Property and Casualty Insurance
Latest Exam 2024
. The endorsement that provides coverage for losses arising from sudden collapse of earth arising
from underground limestone created by the action of water on rock formations is a/an -
ANSWER Sinkhole collapse endorsement
\In addition to the common policy conditions, all of the following conditions apply to liability
coverage EXCEPT - ANSWER Employers liability
\Under the HO-4 and HO-6 homeowners policy forms, property is insured against -
ANSWER Broad form perils
(they provide the same level of coverage as Coverage C in the HO-2 and HO-3)
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? - ANSWER $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.
A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the
customer purchases a life insurance policy from the bank in the amount of the loan. This is an
example of - ANSWER Coercion
A basic dwelling policy automatically provides coverage against fire, lightning, and -
ANSWER Internal explosion
A BOP (businessowners policy) is most similar to - ANSWER Homeowners
=because both require that the policy provide property insurance and liability insurance in a single
policy
A builder's risk form is most often written as which of the following? - ANSWER Completed
value form
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
A business income coverage form would cover all of the following situations EXCEPT -
ANSWER A union strike of construction workers causes the repair of the insured's building
to be delayed for a period of time
A business income coverage form would cover all of the following situations EXCEPT... -
ANSWER A union strike of construction workers causes the repair of the insure's building to
be delayed for a period of time
A business using its own trucks to move its own cargo would insure the cargo using -
ANSWER Motor truck cargo - owners form
A businessowners policy is - ANSWER A self-contained prepackage policy
,Property and Casualty Insurance
Latest Exam 2024
A commercial package policy (CPP) allows the insured to select the coverage needed and customize
the policy to meet the needs of the insured's business. In a CPP, the business owner may select from
all of the following types of coverage EXCEPT - ANSWER Workers compensation coverage
(boiler and machinery coverage, general liability coverage, and crime coverage are all covered)
A commercial property special form covers property in transit up to - ANSWER $5,000
A company has a businessowners policy on a building with an estimated replacement cost of
$300,000. The company carries $150,000 of insurance. If a loss occurs, how much will the insured
company b - ANSWER The coinsurance formula would apply
A contract for the transport of goods between the shipper and the carrier is called -
ANSWER A bill of lading
A covered watercraft was damaged in an accident. The actual cash value of the damaged property
was assessed at $10,000. The cost of repairs for the watercraft was assessed at $5,000. The insured's
watercraft policy is written with a $25,000 limit. How much will the insurer pay for coverage to
damage to the watercraft? - ANSWER $5,000
A customer was injured in a supermarket parking lot when a grocery cart collided with the
customer's leg. Coverage for this claim would be provided under - ANSWER Premises and
operations
A house insured under a dwelling policy has been vacant for 70 consecutive days. Which of the
following statements is true? - ANSWER Loss by vandalism and malicious mischief is
excluded
A liability policy that provides coverage for a claim for injury or damage if the claim is first reported
or filed against the insured during the policy period is called - ANSWER Claims made form
A passenger in a friend's car is injured while getting into the car. Which of the following statements
would apply if both the passenger and the driver had medical payments coverage under a personal
auto policy? - ANSWER The driver's policy would be primary
A person who is not named as an insured on the declarations page of a policy but is protected by the
policy is known as the - ANSWER Additional insured
a plasterer has finished a job. what type of liability coverage would protect him if the plaster falls and
hurts someone because he did not do the job correctly. - ANSWER Completed operations
A policy condition that states if a policy is broadened with no additional premium, then the
expanded coverage will be automatically applied to all policies of the same type is known as -
ANSWER Liberalization clause
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
A policy that insures all property at multiple locations for a single amount is referred to as -
ANSWER Blanket
, Property and Casualty Insurance
Latest Exam 2024
A policyholder has an equipment breakdown policy with a $200,000 limit. If a boiler explosion causes
$100,000 damage to the boiler itself, $50,000 damage to the insured's building, and $30,000 of
expediting expenses, how much will the insured collect under the policy? -
