Liability Insurance
UNIT 5 AZ P&C BASICS OF CASUALTY
INSURANCE EXAM 2025
1. If a driver is found to be negligent after causing an accident while speeding,
what implications might this have for their liability insurance coverage?
They will automatically receive a payout
regardless of negligence. Their insurance
will not be affected since they were not at
, fault.
They will be eligible for a refund on their premiums.
Their liability insurance may cover damages, but they could face
increased premiums or denial of coverage due to the negligence.
2. What is the term used to describe the liability that an employer may incur for
the actions of an employee during the course of their employment?
Strict
liability
Direct
liability
Negligence
Vicarious liability
3. Jane was driving down the street at approximately 40 miles per hour. The
posted speed limit was 35 miles per hour. Another car pulled out from a side
street in front of Jane and Jane's car hit the other car. The driver of the other
car, Sam, was injured. Sam wants to sue Jane for his injuries. In that
litigation, the fact that Jane was
exceeding the speed limit will:
Be used as the issue to determine whether Jane's negligence was
the cause of the accident. Be irrelevant.
Result in Jane being automatically held at fault.
Result in the speed limit of 35 miles per hour being used as the duty in the
negligence case.
,4. Describe the concept of absolute liability and how it differs from
negligence-based liability.
Absolute liability is a type of liability that is imposed by law without
considering negligence, whereas negligence-based liability requires
proof of a failure to exercise reasonable care.
Absolute liability only applies in cases of intentional harm, while
negligence-based liability applies to all accidents.
Absolute liability requires proof of intent, while negligence-based liability
does not.
Absolute liability is only applicable in contractual agreements, while
negligence-based liability applies in tort cases.
5. Describe the purpose of punitive damages in the
context of liability insurance. Punitive damages
compensate the injured party for their losses.
Punitive damages are awarded to cover legal fees.
Punitive damages are intended to punish the wrongdoer and deter
similar conduct in the future. Punitive damages are a form of
insurance reimbursement.
6. What type of damages may be awarded if an individual is found to have acted
willfully in causing harm?
, liquidated damages
compensatory
damages
nominal damages
punitive damages
7. What does the aggregate limit in a liability
insurance policy represent? The minimum
coverage amount required
The maximum amount a company will pay
over the policy period The deductible
amount for each claim
The total number of claims allowed
8. While playing baseball in his yard, your insured's son hits a ball, breaking
their neighbor's windshield. Under the homeowner's policy, Section II
Liability, the claim would most likely be:
Paid because of the insured's legal liability
Paid for under 'Damages to Property of Others' up
to $500/occurrence Paid for under 'Damages to
Property of Others' up to $1000/occurrence Paid
minus a liability deductible applicable to
UNIT 5 AZ P&C BASICS OF CASUALTY
INSURANCE EXAM 2025
1. If a driver is found to be negligent after causing an accident while speeding,
what implications might this have for their liability insurance coverage?
They will automatically receive a payout
regardless of negligence. Their insurance
will not be affected since they were not at
, fault.
They will be eligible for a refund on their premiums.
Their liability insurance may cover damages, but they could face
increased premiums or denial of coverage due to the negligence.
2. What is the term used to describe the liability that an employer may incur for
the actions of an employee during the course of their employment?
Strict
liability
Direct
liability
Negligence
Vicarious liability
3. Jane was driving down the street at approximately 40 miles per hour. The
posted speed limit was 35 miles per hour. Another car pulled out from a side
street in front of Jane and Jane's car hit the other car. The driver of the other
car, Sam, was injured. Sam wants to sue Jane for his injuries. In that
litigation, the fact that Jane was
exceeding the speed limit will:
Be used as the issue to determine whether Jane's negligence was
the cause of the accident. Be irrelevant.
Result in Jane being automatically held at fault.
Result in the speed limit of 35 miles per hour being used as the duty in the
negligence case.
,4. Describe the concept of absolute liability and how it differs from
negligence-based liability.
Absolute liability is a type of liability that is imposed by law without
considering negligence, whereas negligence-based liability requires
proof of a failure to exercise reasonable care.
Absolute liability only applies in cases of intentional harm, while
negligence-based liability applies to all accidents.
Absolute liability requires proof of intent, while negligence-based liability
does not.
Absolute liability is only applicable in contractual agreements, while
negligence-based liability applies in tort cases.
5. Describe the purpose of punitive damages in the
context of liability insurance. Punitive damages
compensate the injured party for their losses.
Punitive damages are awarded to cover legal fees.
Punitive damages are intended to punish the wrongdoer and deter
similar conduct in the future. Punitive damages are a form of
insurance reimbursement.
6. What type of damages may be awarded if an individual is found to have acted
willfully in causing harm?
, liquidated damages
compensatory
damages
nominal damages
punitive damages
7. What does the aggregate limit in a liability
insurance policy represent? The minimum
coverage amount required
The maximum amount a company will pay
over the policy period The deductible
amount for each claim
The total number of claims allowed
8. While playing baseball in his yard, your insured's son hits a ball, breaking
their neighbor's windshield. Under the homeowner's policy, Section II
Liability, the claim would most likely be:
Paid because of the insured's legal liability
Paid for under 'Damages to Property of Others' up
to $500/occurrence Paid for under 'Damages to
Property of Others' up to $1000/occurrence Paid
minus a liability deductible applicable to
