PROPERTY AND CASUALTY PRACTICE EXAMS
ANSWERS AND QUESTIONS SET A+
✔✔An insurer neglects to pay a legitimate claim that is covered under the terms of the
policy. Which of the following insurance principles has the insurer violated? -
✔✔Consideration
✔✔When an insured makes truthful statements on the application for insurance and
pays the required premium, it is known as which of the following? - ✔✔Consideration
✔✔Which of the following is a statement that is guaranteed to be true, and if untrue,
may breach an insurance contract? - ✔✔Warranty
✔✔The other insurance provision that limits the liability of the insurer to a portion of the
loss no greater than the amount the insurer bears to all the insurance covering the
property is called - ✔✔Pro rata liability
✔✔Under the professional liability loss settlement provision, what must an insurer do
before offering to pay a claimant to settle a claim? - ✔✔Get the insured's consent
✔✔In terms of parties to a contract, which of the following does NOT describe a
competent party? - ✔✔The person must have at least completed secondary education
✔✔When would a misrepresentation on the insurance application be considered fraud?
- ✔✔If it is intentional and material
✔✔An insured intentionally did not disclose a material fact on an application for
insurance. This would be considered - ✔✔Concealment
✔✔The ABC Corporation has $100,000 of coverage on its building through insurance
Company A, and $50,000 of identical coverage on the same building through insurance
Company B. Assuming coinsurance is not an issue, when a $24,000 loss occurs and
,the pro rata method is used, how much will each insurer pay? - ✔✔Company A will pay
$16,000 and Company B will pay $8,000
( Each policy pays its pro rata share of the loss based upon each policy's share of the
total amount of coverage.)
✔✔A person who is not named as an insured on the declarations page of a policy but is
protected by the policy is known as the - ✔✔Additional insured
✔✔What insurance policy provision defines how the policy will respond if there is more
than one insurance policy written on the same risk? - ✔✔Other insurance
✔✔An applicant knowingly fails to communicate information that would help an
underwriter make a sound decision regarding coverage. This is an example of -
✔✔Concealment
✔✔When a disagreement occurs as to how to settle a loss in a "fender bender" between
two cars, what procedure is followed? - ✔✔Arbitration through the court
-arbitration is a low-cost alternatie to a full blown lawsuit
✔✔Which of the following clauses establishes the procedure for determining the amount
of a loss when the insurer and the insured cannot agree on the value of property or
amount of loss? - ✔✔Appraisal clause
✔✔The policy conditions define - ✔✔How parties to the contract must act following a
loss
✔✔The pro rata liability clause is designed to protect the principle of - ✔✔Indemnity
✔✔In return for premium, an insurance company must - ✔✔Be fair in underwriting and
pay covered losses
✔✔A sworn written statement that must be furnished by the insured to the insurer
before any loss under a policy can be paid is called - ✔✔Proof of loss
✔✔For a contract to be enforceable by law, the purpose of the contract must be -
✔✔Legal and not against public policy
✔✔Bob insists that the insurer owes him $10,000 for liability damages, while his insurer
asserts that they owe him no more than $7,000. Which of the following would most likely
describe the type of claim settlement that they might pursue? - ✔✔Arbitration
(When an insured and insurer cannot agree on how to settle a claim, arbitration is often
used. The settlement is submitted to an arbitrator(s) whose decision may or may not be
binding on both parties dependent on state law.)
, ✔✔In the event of a loss covered by the policy, if the insurer requests a signed sworn
proof of loss, the named insured is required to submit it within - ✔✔A specified time
(usually 60 days)
✔✔When applying for an individual life insurance policy, an applicant states that he
went to the doctor for nausea, but fails to mention that he was also having severe chest
pains. This is an example of - ✔✔Concealment
✔✔An agent tries to sell insurance over the phone to an applicant who appears to be
confused, but is eventually able to give enough information for the application to be
completed. After the policy was issued, the agent talked to the insured's family, and they
explained that the insured was recovering from a surgery and might have been under
the influence of medication at the time of application. Which of the following is true? -
✔✔The policy may be voided if it can be proven that the applicant was not capable of
making a buying decision at the time of application
✔✔The section of an insurance policy that details what perils are not insured against
and what persons are not insured is known as the - ✔✔Exclusions
✔✔If a property is covered by Company A for $20,000 and Company B covers the
same property for $40,000, how much will Company A pay on a $24,000 loss? -
✔✔$8,000
- Pro rata liability applies. Each policy pays a percentage of the loss based on the
percentage of coverage that policy provides. Company A carries 1/3 of the total
coverage ($20,000 + $40,000 = $60,000). Therefore, it is responsible for 1/3 of the
$24,000 loss, or $8,000.