ANSWER $175,000
(the limit of the equipment breakdown policy applies to property of the insured, property of others,
and expediting expenses in any combination as long as expediting expense does not exceed $25,000)
A professional liability policy will provide coverage for loss in all of the following cases, except, when
the insured doctor was shown to be - ANSWER Criminally negligent
A situation in which a person can only lose or have no change represents - ANSWER Pure
risk
A specific coverage part is listed on the commercial package policy declarations page, but there is no
premium shown. What does that mean? - ANSWER There is no coverage
(no premium=no coverage)
A sworn written statement that must be furnished by the insured to the insurer before any loss
under a policy can be paid is called - ANSWER Proof of loss
A tornado that destroys property would be an example of which of the following? -
ANSWER A Peril
A unique feature in a bailee form is that it covers - ANSWER Customer's property whether
or not the insured has been negligent
ABC Trucking hauls products for Acme, Inc. as a contract carrier. On one shipment, the driver stopped
at a truck stop for lunch. Leaving the truck in the parking lot, he made certain that the truck was
locked before leaving it. Upon returning to the truck, he discovered that someone had broken into
the truck and stolen the cargo. Is ABC legally liable for this loss? - ANSWER No, the driver
had taken reasonable measures to protect the property by locking the truck
According to businessowners policy Section I, which of the following is NOT a condition to be met for
the terms of the policy to apply to mortgageholders? - ANSWER The mortgageholder must
petition the state department of insurance for named status
According to the appraisal condition of a homeowners policy, what procedure may be followed if the
insurer and insured do not agree as to the size of a loss? - ANSWER Each side selects its
own appraiser, and the appraisers select an umpire to settle any differences between the appraisers
According to the common policy conditions for a commercial package policy, if the insured dies, the
policy rights and duties - ANSWER Automatically transfer to a legal representative
According to the standard workers compensation and employer liability policy form, a state should
be listed in Part Three - other states' insurance of the workers compensation and employers liability
policy when - ANSWER The insured expects to extend operations to that state
Latest Exam 2024
. The endorsement that provides coverage for losses arising from sudden collapse of earth arising
from underground limestone created by the action of water on rock formations is a/an -
ANSWER Sinkhole collapse endorsement
\In addition to the common policy conditions, all of the following conditions apply to liability
coverage EXCEPT - ANSWER Employers liability
\Under the HO-4 and HO-6 homeowners policy forms, property is insured against -
ANSWER Broad form perils
(they provide the same level of coverage as Coverage C in the HO-2 and HO-3)
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? - ANSWER $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.
A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the
customer purchases a life insurance policy from the bank in the amount of the loan. This is an
example of - ANSWER Coercion
A basic dwelling policy automatically provides coverage against fire, lightning, and -
ANSWER Internal explosion
A BOP (businessowners policy) is most similar to - ANSWER Homeowners
=because both require that the policy provide property insurance and liability insurance in a single
policy
A builder's risk form is most often written as which of the following? - ANSWER Completed
value form
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
A business income coverage form would cover all of the following situations EXCEPT -
ANSWER A union strike of construction workers causes the repair of the insured's building
to be delayed for a period of time
A business income coverage form would cover all of the following situations EXCEPT... -
ANSWER A union strike of construction workers causes the repair of the insure's building to
be delayed for a period of time
A business using its own trucks to move its own cargo would insure the cargo using -
ANSWER Motor truck cargo - owners form
A businessowners policy is - ANSWER A self-contained prepackage policy
,Property and Casualty Insurance
Latest Exam 2024
A commercial package policy (CPP) allows the insured to select the coverage needed and customize
the policy to meet the needs of the insured's business. In a CPP, the business owner may select from
all of the following types of coverage EXCEPT - ANSWER Workers compensation coverage
(boiler and machinery coverage, general liability coverage, and crime coverage are all covered)
A commercial property special form covers property in transit up to - ANSWER $5,000
A company has a businessowners policy on a building with an estimated replacement cost of
