LA Property & Casualty EXAMS WITH CORRECT
SOLUTIONS 2026/2027/UPDATED
1. A business setting up a self-insurance program is an example of which method of risk
management? - ANSWER-risk retention
2. A claims-made commercial general liability (CGL) policy that is canceled by the insured
automatically gets a basic extended reporting period (BERP), at no additional period, for
how long after the policy is cancelled? - ANSWER-5 years
3. A company that transports cargo belonging to others for a fee is known as what type of
carrier? - ANSWER-carrier for hire
4. A contract that potentially provides one party considerably more than the other party
may receive from it is called a(n): - ANSWER-aleatory contract
5. A fire in a commercial building forces the owner to store office furniture and files away
from the office. Will the owner's commercial property policy cover this personal
property? - ANSWER-coverage applies for up to 30 days in new location
6. A pipe suddenly bursts in a basement and floods an area where new carpeting was
recently installed. What exclusion, if any, might eliminate coverage?
1. leakage or seepage
2. flood
3. none, because the loss would be covered
4. wear and tear - ANSWER-. none, because the loss would be covered
,7. A state that maintains a fund that pays for workers compensation claims is called what
type of workers compensation insurance market?
8. 1.voluntary private market
9. 2.state residual market plan
10. 3.assigned risk plan
11. 4.monopolistic state fund - ANSWER-.monopolistic state fund
12. Abby lives in Texas, where she is licensed as an insurance producer. She wants to apply
for a nonresident license in Louisiana. Which of the following conditions must she
satisfy?
1. She must move to Louisiana.
2. She must surrender her Texas license.
3. She must be sponsored by a producer licensed in Louisiana.
4. She must show that her Texas license is in good standing. - ANSWER-She must show that
her Texas license is in good standing.
13. Additional Living Expenses - ANSWER-A coverage designed to reimburse the insured for
an increase in living expenses necessitated by loss to the dwelling. This Indirect Loss
must be the result of Direct Loss by a covered Peril.
14. Admitted Insurer - ANSWER-An insurer to which a state insurance department has
granted a license to do business within that state.
15. Adverse Selection - ANSWER-The tendency of persons to buy and maintain insurance
who are more likely to have a claim.
16. Agents or producers have an obligation to act in the best interests of applicants or
insureds. Which of the following is not a duty an agent owes to an applicant or insured?
,1. Accurately state the terms or conditions of a policy.
2. Disclose all pertinent information about a proposed policy.
3. Recommend only policies that suit the customer's needs.
4. Retain legal counsel to advise the insured or applicant who buys complex coverage. -
ANSWER-Retain legal counsel to advise the insured or applicant who buys complex
coverage.
17. Aleatory Contract - ANSWER-A contract that potentially provides one party considerably
more than the other party may receive from it is called a
18. All of the following are commercial property conditions in a commercial property
insurance policy EXCEPT:
1. arbitration
2. concealment, misrepresentation, and fraud
3. no benefit to bailee
4. other insurance - ANSWER-arbitration
19. All of the following are components of an insurance rate EXCEPT:
1. loss costs
2. expenses
3. premium
4. profits allowance - ANSWER-. premium
20. All of the following are described in the cancellation provision in property and casualty
insurance policies EXCEPT:
1. why the policy may be canceled
2. who may cancel the policy
3. when the policy may be canceled
4. where the policy may be canceled - ANSWER-where the policy may be canceled
, 21. All of the following are eligible for coverage under an equipment breakdown policy
EXCEPT:
1. a business's plumbing system
2. a business's heating system
3. a business's computer equipment
4. a business's refrigeration system - ANSWER-a business's plumbing system
22. All of the following are examples of a peril EXCEPT:
1. fire that destroys or damages property
2. flood that destroys or damages personal property stored in a basement
3. blocked exit in a burning building delaying entry to firefighters
4. collision of two automobiles - ANSWER-. blocked exit in a burning building delaying entry
to firefighters
23. All of the following are standard provisions in all property or casualty insurance policies
EXCEPT:
24. endorsement
25. insuring agreement
26. definitions
27. exclusions - ANSWER-endorsement
28. All of the following parties can be protected by a property or casualty insurance policy
without the need for a special endorsement EXCEPT:
1. secured creditors
2. bailees
3. mortgage holders
SOLUTIONS 2026/2027/UPDATED
1. A business setting up a self-insurance program is an example of which method of risk
management? - ANSWER-risk retention
2. A claims-made commercial general liability (CGL) policy that is canceled by the insured
automatically gets a basic extended reporting period (BERP), at no additional period, for
how long after the policy is cancelled? - ANSWER-5 years
3. A company that transports cargo belonging to others for a fee is known as what type of
carrier? - ANSWER-carrier for hire
4. A contract that potentially provides one party considerably more than the other party
may receive from it is called a(n): - ANSWER-aleatory contract
5. A fire in a commercial building forces the owner to store office furniture and files away
from the office. Will the owner's commercial property policy cover this personal
property? - ANSWER-coverage applies for up to 30 days in new location
6. A pipe suddenly bursts in a basement and floods an area where new carpeting was
recently installed. What exclusion, if any, might eliminate coverage?
