P/C Chapter 1

Ch 2: Jim Gerber pays an annual premium of $800. THe policy period is 1/1/14 to 1/1/15. THe insurer cancels the policy providing required written notices to Jim as of 6/30/14. What will Jim Receive? A. A pro rata premium return of $800 B. A pro rata premium return of $400 C. A pro rata premium return of $300 D. A short rate premium return of $400

B. A pro rata premium return of $400

Ch 1: According to the Federal Government definitions, which of the following would be considered terrorism? A. A violent storm that causes millions of dollars in damage B. A violent act that covers property damage C. An act deemed by Congress to be terrorism D. An accident that results in the disability of a human

B. A violent act that covers property damage

Ch 2: The cost or reparing or replacing damaged property less a deduction for depreciation best describes: A. Subrogation B. Actual cash Value C. Market Value D. Insurance to value

B. Actual cash value

CH 4: Personal property losses settled under a Dwelling Property Basic form are settled on a(n): A. Replacement cost basis B. Actual cash value basis C. Valued policy basis D. Decreased cost basis

B. Actual cash value basis

Ch 1: An offer and acceptance is also referred to as an: A. Illustration B. Agreement C. Adhesive Contract D. Aleatory Contract

B. Agreement

CH 3: A type of property insurance policy which provides coverage for all types of loss except perils specifically excluded best describes: A. Named peril policy B. All-risk C. Specified Peril D. COntingent peril

B. All-risk

CH 3: The broadest form fo property protection is provided by which of the following? A. named peril policy B. All-risk policy C. Specified peril policy D. Aggregate policy

B. All-risk policy

CH 4: Barbara insures a dwelling in the amount of $200,000. Which of the following permits her to stipulate that Jack receive a loss payment as long as the insurer provides written consent? A. Other insurance provision B. Assignment provision C. Reasonable repairs D. Insurable interest

B. Assignment provision

CH 3: A common law defense that prevents an injured third party from recovery if he was negligent involves: A. comparative negligence B. contributory negligence C. assumed negligence D. Statutory negligence

B. Contributory negligence

CH 4: Which of the following is not a covered peril under a DWelling Property Broad form? A. Damage resulting from bursting pipes B. Damage resulting from land shocks C. Damage resulting from falling objects D. Damage resulting from burglary

B. Damage resulting from land shocks

Ch 1: Which of the following parts of an insurance policy identifies the causes of loss not covered? A. Conditions B. Exclusions C. Insuring provision D. Declarations Page

B. Exclusions

Ch 2: Which of the following types of reinsurance functions on a case by case basis? A. Automatic B. Facultative C. Treaty D. Concurrent

B. Facultative

Ch 1: Which of the following parts of an insurance contract identifies the perils covered? A. Declarations B. Insuring Agreement/Provisions C. Conditions D. Exlusions

B. Insuring Agreement/Provisions

Ch 1: Which of the following parts of an insurance contract contains the nature of the agreement between the insurer and the policyholder? A. Declarations B. Insuring Provision C. Conditions D. Exclusions

B. Insuring Provision

Ch 1: Federal regulations with regard to interstate commerce govern which of the following? A. Canada B. PR C. Bahamas D. Mexico

B. PR

CH 2: When an airport uses de-icing on a plane ready for takeoff, it has engaged in risk: A. Transfer B. Prevention C. Sharing D. Avoidance

B. Prevention

Ch 1: The statements made by an applicant in an insurance application are considered to be: A. Warranties B. Representations C. Misrepresentations D. Countersignatures

B. Representations

CH 4: A Personal Articles Floater provides all-risk coverage on which of the following bases? A. Named-peril basis B. Scheduled basis C. Market value basis D. Valued basis

B. Scheduled Basis

CH 2: If an insured cancels his or her insurance policy during the term of the contract, what type of premium refund will be received? A. Pro rata B. Short rate C. Prohibited D. Arbitrated

B. Short rate

CH 3: A type of property insurance policy covering causes of loss that are named in the contract is known as: A. All-risk insurance B. Specified peril insurance C. Scheduled insurance D. Listed peril policy

B. Specified peril insurance

Ch 2: Property insurance is a personal contract. What concept allows the insurer the legal right to seek reimbursement from at-fault third parties after paying a claim to the insured? A. Indemnity B. Subrogation C. Transfer of rights and duties D. Assignment

B. Subrogation

Ch 1: Which of the following helps to protect the financial capacity of an insurer? A. Violent crime control act B. Terrorism Risk Insurance Act C. Federal Regulations pertinent to insurance D. Risk Retention Act of 1986

