Are flashcards effective for the P&C insurance exam?

Yes. Flashcards use active recall — retrieving an answer from memory — which research shows is one of the most effective ways to make material stick, especially in short sessions spread over several days. That matters for the P&C exam's definition-heavy term pairs like named vs open peril, comprehensive vs collision, and twisting vs churning.

What topics do the P&C flashcards cover?

Every exam area: Insurance & Contract Basics (the indemnity trio, perils/hazards, DICE), Property (HO and DP forms, coinsurance math, ACV vs replacement cost), Casualty/Liability (negligence, CGL, workers' comp, umbrella, limits), Auto (the Personal Auto Policy, UM/UIM, comp vs collision, commercial auto), Specialty Lines & Bonds, and Regulation & Ethics (agent authority, unfair trade practices).

Do these flashcards match the current P&C insurance exam?

Yes. Each card is written to the topics on the general state Property & Casualty producer-license exam and to official guidance from the NAIC, the Insurance Information Institute, and FEMA, so you study exactly what the exam tests. Because the exam is state-administered, the general (national) content is consistent nationwide; verify your state's specific law section separately.

How should I study with these flashcards?

Mix the modes: flip to learn, type to test recall, match for speed, and quiz to check yourself. Drill the easily-confused pairs hardest — named vs open peril, comprehensive vs collision, occurrence vs claims-made, twisting vs churning — then confirm with our free practice questions.

Are the P&C insurance flashcards free?

Yes — 100% free, all four study modes, no paywall and no sign-up.

What is insurable interest?

A financial relationship to the insured property or person such that a loss causes the insured genuine harm. In property/casualty it must exist at the TIME OF LOSS.

When must insurable interest exist in P&C?

At the TIME OF LOSS (in life insurance, only at the time of application). This timing distinction is heavily tested.

What is the principle of indemnity?

Restoring the insured to the same financial position as just before a loss — no profit, no penalty. P&C policies are indemnity contracts.

The insurer's right, after paying a covered claim, to recover that amount from the third party who actually caused the loss. It enforces indemnity and prevents a double recovery.

Can an insured impair the insurer's subrogation right?

No. If the insured releases the at-fault party before being paid, they can destroy the insurer's recovery right and jeopardize their own claim.

The actual CAUSE of a loss — fire, windstorm, theft, collision, hail, vandalism.

A CONDITION that increases the chance or severity of a loss. Types: physical, moral, morale, and legal.

What is a physical hazard?

A tangible condition that increases the chance of loss — icy steps, worn wiring, oily rags by a furnace.

What is a moral hazard?

A DISHONEST tendency or intent to cause or exaggerate a loss — e.g., deliberately burning insured property. (Contrast morale = carelessness.)

What is a morale hazard?

Carelessness or indifference to loss because insurance exists — e.g., leaving keys in an unlocked car. (Contrast moral = dishonest intent.)

Memory hook: moral vs morale hazard?

Moral = dishonest intent (fraud). Morale = careless indifference (laziness). The one extra 'e' flips it from fraud to laziness.

A risk involving only the chance of loss or no loss, with no chance of gain. It is the ONLY insurable type of risk.

What is speculative risk?

A risk with a chance of loss, no loss, OR gain (gambling, investing). It is NOT insurable.

What is the law of large numbers?

As the number of similar, independent exposure units grows, actual losses come closer to predicted losses — the statistical basis that makes insurance possible.

What is adverse selection?

The tendency of higher-risk individuals to seek or keep insurance more than lower-risk ones, threatening loss predictions. Underwriting combats it.

What are the five risk-management techniques?

Avoidance, Retention, Reduction (loss control), Sharing, and Transfer. Insurance is the chief risk-TRANSFER device.

What is risk avoidance?

Eliminating the risk entirely — the only method that reduces the chance of loss to zero (e.g., never building on a floodplain).

What is risk retention?

Keeping the risk and paying losses yourself — planned (a high deductible, self-insurance) or unplanned.

Insurance bought by an insurer (the cedant) to transfer part of its risk to a reinsurer — letting it write larger books and limit catastrophe accumulation.

Treaty vs facultative reinsurance?

Treaty = an automatic, portfolio-level agreement. Facultative = negotiated risk by risk.

What are the four elements of a valid contract?

Offer and acceptance, consideration, competent parties, and a legal purpose.

What does 'aleatory' mean for an insurance contract?

The parties exchange UNEQUAL amounts depending on an uncertain event — an insured may pay little and collect much, or vice versa.

What is a contract of adhesion?

A 'take it or leave it' contract drafted entirely by one party (the insurer). Ambiguities are construed against the drafter — in favor of the insured.

What does 'conditional' mean for an insurance contract?

The insurer's duty to pay is subject to conditions the insured must first meet (notice, proof of loss, cooperation).

What does 'unilateral' mean for an insurance contract?

Only ONE party — the insurer — makes a legally enforceable promise. Only the insurer can be sued for breach.