1. leakage or seepage
2. flood
3. none, because the loss would be covered
4. wear and tear - ANSWER-. none, because the loss would be covered
,7. A state that maintains a fund that pays for workers compensation claims is called what
type of workers compensation insurance market?
8. 1.voluntary private market
9. 2.state residual market plan
10. 3.assigned risk plan
11. 4.monopolistic state fund - ANSWER-.monopolistic state fund
12. Abby lives in Texas, where she is licensed as an insurance producer. She wants to apply
for a nonresident license in Louisiana. Which of the following conditions must she
satisfy?
1. She must move to Louisiana.
2. She must surrender her Texas license.
3. She must be sponsored by a producer licensed in Louisiana.
4. She must show that her Texas license is in good standing. - ANSWER-She must show that
her Texas license is in good standing.
13. Additional Living Expenses - ANSWER-A coverage designed to reimburse the insured for
an increase in living expenses necessitated by loss to the dwelling. This Indirect Loss
must be the result of Direct Loss by a covered Peril.
14. Admitted Insurer - ANSWER-An insurer to which a state insurance department has
granted a license to do business within that state.
15. Adverse Selection - ANSWER-The tendency of persons to buy and maintain insurance
who are more likely to have a claim.
16. Agents or producers have an obligation to act in the best interests of applicants or
insureds. Which of the following is not a duty an agent owes to an applicant or insured?
,1. Accurately state the terms or conditions of a policy.
2. Disclose all pertinent information about a proposed policy.
3. Recommend only policies that suit the customer's needs.
4. Retain legal counsel to advise the insured or applicant who buys complex coverage. -
ANSWER-Retain legal counsel to advise the insured or applicant who buys complex
coverage.
17. Aleatory Contract - ANSWER-A contract that potentially provides one party considerably
more than the other party may receive from it is called a
18. All of the following are commercial property conditions in a commercial property
insurance policy EXCEPT:
1. arbitration
2. concealment, misrepresentation, and fraud
3. no benefit to bailee
4. other insurance - ANSWER-arbitration
19. All of the following are components of an insurance rate EXCEPT:
1. loss costs
2. expenses
3. premium
4. profits allowance - ANSWER-. premium
20. All of the following are described in the cancellation provision in property and casualty
insurance policies EXCEPT:
1. why the policy may be canceled
2. who may cancel the policy
3. when the policy may be canceled
4. where the policy may be canceled - ANSWER-where the policy may be canceled
, 21. All of the following are eligible for coverage under an equipment breakdown policy
EXCEPT:
1. a business's plumbing system
2. a business's heating system
3. a business's computer equipment
4. a business's refrigeration system - ANSWER-a business's plumbing system
22. All of the following are examples of a peril EXCEPT:
1. fire that destroys or damages property
2. flood that destroys or damages personal property stored in a basement
3. blocked exit in a burning building delaying entry to firefighters
4. collision of two automobiles - ANSWER-. blocked exit in a burning building delaying entry
to firefighters
23. All of the following are standard provisions in all property or casualty insurance policies
EXCEPT:
24. endorsement
25. insuring agreement
26. definitions
27. exclusions - ANSWER-endorsement
28. All of the following parties can be protected by a property or casualty insurance policy
without the need for a special endorsement EXCEPT:
1. secured creditors
2. bailees
3. mortgage holders