B. Terrorism Risk Insurance Act

Ch 2: THe difference between an accident and an occurence depends upon which of the following? A. The time of the accident B. THe duration of the loss C. The coverage limits stated in the policy D. the frequency of claim payments

B. The duration of the loss

Ch 1: An insurance policy is comprised of four basic sections. Which of the following appears in the declaration section of the policy? A. the perils covered B. The type of property covered C. The obligations of the insurer D. THe property not covered

B. The type of property covered

Ch 2: Ted owns a commercial building located within city limits. If this building is currently unfurnished it may also be described as: A. Unoccupied B. Vacant C. Proximately occupied D. Indemnified

B. Vacant

Ch 1: An insurer which issues a policy after accepting an incompete application has engaged in a: A. Parole Evidence Rule B. Waiver C. Warranty D. Conditional Acceptance

B. Waiver

Ch 1: Which of the following best describes when an insurer fails to enforce a provision in an insurance policy? A. Concealment B. Waiver C. Adhesion D. Fraud

B. Waiver

CH 4: An insured has scheduled fine arts on a personal articles floater or homeowners policy and later purchases additional fine arts. In order for coverage to be provided for the newly acquired property, when must the insurer be notifed? A.Prior to purchase B. Within 90 days of acquisition C. The insurer does not need to be notified D. By the time the policy renews

B. Within 90 days of acquisition

Ch 2: John works for a construction company which guts out old buildings prior to reconstruction. Many of the old buildings are insulated with a hazardous material and several years later John suffers from a physical disorder related to this exposure. The injury that john has suffered is an example of: A. An accident B. An occurence C. A hazard D. A peril

B. an occurence

Ch 2: Risk is a central concept to the insurance field. It may be defined as: A. transfer of loss B. chance of loss C. probability of gain D. possibility of gain

B. chance of loss

CH 3: Which of the following may be added to a property insurance contract to amend coverage mid-term? A. Proposal B. endorsement C. rider D. extension

B. endorsement

CH 2: Which of the following policies pays a third party on behalf of an insured? A. PRoperty insurance policy B. Liability insurance policy C. Valued policy D. equipment breakdown insurance

B. liability insurance policy

CH 4: All of the following are extensions of coverage or "other coverages" which appear in a Dwelling Property form, EXCEPT: A. Debris removal B. Personal property C. Fire dept services charges D. reasonable repairs

B. personal property

CH 2: Thelma is having a cookout for her relatives on a Saturday afternoon. To be able to run in and out of the house quicker, she leaves the screen door open. A hail storm begins dropping golf ball sized stones on the property and a gust of wind slams the screen door shut, as THelma is entering the home. The door pushes her into the stove, which is lit, and the collision causes the curtains to catch fire, which requires the fire dept to put out the blaze. Which of the following is the proximate cause of the fire damage? A. The hail B. The wind C. The collision D. THe screen door

B. the wind

CH 4: Jean owns a Dwelling Property Special form. The policy deductible is $250. THe dwelling is insured for $100,000. A fire causes $10,000 in damage and Jean must move into a local hotel for two months at a cost of $2,200 per month while the dwelling is repaired. If Jean's normal living expenses are $2,000 per month, what will her policy pay for damages? A. $9,750 B. $9,950 C. $10,150 D. $11,950

C. $10,150

CH 4: Property removed coverage under a DP-3 policy is provided for up to: A. 5 days B. 20 days C. 30 days D. 45 days

C. 30 days

CH 4: Covered loss to a tree, shrub, or plant is paid by a Dwelling Property Broad form in the amount of: A. 10% of the Coverage A amount not to exceed $500 per item B. 10% of the Coverage A amount not to exceed $250 per item C. 5% of the Coverage A amount not to exceed $500 per item D. 5% of the Coverage A amount not to exceed $250 per item

C. 5% of the Coverage A amount not to exceed $500 per item

CH 4: Which of the following risks would be hte best candidates for a dwelling property form? A. A pick-up used as a residence B. A newly constructed single family home C. A hundred year old houes rented to a tenant D. A utility shed used to store lumber located on a lot owned by an insured

C. A hundred year old house rented to a tenant

CH 4: Which of the following types of coverage is also referred to as indirect loss insurance? A. Personal Property Coverage B. Personal Lines insurance C. Additional living expenses D. Insurable interest coverage

C. Additional living expenses

CH 3: Which of the following best describes the concept of negligence? A. Failing to wear a seatbelt B. neglecting to buy snow tires during the winter C. Carelessly causing an auto accident D. Increasing the chance of loss

