FUNDAMENTALS OF INSURANCE - PRACTICE EXAM (ACTUAL
2025/2026) QUESTIONS AND VERIFIED ANSWERS
[DISTINCTION LEVEL]
All of the following coverages are provided to commercial
property insured under the broad form, except one. Pick the
exception:
a. Smoke from agricultural smudging or industrial operations
b. Collapse of building due to snow or ice load
c. Loss or damage caused by land vehicles
d. Theft of stock and equipment - ---Answers---a. Smoke
from agricultural smudging or industrial operations
Generally, the fire rate charged by the insured on a
commercial property insurance will not be effected by:
a. The type of building construction
b. The occupancy or use of the building by the insured
c. The level of available fire protection
d. The type of burglar protection system installed - ---
Answers---d. The type of burglar protection system installed
The named perils form and broad form insure the property of a
business. All of the following items would be insured within
,the limit of insurance selected for "stock" except one. Pick the
exception:
a. Advertising materials
b. Packing and wrapping materials
c. Leased photocopier
d. Similar property of others for which the insured is legally
liable - ---Answers---c. Leased photocopier
The named perils form and broad insure the property of a
business. Your client, a dentist, is a tenant in a building
formerly occupied by a hairdresser. When her took possession
of the building, the dentist made several building
improvements and betterments. The value of such
improvements and betterments should be insured under the
amount of insurance provided for:
a. Stock
b. Equipment
c. Building
d. Personal Property - ---Answers---b. Equipment
The co-insurance clause is designed to:
a. Prevent the chance of a total loss
b. Transfer of the risk to another insurer
,c. Discourage the insured from gambling on suffering only a
partial loss
d. Penalize the insured in the event of over insurance - ---
Answers---c. Discourage the insured from gambling on
suffering only a partial loss
A building is worth $360,000 is insured for $90,000 and the
policy contains 80% co-insurance clause. A fire causes
$72,000 damage. The insured will cover:
a. 18,000
b. 22,500
c. 72,000
d. 90,000 - ---Answers---b. 22,500
A building valued at $120,000 is insured for $30,000 and there
is an 80% co-insurance clause on the policy. The building was
totally destroyed by fire last weekend. The insured would
receive a settlement of:
a. 7,000
b. 12,000
c. 30,000
d. 37,5000 - ---Answers---c. 30,000
The reinstatement clause contained in most policies of
commercial property insurance provided that:
, a. The insureds shall have as much insurance on the property
after an insured loss as they had immediately prior to it
b. Coverage which is suspended due to a breach of policy
conditions is automatically reinstated when that breach is
corrected
c. Coverage which has been terminated by the insurer may be
re-instated at the request of the insured upon application to
the insurer in writing
d. Property lost or damaged shall be re-instated with
equivalent property of like kind and quality - ---Answers---a.
The insureds shall have as much insurance on the property
after an insured loss as they had immediately prior to it
The locked vehicle warranty requires that:
a. The vehicle be equipped with a theft deterrent system
b. The vehicle locked between the house of 9:00 p.m. and 6:00
a.m. and when not in motion
c. The vehicle containing the property insured be properly
licensed and registered by the highway traffic board
d. Visible signs of forcible entry must be present before the
insurer will agree to pay any claim for theft - ---Answers---d.
Visible signs of forcible entry must be present before the
insurer will agree to pay any claim for theft
Loss resulting from the taking of property by a person
breaking into the premises is defined as:
2025/2026) QUESTIONS AND VERIFIED ANSWERS
[DISTINCTION LEVEL]
All of the following coverages are provided to commercial
property insured under the broad form, except one. Pick the
exception:
a. Smoke from agricultural smudging or industrial operations
b. Collapse of building due to snow or ice load
c. Loss or damage caused by land vehicles
d. Theft of stock and equipment - ---Answers---a. Smoke
from agricultural smudging or industrial operations
Generally, the fire rate charged by the insured on a
commercial property insurance will not be effected by:
a. The type of building construction
b. The occupancy or use of the building by the insured
c. The level of available fire protection
d. The type of burglar protection system installed - ---
Answers---d. The type of burglar protection system installed
The named perils form and broad form insure the property of a
business. All of the following items would be insured within
,the limit of insurance selected for "stock" except one. Pick the
exception:
a. Advertising materials
b. Packing and wrapping materials
c. Leased photocopier
d. Similar property of others for which the insured is legally
liable - ---Answers---c. Leased photocopier
The named perils form and broad insure the property of a
business. Your client, a dentist, is a tenant in a building
formerly occupied by a hairdresser. When her took possession
of the building, the dentist made several building
improvements and betterments. The value of such
improvements and betterments should be insured under the
amount of insurance provided for:
a. Stock
b. Equipment
c. Building
d. Personal Property - ---Answers---b. Equipment
The co-insurance clause is designed to:
a. Prevent the chance of a total loss
b. Transfer of the risk to another insurer
,c. Discourage the insured from gambling on suffering only a
partial loss
d. Penalize the insured in the event of over insurance - ---
Answers---c. Discourage the insured from gambling on
suffering only a partial loss
A building is worth $360,000 is insured for $90,000 and the
policy contains 80% co-insurance clause. A fire causes
$72,000 damage. The insured will cover:
a. 18,000
b. 22,500
c. 72,000
d. 90,000 - ---Answers---b. 22,500
A building valued at $120,000 is insured for $30,000 and there
is an 80% co-insurance clause on the policy. The building was
totally destroyed by fire last weekend. The insured would
receive a settlement of:
a. 7,000
b. 12,000
c. 30,000
d. 37,5000 - ---Answers---c. 30,000
The reinstatement clause contained in most policies of
commercial property insurance provided that:
, a. The insureds shall have as much insurance on the property
after an insured loss as they had immediately prior to it
b. Coverage which is suspended due to a breach of policy
conditions is automatically reinstated when that breach is
corrected
c. Coverage which has been terminated by the insurer may be
re-instated at the request of the insured upon application to
the insurer in writing
d. Property lost or damaged shall be re-instated with
equivalent property of like kind and quality - ---Answers---a.
The insureds shall have as much insurance on the property
after an insured loss as they had immediately prior to it
The locked vehicle warranty requires that:
a. The vehicle be equipped with a theft deterrent system
b. The vehicle locked between the house of 9:00 p.m. and 6:00
a.m. and when not in motion
c. The vehicle containing the property insured be properly
licensed and registered by the highway traffic board
d. Visible signs of forcible entry must be present before the
insurer will agree to pay any claim for theft - ---Answers---d.
Visible signs of forcible entry must be present before the
insurer will agree to pay any claim for theft
Loss resulting from the taking of property by a person
breaking into the premises is defined as:
