NJ PSI PROPERTY AND CASUALTY TEST PAPER 2025/2026
ANSWERS AND QUESTIONS GRADED A+
✔✔What kind of clause relates to this statement: E&N Company issued a policy in
consideration of the representations on an application & the payment of the 1st
premium? - ✔✔Consideration
✔✔An insured's representations and warranties are incorrectly stated in which of the
following statements?
a. Statements made by an applicant that are guaranteed true are considered to be
warranties
b. Statements that an applicant believes to be true, but does not guarantee to be true,
are considered to be representations
c. An applicant's statements on an application are considered warranties
d. An applicant's statements on an application are considered representations - ✔✔c.
An applicant's statements on an application are considered warranties
✔✔What term relates to an agreement without legal effect? - ✔✔Void
✔✔An authorized but non-admitted insurer can be represented in this state only by
which of the following? - ✔✔Surplus lines broker
✔✔In franchise groups, how many master policies will be issued? - ✔✔None
✔✔Self-insurance is an example of what kind of risk management? - ✔✔retention
✔✔What kind of plan is a Stock life insurance company conducting when it issues
participating and non-participating policies? - ✔✔Mixed
✔✔What is the fine for if you do not contact the department regarding a change in
partners, owners, officers, or directors? - ✔✔$250
✔✔What is this an example of: Doctors pooling their funds to cover their malpractice
exposures? - ✔✔risk sharing
✔✔Which entity makes an enforceable promise in a unilateral contract? - ✔✔Insurer
✔✔In a court of law, any ambiguity found in a policy will go in favor of the insured
because an insurance policy is what kind of contract? - ✔✔contract of adhesion
✔✔In regard to an informal contract, when will it become binding? - ✔✔When one party
makes an offer and the other party accepts the offer
,✔✔When a risk is insurable, what must be calculable? - ✔✔chance of loss
✔✔What is a non-profit provider of insurance that is covered by a unique section of the
insurance code called? - ✔✔Fraternal Life Insurance Organization
✔✔All of the following are examples of conditions except:
a. Inspections
b. Liberalization clause
c. Return of premium
d. Appraisal - ✔✔d. Appraisal
✔✔If a driver had lots of accidents & violations, compared to other drivers their age,
which rating type would most closely reflect their risk? - ✔✔Merit
✔✔What construction class has a 2 hour fire resistance rating? - ✔✔fire resistive
✔✔What rating system is the most common approach used in the insurance industry? -
✔✔class
✔✔A consequential loss is known as what kind of loss? - ✔✔indirect
✔✔What is ACV? - ✔✔Actual cash value
Replacement cost-depreciation= ACV
✔✔Which kind of penalty does the insured suffer if the insured does NOT carry
sufficient insurance to meet the policy requirement? - ✔✔coinsurance
✔✔Which policy part contains the policy's premium & coverage? - ✔✔declarations
✔✔The Pro Rata provision is most closely associated with which principle? -
✔✔indemnity
✔✔Jan rarely cleans her home & often lets trash build up on her steps. What type of
hazard is this? - ✔✔physical
✔✔What is the location of the property called? - ✔✔policy territory
✔✔What would be the result if a producer sold a policy at a loss cost rate? -
✔✔Financial loss to an insurer
✔✔What contract part contains an insurer's promise to pay? - ✔✔insuring agreement
✔✔What determines the unit of exposure in the measure of insurance? - ✔✔rate
,✔✔An individual insured under a policy that is not named is known as: - ✔✔the insured
✔✔William wants to know whether theft will be covered under his basic form dwelling
policy. Will it be covered? - ✔✔No, it will not be covered.
✔✔Which coverage insures contents damaged by fire? - ✔✔Coverage c
✔✔The broad form dwelling policy with removal coverage will cover property
temporarily removed from the premises to protect it from damage. What is the length of
this coverage? - ✔✔30 days
✔✔What would be covered by Jan's dwelling policy?
a. Theft of her car from detached garage
b. Death of her dog due to smoke inhalation
c. Fire damage to her canoe in her garage
d. Fire damage to her garage on her premises used as a repair shop for cars - ✔✔c.
