COMPREHENSIVE EXAM REVIEW 2026
QUESTIONS AND CORRECT ANSWERS
COMPLETE FINAL EXAM STUDY GUIDE
In the appraisal process of an insurance policy, when the insurance
company and insured cannot agree upon the amount of the loss, and a third
person is selected to help in the appraisal, this third person is called an:
A
Adjuster
B
Umpire
C
Agent
D
Claim representative - CORRECT ANSWER-Both the insurance company
and insured's representatives (usually appraisers) provided for in the
appraisal provision will agree upon the third person to serve as an Umpire.
If the two appraisers fail to agree, they will submit their differences to the
Umpire, and an agreement of any two of the three will set the amount of the
loss.--Umpire
Which of the following best defines short rate cancellation?
A
The insured will receive 75% of the unearned premium
B
,The premium is fully earned by the insurance company
C
The insured will receive less than the full amount of the unearned premium
D
The insured will receive 50% of the unearned premium - CORRECT
ANSWER-The insured will receive less than the full amount of the
unearned premium
The provision that establishes the method by which coverage will be
applied if other insurance applies to the loss, is sometimes called:
A
The Subrogation provision
B
The Claim Settlement provision
C
The Limit of Liability provision
D
The pro rata liability provision - CORRECT ANSWER-This provision is
found in the policy in the Other Insurance condition. It is sometimes
known as the pro rata liability provision because it provides for claim
settlement to be proportioned to the amount of other insurance.--The pro
rata liability provision
Under classifications of construction, material having a fire-resistance
rating between one and two hours for walls, floors and roofs, is classified
as:
,A
Modified fire-resistive
B
Non-Combustible
C
Fire Resistive
D
Jointed Masonry - CORRECT ANSWER-Modified fire-resistive
When a property is written with a replacement cost policy this means that
losses will be paid:
A
For replacement with less costly property that is functionally equivalent
B
For full replacement cost, without any deduction for depreciation
C
For market value of the damaged property
D
For an amount previously agreed upon by the insured and insurer -
CORRECT ANSWER-For many years, damaged property was paid at its
depreciated value (Principal of Indemnity). In recent years, insurance
forms have been developed that pay replacement cost for many classes of
property (new for old).--For full replacement cost, without any deduction
for depreciation
Which of the following is an example of Special Damages?
, A
It is compensation to an injured party for actual medical expenses and loss
of earnings
B
Special Damages are the damages of pain, suffering, and disfigurement
C
Special Damages are the damages assessed by the court as a penalty for
gross negligence
D
Compensation to a husband or wife for the loss of companionship of a
spouse - CORRECT ANSWER-It is compensation to an injured party for
actual medical expenses and loss of earnings
An example of Vicarious Liability might be:
A
Liability of a negligent party or parties, whose identity cannot be
determined
B
The liability of a group of people, acting in concert
C
Liability of members of the clergy
D
The indirect or imputed liability for the acts of another - CORRECT
ANSWER-The liability assigned to one party for the conduct of another,
based solely on a relationship between the two. Examples include
employer/employee relationships and parent/child relationships. This is
QUESTIONS AND CORRECT ANSWERS
COMPLETE FINAL EXAM STUDY GUIDE
In the appraisal process of an insurance policy, when the insurance
company and insured cannot agree upon the amount of the loss, and a third
person is selected to help in the appraisal, this third person is called an:
A
Adjuster
B
Umpire
C
Agent
D
Claim representative - CORRECT ANSWER-Both the insurance company
and insured's representatives (usually appraisers) provided for in the
appraisal provision will agree upon the third person to serve as an Umpire.
If the two appraisers fail to agree, they will submit their differences to the
Umpire, and an agreement of any two of the three will set the amount of the
loss.--Umpire
Which of the following best defines short rate cancellation?
A
The insured will receive 75% of the unearned premium
B
,The premium is fully earned by the insurance company
C
The insured will receive less than the full amount of the unearned premium
D
The insured will receive 50% of the unearned premium - CORRECT
ANSWER-The insured will receive less than the full amount of the
unearned premium
The provision that establishes the method by which coverage will be
applied if other insurance applies to the loss, is sometimes called:
A
The Subrogation provision
B
The Claim Settlement provision
C
The Limit of Liability provision
D
The pro rata liability provision - CORRECT ANSWER-This provision is
found in the policy in the Other Insurance condition. It is sometimes
known as the pro rata liability provision because it provides for claim
settlement to be proportioned to the amount of other insurance.--The pro
rata liability provision
Under classifications of construction, material having a fire-resistance
rating between one and two hours for walls, floors and roofs, is classified
as:
,A
Modified fire-resistive
B
Non-Combustible
C
Fire Resistive
D
Jointed Masonry - CORRECT ANSWER-Modified fire-resistive
When a property is written with a replacement cost policy this means that
losses will be paid:
A
For replacement with less costly property that is functionally equivalent
B
For full replacement cost, without any deduction for depreciation
C
For market value of the damaged property
D
For an amount previously agreed upon by the insured and insurer -
CORRECT ANSWER-For many years, damaged property was paid at its
depreciated value (Principal of Indemnity). In recent years, insurance
forms have been developed that pay replacement cost for many classes of
property (new for old).--For full replacement cost, without any deduction
for depreciation
Which of the following is an example of Special Damages?
, A
It is compensation to an injured party for actual medical expenses and loss
of earnings
B
Special Damages are the damages of pain, suffering, and disfigurement
C
Special Damages are the damages assessed by the court as a penalty for
gross negligence
D
Compensation to a husband or wife for the loss of companionship of a
spouse - CORRECT ANSWER-It is compensation to an injured party for
actual medical expenses and loss of earnings
An example of Vicarious Liability might be:
A
Liability of a negligent party or parties, whose identity cannot be
determined
B
The liability of a group of people, acting in concert
C
Liability of members of the clergy
D
The indirect or imputed liability for the acts of another - CORRECT
ANSWER-The liability assigned to one party for the conduct of another,
based solely on a relationship between the two. Examples include
employer/employee relationships and parent/child relationships. This is
