Louisiana P&C Exam questions with
complete solutions rated A+
Aleatory Contract - correct answer ✔✔the consideration that is being exchanged is unequal or
unrelated to the consideration given by the other party
Basic Form - correct answer ✔✔named peril coverage, the least coverage available. In dwelling
policies it includes: fire, lightning, removal, and internal explosion
Broad Form - correct answer ✔✔named peril coverage, covering more named perils than the
basic form. In dwelling coverage it covers all perils under basic including EC and V&MM plus:
damage by burglars (not theft); weight of ice, snow or sleet; accidental discharge or overflow of
water or steam; freezing of plumbing, heating, a/c, or sprinkler systems; falling objects;
artificially generated electrical current; and tearing apart, cracking, burning, or bulging of a
steam or water system.
Builder's Risk - correct answer ✔✔used to insure buildings under construction
Business Income - correct answer ✔✔(time element form) covers loss of income when a
business has to suspend because of a direct loss. Business income is covered over the time the
operations are suspended while the building is being repaired or replaced. It is calculated as the
net income that would've been earned if the loss occurred and the cost to continue operations
including payroll
Cancellation - correct answer ✔✔termination of a policy by either the insurer or insured before
the expiration date
Cargo - correct answer ✔✔What the ship is hauling
,Causes of Loss - correct answer ✔✔after choosing commercial property coverage for the type of
property your business needs covered, you then need to choose the causes of loss that will be
covered. A business may choose Basic, Broad, or Special cause of loss forms and the extra is
Earthquake (volcanic eruption additional) - that state the perils protected against
Cease & Decist - correct answer ✔✔an official legal document that will require an individual to
stop doing something
Certificate of Authority - correct answer ✔✔makes the insurer an admitted company and
proves that the Department of Insurance finds the company financially sound and structured
well enough to meet the requirements of the state insurance code to conduct insurance
business in Louisiana
Collapse - correct answer ✔✔covers unexpected falling down or caving in of a building
Collision - correct answer ✔✔collision coverage pays for direct and accidental loss due to upset
or collision of the vehicle with another object. Collision coverage would provide protection for
an insured auto due to collision with another vehicle, collision with another object such as a
bridge or tree, and upset or overturn of the vehicle subject to a deductible
Common Carrier - correct answer ✔✔a carrier is a commercial organization that transports
goods or passengers. A carrier is classified as a common carrier when it dedicates its property to
public use in such a manner that its services are available to the public on a regular basis.
Common carriers hold themselves out to the public as engaged in the business of transporting
persons or property from site to site for compensation or a fee. Examples of common carriers
include railroads, bus companies, trucking firms, taxicab companies, airlines, and ferries
Common Conditions - correct answer ✔✔conditions that apply to all coverage parts such as
cancellation, changes, inspections, examination of books and records, etc
Common Declarations - correct answer ✔✔provides information as to who, what, when, where
and how much. It will include the insurance company name, the named insured, policy period,
,business description, coverage parts, premium, and policy forms. All policies take effect on
12:01 AM at the mailing address of the insured listed in the policy. It contains the list of 7
coverage parts followed by the appropriate premium if there is coverage for the part, but no
premium listed if the part is not included in the package
Compulsory - correct answer ✔✔states with laws that require employers to provide worker's
compensation insurance under penalty of law
Controlled Business - correct answer ✔✔when a producer gets into the insurance business in
Louisiana to sell only to themselves, their family and employer
Elective - correct answer ✔✔in states that have elective laws for workers compensation, an
employer does not have to be subject to the State's WC laws, but if they choose not to be
subject to it they lose their common law defenses against liability suits
Employer's Liability - correct answer ✔✔insurance for claims that are not covered under
Workers compensation laws including: exempt employments, illegal employments, and non-
compensable injuries
Errors and Omissions - correct answer ✔✔coverage protects insurance agents and brokers from
financial losses they may suffer as a result of a client that sues for damages because the insured
gave incorrect advice or didn't inform the client about important issues
Equipment Breakdown - correct answer ✔✔the coverage is will pay for damage property caused
by the object described in the declarations. The object must be in use or connected and ready
for use when accident occurs. An accident is defined as the sudden and accidental breakdown
