Property and Casualty Insurance Exam 2026/2027
NEWEST VERIFIED QUESTIONS WITH DETAILED
ANSWERS
• Elements for a contract: -✓✓ 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? -✓✓
Special
• Which method of loss valuation is contrary to the basic concept of indemnity? -✓✓
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? -✓✓ Specific
• The policy provision found in property insurance policies that prevents the insured
from collecting twice for the same loss is called -✓✓ 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? -✓✓ 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 -✓✓ 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? -✓✓ $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? -✓✓ Nothing
• What type of damages may be awarded by the court to create disincentives that
discourage behavior that is deemed highly undesirable by society? -✓✓ Punitive
,• A tornado that destroys property would be an example of which of the following? -✓✓
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? -✓✓ 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? -✓✓ Deposit premium
audit
• All of the following statements concerning coinsurance are true EXCEPT -✓✓ The
coinsurance formula will also be applied to total losses.
• A situation in which a person can only lose or have no change represents -✓✓ Pure
risk
• 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 -✓✓ 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?
-✓✓ Per occurrence
• Which of the following is NOT an element of negligence? -✓✓ Libel
-duty, breach, and unbroken chain are
• Insurable interest in the property covered in a policy must be proven -✓✓ At time of
loss
• 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 considered -✓✓ Vacant
• For the purpose of insurance, risk is defined as -✓✓ The uncertainty or chance of loss
• Which law is the foundation of the statistical prediction of loss upon which rates for
insurance are calculated? -✓✓ 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 -✓✓
Subrogation
• What is a Certificate of Insurance? -✓✓ 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? -✓✓ $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, 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? -✓✓ Material misrepresentation
• All of the following are conditions commonly found in the insurance policy EXCEPT -
✓✓ Insuring agreement
-subrogation, appraisal, cancellation and nonrenewal are all found
• Duties of the insurer found in property policy conditions include all of the following
EXCEPT -✓✓ -Notify the insured in the event of financial difficulty
• All of the following are considered parts of the policy structure EXCEPT -✓✓
Provisions
-conditions, exclusions, and insuring clause are found
• Representations are written or oral statements made by the applicant that are -✓✓
Considered true to the best of the applicant's knowledge
• The part of a policy that clarifies terms in the policy is the -✓✓ Definitions
• In forming an insurance contract, when does acceptance usually occur? -✓✓ When an
insurer's underwriter approves coverage
• In insurance, an offer is usually made when -✓✓ The completed application is
submitted
• Which of the following is NOT the consideration in a policy? -✓✓ The application given
to a prospective insured
NEWEST VERIFIED QUESTIONS WITH DETAILED
ANSWERS
• Elements for a contract: -✓✓ 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? -✓✓
Special
• Which method of loss valuation is contrary to the basic concept of indemnity? -✓✓
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? -✓✓ Specific
• The policy provision found in property insurance policies that prevents the insured
from collecting twice for the same loss is called -✓✓ 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? -✓✓ 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 -✓✓ 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? -✓✓ $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? -✓✓ Nothing
• What type of damages may be awarded by the court to create disincentives that
discourage behavior that is deemed highly undesirable by society? -✓✓ Punitive
,• A tornado that destroys property would be an example of which of the following? -✓✓
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? -✓✓ 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? -✓✓ Deposit premium
audit
• All of the following statements concerning coinsurance are true EXCEPT -✓✓ The
coinsurance formula will also be applied to total losses.
• A situation in which a person can only lose or have no change represents -✓✓ Pure
risk
• 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 -✓✓ 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?
-✓✓ Per occurrence
• Which of the following is NOT an element of negligence? -✓✓ Libel
-duty, breach, and unbroken chain are
• Insurable interest in the property covered in a policy must be proven -✓✓ At time of
loss
• 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 considered -✓✓ Vacant
• For the purpose of insurance, risk is defined as -✓✓ The uncertainty or chance of loss
• Which law is the foundation of the statistical prediction of loss upon which rates for
insurance are calculated? -✓✓ 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 -✓✓
Subrogation
• What is a Certificate of Insurance? -✓✓ 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? -✓✓ $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, 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? -✓✓ Material misrepresentation
• All of the following are conditions commonly found in the insurance policy EXCEPT -
✓✓ Insuring agreement
-subrogation, appraisal, cancellation and nonrenewal are all found
• Duties of the insurer found in property policy conditions include all of the following
EXCEPT -✓✓ -Notify the insured in the event of financial difficulty
• All of the following are considered parts of the policy structure EXCEPT -✓✓
Provisions
-conditions, exclusions, and insuring clause are found
• Representations are written or oral statements made by the applicant that are -✓✓
Considered true to the best of the applicant's knowledge
• The part of a policy that clarifies terms in the policy is the -✓✓ Definitions
• In forming an insurance contract, when does acceptance usually occur? -✓✓ When an
insurer's underwriter approves coverage
• In insurance, an offer is usually made when -✓✓ The completed application is
submitted
• Which of the following is NOT the consideration in a policy? -✓✓ The application given
to a prospective insured