C. Carelessly causing an auto accident

Ch. 1: Each of the following must be present in order for an insurance contract to be legal and enforceable EXCEPT: A. Offer B. Acceptance C. Competent Underwriting D. Legal Purpose

C. Competent Underwriting

CH 4: Which of the following dwelling property policies provides the broadest amount of property protection? A. DP-1 B. DP-2 C. DP-3 D. DP-4

C. DP-3

CH 4: Which of the following is not covered by earthquake coverage? A. Earth movement B. Volcanic eruption C. Damage to land caused by earthquake D. Damage caused by tremors

C. Damage to land caused by earthquakes

CH 4: Which of the following perils is covered by a Dwelling Property Bsaic form? A. Loss caused by bursting pipes B. Damage caused by a falling object C. Destruction of property caused by lightning D. Loss caused by the weight of ice, snow and sleet

C. Destruction of property caused by lightning

CH 4: A surveyor, while working, is injured on the named insured's premises and incurs medical expenses. Coverage for the injury sustained is: A. Covered by CPL policy B. Partially covered by the CPL policy C. Excluded by the CPL policy D. Paid by the CPL with no proof of liability required

C. Excluded by the CPL policy

Ch 2: Which of the following provides broader coverage for something not normally covered by a property insurance policy? A. Appraisal B. Depreciation C. Extension of coverage D. Hazard

C. Extension of coverage

Ch 2: A condition that may increase or heighten the chance that a loss may occur is known as: A. Peril B. Risk C. Hazard D. Concealment

C. Hazard

Ch 2: Which of the following insurance principles makes an insured whole again following a covered loss? A. Subrogation B. Insurance Interest C. Indemnity D. Replacement

C. Indemnity

CH 4: Each of hte following is covered by a Comprehensive Personal Liability policy's Medical Payments section of coverage, EXCEPT: A. Prosthetic devices B. Funeral expenses C. Intentional injury to others D. Professional Nursing Expenses

C. Intentional injury to others

Ch 1: Which of the following is true regarding the Fair Credit Reporting Act? A. It permits insurers to deny invalid claims B. IT allows applicants to do a credit check on an insurer. C. It allows an applicant to receive a copy of the information contained in a consumer report D. It permits an insurer to cancel a policy for nonpayment of premium

C. It allows an applicant to receive a copy of information contained in a consumer report

CH 3: WHich of hte following is true regarding a liability insurance policy? A. It involves two parties only B. It is a three party contract paying damages to an insured C. It is a two party contract paying damages to a third party D. It is a two party contract paying up to the limit of liability to an insured

C. It is a two party contract paying damages to a third party

CH 4: Which of the following would be covered by a dwelling property form? A. Borrowed auto B. Rented watercraft C. Lawn mower borrowed from a neighbor D. Aircraft chartered by an insured

C. Lawnmower borrowed from a neighbor

CH 2: Which of the following involves the full cost to repair or replace destroyed property? A. Actual cash value B. Market Value C. Replacement Cost D. Current Cost

C. Replacement Cost

CH 3: A fine arts policy is covered on which of the following bases? A. Actual cash value B. Replacement cost C. Valued D. Market value

C. Valued

CH 4: All of the following fall under the Nationwide Definition of Marine Insurance, EXCEPT: A. Exports B. Tunnels C. Valued Policies D. Domestic Shipments

C. Valued Policies

CH 4: Which of the following would be coverd in a Dwelling Property Broad Form (DP-2)? A. Water seeping in from an in-ground pool damages property B. Water damage from a sump pump overflow C. Water damage resulting from the accidental discharge from a washing machine D. Windstorm blows out a window and water from rain causes damage to furniture

C. Water damage resulting from the accidental discharge from a washing machine

CH 2: Which of the following losses cannot be covered by an insurance policy since it does not involve a covered peril? A. The insured's dog mauls a passerby B. A mechanic damages a customer's car C. A gambling loss D. Windstorm damages a silo

C. a gambling loss

CH 3: Each of the following involves liability being passed from one party to another, EXCEPT: A. Imputed liability B. Vicarious liability C. Strict liability D. Respondeat Superior

C. strict liability

CH 4: Jim buys a DP-3 policy providing $50,000 of coverage from "ABC Mutual". He also buys another DP-3 policy from "XYZ Mutual" in the amount of $25,000. If Jim suffers a covered loss of $6,000, how much would "XYZ Mutual" pay? A. $2,000 B. $4,000 C. $6,000 D. $2,000 less deductible