What does 'personal' mean for an insurance contract?

The contract is between the insurer and a specific person; selling the property doesn't transfer the policy without the insurer's consent.

What are the five characteristics of an insurance contract?

Aleatory, Adhesion, Conditional, Unilateral, and Personal.

What is utmost good faith?

The duty (uberrimae fidei) of both parties to deal honestly and disclose all material facts — a higher standard than ordinary contracts.

What is a representation?

A statement believed true, made on the application. It must be substantially true; only a MATERIAL misstatement matters.

What is a warranty (in contract law)?

A statement guaranteed true and made part of the contract — a stricter standard than a representation.

Failure to disclose a known MATERIAL fact (silence/omission). If intentional and material, the insurer may void coverage.

What is misrepresentation (contract law)?

A false statement of a material fact (an active falsehood). If material, the insurer may rescind or void the policy.

Representation vs warranty?

Representation = believed true. Warranty = guaranteed true (stricter).

Concealment vs misrepresentation?

Concealment = what you DIDN'T say (silence). Misrepresentation = what you said FALSELY (active).

The voluntary surrender of a known legal right.

Being barred from asserting a right because someone relied on your prior conduct.

What does DICE stand for?

Declarations, Insuring agreement, Conditions, Exclusions — the four core parts of a P&C policy (plus Definitions and Endorsements).

What are the Declarations?

The fact page: WHO is the named insured, WHAT property/risk is covered, the policy period, limits, deductibles, and premium. The 'D' in DICE.

What is the Insuring Agreement?

The insurer's core promise to pay for covered losses — the heart of the policy. The 'I' in DICE. Written as named-peril or open-peril.

What are policy Conditions?

The rules and duties of both parties: notice of loss, proof of loss, cooperation, cancellation, appraisal, and subrogation. The 'C' in DICE.

What is an Exclusion?

A policy provision stating what is NOT covered — it narrows the insuring agreement (e.g., flood, earth movement, war, intentional acts). The 'E' in DICE.

What is an endorsement (rider)?

An attachment that adds, deletes, or modifies policy provisions — e.g., a replacement-cost or scheduled-property endorsement.

A temporary contract providing immediate, unconditional coverage before the policy is issued — common in P&C.

What is a deductible?

The amount the insured pays out of pocket before insurance applies. A higher deductible lowers the premium.

What is the difference between a peril and a hazard?

A peril is the CAUSE of a loss (fire, theft); a hazard is a CONDITION that makes that loss more likely or severe.

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Property & Casualty Insurance Flashcards

