PROPERTY AND CASUALTY INSURANCE
UPDATED ACTUAL EXAM QUESTIONS AND
CORRECT ANSWERS COMPLETE STUDY
GUIDE
●● Payment for medical expenses, loss of wages, funeral expenses, or
the cost to repair or replace damaged property are known as what type of
compensatory damages?
Answer: Special
●● Which method of loss valuation is contrary to the basic concept of
indemnity?
Answer: Replacement cost
●● An insured owns several buildings, each at a different location and
insured on a separate policy. What type of coverage does the insured
have?
Answer: Specific
●● The policy provision found in property insurance policies that
prevents the insured from collecting twice for the same loss is called
Answer: Subrogation
,●● Losses caused by continuous or repeated exposure to conditions
resulting in injury persons or damage to property that is neither intended
nor expected is the definition of which of the following terms?
Answer: Occurrence
●● An insured relocated to another state for work. However, she still
owns and insures a house in this state, but has had no one living in it for
3 months. She is also storing some of furniture and clothes in the house.
From an insurance standpoint, the insured's house is considered
Answer: Unoccupied
●● An insured's roof cost $4,000 when installed 5 years ago. It has been
damaged by hail and must be replaced. The new roof will cost $6,000 at
today's prices. If the roof has been depreciating at $200 per year and the
insured's policy is written on the actual cash value(ACV), how much
will the policy pay toward the insured's new roof?
Answer: $5,000
●● An insured carries a property policy on her home in the amount of
$250,000. A bank is shown as the mortgagor in the policy. Last month
the insured made her final mortgage payment, but did not remove the
bank from the policy. In the event of a covered loss to her home, how
much will the bank receive?
Answer: Nothing
,●● What type of damages may be awarded by the court to create
disincentives that discourage behavior that is deemed highly undesirable
by society?
Answer: Punitive
●● A tornado that destroys property would be an example of which of
the following?
Answer: A Peril
●● The insured's house is located one mile from the county's new
landfill and across the road from the entrance of a rock quarry. It would
cost $150,000 to rebuild the house if something happened to it, but when
the insured tried to sell it, the best offer he received was $80,000. The
insurance company will insure the house for only $80,000. What method
of valuation is used to insure this property?
Answer: Market Value
●● An insured is applying for a casualty insurance policy. One of the
conditions of the policy allows the insurance company to inspect the
insured's books at the end of the policy term to make sure sufficient
premium has been collected for the exposure she plans to insure. Which
condition is part of the insured's policy?
Answer: Deposit premium audit
●● All of the following statements concerning coinsurance are true
EXCEPT
, Answer: The coinsurance formula will also be applied to total losses.
●● A situation in which a person can only lose or have no change
represents
Answer: Pure risk
●● A policy condition that stipulates how the amount of damaged or lost
property will be determined if the insured and the principal do not agree
is known as
Answer: Appraisal
●● An insured has a liability policy that sets the amount for all claims
that arise from a single incident at $50,000. Which type of limit of
liability does this insured's policy have?
Answer: Per occurrence
●● Which of the following is NOT an element of negligence?
Answer: Libel
-duty, breach, and unbroken chain are
●● Insurable interest in the property covered in a policy must be proven
Answer: At time of loss
UPDATED ACTUAL EXAM QUESTIONS AND
CORRECT ANSWERS COMPLETE STUDY
GUIDE
●● Payment for medical expenses, loss of wages, funeral expenses, or
the cost to repair or replace damaged property are known as what type of
compensatory damages?
Answer: Special
●● Which method of loss valuation is contrary to the basic concept of
indemnity?
Answer: Replacement cost
●● An insured owns several buildings, each at a different location and
insured on a separate policy. What type of coverage does the insured
have?
Answer: Specific
●● The policy provision found in property insurance policies that
prevents the insured from collecting twice for the same loss is called
Answer: Subrogation
,●● Losses caused by continuous or repeated exposure to conditions
resulting in injury persons or damage to property that is neither intended
nor expected is the definition of which of the following terms?
Answer: Occurrence
●● An insured relocated to another state for work. However, she still
owns and insures a house in this state, but has had no one living in it for
3 months. She is also storing some of furniture and clothes in the house.
From an insurance standpoint, the insured's house is considered
Answer: Unoccupied
●● An insured's roof cost $4,000 when installed 5 years ago. It has been
damaged by hail and must be replaced. The new roof will cost $6,000 at
today's prices. If the roof has been depreciating at $200 per year and the
insured's policy is written on the actual cash value(ACV), how much
will the policy pay toward the insured's new roof?
Answer: $5,000
●● An insured carries a property policy on her home in the amount of
$250,000. A bank is shown as the mortgagor in the policy. Last month
the insured made her final mortgage payment, but did not remove the
bank from the policy. In the event of a covered loss to her home, how
much will the bank receive?
Answer: Nothing
,●● What type of damages may be awarded by the court to create
disincentives that discourage behavior that is deemed highly undesirable
by society?
Answer: Punitive
●● A tornado that destroys property would be an example of which of
the following?
Answer: A Peril
●● The insured's house is located one mile from the county's new
landfill and across the road from the entrance of a rock quarry. It would
cost $150,000 to rebuild the house if something happened to it, but when
the insured tried to sell it, the best offer he received was $80,000. The
insurance company will insure the house for only $80,000. What method
of valuation is used to insure this property?
Answer: Market Value
●● An insured is applying for a casualty insurance policy. One of the
conditions of the policy allows the insurance company to inspect the
insured's books at the end of the policy term to make sure sufficient
premium has been collected for the exposure she plans to insure. Which
condition is part of the insured's policy?
Answer: Deposit premium audit
●● All of the following statements concerning coinsurance are true
EXCEPT
, Answer: The coinsurance formula will also be applied to total losses.
●● A situation in which a person can only lose or have no change
represents
Answer: Pure risk
●● A policy condition that stipulates how the amount of damaged or lost
property will be determined if the insured and the principal do not agree
is known as
Answer: Appraisal
●● An insured has a liability policy that sets the amount for all claims
that arise from a single incident at $50,000. Which type of limit of
liability does this insured's policy have?
Answer: Per occurrence
●● Which of the following is NOT an element of negligence?
Answer: Libel
-duty, breach, and unbroken chain are
●● Insurable interest in the property covered in a policy must be proven
Answer: At time of loss