D. $2,000 less deductible

Ch 2: The principle of indemnity is best supported by which of the following? A. Nonrenewal Provision B. Cancellation C. Right of Salvage D. Actual Cash Value

D. Actual Cash Value

Ch 2: Which of the following types of loss is considered to be an indirect loss? A. Loss of use B. Loss of income C. Additional living expenses D. all of the above

D. All of the above

Ch 2: A process utilized when an insurer and insured cannot agree upon the extent of a loss best describes? A. Arbitration B. Subrogation C. Indemnification D. Appraisal

D. Appraisal

CH 2: An individual who refuses to invest in the securities or bond market is engaging in what type of risk management? A. Retention B. Reduction C. Transfer D. Avoidance

D. Avoidance

CH 4: Which of the following liability losses would be covered by a Comprehensive Personal Liability policy? A. BI Resulting from an inboard motor boat owned by the insured B. BI resulting from an inboard motor boat rented by the insured C. BI Resulting from an outboard motor boat rented by the insured D. BI resulting from a sailboat less than 26 ft in length

D. BI resulting from a sailboat less than 26 ft in length

CH 3: John owns a home on an acre of cleared land. Recently, john has been building a deck at the rear of his residence. Most of the time, he leaves his tools on the deck. A neighbor's child is attracted to the tools and is injured while playing with them. John is legally liable for the injury due to his negligence or: A. aggregate liability B. strict liability C. prudent behavior D. carelessness

D. Carelessness

CH 3: Which of the following negligence laws indicates that the degree of fault is determined by a court? A. last clear chance B. Assumption of risk C. contributory negligence D. Comparative negligence

D. Comparative negligence

CH 2: Which of the following supports the theory of indemnity? A. Liberalization clause B. Abandonment C. Market Value D. depreciation

D. Depreciation

Ch 1: WHich of the following permits an insurer to reduce the cost of insurance? A. Declarations B. Insuring Agreement C. Conditions D. Exclusions

D. Exclusions

CH 4: Which of the following type of property is covered on a valued basis? A. Cameras B. Musical instruments C. Jewelry D. FIne arts

D. Fine Arts

Ch 2: Several cans of gasoline stored in an insured's basement is an illustration of a: A) Peril B) Loss C) Risk D) Hazard

D. Hazard

Ch 1: Concealment may be used by an insurer to void an insurance contract if the concealment on the part of an insured is: A. Accurate and relevant B. Deliberate and manufactured C. Manufactured and inconsistent D. Intentional and material

D. Intentional and material

CH 2: Which of the following best describes the total losses suffered by an insurer during the year divided by the earned premiums collected? A. Reserve ratio B. Current ratio C. Profit Ratio D. Loss Ratio

D. Loss Ratio

CH 4: All of the following are exclusions which appear in a Dwelling Property Special Form, EXCEPT: A. Intentional destruction B. Loss by neglect C. Damage caused by sewer backup D. Loss caused by airborne shock

D. Loss caused by airborne shocks

Ch 1: In which of the following situations will terrorism be covered? A. Property losses of more than $1 million results B. Property losses of more than $10 million results C. Property losses of more than $20 million results D. Property losses of more than $100 million results

D. Property losses of more than $100 million results

Ch 2: The probability or possibility of loss best identifies which of the following? A. Assignment B. RIght of salvage C. Repalcement Cost D. Risk

D. Risk

CH 4: Dwelling policies provide property insurance protection for an insured. Why would the insurance company providing the coverage exclude loss due to wear and tear? A. Since it is an intentional act B. Since it is not influenced by the loss of large numbers C. Since it is a catastrophic loss D. Since it involves a certainty

D. Since it involves a certainty

Ch 2: Which of the following best describes the concept of insurance? A. THe transfer of rights of recovery B. THe transfer of rights and duties C. The uncertainty concerning loss D. THe transfer of risk from one party to another

D. The transfer of risk from one party to another

Ch 2: What is the primary obligation or responsibility of an insurance company? A. To collect premiums B. To make a profit C. TO return all unearned premium due an insured D. To pay valid claims

D. To play valid claims

CH 4: Extended coverages may be added to a Dwelling Property Basic form for an additional premium. Each of the following is covered by extended coverages EXCEPT: A. Damage caused by riot B. Wind damage C. Damage caused by explosion D. Vandalism damage

D. Vandalism damage

Ch 1: A statement made by an applicant for insurance that is guaranteed to be absolutely true and is made part of the contract is called a: A. Representation B. Conditional Promise C. Consideration D. Warranty

