P&C Exam Cheat Sheet: 10 Key Terms You MUST Know

These 10 terms appear on the P&C exam over and over. If you can define each one cold, you're ahead of 80% of test takers.

1. INDEMNITY The principle that insurance restores the insured to their pre-loss financial position — no more, no less. You cannot profit from a claim.

2. SUBROGATION After paying a claim, the insurer has the right to pursue the responsible third party to recover the amount paid.

3. INSURABLE INTEREST You must have a financial stake in the property or person being insured at the time of the loss. No insurable interest = no valid claim.

4. OCCURRENCE vs. CLAIMS-MADE Occurrence policies cover events that happen during the policy period. Claims-made policies cover claims filed during the policy period.

5. DEDUCTIBLE The amount the insured pays out of pocket before the insurance coverage kicks in.

6. COINSURANCE A requirement to insure property to a minimum percentage of its value. Fail to meet it and you share in any loss.

7. ENDORSEMENT A written modification to a policy that adds, removes, or changes coverage.

8. EXCLUSION A provision that removes specific coverage from the policy. Know the common ones: flood, earthquake, wear and tear.

9. LOSS PAYEE A third party (like a lender) that receives insurance proceeds first, up to the amount owed.

10. ADDITIONAL INSURED A person or entity added to a policy who receives liability coverage, not just proceeds.

Save this list. Review it every morning for a week before your exam and these definitions will be locked in.

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