Pearson VUE: Property Insurance Practice
Exam, Study questions insurance,
Casualty FL
S is purchasing a Commercial Property policy to cover a commercial building with a
replacement cost of $100,000. The policy includes an 80 percent Coinsurance clause. To avoid
a coinsurance penalty in the event of a partial loss, S should purchase a policy with minimum
limits of AT LEAST which of the following amounts?
A. $100,000
B. $90,000
C. $80,000
D. $20,000 - ANSC
The MAXIMUM amount a policy will pay in the event of a loss is called the:
A. coinsurance amount
B. deductible
C. limit of liability
D. pro rata return - ANSC
The National Flood Insurance Program provides coverage for losses caused by all of the
following occurrences EXCEPT:
A. mudslides
B. runoff from heavy rain
C. overflow of tidal waters
D. water-main breakage - ANSD
Special Form or Open Perils coverage:
,A. Provides coverage against the named perils
B. Provides coverage against scheduled risks
C. Is limited by the named exclusions
D. Includes no exclusions - ANSC
Which of the following businesses would be eligible for a Businessowners policy?
A. Auto body shop
B. Theater
C. Branch bank
D. Barber shop - ANSD
During a tornado, a barn is destroyed when a section of its wall is blown down, knocking over a
lantern, which sets the barn on fire. The proximate cause of loss is the:
A. fire
B. collapse of the wall
C. tornado
D. smoke - ANSC
A fire in an insured's restaurant burns the kitchen walls and causes smoke damage to the entire
interior. Water used to extinguish the fire causes extensive damage to floors and furnishings.
The water damage is best described as:
A. a time element loss
B. a consequential loss
C. a direct loss
D. an indirect loss - ANSC
Which of the following terms is defined as the uncertainty of future outcome?
,A. Risk
B. Hazard
C. Peril
D. Cause - ANSA
The Personal Liability section of a Homeowners policy covers which of the following options?
A. Damage to an insured's property caused by a visitor
B. Bodily injury to a resident caused by a neighbor's dog
C. Property damage caused by war
D. Bodily injury caused by the personal activities of an insured - ANSD
An insured owns an antique marble statue valued at $3,000, which is covered under a Personal
Articles Floater. Damage to the statue would be covered in all of the following situations
EXCEPT:
A. it was accidentally damaged by a housekeeper
B. it was damaged in a flood
C. a guest of the insured maliciously damaged it
D. the insured threw it - ANSD
Which of the following sources may be used to provide property insurability information?
A. Police records
B. Physical inspections
C. Checking account statements
D. Lie detector tests - ANSB
All of the following perils are covered under a Building and Business Personal Property
Coverage Form with a Causes of Loss-Basic Form attached EXCEPT:
A. smoke
, B. sprinkler leakage
C. sinkhole collapse
D. earth movement - ANSD
X insures a home for $100,000 under a Dwelling Property Broad Form (DP-2). If a flood causes
$1,000 in damage to the home's contents, which of the following
MAXIMUM amounts will X's insurer pay?
A. $0
B. $800
C. $900
D. $1,000 - ANSA
In order to issue a written binder for a commercial property policy, what is the MINIMUM
consideration a producer must secure from an applicant?
A. A promise to pay the premium
B. A signature on a premium finance agreement
C. Payment of six months' premium
D. Payment of twelve months' premium - ANSA
An insured owns a set of six drawing pens designed and used by Benjamin Franklin. Each pen
is worth $1,000 alone, but the set is worth $12,000. One pen is destroyed by a covered peril.
Under the Pair and Set clause, the insurer will pay a MAXIMUM of which of the following
amounts?
A. $1,000
B. $2,000
C. $7,000
D. $12,000 - ANSC
Pro-rata cancellation occurs when:
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