Pearson VUE: Property Insurance Practice Exam Questions and Answers (Graded A+)

S is purchasing a Commercial Property policy to cover a commercial building with a replacement cost of $100,000. The policy includes an 80 percent Coinsurance clause. To avoid a coinsurance penalty in the event of a partial loss, S should purchase a policy with minimum limits of AT LEAST which of the following amounts? A. $100,000 B. $90,000 C. $80,000 D. $20,000 - ANSWER-C The MAXIMUM amount a policy will pay in the event of a loss is called the: A. coinsurance amount B. deductible C. limit of liability D. pro rata return - ANSWER-C The National Flood Insurance Program provides coverage for losses caused by all of the following occurrences EXCEPT: A. mudslides B. runoff from heavy rain C. overflow of tidal waters D. water-main breakage - ANSWER-D Special Form or Open Perils coverage: A. Provides coverage against the named perils B. Provides coverage against scheduled risks C. Is limited by the named exclusions D. Includes no exclusions - ANSWER-C Which of the following businesses would be eligible for a Businessowners policy? A. Auto body shop B. Theater C. Branch bank D. Barber shop - ANSWER-D During a tornado, a barn is destroyed when a section of its wall is blown down, knocking over a lantern, which sets the barn on fire. The proximate cause of loss is the: