NJ Property, Casualty, and Auto
Licensing Exam
Insuring Agreement - answer company’s obligation to pay, includes the perils and
coverage for specific or named peril policies
Exclusions - answer what the policy will not pay for
Definitions - answer names of the persons insured in addition to the named insured are
listed here, along with any other (blank) of terms in the policy
Additional Coverage - answer coverages under a policy that are provided by the insurer
at no extra cost
Casualty Policies - answer defense costs over and above liability limits, post-judgement
interest, bail bonds and appeal bonds
Property Policies - answer debris removal, falls within the insured dwelling limit and
cannot exceed the limit
Binder - answer temporary proof of coverage before policy is issued (oral is good for 10
days, written for 60 days)
Bodily Injury and Property Damage Coverage Amounts - answer Minimum: 15k per
person/30k per accident/5k for property; Max is $500k
Auto - Personal Assigned Risk Policy – answer PAIP; standard risk 0 points, non-
standard risk 1-8 points, assigned risk 9 points. (blank) classification runs for 3 years
Auto - Commercial Assigned Risk Policy – answer CAIP; assigned risk policy for
commercial vehicles, including private vehicles owned by the business
Personal Injury Protection – answer PIP or No-Fault, NJ Representations Act;
mandatory, encourage the insured to recover under his/her own policy, tries to reduce
premiums and hasten settlements through avoidance of lengthy litigation that would
normally be the case. The benefits of the standard policy are statutory and therefor
minimal
Fire – answer A named peril policy. (blank) policies must be filed with the DOBI
commissioner before use and must provide a fairly uniform look, and provide ample
space for coverage, limits, rates, policy inception, and expiration dates
, Friendly Fire - answerfire is within it's intended confines (not covered)
Hostile Fire - answerfire is outside it's intended confines
Covered Fire Perils - answerfire - hostile, lightening, debris removal, theft within first 5
days
Excluded Fire Perils - answertheft (after first 5 days of fire), neglect that gives rise to
proximate cause of fire, war, government action, fire - friendly
Fair Plan - answer(blank) policies are designed to prevent redlining in urban areas:
improve property conditions from an availability standpoint, stabilize the property
insurance market, provide coverage for risks which insurance cannot be obtained in the
open market
$1.5 million - answerFAIR Plan max limit
Covered FAIR Plan Perils - answerFAIR: fire, lightening, debris removal
Excluded FAIR Plan Perils - answerFAIR: burglary damage, flood, farms (farms are not
urban)
Dwelling Policy - answer1st party coverage only, not necessary to be owner-occupied,
no more than 4 families or 5 roomers
Basic Peril Coverage - DP1 - answerbasic peril coverage - named perils - most basic
dwelling policy
Broad Peril Coverage - DP2 - answernamed perils, but more perils than DP1
Special Peril Coverage - DP3 - answerALL-RISK on dwelling unless specifically
excluded and BROAD on contents or personal property
Coverage A - answerdwelling + attached structures - no co-insurance requirement
unlike homeowners policy
Coverage B - answerdetached structures - limited to 10% of coverage A amount
Coverage C - answerpersonal property - limited to 50% of coverage A amount / 10% of
secondary insurance
Coverage D - answerfair rental value - limited to 10% of coverage A amount
Coverage E - answeradditional living expense - limited to 20% of coverage A amount
Licensing Exam
Insuring Agreement - answer company’s obligation to pay, includes the perils and
coverage for specific or named peril policies
Exclusions - answer what the policy will not pay for
Definitions - answer names of the persons insured in addition to the named insured are
listed here, along with any other (blank) of terms in the policy
Additional Coverage - answer coverages under a policy that are provided by the insurer
at no extra cost
Casualty Policies - answer defense costs over and above liability limits, post-judgement
interest, bail bonds and appeal bonds
Property Policies - answer debris removal, falls within the insured dwelling limit and
cannot exceed the limit
Binder - answer temporary proof of coverage before policy is issued (oral is good for 10
days, written for 60 days)
Bodily Injury and Property Damage Coverage Amounts - answer Minimum: 15k per
person/30k per accident/5k for property; Max is $500k
Auto - Personal Assigned Risk Policy – answer PAIP; standard risk 0 points, non-
standard risk 1-8 points, assigned risk 9 points. (blank) classification runs for 3 years
Auto - Commercial Assigned Risk Policy – answer CAIP; assigned risk policy for
commercial vehicles, including private vehicles owned by the business
Personal Injury Protection – answer PIP or No-Fault, NJ Representations Act;
mandatory, encourage the insured to recover under his/her own policy, tries to reduce
premiums and hasten settlements through avoidance of lengthy litigation that would
normally be the case. The benefits of the standard policy are statutory and therefor
minimal
Fire – answer A named peril policy. (blank) policies must be filed with the DOBI
commissioner before use and must provide a fairly uniform look, and provide ample
space for coverage, limits, rates, policy inception, and expiration dates
, Friendly Fire - answerfire is within it's intended confines (not covered)
Hostile Fire - answerfire is outside it's intended confines
Covered Fire Perils - answerfire - hostile, lightening, debris removal, theft within first 5
days
Excluded Fire Perils - answertheft (after first 5 days of fire), neglect that gives rise to
proximate cause of fire, war, government action, fire - friendly
Fair Plan - answer(blank) policies are designed to prevent redlining in urban areas:
improve property conditions from an availability standpoint, stabilize the property
insurance market, provide coverage for risks which insurance cannot be obtained in the
open market
$1.5 million - answerFAIR Plan max limit
Covered FAIR Plan Perils - answerFAIR: fire, lightening, debris removal
Excluded FAIR Plan Perils - answerFAIR: burglary damage, flood, farms (farms are not
urban)
Dwelling Policy - answer1st party coverage only, not necessary to be owner-occupied,
no more than 4 families or 5 roomers
Basic Peril Coverage - DP1 - answerbasic peril coverage - named perils - most basic
dwelling policy
Broad Peril Coverage - DP2 - answernamed perils, but more perils than DP1
Special Peril Coverage - DP3 - answerALL-RISK on dwelling unless specifically
excluded and BROAD on contents or personal property
Coverage A - answerdwelling + attached structures - no co-insurance requirement
unlike homeowners policy
Coverage B - answerdetached structures - limited to 10% of coverage A amount
Coverage C - answerpersonal property - limited to 50% of coverage A amount / 10% of
secondary insurance
Coverage D - answerfair rental value - limited to 10% of coverage A amount
Coverage E - answeradditional living expense - limited to 20% of coverage A amount
