1
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Property and Casualty Insurance
Questions and Answers (100% Correct
Answers) Already Graded A+
Elements for a contract:—Ans: 1) Agreement - offer and
acceptance
2) Consideration
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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
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what type of compensatory damages?—Ans: Special
Which method of loss valuation is contrary to the basic concept of
indemnity?—Ans: 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?—Ans: Specific
The policy provision found in property insurance policies that
prevents the insured from collecting twice for the same loss is
called—Ans: 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?—Ans: 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—Ans: Unoccupied
, 2
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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?—Ans: $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 payment, but did not
remove the bank from the policy. In the event of a covered loss to
her home, how much will the bank receive?—Ans: Nothing
What type of damages may be awarded by the court to create
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disincentives that discourage behavior that is deemed highly
undesirable by society?—Ans: Punitive
A tornado that destroys property would be an example of which
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of the following?—Ans: A Peril
The insured's house is located one mile from the county's new
landfill and across the road from the entrance of a rock quarry. It
would cost $150,000 to rebuild the house if something happened
to it, but when the insured tried to sell it, the best offer he received
was $80,000. The insurance company will insure the house for only
$80,000. What method of valuation is used to insure this
property?—Ans: Market Value
An insured is applying for a casualty insurance policy. One of the
conditions of the policy allows the insurance company to inspect
the insured's books at the end of the policy term to make sure
sufficient premium has been collected for the exposure she plans
to insure. Which condition is part of the insured's policy?—Ans:
Deposit premium audit
All of the following statements concerning coinsurance are true
EXCEPT—Ans: The coinsurance formula will also be applied to
total losses.
A situation in which a person can only lose or have no change
represents—Ans: Pure risk
, 3
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A policy condition that stipulates how the amount of damaged or
lost property will be determined if the insured and the principal do
not agree is known as—Ans: Appraisal
An insured has a liability policy that sets the amount for all claims
that arise from a single incident at $50,000. Which type of limit of
liability does this insured's policy have?—Ans: Per occurrence
Which of the following is NOT an element of negligence?—Ans:
Libel
-duty, breach, and unbroken chain are
Insurable interest in the property covered in a policy must be
proven—Ans: At time of loss
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A building is insured, but no one has lived or worked in it for 10
years. The building is completely empty of any furniture or personal
belongings. From an insurance standpoint, the building is
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considered—Ans: Vacant
For the purpose of insurance, risk is defined as—Ans: The
uncertainty or chance of loss
Which law is the foundation of the statistical prediction of loss
upon which rates for insurance are calculated?—Ans: Law of
large numbers
The legal process that gives the insurer, after payment of a loss,
the right to seek recovery from a third party that was responsible
for the loss is known as—Ans: Subrogation
What is a Certificate of Insurance?—Ans: A written document
showing the types and amounts of insurance that have been
issued to the insured
A $100,000 house insured on a policy with an 80% coinsurance
requirement has a fire that caused $40,000 of damage; the owner
has a policy with $60,000 coverage. How much can the owner
collect for his loss?—Ans: $30,000
- For the total amount of a partial loss to be paid, a house must be
insured for at least 80% of its value on the date of loss. In this case,
, 4
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because the house is insured for only $60,000 (75% of the minimum
requirement), the policy will pay only 75% of the loss, or $30,000.
An insured stated on her application for life insurance that she
had never had a heart attack, when in fact she had a series of
minor heart attacks last year for which she sought medical
attention. Which of the following will explain the reason a death
benefit claim is denied?—Ans: Material misrepresentation
All of the following are conditions commonly found in the
insurance policy EXCEPT—Ans: Insuring agreement
-subrogation, appraisal, cancellation and nonrenewal are all
found
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Duties of the insurer found in property policy conditions include all
of the following EXCEPT—Ans: -Notify the insured in the event of
financial difficulty
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All of the following are considered parts of the policy structure
EXCEPT—Ans: Provisions
-conditions, exclusions, and insuring clause are found
Representations are written or oral statements made by the
applicant that are—Ans: Considered true to the best of the
applicant's knowledge
The part of a policy that clarifies terms in the policy is the—Ans:
Definitions
In forming an insurance contract, when does acceptance usually
occur?—Ans: When an insurer's underwriter approves coverage
In insurance, an offer is usually made when—Ans: The completed
application is submitted
Which of the following is NOT the consideration in a policy?—Ans:
The application given to a prospective insured
