PROPERTY AND CASUALTY INSURANCE
EXAM QUESTIONS AND ANSWERS
According to the standard workers compensation and employer liability policy form, a
state should be listed in Part Three - other states' insurance of the workers
compensation and employers liability policy when - Answer- The insured expects to
extend operations to that state
A passenger in a friend's car is injured while getting into the car. Which of the following
statements would apply if both the passenger and the driver had medical payments
coverage under a personal auto policy? - Answer- The driver's policy would be primary
The type of professional liability coverage a medical doctor needs is - Answer-
Malpractice coverage
Under the commercial crime coverage inside the premises - robbery or safe burglary of
other property, what is the special per occurrence limit that applies to loss or damage to
precious metals, precious and semiprecious stones, pearls, furs, manuscripts, drawings,
or records? - Answer- $5,000
What method of premium computation relates an employer's losses, payroll, and
premiums to the rating bureau's classifications of operations? - Answer- Experience
modification factor
The at-fault driver in an insured's auto crash had the state required minimums for auto
liability coverage, but not enough to pay for all the damage done to the insured. This
driver is - Answer- Considered underinsured
Which of the following is a common exclusion found in Part D: Coverage for Damage to
Your Auto of a PAP? - Answer- Mechanical breakdown
Which commercial crime form would provide coverage for a loss that did not necessarily
happen during the policy period but was revealed during the policy period? - Answer-
Discovery form
(discovery period is normally 1 year)
If an insured bakery is sued because its marketing states that the products of another
bakery may not be safe, which coverage of a commercial general liability policy will
defend the suit? - Answer- Personal and advertising injury liability
,A professional liability policy will provide coverage for loss in all of the following cases,
except, when the insured doctor was shown to be - Answer- Criminally negligent
Professional liability coverage protects the insured against legal liability resulting from -
Answer- Errors and omissions
What is the deductible of a personal liability umbrella policy called? - Answer- The SIR
(self insured retention is an initial part of a loss the insured pays before the umbrella
pays if no other policy covers the loss)
Directors and officers liability insurance defends actions against a corporation or its
officers and directors alleging wrongful acts. With regard to the coverage provided,
wrongful acts include any of the following EXCEPT - Answer- Embezzlement
B&B Market was sued when an employee detained a person he believed to be a
shoplifter, but the person turned out to be the meter reader. Which coverage would
apply to this suit? - Answer- Personal and advertising injury liability
When a replacement auto is acquired during the policy period, what coverage will apply
to it automatically under a personal auto policy? - Answer- Whatever coverage applied
to the vehicle being replaced
Which of the following would NOT be covered under the liability section of a personal
auto policy? - Answer- Bodily injury is caused by the insured's negligence while driving
a 3 wheel all terrain vehicle
(has to have 4 wheels to be covered)
Which of the following statements is true concerning a bonded contractor who defaults
on a construction performance contract? - Answer- The obligee may engage another
contractor and then see reimbursement from the surety
(the bonding company would have to see that the job was completed and then seek
recovery for its expenses from the bonded contractor "principal")
Which of the following statements would be correct if an insured failed to maintain the
underlying limits as required by a personal umbrella policy? - Answer- The insured
would be responsible for the amount required as underlying limits in the event of a
claim.
Which of the following statements is true regarding the premium computation for
workers compensation insurance? - Answer- A premium auditor has the right to
examine the insured's compensation records at the end of the policy period to
determine the actual premium basis.
Who is NOT considered an employee in a commercial general liability (CGL) policy? -
Answer- Temporary worker
, An insured is involved in an auto accident in another state. The state has a financial
responsibility law that specifies limits of liability higher than the limits shown in the
declarations. What amount will the insured's policy pay? - Answer- Higher limits
Coverage A - Bodily Injury and Property Damage in the commercial general liability
policy will cover - Answer- Losses due to the insured's negligence
A liability policy that provides coverage for a claim for injury or damage if the claim is
first reported or filed against the insured during the policy period is called - Answer-
Claims made form
Elements for a contract: - Answer- 1) Agreement - offer and acceptance
2) Consideration
3) Competent parties
4) Legal purpose
Payment for medical expenses, loss of wages, funeral expenses, or the cost to repair or
replace damaged property are known as what type of compensatory damages? -
Answer- Special
Which method of loss valuation is contrary to the basic concept of indemnity? - Answer-
Replacement cost
An insured owns several buildings, each at a different location and insured on a
separate policy. What type of coverage does the insured have? - Answer- Specific
The policy provision found in property insurance policies that prevents the insured from
collecting twice for the same loss is called - Answer- Subrogation
Losses caused by continuous or repeated exposure to conditions resulting in injury
persons or damage to property that is neither intended nor expected is the definition of
which of the following terms? - Answer- Occurrence
An insured relocated to another state for work. However, she still owns and insures a
house in this state, but has had no one living in it for 3 months. She is also storing some
of furniture and clothes in the house. From an insurance standpoint, the insured's house
is considered - Answer- Unoccupied
An insured's roof cost $4,000 when installed 5 years ago. It has been damaged by hail
and must be replaced. The new roof will cost $6,000 at today's prices. If the roof has
been depreciating at $200 per year and the insured's policy is written on the actual cash
value(ACV), how much will the policy pay toward the insured's new roof? - Answer-
$5,000
An insured carries a property policy on her home in the amount of $250,000. A bank is
shown as the mortgagor in the policy. Last month the insured made her final mortgage
