Exam FX Insurance Practice Exam Questions
1. Which of the following is a statement that is guaranteed to be true, and if untrue, may
breach an insurance contract?: Warranty
2. Most insurance policies exclude losses by: Mysterious disappearance.
3. A commercial package policy (CPP) allows the insured to select the cov-erage 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 followingtypes of coverage EXCEPT: Workers
compensation coverage
4. The mobilehome endorsement alters the homeowners policy to cover a mobilehome and
other structures on land: Owned or leased by the resident ofthe mobilehome.
5. In a participation plan, the insured may be eligible for which of the follow-ing?: A partial
premium refund
6. Coverage for water backup or sump pump overflow is excluded from the Dwelling
Policy. However, with the purchase of the water backup and sump pump overflow
endorsement, coverage for up to $5,000 in loss or damage can
be provided for an additional premium. What is the deductible associated withthis coverage?:
$250
7. An applicant is purchasing a homeowners policy. A producer comes to herhome, fills out
the paperwork, and tells the applicant that her home will be covered as soon she signs all of
the paperwork, and that she will receive a new policy in the mail in 5 business days. Even though
the policy is not issued,the applicant's home is temporarily covered until then. Which of the
followingmakes that possible?: Binder
8. Which of the following provisions requires that the insured protects the damaged
property from further damage, cooperates with the insurer in set- tling the loss, and submits to
the insurer signed proof of loss within a specifiedperiod of time?: Duties after loss
9. Events or conditions that increase the chances of an insured loss occur-ring are referred to
as: Hazards
10. In property insurance, actual cash value is defined as which of the follow-ing?:
Replacement cost at the time of the loss, less depreciation
11. Which of the following is the basis for a claim against an insurance poli-cy?: Loss
12. Which of the following is most likely to occur if it is determined by the audit that the
deposit premium was too high?: The insured will receive a returnpremium.
13. In terms of parties to a contract, which of the following does NOT describe acompetent
party?: The person must have at least completed secondary education.
14. A small restaurant was forced to close for 10 days in August when the power company's
transformer was destroyed by lightning, and the restaurantwas without electricity. Which of the
following endorsements could be addedto the businessowners policy that would provide
, protection against loss of income from such events?: Utility services - time element
endorsement
15. Coverage for all of the following is found in Section I of a homeownerspolicy EXCEPT:
Personal liability.
16. Which of the following policies will help an auto dealership cover most ofits liability
exposures?: A garage liability coverage
17. If a liability policy had split limits of 50/100/30, what is the maximum amount that would
be payable in the event of injury to a single person?: -
$50,000
18. Surety bonds are written for a definite limit called: The bond penalty.
19. The War, Military Act, and Terrorism Exclusion will only apply to an incidentof terrorism in
which the total of insured damage to all types of property in
the United States, its territories and possessions, Puerto Rico and Canadaexceeds what
amount?: $25,000,000
20. What term includes damage where the insured peril was the proximatecause of loss?:
Direct loss
21. The causes of loss insured against in an insurance policy are known as: -
Perils
22. Before an insurer will pay any loss under a policy, what is usually requiredfrom the
insured?: Proof of loss
23. An insured works outside the home. The insured's sister lives with him andcares for his
four children. When the insured's home is severely damaged byfire, the family moves into an
apartment while repairs are being made. The largest apartment available in the area has two
bedrooms, so the insured's sister has to stay at a motel. How much will the HO-3 form pay for
these additional living expense?: All of the expense up to the Coverage D limit
24. All of the following statements concerning coinsurance are true EXCEPT: -
The coinsurance formula will also be applied to total losses.
25. What insurance policy provision defines how the policy will respond if thereis more than
one insurance policy written on the same risk?: Other insurance
26. What is the purpose of the coinsurance clause found in property insurancepolicies?:
Encourage the insured to insure the property closer to its full value
27. With respect to the business of insurance, a hazard is: Any condition orexposure that
increases the possibility of loss.
