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  4. Property and Casualty Insurance Basics

Free Property and Casualty Insurance Basics Practice Questions

Tennessee Property & Casualty exam — 66 practice questions.

Subtopics: Risk pooling, Contract elements, Competent parties, Consideration, Legal purpose, Moral hazard, Morale hazard, Physical hazard, Loss frequency, Reinsurance, Coinsurance, Insurable interest, Loss valuation, Negligence, Damages, Types of loss, Insurer provisions, Other insurance, Liability, Limits of liability, Deductibles, Policy structure, Policy conditions, Actual cash value, Replacement cost, Pair and set clause, Vacancy provision, Mortgagee rights, Appraisal condition, Proof of loss, Salvage and abandonment, Liberalization clause, Assignment condition, Binder, Sublimit, Named perils vs open perils, Burden of proof, Direct vs indirect loss, Comparative negligence, Strict liability, Vicarious liability, Punitive damages, Special vs general damages, Proximate cause, Absolute liability, Hold harmless, Bailee liability, Attractive nuisance, Res ipsa loquitur, Coinsurance calculation, Actual cash value calculation, Split limits application

Read the Property and Casualty Insurance Basics study guide

Sample questions & answers

1. The basic mechanism by which insurance works is:

Pooling the risks of many to pay the losses of a few

Insurance works by pooling the premiums and risks of many insureds to pay the losses of the few who suffer them.

2. Which is a required element of a valid insurance contract?

Offer and acceptance (agreement)

A valid contract requires agreement (offer and acceptance), consideration, legal purpose, and competent parties.

3. For an insurance contract to be valid, the parties must be:

Legally competent

The parties to a valid contract must be legally competent to contract.

4. The insured's consideration in a property insurance contract is primarily:

The premium payment

The insured's consideration is primarily the premium paid in exchange for the insurer's promise to pay covered losses.

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Practice: Property and Casualty Insurance Basics

Take a randomized, timed-style practice test. Answer choices are shuffled and your results are scored instantly with an explanation for every question.

Practice questions are study aids generated for exam preparation and are not actual exam questions. Content is provided for educational purposes and is not legal advice. Verify current statutes, rules, and exam specifications with the Pennsylvania Insurance Department and the exam administrator before relying on it.