Property and Casualty Insurance Practice Examination

Which of the following is the special limit of coverage on the homeowners policy form for property damage to personal watercraft? 1. $1,000 2. $1,500 3. $2,000 4. $2,500

$1,500

Homeowner Form HO-2 provides coverage for loss of appliances, carpeting, and other household furnishings for a maximum of how much? 1. $2,000 2. $2,500 3. $3,000 4. $4,500

$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? 1. $24,000 2. $29,000 3. $40,000 4. $45,000

$24,000

A single earthquake constitutes all shocks that occur within which time period? 1. 16 hours 2. 24 hours 3. 48 hours 4. 168 hours

168 hours

Which of the following limits of insurance on the dwelling are available and apply to Coverage D-Fair Rental Value? 1. 10% 2. 15% 3. 20% 4. 25%

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? 1. Causes of Loss forms 2. Business Income Coverage forms 3. Suspension forms 4. Commercial Casualty forms

Business Income Coverage forms

Which document would a lender ask an insured for as evidence that a policy has been written? 1. Certificate 2. Declarations 3. Endorsement 4. Policy

Certificate

Which of the following best describes the commercial general liability?s general aggregate annual limit as it applies to the coverage parts of the CGL? 1. Coverage A and C limits are excess of the general annual aggregate limit. 2. Coverage B limit is not subject to the general aggregate annual limit. 3. Coverage A, B, and C apply separately to non-consecutive annual periods. 4. Coverage A, B, and C apply in sum and are the most that will be paid subject to the general aggregate annual limit.

Coverage A, B, and C apply in sum and are the most that will be paid subject to the general aggregate annual limit.

Which of the following represents the primary amount of insurance for the HO-4? 1. Coverage A 2. Coverage B 3. Coverage C 4. Coverage D

Coverage C

Which of the following is EXCLUDED as a covered loss under the DP-3 coverage? 1. Freezing of pipes when water is shut off during a vacancy 2. Vandalism in a house vacant for 30 days 3. Sudden seepage from an air conditioning system 4. Damage by ice to outdoor radio and television antennas and aerials

Damage by ice to outdoor radio and television antennas and aerial

A property damage liability policy would offer protection for which of the following losses? 1. The neighbor's injury sustained at the insured's outdoor party. 2. Damages done to a gas station due to insured's parking collision. 3. A slip and fall injury that happened on the insured's premises. 4. Damages to the insured's home caused by a family member.

Damages done to a gas station due to insured's parking collision.

Which Homeowner Form covers fixtures, installations, and improvements made or acquired at the insured's expense? 1. HO-2 2. HO-3 3. HO-4 4. HO-5

HO-4

Which of the following describes why the insuring agreement is the heart of an insurance policy? 1. It states the ground rules for the policy. 2. It describes the losses for which the insured is not covered. 3. It lists the amount of coverage provided. 4. It describes property covered and perils insured.

It describes property covered and perils insured.

An extended reporting period attached to a general liability policy provides coverage in which of the following ways? 1. It provides coverage for claims made outside the policy term. 2. It gives an additional 30 days coverage beyond the policy term. 3. It gives an additional 10 years coverage beyond the policy term. 4. It covers any gap between the claims-made and occurrence forms.

It provides coverage for claims made outside the policy term

When does the coverage begin for a builders risk form? 1. The date the policy premium is paid 2. On the date any construction begins 3. On the date construction starts above the highest basement floor if there is a basement 4. On the date construction starts above the lowest basement floor if there is a basement

On the date construction starts above the lowest basement floor if there is a basement

How does the BOP differ from the CPP? 1. The BOP covers property damage only. 2. The BOP is specifically designed for larger companies. 3. The BOP covers small businesses that have multiple locations. 4. The BOP prepackages a group of coverages desirable to small businesses.

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? 1. Insured has excess coverage only. 2. No coverage extends from insured's policy. 3. Liability coverage extends to the owner of the vehicle. 4. The broadest coverage available extends from the insured's policy.

The broadest coverage available extends from the insured's policy.

In which of the following situations would workers' compensation benefits be covered for an injured employee? 1. sole proprietor lifting heavy boxes 2. a slip and fall while on the job at work 3. spouse of employee at company picnic 4. shopping after work at place of employment

a slip and fall while on the job at work

Which of the following persons is covered for accidental injury on the insured?s premises under the commercial general liability medical payments? 1. a tenant of the premises 2. an employee of the insured 3. person injured in warfare 4. a volunteer worker

a volunteer worker

Under the insured's personal auto policy, which of the following is CORRECT for a newly acquired car to be covered prior to reporting it to the insurance company? 1. for physical damage coverage to extend it must be a brand new vehicle. 2. for liability coverage to extend it must only be driven by an insured. 3. all coverage extends if the insured reports the car within fourteen days. 4. for uninsured motorist coverage to extend the driver must be the insured.

all coverage extends if the insured reports the car within fourteen days.

