Property and Casualty
Insurance - Final Exam
1. Which of the following best describes "proximate cause"?
A. The cause nearest in time
B. The event that causes the loss
C. The cause that initiates an unbroken chain of events leading to a loss
D. The immediate cause of loss
Answer: C – Proximate cause is the first event in an unbroken chain leading to the
loss.
2. Pure risk is best defined as:
A. Risk offering a chance of gain or loss
B. Risk involving speculative investment
C. Risk with only the possibility of loss
D. Risk that can be avoided
Answer: C
3. Which is NOT a requirement of a legally valid insurance contract?
A. Legal purpose
B. Counteroffer
C. Consideration
D. Competent parties
,Answer: B – A counteroffer is not required; an offer and acceptance are.
4. A hazard that arises from the physical condition of the property is called:
A. Moral hazard
B. Morale hazard
C. Legal hazard
D. Physical hazard
Answer: D
5. "Actual Cash Value (ACV)" means:
A. Replacement cost
B. Replacement cost minus depreciation
C. Market value
D. Cost plus salvage value
Answer: B
6. Liability insurance protects against:
A. Intentional acts
B. Criminal acts
C. Legal responsibility for injury or damage to others
D. Loss to insured property
Answer: C
7. In homeowners insurance, Coverage C applies to:
A. Dwelling
B. Other structures
C. Personal property
D. Loss of use
, Answer: C
8. HO-3 provides:
A. Named perils on dwelling and personal property
B. Open perils on dwelling, named perils on personal property
C. Open perils on both
D. Liability only
Answer: B
9. Which homeowners form covers renters/tenants?
A. HO-2
B. HO-4
C. HO-6
D. HO-8
Answer: B
10. A deductible is:
A. A surcharge
B. The amount insurer pays first
C. The amount insured must pay before the insurer pays
D. Premium discount
Answer: C
11. What is subrogation?
A. The transfer of legal rights to pursue recovery
B. The right to cancel a policy
C. The right to receive dividends
D. None of the above
Insurance - Final Exam
1. Which of the following best describes "proximate cause"?
A. The cause nearest in time
B. The event that causes the loss
C. The cause that initiates an unbroken chain of events leading to a loss
D. The immediate cause of loss
Answer: C – Proximate cause is the first event in an unbroken chain leading to the
loss.
2. Pure risk is best defined as:
A. Risk offering a chance of gain or loss
B. Risk involving speculative investment
C. Risk with only the possibility of loss
D. Risk that can be avoided
Answer: C
3. Which is NOT a requirement of a legally valid insurance contract?
A. Legal purpose
B. Counteroffer
C. Consideration
D. Competent parties
,Answer: B – A counteroffer is not required; an offer and acceptance are.
4. A hazard that arises from the physical condition of the property is called:
A. Moral hazard
B. Morale hazard
C. Legal hazard
D. Physical hazard
Answer: D
5. "Actual Cash Value (ACV)" means:
A. Replacement cost
B. Replacement cost minus depreciation
C. Market value
D. Cost plus salvage value
Answer: B
6. Liability insurance protects against:
A. Intentional acts
B. Criminal acts
C. Legal responsibility for injury or damage to others
D. Loss to insured property
Answer: C
7. In homeowners insurance, Coverage C applies to:
A. Dwelling
B. Other structures
C. Personal property
D. Loss of use
, Answer: C
8. HO-3 provides:
A. Named perils on dwelling and personal property
B. Open perils on dwelling, named perils on personal property
C. Open perils on both
D. Liability only
Answer: B
9. Which homeowners form covers renters/tenants?
A. HO-2
B. HO-4
C. HO-6
D. HO-8
Answer: B
10. A deductible is:
A. A surcharge
B. The amount insurer pays first
C. The amount insured must pay before the insurer pays
D. Premium discount
Answer: C
11. What is subrogation?
A. The transfer of legal rights to pursue recovery
B. The right to cancel a policy
C. The right to receive dividends
D. None of the above
