Property/Casualty Illinois for State Exam ISO (Insurance Services Office) - Correct Answers ✅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 define insurance - Correct Answers ✅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 define risk - Correct Answers ✅uncertainty concerning the occurrence of a loss What are the 2 types of risk? - Correct Answers ✅Pure and Speculative What is the difference between pure and speculative risk? - Correct Answers ✅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) 1 / 4
Property/Casualty Illinois for State Exam What are the 3 types of hazards? - Correct Answers ✅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 existence of insurance (combustible material near a furnace) peril - Correct Answers ✅causes of loss hazards - Correct Answers ✅conditions/circumstances that increase the probability of an insured loss occurring there are 3 types direct loss - Correct Answers ✅direct physical damage to buildings/personal property
*this includes proximate cause: chain of events resulting from
a covered peril 2 / 4
Property/Casualty Illinois for State Exam indirect loss/consequential losses - Correct Answers ✅losses considered a result of direct loss; this usually results from when repairs begin so it could be additional living expenses for homeowners or loss of profits for businesses named peril - Correct Answers ✅lists of specific perils; no coverage for unlisted perils open perils (all risk) - Correct Answers ✅insures against any risk of loss that is not excluded Explain the difference between vacancy and unoccupied - Correct Answers ✅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
- elements of insurable risk - Correct Answers ✅1.
- Blood (a relative)
- Business (a business partner)
Financial (a monetary interest)
indemnity - Correct Answers ✅to reimburse or make whole; permitted to collect only to the extent of financial loss (cannot gain) 3 / 4
Property/Casualty Illinois for State Exam subrogation - Correct Answers ✅The process by which an insurer can, after it has paid a loss under the policy, recover the amount paid from any party (other than the insured) who caused the loss or is otherwise legally liable for the loss.Accident vs. Occurrence - Correct Answers ✅an accident is a sudden, unplanned and unexpected event not under the control of the insured and results in injury/damage that is not intended/expected an occurrence includes losses caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected BLANKET VS SPECIFIC - Correct Answers ✅BLANKET COVERAGE-provides coverage for different classes of property under one policy SPECIFIC INSURANCE-is when you insure a specific item or specific kind of property actual cash value - Correct Answers ✅recognizes the reduction of value of property as it ages and becomes subject to wear and tear and obsolescence calculated by: (current replacement cost) - (depreciation)
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