What does an application for insurance contractually represent for the insured? 1. an offer 2. a promise to pay 3. an agreement of terms 4. a primary source of information

an offer

Which of the following is considered a hired auto under the commercial auto policy Symbol 8? 1. any auto the insured owns and rents 2. autos rented or borrowed from employees 3. autos the insured leases, borrows or rents 4. any auto the insured will use during the policy period

autos the insured leases, borrows or rents

All of the following are the most commonly used personal inland marine forms EXCEPT 1. personal property form. 2. personal articles form. 3. builder's floater form. 4. personal effects form.

builder's floater form

Which of the following hazards is an example of a physical hazard? 1. burning debris near the building on a calm sunny day 2. leaving the shed unlocked at night because contents are insured 3. backing into the garage door because you want insurance to pay for a new one 4. leaving the keys in the car and doors unlocked

burning debris near the building on a calm sunny day

The property coverage of a BOP includes which of the following? 1. motor vehicles 2. outdoor fencing 3. outdoor signs that are not attached to the building 4. carpeting that is permanently installed inside the building

carpeting that is permanently installed inside the building

Which of the following professionals would purchase Directors and Officers (D &O) insurance to manage the liability risk associated with their activities? 1. film director 2. police officer 3. funeral director 4. chief executive officer

chief executive officer

All of the following are methods of limiting liability EXCEPT 1. split limit. 2. singe limit. 3. per accident. 4. collective limit.

collective limit

Which of the following situations under dwelling policy conditions describe how the insurance company will settle a loss? 1. pay the full value of a pair of earrings when only one is lost 2. company has the option to repair to pre-loss condition 3. if loss is covered by other insurance the other insurance pays full loss 4. property is replaced by company at full replacement value at 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? 1. broad 2. basic 3. comprehensive 4. limited liability

comprehensive

All of the following are listed in the duties of the insured following loss EXCEPT 1. notice of claim. 2. proof of loss. 3. submitting to examination. 4. contracting for restoration

contracting for restoration.

All of the following are used to establish negligence EXCEPT 1. proximate cause. 2. legal duty owed. 3. breach of legal duty owed. 4. cost of damages.

cost of damages

Which of the following does HO-6 provide? 1. coverage for tenant living in a condominium 2. coverage for personal property of a condominium owner 3. broad dwelling coverage for a condominium owner 4. coverage for the rehabilitation of a condominium structure

coverage for personal property of a condominium owner

A DP-2 policy covers all of the following EXCEPT 1. damage to awnings from weight of snow. 2. damage to property caused by burglars. 3. freezing of automatic fire sprinkler systems. 4. accidental discharge of steam from a plumbing system.

damage to awnings from weight of snow.

Which part of the commercial general liability designates who is an insured? 1. conditions 2. declarations 3. definitions 4. insuring agreement

declarations

Underwriters are permitted to use all of the following when underwriting an application for insurance EXCEPT 1. disability. 2. inspection services. 3. credit reports. 4. claim history.

disability.

The insured has a commercial auto policy with a drive other car broadened coverage liability for named individuals (DOC) endorsement. In which of the following would the named individual be covered? 1. racing company car 2. driving neighbor's auto 3. any vehicle owned by insured 4. family member driving company vehicle

driving neighbor's auto

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? 1. employer liability 2. no fault insurance 3. worker insurance 4. employee indemnity

employer liability

All of the following are considered an insured under Part A liability coverage, of the personal auto policy EXCEPT 1. owners of a vehicle the insured is using. 2. employer while insured is driving a company car. 3. anyone using the insured's car with permission. 4. others to the extent that they share liability with the insured.

employer while insured is driving a company car.

A cable company uses employees to install equipment in customers' homes. The company purchases a bond from an insurance company to protect itself from potential dishonest acts of the employees. Which of the following types of bond does the cable company purchase? 1. blanket bond 2. fidelity bond 3. schedule bond 4. surety bond

fidelity bond

Exclusions common to liability coverage for both the personal auto policy and the business auto policy include all of the following EXCEPT 1. work related injuries to insured's employees. 2. vehicles used in prearranged racing or speed contests. 3. for bodily injury or property damage caused intentionally by the insured. 4. for liability arising while the insured auto is being used in an auto business.

for liability arising while the insured auto is being used in an auto business.

All of the following activities are subject to the imposition of strict liability EXCEPT 1. chemical processing. 2. in home child care. 3. manufacturing ladders. 4. staging fireworks displays.

in home child care

All of the following demonstrate insurable interest EXCEPT 1. purchasing fire insurance on a newly acquired cottage. 2. adding collision coverage on auto due to a new loan. 3. deciding to insure an inherited firearms collection. 4. insuring an engagement ring given to fiancée.

insuring an engagement ring given to fiancée.