28. 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
1. Which of the following is a statement that is guaranteed to be true, and if untrue, may
breach an insurance contract?: Warranty
2. Most insurance policies exclude losses by: Mysterious disappearance.
3. A commercial package policy (CPP) allows the insured to select the cov-erage 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 followingtypes of coverage EXCEPT: Workers
compensation coverage
4. The mobilehome endorsement alters the homeowners policy to cover a mobilehome and
other structures on land: Owned or leased by the resident ofthe mobilehome.
5. In a participation plan, the insured may be eligible for which of the follow-ing?: A partial
premium refund
6. Coverage for water backup or sump pump overflow is excluded from the Dwelling
Policy. However, with the purchase of the water backup and sump pump overflow
endorsement, coverage for up to $5,000 in loss or damage can
be provided for an additional premium. What is the deductible associated withthis coverage?:
$250
7. An applicant is purchasing a homeowners policy. A producer comes to herhome, fills out
the paperwork, and tells the applicant that her home will be covered as soon she signs all of
the paperwork, and that she will receive a new policy in the mail in 5 business days. Even though
the policy is not issued,the applicant's home is temporarily covered until then. Which of the
followingmakes that possible?: Binder
8. Which of the following provisions requires that the insured protects the damaged
property from further damage, cooperates with the insurer in set- tling the loss, and submits to
the insurer signed proof of loss within a specifiedperiod of time?: Duties after loss
9. Events or conditions that increase the chances of an insured loss occur-ring are referred to
as: Hazards
10. In property insurance, actual cash value is defined as which of the follow-ing?:
Replacement cost at the time of the loss, less depreciation
11. Which of the following is the basis for a claim against an insurance poli-cy?: Loss
12. Which of the following is most likely to occur if it is determined by the audit that the
deposit premium was too high?: The insured will receive a returnpremium.
13. In terms of parties to a contract, which of the following does NOT describe acompetent
party?: The person must have at least completed secondary education.
14. A small restaurant was forced to close for 10 days in August when the power company's
transformer was destroyed by lightning, and the restaurantwas without electricity. Which of the
following endorsements could be addedto the businessowners policy that would provide
, protection against loss of income from such events?: Utility services - time element
endorsement
15. Coverage for all of the following is found in Section I of a homeownerspolicy EXCEPT:
Personal liability.
16. Which of the following policies will help an auto dealership cover most ofits liability
exposures?: A garage liability coverage
17. If a liability policy had split limits of 50/100/30, what is the maximum amount that would
be payable in the event of injury to a single person?: -
$50,000
18. Surety bonds are written for a definite limit called: The bond penalty.
19. The War, Military Act, and Terrorism Exclusion will only apply to an incidentof terrorism in
which the total of insured damage to all types of property in
the United States, its territories and possessions, Puerto Rico and Canadaexceeds what
amount?: $25,000,000
20. What term includes damage where the insured peril was the proximatecause of loss?:
Direct loss
21. The causes of loss insured against in an insurance policy are known as: -
Perils
22. Before an insurer will pay any loss under a policy, what is usually requiredfrom the
insured?: Proof of loss
23. An insured works outside the home. The insured's sister lives with him andcares for his
four children. When the insured's home is severely damaged byfire, the family moves into an
apartment while repairs are being made. The largest apartment available in the area has two
bedrooms, so the insured's sister has to stay at a motel. How much will the HO-3 form pay for
these additional living expense?: All of the expense up to the Coverage D limit
24. All of the following statements concerning coinsurance are true EXCEPT: -
The coinsurance formula will also be applied to total losses.
25. What insurance policy provision defines how the policy will respond if thereis more than
one insurance policy written on the same risk?: Other insurance
26. What is the purpose of the coinsurance clause found in property insurancepolicies?:
Encourage the insured to insure the property closer to its full value
27. With respect to the business of insurance, a hazard is: Any condition orexposure that
increases the possibility of loss.
28. 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
