AD BANKER PROPERTY & CASUALTY QUESTIONS
AND ANSWERS 2024
Manufacturers, wholesalers, or retailers all have potential legal liability associated with a
product that may arise from each of the following, except:
A - Breach of warranty
B - Expected or intended injury
C - Strict liability
D - Negligence - Answers - B - Expected or intended injury
Legal liability to those associated with the manufacturing, wholesaling, or retailing of a
product may arise from negligence, breach of warranty, or strict liability. Liability arising
out of expected or intended injury is not covered.
When the insured and a third party cannot agree on legal liability, the final decision is
made by:
A - The appraisal method
B - The insurer
C - The court
D - The state Insurance Commissioner - Answers - C - The court
The following are all correct, except:
A - A moral hazard includes dishonesty
B - Flammable material near a furnace would be considered a physical hazard
C - A physical hazard includes an attitude of indifference to loss
D - A physical hazard includes location - Answers - C - A physical hazard includes an
attitude of indifference to loss.
A physical hazard is a physical condition that increases the likelihood of loss. A morale
hazard is an attitude of indifference to loss.
A cause of loss, such as the theft of a car, is which of the following?
A - Occurrence
B - A peril
C - Hazard
D - Accident - Answers - B - A peril
Property insurance insures against perils. A peril is a potential cause of loss to property
such as fire, windstorm, hail, flood, etc.
The predictability of loss improves when the number of similar units increase because of
which principle?
,A - The Law of Averages
B - Accumulated Experience
C - The Golden Rule of Underwriting
D - The Law of Large Numbers - Answers - D - The Law of Large Numbers
The Law of Large Numbers is an underlying principle of insurance, stating that the
greater the number of units of exposure, the greater the accuracy in predicting a loss.
An insurer authorized to transact insurance in a particular state by that state's insurance
department is known as:
A - A resident insurer
B - A domestic insurer
C - A non-admitted insurer
D - An admitted insurer - Answers - D - An admitted insurer
An admitted insurer is an insurer authorized to transact insurance in a particular state by
that state's department or division of insurance. An insurer who has a certificate of
authority to transact business is an admitted insurer.
California's Shine the Light Act establishes disclosure requirements for:
A - Categories of personal information shared with third parties and used for direct
marketing purposes
B - Nonpublic personal information obtained by financial institutions
C - The use of consumer credit reports
D - Personal information collected by businesses - Answers - A - Categories of personal
information shared with third parties and used for direct marketing purposes
California's Shine the Light Act of 2003 sets disclosure requirements for the sharing of
personal information to third parties for direct marketing purposes and gives consumers
an opportunity to opt out of those sharing practices. The California Consumer Privacy
Act of 2018 gives consumers the right to know about the personal information
businesses collect about them and how that information is used and shared.
When disputed by the parties, a court of law (or arbitrator) makes the final determination
of liability.
The Insuring Agreement of a policy describes:
A - Perils that are not covered
B - Perils that are covered
C - Transfer of the rights of recovery
D - The duties of the insured in the event of a loss - Answers - B - Perils that are
covered
,The Insuring Agreement includes the perils insured against. The duties of the insured
and the transfer of recovery rights (subrogation) would be included in the policy's
Conditions. Excluded perils would be listed in the Exclusions section.
All of the following are characteristics of a mutual insurance company, except:
A - They provide insurance to members
B - A policyholder votes for the board of directors
C - Stockholders have ownership
D - Profits may be returned as policy dividends - Answers - C - Stockholders have
ownership.
A mutual insurance company is owned by its policyholders, and does not have
stockholders. Some mutual insurance companies require policyowners to be members
of an underlying organization.
Gasoline-stained clothes stored by a furnace are considered a ___________.
A - Severity
B - Hazard
C - Adverse selection
D - Risk - Answers - B - Hazard
Gasoline stained clothes stored by the furnace increase a chance of loss and would be
considered a physical hazard.
