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ILLINOIS STATE
PROPERTY/CASUALTY EX AM
QUESTIONS AND ANSWER S
(LATEST)
Question : ISO (Insurance Services Office)
CORRECT ANSWER: ISO creates standardized
property and casualty insurance policies that are approved by states and used as a standard policy for insurers.-they can be modified to comply with state regulations -may be modified to a degree for insurance companies to create their own policy form
Question : define insurance
CORRECT ANSWER: Insurance transfers the risk of
loss from an individual or business entity to an insurance company, which in turn spreads the costs of unexpected losses to many individuals
Question : define risk
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CORRECT ANSWER: uncertainty concerning the
occurrence of a loss
Question : What are the 2 types of risk?
CORRECT ANSWER: Pure and Speculative
Question : What is the difference between pure and
speculative risk?
CORRECT ANSWER: only pure risk is insurable since
it can only result in a loss or no change speculative risk is not insurable since it can result in a loss or gain (like gambling)
Question : What are the 3 types of hazards?
CORRECT ANSWER: 1) Physical - hazards arising
from the material, structural, or operational features 2) Moral - refers to applicants that may lie on their application 3) Morale - increase the hazard presented by a risk arising from the insured's indifference to loss because of the
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existence of insurance (combustible material near a furnace)
Question : peril
CORRECT ANSWER: causes of loss
Question : hazards
CORRECT ANSWER: conditions/circumstances that
increase the probability of an insured loss occurring there are 3 types
Question : direct loss
CORRECT ANSWER: direct physical damage to
buildings/personal property
*this includes proximate cause: chain of events resulting
from a covered peril
Question : indirect loss/consequential losses
CORRECT ANSWER: losses considered a result of
direct loss; this usually results from when repairs begin so
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it could be additional living expenses for homeowners or loss of profits for businesses
Question : named peril
CORRECT ANSWER: lists of specific perils; no
coverage for unlisted perils
Question : open perils (all risk)
CORRECT ANSWER: insures against any risk of loss
that is not excluded
Question : Explain the difference between vacancy and
unoccupied
CORRECT ANSWER: vacancy refers to a property that
has no people or personal property in it for 60 days unoccupied refers to a property that has no people in it but there is personal property in it