Property and Casualty Exam
Personal contract
A carrier in Florida issues a Homeowners policy to C. The policy is written specifically to respond to the property and liability risk exposures of C and C's family. The policy is not intended to be assigned to another party, and any transfer of policy ownership must have the carrier's consent. This best describes what type of policy? A Contract of adhesion B Indemnity contract C Conditional contract D Personal contract
Products liability
A company manufactures and packages household cleaners. Defective packaging makes it difficult for a customer to open the cleaner. After the customer forced it open, the cleaner gets into their eyes, causing blindness. This is an example of which legal liability exposure faced by the company? A Operations liability B Products liability C Completed operations liability D Premises liability
Increased cost of construction
A loss caused by which of the following would be automatically covered under a Businessowners policy? A Earth movement B Mechanical breakdown C Increased cost of construction D Off-premises power failure
10%
A producer is deemed to be financing premiums if they allow a minimum of what percentage of total premium accounts receivable to be more than 90 days past due? A 25% B 10% C 5% D 15%
Individual Named Insured Endorsement
A sole proprietor with a Business Auto policy can add Personal Auto coverage for their use of a covered private passenger auto through which endorsement? A Employees as Insureds Endorsement B Uninsured Motorists Coverage Endorsement C Drive Other Car Endorsement D Individual Named Insured Endorsement
A deductable
After a covered partial property loss, the insured must retain an amount of the loss, and that amount is subtracted from the insurer's claim payment. This amount is known as: A A deductible B Self-insurance C Coinsurance D Salvage
Pay the difference between the actual cash value of the property before and after the loss
After a partial loss to property that is included in a set, the insurer may: A Deny coverage because the loss was not a total loss B Pay the difference between the actual cash value of the property before and after the loss C Replace the entire set with a set of equal value D Pay the appraised value of the set
Mutual farm
All of the following are classes of insurance requiring a producer's license except: A Accident and health B Mutual farm C Motor vehicle D Life
They will cover damage to the insured's own property
All of the following are true of liability policies, except: A They will cover damage to the insured's own property B They do not cover medical expenses incurred by the insured C They are designed to cover third party injuries or damages D They will pay sums that the insured becomes legally liable to pay
Newly acquired items are automatically covered for 60 days
All of the following provisions are included on the Personal Jewelry Floater, except: A The insurer may require appraisal to determine the value of scheduled jewelry B Coverage can be written on a valued basis C Newly acquired items are automatically covered for 60 days D A Pair and Sets clause applies in the event of a partial loss to a pair or set
Bodily injury includes personal injury, sickness, and disease
All of the following statements regarding liability losses are correct, except: A Loss of consortium means the loss of companionship of a spouse B Advertising injury includes defamation and copyright infringement C Bodily injury includes personal injury, sickness, and disease D Property damage includes physical damage to tangible property, including loss of use of that property
Represent the insured
An agent has authority to do all of the following, except: A Represent the insured B Maintain premium funds in a trust account separate from the agent's operating funds C Use their express authority D Solicit applications on the insurer's behalf
The injury occurs on the way to work
An injury would not be covered by Workers' Compensation under which of the following circumstances? A The injury occurs while a worker is performing work duties B A worker is injured during assigned hours C The injury occurs on the way to work D The risk causing the injury is employment-related
10 days
An insurance company in Illinois may cancel a property or casualty policy for nonpayment by giving notice of: A 5 days B 20 days C 45 days D 10 days
Acquire the insured's financial records and make them available for insurer inspection
An insured has a Homeowners policy, and a mortgage holder is shown in the Declarations. If the insured is denied a claim because they failed to submit a proof of loss, the mortgage holder may still receive loss payment if they do all of the following, except: A Pay any premium due B Notify the insurer of any substantial change in risk C Acquire the insured's financial records and make them available for insurer inspection D Submit a signed and sworn proof of loss
nothing
An insured has a property policy that provides $50,000 of personal property coverage and $100,000 of coverage for the building, with a $1,000 deductible and an 80% coinsurance requirement. If furniture sustains $500 of covered fire damage, how much does the insurer pay? A Nothing B $400 C $1,000 D $500
