Property and casualty insurance Exam Questions and Answers
1. Which of the following is defined as a covered cause of loss in busines-sowners property
coverage?: Leakage from fire-extinguishing equipment
2. The insured's mother-in-law broke her leg falling down the front steps of the insured's
premises. The insured's homeowners medical payments cover-age will: Apply to injuries of
any guests or visitors.
3. All of the following are exclusions under farm property coverage EXCEPT-
: Loss of use.
4. Coverage for medical payments under a personal auto policy applies to ex- penses following
a covered accident that are incurred and services rendered within what maximum time period?:
3 years
5. Which of the following is an example of an unfair claims settlement prac- tice?: Failure to
promptly settle a claim when liability has been clearly established
6. Which of the following definitions best defines the term "accident"?: A sudden, unplanned
and unexpected event, not under the control of the insured, resulting in injury or damage
neither expected nor intended
7. An insured's accounts receivable records have been damaged. The lossmay be covered
with: The accounts receivable coverage form.
8. Under the workers compensation system, who is responsible for the ex- penses resulting
from work-related injuries and occupational diseases?: Theemployer, regardless of whether it
was at fault for the injury or disease
9. A person applying for a manager or exclusive general agent license must meet all of the
following criteria EXCEPT: Be responsible for at least 25% of total commissions collected by
the office that he or she manages.
10. When a vehicle travels from one state to another, what happens to the limits of policy liability
in a personal auto policy?: They do not change.
11. In a personal umbrella policy, the amount paid by the insured for certain losses not
covered under the primary coverage is called: Self-insured retention.
12. Which of the following circumstances would be EXCLUDED under medicalpayments
coverage of a personal auto policy?: The insured is injured while driving his motorcycle on
his resident premises.
13. Which of the following is NOT an essential element of an insurance con-tract?:
Counteroffer
14. Which of the following persons is required to hold a producer license?: Aperson who
negotiates insurance contracts
15. If an insurance company wishes to order a consumer report on an ap-plicant to assist in
,the underwriting process, and if a notice of insurance information practices has been provided,
the report may contain all of thefollowing information EXCEPT the applicant's: Ancestry
16. Which of the following would NOT be classified as personal property forinsurance
purposes?: A house
17. Under the "limited tort insurance" option, an insured may not seek re- covery for pain and
suffering or other nonmonetary damages UNLESS: Theinjuries fall within the definition of
"serious injury."
18. Which of the following statements is true regarding the commercial gener- al liability
policy's Coverage C - Medical Payments?: The coverage is considered good will because
payments are made without regard to fault.
19. Homeowners policies provide coverage for: Business property while on the residence
premises.
20. Who will transport the property of anyone who hires them?: Commoncarriers
21. In property and casualty insurance, what is the term for the amount of a loss that the
insured must cover out of pocket, and the insurer will only pay for the additional amount of the
loss above this limit?: Deductible
22. A restaurant is out of business for 3 days after an insured's automobilehits an electrical
pole. The pole falls and hits the building, knocking out allelectrical power supply. Which of
the following is NOT covered under the insured driver's auto policy?: Lost revenues from the
restaurant
23. How much is the premium for the dwelling under construction endorse- ment under the
dwelling policy?: The average amount of insurance during con-struction
24. Which of the following are the authorities that an agent can hold?: Expressand implied
25. Which of the following terms refers to such disabilities the loss of a limb,hearing , or eye
sight?: Permanent partial disability
26. Who is NOT considered an employee in an commercial general liability(CGL) policy?:
Temporary worker
27. The major portion of the premium of an equipment breakdown policy pays?-
: For inspections and examinations
28. An insured owns a building valued at $400,000. To comply with the 80% coinsurance
provision of his insurance policy, how , much should he insurethe property for?: 80% of the
property's replacement cost or more
29. Under the Fair Credit Reporting Act, if the consumer challenges the accu-racy of the
information contained in his or her report, the reporting agency must: Respond to the
consumer's complaint.
30. All of the following are found in the declarations section of a policy EXCEPTthe:
Exclusions.
