Property and Casualty Insurance Exam 100% Verified
Questions & Answers
Q: |Latest 2025
Elements for a contract:
Answer:
1) Agreement - offer and acceptance
Q: Consideration
Competent parties
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?
Answer:
Special
Q: Which method of loss valuation is contrary to the basic concept of indemnity?
Answer:
Replacement cost
Q: An insured owns several buildings, each at a different location and insured on a separate policy. What type of
coverage does the insured have?
Answer:
Specific
Q: The policy provision found in property insurance policies that prevents the insured from collecting twice for the same
loss is called
Answer:
Subrogation
Q: 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
Answer:
Unoccupied
Q: 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?
,Answer:
$5,000
Q: 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?
Answer:
Punitive
Q: A tornado that destroys property would be an example of which of the following?
Answer:
A Peril
Q: 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?
Answer:
Market Value
Q: to insure. Which condition is part of the insured's policy? -
Answer:
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 pl
Q: Deposit premium audit
All of the following statements concerning coinsurance are true EXCEPT
Answer:
The coinsurance formula will also be applied to total losses.
Q: A situation in which a person can only lose or have no change represents
Answer:
Pure risk
Q: 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
Answer:
Appraisal
,Q: 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?
Answer:
Per occurrence
Q: Which of the following is NOT an element of negligence?
Answer:
Libel
Q: -duty, breach, and unbroken chain are
Insurable interest in the property covered in a policy must be proven
Answer:
At time of loss
Q: 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
Answer:
Vacant
Q: For the purpose of insurance, risk is defined as
Answer:
The uncertainty or chance of loss
Q: Which law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated?
Answer:
Law of large numbers
Q: 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
Answer:
Subrogation
Q: What is a Certificate of Insurance?
Answer:
A written document showing the types and amounts of insurance that have been issued to the insured
Q: 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?
Answer:
Material misrepresentation
Q: All of the following are conditions commonly found in the insurance policy EXCEPT
Answer:
Insuring agreement
Q: -subrogation, appraisal, cancellation and nonrenewal are all found
Duties of the insurer found in property policy conditions include all of the following EXCEPT
Answer:
-Notify the insured in the event of financial difficulty
Q: All of the following are considered parts of the policy structure EXCEPT
Answer:
Provisions
Q: -conditions, exclusions, and insuring clause are found
Representations are written or oral statements made by the applicant that are
Answer:
Considered true to the best of the applicant's knowledge
Q: The part of a policy that clarifies terms in the policy is the
Answer:
Definitions
Q: In forming an insurance contract, when does acceptance usually occur?
Answer:
When an insurer's underwriter approves coverage
Q: In insurance, an offer is usually made when
Answer:
The completed application is submitted
Q: Which of the following is NOT the consideration in a policy?
Answer:
The application given to a prospective insured
Q: Before an insurer will pay any loss under a policy, what is usually required from the insured?
Questions & Answers
Q: |Latest 2025
Elements for a contract:
Answer:
1) Agreement - offer and acceptance
Q: Consideration
Competent parties
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?
Answer:
Special
Q: Which method of loss valuation is contrary to the basic concept of indemnity?
Answer:
Replacement cost
Q: An insured owns several buildings, each at a different location and insured on a separate policy. What type of
coverage does the insured have?
Answer:
Specific
Q: The policy provision found in property insurance policies that prevents the insured from collecting twice for the same
loss is called
Answer:
Subrogation
Q: 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
Answer:
Unoccupied
Q: 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?
,Answer:
$5,000
Q: 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?
Answer:
Punitive
Q: A tornado that destroys property would be an example of which of the following?
Answer:
A Peril
Q: 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?
Answer:
Market Value
Q: to insure. Which condition is part of the insured's policy? -
Answer:
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 pl
Q: Deposit premium audit
All of the following statements concerning coinsurance are true EXCEPT
Answer:
The coinsurance formula will also be applied to total losses.
Q: A situation in which a person can only lose or have no change represents
Answer:
Pure risk
Q: 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
Answer:
Appraisal
,Q: 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?
Answer:
Per occurrence
Q: Which of the following is NOT an element of negligence?
Answer:
Libel
Q: -duty, breach, and unbroken chain are
Insurable interest in the property covered in a policy must be proven
Answer:
At time of loss
Q: 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
Answer:
Vacant
Q: For the purpose of insurance, risk is defined as
Answer:
The uncertainty or chance of loss
Q: Which law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated?
Answer:
Law of large numbers
Q: 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
Answer:
Subrogation
Q: What is a Certificate of Insurance?
Answer:
A written document showing the types and amounts of insurance that have been issued to the insured
Q: 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?
Answer:
Material misrepresentation
Q: All of the following are conditions commonly found in the insurance policy EXCEPT
Answer:
Insuring agreement
Q: -subrogation, appraisal, cancellation and nonrenewal are all found
Duties of the insurer found in property policy conditions include all of the following EXCEPT
Answer:
-Notify the insured in the event of financial difficulty
Q: All of the following are considered parts of the policy structure EXCEPT
Answer:
Provisions
Q: -conditions, exclusions, and insuring clause are found
Representations are written or oral statements made by the applicant that are
Answer:
Considered true to the best of the applicant's knowledge
Q: The part of a policy that clarifies terms in the policy is the
Answer:
Definitions
Q: In forming an insurance contract, when does acceptance usually occur?
Answer:
When an insurer's underwriter approves coverage
Q: In insurance, an offer is usually made when
Answer:
The completed application is submitted
Q: Which of the following is NOT the consideration in a policy?
Answer:
The application given to a prospective insured
Q: Before an insurer will pay any loss under a policy, what is usually required from the insured?