All of the following losses are excluded from the DP-1 basic policy form EXCEPT 1. earth movement. 2. lightning strike. 3. power interruption. 4. water damage.

lightning strike

When an employer sends employees out of state on work related business, which of the following must he do to ensure the appropriate workers' compensation coverage? 1. purchase a separate policy for the state in question 2. list the names of the employees sent out of state 3. list the state on the information page for other states' coverage 4. report the work to the insurance company as soon as it is completed

list the state on the information page for other states' coverage

Which of the following is the financial injury sustained by the insured caused by an accident for which the insurer, in consideration of the premium, has undertaken to indemnify the insured? 1. exposure 2. loss 3. peril 4. risk

loss

Which of the following would be covered by a commercial package policy? 1. small to medium sized businesses 2. ocean marine 3. loss due to crime 4. injury to worker on the job

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? 1. loss payment condition 2. loss settlement condition 3. consent to settle condition 4. recovered property condition

loss settlement condition

All of the following are considered compensatory special damages when an insured is found legally liable for the loss of another EXCEPT 1. cost to repair damaged property. 2. lost wages. 3. medical expenses. 4. mental anguish

mental anguish.

An insurance company's right to cancel a policy is often limited by state laws but is generally permitted under which of the following conditions? 1. insured files three claims 2. catastrophic loss event 3. non-payment of premium 4. underwriting action

non-payment of premium

Which of the following forms trigger coverage for a loss under the commercial general liability policy if a loss happens during the policy period? 1. claims made form 2. occurrence form 3. period certain form 4. static form

occurrence form

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? 1. bodily injury 2. medical payments 3. per occurrence 4. property damage

per occurrence

The Causes of Loss form for farm property lists which of the following? 1. the type of property insured 2. the amount of insurance provided 3. perils property is insured against 4. exclusions to named insureds

perils property is insured against

Which of the following business liability exposures does a slip and fall loss fall under? 1. indirect and contingent 2. medical expense 3. premises and operations 4. retail hazards

premises and operations

Which of the following terms applies to a policy that pays first when two policies cover the same property? 1. excess 2. pro rata 3. primary 4. non-assigned

primary

All of the following are elements of a valid contract EXCEPT 1. competent parties. 2. consideration. 3. legal purpose. 4. provisions.

provisions.

Which one of the following valuations methods best describes how a loss will be settled when the policy provides for actual cash value settlement? 1. depreciation plus replacement cost 2. cost to repair if less than policy limit 3. replacement cost less depreciation 4. the lesser of insurable interest

replacement cost less depreciation

Workers' compensation benefits for loss of wages include which of the following? 1. reimbursement for medical bills 2. complete replacement for lost wages 3. replacement of a portion of lost wages 4. income stream for survivors

replacement of a portion of lost wages

All of the following establish a defense against negligence EXCEPT 1. contributory negligence. 2. knowingly exposing oneself to risk. 3. repudiation of the claim in a court of law. 4. expiration of the statute of limitations.

repudiation of the claim in a court of law.

Federal Crop Insurance is a type of insurance sometimes called which one of the following? 1. voluntary private insurance 2. special broadened forms insurance 3. national association coverage insurance 4. residual market insurance

residual market insurance

Which of the following types of crime best describe the unlawful act of taking property from the care and custody of another person while threatening to cause bodily harm? 1. burglary 2. robbery 3. shoplifting 4. breaking and entering

robbery

Which of the following terms refers to the transfer of the insured's right of recovery against others to his insurance company? 1. abandonment 2. legal release 3. loss transfer 4. subrogation

subrogation

The Terrorism Risk Insurance Act and the National Flood Insurance Program are similar by providing which of the following? 1. relief for victims of flood loss 2. coverage for loss caused by terrorism acts 3. subsidies, loss sharing or excess coverage 4. government oversight of specialized insurance

subsidies, loss sharing or excess coverage

The following are all types of disability categories under workers' compensation insurance EXCEPT 1. temporary permanent. 2. permanent total. 3. permanent partial. 4. temporary total.

temporary permanent.

Which of the following created The National Flood Insurance Program? 1. an association of mortgage banks 2. the United States Congress 3. governors of flood prone states 4. a consortium of insurance companies

the United States Congress

A woman slips on icy steps and breaks her leg. Which of the following is the peril in this situation? 1. the fall 2. the icy steps 3. the broken leg 4. the season of the year

the fall

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? 1. the state's uninsured motorist fund 2. the uninsured driver 3. the insured's insurance company 4. the insured has no avenue to recover

the insured's insurance company

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? 1. theft 2. forgery 3. robbery 4. burglary

theft

What is the purpose of the causes of loss form that lists specific exclusions? 1. to inform the insurer what the loss is in a claim 2. to state which properties are covered in a loss 3. to state which perils are insured against 4. to inform the insured whether the loss in a claim is covered

to state which perils are insured against

Which of the following are defined as a part of the policy and can void the policy if they are breached, whether the breach was intentional or unintentional? 1. material facts 2. representations 3. waivers 4. warranties

warranties

All of the following are examples of insurable risks EXCEPT 1. when the risk of a loss is expected. 2. when the risk of a loss must cause financial hardship. 3. when the risk of a loss is definite to time and place. 4. when the risk of a loss does not potentially effect a large number of people.

when the risk of a loss is expected