COLORADO PROPERTY INSURANCE EXAM
QUESTIONS WITH ALL CORRECT & VERIFIED
ANSWERS
How often must an insurer who sells personal lines property and casualty policies recalculate a
consumer's insurance score or obtain an updated credit report? Correct answer-Every 36 months.
(The least often the insurer must pull the credit report is once every 3 years. The most often an
insured can request that the credit report be pulled, for the purposes of insurance rating, is every 12
months [annually])
An insurer who frequently misses deadlines to respond to inquiries from the Division of Insurance
may be fined, for each violation, as much as... Correct answer-$5,000.
(An insurer who fails to respond to a Division of Insurance inquiry by the deadline faces a $500 civil
penalty for the initial violation. Fines may reach up to $5,000 for subsequent violations.)
Which of the following will NOT be considered unfair discrimination by insurers?
a) Discriminating in benefits and coverages based on the insured's habits and lifestyle
b) Charging applicants with similar health histories different premiums based on their ethnicity
c) Cancelling individual coverage based on the insured's marital status
d) Assigning different risk classifications to applicants based on gender identity Correct answer-
Discriminating in benefits and coverages based on the insured's habits and lifestyle. (Discriminating
between individuals of the same class with equal life expectancies, or by reason of race, nationality,
or ethnic group would be considered unfair discrimination. Insurers are also not allowed to cancel
individual coverage due to a change in marital status. Discriminating in benefits based on the
insured's habits and lifestyle [such as smoking or dangerous hobbies] - is acceptable.)
An insurer wishes to cancel a Commercial General Liability Policy. This policy has been in effect for
more than 60 days and the cancellation is due to a reason other than nonpayment of premium. How
many days before the effective date of cancellation must the insurer send notice of cancellation to
the insured? Correct answer-45 days.
For how many years must a producer keep supporting documentation of his or her continuing
education completion? Correct answer-5 years following license continuation. (It is the
responsibility of the producer to maintain records sufficient to document successful completion of 24
credit hours on a biennial basis. Supporting documentation must be maintained by the producer for
5 years following license continuation and must be available for audit by the Division of Insurance or
the Continuing Education Administrator.)
Under Colorado's Unfair Claims Practices regulations, when denying a claim an insurer must do all of
the following EXCEPT...
a) Respond promptly to claims communications.
b) Conduct a reasonable investigation.
c) Pay a claim that occurs after the grace period has ended.
d) Indicate to the claimant which section of the policy they are relying upon. Correct answer-Pay a
claim that occurs after the grace period has ended. (A claim that occurs during a grace period of a
policy is covered, the insurer will simply deduct premium owed from the claim and pay the rest up to
a limit, if one is indicated on the policy. Once the grace period ends, a policy expires and no further
claims are valid.)
, As a condition of initial licensure, an individual applicant for a producer license in one line of
authority will be required to complete approved prelicensing education of how many hours?
Correct answer-50 hours! (A total of 50 hours of an approved course is required as a condition of
initial licensure. Of the 50 hours, at least 3 hours will pertain specifically to ethics and 4 hours will
pertain specifically to state laws related to the line of authority.)
The process of determining the premium charged and how much insurance is required for a
particular loss is called...? Correct answer-Loss valuation. (Loss valuation is the process of
determining appropriate monetary value to a particular loss and its resulting repair or replacement.)
What is the minimum amount of coverage that should be carried on an HO-2 on a home that was
purchased four years ago for $75,000, which today has a replacement value of $100,000? Correct
answer-$80,000
(A homeowner, at the time of loss, must be insured for at least 80% of replacement cost in order to
collect the full replacement cost of a partial loss.)
The extension of coverage under the Commercial Fine Arts Floater includes coverage for newly
acquired property for a maximum of... Correct answer-$10,000.
(An extension of coverage is included for newly acquired property for 30 days for up to 25% of the
total limit of insurance, for a maximum of $10,000.)
Replacement cost is defined as... Correct answer-Full replacement of property at its current cost,
new and without reduction for depreciation.
Which of the following is covered under the Mail floater of a Commercial Inland Marine policy ONLY
if is sent by registered mail? Correct answer-Currency and unsold travelers checks.
(Property covered only when sent by registered mail includes the following: bullion; platinum and
other precious metals; currency and unsold travelers checks; or jewelry, watches, precious and
semiprecious stones and similar property.)
Coverage under the builders risk form will end in all of the following situations EXCEPT...
a) The insured has sold the property.
b) 60 days after the construction has ended.
c) Construction has been abandoned.
d) 60 days after the building became occupied. Correct answer-60 days after the construction has
ended.(Coverage under the builders risk form ends if it is abandoned without any plans to complete
it or if the insured's interest in the property ceases, or 60 days after the building is occupied, or 90
days after construction is completed.)
Flood and earthquake are perils that are... Correct answer-Flood and earthquake are both
excluded perils in all property policies. However, coverage for both or either one usually can be
purchased separately for an additional premium (by endorsement).
Which of the following does the term proximate cause refer to? Correct answer-Negligence that
leads to an injury. (Proximate cause is the reasonably foreseeable act or event that results in an
injury or damage. Negligence may often be the proximate cause of the damage; without it, the
accident would not have happened. This is also called direct liability.)
In return for premium, an insurance company must... Correct answer-Be fair in underwriting and
pay covered losses.
