PC Review

Question 1

Which section of a Special form policy determines whether a peril is covered?

Select one:

a.
Exclusions

b.
Declarations

c.
Insuring agreements

d.
Conditions

Answer 1

Exclusions

Question 2

A policy may be voided due to each of these EXCEPT:

Select one:

a.
increase in the hazards

b.
fraud

c.
failure to pay premiums

d.
failure to file a proof of loss form

Answer 2

Failure to file a proof of loss form

Question 3

Which section of a property policy requires the Insured to submit a sworn proof of loss form?

Select one:

a.
insuring agreement

b.
exclusions

c.
conditions

d.
declarations

Answer 3

Conditions

Question 4

After a loss by a covered peril, the Insured demands full payment for damaged property given to the Insurer. This is an illegal attempt at:

Select one:

a.
indemnity

b.
abandonment

Answer 4

Abandonment

Question 5

The limit of liability in a policy refers to the extent of the:

Select one:

a.
insurer’s liability.

b.
deductible.

Answer 5

Insurer’s liability

Question 6

If the Insured fails to submit a proof of loss, the mortgagee should:

Select one:

a.
file a proof of loss form.

b.
sue the insurer.

Answer 6

File a proof of loss form

Question 7

Under the appraisal provision:

Select one:

a.
the court selects the umpire.

b.
each party selects an umpire.

c.
the court selects the appraisers.

d.
each party selects an appraiser.

Answer 7

Each party selects an appraiser

Question 8

Which of these involves negligence?

Select one:

a.
A driver runs a stop light.

b.
A driver goes too fast and hits another vehicle.

Answer 8

A driver goes too fast and hits another vehicle

Question 9

Which section of the policy contains the covered perils?

Select one:

a.
Insuring Agreements

b.
Conditions

c.
Declaration

d.
Exclusions

Answer 9

Insuring agreements

Question 10

Each of the following is true about the mortgagee EXCEPT:

Select one:

a.
The mortgagee is entitled to coverage which exceeds the policy limits.

b.
The mortgagee has an insurable interest.

c.
The mortgagee may file a claim if the insured fails to do so.

d.
The mortgagee must be notified of cancellation or nonrenewal.

Answer 10

The mortgagee is entitled to coverage which exceeds the policy limits

Question 11

A binder is:

Select one:

a.
a policy of insurance

b.
confirmation of temporary insurance

Answer 11

Confirmation of temporary insurance

Question 12

Which is a hazard?

Select one:

a.
a fire

b.
a slippery road

c.
a collision

d.
a flood

Answer 12

A slippery road

Question 13

The rules of conduct between the Insurer and Insured are set forth in which section of the policy?

Select one:

a.
Insuring Agreement

b.
Exclusions

c.
Declarations

d.
Conditions

Answer 13

Conditions

Question 14

In situations involving misrepresentation, the insurer may:

Select one:

a.
charge an extra premium.

b.
cancel the policy.

Answer 14

Cancel the policy

Question 15

The liability policy may cover each of the following except:

Select one:

a.
Intentional Acts

b.
Bodily injury coverage (BI)

c.
Supplementary Coverage

d.
Personal Injury Liability (PI)

Answer 15

Intentional acts

Question 16

Which section of the policy contains the cancellation provisions?

Select one:

a.
Declaration

b.
Conditions

c.
Exclusions

d.
Insuring Agreements

Answer 16

Conditions

Question 17

Which section of the policy may require the Insured to use the claim payment to replace the destroyed property?

Select one:

a.
Exclusions

b.
Insuring Agreements

c.
Declaration

d.
Conditions

Answer 17

Conditions

Question 18

Uncertainty of future outcomes is:

Select one:

a.
insurance

b.
risk

Answer 18

Risk

Question 19

Insurable interest and actual cash value are both related to:

Select one:

a.
Speculative risk

b.
Law of Large Numbers

c.
Indemnity

d.
Peril

Answer 19

Indemnity

Question 20

A mortgage clause:

Select one:

a.
Grants the mortgagee specific rights not granted to the Insured.

b.
Obligates the Insurer to pay the mortgage payments if the Insured is disabled.

Answer 20

Grants the mortgagee specific rights not granted to the insured

Question 21

Which section of the policy contains the Insured’s right to bring legal action against the Insurer?

Select one:

a.
Conditions

b.
Exclusions

c.
Declaration

d.
Insuring Agreements

Answer 21

Conditions

Question 22

An application says no fire wood will be stored on the premises. If a later fire is caused by fire wood stored on the premises, the insurer may refuse coverage if the insured:

Select one:

a.
misrepresented material facts.

b.
concealed immaterial facts.

c.
misrepresented immaterial facts.

d.
unintentionally made a misstatement.

Answer 22

Misrepresented material facts

Question 23

A binder becomes effective when:

Select one:

a.
the insured delivers the premium payment.

b.
made by the agent.

