Fundamentals of Insurance – Practice Exam
Questions with Correct Answers – Complete
Insurance Revision Study Material
Introduction
This document contains a comprehensive collection of
multiple-choice practice exam questions with correct answers
covering the fundamentals of insurance. It includes topics
such as property insurance, homeowners insurance,
commercial insurance, liability, automobile insurance,
insurance principles, underwriting, risk management, ethics,
and insurance law. The material is designed as a revision
resource to help students prepare for insurance certification
and licensing examinations. It provides a wide range of exam-
style questions that reinforce key insurance concepts and
policy provisions.
Exam Questions and Answers
When the insurer opts to repair, rebuild, or replace damaged
property rather than make payment in the form of a cash
settlement it must:
,a. First provide the insured with the option of accepting or
rejecting the proposed basis of settlement
b. Provide the insured with written notice of the intention to
do so within 30 days after receipt of proof of loss
c. Seek the consent of the insured's mortgagee
d. Advise the insured's broker or agent of its decision ---
correct precise answer ---b. Provide the insured with written
notice of the intention to do so within 30 days after receipt of
proof of loss
This is the most common of errors and omissions claims,
accounting for nearly 50% of all claims
a. Policy change errors
b. Processing delays
c. Cancellation of renewal errors
d. Inadequate coverage --- correct precise answer ---d.
Inadequate coverage
A physical hazard is:
a. A type of peril
b. The same as a moral hazard
c. A condition relating to the premises which may cause a
peril to occur
d. The possibility of a loss due to the character of the insured -
-- correct precise answer ---c. A condition relating to the
premises which may cause a peril to occur
,There is no one standard policy. Insurance companies provide
consumers with a variety of operation or choices from which
they can select the policy which is best for them. When you
sell broad form of comprehensive form, your should advise the
client that the policy insures:
a. All risks it is possible to assume, without exception
b. All risks, except earthquake and radioactive contamination
c. All risk, except theft from the interior of an unlocked car
d. All risks of direct physical loss or damage, subject to the
policy conditions and exclusions --- correct precise answer ---
d. All risks of direct physical loss or damage, subject to the
policy conditions and exclusions
Property policies contain two types of exclusions - one for
property excluded and one for perils excluded. All of the
following property items are normally excluded by property
policies, except one. Pick the exception:
a. Automobiles
b. Yard and maintenance equipment
c. Money and securities
d. Property which has been vacant for more than 30
consecutive days --- correct precise answer ---b. Yard and
maintenance equipment
Under a policy of insurance, a "deductible" is:
, a. payable by the insureds only if they are responsible for the
loss
b. Payable by the insured's only when the insurer disputes the
amount of its liability for the loss
c. The amount the insured is required to absorb for each loss
before receiving any payment from the insurer
d. The responsibility of the broker --- correct precise answer -
--c. The amount the insured is required to absorb for each loss
before receiving any payment from the insurer
Every property insurance policy describes the method used to
pay claims. Normally, the insurer will pay the lesser of the
three amounts in the event of a claim. One factor which does
not enter into this calculation is:
a. The actual cash value of the property
b. The original cost of the property
c. The insured's interest in the property
d. The policy limit --- correct precise answer ---b. The original
cost of the property
Your clients furniture store is insured under a commercial
property insurance policy to which a replacement cost
endorsement is attached. To qualify for settlement on a
replacement cost basis. The insured must comply with all of
the following obligations, except one. Pick the exception:
Questions with Correct Answers – Complete
Insurance Revision Study Material
Introduction
This document contains a comprehensive collection of
multiple-choice practice exam questions with correct answers
covering the fundamentals of insurance. It includes topics
such as property insurance, homeowners insurance,
commercial insurance, liability, automobile insurance,
insurance principles, underwriting, risk management, ethics,
and insurance law. The material is designed as a revision
resource to help students prepare for insurance certification
and licensing examinations. It provides a wide range of exam-
style questions that reinforce key insurance concepts and
policy provisions.
Exam Questions and Answers
When the insurer opts to repair, rebuild, or replace damaged
property rather than make payment in the form of a cash
settlement it must:
,a. First provide the insured with the option of accepting or
rejecting the proposed basis of settlement
b. Provide the insured with written notice of the intention to
do so within 30 days after receipt of proof of loss
c. Seek the consent of the insured's mortgagee
d. Advise the insured's broker or agent of its decision ---
correct precise answer ---b. Provide the insured with written
notice of the intention to do so within 30 days after receipt of
proof of loss
This is the most common of errors and omissions claims,
accounting for nearly 50% of all claims
a. Policy change errors
b. Processing delays
c. Cancellation of renewal errors
d. Inadequate coverage --- correct precise answer ---d.
Inadequate coverage
A physical hazard is:
a. A type of peril
b. The same as a moral hazard
c. A condition relating to the premises which may cause a
peril to occur
d. The possibility of a loss due to the character of the insured -
-- correct precise answer ---c. A condition relating to the
premises which may cause a peril to occur
,There is no one standard policy. Insurance companies provide
consumers with a variety of operation or choices from which
they can select the policy which is best for them. When you
sell broad form of comprehensive form, your should advise the
client that the policy insures:
a. All risks it is possible to assume, without exception
b. All risks, except earthquake and radioactive contamination
c. All risk, except theft from the interior of an unlocked car
d. All risks of direct physical loss or damage, subject to the
policy conditions and exclusions --- correct precise answer ---
d. All risks of direct physical loss or damage, subject to the
policy conditions and exclusions
Property policies contain two types of exclusions - one for
property excluded and one for perils excluded. All of the
following property items are normally excluded by property
policies, except one. Pick the exception:
a. Automobiles
b. Yard and maintenance equipment
c. Money and securities
d. Property which has been vacant for more than 30
consecutive days --- correct precise answer ---b. Yard and
maintenance equipment
Under a policy of insurance, a "deductible" is:
, a. payable by the insureds only if they are responsible for the
loss
b. Payable by the insured's only when the insurer disputes the
amount of its liability for the loss
c. The amount the insured is required to absorb for each loss
before receiving any payment from the insurer
d. The responsibility of the broker --- correct precise answer -
--c. The amount the insured is required to absorb for each loss
before receiving any payment from the insurer
Every property insurance policy describes the method used to
pay claims. Normally, the insurer will pay the lesser of the
three amounts in the event of a claim. One factor which does
not enter into this calculation is:
a. The actual cash value of the property
b. The original cost of the property
c. The insured's interest in the property
d. The policy limit --- correct precise answer ---b. The original
cost of the property
Your clients furniture store is insured under a commercial
property insurance policy to which a replacement cost
endorsement is attached. To qualify for settlement on a
replacement cost basis. The insured must comply with all of
the following obligations, except one. Pick the exception:
