1
Property and Casualty Insurance Exam
Questions and Answers A+ Graded
1. Garage Keepers Insurance - ANSWER this type of insurance covers the
insured's liability for damage to customer's property that the insured has for
servicing, repair, parking and storage.
2. Motor Carrier Act of 1980 - ANSWER This is an act that required trucking
companies to certify that they are able to meet financial obligations if they
become liable for injury or damage arising from their trucking operations.
3. MCS-90 Endorsement - ANSWER this is an endorsement attached to the
truckers coverage form to provide public liability coverage.
4. Gramm Leach Bliley Privacy Protection Act - ANSWER is a federal law
enacted in the United States to control the ways that financial institutions
deal with the private information of individuals.
5. Drive Other Cars (DOC) Coverage Endorsement - ANSWER this is an
endorsement that extends the definition of a covered auto to include autos
the named insured does not own, hire or borrow while being used by the
person named in the endorsement.
6. Burglary - ANSWER the taking of property from inside the premises by a
person unlawfully entering or leaving the premises.
-must be evidence of forcible entry or exit.
7. Robbery - ANSWER this is unlawful taking of property from the care and
custody of another person. The unlawful person must have caused or
threatened to cause bodily harm to a person or persons involved.
8. Theft - ANSWER the unlawful taking of property. this broad term includes
robbery, burglary, etc.
9. Forgery - ANSWER this is signing the name of another person or
organization with the intent to deceive.
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10.Extortion - ANSWER the surrender of property away from the premises as
the result of a threat communicated to the insured to do bodily harm to the
insured or to an employee or relative who is being held captive.
11.Bond - ANSWER this is a guarantee that a specific duty will be discharged,
a certain performance maintained or a specific obligation fulfilled.
12.Fidelity Bond - ANSWER this type of bond guarantees an employee's
honest discharge of duty and are written to protect an insured against
dishonest acts by employees.
13.Surety Bond - ANSWER this type of bond guarantees that someone will
perform faithfully for whatever she agrees to do or that someone will make
an agreed-upon payment to another party.
14.Workers' Compensation Laws - ANSWER these laws give employees the
right to collect from their employers for injury, disability, or death that
occurs in the course of employment.
15.Assumption of Risk - ANSWER this allowed the employer to deny liability
on the basis that the employee knew what the situation was like before
employment and assumed all of the risk of injury.
16.What three factors are used to determine if the injury arose during
employment? - ANSWER -time
-place
-and circumstances
17.Specific insurance - ANSWER This type of insurance designates a particular
item to be insured
18.Blanket insurance - ANSWER This type of insurance covers more than one
item of property at a single location or one more items of property at
multiple locations.
19.Speculative - ANSWER possibility of both gain and loss. Not insurable.
20.Pure - ANSWER only the possibility of loss. Insurable.
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21.What are the 5 methods of managing or handling risk? - ANSWER avoid,
control, retain, and transfer risk.
22.Hazard - ANSWER A condition or situation which increases the chance for
loss
23.Physical Hazards - ANSWER a hazard that arises from the condition,
occupancy, or use of the property itself.
ex: skateboard left on the steps
24.Moral Hazards - ANSWER when an individual through carelessness or by
irresponsible actions can increase the possibly for a loss.
ex: person who drives carelessly just because they know they are insured.
25.Morale Hazards - ANSWER when a person might create a loss situation on
purpose just to collect from the insurance company.
ex: Prearranged, faked theft of someone's old vehicle so they can get an
insurance payout to buy a new vehicle.
26.Replacement Cost - ANSWER The amount of money it would take to
replace a damaged or destroyed item with one of like kind and quality AT
THE TIME OF LOSS. No deduction for depreciation.
27.Actual Cash Value (ACV) - ANSWER Replacement Cost, minus
depreciation.
28.Pair and Set Clause - ANSWER Loss to one item of a pair or set does not
constitute loss to the entire pair or set.
29.Appraisal - ANSWER A method of resolving disputes between insurers and
insureds over the amount owed on a covered loss.
-both parties select an appraiser
-the two appraisers select an umpire
-if the appraisers do not agree, the umpire is consulted
-the amount agreed on by 2 out of 3 is the amount that will be paid
30.Subrogation - ANSWER An insurer's right to recover the amount of its loss
payment from the third party who is legally responsible for the loss.
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31.Arbitration - ANSWER this condition is similar to the Appraisal Condition
but it is not limited to disputes over the value of the loss. It may also be used
to resolve other areas of disagreement between the insured and the insurance
company.
32.What does WC SHAVVER stand for? - ANSWER Windstorm, Civil
commotion, Smoke, Hail, Aircraft, Vehicles, Volcanic eruption, Explosion,
Riot
33.What does BIG AFFECT stand for? - ANSWER Burglar damage, Ice &
snow weight, Glass breakage, Accidental discharge, Falling objects,
Freezing of pipes, Electrical damage, Collapse, Tearing apart.
34.Insolvency - ANSWER A financial state that occurs if liabilities are greater
than assets.
35.Law of Agency - ANSWER Knowledge of the Agents is Knowledge of the
Principal (Insurance Company)
36.Principal - ANSWER Insurance Company
37.What is the ISO? - ANSWER Insurance Services Office which is an
organization established for the benefit of its member insurance companies.
This organization gathers statistics, provides loss costs, drafts policy forms
and coverage provisions and conducts inspections for rate making purposes.
38.Coinsurance Clause - ANSWER Requires the insured to carry a minimum
specified amount (generally 80%) of the replacement cost value of the
insured property in order for partial losses to be paid in full.
39.Estoppel - ANSWER A legal bar to changing or denying a fact because of
one's own previous actions or words to the contrary.
40.ex: If an insurance company representative intentionally or unintentionally
gives the impression that a specific fact exists when it does not and a client
relies on that impression and is damaged a result.
41.Binder - ANSWER A temporary contract of insurance, oral or written,
offered by an insurer pending issuance of the policy. Usually written for a
Property and Casualty Insurance Exam
Questions and Answers A+ Graded
1. Garage Keepers Insurance - ANSWER this type of insurance covers the
insured's liability for damage to customer's property that the insured has for
servicing, repair, parking and storage.
2. Motor Carrier Act of 1980 - ANSWER This is an act that required trucking
companies to certify that they are able to meet financial obligations if they
become liable for injury or damage arising from their trucking operations.
3. MCS-90 Endorsement - ANSWER this is an endorsement attached to the
truckers coverage form to provide public liability coverage.
4. Gramm Leach Bliley Privacy Protection Act - ANSWER is a federal law
enacted in the United States to control the ways that financial institutions
deal with the private information of individuals.
5. Drive Other Cars (DOC) Coverage Endorsement - ANSWER this is an
endorsement that extends the definition of a covered auto to include autos
the named insured does not own, hire or borrow while being used by the
person named in the endorsement.
6. Burglary - ANSWER the taking of property from inside the premises by a
person unlawfully entering or leaving the premises.
-must be evidence of forcible entry or exit.
7. Robbery - ANSWER this is unlawful taking of property from the care and
custody of another person. The unlawful person must have caused or
threatened to cause bodily harm to a person or persons involved.
8. Theft - ANSWER the unlawful taking of property. this broad term includes
robbery, burglary, etc.
9. Forgery - ANSWER this is signing the name of another person or
organization with the intent to deceive.
, 2
10.Extortion - ANSWER the surrender of property away from the premises as
the result of a threat communicated to the insured to do bodily harm to the
insured or to an employee or relative who is being held captive.
11.Bond - ANSWER this is a guarantee that a specific duty will be discharged,
a certain performance maintained or a specific obligation fulfilled.
12.Fidelity Bond - ANSWER this type of bond guarantees an employee's
honest discharge of duty and are written to protect an insured against
dishonest acts by employees.
13.Surety Bond - ANSWER this type of bond guarantees that someone will
perform faithfully for whatever she agrees to do or that someone will make
an agreed-upon payment to another party.