A single-family dwelling in the Emergency Program
An insured is obtaining flood insurance through the NFIP, and their policy is written using the maximum available limits: $35,000 for the building and $10,000 for the contents. Which building would these limits apply to? A An apartment building in the Emergency Program B A 2-family dwelling in the Regular Program C A single-family dwelling in the Emergency Program D A small business in the Regular Program
It does not contain enough business personal property to conduct customary operations
An insured rents a commercial unit for their business and has commercial property coverage under the Building and Personal Property Coverage Form. The unit is considered vacant when: A Less than 31% of its usual stock is contained in the unit B Less than 31% of the total square footage is used for normal operations C The insured has not visited the property in 60 days D It does not contain enough business personal property to conduct customary operations
Conditions
An insured's home is insured on a Homeowners policy. During a storm, a tree falls and crashes into the side of the home. The Homeowners policy states that the insured must promptly notify the insurer of the loss. The requirement for prompt notice of loss is found in the policy's: A Declarations B Insuring Agreement C Conditions D Endorsements
Necessary dental expenses
An insured's medical payments coverage would provide payment to an injured party for: A Loss of consortium B Mental anguish C Necessary dental expenses D Defamation
Keep the claim payment and surrender the returned property to the insurer
An insured's property is stolen, and the loss is covered by the insurer. A few weeks after the insured receives the claim payment, the stolen property is located and returned to the insured. The insured can: A Repair the returned property at their own expense and sell it to a willing buyer B Keep the claim payment and surrender the returned property to the insurer C Keep the claim payment and the returned property D Notify the insurer of their intent to keep the returned property and pay for repair expenses with the claim payment funds
The SERP must be purchased at the beginning of the policy period
An insured, who has a Commercial General Liability policy written on the Claims-Made Form, is considering adding a supplemental extended reporting period to their policy. All of the following statements about the SERP are correct, except: A The SERP must be purchased at the beginning of the policy period B The SERP provides an unlimited period to report claims C The SERP does not increase the policy limits D The insured must request to add the SERP within 60 days after the end of the policy period
False financial statements
An intruder breaks into a home, threatens the homeowner, and takes the homeowner's money. This is an example of: A Inherent vice B Mysterious disappearance C Robbery D Burglary
Robbery
An intruder breaks into a home, threatens the homeowner, and takes the homeowner's money. This is an example of: A Inherent vice B Mysterious disappearance C Robbery D Burglary
Advertising liability coverage
An unendorsed Garage Coverage Form does not provide: A Garagekeepers coverage B Advertising liability coverage C Physical damage coverage for the insured's autos D Product liability coverage
Physical injury, sickness, or death arising from the negligent acts of an insured
As used in casualty insurance, bodily injury is best described as: A All financially measurable injuries directly sustained, including libel and false arrest B Physical injury, sickness, or death arising from the negligent acts of an insured C Any injury resulting in bleeding, bruising, bone fractures, or disfigurement D Any injury causing hospitalization, disability, or loss of income
Exceeds $500
C has a Homeowners policy with the Personal Property Replacement Cost Endorsement. The insurer will only pay the actual cash value of personal property until actual repair or replacement is complete if the amount of loss: A Exceeds $500 B Is under $500 C Exceeds $1,000 D Exceeds $100
The unlawful taking of property by use of force or threat of force against another person
Commercial Crime policies define robbery as: A The unlawful taking of property by use of force or threat of force against another person B The unlawful taking of property by forcible entry or exit into a premises or safe C A loss evidenced only by an inventory shortage D Any unlawful taking of property
Employee's relatives injured as a consequence of the employee's work
Coverage A of a Commercial General Liability policy will exclude coverage for: A Insured contracts B Host liquor liability C Employee's relatives injured as a consequence of the employee's work D Watercraft ashore on the insured's premises
Permanent partial
Disability income benefits provided by Workers' Compensation typically use a schedule of benefits to determine the compensation owed to a worker with which type of disability? A Temporary partial B Temporary total C Permanent total D Permanent partial
Work classification
For Workers' Compensation and Employers Liability policies, the rate and premium basis used to calculate the premium is determined by the employer's: A Work classification B Premium surcharges C Experience modification factor D Payroll