What is insurable interest?: A financial relationship to the insured property or person such that a loss causes the insured genuine harm. In property/casualty it must exist at the TIME OF LOSS.
When must insurable interest exist in P&C?: At the TIME OF LOSS (in life insurance, only at the time of application). This timing distinction is heavily tested.
What is the principle of indemnity?: Restoring the insured to the same financial position as just before a loss — no profit, no penalty. P&C policies are indemnity contracts.
What is subrogation?: The insurer's right, after paying a covered claim, to recover that amount from the third party who actually caused the loss. It enforces indemnity and prevents a double recovery.
Can an insured impair the insurer's subrogation right?: No. If the insured releases the at-fault party before being paid, they can destroy the insurer's recovery right and jeopardize their own claim.
What is a peril?: The actual CAUSE of a loss — fire, windstorm, theft, collision, hail, vandalism.
What is a hazard?: A CONDITION that increases the chance or severity of a loss. Types: physical, moral, morale, and legal.
What is a physical hazard?: A tangible condition that increases the chance of loss — icy steps, worn wiring, oily rags by a furnace.
What is a moral hazard?: A DISHONEST tendency or intent to cause or exaggerate a loss — e.g., deliberately burning insured property. (Contrast morale = carelessness.)
What is a morale hazard?: Carelessness or indifference to loss because insurance exists — e.g., leaving keys in an unlocked car. (Contrast moral = dishonest intent.)
Memory hook: moral vs morale hazard?: Moral = dishonest intent (fraud). Morale = careless indifference (laziness). The one extra 'e' flips it from fraud to laziness.
What is pure risk?: A risk involving only the chance of loss or no loss, with no chance of gain. It is the ONLY insurable type of risk.
What is speculative risk?: A risk with a chance of loss, no loss, OR gain (gambling, investing). It is NOT insurable.
What is the law of large numbers?: As the number of similar, independent exposure units grows, actual losses come closer to predicted losses — the statistical basis that makes insurance possible.
What is adverse selection?: The tendency of higher-risk individuals to seek or keep insurance more than lower-risk ones, threatening loss predictions. Underwriting combats it.
What are the five risk-management techniques?: Avoidance, Retention, Reduction (loss control), Sharing, and Transfer. Insurance is the chief risk-TRANSFER device.
What is risk avoidance?: Eliminating the risk entirely — the only method that reduces the chance of loss to zero (e.g., never building on a floodplain).
What is risk retention?: Keeping the risk and paying losses yourself — planned (a high deductible, self-insurance) or unplanned.
What is reinsurance?: Insurance bought by an insurer (the cedant) to transfer part of its risk to a reinsurer — letting it write larger books and limit catastrophe accumulation.
Treaty vs facultative reinsurance?: Treaty = an automatic, portfolio-level agreement. Facultative = negotiated risk by risk.
What are the four elements of a valid contract?: Offer and acceptance, consideration, competent parties, and a legal purpose.
What does 'aleatory' mean for an insurance contract?: The parties exchange UNEQUAL amounts depending on an uncertain event — an insured may pay little and collect much, or vice versa.
What is a contract of adhesion?: A 'take it or leave it' contract drafted entirely by one party (the insurer). Ambiguities are construed against the drafter — in favor of the insured.
What does 'conditional' mean for an insurance contract?: The insurer's duty to pay is subject to conditions the insured must first meet (notice, proof of loss, cooperation).
What does 'unilateral' mean for an insurance contract?: Only ONE party — the insurer — makes a legally enforceable promise. Only the insurer can be sued for breach.
What does 'personal' mean for an insurance contract?: The contract is between the insurer and a specific person; selling the property doesn't transfer the policy without the insurer's consent.
What are the five characteristics of an insurance contract?: Aleatory, Adhesion, Conditional, Unilateral, and Personal.
What is utmost good faith?: The duty (uberrimae fidei) of both parties to deal honestly and disclose all material facts — a higher standard than ordinary contracts.
What is a representation?: A statement believed true, made on the application. It must be substantially true; only a MATERIAL misstatement matters.
What is a warranty (in contract law)?: A statement guaranteed true and made part of the contract — a stricter standard than a representation.
What is concealment?: Failure to disclose a known MATERIAL fact (silence/omission). If intentional and material, the insurer may void coverage.
What is misrepresentation (contract law)?: A false statement of a material fact (an active falsehood). If material, the insurer may rescind or void the policy.
Representation vs warranty?: Representation = believed true. Warranty = guaranteed true (stricter).
Concealment vs misrepresentation?: Concealment = what you DIDN'T say (silence). Misrepresentation = what you said FALSELY (active).
What is waiver?: The voluntary surrender of a known legal right.
What is estoppel?: Being barred from asserting a right because someone relied on your prior conduct.
What does DICE stand for?: Declarations, Insuring agreement, Conditions, Exclusions — the four core parts of a P&C policy (plus Definitions and Endorsements).
What are the Declarations?: The fact page: WHO is the named insured, WHAT property/risk is covered, the policy period, limits, deductibles, and premium. The 'D' in DICE.
What is the Insuring Agreement?: The insurer's core promise to pay for covered losses — the heart of the policy. The 'I' in DICE. Written as named-peril or open-peril.
What are policy Conditions?: The rules and duties of both parties: notice of loss, proof of loss, cooperation, cancellation, appraisal, and subrogation. The 'C' in DICE.
What is an Exclusion?: A policy provision stating what is NOT covered — it narrows the insuring agreement (e.g., flood, earth movement, war, intentional acts). The 'E' in DICE.