Answer 23

Made by the agent

Question 24

To avoid the concentration of insurance risks, an insurer should:

Select one:

a.
spread the risk.

b.
raise premiums.

c.
reduce the number of policies sold.

d.
cover only one Insured.

Answer 24

Spread the risk

Question 25

Which best demonstrates indemnification? Select one: a. After a fire, a homeowner is paid retail prices for personal property as well as the cost of rebuilding the structure b. After a loss, an Insured collects from both her insurance and another person’s insurance c. An Insured demands a new car when the old car is destroyed d. After a car wreck, an injured person is paid for medical expenses and vehicle damages

Answer 25

After a car wreck, an injured person is paid for medical expenses and vehicle damages

Question 26

Using a disinterested third party to resolve a claim dispute is: Select one: a. arbitration b. assignment

Answer 26

Arbitration

Question 27

Which is an indirect loss? Select one: a. a water pipe breaks on the top floor and floods a basement b. a business loses money due to a fire

Answer 27

A business loses money due to a fire

Question 28

The mortgagee should receive how much notice of cancellation? Select one: a. 10 days b. 30 days c. 60 days d. 90 days

Answer 28

10 days

Question 29

Indemnity is: Select one: a. coming out ahead b. making whole

Answer 29

Making whole

Question 30

Chance of a windstorm causing a loss to one's property is: Select one: a. risk b. hazard c. uninsurable d. peril

Answer 30

Risk

Question 31

The deductible: Select one: a. decreases the insurer’s losses. b. increases the Insurer's administrative expenses.

Answer 31

Decreases the insurer’s losses

Question 32

The burden of proving a loss rests on the: Select one: a. insurer b. insured

Answer 32

Insured

Question 33

The creation of a contract requires each of these EXCEPT: Select one: a. consideration b. legal purpose c. notarization d. competent parties

Answer 33

Notarization

Question 34

Each of the following can have an insurable interest EXCEPT: Select one: a. a mortgagee b. an ex-owner carrying the mortgage c. a tenant d. an ex-owner who didn’t cancel the policy

Answer 34

An ex-owner who didn’t cancel the policy

Question 35

Which section of the policy requires the Insurer to provide coverage? Select one: a. Declarations b. Exclusions c. Insuring Agreements d. Conditions

Answer 35

Insuring agreements

Question 36

During a fire, one wall of a building collapses and damages an adjacent building. This is: Select one: a. an indirect loss b. a direct loss

Answer 36

A direct loss

Question 37

Assume that a property is insured by two policies. Each policy has an equal amount of coverage. If the property is damaged by a covered peril: Select one: a. both insurers will share equally in the loss. b. only the first policy issued will pay on the claim.

Answer 37

Both insurers will share equally in the loss

Question 38

An electrical interruption causes a business to temporarily close. The electrical interruption is known as the? Select one: a. proximate cause b. catastrophe

Answer 38

Proximate cause

Question 39

Which of the following is considered to be part of the policy? Select one: a. premium b. insured c. proof of loss form d. application

Answer 39

Application

Question 40

A mortgagee must be given how much notice of cancellation? Select one: a. 10 days b. 20 days c. 40 days d. 80 days

Answer 40

10 days

Question 41

The conditions section of the policy contains: Select one: a. the insurer's obligations if a loss occurs b. the insured's obligations if a loss occurs

Answer 41

The insured’s obligations if a loss occurs

Question 42

The cause of the loss is: Select one: a. risk b. peril

Answer 42

Peril

Question 43

A peril is: Select one: a. any factor which increases the likelihood of a loss. b. the proximate cause of the loss.

Answer 43

The proximate cause of the loss

Question 44

Which policy section should the Insured check to determine if a particular coverage is provided in a named peril policy? Select one: a. Conditions b. Exclusions c. Insuring Agreements d. Declaration

Answer 44

Insuring agreements

Question 45

A consequential loss is: Select one: a. an indirect loss b. a direct loss

Answer 45

An indirect loss

Question 46

Payment based on the fact that the Insured owns the property involved is: Select one: a. Actual cash value b. Insurable interest c. Replacement cost d. Indemnity

Answer 46

Insurable interest

Question 47

Concealment involves intentionally hiding: Select one: a. an immaterial fact. b. a material fact.

Answer 47

A material fact

Question 48

In addition to requiring that Insurers protect clients' privacy rights, the Gramm-Leach-Bliley Act: Select one: a. prohibits the sale of property insurance in America. b. encourages the states to adopt uniform licensing requirements to make it easier for Producers to sell insurance across state lines.