, 31. The cost of restoring farm records is an additional coverage offered under afarm policy.
How much will the policy pay to restore the records?: Up to $2,000
32. All of the following could be considered rebates if offered to an insured inthe sale of
insurance EXCEPT: Dividends from a mutual insurer.
33. Which of the following may be covered by electronic data processing coverage form
under an inland marine policy?: a) Computer hardware that isspecifically scheduled.
b) Extra expense the insured incurs to continue the business following a loss.
c) Data processing media, including magnetic tapes or paper tapes, punch cardsand discs
34. The party to a surety or fidelity bond who promises to fulfill the obligationis the: Principal
35. The transfer of money from inside a banking premises to a person other than a messenger
outside those premises or to a place outside those premis-es is covered under which
commercial crime coverage?: Computer fraud
36. Which of the following would NOT be covered under the liability section of a personal auto
policy?: Bodily injury is caused by the insured's negligence while driving a three-wheel all-
terrain vehicle.
37. When a producer holding a certificate or a broker's license has a change in his/her
residence or business address, he/she must notify the Department
of Insurance and any company for which the producer holds an appointmentwithin: 30 days.
38. What will happen if a house covered by a standard mortgage clause is a total loss?: The
insurer pays the mortgagee according to the mortgagee's interestin the property.
39. What is the civil penalty for violating a cease and desist order of theCommissioner?:
$10,000
40. The Business Pursuits endorsement under Section II of a homeownerspolicy will cover all
of the following EXCEPT: Business liability.
41. If a property is covered by Company A for $20,000 and Company B coversthe same
property for $40,000, how much will Company A pay on a $24,000 loss?: $8,000
42. The risk management technique that is used to prevent a specific loss bynot exposing
oneself to that activity is called: Avoidance.
43. In a farm policy, any cost incurred by the insurer for the investigation ordefense of a claim
will be paid by: The insurer.
44. Which of the following entities must approve all continuing educationcourses in this
state?: The Commissioner
45. An applicant knowingly fails to communicate information that would help an underwriter
1. Which of the following is defined as a covered cause of loss in busines-sowners property
coverage?: Leakage from fire-extinguishing equipment
2. The insured's mother-in-law broke her leg falling down the front steps of the insured's
premises. The insured's homeowners medical payments cover-age will: Apply to injuries of
any guests or visitors.
3. All of the following are exclusions under farm property coverage EXCEPT-
: Loss of use.
4. Coverage for medical payments under a personal auto policy applies to ex- penses following
a covered accident that are incurred and services rendered within what maximum time period?:
3 years
5. Which of the following is an example of an unfair claims settlement prac- tice?: Failure to
promptly settle a claim when liability has been clearly established
6. Which of the following definitions best defines the term "accident"?: A sudden, unplanned
and unexpected event, not under the control of the insured, resulting in injury or damage
neither expected nor intended
7. An insured's accounts receivable records have been damaged. The lossmay be covered
with: The accounts receivable coverage form.
8. Under the workers compensation system, who is responsible for the ex- penses resulting
from work-related injuries and occupational diseases?: Theemployer, regardless of whether it
was at fault for the injury or disease
9. A person applying for a manager or exclusive general agent license must meet all of the
following criteria EXCEPT: Be responsible for at least 25% of total commissions collected by
the office that he or she manages.
10. When a vehicle travels from one state to another, what happens to the limits of policy liability
in a personal auto policy?: They do not change.
11. In a personal umbrella policy, the amount paid by the insured for certain losses not
covered under the primary coverage is called: Self-insured retention.
12. Which of the following circumstances would be EXCLUDED under medicalpayments
coverage of a personal auto policy?: The insured is injured while driving his motorcycle on
his resident premises.