What is an endorsement (rider)?: An attachment that adds, deletes, or modifies policy provisions — e.g., a replacement-cost or scheduled-property endorsement.
What is a binder?: A temporary contract providing immediate, unconditional coverage before the policy is issued — common in P&C.
What is a deductible?: The amount the insured pays out of pocket before insurance applies. A higher deductible lowers the premium.
What is the difference between a peril and a hazard?: A peril is the CAUSE of a loss (fire, theft); a hazard is a CONDITION that makes that loss more likely or severe.
What is a stock insurer?: An insurer owned by shareholders that issues nonparticipating policies (no policyowner dividends).
What is a mutual insurer?: An insurer owned by its policyowners that may issue participating (dividend-paying) policies.
Admitted vs non-admitted insurer?: Admitted = state-licensed and backed by the guaranty fund. Non-admitted (surplus lines) = not licensed in the state; used for hard-to-place risks.
What is underwriting?: The process of evaluating, classifying, and pricing risks to decide whether and how to insure an applicant. It guards against adverse selection.
What is a proximate cause (coverage)?: The primary, efficient cause that sets in motion an unbroken chain of events leading to a loss.
Named-peril coverage?: Pays only for losses caused by perils specifically LISTED. The INSURED must prove the loss was a listed peril. Narrower, cheaper.
Open-peril coverage?: 'All-risk'/special — pays for all causes of loss EXCEPT those excluded. The INSURER must prove an exclusion applies. Broader, costlier.
Named-peril vs open-peril — what really differs?: The burden of proof. Named-peril: the insured proves coverage. Open-peril: the insurer proves the exclusion.
What is the HO-1 form?: The Basic homeowners form — covers a minimal list of named perils. Largely obsolete today.
What is the HO-2 form?: The Broad form — named-peril coverage on BOTH the dwelling and personal property for an owner-occupant.
What is the HO-3 form?: The Special Form — the MOST COMMON. Open-peril on the dwelling, named-peril on personal property. 'Open on the house, named on your stuff.'
What is the HO-4 form?: The renters/tenants form. Covers personal property and liability but NO dwelling, because the tenant doesn't own the building.
What is the HO-5 form?: The Comprehensive form — the broadest standard homeowners policy. Open-peril on BOTH the dwelling and personal property.
What is the HO-6 form?: The condominium unit-owner form. Covers interior improvements and personal property; the association master policy covers the exterior.
What is the HO-8 form?: The modified form for older homes whose replacement cost exceeds market value — typically a functional/ACV settlement.
Which HO form covers open-peril on BOTH dwelling and contents?: The HO-5 (Comprehensive). The HO-3 is open on the dwelling but named on contents.
What is HO Coverage A?: Dwelling — the house plus attached structures. The base limit; B, C, and D are percentages of Coverage A.
What is HO Coverage B and its usual limit?: Other Structures (detached garage, fence, shed) — usually 10% of Coverage A.
What is HO Coverage C and its usual limit?: Personal Property (your belongings) — usually 50% of Coverage A (often raisable to 70%).
What is HO Coverage D and its usual limit?: Loss of Use / Additional Living Expense — usually 30% of Coverage A.
What is HO Coverage E?: Personal Liability — pays bodily injury and property damage you're legally liable for, plus defense costs. A flat limit (e.g., $100,000).
What is HO Coverage F?: Medical Payments to Others — pays others' medical bills regardless of fault (a small goodwill coverage). A flat limit.
Exam trap: are B, C, and D percentages of each other?: No. B, C, and D are all percentages of Coverage A — never of each other. Memorize 10 / 50 / 30.
What is a Dwelling (DP) policy used for?: Properties not eligible for a full homeowners policy — rentals, seasonal cabins, vacant or older homes. No automatic liability or contents.
DP-1 form?: Basic dwelling form — named-peril (~9 perils), settled at ACV. Cheapest; older or vacant homes.
DP-2 form?: Broad dwelling form — named-peril (broader list), settled at replacement cost.
DP-3 form?: Special dwelling form — open-peril on the dwelling, replacement cost on the structure. The broadest/most common for rentals.
Which DP forms are named vs open peril?: DP-1 and DP-2 are named-peril; DP-3 is open-peril. DP-1 settles at ACV; DP-2 and DP-3 at replacement cost.
What is a Businessowners Policy (BOP)?: A pre-packaged bundle of commercial property + general liability for small/mid eligible businesses; often written without a coinsurance penalty.
What is a Commercial Package Policy (CPP)?: A modular policy combining two or more standalone coverage parts under one declarations page, for larger businesses needing higher limits.
What are the commercial causes-of-loss forms?: Basic, Broad, and Special, attached to a commercial property form. Special is open-peril (broadest); basic and broad are named-peril.
What is Actual Cash Value (ACV)?: Replacement cost MINUS depreciation — the depreciated value of property at the time of loss. ACV pays less on older, worn property.
What is replacement cost?: The cost to repair or replace property with like kind and quality, with NO deduction for depreciation.
How does the standard HO-3 settle dwelling vs contents?: Dwelling at replacement cost; personal property at ACV — unless a replacement-cost endorsement is added on contents.
What is a coinsurance clause?: It requires the insured to carry insurance equal to a stated % of value (often 80/90/100%); carrying less makes them a co-insurer of a partial loss.
What is the coinsurance formula?: Payment = (Did / Should) x Loss - Deductible, where Should = coinsurance % x value, and Did = the amount carried.
When does the coinsurance penalty apply?: Only to PARTIAL losses. A total loss simply pays the policy limit — coinsurance is ignored.
What is an Agreed Value endorsement?: An endorsement that suspends the coinsurance clause because the insurer and insured agree on the property's value in advance.