$300,000. The company carries $150,000 of insurance. If a loss occurs, how much will the insured
company b - ANSWER The coinsurance formula would apply
A contract for the transport of goods between the shipper and the carrier is called -
ANSWER A bill of lading
A covered watercraft was damaged in an accident. The actual cash value of the damaged property
was assessed at $10,000. The cost of repairs for the watercraft was assessed at $5,000. The insured's
watercraft policy is written with a $25,000 limit. How much will the insurer pay for coverage to
damage to the watercraft? - ANSWER $5,000
A customer was injured in a supermarket parking lot when a grocery cart collided with the
customer's leg. Coverage for this claim would be provided under - ANSWER Premises and
operations
A house insured under a dwelling policy has been vacant for 70 consecutive days. Which of the
following statements is true? - ANSWER Loss by vandalism and malicious mischief is
excluded
A liability policy that provides coverage for a claim for injury or damage if the claim is first reported
or filed against the insured during the policy period is called - ANSWER Claims made form
A passenger in a friend's car is injured while getting into the car. Which of the following statements
would apply if both the passenger and the driver had medical payments coverage under a personal
auto policy? - ANSWER The driver's policy would be primary
A person who is not named as an insured on the declarations page of a policy but is protected by the
policy is known as the - ANSWER Additional insured
a plasterer has finished a job. what type of liability coverage would protect him if the plaster falls and
hurts someone because he did not do the job correctly. - ANSWER Completed operations
A policy condition that states if a policy is broadened with no additional premium, then the
expanded coverage will be automatically applied to all policies of the same type is known as -
ANSWER Liberalization clause
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
A policy that insures all property at multiple locations for a single amount is referred to as -
ANSWER Blanket
, Property and Casualty Insurance
Latest Exam 2024
A policyholder has an equipment breakdown policy with a $200,000 limit. If a boiler explosion causes
$100,000 damage to the boiler itself, $50,000 damage to the insured's building, and $30,000 of
expediting expenses, how much will the insured collect under the policy? -
ANSWER $175,000
(the limit of the equipment breakdown policy applies to property of the insured, property of others,
and expediting expenses in any combination as long as expediting expense does not exceed $25,000)
A professional liability policy will provide coverage for loss in all of the following cases, except, when
the insured doctor was shown to be - ANSWER Criminally negligent
A situation in which a person can only lose or have no change represents - ANSWER Pure
risk
A specific coverage part is listed on the commercial package policy declarations page, but there is no
premium shown. What does that mean? - ANSWER There is no coverage
(no premium=no coverage)
A sworn written statement that must be furnished by the insured to the insurer before any loss
under a policy can be paid is called - ANSWER Proof of loss
A tornado that destroys property would be an example of which of the following? -
ANSWER A Peril
A unique feature in a bailee form is that it covers - ANSWER Customer's property whether
or not the insured has been negligent
ABC Trucking hauls products for Acme, Inc. as a contract carrier. On one shipment, the driver stopped
at a truck stop for lunch. Leaving the truck in the parking lot, he made certain that the truck was
locked before leaving it. Upon returning to the truck, he discovered that someone had broken into
the truck and stolen the cargo. Is ABC legally liable for this loss? - ANSWER No, the driver
had taken reasonable measures to protect the property by locking the truck
According to businessowners policy Section I, which of the following is NOT a condition to be met for
the terms of the policy to apply to mortgageholders? - ANSWER The mortgageholder must
petition the state department of insurance for named status
According to the appraisal condition of a homeowners policy, what procedure may be followed if the
insurer and insured do not agree as to the size of a loss? - ANSWER Each side selects its
own appraiser, and the appraisers select an umpire to settle any differences between the appraisers
According to the common policy conditions for a commercial package policy, if the insured dies, the
policy rights and duties - ANSWER Automatically transfer to a legal representative
According to the standard workers compensation and employer liability policy form, a state should
be listed in Part Three - other states' insurance of the workers compensation and employers liability
policy when - ANSWER The insured expects to extend operations to that state
