ILLINOIS PROPERTY AND CASUALTY
EXAM QUESTIONS AND ANSWERS
WITH COMPLETE SOLUTIONS (GRADED
A+)
Question 1: A fire severely damages a retail store, forcing the owner to
temporarily close the business for three weeks while physical repairs are
completed. Because the doors are closed, the business suffers a severe loss of
ongoing business income. This loss of income is classified as what type of loss?
A) Direct loss
B) Consequential (or indirect) loss ✔✔
C) Speculative loss
D) Proximate physical loss
Question 2: When a property insurance policy is explicitly written without being
subject to any coinsurance penalties or valuation clauses, and the full face amount
stated in the policy is paid out completely in the event of a total covered loss, the
policy is said to be written on what basis?
A) Actual cash value
B) Replacement cost
C) Stated amount (or valued policy) ✔✔
D) Market value index
Question 3: Under standard insurance underwriting guidelines, which of the
following conditions must be met for a policyholder to add broad theft coverage
(which covers both on-premises and off-premises theft) to a Dwelling Policy (DP)?
A) The dwelling must be left vacant for at least six consecutive months
B) The insured must be the owner-occupant of the insured dwelling ✔✔
, C) The structure must be located within an exclusively commercial zoning
district
D) The policy must be written as an unendorsed basic form (DP-1)
When other insurance is written on the same basis as a Commercial Property
policy, what is the insurer obligated to cover? -ANSWER ✔✔A share of the loss
Under the conditions of a Film Coverage Form, how long must the insured
maintain records of each production? -ANSWER ✔✔3 years after the policy
expires
Which of the following statements regarding coverage for the flood and earthquake
perils is true? -ANSWER ✔✔Both flood and earthquake are excluded perils in all
property policies.
Individuals in the business of selling construction equipment and mobile
equipment should insure with a/an -ANSWER ✔✔Equipment Dealers Coverage
Form:
Who would participate in a Write Your Own (WYO) flood insurance program? -
ANSWER ✔✔Private insurers that wish to write and service National Flood
Insurance policies on a no risk-bearing basis
Under the examinations of books and records condition, the insurance company
has the right to examine and audit the insured's books and records related to the
policy -ANSWER ✔✔During the policy period and for up to 3 years after the
termination of the policy.
EXAM QUESTIONS AND ANSWERS
WITH COMPLETE SOLUTIONS (GRADED
A+)
Question 1: A fire severely damages a retail store, forcing the owner to
temporarily close the business for three weeks while physical repairs are
completed. Because the doors are closed, the business suffers a severe loss of
ongoing business income. This loss of income is classified as what type of loss?
A) Direct loss
B) Consequential (or indirect) loss ✔✔
C) Speculative loss
D) Proximate physical loss
Question 2: When a property insurance policy is explicitly written without being
subject to any coinsurance penalties or valuation clauses, and the full face amount
stated in the policy is paid out completely in the event of a total covered loss, the
policy is said to be written on what basis?
A) Actual cash value
B) Replacement cost
C) Stated amount (or valued policy) ✔✔
D) Market value index
Question 3: Under standard insurance underwriting guidelines, which of the
following conditions must be met for a policyholder to add broad theft coverage
(which covers both on-premises and off-premises theft) to a Dwelling Policy (DP)?
A) The dwelling must be left vacant for at least six consecutive months
B) The insured must be the owner-occupant of the insured dwelling ✔✔
, C) The structure must be located within an exclusively commercial zoning
district
D) The policy must be written as an unendorsed basic form (DP-1)
When other insurance is written on the same basis as a Commercial Property
policy, what is the insurer obligated to cover? -ANSWER ✔✔A share of the loss
Under the conditions of a Film Coverage Form, how long must the insured
maintain records of each production? -ANSWER ✔✔3 years after the policy
expires
Which of the following statements regarding coverage for the flood and earthquake
perils is true? -ANSWER ✔✔Both flood and earthquake are excluded perils in all
property policies.
Individuals in the business of selling construction equipment and mobile
equipment should insure with a/an -ANSWER ✔✔Equipment Dealers Coverage
Form:
Who would participate in a Write Your Own (WYO) flood insurance program? -
ANSWER ✔✔Private insurers that wish to write and service National Flood
Insurance policies on a no risk-bearing basis
Under the examinations of books and records condition, the insurance company
has the right to examine and audit the insured's books and records related to the
policy -ANSWER ✔✔During the policy period and for up to 3 years after the
termination of the policy.