13. Which of the following is NOT an essential element of an insurance con-tract?:
Counteroffer
14. Which of the following persons is required to hold a producer license?: Aperson who
negotiates insurance contracts
15. If an insurance company wishes to order a consumer report on an ap-plicant to assist in
,the underwriting process, and if a notice of insurance information practices has been provided,
the report may contain all of thefollowing information EXCEPT the applicant's: Ancestry
16. Which of the following would NOT be classified as personal property forinsurance
purposes?: A house
17. Under the "limited tort insurance" option, an insured may not seek re- covery for pain and
suffering or other nonmonetary damages UNLESS: Theinjuries fall within the definition of
"serious injury."
18. Which of the following statements is true regarding the commercial gener- al liability
policy's Coverage C - Medical Payments?: The coverage is considered good will because
payments are made without regard to fault.
19. Homeowners policies provide coverage for: Business property while on the residence
premises.
20. Who will transport the property of anyone who hires them?: Commoncarriers
21. In property and casualty insurance, what is the term for the amount of a loss that the
insured must cover out of pocket, and the insurer will only pay for the additional amount of the
loss above this limit?: Deductible
22. A restaurant is out of business for 3 days after an insured's automobilehits an electrical
pole. The pole falls and hits the building, knocking out allelectrical power supply. Which of
the following is NOT covered under the insured driver's auto policy?: Lost revenues from the
restaurant
23. How much is the premium for the dwelling under construction endorse- ment under the
dwelling policy?: The average amount of insurance during con-struction
24. Which of the following are the authorities that an agent can hold?: Expressand implied
25. Which of the following terms refers to such disabilities the loss of a limb,hearing , or eye
sight?: Permanent partial disability
26. Who is NOT considered an employee in an commercial general liability(CGL) policy?:
Temporary worker
27. The major portion of the premium of an equipment breakdown policy pays?-
: For inspections and examinations
28. An insured owns a building valued at $400,000. To comply with the 80% coinsurance
provision of his insurance policy, how , much should he insurethe property for?: 80% of the
property's replacement cost or more
29. Under the Fair Credit Reporting Act, if the consumer challenges the accu-racy of the
information contained in his or her report, the reporting agency must: Respond to the
consumer's complaint.
30. All of the following are found in the declarations section of a policy EXCEPTthe:
Exclusions.
, 31. The cost of restoring farm records is an additional coverage offered under afarm policy.
How much will the policy pay to restore the records?: Up to $2,000
32. All of the following could be considered rebates if offered to an insured inthe sale of
insurance EXCEPT: Dividends from a mutual insurer.
33. Which of the following may be covered by electronic data processing coverage form
under an inland marine policy?: a) Computer hardware that isspecifically scheduled.
b) Extra expense the insured incurs to continue the business following a loss.
c) Data processing media, including magnetic tapes or paper tapes, punch cardsand discs
34. The party to a surety or fidelity bond who promises to fulfill the obligationis the: Principal
35. The transfer of money from inside a banking premises to a person other than a messenger
outside those premises or to a place outside those premis-es is covered under which
commercial crime coverage?: Computer fraud
36. Which of the following would NOT be covered under the liability section of a personal auto
policy?: Bodily injury is caused by the insured's negligence while driving a three-wheel all-
terrain vehicle.
37. When a producer holding a certificate or a broker's license has a change in his/her
residence or business address, he/she must notify the Department
of Insurance and any company for which the producer holds an appointmentwithin: 30 days.
38. What will happen if a house covered by a standard mortgage clause is a total loss?: The
insurer pays the mortgagee according to the mortgagee's interestin the property.
39. What is the civil penalty for violating a cease and desist order of theCommissioner?:
$10,000
40. The Business Pursuits endorsement under Section II of a homeownerspolicy will cover all
of the following EXCEPT: Business liability.
41. If a property is covered by Company A for $20,000 and Company B coversthe same
property for $40,000, how much will Company A pay on a $24,000 loss?: $8,000
42. The risk management technique that is used to prevent a specific loss bynot exposing
oneself to that activity is called: Avoidance.
43. In a farm policy, any cost incurred by the insurer for the investigation ordefense of a claim
will be paid by: The insurer.
44. Which of the following entities must approve all continuing educationcourses in this
state?: The Commissioner
45. An applicant knowingly fails to communicate information that would help an underwriter
