PNC Exam Extra Review UPDATED
ACTUAL Exam Questions and CORRECT
Answers
What is an umbrella policy? - CORRECT ANSWER - Extra liability insurance coverage
that goes beyond the limits of the insured's home, auto or watercraft insurance. It provides an
additional layer of security to those who are at risk for being sued for damages to other people's
property or injuries caused to others in an accident. It also protects against libel, vandalism,
slander and invasion of privacy. An umbrella insurance policy is very helpful when the insurance
owner is sued and the dollar limit of the original policy has been exhausted. The added coverage
provided by liability insurance is most useful to individuals who own a lot of assets or very
expensive assets and are at significant risk for being sued.
Aggregate Excess liability - CORRECT ANSWER - An insurance policy that limits the
amount that a policyholder has to pay out over a specific time period. Aggregate excess
insurance is designed to protect policyholders that experience an unusually high level of claims
that is considered unexpected. Aggregate excess insurance provides payment for total losses that
occur over a period of time, and is not limited to a per occurrence basis.
Consideration - CORRECT ANSWER - Consideration is the concept of legal value in
connection with contracts. It is anything of value promised to another when making a contract. It
can take the form of money, physical objects, services, promised actions, abstinence from a
future action, and much more. Consideration to create a legally enforceable contract entails a
bargained for, legal detriment incurred by the promisee OR a legal benefit to the promisor.
Under the notion of "pre-existing duties", if either the promisor or the promisee already had a
legal obligation to render such payment, it cannot be seen as consideration in the legal sense.
Supplementary payments - CORRECT ANSWER - Supplementary payments are limited
to the coverages that provide liability and defense protection. The expenses described here are
the sole responsibility of the insurance company, have no limit, and are paid in addition to the
policy limits.
1. Legal Fees: Since the company is obligated to defend the insured, these expenses can be high,
including legal fees, investigations, expert witnesses and court costs.
2. Release of Attachment Bonds: The company is not obligated to provide these bonds, only pay
for them, to enable the insured to get the attachment on his equipment or other property
"released" by the court.
, 3. Reasonable Expenses: If an insured is asked to participate in the defense of a claim, the
company will pay all direct expenses incurred. If the insured can show a loss of earnings, he can
collect up to $250 a day. This latter benefit is not an automatic payment. Taking a day of leave to
be in court is not considered a loss of earnings for a salaried individual.
4. Court Costs: When an insured is on the losing end of a lawsuit, the insured may be required to
pay court costs as part of the judgment. Those costs are covered by this supplementary coverage.
However, the insured may also be required to pay the opposing party's attorney's fees. These
costs are not covered by this supplementary coverage; they would be covered as part of the
liability coverage and therefore subject to the limit of liability.
Fair Credit Reporting Act - CORRECT ANSWER - •Know whats in your file.
•Free file disclosure once per year from each of the major credit bureaus.
•Ask for your credit score (there may be a fee).
•Verify accuracy of report when required for employment purposes.
•Notification if your file has been used against you.
•Dispute and correct information that is incomplete or inaccurate.
•Remove outdated, negative information (seven-years old or 10 years in the case of bankruptcy).
Scheduled Perils - CORRECT ANSWER - Scheduled Personal Property (SPP) is handled
as a "floater" to your home insurance policy, and assigns specific value amounts to prized items
like artwork, jewelry, expensive handbags, designer clothing and furs (You will need to hire a
professional appraiser to assign a value to the items). A common misconception is that your
homeowner's insurance policy will take care of these items in the event that you have a fire, are a
victim of theft or other disaster which destroys the valuable contents in your home. While that is
true, the replacement limits covered under a standard policy are typically much lower than the
value of the property that was lost or damaged. For example, a wedding ring lost in a fire might
be replaced at a maximum amount of only $1,500, according to the Insurance Information
Institute. Furthermore, SPP will cover valuables that are lost during travel, are accidentally
misplaced, and even, wedding rings that slide down the drain.