Coinsurance example: 80% on a $500,000 building, $300,000 carried — what fraction is paid?: Should = 80% x $500,000 = $400,000. Did / Should = $300,000 / $400,000 = 0.75. A partial loss is paid at 75% (minus deductible).
What is a valued policy?: A policy that pays a pre-agreed amount on a total loss, rather than ACV or replacement cost.
What is functional replacement cost?: Rebuilding with modern, less costly equivalents (common on HO-8) when full replacement cost would exceed market value.
Is flood covered by a standard property policy?: No — flood is EXCLUDED. It is bought separately, usually through the National Flood Insurance Program (NFIP), administered by FEMA.
Is earthquake covered by a standard HO policy?: No — earthquake is excluded. It is added by endorsement or a separate policy.
What are NFIP residential coverage limits?: Up to $250,000 on the building and up to $100,000 on contents; a new policy generally has a 30-day waiting period.
What is a floater?: Inland marine coverage that travels WITH movable property (jewelry, fine art, instruments) — usually open-peril and often worldwide.
What is business income (business interruption) coverage?: Pays lost income (and extra operating cost via extra expense) while operations are suspended by a covered property loss.
What is equipment breakdown (boiler & machinery) coverage?: Covers sudden, accidental breakdown of boilers, pressure vessels, and electrical equipment.
Why is HO-8 settled on a modified basis?: Because older homes' replacement cost can far exceed market value; HO-8 pays a functional/ACV settlement to avoid over-insuring.
Section I vs Section II of an HO policy?: Section I = Property (Coverages A-D). Section II = Liability (Coverages E-F).
Which HO form fits a tenant who owns no building?: The HO-4 (renters form) — personal property and liability, no dwelling coverage.
What is a tort?: A civil wrong (other than breach of contract) that causes injury, remedied by damages.
What is negligence?: Failure to use the care a reasonably prudent person would. It requires four elements: duty, breach, proximate cause, and damages.
What are the four elements of negligence?: Duty owed, breach of that duty, proximate cause, and actual damages. Missing any one defeats the claim.
What is 'duty' in a negligence claim?: A legal obligation to act with reasonable care toward another person.
What is 'breach' in a negligence claim?: Failing to meet the reasonable-care standard (e.g., mopping a floor but posting no warning sign).
What is an intervening (superseding) cause?: A new, independent cause that breaks the chain of proximate cause and can defeat liability.
What is contributory negligence?: A strict rule (only a few states: AL, MD, NC, VA, DC) that bars all recovery if the plaintiff was even slightly at fault.
What is pure comparative negligence?: Recovery is reduced by the plaintiff's percentage of fault — they can recover even if 99% at fault.
What is modified comparative negligence?: The plaintiff recovers only if their fault is below a 50%/51% threshold; recovery is barred at or above it.
What is assumption of risk?: A defense: the plaintiff knowingly accepted a known danger, barring recovery within the assumed risk.
What is strict (absolute) liability?: Liability imposed WITHOUT proving fault — for ultra-hazardous activities (blasting, wild animals) and defective products.
What is vicarious liability?: Liability of one party for another's acts based on their relationship (employer/employee, parent/child), regardless of the held party's own care.
What is respondeat superior?: The employer-for-employee form of vicarious liability — an employer is liable for an employee's acts within the scope of employment.
What are compensatory damages?: Damages that reimburse the injured party for actual loss — special (measurable) and general (intangible).
Special vs general compensatory damages?: Special = measurable economic loss (medical bills, lost wages). General = intangible loss (pain & suffering, loss of consortium).
What are punitive (exemplary) damages?: Damages that punish reckless or willful conduct and deter others. Often excluded or uninsurable as a matter of public policy.
Which damages do liability policies pay?: Compensatory damages. Punitive damages are often excluded or uninsurable by law.
What is a per-occurrence limit?: The most the insurer pays for any single accident/occurrence (e.g., $1,000,000 per occurrence).
What is an aggregate limit?: The most the insurer pays for ALL losses in the policy period (e.g., $2,000,000 aggregate).
What are split limits?: Three separate liability limits: BI per person / BI per accident / PD per accident (e.g., 100/300/50).
What is a Combined Single Limit (CSL)?: One liability limit covering bodily injury and property damage combined, per accident, in any mix.
What is a CGL policy?: Commercial General Liability — the core business-liability coverage for bodily injury, property damage, and personal & advertising injury.
What does CGL Coverage A cover?: Bodily Injury & Property Damage liability from an occurrence — premises/operations and products/completed operations; includes defense.
What does CGL Coverage B cover?: Personal & Advertising Injury — libel, slander, defamation, false arrest, wrongful eviction, advertising/copyright infringement.
What does CGL Coverage C cover?: Medical Payments — others' medical expenses regardless of fault (no-fault goodwill coverage).
What is an occurrence trigger?: Covers injury/damage that HAPPENS during the policy period, no matter when the claim is filed — even years later.
What is a claims-made trigger?: Covers only claims first MADE during the policy period, subject to a retroactive date; may need an Extended Reporting Period (a 'tail').
What is a retroactive date?: On a claims-made policy, the date before which injuries are NOT covered, even if the claim is made during the policy period.
What is an Extended Reporting Period (tail)?: An extension on a claims-made policy that extends the time to REPORT a claim for past work — it does not cover new occurrences.
Occurrence vs claims-made premium?: Occurrence costs more (simpler, covers late claims). Claims-made starts cheaper and rises as it 'matures.'
