Property & Casualty Insurance Exam Questions and Correct Answers (Verified by Expert)

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Property & Casualty Insurance Exam Questions and Correct Answers (Verified by Expert) In which of the following situations would off-premises coverage in a broad theft endorsement of the insured's ... dwelling policy apply? A) The insured's camera is stolen from his suitcase while he is on vacation B) The insured's live-in maid's quarters are burglarized C) The insured's china set is stolen from her home while she's traveling on business D) The insured's vacuum cleaner is stolen from her apartment ✔✔ A) The insured's camera is stolen from his suitcase while he is on vacation In insurance contracts, when does acceptance usually occur? ✔✔ When the insurer approves a prepaid application What does the term reasonable expectations mean in insurance? ✔✔ Certain expectations for coverage that a reasonable person would have based on sources other than just the policy language In forming an insurance contract, when does acceptance usually occur? ✔✔ When an insurer's underwriter approves coverage Subrogation ✔✔ The right of the insurer to seek out damages from a third party after it has paid out for a loss In property insurance, what is actual cash value? ✔✔ Replacement cost at the time of loss, minus depreciation A policy that covers all causes of loss except for those specifically excluded is known as what type of policy? ✔✔ Open peril (or special) form What sublimit in a liability policy puts a ceiling on the payment for all claims that arise from a single accident? ✔✔ per occurrence Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses? ✔✔ Additional coverage Duties of the insurer found in property policy conditions do not include what? ✔✔ Notify the insured in the event of financial difficulty According to the standard mortgage clause, who has the right to bring a suit in their own name to recover damages, pay policy premiums, and submit a proof of loss? ✔✔ Mortgagee What type of information would be found in a policy's insuring agreement? A) Insurer's address B) Renewal dates C) Location of premises D) Policy limits ✔✔ B) Renewal dates The insuring agreement lists the parties to the contract, effective and renewal dates, the description of coverage provided, and perils. Location of premises, policy limits, supplemental representations, and insurer's name and address can all be found in the Declarations All of the following are conditions commonly found in the insurance policy EXCEPT A) Subrogation B) Appraisal C) Insuring agreement D) Cancellation and nonrenewal ✔✔ C) Insuring agreement With regard to fire insurance premiums, structures with which type of construction would most likely have a the most favorable premium rate for the peril of fire? ✔✔ Fire-resistive Which of the following is a mandatory part of an insurance policy that varies with each individual policy? A) Exclusions B) Insuring agreement C) Declarations D) Conditions ✔✔ C) Declarations Rates that are established based on the similarities of the risk with other risks are known as ✔✔ Manual rates Which of the following terms refers to other insurance that is written on the same risk, but not on the same coverage basis? A) Primary and excess B) Pro rata C) Contribution by equal shares D) Nonconcurrency ✔✔ D) Nonconcurrency The loss ratio compares ✔✔ Earned premium to losses Equation: Loss ratio = (incurred losses + loss adjusting expense) / earned premium Which of the following coverages in dwelling and homeowners policies is for indirect losses? A) Structures B) Contents C) Loss of use D) Dwelling ✔✔ C) Loss of use What are the 3 dwelling property forms? ✔✔ Basic, broad, and special All of the following are characteristics of the dwelling policy EXCEPT A) Incidental occupancy of limited service type exposure is permitted B) Dwellings up to four family units are eligible C) The dwelling must be owner-occupied D) Coverage includes the dwelling only, contents only, or both ✔✔ C) The dwelling must be owner-occupied Dwelling coverage includes all of the following EXCEPT A) Land on which the dwelling is located B) The dwelling used principally for residential purposes C) Materials on the described location used to alter or repair the dwelling D) Building and outdoor equipment used to service the described location ✔✔ A) Land on which the dwelling is located What is the maximum number of roomers or boarders for properties insured under the dwelling policy? ✔✔ 5 A basic dwelling policy automatically provides coverage against fire, lightning, and _____ ✔✔ internal explosion All of the following would be eligible for coverage under the dwelling policy EXCEPT A) A duplex with one primary owner B) A house that has 5 residential units C) A tenant-occupied dwelling D) A dwelling in the course of construction ✔✔ B) A house that has 5 residential units In dwelling policies, the following acronyms can be used to describe which extended coverage perils? WHARVES or WCSHAVER ✔✔ Windstorm or hail, aircraft, riots or civil commotion, volcanic eruption and vehicles, explosion, smoke What kind of perils does dwelling property 1 - basic form cover? ✔✔ named perils [Show More]

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