Personal Auto Policy (PAP) liability coverage - CORRECT ANSWER - Anyone who
operates a non-commercial vehicle in the United States must have personal automotive insurance
on that vehicle in the event of an accident, and it's also the law. Higher coverage amounts and
ACTUAL Exam Questions and CORRECT
Answers
What is an umbrella policy? - CORRECT ANSWER - Extra liability insurance coverage
that goes beyond the limits of the insured's home, auto or watercraft insurance. It provides an
additional layer of security to those who are at risk for being sued for damages to other people's
property or injuries caused to others in an accident. It also protects against libel, vandalism,
slander and invasion of privacy. An umbrella insurance policy is very helpful when the insurance
owner is sued and the dollar limit of the original policy has been exhausted. The added coverage
provided by liability insurance is most useful to individuals who own a lot of assets or very
expensive assets and are at significant risk for being sued.
Aggregate Excess liability - CORRECT ANSWER - An insurance policy that limits the
amount that a policyholder has to pay out over a specific time period. Aggregate excess
insurance is designed to protect policyholders that experience an unusually high level of claims
that is considered unexpected. Aggregate excess insurance provides payment for total losses that
occur over a period of time, and is not limited to a per occurrence basis.
Consideration - CORRECT ANSWER - Consideration is the concept of legal value in
connection with contracts. It is anything of value promised to another when making a contract. It
can take the form of money, physical objects, services, promised actions, abstinence from a
future action, and much more. Consideration to create a legally enforceable contract entails a
bargained for, legal detriment incurred by the promisee OR a legal benefit to the promisor.
Under the notion of "pre-existing duties", if either the promisor or the promisee already had a
legal obligation to render such payment, it cannot be seen as consideration in the legal sense.
Supplementary payments - CORRECT ANSWER - Supplementary payments are limited
to the coverages that provide liability and defense protection. The expenses described here are
the sole responsibility of the insurance company, have no limit, and are paid in addition to the
policy limits.
1. Legal Fees: Since the company is obligated to defend the insured, these expenses can be high,
including legal fees, investigations, expert witnesses and court costs.
2. Release of Attachment Bonds: The company is not obligated to provide these bonds, only pay
for them, to enable the insured to get the attachment on his equipment or other property
"released" by the court.
, 3. Reasonable Expenses: If an insured is asked to participate in the defense of a claim, the
company will pay all direct expenses incurred. If the insured can show a loss of earnings, he can
collect up to $250 a day. This latter benefit is not an automatic payment. Taking a day of leave to
be in court is not considered a loss of earnings for a salaried individual.
4. Court Costs: When an insured is on the losing end of a lawsuit, the insured may be required to
pay court costs as part of the judgment. Those costs are covered by this supplementary coverage.
However, the insured may also be required to pay the opposing party's attorney's fees. These
costs are not covered by this supplementary coverage; they would be covered as part of the
liability coverage and therefore subject to the limit of liability.
Fair Credit Reporting Act - CORRECT ANSWER - •Know whats in your file.
•Free file disclosure once per year from each of the major credit bureaus.
•Ask for your credit score (there may be a fee).
•Verify accuracy of report when required for employment purposes.
•Notification if your file has been used against you.
•Dispute and correct information that is incomplete or inaccurate.
•Remove outdated, negative information (seven-years old or 10 years in the case of bankruptcy).
Scheduled Perils - CORRECT ANSWER - Scheduled Personal Property (SPP) is handled
as a "floater" to your home insurance policy, and assigns specific value amounts to prized items
like artwork, jewelry, expensive handbags, designer clothing and furs (You will need to hire a
professional appraiser to assign a value to the items). A common misconception is that your
homeowner's insurance policy will take care of these items in the event that you have a fire, are a
victim of theft or other disaster which destroys the valuable contents in your home. While that is
true, the replacement limits covered under a standard policy are typically much lower than the
value of the property that was lost or damaged. For example, a wedding ring lost in a fire might
be replaced at a maximum amount of only $1,500, according to the Insurance Information
Institute. Furthermore, SPP will cover valuables that are lost during travel, are accidentally
misplaced, and even, wedding rings that slide down the drain.
Personal Auto Policy (PAP) liability coverage - CORRECT ANSWER - Anyone who
operates a non-commercial vehicle in the United States must have personal automotive insurance
on that vehicle in the event of an accident, and it's also the law. Higher coverage amounts and