of an object resulting in damage
Excess Coverage - correct answer ✔✔insurance that covers the same thing as another policy,
but only the amount of a claim or loss after the limit of the other policy is reached and may
include amounts or events that may not be covered by the other policy
, Experience or Merit Rating - correct answer ✔✔the rate is affected by the insured's own past
loss experience. Insured's with fewer claims pay a lower premium
Extended Coverage - correct answer ✔✔in dwelling policies, extended coverage basic (EC) adds
coverage for: windstorm or hail, explosion, volcanic eruption, riot or civil commotion, aircraft or
vehicles (damage due to direct physical contact with an aircraft or vehicle not owned by the
resident), and smoke to the basic coverage of fire, lightning and internal explosion
Extra Expense - correct answer ✔✔covers expenses more than normal business expenses the
business will incur to keep it operational following a direct loss to the business property. It may
include the expenses of moving to a new location or to rent new equipment
Farm Policy - correct answer ✔✔covers property and liability for the business of a farm
operation as well as a residence. The eligible risks include growing and marketing crops, fruits,
mushrooms, vegetables, flowers, green house or nursery stock, or sod, raising or keeping of
livestock, poultry, fur bearing animals, bees, and aquaculture (fish farms)
Foreign - correct answer ✔✔incorporated in states (or U.S. territories) other than Louisiana
Freight - correct answer ✔✔the revenue to the ship owner to deliver the cargo
Garagekeepers - correct answer ✔✔a type of bailee coverage (protecting the business for
damage to the property of their customers) available to automobile dealerships. Garagekeepers
insurance provides coverage for damage to automobiles of others arising out of the general
operations of the business. The need for garagekeepers insurance arises from the fact that
garage liability insurance does not cover property damage losses to automobiles in an insured's
care, custody, or control
General average - correct answer ✔✔defined as an ocean marine loss which occurs through the
voluntary sacrifice of any part of the vessel or cargo to safeguard the vessel or cargo
complete solutions rated A+
Aleatory Contract - correct answer ✔✔the consideration that is being exchanged is unequal or
unrelated to the consideration given by the other party
Basic Form - correct answer ✔✔named peril coverage, the least coverage available. In dwelling
policies it includes: fire, lightning, removal, and internal explosion
Broad Form - correct answer ✔✔named peril coverage, covering more named perils than the
basic form. In dwelling coverage it covers all perils under basic including EC and V&MM plus:
damage by burglars (not theft); weight of ice, snow or sleet; accidental discharge or overflow of
water or steam; freezing of plumbing, heating, a/c, or sprinkler systems; falling objects;
artificially generated electrical current; and tearing apart, cracking, burning, or bulging of a
steam or water system.
Builder's Risk - correct answer ✔✔used to insure buildings under construction
Business Income - correct answer ✔✔(time element form) covers loss of income when a
business has to suspend because of a direct loss. Business income is covered over the time the
operations are suspended while the building is being repaired or replaced. It is calculated as the
net income that would've been earned if the loss occurred and the cost to continue operations
including payroll
Cancellation - correct answer ✔✔termination of a policy by either the insurer or insured before
the expiration date
Cargo - correct answer ✔✔What the ship is hauling
,Causes of Loss - correct answer ✔✔after choosing commercial property coverage for the type of
property your business needs covered, you then need to choose the causes of loss that will be
covered. A business may choose Basic, Broad, or Special cause of loss forms and the extra is
Earthquake (volcanic eruption additional) - that state the perils protected against
Cease & Decist - correct answer ✔✔an official legal document that will require an individual to
stop doing something
Certificate of Authority - correct answer ✔✔makes the insurer an admitted company and
proves that the Department of Insurance finds the company financially sound and structured
well enough to meet the requirements of the state insurance code to conduct insurance
business in Louisiana
Collapse - correct answer ✔✔covers unexpected falling down or caving in of a building
Collision - correct answer ✔✔collision coverage pays for direct and accidental loss due to upset
or collision of the vehicle with another object. Collision coverage would provide protection for
an insured auto due to collision with another vehicle, collision with another object such as a
bridge or tree, and upset or overturn of the vehicle subject to a deductible
Common Carrier - correct answer ✔✔a carrier is a commercial organization that transports
goods or passengers. A carrier is classified as a common carrier when it dedicates its property to
public use in such a manner that its services are available to the public on a regular basis.