What is workers' compensation?: A statutory, no-fault system: an injured employee gets benefits regardless of fault and, in exchange, gives up the right to sue the employer.
What is the exclusive remedy doctrine?: The workers' comp bargain ('grand bargain'): the employee gets no-fault statutory benefits and gives up the right to sue the employer.
What does Workers' Comp Coverage Part One do?: Pays all benefits the state WC law requires — with NO dollar limit (statutory benefits).
What does Workers' Comp Coverage Part Two do?: Employers Liability — covers work-injury suits OUTSIDE the WC statute, and HAS limits.
What does Workers' Comp Coverage Part Three do?: Other States Insurance — extends coverage to listed states the employer might expand into.
What benefits does workers' comp provide?: Medical care, a portion of lost wages, death benefits, and rehabilitation.
What is an umbrella policy?: Excess liability above primary policies (CGL, auto, employers liability) that adds limits, drops down when an underlying aggregate is exhausted, and can broaden coverage.
Umbrella vs excess policy?: An umbrella adds limits AND can broaden coverage (subject to a self-insured retention). A plain excess policy adds limits only.
What is a self-insured retention (SIR)?: An amount the insured pays out of pocket before an umbrella responds to a gap not covered by an underlying policy.
What is E&O insurance?: Errors & Omissions (professional liability) — covers service errors, faulty advice, or negligence by a professional. Usually claims-made.
What is D&O insurance?: Directors & Officers liability — covers corporate directors and officers (and often the entity) for wrongful acts in their management decisions.
What is EPLI?: Employment Practices Liability Insurance — covers employment claims such as wrongful termination, discrimination, and harassment.
What is the 'Who Is An Insured' provision?: The part of a liability policy that defines, beyond the named insured, which additional persons and organizations qualify for coverage.
What are supplementary payments?: Amounts a liability insurer pays IN ADDITION to the limit — such as defense costs, bonds, and court costs.
Are defense costs inside or outside the CGL limit?: Outside — defense costs are a supplementary payment paid in addition to the policy limit.
How many parts are in the Personal Auto Policy (PAP)?: Four: Part A Liability, Part B Medical Payments, Part C UM/UIM, Part D Damage to Your Auto.
What does PAP Part A cover?: Liability (BI/PD) — damages you're legally liable to others for. Defense is paid IN ADDITION to the limit.
What does PAP Part B cover?: Medical Payments — reasonable medical/funeral expenses regardless of fault, incurred within 3 years.
What does PAP Part C cover?: Uninsured/Underinsured Motorist (UM/UIM) — your bodily injury from an at-fault driver with no or insufficient insurance, or a hit-and-run.
What does PAP Part D cover?: Damage to Your Auto — first-party physical damage: Collision and Other-Than-Collision, minus a deductible.
What is UM coverage?: Uninsured Motorist — pays your bodily injury when the at-fault driver has NO insurance, is a hit-and-run, or is insolvent.
What is UIM coverage?: Underinsured Motorist — pays when the at-fault driver has insurance but NOT ENOUGH to cover your injuries; it pays the gap.
UM vs UIM?: UM = the at-fault driver has NO insurance. UIM = they have insurance but NOT ENOUGH.
What does auto Collision coverage cover?: Your vehicle's upset, rollover, or striking another object (another car, a tree, a pole, a guardrail).
What does auto Comprehensive (other-than-collision) cover?: Non-collision losses — fire, theft, hail, flood, vandalism, falling objects, glass breakage, and hitting an animal.
Is hitting a deer collision or comprehensive?: Comprehensive (other-than-collision), NOT collision. The classic auto exam trap.
Is glass breakage collision or comprehensive?: Comprehensive (other-than-collision).
What do split limits like 25/50/25 mean?: $25K bodily injury per person / $50K BI per accident / $25K property damage per accident.
What is no-fault (PIP) auto insurance?: In no-fault states, your own insurer pays your medical and lost wages through Personal Injury Protection (PIP) regardless of fault, and your right to sue is limited by a threshold.
PIP vs Medical Payments?: PIP (no-fault states) is broader — it covers medical, lost wages, and related expenses. Medical Payments covers medical/funeral expenses only.
What is a financial responsibility law?: Requires proof of the ability to pay AFTER an accident or violation (via insurance, a bond, or a deposit).
What is a compulsory insurance law?: Requires a driver to carry liability insurance UP FRONT.
What is an SR-22?: A certificate the INSURER files verifying minimum coverage (not a policy itself); often required after a DUI.
What is an FR-44?: A higher-limit version of the SR-22 — used in Florida and Virginia only.
What is the Business Auto Policy (BAP)?: Commercial auto coverage that uses covered-auto SYMBOLS (not a vehicle schedule) to say which autos a coverage applies to.
What is BAP Symbol 1?: 'Any auto' — the broadest covered-auto designation; it closes every gap, including temporary substitute vehicles.
BAP trap: do symbols 2 + 8 + 9 equal symbol 1?: No. Only Symbol 1 ('any auto') truly closes every gap. 2+8+9 do NOT equal 1.
What is the Garage Coverage Form for?: Auto dealerships and similar auto businesses — it blends liability and physical damage and includes garage operations.
What is Garagekeepers coverage?: Protects a garage, repair shop, or storage operation against liability for damage to CUSTOMERS' autos left in its care, custody, or control.
Who is a 'covered person' for PAP liability?: The named insured and family members, anyone using the covered auto with permission, and others liable for that use.
What is inland marine insurance?: Coverage for movable property, property in transit, and high-value scheduled items (jewelry, fine art) — usually open-peril.
What does ocean marine insurance cover?: Hull, Cargo, Freight, and Protection & Indemnity (liability) for vessels and their cargo.