Retain the salvage of the property without notifying the insured
If an insurer recovers lost property for which it has already paid a claim to the insured, the insurer must do all of the following, except: A Retain the salvage of the property without notifying the insured B Allow the insured the right to retain the property and return the claim payment C Pay for repair expenses if the insured retains the property D Notify the insured of their recovery of the property
10 days
In Illinois, an insurance company may cancel a property policy for nonpayment of premium by giving a notice of: A 20 days B 10 days C 5 days D 45 days
Classify employers with similar exposures to determine the rate and premium basis
In Workers' Compensation insurance, classifications are used to: A Classify employers with similar exposures to determine the rate and premium basis B Calculate the final premium C Classify employees into exposure groups to estimate future claims D Calculate remuneration to use as a premium basis
The named insured, who is struck as a pedestrian by an ATV
In the event of an accident, all of the following people may receive medical payments under a Personal Auto policy, except: The named insured, who is struck as a pedestrian by an ATV B A family friend, who is a passenger in a covered auto C The named insured's foster child, who is struck by an auto while on a crosswalk D The named insured, who is occupying a rental car
Liberalization
Insurer FGH publishes a new edition of a policy form to increase the amount of first aid benefits provided by the form, without a resulting premium increase. What is the name of the condition that automatically applies this broader coverage to all policies currently in effect by the same insurer? A Assignment B Assumption of risk C Liberalization D Subrogation
C's policy
M and C both have Personal Auto policies with liability limits of 20/30/10. If M borrows C's car and injures a pedestrian, causing injuries that will cost $5,000 to treat, which policy will provide coverage for the injured party?
Expected or intended injury
Manufacturers, wholesalers, or retailers all have potential legal liability associated with a product that may arise from each of the following, except: A Expected or intended injury B Strict liability C Breach of warranty D Negligence
Autos owned by the insured's employees while being used in the insured's business
Non-owned autos under the Business Auto Coverage Form include: A Autos owned by the insured's employees while being used in the insured's business B Autos leased or hired by the insured C Autos borrowed by the insured D Any auto not used in the insured's business
Open perils coverage for 30 days
On a Special Form Homeowners policy, which of the following coverages is provided under the Property Removed Additional Coverage? A Open perils coverage for 30 days B Open perils coverage for 10 days C Named perils coverage for 30 days D Named perils coverage for 15 days
Loss of property because it was seized by the government
PQR Company has a Commercial Package policy that includes commercial property and general liability coverages. If the commercial property coverage part of the policy uses the Causes of Loss - Broad Form, all of the following losses are covered, except: A Water damage caused by the accidental discharge of water from the air conditioning system B Loss of property because it was seized by the government C Damage to the building caused by a falling tree D Damage to the roof caused by the weight of ice
Medical payment
Payment of necessary medical expenses without regard to negligence is covered by which of the following insurance coverages? A Property damage B Medical payments C Bodily injury D Personal injury
An agreement between the insurance company and the reinsurer
Policyholder A's insurer is providing coverage on too many homes subject to wind losses. As a result, the company decides to reinsure those policies to share the high risk of wind loss. The reinsurance contract can best be described as which of the following? A An agreement between the insurance company and the reinsurer B An agreement between A and the reinsurance company C An agreement between A, the insurance company, and the reinsurer D An agreement between A's agent and the insurance company
$4,000
T has two Personal Auto policies applying to an auto. The policy through Company A has a limit of $25,000 per accident for property damage liability. The policy through Company B has a limit of $50,000 per accident for property damage liability. How much will Company B have to pay for a covered loss of $6,000 after T damages someone else's property? A $4,000 B $2,000 C $6,000 D Zero
Two
T owns a commercial building with 5 units and insures the building on a Businessowners policy. What is the minimum number of units that must be used to conduct customary operations in order for the building to not be considered vacant? A One B Two C Three D Four
collapse
The Broad Form perils named on the HO-2 include all of the following causes of loss, except: A Windstorm or hail B Theft C Vandalism and malicious mischief D Collapse