Answer 48

Encourages the states to adopt uniform licensing requirements to make it easier for producers to sell insurance across state lines

Question 49

A promise by the insured that certain future conditions will exist is a? Select one: a. representation b. concealment c. misrepresentation d. warranty

Answer 49

Warranty

Question 50

The Actual Cash Value formula is: Select one: a. Replacement cost minus physical depreciation b. Original cost minus physical depreciation

Answer 50

Replacement cost minus physical depreciation

Question 51

If the Insured tries to turn partially or totally destroyed property over to the Insurer while demanding full payment is, this could be construed as the Insured's illegal attempt at: Select one: a. salvage b. abandonment

Answer 51

Abandonment

Question 52

Which section of the policy specifies the Insured’s responsibilities? Select one: a. Declaration b. Exclusions c. Conditions d. Insuring Agreements

Answer 52

Conditions

Question 53

The limit payable for all losses in a policy year is the: Select one: a. occurrence limit. b. aggregate limit.

Answer 53

Aggregate limit

Question 54

A mortgagee who is not notified that the policy has been canceled may recover: Select one: a. the balance owing on the mortgage b. the policy limit

Answer 54

The balance owing on the mortgage

Question 55

The amount an insured may recover under an airplane policy is restricted by the: Select one: a. limit of liability b. subrogation provision

Answer 55

Limit of liability

Question 56

A tenant is wrongfully evicted. This is an example of: Select one: a. personal injury b. bodily injury

Answer 56

Personal injury

Question 57

The Other Insurance Clause: Select one: a. allows more than one person to be insured under the policy. b. allows coverage for catastrophic losses. c. prohibits other insurance on the same property. d. upholds the principle of indemnity.

Answer 57

Upholds the principle of indemnity

Question 58

An Insurer's required assignment of rights of recovery after paying a claim is: Select one: a. coinsurance b. risk c. subrogation d. salvage

Answer 58

Subrogation

Question 59

Which section of the policy contains the Insurer’s obligation to repair, replace or pay? Select one: a. Declaration b. Exclusions c. Conditions d. Insuring Agreements

Answer 59

Insuring agreements

Question 60

Each of the following provides coverage over and above the policy limit EXCEPT: Select one: a. Preservation of Property b. Fire Department Service Charge c. Debris removal

Answer 60

Preservation of property

Question 61

Cindy and Hal own a commercial building. Cindy asks the Insurer to increase the coverage but Hal objects. What should the Insurer do? Select one: a. Refer the matter to the state Insurance Commissioner. b. Comply with the desire of whichever Insured is named last in the policy's declarations. c. Comply with the desire of whichever Insured is named first in the policy's declarations. d. Reject the request until both parties agree on the issue.

Answer 61

Comply with the desire of whichever insured is named first in the policies declarations

Question 62

Liability insurance is a: Select one: a. two party contract with payment to a third party. b. three party contract with payment to the insured.

Answer 62

Two party contract with payment to a third party

Question 63

Negligence is determined by: Select one: a. how the accused has acted in the past. b. how a reasonable person would have acted under the circumstances.

Answer 63

How reasonable a person would have acted under the circumstances

Question 64

Q sold a building but did not cancel the policy. The building was later destroyed by a covered peril. Q will not collect under the policy due to: Select one: a. lack of insurable interest. b. the coinsurance clause.

Answer 64

Lack of insurable intrest

Question 65

Risk is the: Select one: a. cause of the loss b. uncertainty or chance of loss

Answer 65

Uncertainty or chance of loss

Question 66

"Bodily injury" includes each of the following except: Select one: a. personal injury b. pain and suffering c. death d. disease

Answer 66

Personal injury

Question 67

Broad form covers: Select one: a. Glass breakage. b. Water damage to the floor due to water backing up through a clogged floor drain.

Answer 67

Glass breakage

Question 68

To prevent recovery beyond the amount of the insured’s actual loss, the policy will contain: Select one: a. an Other Insurance Clause b. a Coinsurance Clause

Answer 68

An other insurance clause

Question 69

To guarantee that depreciation will not be a factor in calculating the amount to be paid at the time of a loss, an Insured should purchase: Select one: a. Actual cash value b. Replacement cost

Answer 69

Replacement cost

Question 70

A written document providing evidence that coverage is in effect and which summarizes the coverage is known as: Select one: a. an application b. a certificate of insurance

Answer 70

A certificate of insurance

Question 71

Which of the following is issued by the agent to notify the parties of the date coverage becomes effective? Select one: a. binder b. presumption of proposition c. quotation d. condition

Answer 71

Binder

Question 72

One who can lose financially in the event of a loss has: Select one: a. an insurable interest b. a moral hazard

Answer 72

An insurable interest

Question 73

Binders must show each of these EXCEPT: Select one: a. list of covered items b. the date the binder becomes effective c. name of insurer and insured d. the amount of the premium

Answer 73

The amount of the premium

Question 74

The insured cancels a policy half way through its term yet receives less than a 50% refund. This is: Select one: a. fraud b. a short-rate refund

Answer 74

A short-rate refund

Question 75

Cancellation involves: Select one: a. termination by either the insurer or insured during the policy term. b. the insurer’s refusal to continue the coverage at the end of the policy term.