D. Warranty

CH 4: Joe is covered by a Dwelling Property Basic form. Which of the following losses will be covered by this mono-line property insurance policy? A. Damage resulting from the continual leakage of a plumbing or heating system B. Ice, snow and sleet damage to a fence C. Damage to the insured's sidewalk caused by an oil truck delivering oil D. Water damage to insured property as result of fire

D. Water damage to insured property as result of fire

CH 4: An insured who owns a Dwelling property poilicy may use up to 10% of the personal property coverage amount carried for loss to contents away from the premises according to which of the following extensions of coverage? A. Property removed B. Rental Value C. improvements and betterments D. World-wide coverage

D. World-wide coverage

Ch 1: All of the following are exceptions to legal capacity, EXCEPT: A. A sixteen year old B. an individual under the influence C. A person suffering from mental illness D. A retired short order cook

D. a retired short order cook

CH 3: Which of the following best describes a separate unrelated cause that interrupts a series or chain of events and leads to another series of events? A. proximate cause B. common cause C. consequential cause D. Intervening cause

D. intervening cause

CH 4: The Johnson's buy a Dwelling property basic form with extended coverages. While on vacation for two weeks, their home is burglarized and $2,500 of damage is done to their living room. The policy includes a $500 deductible. How much will the policy pay? A. $0 B. $500 C. $2,000 D. $2,500

A. $0

CH 4: Tom buys a homeowners policy with a $200 deductible. He incurs separate losses of $500 and $100 during the policy year. How much will his policy pay? A. $300 B. $400 C. $500 D. $600

A. $300

Ch 1: A producer who misappropriates or embezzles funds from an insurer which causes it to experience financial difficulty may be imprisoned for which of the following A. 15 years B. 20 years C. 25 years D. 30 years

A. 15 years

CH 4: John's home is endangered by fire. He removes several items of personal property from the dwellings and places them in a neighbor's garage. Under property removed coverage, John will have coverage for his property at this other location under his Dwelling Property Basic Form for: A. 5 days B. 20 days C. 30 days D. 45 days

A. 5 days

Ch 1: An insurance contract is created by an insurer. Any ambiguities that appear in the future will be decided by a court in favor of the insured since the policy is: A. A contract of adhesion B. An aleatory contract C. A unilateral contract D. A personal contract

A. A contract of adhesion

CH 2: A temporary insurance contract that may be oral or written and generally lasts no more than thirty days best describes: A. Binder B. Endorsement C. Proposal D. Warranty

A. Binder

CH 4: Which of the following would be covered by a Dwelling Property Special form? A. Damage to a detached garage caused by the insured's auto B. Theft of property C. Vandalism to property 65 days after the premises became vacant D. Damage to property 35 days after it was removed from the premises because of a fire

A. Damage to a detached garage caused by the insured's auto

Ch 1: The name of a mortgagee, amount of the annual premium and the coverage inception date all appear in what section of a property and casualty insurance policy? A. Declarations B. Insuring agreement C. Conditions D. Exclusions

A. Declarations

Ch 1: Which of the following is a generic section of an insurance contract but includes different information in each individual policy? A. Declarations B. Insuring Agreement C. Conditions D. Exclusions

A. Declarations

CH 2: Which of the following supports and is influenced by the theory of indemnity? A. Insurable Interest B. Transfer of rights of recovery C. Consequential loss D. A covered peril

A. Insurable Interest

Ch 1: Ms. Walters makes an offer to an insurer. The insurer then counters the original offer. This means that the original offer has been: A. Rejected B. Accepted C. unilaterally assumed D. Negotiated

A. Rejected

Ch 1: A promise made in exchange for an act already performed best describes: A. A unilateral contract B. A bilateral contract C. An executory contract D. An executed contract

A. Unilateral Contract

Ch 2: An insurer who pays a fire claim in an amount greater than the actual value of the damaged bulding has violated: A. the principle of indemnity B. the law of averages C. Subrogation D. Actual cash value law

A. principle of indemnity

CH 4: Which of the following provisions or coverage does not appear in A Dwelling Property Basic form? A. Replacement Cost B. Rental Value C. Property Removed D. Reasonable repairs

A. replacement cost

CH 2: Which of the following provision would prevent an insured from collecting damages twice from the same loss? A. Subrogation provision B. Duties in the event of loss provision C. Assignment provision D. Vacancy Provision

A. subrogation provision

Ch 1: Which of the following appears on the declarations page of a homeowners policy? A. The coverage limits B. the promise of the insurer C. The perils not covered D. The rules of conduct

A. the coverage limits