The policy will be voided if there is material concealment, misrepresentation, or fraud on the insured's part
The Concealment and Fraud condition in a property insurance policy states: A The company will not grant any coverage that benefits a bailee B The policy will be voided if there is material concealment, misrepresentation, or fraud on the insured's part C Making a false statement regarding a claim does not constitute fraud D The insured must cooperate with the company in the investigation of a claim
Amend the insurance code as needed
The Director may take all of the following actions, except: A Subpoena witnesses B Institute legal proceedings to enforce insurance laws C Issue a cease and desist order D Amend the insurance code as needed
All insurers that write automobile insurance
The Illinois Automobile Insurance Plan (Assigned Risk) is made up of: A All insurers that write property and casualty insurance B All insurers that write automobile insurance C All insurers D Voluntary insurers
Mexico
The Policy Period and Territory condition states that losses are only covered when they occur within the coverage territory. Typically, the territory includes all of the following places, except: A Mexico B Puerto Rico C Canada D Another state in the United States
Loss
The basis for an insurance claim made by a policyholder is a: A Pure risk B Peril C Speculative risk D Loss
Evidences of debt
The definition of money provided by the Businessowners policy includes all of the following, except: A Evidences of debt B Currency C Coins D Traveler's and register checks
Per person limit
The maximum amount that a policy will pay for loss to any one injured party, regardless of overall policy limits, is known as the: A Split limit B Aggregate limit C Per occurrence limit D Per person limit
Conditions
The rules and procedures to be followed by the insured and the insurer are found in which section of an insurance policy?
Cancellation
The termination of an insurance policy, by either the insured or the insurer, before the policy's expiration date is known as: A Lapse B Nonrenewal C Cancellation D Abandonment
The attorney general, at the director's request
To enforce an administrative order or proceeding decision related to Illinois insurance law, legal action may be initiated by: A The governor, at their discretion B The Attorney General, at the Director's request C The Director of Insurance, at their discretion D The state treasurer, at the Director's request
Cherry picker
Under Commercial Auto policies, an auto can include a self-propelled vehicle with permanently attached: A Cherry picker B Power crane C Drill D Scraper
Property of a tenant
Under Coverage C of a Homeowners policy, losses to all of the following may be covered, except: A Property of the insured's child who is away at college B Property of a residence employee C Property of a tenant D Property of a guest
Collision coverage
Under Part D - Coverage for Damage to Your Auto of the Personal Auto policy, vehicle upset would be covered under: A Other than collision coverage B Comprehensive coverage C Collision coverage D Transportation expenses coverage
Actual cash value
Under a Basic Form Dwelling policy, losses to the dwelling are paid on which basis? A Market value B Replacement cost C Actual cash value D Agreed value
The retroactive date
Under a Claims-Made Commercial General Liability policy, what is the date after which an occurrence can take place and be covered by the policy? A The retroactive date B The expiration date C The effective date D The countersignature date
Contribution by equal shares
Under an employer's Workers' Compensation and Employers Liability policy, if the employer has other insurance covering its liability for Workers' Compensation benefits, the policies will pay on what basis? A Contribution by equal shares B Elective C Excess D Pro rata
Electronic data
Under the BOP, which of the following is not an Optional Coverage? A Electronic Data B Money and Securities C Employee Dishonesty D Outdoor Signs
Uninsured motorists coverage is automatically included in Section ||
Under the Business Auto Coverage Form, all of the following are correct, except: A Coverage is primary on owned autos B Uninsured motorists coverage is automatically included in Section II C Medical payments coverage must be added by endorsement D Coverage may be written on owned private passenger autos
Payroll
Under the Business Income With Extra Expense Coverage Form, extra expenses are defined to include all of the following expenses, except: A The costs to relocate and equip the temporary location B Expenses incurred to minimize the suspension of business C The cost to continue operations at the described location D Payroll
31%
Under the Commercial Building and Personal Property Coverage Form, the commercial building owned by the insured is considered vacant unless at least what percentage of the square footage is rented or is used to conduct operations? A 51% B 61% C 41% D 31%
The period of restoration ends 5 consecutive days after the damaged property is repaired or replaced