What is crime insurance?: Covers loss of money/securities from employee dishonesty, theft, robbery, burglary, and forgery.
What is a fidelity bond?: Reimburses an EMPLOYER if an employee steals money or property. A two-party arrangement (employer + insurer).
What is a surety (performance) bond?: A three-party guarantee that a contractor (principal) will COMPLETE the job per the contract for the project owner (obligee).
Fidelity vs surety bond?: Fidelity = two-party, reimburses an employer for employee theft. Surety = three-party, guarantees a contractor completes the job.
Who are the three parties to a surety bond?: The principal (who must perform), the obligee (who is protected), and the surety (who guarantees performance).
Is a surety bond insurance?: No — it is a three-party guarantee of performance, not a two-party indemnity insurance contract.
What is a FAIR plan?: A residual-market mechanism providing basic PROPERTY coverage to applicants who can't obtain it in the standard market.
What is an automobile assigned-risk (shared market) plan?: A residual-market mechanism making AUTO coverage available to high-risk drivers who can't obtain it normally.
What is cyber liability insurance?: Covers a business's data-breach and cyber-incident liability, including notification and recovery costs.
What is loss assessment coverage?: An HO endorsement that pays a condo/co-op unit-owner's proportionate share of an assessment levied by the association for a covered loss.
What does a personal umbrella policy do?: Provides high excess liability limits above an insured's underlying auto and homeowners coverage and can fill some coverage gaps.
What is a residual (shared) market?: Mechanisms that provide coverage to risks the voluntary market won't write — FAIR plans (property) and assigned-risk plans (auto).
What is an inland marine floater?: A schedule of specific high-value movable items (jewelry, cameras, instruments) covered usually open-peril and often worldwide.
What is a producer?: A person licensed to sell, solicit, or negotiate insurance. The NAIC Producer Licensing Model Act merged 'agent' and 'broker' into 'producer.'
Whom does an agent represent?: The INSURER — and an agent can typically bind coverage.
Whom does a broker represent?: The APPLICANT/client — and a broker generally cannot bind coverage.
What is express authority?: Authority explicitly granted in writing in the agent's contract or appointment (e.g., authority to bind auto up to a stated limit).
What is implied authority?: Authority not written but reasonably necessary to carry out express authority (e.g., renting an office, collecting premiums).
What is apparent (ostensible) authority?: Authority the public reasonably believes an agent has based on the insurer's conduct, even where no actual authority was granted.
What is a producer's fiduciary duty?: Producers hold client premiums in trust; commingling client funds with their own personal funds is a violation.
Resident vs non-resident license?: A producer is resident in their home state and obtains non-resident licenses elsewhere by reciprocity, usually without retaking the exam.
What is misrepresentation as an unfair trade practice?: Making false/misleading statements about a policy's benefits, terms, or the insurer's financial condition.
What is rebating?: Offering an inducement NOT specified in the policy (cash, gifts, services) to persuade someone to buy — a prohibited unfair trade practice.
What is twisting?: Inducing a policyholder to drop or replace a policy through MISREPRESENTATION, usually between different insurers.
What is churning?: Replacing a policy using the EXISTING policy's own values, with the SAME insurer, to generate commissions.
Twisting vs churning?: Twisting uses misrepresentation (often between different insurers). Churning uses the existing policy's own values with the SAME insurer.
What is defamation (unfair trade practice)?: Making false, malicious statements that injure a competitor's or an insurer's reputation.
What is unfair discrimination?: Charging different premiums or terms to individuals of the same class and equal risk.
What is boycott, coercion, and intimidation?: Acts that restrain trade or tend to create a monopoly — a prohibited unfair trade practice.
Who is the Insurance Commissioner?: The official (also Director or Superintendent) who heads the state Department of Insurance — licensing, disciplining, examining, and issuing cease-and-desist orders.
Is the NAIC a regulator?: No. The NAIC is NOT a regulator — it drafts MODEL LAWS that states must adopt to have legal force.
What is the McCarran-Ferguson Act?: Federal law leaving the regulation of insurance to the states (15 U.S.C. 1011-1015).
What does the Fair Credit Reporting Act (FCRA) require of producers?: Notice to a consumer when a consumer/inspection report is obtained, and an adverse-action notice when that report drives an underwriting decision.
What does Gramm-Leach-Bliley (GLBA) require?: Privacy notices to consumers and safeguarding of nonpublic personal financial information.
What is the Unfair Claims Settlement Practices Act?: An NAIC model act prohibiting unfair claim-handling practices, such as misrepresenting policy provisions or failing to act promptly on claims.
What is an agent's appointment?: An insurer's authorization for a licensed producer to transact business and bind coverage on its behalf.
What is continuing education (CE) for producers?: Required ongoing coursework (hours plus an ethics requirement set by each state) that a producer must complete to renew a license.
Who administers the P&C producer license exam?: Each state's Department of Insurance, delivered through a testing vendor (PSI, Pearson VUE, or Prometric). There is no national P&C license.
What is commingling?: Improperly mixing client premium funds with the producer's own personal or business funds — a breach of fiduciary duty.
What is a cease-and-desist order?: An order from the Commissioner directing a person to stop a prohibited act, such as an unfair trade practice.
What is a market-conduct exam?: A regulator's review of how an insurer treats policyholders — sales, underwriting, and claims practices — for compliance with state law.

