Property and casualty insurance Exam
Questions and Answers Part one
1. A banker is ready to close on a customer's loan. The bank is prepared to offer the loan
but only if the customer purchases a life insurance policy from the bank in the amount of
the loan. This is an example of - ANS-Coercion.
2. A builder's risk form is most often written as which of the following? - ANS-Completed
value form
3. A building is insured, but no one has lived or worked in it for 10 years. The building is
completely empty of any furniture or personal belongings. From an insurance standpoint,
the building is considered - ANS-Vacant.
4. A business using its own trucks to move its own cargo would insure the cargo using -
ANS-Motor truck cargo - owners form.
5. A commercial package policy (CPP) allows the insured to select the coverage needed
and customize the policy to meet the needs of the insured's business. In a CPP, the
business owner may select from all of the following types of coverage EXCEPT -
ANS-Workers compensation coverage
6. A commercial property special form covers property in transit up to - ANS-$5,000.
7. A common exclusion found under physical damage to your auto includes -
ANS-Mechanical breakdown.
8. A licensee serving in the military is unable to fulfill her continuing education requirement.
What would the licensee have to do to renew the license? - ANS-The licensee may
submit a request to the department to have requirements and fees waived. The
department will then determine if the request is permissible.
9. A meteorite hits the insured's car, causing damage. Under which of the following
coverages in a personal auto policy would this loss be paid? - ANS-Other-than-collision
10. A mortgage company is named as a loss payee on the insured's homeowners policy,
under the standard mortgage clause. If the insured suffers a loss due to a fire, which of
the following is true? - ANS-The loss is payable to the insured and the mortgagee.
11. A municipality can protect itself against the construction or repair of properties that do
not conform to the building codes established by ordinance by requiring the contractors
to obtain - ANS-License and permit bonds.
12. A participating insurance policy may do which of the following? - ANS-Pay dividends to
the policyowner
13. A person applying for a manager or exclusive general agent license must meet all of the
following criteria EXCEPT - ANS-Be responsible for at least 25% of total commissions
collected by the office that he or she manages.
14. A person who does not lock the doors or does not repair leaks shows an indifferent
attitude. This person presents what type of hazard? - ANS-Morale
,15. A person who is not named as an insured on the declarations page of a policy but is
protected by the policy is known as the - ANS-Additional insured.
16. A premium discount is the term that describes when an insured owes a total standard
premium greater than - ANS-$5,000.
17. A producer licensed in Pennsylvania must notify the Insurance Department of any
change of address in his or her residence or business address within how many days? -
ANS-30
18. A ranchowners policy is most similar to which of the following? - ANS-Homeowners
19. A recent college graduate bought a new car and is trying to get automobile insurance on
it as required by the lienholder. After being rejected by several insurance companies due
to his driving record, he finally talked to an agent who can get him coverage. His agent
called him a residual market risk. From which type of automobile insurance plan can the
applicant purchase insurance? - ANS-Assigned risk
20. A restaurant is out of business for 3 days after an insured's automobile hits an electrical
pole. The pole falls and hits the building, knocking out all electrical power supply. Which
of the following is NOT covered under the insured driver's auto policy? - ANS-Lost
revenues from the restaurant
21. A trucking business swaps trailers with other carriers. What coverage is necessary to
cover loss to the other's trailer while in the borrower's possession? - ANS-Trailer
interchange coverage
22. A trucking company owns a large fleet of trucks that transport oil across state lines.
According to the financial responsibility requirements set by the Motor Carrier Act of
1980, what is the minimum amount of insurance the company must carry on vehicles
that transport oil? - ANS-$1 million
23. A type of policy that is used to provide a specific amount of replacement cost for a given
risk after it has been destroyed is called a(n) - ANS-Valued policy.
24. ABC Trucking hauls products for Acme, Inc. as a contract carrier. On one shipment, the
driver stopped at a truck stop for lunch. Leaving the truck in the parking lot, he made
certain that the truck was locked before leaving it. Upon returning to the truck, he
discovered that someone had broken into the truck and stolen the cargo. Is ABC legally
liable for this loss? - ANS-No, the driver had taken reasonable measures to protect the
property by locking the truck.
25. According to the loss payment condition in HO policies, losses must be paid within how
many days of the insurer receiving proof of loss? - ANS-60 days
26. According to the principles of ocean marine insurance, an actual total loss may occur in
all of the following situations EXCEPT - ANS-When cargo is misplaced.
27. According to the privacy of consumer financial information regulation, if a consumer
decides to opt out, this means - ANS-The consumer directs the licensee not to disclose
the consumer's nonpublic personal financial information to a third party.
28. According to the standard workers compensation and employer liability policy form, a
state should be listed in Part Three - other states' insurance of the workers
compensation and employers liability policy when - ANS-The insured expects to extend
operations to that state.
, 29. After a hearing, if the Commissioner finds that a licensee is in violation of the state
insurance laws, the Commissioner can do any of the following EXCEPT - ANS-Imprison
the licensee.
30. Agents who persuade insureds to cancel a policy in favor of another one when it might
not be in the insured's best interest are guilty of - ANS-Twisting.
31. All of the following actions by a person could be described as risk avoidance EXCEPT -
ANS-Investing in the stock market.
32. All of the following actions can be described as twisting EXCEPT - ANS-Explaining to
client the advantages of permanent insurance over term and suggesting changing
policies
33. All of the following are conditions commonly found in the insurance policy EXCEPT -
ANS-Insuring agreement.
34. All of the following are essential elements of a commercial package policy (CPP)
EXCEPT - ANS-Valuations and/or settlement provisions
35. All of the following are exclusions under farm property coverage EXCEPT - ANS-Loss of
use.
36. All of the following are factors in the determination of actual cash value EXCEPT -
ANS-Insurance premium paid.
37. All of the following are found in the declarations section of a policy EXCEPT the -
ANS-Exclusions.
38. All of the following are other coverages under the dwelling policy EXCEPT - ANS-Earth
movement.
39. All of the following are true of Coverage B - Other Structures EXCEPT - ANS-It must be
added by endorsement to a homeowners policy.
40. All of the following are true regarding physical damage coverage EXCEPT - ANS-The
limit of liability is the greater of the actual cash value of the vehicle at the time of loss or
the amount necessary to repair or replace the vehicle.
41. All of the following are true regarding rebates EXCEPT - ANS-Rebates are allowed if it's
in the best interest of the client.
42. All of the following could be considered rebates if offered to an insured in the sale of
insurance EXCEPT - ANS-Dividends from a mutual insurer.
43. All of the following people would be considered insureds under the liability section of a
homeowners policy EXCEPT - ANS-The 22-year-old niece of the insured who is visiting.
44. All of the following statements describe the concept of strict liability EXCEPT - ANS-It is
imposed on defendants engaged in hazardous activities.
45. An advertising company has its annual holiday party for employees and customers, after
which a customer who had too much to drink is involved in an automobile accident.
Occupants of the other car involved in the accident sue the company for serving the
customer too much alcohol. Will the company's businessowners policy provide
coverage? - ANS-Yes, none of the exclusions will apply.
46. An apartment occupant's personal property would be insured under which homeowners
form? - ANS-Tenant broad form (HO-4)
47. An applicant knowingly fails to communicate information that would help an underwriter
make a sound decision regarding coverage. This is an example of - ANS-Concealment
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