QUESTIONS WITH ALL CORRECT & VERIFIED
ANSWERS
How often must an insurer who sells personal lines property and casualty policies recalculate a
consumer's insurance score or obtain an updated credit report? Correct answer-Every 36 months.
(The least often the insurer must pull the credit report is once every 3 years. The most often an
insured can request that the credit report be pulled, for the purposes of insurance rating, is every 12
months [annually])
An insurer who frequently misses deadlines to respond to inquiries from the Division of Insurance
may be fined, for each violation, as much as... Correct answer-$5,000.
(An insurer who fails to respond to a Division of Insurance inquiry by the deadline faces a $500 civil
penalty for the initial violation. Fines may reach up to $5,000 for subsequent violations.)
Which of the following will NOT be considered unfair discrimination by insurers?
a) Discriminating in benefits and coverages based on the insured's habits and lifestyle
b) Charging applicants with similar health histories different premiums based on their ethnicity
c) Cancelling individual coverage based on the insured's marital status
d) Assigning different risk classifications to applicants based on gender identity Correct answer-
Discriminating in benefits and coverages based on the insured's habits and lifestyle. (Discriminating
between individuals of the same class with equal life expectancies, or by reason of race, nationality,
or ethnic group would be considered unfair discrimination. Insurers are also not allowed to cancel
individual coverage due to a change in marital status. Discriminating in benefits based on the
insured's habits and lifestyle [such as smoking or dangerous hobbies] - is acceptable.)
An insurer wishes to cancel a Commercial General Liability Policy. This policy has been in effect for
more than 60 days and the cancellation is due to a reason other than nonpayment of premium. How
many days before the effective date of cancellation must the insurer send notice of cancellation to
the insured? Correct answer-45 days.
For how many years must a producer keep supporting documentation of his or her continuing
education completion? Correct answer-5 years following license continuation. (It is the
responsibility of the producer to maintain records sufficient to document successful completion of 24
credit hours on a biennial basis. Supporting documentation must be maintained by the producer for
5 years following license continuation and must be available for audit by the Division of Insurance or
the Continuing Education Administrator.)
Under Colorado's Unfair Claims Practices regulations, when denying a claim an insurer must do all of
the following EXCEPT...
a) Respond promptly to claims communications.
b) Conduct a reasonable investigation.
c) Pay a claim that occurs after the grace period has ended.
d) Indicate to the claimant which section of the policy they are relying upon. Correct answer-Pay a
claim that occurs after the grace period has ended. (A claim that occurs during a grace period of a
policy is covered, the insurer will simply deduct premium owed from the claim and pay the rest up to
a limit, if one is indicated on the policy. Once the grace period ends, a policy expires and no further
claims are valid.)
, As a condition of initial licensure, an individual applicant for a producer license in one line of
authority will be required to complete approved prelicensing education of how many hours?
Correct answer-50 hours! (A total of 50 hours of an approved course is required as a condition of
initial licensure. Of the 50 hours, at least 3 hours will pertain specifically to ethics and 4 hours will
pertain specifically to state laws related to the line of authority.)
The process of determining the premium charged and how much insurance is required for a
particular loss is called...? Correct answer-Loss valuation. (Loss valuation is the process of
determining appropriate monetary value to a particular loss and its resulting repair or replacement.)
What is the minimum amount of coverage that should be carried on an HO-2 on a home that was
purchased four years ago for $75,000, which today has a replacement value of $100,000? Correct
answer-$80,000
(A homeowner, at the time of loss, must be insured for at least 80% of replacement cost in order to
collect the full replacement cost of a partial loss.)
The extension of coverage under the Commercial Fine Arts Floater includes coverage for newly
acquired property for a maximum of... Correct answer-$10,000.
(An extension of coverage is included for newly acquired property for 30 days for up to 25% of the
total limit of insurance, for a maximum of $10,000.)
Replacement cost is defined as... Correct answer-Full replacement of property at its current cost,
new and without reduction for depreciation.
Which of the following is covered under the Mail floater of a Commercial Inland Marine policy ONLY
if is sent by registered mail? Correct answer-Currency and unsold travelers checks.
(Property covered only when sent by registered mail includes the following: bullion; platinum and
other precious metals; currency and unsold travelers checks; or jewelry, watches, precious and
semiprecious stones and similar property.)
Coverage under the builders risk form will end in all of the following situations EXCEPT...
a) The insured has sold the property.
b) 60 days after the construction has ended.
c) Construction has been abandoned.
d) 60 days after the building became occupied. Correct answer-60 days after the construction has
ended.(Coverage under the builders risk form ends if it is abandoned without any plans to complete
it or if the insured's interest in the property ceases, or 60 days after the building is occupied, or 90
days after construction is completed.)
Flood and earthquake are perils that are... Correct answer-Flood and earthquake are both
excluded perils in all property policies. However, coverage for both or either one usually can be
purchased separately for an additional premium (by endorsement).
Which of the following does the term proximate cause refer to? Correct answer-Negligence that
leads to an injury. (Proximate cause is the reasonably foreseeable act or event that results in an
injury or damage. Negligence may often be the proximate cause of the damage; without it, the
accident would not have happened. This is also called direct liability.)
In return for premium, an insurance company must... Correct answer-Be fair in underwriting and
pay covered losses.