✔✔What type of property does a Personal Floaters policy cover? - ✔✔Movable
personal property, wherever it may be located
✔✔Professional photographers and musicians may insure their equipment with - ✔✔A
commercial articles floater
✔✔An insured's accounts receivable records have been damaged. The loss may be
covered with - ✔✔The accounts receivable coverage form
✔✔Which of the following could be covered by an HO policy? - ✔✔An oriental rug in an
on-premises apartment
✔✔The insured's mother-in-law broke her leg falling down the front steps of the
insured's premises. The insured's homeowners medical payments coverage will -
✔✔Apply to injuries of any guests or visitors
ANSWERS AND QUESTIONS SET A+
✔✔An insurer neglects to pay a legitimate claim that is covered under the terms of the
policy. Which of the following insurance principles has the insurer violated? -
✔✔Consideration
✔✔When an insured makes truthful statements on the application for insurance and
pays the required premium, it is known as which of the following? - ✔✔Consideration
✔✔Which of the following is a statement that is guaranteed to be true, and if untrue,
may breach an insurance contract? - ✔✔Warranty
✔✔The other insurance provision that limits the liability of the insurer to a portion of the
loss no greater than the amount the insurer bears to all the insurance covering the
property is called - ✔✔Pro rata liability
✔✔Under the professional liability loss settlement provision, what must an insurer do
before offering to pay a claimant to settle a claim? - ✔✔Get the insured's consent
✔✔In terms of parties to a contract, which of the following does NOT describe a
competent party? - ✔✔The person must have at least completed secondary education
✔✔When would a misrepresentation on the insurance application be considered fraud?
- ✔✔If it is intentional and material
✔✔An insured intentionally did not disclose a material fact on an application for
insurance. This would be considered - ✔✔Concealment
✔✔The ABC Corporation has $100,000 of coverage on its building through insurance
Company A, and $50,000 of identical coverage on the same building through insurance
Company B. Assuming coinsurance is not an issue, when a $24,000 loss occurs and
,the pro rata method is used, how much will each insurer pay? - ✔✔Company A will pay
$16,000 and Company B will pay $8,000
( Each policy pays its pro rata share of the loss based upon each policy's share of the
total amount of coverage.)
✔✔A person who is not named as an insured on the declarations page of a policy but is
protected by the policy is known as the - ✔✔Additional insured
✔✔What insurance policy provision defines how the policy will respond if there is more
than one insurance policy written on the same risk? - ✔✔Other insurance
✔✔An applicant knowingly fails to communicate information that would help an
underwriter make a sound decision regarding coverage. This is an example of -
✔✔Concealment
✔✔When a disagreement occurs as to how to settle a loss in a "fender bender" between
two cars, what procedure is followed? - ✔✔Arbitration through the court
-arbitration is a low-cost alternatie to a full blown lawsuit
✔✔Which of the following clauses establishes the procedure for determining the amount
of a loss when the insurer and the insured cannot agree on the value of property or
amount of loss? - ✔✔Appraisal clause
✔✔The policy conditions define - ✔✔How parties to the contract must act following a
loss
✔✔The pro rata liability clause is designed to protect the principle of - ✔✔Indemnity
✔✔In return for premium, an insurance company must - ✔✔Be fair in underwriting and
pay covered losses
✔✔A sworn written statement that must be furnished by the insured to the insurer
before any loss under a policy can be paid is called - ✔✔Proof of loss
✔✔For a contract to be enforceable by law, the purpose of the contract must be -
✔✔Legal and not against public policy
✔✔Bob insists that the insurer owes him $10,000 for liability damages, while his insurer
asserts that they owe him no more than $7,000. Which of the following would most likely
describe the type of claim settlement that they might pursue? - ✔✔Arbitration
(When an insured and insurer cannot agree on how to settle a claim, arbitration is often
used. The settlement is submitted to an arbitrator(s) whose decision may or may not be
binding on both parties dependent on state law.)
, ✔✔In the event of a loss covered by the policy, if the insurer requests a signed sworn
proof of loss, the named insured is required to submit it within - ✔✔A specified time
(usually 60 days)
✔✔When applying for an individual life insurance policy, an applicant states that he
went to the doctor for nausea, but fails to mention that he was also having severe chest
pains. This is an example of - ✔✔Concealment
✔✔An agent tries to sell insurance over the phone to an applicant who appears to be
confused, but is eventually able to give enough information for the application to be
completed. After the policy was issued, the agent talked to the insured's family, and they
explained that the insured was recovering from a surgery and might have been under
the influence of medication at the time of application. Which of the following is true? -
✔✔The policy may be voided if it can be proven that the applicant was not capable of
making a buying decision at the time of application
✔✔The section of an insurance policy that details what perils are not insured against
and what persons are not insured is known as the - ✔✔Exclusions
✔✔If a property is covered by Company A for $20,000 and Company B covers the
same property for $40,000, how much will Company A pay on a $24,000 loss? -
✔✔$8,000
- Pro rata liability applies. Each policy pays a percentage of the loss based on the
percentage of coverage that policy provides. Company A carries 1/3 of the total
coverage ($20,000 + $40,000 = $60,000). Therefore, it is responsible for 1/3 of the
$24,000 loss, or $8,000.
✔✔What type of property does a Personal Floaters policy cover? - ✔✔Movable
personal property, wherever it may be located
✔✔Professional photographers and musicians may insure their equipment with - ✔✔A
commercial articles floater
✔✔An insured's accounts receivable records have been damaged. The loss may be
covered with - ✔✔The accounts receivable coverage form
✔✔Which of the following could be covered by an HO policy? - ✔✔An oriental rug in an
on-premises apartment
✔✔The insured's mother-in-law broke her leg falling down the front steps of the
insured's premises. The insured's homeowners medical payments coverage will -
✔✔Apply to injuries of any guests or visitors