EXAM QUESTIONS AND ANSWERS
According to the standard workers compensation and employer liability policy form, a
state should be listed in Part Three - other states' insurance of the workers
compensation and employers liability policy when - Answer- The insured expects to
extend operations to that state
A passenger in a friend's car is injured while getting into the car. Which of the following
statements would apply if both the passenger and the driver had medical payments
coverage under a personal auto policy? - Answer- The driver's policy would be primary
The type of professional liability coverage a medical doctor needs is - Answer-
Malpractice coverage
Under the commercial crime coverage inside the premises - robbery or safe burglary of
other property, what is the special per occurrence limit that applies to loss or damage to
precious metals, precious and semiprecious stones, pearls, furs, manuscripts, drawings,
or records? - Answer- $5,000
What method of premium computation relates an employer's losses, payroll, and
premiums to the rating bureau's classifications of operations? - Answer- Experience
modification factor
The at-fault driver in an insured's auto crash had the state required minimums for auto
liability coverage, but not enough to pay for all the damage done to the insured. This
driver is - Answer- Considered underinsured
Which of the following is a common exclusion found in Part D: Coverage for Damage to
Your Auto of a PAP? - Answer- Mechanical breakdown
Which commercial crime form would provide coverage for a loss that did not necessarily
happen during the policy period but was revealed during the policy period? - Answer-
Discovery form
(discovery period is normally 1 year)
If an insured bakery is sued because its marketing states that the products of another
bakery may not be safe, which coverage of a commercial general liability policy will
defend the suit? - Answer- Personal and advertising injury liability
,A professional liability policy will provide coverage for loss in all of the following cases,
except, when the insured doctor was shown to be - Answer- Criminally negligent
Professional liability coverage protects the insured against legal liability resulting from -
Answer- Errors and omissions
What is the deductible of a personal liability umbrella policy called? - Answer- The SIR
(self insured retention is an initial part of a loss the insured pays before the umbrella
pays if no other policy covers the loss)
Directors and officers liability insurance defends actions against a corporation or its
officers and directors alleging wrongful acts. With regard to the coverage provided,
wrongful acts include any of the following EXCEPT - Answer- Embezzlement
B&B Market was sued when an employee detained a person he believed to be a
shoplifter, but the person turned out to be the meter reader. Which coverage would
apply to this suit? - Answer- Personal and advertising injury liability
When a replacement auto is acquired during the policy period, what coverage will apply
to it automatically under a personal auto policy? - Answer- Whatever coverage applied
to the vehicle being replaced
Which of the following would NOT be covered under the liability section of a personal
auto policy? - Answer- Bodily injury is caused by the insured's negligence while driving
a 3 wheel all terrain vehicle
(has to have 4 wheels to be covered)
Which of the following statements is true concerning a bonded contractor who defaults
on a construction performance contract? - Answer- The obligee may engage another
contractor and then see reimbursement from the surety
(the bonding company would have to see that the job was completed and then seek
recovery for its expenses from the bonded contractor "principal")
Which of the following statements would be correct if an insured failed to maintain the
underlying limits as required by a personal umbrella policy? - Answer- The insured
would be responsible for the amount required as underlying limits in the event of a
claim.
Which of the following statements is true regarding the premium computation for
workers compensation insurance? - Answer- A premium auditor has the right to
examine the insured's compensation records at the end of the policy period to
determine the actual premium basis.
Who is NOT considered an employee in a commercial general liability (CGL) policy? -
Answer- Temporary worker
, An insured is involved in an auto accident in another state. The state has a financial
responsibility law that specifies limits of liability higher than the limits shown in the
declarations. What amount will the insured's policy pay? - Answer- Higher limits
Coverage A - Bodily Injury and Property Damage in the commercial general liability
policy will cover - Answer- Losses due to the insured's negligence
A liability policy that provides coverage for a claim for injury or damage if the claim is
first reported or filed against the insured during the policy period is called - Answer-
Claims made form
Elements for a contract: - Answer- 1) Agreement - offer and acceptance
2) Consideration
3) Competent parties
4) Legal purpose
Payment for medical expenses, loss of wages, funeral expenses, or the cost to repair or
replace damaged property are known as what type of compensatory damages? -
Answer- Special
Which method of loss valuation is contrary to the basic concept of indemnity? - Answer-
Replacement cost
An insured owns several buildings, each at a different location and insured on a
separate policy. What type of coverage does the insured have? - Answer- Specific
The policy provision found in property insurance policies that prevents the insured from
collecting twice for the same loss is called - Answer- Subrogation
Losses caused by continuous or repeated exposure to conditions resulting in injury
persons or damage to property that is neither intended nor expected is the definition of
which of the following terms? - Answer- Occurrence
An insured relocated to another state for work. However, she still owns and insures a
house in this state, but has had no one living in it for 3 months. She is also storing some
of furniture and clothes in the house. From an insurance standpoint, the insured's house
is considered - Answer- Unoccupied
An insured's roof cost $4,000 when installed 5 years ago. It has been damaged by hail
and must be replaced. The new roof will cost $6,000 at today's prices. If the roof has
been depreciating at $200 per year and the insured's policy is written on the actual cash
value(ACV), how much will the policy pay toward the insured's new roof? - Answer-
$5,000
An insured carries a property policy on her home in the amount of $250,000. A bank is
shown as the mortgagor in the policy. Last month the insured made her final mortgage