Before an insurer will pay any loss under a policy, what is usually
required from the insured?—Ans: Proof of loss
For Expert help and assignment solutions, +254707240657
Property and Casualty Insurance
Questions and Answers (100% Correct
Answers) Already Graded A+
Elements for a contract:—Ans: 1) Agreement - offer and
acceptance
2) Consideration
© 2025 Assignment Expert
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
Guru01 - Stuvia
what type of compensatory damages?—Ans: Special
Which method of loss valuation is contrary to the basic concept of
indemnity?—Ans: 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?—Ans: Specific
The policy provision found in property insurance policies that
prevents the insured from collecting twice for the same loss is
called—Ans: 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?—Ans: 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—Ans: Unoccupied
, 2
For Expert help and assignment solutions, +254707240657
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?—Ans: $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 payment, but did not
remove the bank from the policy. In the event of a covered loss to
her home, how much will the bank receive?—Ans: Nothing
What type of damages may be awarded by the court to create
© 2025 Assignment Expert
disincentives that discourage behavior that is deemed highly
undesirable by society?—Ans: Punitive
A tornado that destroys property would be an example of which
Guru01 - Stuvia
of the following?—Ans: A Peril
The insured's house is located one mile from the county's new
landfill and across the road from the entrance of a rock quarry. It
would cost $150,000 to rebuild the house if something happened
to it, but when the insured tried to sell it, the best offer he received
was $80,000. The insurance company will insure the house for only
$80,000. What method of valuation is used to insure this
property?—Ans: Market Value
An insured is applying for a casualty insurance policy. One of the
conditions of the policy allows the insurance company to inspect
the insured's books at the end of the policy term to make sure
sufficient premium has been collected for the exposure she plans
to insure. Which condition is part of the insured's policy?—Ans:
Deposit premium audit
All of the following statements concerning coinsurance are true
EXCEPT—Ans: The coinsurance formula will also be applied to
total losses.
A situation in which a person can only lose or have no change
represents—Ans: Pure risk
, 3
For Expert help and assignment solutions, +254707240657
A policy condition that stipulates how the amount of damaged or
lost property will be determined if the insured and the principal do
not agree is known as—Ans: Appraisal
An insured has a liability policy that sets the amount for all claims
that arise from a single incident at $50,000. Which type of limit of
liability does this insured's policy have?—Ans: Per occurrence
Which of the following is NOT an element of negligence?—Ans:
Libel
-duty, breach, and unbroken chain are
Insurable interest in the property covered in a policy must be
proven—Ans: At time of loss
© 2025 Assignment Expert
A building is insured, but no one has lived or worked in it for 10
years. The building is completely empty of any furniture or personal
belongings. From an insurance standpoint, the building is
Guru01 - Stuvia
considered—Ans: Vacant
For the purpose of insurance, risk is defined as—Ans: The
uncertainty or chance of loss
Which law is the foundation of the statistical prediction of loss
upon which rates for insurance are calculated?—Ans: Law of
large numbers
The legal process that gives the insurer, after payment of a loss,
the right to seek recovery from a third party that was responsible
for the loss is known as—Ans: Subrogation
What is a Certificate of Insurance?—Ans: A written document
showing the types and amounts of insurance that have been
issued to the insured
A $100,000 house insured on a policy with an 80% coinsurance
requirement has a fire that caused $40,000 of damage; the owner
has a policy with $60,000 coverage. How much can the owner
collect for his loss?—Ans: $30,000
- For the total amount of a partial loss to be paid, a house must be
insured for at least 80% of its value on the date of loss. In this case,
, 4
For Expert help and assignment solutions, +254707240657
because the house is insured for only $60,000 (75% of the minimum
requirement), the policy will pay only 75% of the loss, or $30,000.
An insured stated on her application for life insurance that she
had never had a heart attack, when in fact she had a series of
minor heart attacks last year for which she sought medical
attention. Which of the following will explain the reason a death
benefit claim is denied?—Ans: Material misrepresentation
All of the following are conditions commonly found in the
insurance policy EXCEPT—Ans: Insuring agreement
-subrogation, appraisal, cancellation and nonrenewal are all
found
© 2025 Assignment Expert
Duties of the insurer found in property policy conditions include all
of the following EXCEPT—Ans: -Notify the insured in the event of
financial difficulty
Guru01 - Stuvia
All of the following are considered parts of the policy structure
EXCEPT—Ans: Provisions
-conditions, exclusions, and insuring clause are found
Representations are written or oral statements made by the
applicant that are—Ans: Considered true to the best of the
applicant's knowledge
The part of a policy that clarifies terms in the policy is the—Ans:
Definitions
In forming an insurance contract, when does acceptance usually
occur?—Ans: When an insurer's underwriter approves coverage
In insurance, an offer is usually made when—Ans: The completed
application is submitted
Which of the following is NOT the consideration in a policy?—Ans:
The application given to a prospective insured
Before an insurer will pay any loss under a policy, what is usually
required from the insured?—Ans: Proof of loss