Answer 75

Termination by either the insurer or the insured during the policy term

Question 76

If your building is destroyed by fire, you must notify the Insurer: Select one: a. within 60 days b. promptly

Answer 76

Promptly

Question 77

An assignment must be: Select one: a. agreed to in writing by the insurer. b. approved by the state insurance commissioner. c. agreed to prior to a property loss. d. notarized.

Answer 77

Agreed to in writing by the insurer

Question 78

Under the Other Insurance Clause, if the Insured is covered by two policies, what will happen if a loss occurs? Select one: a. Each policy must pay in full. b. Each policy will pay a part of the loss.

Answer 78

Each policy will pay a part of the loss

Question 79

Which is an indirect loss? Select one: a. smoke from an oven damages living room drapes b. a fire causes a business to close c. water damage from firefighters d. heavy snows cause a roof to collapse

Answer 79

A fire causes a business to close

Question 80

Concealment is: Select one: a. intentional nondisclosure of material facts b. misstating material facts

Answer 80

Intentional nondisclosure of material facts

Question 81

Which of the following is considered to be a "participating" Insurer? Select one: a. a mutual insurer b. a fraternal insurer c. a government insurer d. a stock insurer

Answer 81

A mutual insurer

Question 82

Consideration is evidenced by: Select one: a. endorsing a policy b. filing a proof of loss form c. issuing a policy d. paying a premium

Answer 82

Paying a premium

Question 83

Which section of the policy contains the premium? Select one: a. Declaration b. Conditions c. Exclusions d. Insuring Agreements

Answer 83

Declaration

Question 84

Uncertainty of future outcomes is: Select one: a. insurance b. risk

Answer 84

Risk

Question 85

Which of the following is an example of vicarious liability? Select one: a. A store owner is held liable for carelessly dropping a box on a customer's foot. b. A store owner is held liable when a store employee carelessly drops a box on a customer's foot.

Answer 85

A store owner is held liable when a store employee carelessly drops a box on a customers foot

Question 86

The insurer’s exposure under a policy is restricted by: Select one: a. the Limit of Liability. b. reserve requirements

Answer 86

The limit of liability

Question 87

Deductibles: Select one: a. eliminate small claims and reduce administrative expenses. b. eliminate large claims and increase administrative expenses.

Answer 87

Eliminate small claims and reduce administrative expenses

Question 88

Prior to issuing the policy, the agent may provide evidence of temporary insurance. This is a: Select one: a. endorsement b. binder

Answer 88

Binder

Question 89

To collect on a loss, the Insured must comply with the procedures set forth in the? Select one: a. Conditions b. Exclusions c. Insuring Agreements d. Declaration

Answer 89

Conditions

Question 90

A person with an alleged injury notifies a Producer that the Producer's client negligently caused the injury. The producer should first notify the: Select one: a. Client b. Police c. Insurance Commissioner d. Insurer

Answer 90

Insurer

Question 91

The limit of liability is the maximum amount that: Select one: a. the insurer will pay for all losses in a particular state in a given year. b. the insured can collect for any one loss. c. can be charged for a policy premium. d. can be charged for a deductible.

Answer 91

The insured can collect for any one loss

Question 92

Indemnification is: Select one: a. making whole. b. making a profit.

Answer 92

Making whole

Question 93

A Special Form policy covers: Select one: a. rats eat wiring insulation. b. termite damage. c. decay that causes a wall to collapse. d. fungus.

Answer 93

Decay that causes a wall to collapse

Question 94

Which section of the policy requires the insured to assume a stated amount of the loss? Select one: a. Deductible b. Risk

Answer 94

Deductible

Question 95

A proof of loss form: Select one: a. settles disputes regarding whether losses are covered b. assists the insurer in settling a loss covered by the policy c. which contains a false statement will automatically void coverage

Answer 95

Assists the insurer in settling a loss covered by the policy

Question 96

Depreciated value is: Select one: a. Actual cash value b. Replacement cost

Answer 96

Actual cash value

Question 97

Nonrenewal requires the Insurer to: Select one: a. provide 90 days notice to the state insurance department. b. mail notice to the insured in advance.

Answer 97

Mail notice to the insured in advance

Question 98

"Acts of God" are best covered by: Select one: a. Basic form b. Liability policies c. Broad form d. Special form

Answer 98

Special form

Question 99

The primary concept behind insurance is: Select one: a. risk elimination b. transfer of risk

Answer 99

Transfer of risk

Question 100

The applicant believes the statement to be true with a/an? Select one: a. concealment b. representation c. misrepresentation d. warranty

Answer 100

Representation