Common carriers hold themselves out to the public as engaged in the business of transporting
persons or property from site to site for compensation or a fee. Examples of common carriers
include railroads, bus companies, trucking firms, taxicab companies, airlines, and ferries
Common Conditions - correct answer ✔✔conditions that apply to all coverage parts such as
cancellation, changes, inspections, examination of books and records, etc
Common Declarations - correct answer ✔✔provides information as to who, what, when, where
and how much. It will include the insurance company name, the named insured, policy period,
,business description, coverage parts, premium, and policy forms. All policies take effect on
12:01 AM at the mailing address of the insured listed in the policy. It contains the list of 7
coverage parts followed by the appropriate premium if there is coverage for the part, but no
premium listed if the part is not included in the package
Compulsory - correct answer ✔✔states with laws that require employers to provide worker's
compensation insurance under penalty of law
Controlled Business - correct answer ✔✔when a producer gets into the insurance business in
Louisiana to sell only to themselves, their family and employer
Elective - correct answer ✔✔in states that have elective laws for workers compensation, an
employer does not have to be subject to the State's WC laws, but if they choose not to be
subject to it they lose their common law defenses against liability suits
Employer's Liability - correct answer ✔✔insurance for claims that are not covered under
Workers compensation laws including: exempt employments, illegal employments, and non-
compensable injuries
Errors and Omissions - correct answer ✔✔coverage protects insurance agents and brokers from
financial losses they may suffer as a result of a client that sues for damages because the insured
gave incorrect advice or didn't inform the client about important issues
Equipment Breakdown - correct answer ✔✔the coverage is will pay for damage property caused
by the object described in the declarations. The object must be in use or connected and ready
for use when accident occurs. An accident is defined as the sudden and accidental breakdown
of an object resulting in damage
Excess Coverage - correct answer ✔✔insurance that covers the same thing as another policy,
but only the amount of a claim or loss after the limit of the other policy is reached and may
include amounts or events that may not be covered by the other policy
, Experience or Merit Rating - correct answer ✔✔the rate is affected by the insured's own past
loss experience. Insured's with fewer claims pay a lower premium
Extended Coverage - correct answer ✔✔in dwelling policies, extended coverage basic (EC) adds
coverage for: windstorm or hail, explosion, volcanic eruption, riot or civil commotion, aircraft or
vehicles (damage due to direct physical contact with an aircraft or vehicle not owned by the
resident), and smoke to the basic coverage of fire, lightning and internal explosion
Extra Expense - correct answer ✔✔covers expenses more than normal business expenses the
business will incur to keep it operational following a direct loss to the business property. It may
include the expenses of moving to a new location or to rent new equipment
Farm Policy - correct answer ✔✔covers property and liability for the business of a farm
operation as well as a residence. The eligible risks include growing and marketing crops, fruits,
mushrooms, vegetables, flowers, green house or nursery stock, or sod, raising or keeping of
livestock, poultry, fur bearing animals, bees, and aquaculture (fish farms)
Foreign - correct answer ✔✔incorporated in states (or U.S. territories) other than Louisiana
Freight - correct answer ✔✔the revenue to the ship owner to deliver the cargo
Garagekeepers - correct answer ✔✔a type of bailee coverage (protecting the business for
damage to the property of their customers) available to automobile dealerships. Garagekeepers
insurance provides coverage for damage to automobiles of others arising out of the general
operations of the business. The need for garagekeepers insurance arises from the fact that
garage liability insurance does not cover property damage losses to automobiles in an insured's
care, custody, or control
General average - correct answer ✔✔defined as an ocean marine loss which occurs through the
voluntary sacrifice of any part of the vessel or cargo to safeguard the vessel or cargo
