Exam FX Insurance Practice Exam Questions With Complete Solutions

The causes of loss insured against in an insurance policy are known as correct answer: Perils Before an insurer will pay any loss under a policy, what is usually required from the insured? correct answer: Proof of loss An insured works outside the home. The insured's sister lives with him and cares for his four children. When the insured's home is severely damaged by fire, the family moves into an apartment while repairs are being made. The largest apartment available in the area has two bedrooms, so the insured's sister has to stay at a motel. How much will the HO-3 form pay for these additional living expense? correct answer: All of the expense up to the Coverage D limit All of the following statements concerning coinsurance are true EXCEPT correct answer: The coinsurance formula will also be applied to total losses. What insurance policy provision defines how the policy will respond if there is more than one insurance policy written on the same risk? correct answer: Other insurance What is the purpose of the coinsurance clause found in property insurance policies? correct answer: Encourage the insured to insure the property closer to its full value With respect to the business of insurance, a hazard is correct answer: Any condition or exposure that increases the possibility 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 correct answer: Vacant For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become correct answer: Larger The businessowners policy liability coverage will pay for necessary medical expenses of others incurred within what maximum time period? correct answer: 1 year An insured is driving her auto and strikes a large pothole, causing a flat tire. Which coverage of the insured's personal auto policy will pay for the repair? correct answer: This loss is not covered Which of the following coverages in dwelling and homeowners policies is for indirect losses? correct answer: Loss of use Which of the following types of valuation works best for property whose value does not fluctuate much? correct answer: Agreed value Under the limits of insurance provision found in the Physical Damage Coverage Form in a Commercial Auto policy, how much will an insurer pay to repair or replace a covered auto? correct answer: The lesser of the actual cash value or the cost to repair or replace a covered auto All of the following conditions must exist for injury or damage to be included in the products and completed operations hazard of a commercial general liability policy EXCEPT correct answer: The injury or damage must occur within 90 days after the insured's work is completed.