KY PROPERTY & CASUALTY TEST REVIEW
QUESTIONS 2026 FULLY SOLVED GRADED A+
◍ Which of the following is not an example of insurable interest?
(A) The gas station, which is intended to be bought next week
(B) A baseball card collection given to the insured by a grandfather
(C) Personal property left at a vacation home
(D) Personal tools that are left at the station. Ans: (A) The gas station,
which is intended to be bought next week
◍ Which of the following will state that the insured will be
indemnified against loss caused by fire, lightning, and internal
explosion?
(A) Named peril
(B) Stated value
(C) Special form
(D) Open peril. Ans: (A) Named peril
◍ An insured originally bought a house for $150,000. Today it could
sell for $200,000. It is estimated that if the house were totally
destroyed it would cost approximately $180,000 to rebuild. The
replacement cost of the house is:
(A) $200,000
,(B) $180,000
(C) $160,000
(D) $150,000. Ans: (B) $180,000
◍ One of the purposes of the Other Insurance clause found in a
Property Policy is to:
(A) Provide bodily injury coverage equal to property coverage offered
under the contract
(B) Encourages insured to purchase adequate amounts of insurance
(C) Prevent the insured from profiting from a loss by over insuring
the property
(D) Provides that if other insurance applies to the loss the insurer does
not pay. Ans: (C) Prevent the insured from profiting from a loss by
over insuring the property
◍ Which of the following is necessary for a valid contract?
(A) Must show signs of duress
(B) A written agreement signed by both the applicant and the agent
(C) Acceptance must be accepted by the insured
(D) Something of value must be exchanged between each party. Ans:
(D) Something of value must be exchanged between each party
, ◍ If an individual is liable for the loss of another, the court can
require damages be paid. What type of damages is typically covered
by liability insurance?
(A) Punitive damages meant to punish insured for gross negligence
(B) Special damages, which includes tangible financial losses
(C) Negligent property damage to a borrowed piece of equipment
(D) Negligence that results from an intervening cause. Ans: (B)
Special damages, which includes tangible financial losses
◍ An insured purchases a property contract with a one-year policy
period. Parkway through the year the insured is informed that at the
end of the policy period the insurer will no longer provide coverage.
This is known as:
(A) Cancellation with unearned premium returned on pro rata basis.
(B) Nonrenewal with no refund.
(C) All premiums will be refunded since the insurer is canceling.
(D) Cancellation with unearned premium returned on short rate basis..
Ans: (B) Nonrenewal with no refund.
◍ In order to collect, insurable interest in Property and Casualty
Insurance must exist:
(A) At the time the application is made.
(B) At the time the loss occurs.
, (C) At the time of the application and at the time of the loss.
(D) Continuously throughout the policy period.. Ans: (B) At the time
the loss occurs.
◍ Some teenagers decided it would be fun to sneak into the zoo at
night and release some animals. To their dismay they discover the
cage they just opened was not the monkey cage but the gorilla cage.
After the gorilla chases them for several miles it decides to roam the
neighborhood. What kind of liability does the zoo have, if any?
(A) Absolute Liability.
(B) Comparative Liability.
(C) Vicarious Liability.
(D) Contributory Liability.. Ans: (A) Absolute Liability.
◍ A fire bums a tire store. Under a property contract insuring against
fire losses, the loss of income resulting from the charred inventory
would represent a/an:
(A) Direct loss
(B) Indirect loss
(C) Physical loss
(D) Fair Market loss. Ans: (B) Indirect loss
◍ All the following are examples of managing risk EXCEPT:
(A) The insured does not own a vehicle
QUESTIONS 2026 FULLY SOLVED GRADED A+
◍ Which of the following is not an example of insurable interest?
(A) The gas station, which is intended to be bought next week
(B) A baseball card collection given to the insured by a grandfather
(C) Personal property left at a vacation home
(D) Personal tools that are left at the station. Ans: (A) The gas station,
which is intended to be bought next week
◍ Which of the following will state that the insured will be
indemnified against loss caused by fire, lightning, and internal
explosion?
(A) Named peril
(B) Stated value
(C) Special form
(D) Open peril. Ans: (A) Named peril
◍ An insured originally bought a house for $150,000. Today it could
sell for $200,000. It is estimated that if the house were totally
destroyed it would cost approximately $180,000 to rebuild. The
replacement cost of the house is:
(A) $200,000
,(B) $180,000
(C) $160,000
(D) $150,000. Ans: (B) $180,000
◍ One of the purposes of the Other Insurance clause found in a
Property Policy is to:
(A) Provide bodily injury coverage equal to property coverage offered
under the contract
(B) Encourages insured to purchase adequate amounts of insurance
(C) Prevent the insured from profiting from a loss by over insuring
the property
(D) Provides that if other insurance applies to the loss the insurer does
not pay. Ans: (C) Prevent the insured from profiting from a loss by
over insuring the property
◍ Which of the following is necessary for a valid contract?
(A) Must show signs of duress
(B) A written agreement signed by both the applicant and the agent
(C) Acceptance must be accepted by the insured
(D) Something of value must be exchanged between each party. Ans:
(D) Something of value must be exchanged between each party
, ◍ If an individual is liable for the loss of another, the court can
require damages be paid. What type of damages is typically covered
by liability insurance?
(A) Punitive damages meant to punish insured for gross negligence
(B) Special damages, which includes tangible financial losses
(C) Negligent property damage to a borrowed piece of equipment
(D) Negligence that results from an intervening cause. Ans: (B)
Special damages, which includes tangible financial losses
◍ An insured purchases a property contract with a one-year policy
period. Parkway through the year the insured is informed that at the
end of the policy period the insurer will no longer provide coverage.
This is known as:
(A) Cancellation with unearned premium returned on pro rata basis.
(B) Nonrenewal with no refund.
(C) All premiums will be refunded since the insurer is canceling.
(D) Cancellation with unearned premium returned on short rate basis..
Ans: (B) Nonrenewal with no refund.
◍ In order to collect, insurable interest in Property and Casualty
Insurance must exist:
(A) At the time the application is made.
(B) At the time the loss occurs.
, (C) At the time of the application and at the time of the loss.
(D) Continuously throughout the policy period.. Ans: (B) At the time
the loss occurs.
◍ Some teenagers decided it would be fun to sneak into the zoo at
night and release some animals. To their dismay they discover the
cage they just opened was not the monkey cage but the gorilla cage.
After the gorilla chases them for several miles it decides to roam the
neighborhood. What kind of liability does the zoo have, if any?
(A) Absolute Liability.
(B) Comparative Liability.
(C) Vicarious Liability.
(D) Contributory Liability.. Ans: (A) Absolute Liability.
◍ A fire bums a tire store. Under a property contract insuring against
fire losses, the loss of income resulting from the charred inventory
would represent a/an:
(A) Direct loss
(B) Indirect loss
(C) Physical loss
(D) Fair Market loss. Ans: (B) Indirect loss
◍ All the following are examples of managing risk EXCEPT:
(A) The insured does not own a vehicle