Under the Equipment Breakdown Protection Coverage Form, which of the following statements about business income and extra expense coverage is correct? A If the insured has this coverage, the Annual Report of Values form is not necessary B Coverage is automatically provided by the policy, up to a percentage of the limit applying to property damage coverage C This coverage pays for necessary extra costs to expedite permanent repairs or replacements D The period of restoration ends 5 consecutive days after the damaged property is repaired or replaced
If an individual is denied insurance coverage because of a consumer report, they can request a copy of the report
Under the Fair Credit Reporting Act, which of the following statements is correct? A The reporting agency has no responsibility to investigate inaccurate information B The Act is designed to protect reporting agencies from the public C If an individual is denied insurance coverage because of a consumer report, they can request a copy of the report D The reporting company can provide confidential information to anyone requesting it
The policy will not provide any coverage while insured property is being removed when endangered by a covered peril
Under the Property Removed Other Coverage of a Dwelling policy, which of the following is incorrect? A Removed property is covered against direct loss from any peril B The coverage does not change the limit of liability that applies to the property C The policy will not provide any coverage while insured property is being removed when endangered by a covered peril D Under the DP-1, coverage is provided for up to 5 days
$20
What is the maximum the Business Auto Coverage Form will pay per day for loss of use of a hired auto?
The highest limit of the two policies
When an auto has two Personal Auto policies with the same insurer, the insurer's liability would not exceed: A The highest limit of the two policies B The limit of the last one purchased C The limit of the first one purchased D The combined limit of the two policies
A peak season endorsement
When an insured has a business that experiences an increase in business personal property during a designated period, they might consider purchasing: A Agreed Value Optional Coverage B A Peak Season Endorsement C Inflation Guard Optional Coverage D A Value Reporting Form
If the producer accepts over 10% of total accounts in installments and any portion of the accounts is collected 90 days or more after the premium due date
When is a producer considered to be financing premiums? A If the producer accepts over 10% of total accounts in installments and any portion of the accounts is collected 30 days or more after the premium due date B If the producer accepts over 50% of total accounts in installments and any portion of the accounts is collected 90 days or more after the premium due date C If the producer accepts over 10% of total accounts in installments and any portion of the accounts is collected 90 days or more after the premium due date D If the producer accepts any account in installments that is collected 90 days or more after the premium due date
Theft
When the named insured's personal effects are insured by the Personal Effects Coverage Extension of a Businessowners policy, coverage is provided against all of the following perils, except: A Theft B Sinkhole collapse C Riot or civil commotion D Lightning
Subrogation
Which condition provides the insurer the right to collect against a responsible third party?
Replacement cost
Which loss valuation basis often requires the policyholder to carry insurance to value? A Actual cash value B Market value C Replacement cost D Agreed value
Bailees Customers Form
Which of the following Inland Marine coverage forms covers property of others that is held by the insured for servicing or repair? A Bailees Customers Form B Equipment Dealers Floater C Installation Floater D Contractors Equipment Floater
Contributory negligence
Which of the following defenses against negligence prevents recovery for injuries caused by a negligent party if the claimant was also negligent? A Comparative negligence B Intervening cause C Assumption of risk D Contributory negligence
Replacement cost up to the Coverage A limit
Which of the following describes the loss settlement basis for a fire damage claim to a dwelling insured under a DP-3 policy? A Replacement cost up to the Coverage A limit B Actual cash value of the dwelling up to the Coverage A limit C Replacement cost up to the Coverage B limit D Actual cash value of the dwelling up to the Coverage B limit
Backdating
Which of the following is not an example of a prohibited practice? A Rebating B Backdating C Defamation D Misrepresentation
A broken leg
Which of the following is not an example of personal injury? A Misappropriation of a title or slogan B Infringement of copyright C A broken leg D False arrest
Loss by theft of personal effects
Which of the following is not included in the Personal Effects and Property of Others Coverage Extension available under the Building and Personal Property Coverage Form? A Personal effects owned by the insured B Loss by theft of personal effects C Personal property of others in the insured's care D Personal effects owned by any partner or member of the insured
Coverage is not included for wind loss to television antennas