Fire damage to her canoe in her garage
✔✔Sally is moving to a new location. Her personal property coverage under her
dwelling policy will apply on a pro rata basis for how many days? - ✔✔30 days
✔✔Which coverage provides additional living expenses? - ✔✔Coverage E
✔✔What are the max coverage limits for Coverage A and Coverage C under the JIA? -
✔✔$455,000 & $228,000
✔✔Vandalism would be covered if an insured's premises was vacant for how many
days? - ✔✔35
✔✔Under dwelling policy coverage C, which is included
a. Small plane belonging to a renter
b. Sofa belonging to a renter
c. Watch belonging to a guest
d. Garden shed belonging to a neighbor - ✔✔c. Watch belonging to a guest
✔✔Which of the following is not covered in the broad and special form dwelling policy?
a. glass breakage
b. trees
c. collapse
d. theft of personal property - ✔✔d. theft of personal property
, ✔✔Under a dwelling policy, how many separate causes of loss forms are available? -
✔✔3
✔✔Which coverage would replace the cost of a dwelling? - ✔✔DP-2 & DP-3
✔✔Frank had his dwelling policy for 30 days. How much notice must his insurer give to
cancel his policy? - ✔✔10 days
✔✔Which of the following is NOT covered under a dwelling policy:
a. earth movement
b. other structures
c. debris removal
d. improvements - ✔✔a. earth movement
✔✔When do mobile homes qualify for basic coverage? - ✔✔If permanently located on a
private lot
✔✔What is excluded from other coverages in the Basic Dwelling policy? - ✔✔breakage
of glass
✔✔DP-2 differs from dwelling basic form with extended coverage because DP-2 adds...
- ✔✔coverage for damage caused by burgulars
✔✔Which of the following clauses under a Dwelling policy would apply to Jane who lost
one of her two matching crystal candlesticks? - ✔✔Pair or set
✔✔In all homeowner's forms, additional coverage for a fire department service charge
covers charges made by the fire department to... - ✔✔save covered property from a fire
✔✔What homeowner's policy has the broad form? - ✔✔HO-2
✔✔What condition voids a homeowner's policy? - ✔✔Concealment/fraud
✔✔An exclusive home would likely be insured under which form? - ✔✔HO-8
✔✔The Jackson's house is under repair after last month's storm. Which coverage will
allow the family to maintain its normal standard of living? - ✔✔Additional Living Expense
Coverage
✔✔When can a policy be voided if an insured committed fraud? - ✔✔Before or after a
loss
✔✔All forms of homeowner's policies exclude:
ANSWERS AND QUESTIONS GRADED A+
✔✔What kind of clause relates to this statement: E&N Company issued a policy in
consideration of the representations on an application & the payment of the 1st
premium? - ✔✔Consideration
✔✔An insured's representations and warranties are incorrectly stated in which of the
following statements?
a. Statements made by an applicant that are guaranteed true are considered to be
warranties
b. Statements that an applicant believes to be true, but does not guarantee to be true,
are considered to be representations
c. An applicant's statements on an application are considered warranties
d. An applicant's statements on an application are considered representations - ✔✔c.
An applicant's statements on an application are considered warranties
✔✔What term relates to an agreement without legal effect? - ✔✔Void
✔✔An authorized but non-admitted insurer can be represented in this state only by
which of the following? - ✔✔Surplus lines broker
✔✔In franchise groups, how many master policies will be issued? - ✔✔None
✔✔Self-insurance is an example of what kind of risk management? - ✔✔retention
✔✔What kind of plan is a Stock life insurance company conducting when it issues
participating and non-participating policies? - ✔✔Mixed
✔✔What is the fine for if you do not contact the department regarding a change in
partners, owners, officers, or directors? - ✔✔$250
✔✔What is this an example of: Doctors pooling their funds to cover their malpractice
exposures? - ✔✔risk sharing
✔✔Which entity makes an enforceable promise in a unilateral contract? - ✔✔Insurer
✔✔In a court of law, any ambiguity found in a policy will go in favor of the insured
because an insurance policy is what kind of contract? - ✔✔contract of adhesion
✔✔In regard to an informal contract, when will it become binding? - ✔✔When one party
makes an offer and the other party accepts the offer
,✔✔When a risk is insurable, what must be calculable? - ✔✔chance of loss
✔✔What is a non-profit provider of insurance that is covered by a unique section of the
insurance code called? - ✔✔Fraternal Life Insurance Organization
