Pearson VUE: Casualty Insurance Practice Exam

Premium costs for standard Workers Compensation insurance are paid by: A. employers only B. employees only C. employers and employees jointly D. the Workers Compensation Board

A

Risk is best defined as: A. the uncertainty of loss B. the cause of loss C. the increased chance of loss D. financial loss

A

The act of intentionally withholding from an insurance application a fact that would affect issuance of the policy is referred to as: A. concealment B. misrepresentation C. defamation D. twisting

A

The attempt to restore an insured to the insured's previous financial condition before the loss occurred is BEST described as: A. indemnification B. subrogation C. coinsurance D. self-insurance

A

Under a Commercial General Liability policy, Personal and Advertising Injury Liability coverage does NOT apply to damages resulting from: A. slanderous statements made by an advertising firm B. copyright infringement by a department store C. harmful, truthful information published by a realtor D. invasion of an individual's privacy

A

Which of the following individuals is a named insured under a Personal Auto policy? A. A person who is listed in the Declarations section B. A valet who parks an insured's car C. An insured's employer who drives the insured's car for personal use D. A neighbor who drives an insured's car with permission

A

Which of the following liability coverages may require the insured's consent before the insurance company settles and pays a loss? A. Professional B. Automobile C. Products D. Contractual

A

A business insured under a Commercial General Liability policy has a General Aggregate limit of $1,000,000 and an Occurrence limit of $100,000. An injured party is awarded $100,000. What limits will remain available to the insured? A. General Aggregate of $1,000,000; Occurrence limit of $100,000 B. General Aggregate of $900,000; Occurrence limit of $100,000 C. General Aggregate of $1,000,000; Occurrence limit of $0 D. General Aggregate of $900,000; Occurrence limit of $0

B

A legal obligation for injuries that are sustained due to failure to perform a duty is known as: A. negligence B. liability C. physical hazard D. claims payment

B

A person is acting negligently if they: A. buy a sportscar B. fail to act prudently C. work at home D. spend more than they earn

B

A policyholder would expect to find which of the following information in the Insuring Agreement section of an auto policy? A. Bodily Injury limits of liability B. The insurance company's promise to pay on the behalf of the insured C. Exclusions regarding certain uses of the auto D. The obligations of the insured in the event of a loss

B

An insured is required to take which of the following actions immediately after an occurence? A. Request a subrogation statement from the producer B. Give notice of claim to the insurance company C. Notify an independent adjuster D. Obtain a written report from the police department

B

Anything that increases the chance of loss is known as a(n): A. risk B. hazard C. direct loss D. indirect loss

B

In insurance, which of the following terms refers to continuous or repeated exposure to conditions that may result in bodily injury or damage neither expected nor intended? A. An accident B. An occurrence C. An event D. A condition

B

The principle of actual cash value is applied to claims for which of the following policies? A. Accidental Death B. Auto Physical Damage C. Variable Annuity D. Workers' Compensation

B

Which of the following policies is intended to broaden the coverages and increase the limits of underlying insurance? A. Owners and Contractors Protective Liability B. Umbrella Liability C. Excess Liability D. Commercial General Liability

B

Which of the following sections of an insurance policy would explain the term "auto" ? A. Declarations B. Definitions C. Insuring agreement D. Obligations of the insurance company

B

After paying a claim, an insurance company may have the right to pursue legal action against the negligent party. This right is called: A. assignment B. other insurance C. subrogation D. action against the company

C

An insured has an automobile policy with a combined single limit of $500,000 for Bodily Injury and Property Damage. After an accident, a court awards $300,000 bodily injury and $25,000 property damage to Claimant A, and $200,000 bodily injury and $25,000 property damage to Claimant B. In this situation, the insurance company's limit for liability is: A. $300,000 B. $350,000 C. $500,000 D. $550,000

C

An insured may cancel a Personal Auto Policy by taking which of the following actions? A. Paying the insurance company any past due premiums B. Waiting until the policy expiration date C. Giving written notice to the insurance company D. Informing the producer by telephone

C

In a Commercial General Liability policy, medical payment expenses MUST be: A. caused by the negligence of the insured B. caused by a product manufactured by the insured C. reported within one year of the date of the accident D. reported within two years of the policy expiration

C

Insurance purchased to protect an insured from death, injury, disability or property damage of another is defined as: A. Credit Insurance B. Property Damage Legal Insurance C. Liability Insurance D. Accident and Health Insurance

C

Investment consultants should purchase which of the following policies to protect themselves from errors and omissions claims? A. Owners and Contractors Protective Liability B. Premises and Operations Liability C. Professional Liability D. Products and Completed Operations Liability

C

J drives L's car. Both J and L have a Personal Auto Policy. Which of the following statements is CORRECT concerning coverage if J causes an accident? A. J's policy only will pay for any damage B. L's policy only will pay for any damage C. L's policy is primary and J's is excess D. J's policy is primary and L's is excess

C

The Arbitration clause in a Personal Auto policy would be used in which of the following circumstances? A. The insurance company and a pedestrian struck by the insured's auto cannot reach an agreement regarding the settlement of a claim. B. The insured and an injured third party cannot reach an agreement regarding the settlement of a claim. C. The insured and the insurance company cannot reach an agreement regarding the settlement of a claim. D. The courts have ruled against an injured third party.

C

The limits of liability are found in which of the following sections of a casualty policy? A. Conditions B. Insuring Agreement C. Declarations D. Definitions

C

Which of the following injuries is covered under the Medical Payments section of an insured's Commercial General Liability policy? A. An employee breaks an ankle in the insured's warehouse. B. An individual is injured while participating in an athletic event on the insured's property. C. A supplier is injured while visiting the insured's showroom. D. A tenant in the insured's apartment building slips in their apartment and requires x-rays.