Which of the following is true regarding Coverage A under a Dwelling policy? A Outdoor equipment is not covered B Coverage is not included for wind loss to television antennas C Coverage for land is restricted to the land upon which the dwelling is sitting D Coverage A would protect a detached carport
Blanket
Which of the following methods of writing insurance is used to provide insurance on properties at different locations, using a single policy, and a single limit of insurance? A Blanket B Unified C Listed D Scheduled
Smoke damage from industrial operations
Which of the following perils is not covered under a Broad Form Dwelling policy? A Smoke damage from industrial operations B Weight of ice and snow C Burglary damage D Vehicle damage to the dwelling
The premium is higher based on insured's geographic location and actuarial data
Which of the following scenarios is not an example of discrimination? A The premium is higher based on insured's geographic location and actuarial data B The application is denied because the insured will travel to Africa C The policy is renewed because of the insured's previous military service D The coverage is limited because the insured is blind
It applies to losses from all occurrences within a specified policy period
Which of the following statements about an aggregate limit is correct? A It replaces the per occurrence limit for each loss B It is a lifetime limit C It applies per occurrence D It applies to losses from all occurrences within a specified policy period
The insured will receive back the entire unearned premium without any penalty
Which of the following statements about pro rata cancellation is the most correct? A The insured will receive back 90% of the unearned premium B The insured will receive back 75% of the unearned premium C The insured will receive back the entire unearned premium without any penalty D The premium is fully earned by the insurance company
The Fund consists of a residential sub-fund and a commercial sub-fund
Which of the following statements is true concerning the Illinois Mine Subsidence Insurance Fund? A Insurers reimburse the Fund for claims resulting from mine subsidence B The Fund consists of a Residential sub-fund and a Commercial sub-fund C The Fund is financed by member insurers D Insurers provide reinsurance for the Fund
A policy of Fire and Extended Coverage insurance may not be cancelled without allowing the insured the opportunity to make repairs sufficient to continue coverage
Which of the following statements regarding terminations of policies issued in Illinois is correct? A A property policy insuring a day care home may be cancelled solely because the insured operates a licensed day care home on the premises B A personal policy may not be cancelled or nonrenewed based on credit information C An insurer may terminate an auto policy because an agent or broker is not located in geographical proximity to the applicant D A policy of Fire and Extended Coverage insurance may not be cancelled without allowing the insured the opportunity to make repairs sufficient to continue coverage
An interstate railroad worker
Which of the following workers would be covered by the Federal Employers Liability Act (FELA)? A A miner B A shipbuilder C An insterstate railroad worker D An agricultural worker
The insured's tenant
Which of the following would NOT be an insured under Section II of the Homeowners policy? A Any person legally responsible for watercraft owned by an insured B Relatives of the named insured, meaning they are related by blood, marriage, or adoption C Members of the family under the age of 24 living at school away from the home D The insured's tenant
Property damage to property owned by an insured
Which of the following would not be covered under Section II of a Homeowners policy?
Road damage to tires
Which peril is not covered under part D of the personal auto policy? A Riot B Flood C Earthquake D Road damage to tires
Additional insured
Which person is not typically covered by a policy, but can be included in coverage by endorsement when they have insurable interest in property? A First named insured B Named insured C Excess insured D Additional insured
Loss settlement
Which property policy condition indicates which loss valuation method applies to covered property? A Arbitration B Limit of Insurance C Loss Settlement D Loss Payment
Actual cash value
Which term describes the cost to replace property minus the deduction for depreciation?
First named insured
Who is responsible for paying premiums, and will receive any premiums that have to be returned? A Any insured B An additional insured C Any named insured D First named insured
30
Within how many days after an insured acquires new business property must the property be added to the BOP policy? A 60 B 20 C 30 D 45
Absolute liability
Z is a distributor of natural gas. While connecting gas to B's house, an explosion occurs and the house is destroyed. Z's defense is that B did not turn off the pilot light on the furnace before the hookup, as instructed by the company. The court ruled that the activities of connecting gas lines were so dangerous that Z's defense did not relieve its liability. What legal principle is applicable in this case? A Absolute liability B Assumption of risk C Comparative negligence D Contributory negligence
