Exam (elaborations)
Florida Personal Lines (Property & Casualty) Exam Questions and Answers
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Florida Personal Lines (Property & Casualty) Exam
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Florida Personal Lines (Property &Casualty) Exam
Insurance - answer A transfer of risk of loss from an individual or a business entity to an
insurance company, which, in turn, spreads the costs of unexpected losses to many
individuals; or protection from financial loss
Law of Large Numbers - answer States that the larger the number of people with a
similar exposure to loss, the more predictable actual losses will be.
Law of Large Numbers - answer This law forms the basis for statistical prediction of loss
upon which insurance rates are calculated
Depreciation - answer Reduction in value, particularly due to wear and tear.
Exposure - answer Susceptibility to risk
Implied Warranty - answerA legal term meaning that a product is suitable for its
intended purpose and that it fits an ordinary buyer's expectations
Insurance Policy - answera contract between a policyowner (and/or insured) and an
insurance company which agrees to pay the insured or the beneficiary for loss caused
by specific events
Insurer (principle) - answerthe company who issues an insurance policy
Premium - answerThe money paid to the insurance company for the insurance policy
Obsolescence - answerDepreciation in the value of a property due to becoming
outdated
Elements of Insurable Risk - answer1. Financial (a monetary interest)
2. Blood (a relative)
3. Business ( a business partner)
Risk - answerThe uncertainty or chance of a loss occurring
Insurable Interest - answerMust exist at the time of the loss
Pure Risk - answerrefers to situations that can only result in a loss or no change. There
is no opportunity for financial gain; is the only type of risk that insurance companies are
willing to accept
,Speculative Risk - answerInvolves the opportunity for either loss or gain; these types of
risks are not Insurable
Hazards - answerare conditions or situations that increase the probability of an insured
loss occurring.
Conditions - answerThe section of an insurance policy that indicates the general rules
or procedures that the insurer and insured agree to follow under the terms of the policy
Physical Hazards - answerhazards arising from the material, structural, or operational
features of the risk, apart from the persons owning or managing it
Moral Hazards - answerRefer to those applicants that may lie on an application for
insurance , or in the past, have submitted fraudulent claims against an insurer
Morale Hazard - answerRefers to an increase in the hazard presented by a risk, arising
from the insured's indifference to loss because of the existence of insurance
Perils - answerThe causes of loss insured against in an insurance policy.
Life Insurance - answerInsures against the financial loss caused by premature death of
the insured
Health Insurance - answerinsures against the medical expenses and/or loss of income
caused by the insured's sickness or accidental injury;
Property Insurance - answerInsures against the loss of physical property or the loss of
its income-producing abilities;
Casualty Insurance - answerInsures against the loss and/or damage of property and
resulting liabilities
Loss - answerThe reduction, decrease, or disappearance of value of the person or
property insured in a policy , caused by a named peril
Indemnity - answerSometimes referred to as reimbursement, is a provision in an
insurance policy that states that in the event of loss, an insured or a beneficiary is
permitted to collect only to the extent of the financial loss and, is not allowed to gain
financially because of the existence of an insurance contract.
Subrogation - answerThe insurer's legal right to seek damages from third parties, after it
has reimbursed the insured for the loss.
Accident - answerA sudden, unplanned and unexpected event, not under the control of
the insured, resulting in injury or damage that is neither expected nor intended.
, Occurrence - answerA broader definition of loss than accident because it includes those
losses caused by continuous or repeated exposure to conditions resulting in injury to
persons or damage to property that is neither intended nor expected
Types of Property Losses - answerDirect and indirect
Direct Losses - answerMeans direct physical damage to buildings and/or personal
property
Indirect Losses (Consequential Losses) - answerlosses considered a result of direct
loss. Such losses usually result from the time it takes to repair or replace damaged
property.
Named Peril - answerA term used in property insurance to describe the breadth of
coverage provided under an insurance policy form that lists specific covered perils
Open Peril - answerTerm used in property insurance to describe the breadth of
coverage provided under an insurance policy form that insures against "any risk of loss"
that is not specifically excluded.
Negligence - answerThe failure to use the care that a reasonable, prudent person would
have taken under the same or similar circumstances
Burglary - answerThe crime of forced entry into or out of the premises of another by a
person or persons with felonious intent
Robbery - answerThe taking of property from the care and custody of a person by one
who has caused or threatened to cause that person bodily harm or committed an
obviously unlawful act witnessed by that person
Theft - answerAny act of stealing and encompasses both burglary and robbery
Mysterious Disappearance - answerThe disappearance of property without knowledge
as to the location, time or how the property was lost
Vacancy - answerrefers to an insured structure in which no people have been living or
working, and no property has been stored for the period of time required as stated in the
policy (usually 60 days)
Unoccupancy (nonoccupancy) - answerRefers to an insured structure in which no
people have been living or working within the required period of time, but some property
is stored.
Medical Payments (Med Pay) - answerCovers medical costs due to injury on a no-fault
basis
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