14.Workers' Compensation Laws - ANSWER these laws give employees the
right to collect from their employers for injury, disability, or death that
occurs in the course of employment.
15.Assumption of Risk - ANSWER this allowed the employer to deny liability
on the basis that the employee knew what the situation was like before
employment and assumed all of the risk of injury.
16.What three factors are used to determine if the injury arose during
employment? - ANSWER -time
-place
-and circumstances
17.Specific insurance - ANSWER This type of insurance designates a particular
item to be insured
18.Blanket insurance - ANSWER This type of insurance covers more than one
item of property at a single location or one more items of property at
multiple locations.
19.Speculative - ANSWER possibility of both gain and loss. Not insurable.
20.Pure - ANSWER only the possibility of loss. Insurable.
, 3
21.What are the 5 methods of managing or handling risk? - ANSWER avoid,
control, retain, and transfer risk.
22.Hazard - ANSWER A condition or situation which increases the chance for
loss
23.Physical Hazards - ANSWER a hazard that arises from the condition,
occupancy, or use of the property itself.
ex: skateboard left on the steps
24.Moral Hazards - ANSWER when an individual through carelessness or by
irresponsible actions can increase the possibly for a loss.
ex: person who drives carelessly just because they know they are insured.
25.Morale Hazards - ANSWER when a person might create a loss situation on
purpose just to collect from the insurance company.
ex: Prearranged, faked theft of someone's old vehicle so they can get an
insurance payout to buy a new vehicle.
26.Replacement Cost - ANSWER The amount of money it would take to
replace a damaged or destroyed item with one of like kind and quality AT
THE TIME OF LOSS. No deduction for depreciation.
27.Actual Cash Value (ACV) - ANSWER Replacement Cost, minus
depreciation.
28.Pair and Set Clause - ANSWER Loss to one item of a pair or set does not
constitute loss to the entire pair or set.
29.Appraisal - ANSWER A method of resolving disputes between insurers and
insureds over the amount owed on a covered loss.
-both parties select an appraiser
-the two appraisers select an umpire
-if the appraisers do not agree, the umpire is consulted
-the amount agreed on by 2 out of 3 is the amount that will be paid
30.Subrogation - ANSWER An insurer's right to recover the amount of its loss
payment from the third party who is legally responsible for the loss.
, 4
31.Arbitration - ANSWER this condition is similar to the Appraisal Condition
but it is not limited to disputes over the value of the loss. It may also be used
to resolve other areas of disagreement between the insured and the insurance
company.
32.What does WC SHAVVER stand for? - ANSWER Windstorm, Civil
commotion, Smoke, Hail, Aircraft, Vehicles, Volcanic eruption, Explosion,
Riot
33.What does BIG AFFECT stand for? - ANSWER Burglar damage, Ice &
snow weight, Glass breakage, Accidental discharge, Falling objects,
Freezing of pipes, Electrical damage, Collapse, Tearing apart.
34.Insolvency - ANSWER A financial state that occurs if liabilities are greater
than assets.
35.Law of Agency - ANSWER Knowledge of the Agents is Knowledge of the
Principal (Insurance Company)
36.Principal - ANSWER Insurance Company
37.What is the ISO? - ANSWER Insurance Services Office which is an
organization established for the benefit of its member insurance companies.
This organization gathers statistics, provides loss costs, drafts policy forms
and coverage provisions and conducts inspections for rate making purposes.
38.Coinsurance Clause - ANSWER Requires the insured to carry a minimum
specified amount (generally 80%) of the replacement cost value of the
insured property in order for partial losses to be paid in full.
39.Estoppel - ANSWER A legal bar to changing or denying a fact because of
one's own previous actions or words to the contrary.
40.ex: If an insurance company representative intentionally or unintentionally
gives the impression that a specific fact exists when it does not and a client
relies on that impression and is damaged a result.
41.Binder - ANSWER A temporary contract of insurance, oral or written,
offered by an insurer pending issuance of the policy. Usually written for a
