Property and Casualty Insurance
Exam Questions with 100%
Correct Answers
When a replacement auto is acquired during the policy period, what coverage will apply
to it automatically under a personal auto policy? - Answer-Whatever coverage applied to
the vehicle being replaced
Which of the following statements would be correct if an insured failed to maintain the
underlying limits as required by a personal umbrella policy? - Answer-The insured would
be responsible for the amount required as underlying limits in the event of a claim.
Which of the following statements is true regarding the premium computation for
workers compensation insurance? - Answer-A premium auditor has the right to examine
the insured's compensation records at the end of the policy period to determine the
actual premium basis.
Who is NOT considered an employee in a commercial general liability (CGL) policy? -
Answer-Temporary worker
An insured is involved in an auto accident in another state. The state has a financial
responsibility law that specifies limits of liability higher than the limits shown in the
declarations. What amount will the insured's policy pay? - Answer-Higher limits
Coverage A - Bodily Injury and Property Damage in the commercial general liability
policy will cover - Answer-Losses due to the insured's negligence
A liability policy that provides coverage for a claim for injury or damage if the claim is
first reported or filed against the insured during the policy period is called - Answer-
Claims made form
Workers compensation rating is developed by applying a rating bureau job classification
rate to each - Answer-$100 of payroll
While an insured's covered auto is in the repair shop following damage caused by a
collision, the insured would have coverage for which of the following vehicles under a
personal auto policy? - Answer-Any vehicle not owned by the insured, but furnished for
use while the covered auto is out of normal use because of repair
,Under the dwelling policy form, what is the maximum time limit during which multiple
volcanic activites would be considered part of one occurrence? - Answer-72 hours
In a participation plan, the insured may be eligible for which of the following? - Answer-A
partial premium refund
Which of the following is a mandatory part of an insurance policy that varies with each
individual policy? - Answer-Declarations
Elements for a contract: - Answer-1) Agreement - offer and acceptance
2) Consideration
3) Competent parties
4) Legal purpose
Payment for medical expenses, loss of wages, funeral expenses, or the cost to repair or
replace damaged property are known as what type of compensatory damages? -
Answer-Special
Which method of loss valuation is contrary to the basic concept of indemnity? - Answer-
Replacement cost
An insured owns several buildings, each at a different location and insured on a
separate policy. What type of coverage does the insured have? - Answer-Specific
The policy provision found in property insurance policies that prevents the insured from
collecting twice for the same loss is called - Answer-Subrogation
Losses caused by continuous or repeated exposure to conditions resulting in injury
persons or damage to property that is neither intended nor expected is the definition of
which of the following terms? - Answer-Occurrence
An insured relocated to another state for work. However, she still owns and insures a
house in this state, but has had no one living in it for 3 months. She is also storing some
of furniture and clothes in the house. From an insurance standpoint, the insured's house
is considered - Answer-Unoccupied
An insured's roof cost $4,000 when installed 5 years ago. It has been damaged by hail
and must be replaced. The new roof will cost $6,000 at today's prices. If the roof has
been depreciating at $200 per year and the insured's policy is written on the actual cash
value(ACV), how much will the policy pay toward the insured's new roof? - Answer-
$5,000
An insured carries a property policy on her home in the amount of $250,000. A bank is
shown as the mortgagor in the policy. Last month the insured made her final mortgage
, payment, but did not remove the bank from the policy. In the event of a covered loss to
her home, how much will the bank receive? - Answer-Nothing
What type of damages may be awarded by the court to create disincentives that
discourage behavior that is deemed highly undesirable by society? - Answer-Punitive
A tornado that destroys property would be an example of which of the following? -
Answer-A Peril
The insured's house is located one mile from the county's new landfill and across the
road from the entrance of a rock quarry. It would cost $150,000 to rebuild the house if
something happened to it, but when the insured tried to sell it, the best offer he received
was $80,000. The insurance company will insure the house for only $80,000. What
method of valuation is used to insure this property? - Answer-Market Value
An insured is applying for a casualty insurance policy. One of the conditions of the
policy allows the insurance company to inspect the insured's books at the end of the
policy term to make sure sufficient premium has been collected for the exposure she
plans to insure. Which condition is part of the insured's policy? - Answer-Deposit
premium audit
All of the following statements concerning coinsurance are true EXCEPT - Answer-The
coinsurance formula will also be applied to total losses.
A situation in which a person can only lose or have no change represents - Answer-
Pure risk
A policy condition that stipulates how the amount of damaged or lost property will be
determined if the insured and the principal do not agree is known as - Answer-Appraisal
An insured has a liability policy that sets the amount for all claims that arise from a
single incident at $50,000. Which type of limit of liability does this insured's policy have?