C

Which of the following vehicles is considered a covered auto under a Personal Auto Policy? A. A vehicle used by the insured to transport passengers to and from an airport for a fee B. The insured's all-terrain vehicle with three wheels C. A replacement car purchased by the insured a week ago but not yet reported to the insurance company D. A company car provided to the insured by an employer

C

A Commercial General Liability policy provides coverage for which of the following hazards? A. Professional Liability B. Employee Injury Liability C. Pollution Liability D. Premises Liability

D

An insurance binder is best described as: A. a large bound volume of rules, rates, and forms B. a rate manual supplied by one of the rating organizations C. a temporary agreement to pay a claim pending final settlement D. temporary short-term evidence of coverage

D

In an application for marine insurance, a yacht owner states that the yacht will only be sailed on inland waters. If the insured subsequently sails the yacht on the seas, coverage may be denied because the insured has breached: A. the Inchmaree clause B. the policy clause C. a representation D. a warranty

D

In the event of a loss under a Personal Auto Policy, an insured is required to submit to the insurance company all of the following information EXCEPT: A. a Proof of Loss statement if requested B. a Notice of Claim C. a list of any known witnesses D. an appraisal of the damaged property

D

Products Liability coverage would insure damages that arise from which of the following situations? A. A manufacturer is required to recall a defective product. B. A contractor installs inferior-grade siding on a building. C. A customer receives an electrical shock from a curling iron during an in-store demonstration. D. A bicycle rider is injured when a wheel malfunctions.

D

The Conditions section of an insurance policy states the: A. deductible amount, if any B. policy term C. policy provisions D. duties of the insured

D

The Fair Credit Reporting Act requires the: A. insurance company to review the applicant's credit history prior to underwriting a policy B. insurance producer to summarize a policy for the insured C. insurance producer to review the applicant's credit history prior to issuing a policy D. insurance company to inform the applicant a credit report may be obtained

D

W, an electrician, caused damage to the main wiring of a shopping center while working on another building. As a result, the shopping center was forced to close early for the day. The loss resulting from this damage would be considered which of the following types under W's Commercial General Liability policy? A. Products B. Completed Operations C. Premises D. Operations

D

Which of the following individuals is likely to have a valid Workers Compensation claim? A. A retired employee injured while visiting his old workplace B. An employee who suffers a diabetic coma from failure to take prescribed medicine C. A sole proprietor injured in an auto accident while driving to a friend's house D. An employee injured while undergoing job training

D

Which of the following losses would be covered under an Inside the Premises - Robbery and Safe Burglary of Other Property Form? A. Valuable papers kept in a locked safe are destroyed by fire. B. Cash is stolen from a locked safe that shows no signs of forced entry. C. Jewelry is stolen from a locked safe that shows no signs of forced entry. D. Gold bars are stolen from a locked safe that shows signs of forced entry.

D

Which of the following occurrences would be included under the definition of a personal injury? A. A customer injured in a department store when a sign falls on her sues the store for medical costs and pain and suffering. B. An employee injured lifting a heavy carton sues his employer for costs. C. An individual fired from her job sues her employer for unemployment benefits. D. A tenant evicted by his landlord sues the landlord for invasion of privacy and wrongful eviction.

D

Which of the following sections of a policy limits coverage? A. Policy summary B. Conditions C. Binders D. Exclusions

D

Which of the following vehicles is considered a temporary substitute auto under a Personal Auto policy? A. A neighbor's pickup truck borrowed by an insured to run an errand B. An auto purchased by an insured to replace a previously owned vehicle C. An auto rented by an insured when the insured is on vacation D. An auto rented by an insured when the insured's car is in a garage for repairs

D

a store, all of the following situations would be considered theft EXCEPT: A. merchandise being stolen with evidence of forced entry B. a clerk witnessing a customer shoplifting merchandise C. a clerk being robbed at gunpoint D. the store's year-end inventory coming up short by 5 percent

D

In insurance, all of the following losses are examples of pure risk EXCEPT: A. auto accident B. flood damage to a home C. decline of stock values on the stock market D. fire damage to a building

C

Which of the following coverages may be written with Workers Compensation? A. Products B. Contractual C. Employers Liability D. Completed Operations

C

Actual cash value is most often defined as: A. replacement cost less depreciation B. original purchase price less depreciation C. stated amount a policy will pay D. cost to replace

A

If an insured intentionally conceals a material fact about an auto to be covered by a policy, coverage may be: A. voided B. suspended C. reduced D. restricted

A

Under a Fidelity Bond, which of the following individuals is considered the obligee? A. An employer B. An employee C. A subcontractor D. A creditor

A

Which of the following claims may be covered under Bodily Injury Liability coverage? A. Physical impairment B. False arrest C. Libel D. Suicide

A

Which of the following statements best describes a representation in an insurance application? A. It is a statement made by the insured that certain conditions exist at the time of application. B. It is a promise made by the insured that certain conditions will continue to exist throughout the policy term. C. It explains the promises of the insurance company. D. It is part of the Insuring Agreement.

A

In a state where minimum auto bodily injury liability limits are 20/40, S is driving with limits of 20/40. S is responsible for an accident with T in which T suffers bodily injury in the amount of $120,000. T has non-stacked Underinsured Motorists limits of 100/300. How much will T's policy pay toward T's injuries? A. $20,000 B. $80,000 C. $100,000 D. $120,000

B