The California Financial Information Privacy Act provides for all of the following as
compared to the GLBA, except:
A - An Opt-Out standard concerning information sharing with unrelated third parties
B - Penalties for identity theft perpetrators are doubled
C - Consumers have the final say in the sharing of their information
D - Financial profiling of consumers is greatly restricted - Answers - A - An Opt-Out
standard concerning information sharing with unrelated third parties
The California Financial Information Privacy Act provides that the Opt-Out provisions of
GLBA were changed to an Opt-In standard concerning information sharing with
unrelated third parties.
A person can purchase an insurance policy to cover losses from all the following,
except:
A - An operation of drug smuggling
B - Loss of property through burglary or theft
C - Sudden and direct damage to property by natural causes
, D - Loss of assets through tort actions brought against the person - Answers - A - An
operation of drug smuggling
A contract, including the insurance contract, is void if it is based on an illegal purpose or
contrary to public policy. It will not be recognized by a court or enforceable by either
party.
When insurance cannot be placed with a licensed insurer, it may be placed with a non-
admitted insurer by a:
A - General use producer
B - General surplus producer
C - Surplus lines broker
D - General consultant
Only a surplus lines broker may place business directly with a non-admitted insurer. -
Answers - C - Surplus lines broker
Only a surplus lines broker may place business directly with a non-admitted insurer.
The Insuring Agreement in an insurance policy is best described as:
A - A description of the property being insured
B - The Additional Coverages provided by the policy
C - The name and address of the insured and the name of the insurer
D - It determines the coverage that is provided - Answers - D - It determines the
coverage that is provided
The Insuring Agreement is the company's commitment of protection to the insured.
Which term describes the equal sharing of a loss by two or more insurers until the loss
is paid, or until each insurer has exhausted its limits of insurance, whichever comes
first?
A - Contribution by equal shares
B - Pro rata liability
C - Excess insurance
D - Primary insurance - Answers - A - Contribution by equal shares
Under contribution by equal shares, each insurer pays an equal amount to the loss
settlement until the loss is paid, or until each insurer has exhausted its limits of
insurance, whichever comes first.
Which of the following best describes the Concealment or Fraud Condition in a property
insurance policy?
AND ANSWERS 2024
Manufacturers, wholesalers, or retailers all have potential legal liability associated with a
product that may arise from each of the following, except:
A - Breach of warranty
B - Expected or intended injury
C - Strict liability
D - Negligence - Answers - B - Expected or intended injury
Legal liability to those associated with the manufacturing, wholesaling, or retailing of a
product may arise from negligence, breach of warranty, or strict liability. Liability arising
out of expected or intended injury is not covered.
When the insured and a third party cannot agree on legal liability, the final decision is
made by:
A - The appraisal method
B - The insurer
C - The court
D - The state Insurance Commissioner - Answers - C - The court
The following are all correct, except:
A - A moral hazard includes dishonesty
B - Flammable material near a furnace would be considered a physical hazard
C - A physical hazard includes an attitude of indifference to loss
D - A physical hazard includes location - Answers - C - A physical hazard includes an
attitude of indifference to loss.
A physical hazard is a physical condition that increases the likelihood of loss. A morale
hazard is an attitude of indifference to loss.
A cause of loss, such as the theft of a car, is which of the following?
A - Occurrence
B - A peril
C - Hazard
D - Accident - Answers - B - A peril
Property insurance insures against perils. A peril is a potential cause of loss to property
such as fire, windstorm, hail, flood, etc.
The predictability of loss improves when the number of similar units increase because of
which principle?
,A - The Law of Averages
B - Accumulated Experience
C - The Golden Rule of Underwriting
D - The Law of Large Numbers - Answers - D - The Law of Large Numbers
The Law of Large Numbers is an underlying principle of insurance, stating that the
greater the number of units of exposure, the greater the accuracy in predicting a loss.
An insurer authorized to transact insurance in a particular state by that state's insurance
department is known as:
A - A resident insurer
B - A domestic insurer
C - A non-admitted insurer
D - An admitted insurer - Answers - D - An admitted insurer
An admitted insurer is an insurer authorized to transact insurance in a particular state by
that state's department or division of insurance. An insurer who has a certificate of
authority to transact business is an admitted insurer.