- Answer-Per occurrence
Which of the following is NOT an element of negligence? - Answer-Libel
-duty, breach, and unbroken chain are
Insurable interest in the property covered in a policy must be proven - Answer-At time of
loss
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 building is considered - Answer-Vacant
For the purpose of insurance, risk is defined as - Answer-The uncertainty or chance of
loss
Exam Questions with 100%
Correct Answers
When a replacement auto is acquired during the policy period, what coverage will apply
to it automatically under a personal auto policy? - Answer-Whatever coverage applied to
the vehicle being replaced
Which of the following statements would be correct if an insured failed to maintain the
underlying limits as required by a personal umbrella policy? - Answer-The insured would
be responsible for the amount required as underlying limits in the event of a claim.
Which of the following statements is true regarding the premium computation for
workers compensation insurance? - Answer-A premium auditor has the right to examine
the insured's compensation records at the end of the policy period to determine the
actual premium basis.
Who is NOT considered an employee in a commercial general liability (CGL) policy? -
Answer-Temporary worker
An insured is involved in an auto accident in another state. The state has a financial
responsibility law that specifies limits of liability higher than the limits shown in the
declarations. What amount will the insured's policy pay? - Answer-Higher limits
Coverage A - Bodily Injury and Property Damage in the commercial general liability
policy will cover - Answer-Losses due to the insured's negligence
A liability policy that provides coverage for a claim for injury or damage if the claim is
first reported or filed against the insured during the policy period is called - Answer-
Claims made form
Workers compensation rating is developed by applying a rating bureau job classification
rate to each - Answer-$100 of payroll
While an insured's covered auto is in the repair shop following damage caused by a
collision, the insured would have coverage for which of the following vehicles under a
personal auto policy? - Answer-Any vehicle not owned by the insured, but furnished for
use while the covered auto is out of normal use because of repair
,Under the dwelling policy form, what is the maximum time limit during which multiple
volcanic activites would be considered part of one occurrence? - Answer-72 hours
In a participation plan, the insured may be eligible for which of the following? - Answer-A
partial premium refund
Which of the following is a mandatory part of an insurance policy that varies with each
individual policy? - Answer-Declarations
Elements for a contract: - Answer-1) Agreement - offer and acceptance
2) Consideration
3) Competent parties
4) Legal purpose
Payment for medical expenses, loss of wages, funeral expenses, or the cost to repair or
replace damaged property are known as what type of compensatory damages? -
Answer-Special
Which method of loss valuation is contrary to the basic concept of indemnity? - Answer-
Replacement cost
An insured owns several buildings, each at a different location and insured on a
separate policy. What type of coverage does the insured have? - Answer-Specific
The policy provision found in property insurance policies that prevents the insured from
collecting twice for the same loss is called - Answer-Subrogation
Losses caused by continuous or repeated exposure to conditions resulting in injury
persons or damage to property that is neither intended nor expected is the definition of
which of the following terms? - Answer-Occurrence
An insured relocated to another state for work. However, she still owns and insures a
house in this state, but has had no one living in it for 3 months. She is also storing some
of furniture and clothes in the house. From an insurance standpoint, the insured's house
is considered - Answer-Unoccupied
An insured's roof cost $4,000 when installed 5 years ago. It has been damaged by hail
and must be replaced. The new roof will cost $6,000 at today's prices. If the roof has
been depreciating at $200 per year and the insured's policy is written on the actual cash
value(ACV), how much will the policy pay toward the insured's new roof? - Answer-
$5,000
An insured carries a property policy on her home in the amount of $250,000. A bank is
shown as the mortgagor in the policy. Last month the insured made her final mortgage
, payment, but did not remove the bank from the policy. In the event of a covered loss to
her home, how much will the bank receive? - Answer-Nothing
What type of damages may be awarded by the court to create disincentives that
discourage behavior that is deemed highly undesirable by society? - Answer-Punitive
A tornado that destroys property would be an example of which of the following? -
Answer-A Peril
The insured's house is located one mile from the county's new landfill and across the
road from the entrance of a rock quarry. It would cost $150,000 to rebuild the house if
something happened to it, but when the insured tried to sell it, the best offer he received
was $80,000. The insurance company will insure the house for only $80,000. What
method of valuation is used to insure this property? - Answer-Market Value
An insured is applying for a casualty insurance policy. One of the conditions of the
policy allows the insurance company to inspect the insured's books at the end of the
policy term to make sure sufficient premium has been collected for the exposure she
plans to insure. Which condition is part of the insured's policy? - Answer-Deposit
premium audit
All of the following statements concerning coinsurance are true EXCEPT - Answer-The
coinsurance formula will also be applied to total losses.
A situation in which a person can only lose or have no change represents - Answer-
Pure risk
A policy condition that stipulates how the amount of damaged or lost property will be
determined if the insured and the principal do not agree is known as - Answer-Appraisal
An insured has a liability policy that sets the amount for all claims that arise from a
single incident at $50,000. Which type of limit of liability does this insured's policy have?
- Answer-Per occurrence
Which of the following is NOT an element of negligence? - Answer-Libel
-duty, breach, and unbroken chain are
Insurable interest in the property covered in a policy must be proven - Answer-At time of
loss
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 building is considered - Answer-Vacant
For the purpose of insurance, risk is defined as - Answer-The uncertainty or chance of
loss