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By Career EmployerUpdated Jun 20, 2026

200+ free Property & Casualty Insurance flashcards — 4 ways to study

Property & Casualty Insurance Flashcard of the DayNew daily

The classic card. Do you know this one?

Click Study Flashcards above to open the flashcard hub — hundreds of Property & Casualty insurance cards you can flip, match, type, or quiz yourself on. Every card is drawn from the topics on the general producer-license exam, so you study exactly what the P&C insurance exam tests.^[1] Pair them with our free practice questions and study guide.

Property & Casualty Insurance Flashcard Study Modes

Most flashcard sites give you one thing: a card to flip. Ours has four modes so you can both learn the material and prove you know it — the difference between recognizing an answer and recalling it under pressure.

Flip (Study) — the classic card. Flip term ↔ definition, shuffle the deck, and mark each card “Got it” or “Still learning.”
Match (Game) — a timed game: pair each term to its definition as fast as you can. Great for cementing the HO forms, CGL coverages, and the auto policy parts.
Type (Recall) — read the definition and type the term. Typing forces true active recall instead of passive recognition.
Quiz (Test) — multiple-choice questions generated from the cards, so you can self-test exactly like exam day.

Free Property & Casualty insurance flashcards from Career Employer — active recall for the producer-license exam

Why Flashcards Work for the P&C License Exam

Flashcards aren’t busywork — they’re built on active recall: pulling an answer out of memory strengthens it far more than re-reading notes. Pair that with spacing — short sessions across several days rather than one cram — and you retain more in less time.

That matters on this exam, which is dense with easily-confused term pairs: named vs open peril, ACV vs replacement cost, comprehensive vs collision, occurrence vs claims-made, and twisting vs churning. Used alongside our practice questions and study guide, flashcards turn review time into measurable progress.

Property & Casualty Insurance Flashcards by Topic

The cards are organized by the exam’s major content areas. The exam splits into a general (national) portion (consistent nationwide) and a state-specific law portion:^[1]

P&C exam content areas covered by the flashcards
Content area	What the cards cover
Insurance & Contract Basics	Insurable interest, indemnity, subrogation, perils/hazards, DICE, contract characteristics
Property Insurance	HO & DP forms, named vs open peril, Coverages A–F, coinsurance math, ACV vs replacement cost
Casualty / Liability	Negligence elements, defenses, CGL coverages & triggers, workers' comp, umbrella, limits
Auto Insurance	The PAP's four parts, UM/UIM, comprehensive vs collision, no-fault/PIP, commercial auto
Specialty Lines & Bonds	Inland/ocean marine, crime, fidelity vs surety bonds, residual markets, E&O/D&O/EPLI
Regulation & Ethics	Agent authority, fiduciary duty, unfair trade practices, the Commissioner, McCarran-Ferguson

How to Get the Most Out of These Flashcards

Start early, review daily. Begin flashcards as you cover each topic, not the week before — a few minutes a day beats one marathon session.
Use Type and Quiz, not just Flip. Recognizing the right answer is easy; recalling and choosing it is the real test.
Drill the easily-confused pairs hardest. Named vs open peril, ACV vs replacement cost, comprehensive vs collision, occurrence vs claims-made, and twisting vs churning are the densest, most-tested distinctions.
Lock in the high-yield numbers. HO Coverage percentages (10/50/30), split limits, and the coinsurance formula are repeatable points.
Then prove it. When the cards feel easy, confirm with our practice questions — aim for 80%+ before exam day.

Property & Casualty Insurance Flashcards FAQ

Hundreds of free P&C flashcards, organized across the topics on the general producer-license exam — from insurance and contract basics through property (HO and dwelling forms, coinsurance, valuation), casualty and liability (negligence, CGL, workers' comp), auto, specialty lines and bonds, and state regulation and ethics. They're free with no account required.

References

1.National Association of Insurance Commissioners (NAIC). “Producer Licensing & Unfair Trade Practices Act (Model #880).” naic.org. ↑
2.Insurance Information Institute (III). “Understanding Your Homeowners and Auto Insurance Coverage.” iii.org. ↑
3.Federal Emergency Management Agency (FEMA). “Flood Insurance (National Flood Insurance Program).” fema.gov. ↑

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