Property & Casualty Insurance Practice Exam (75 items)
What does an application for insurance contractually represent for the insured?
an offer
Which of the following is the special limit of coverage on the homeowners policy form for property damage to personal watercraft?
$1,500
Homeowner Form HO-2 provides coverage for loss of appliances, carpeting, and other household furnishings for a maximum of how much?
$2,500
The insured purchased a car for $40,000 and added $5,000 in insured modifications. Four years later it was worth $24,000 when it was totaled in a crash. According to the principle of indemnity, how much should the insured receive from the insurance proceeds?
$24,000
Which of the following defines the term peril?
cause of loss
A single earthquake constitutes all shocks that occur within which time period?
168 hours
Damages compensate for pain and suffering.
Which applies when an insured is found legally liable for the loss of another and is ordered to pay general damages?
All of the following are considered an insured under the liability part of a personal auto insurance policy EXCEPT
a stranger who takes the car without permission.
Which of the following persons is covered for accidental injury on the insured?s premises under the commercial general liability medical payments?
a volunteer worker
All of the following are examples of direct loss EXCEPT
after a car crash you have to rent a replacement vehicle.
Which of the following professionals would purchase Errors And Omissions insurance to manage the liability risk associated with their business endeavors?
attorney
The property coverage of a BOP includes which of the following?
carpeting that is permanently installed inside the building
All of the following are methods of limiting liability EXCEPT
collective limit.
Which of the following situations under dwelling policy conditions describe how the insurance company will settle a loss?
company has the option to repair to pre-loss condition
When the insured's child spills red juice on the carpet of insured's covered automobile, which of the following coverages will apply?
comprehensive
Under the commercial general liability which one of the following is covered under supplementary payments?
cost of bail bonds
Which of the following does HO-6 provide?
coverage for personal property of a condominium owner
All of the following are common exclusions in a liability policy EXCEPT
damage caused by acts of civil disobedience and riots.
A DP-2 policy covers all of the following EXCEPT
damage to awnings from weight of snow.
Which part of the commercial general liability designates who is an insured?
declarations
The description of the insured will be found in which part of an insurance policy?
definitions
Which of the following is an example of a financial loss caused by a home being damaged in a windstorm?
direct loss
Underwriters are permitted to use all of the following when underwriting an application for insurance EXCEPT
disability.
Which of the following provides insurance for employers when workers not covered by workers' compensation insurance are injured on the job and sue for compensation?
employer liability
Workers' compensation coverage is rated on the basis of which of the following?
employer's payroll
All of the following demonstrate insurable interest EXCEPT
insuring an engagement ring given to fiancée.
Which of the following limits of insurance on the dwelling are available and apply to Coverage D-Fair Rental Value?
20%
Which coverage forms are used when the insured sustains loss of revenue due to direct physical loss from a peril insured against that forces the insured to suspend operations during the period of restoration?
Business Income Coverage forms
Which of the following is TRUE when the insured's limits of insurance apply per occurrence?
Coverage is triggered for smoke damage to siding caused by repeated acts by insured's neighbor.
Which of the following describes why the insuring agreement is the heart of an insurance policy?
It describes property covered and perils insured.
When does the coverage begin for a builders risk form?
On the date construction starts above the lowest basement floor if there is a basement
Which document would a lender ask an insured for as evidence that a policy has been written?
Certificate
Which of the following is EXCLUDED as a covered loss under the DP-3 coverage?
Damage by ice to outdoor radio and television antennas and aerials
Which Homeowner Form covers fixtures, installations, and improvements made or acquired at the insured's expense?
HO-4
Which of the following homeowners forms covers tenants?
HO-4
Which of the following makes use of market value in determining loss valuation?
Property is evaluated for what it sells for at the time of the loss.
How does the BOP differ from the CPP?
The BOP prepackages a group of coverages desirable to small businesses.
If the insured has a loss with a private passenger nonowned temporary substitute vehicle how will the loss be treated by the insured's own policy for physical damage?
The broadest coverage available extends from the insured's policy.
Which of the following policy assignment rights occurs when the named insured dies?
The insured's legal representative takes over the policy.
Which of the following causes of loss to a vehicle will trigger collision coverage on the personal auto policy Part D- coverage for damage to your auto?
