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.