California's Shine the Light Act establishes disclosure requirements for:
A - Categories of personal information shared with third parties and used for direct
marketing purposes
B - Nonpublic personal information obtained by financial institutions
C - The use of consumer credit reports
D - Personal information collected by businesses - Answers - A - Categories of personal
information shared with third parties and used for direct marketing purposes
California's Shine the Light Act of 2003 sets disclosure requirements for the sharing of
personal information to third parties for direct marketing purposes and gives consumers
an opportunity to opt out of those sharing practices. The California Consumer Privacy
Act of 2018 gives consumers the right to know about the personal information
businesses collect about them and how that information is used and shared.
When disputed by the parties, a court of law (or arbitrator) makes the final determination
of liability.
The Insuring Agreement of a policy describes:
A - Perils that are not covered
B - Perils that are covered
C - Transfer of the rights of recovery
D - The duties of the insured in the event of a loss - Answers - B - Perils that are
covered
,The Insuring Agreement includes the perils insured against. The duties of the insured
and the transfer of recovery rights (subrogation) would be included in the policy's
Conditions. Excluded perils would be listed in the Exclusions section.
All of the following are characteristics of a mutual insurance company, except:
A - They provide insurance to members
B - A policyholder votes for the board of directors
C - Stockholders have ownership
D - Profits may be returned as policy dividends - Answers - C - Stockholders have
ownership.
A mutual insurance company is owned by its policyholders, and does not have
stockholders. Some mutual insurance companies require policyowners to be members
of an underlying organization.
Gasoline-stained clothes stored by a furnace are considered a ___________.
A - Severity
B - Hazard
C - Adverse selection
D - Risk - Answers - B - Hazard
Gasoline stained clothes stored by the furnace increase a chance of loss and would be
considered a physical hazard.
The California Financial Information Privacy Act provides for all of the following as
compared to the GLBA, except:
A - An Opt-Out standard concerning information sharing with unrelated third parties
B - Penalties for identity theft perpetrators are doubled
C - Consumers have the final say in the sharing of their information
D - Financial profiling of consumers is greatly restricted - Answers - A - An Opt-Out
standard concerning information sharing with unrelated third parties
The California Financial Information Privacy Act provides that the Opt-Out provisions of
GLBA were changed to an Opt-In standard concerning information sharing with
unrelated third parties.
A person can purchase an insurance policy to cover losses from all the following,
except:
A - An operation of drug smuggling
B - Loss of property through burglary or theft
C - Sudden and direct damage to property by natural causes
, D - Loss of assets through tort actions brought against the person - Answers - A - An
operation of drug smuggling
A contract, including the insurance contract, is void if it is based on an illegal purpose or
contrary to public policy. It will not be recognized by a court or enforceable by either
party.
When insurance cannot be placed with a licensed insurer, it may be placed with a non-
admitted insurer by a:
A - General use producer
B - General surplus producer
C - Surplus lines broker
D - General consultant
Only a surplus lines broker may place business directly with a non-admitted insurer. -
Answers - C - Surplus lines broker
Only a surplus lines broker may place business directly with a non-admitted insurer.
The Insuring Agreement in an insurance policy is best described as:
A - A description of the property being insured
B - The Additional Coverages provided by the policy
C - The name and address of the insured and the name of the insurer
D - It determines the coverage that is provided - Answers - D - It determines the
coverage that is provided
The Insuring Agreement is the company's commitment of protection to the insured.
Which term describes the equal sharing of a loss by two or more insurers until the loss
is paid, or until each insurer has exhausted its limits of insurance, whichever comes
first?
A - Contribution by equal shares
B - Pro rata liability
C - Excess insurance
D - Primary insurance - Answers - A - Contribution by equal shares
Under contribution by equal shares, each insurer pays an equal amount to the loss
settlement until the loss is paid, or until each insurer has exhausted its limits of
insurance, whichever comes first.
Which of the following best describes the Concealment or Fraud Condition in a property
insurance policy?