Vehicle upset
Employees are barred from suing employers in court to obtain compensation for injuries covered by workers' compensation because of which of the following doctrines?
exclusive remedy
The Gramm-Leach-Bliley Act was enacted to protect consumer's right to privacy and made mandatory which of the following?
financial institutions must have a privacy policy in place
Exclusions common to liability coverage for both the personal auto policy and the business auto policy include all of the following EXCEPT
for liability arising while the insured auto is being used in an auto business.
According to the Nationwide Definition of marine insurance, which category is an eligible marine risk?
imported goods
All of the following are correct for towing and labor costs coverage on the personal auto policy EXCEPT
labor costs are performed at the shop are limited to $25.
A contract that is against public policy is not enforceable according to which contract characteristic?
legal purpose
With which of the following methods are losses settled on an actual cash value (ACV) basis?
less depreciation
All of the following losses are excluded from the DP-1 basic policy form EXCEPT
lightning strike.
Which of the following would be covered by a commercial package policy?
loss due to crime
Which policy condition applies when an insurer covers property losses at cash value rather than an amount that exceeds the repair or replacement value?
loss settlement condition
As a general rule, commercial inland marine insurance covers all of following EXCEPT
merchandise while it is being manufactured.
A person who intentionally defrauds and insurance company to gain from a claim is an example of which type of hazard?
moral hazard
Absolute liability can be imposed by law and exist in the absence of which of the following?
negligence
When the policy term ends and either the insured or the insurance company wants to discontinue coverage which provision is applied?
nonrenewal
Which of the following forms trigger coverage for a loss under the commercial general liability policy if a loss happens during the policy period?
occurrence form
When an insured selects Symbol 2 on the automobile declarations, indicating coverage for any auto titled to the insured, which of the following automobile types will be covered?
owned autos only
For the commercial general liability coverages of bodily injury, property damage and medical payments, which of the following limits of insurance apply if the aggregate limit is NOT met?
per occurrence
The Causes of Loss form for farm property lists which of the following?
perils property is insured against
Which of the following business liability exposures does a slip and fall loss fall under?
premises and operations
An insured has transportation expenses coverage under Part D of the personal auto policy when involved in a collision. Coverage provides which of the following?
rental reimbursement until claim is settled by insurance
Workers' compensation benefits for loss of wages include which of the following?
replacement of a portion of lost wages
The policy conditions as well as state laws permit the insurance company to cancel or rescind a policy when any of the following exist EXCEPT
representations.
The claims-made liability form provides coverage from a date that precedes the policy effective date. Which of the following defines that date?
retroactive date
The State highway department is rebuilding a roadway and the general contractor winning the bid will be required to purchase a bond guaranteeing the work will be completed according to specifications and on time. Which of the following types of bonds will the general contractor need to purchase?
surety bond
The following are all types of disability categories under workers' compensation insurance EXCEPT
temporary permanent.
Which of the following created The National Flood Insurance Program?
the United States Congress
When an insured disagrees with the valuation of a loss and his appraiser and the insurance company's appraiser disagree, how will the loss be settled?
the amount agreed to by any two of the three
The insured carries uninsured motorist coverage limits of 100/300/100 and is struck by an uninsured motorist, who will pay insured's bodily injury damages claimed for $100,000?
the insured's insurance company
Which of the following is the party who agrees to be responsible for loss in the case of a fidelity bond?
the surety
Which type of crime listed below best describes someone who waits until store personnel are preoccupied and pockets merchandise while no one is looking and leaves without detection?
theft
All of the following are excluded losses under Part D-damage to an auto of the personal auto policy EXCEPT
to caps, covers, or bedliners on pickup trucks.
What is the purpose of the causes of loss form that lists specific exclusions?
to state which perils are insured against
Liability arising out of any of the following is excluded from the personal and advertising injury liability coverage EXCEPT
unknowingly inflicting injury that violates the rights of another.
An injured employee covered under workers' compensation is entitled to reasonably justifiable expenses for retraining. This benefit falls under which of the following?
vocational rehabilitation
All of the following are examples of insurable risks EXCEPT
when the risk of a loss is expected.