✔✔All of the following are examples of conditions except:
a. Inspections
b. Liberalization clause
c. Return of premium
d. Appraisal - ✔✔d. Appraisal
✔✔If a driver had lots of accidents & violations, compared to other drivers their age,
which rating type would most closely reflect their risk? - ✔✔Merit
✔✔What construction class has a 2 hour fire resistance rating? - ✔✔fire resistive
✔✔What rating system is the most common approach used in the insurance industry? -
✔✔class
✔✔A consequential loss is known as what kind of loss? - ✔✔indirect
✔✔What is ACV? - ✔✔Actual cash value
Replacement cost-depreciation= ACV
✔✔Which kind of penalty does the insured suffer if the insured does NOT carry
sufficient insurance to meet the policy requirement? - ✔✔coinsurance
✔✔Which policy part contains the policy's premium & coverage? - ✔✔declarations
✔✔The Pro Rata provision is most closely associated with which principle? -
✔✔indemnity
✔✔Jan rarely cleans her home & often lets trash build up on her steps. What type of
hazard is this? - ✔✔physical
✔✔What is the location of the property called? - ✔✔policy territory
✔✔What would be the result if a producer sold a policy at a loss cost rate? -
✔✔Financial loss to an insurer
✔✔What contract part contains an insurer's promise to pay? - ✔✔insuring agreement
✔✔What determines the unit of exposure in the measure of insurance? - ✔✔rate
,✔✔An individual insured under a policy that is not named is known as: - ✔✔the insured
✔✔William wants to know whether theft will be covered under his basic form dwelling
policy. Will it be covered? - ✔✔No, it will not be covered.
✔✔Which coverage insures contents damaged by fire? - ✔✔Coverage c
✔✔The broad form dwelling policy with removal coverage will cover property
temporarily removed from the premises to protect it from damage. What is the length of
this coverage? - ✔✔30 days
✔✔What would be covered by Jan's dwelling policy?
a. Theft of her car from detached garage
b. Death of her dog due to smoke inhalation
c. Fire damage to her canoe in her garage
d. Fire damage to her garage on her premises used as a repair shop for cars - ✔✔c.
Fire damage to her canoe in her garage
✔✔Sally is moving to a new location. Her personal property coverage under her
dwelling policy will apply on a pro rata basis for how many days? - ✔✔30 days
✔✔Which coverage provides additional living expenses? - ✔✔Coverage E
✔✔What are the max coverage limits for Coverage A and Coverage C under the JIA? -
✔✔$455,000 & $228,000
✔✔Vandalism would be covered if an insured's premises was vacant for how many
days? - ✔✔35
✔✔Under dwelling policy coverage C, which is included
a. Small plane belonging to a renter
b. Sofa belonging to a renter
c. Watch belonging to a guest
d. Garden shed belonging to a neighbor - ✔✔c. Watch belonging to a guest
✔✔Which of the following is not covered in the broad and special form dwelling policy?
a. glass breakage
b. trees
c. collapse
d. theft of personal property - ✔✔d. theft of personal property
, ✔✔Under a dwelling policy, how many separate causes of loss forms are available? -
✔✔3
✔✔Which coverage would replace the cost of a dwelling? - ✔✔DP-2 & DP-3
✔✔Frank had his dwelling policy for 30 days. How much notice must his insurer give to
cancel his policy? - ✔✔10 days
✔✔Which of the following is NOT covered under a dwelling policy:
a. earth movement
b. other structures
c. debris removal
d. improvements - ✔✔a. earth movement
✔✔When do mobile homes qualify for basic coverage? - ✔✔If permanently located on a
private lot
✔✔What is excluded from other coverages in the Basic Dwelling policy? - ✔✔breakage
of glass
✔✔DP-2 differs from dwelling basic form with extended coverage because DP-2 adds...
- ✔✔coverage for damage caused by burgulars
✔✔Which of the following clauses under a Dwelling policy would apply to Jane who lost
one of her two matching crystal candlesticks? - ✔✔Pair or set
✔✔In all homeowner's forms, additional coverage for a fire department service charge
covers charges made by the fire department to... - ✔✔save covered property from a fire
✔✔What homeowner's policy has the broad form? - ✔✔HO-2
✔✔What condition voids a homeowner's policy? - ✔✔Concealment/fraud
✔✔An exclusive home would likely be insured under which form? - ✔✔HO-8
✔✔The Jackson's house is under repair after last month's storm. Which coverage will
allow the family to maintain its normal standard of living? - ✔✔Additional Living Expense
Coverage
✔✔When can a policy be voided if an insured committed fraud? - ✔✔Before or after a
loss
✔✔All forms of homeowner's policies exclude:
