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Property & Casualty Exam > PC Review > Flashcards

PC Review Flashcards

1
Q

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

Select one:

a.
Exclusions

b.
Declarations

c.
Insuring agreements

d.
Conditions

A

Exclusions

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2
Q

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

A

Failure to file a proof of loss form

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3
Q

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

A

Conditions

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4
Q

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

A

Abandonment

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5
Q

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

Select one:

a.
insurer’s liability.

b.
deductible.

A

Insurer’s liability

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6
Q

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.

A

File a proof of loss form

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7
Q

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.

A

Each party selects an appraiser

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8
Q

Which of these involves negligence?

Select one:

a.
A driver runs a stop light.

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

A

A driver goes too fast and hits another vehicle

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9
Q

Which section of the policy contains the covered perils?

Select one:

a.
Insuring Agreements

b.
Conditions

c.
Declaration

d.
Exclusions

A

Insuring agreements

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10
Q

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.

A

The mortgagee is entitled to coverage which exceeds the policy limits

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11
Q

A binder is:

Select one:

a.
a policy of insurance

b.
confirmation of temporary insurance

A

Confirmation of temporary insurance

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12
Q

Which is a hazard?

Select one:

a.
a fire

b.
a slippery road

c.
a collision

d.
a flood

A

A slippery road

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13
Q

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

A

Conditions

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14
Q

In situations involving misrepresentation, the insurer may:

Select one:

a.
charge an extra premium.

b.
cancel the policy.

A

Cancel the policy

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15
Q

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)

A

Intentional acts

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16
Q

Which section of the policy contains the cancellation provisions?

Select one:

a.
Declaration

b.
Conditions

c.
Exclusions

d.
Insuring Agreements

A

Conditions

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17
Q

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

A

Conditions

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18
Q

Uncertainty of future outcomes is:

Select one:

a.
insurance

b.
risk

A

Risk

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19
Q

Insurable interest and actual cash value are both related to:

Select one:

a.
Speculative risk

b.
Law of Large Numbers

c.
Indemnity

d.
Peril

A

Indemnity

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20
Q

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.

A

Grants the mortgagee specific rights not granted to the insured

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21
Q

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

A

Conditions

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22
Q

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.

A

Misrepresented material facts

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23
Q

A binder becomes effective when:

Select one:

a.
the insured delivers the premium payment.

b.
made by the agent.

A

Made by the agent

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24
Q

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.

A

Spread the risk

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25
Q

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

A

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

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26
Q

Using a disinterested third party to resolve a claim dispute is:

Select one:

a.
arbitration

b.
assignment

A

Arbitration

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27
Q

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

A

A business loses money due to a fire

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28
Q

The mortgagee should receive how much notice of cancellation?

Select one:

a.
10 days

b.
30 days

c.
60 days

d.
90 days

A

10 days

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29
Q

Indemnity is:

Select one:

a.
coming out ahead

b.
making whole

A

Making whole

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30
Q

Chance of a windstorm causing a loss to one’s property is:

Select one:

a.
risk

b.
hazard

c.
uninsurable

d.
peril

A

Risk

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31
Q

The deductible:

Select one:

a.
decreases the insurer’s losses.

b.
increases the Insurer’s administrative expenses.

A

Decreases the insurer’s losses

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32
Q

The burden of proving a loss rests on the:

Select one:

a.
insurer

b.
insured

A

Insured

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33
Q

The creation of a contract requires each of these EXCEPT:

Select one:

a.
consideration

b.
legal purpose

c.
notarization

d.
competent parties

A

Notarization

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34
Q

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

A

An ex-owner who didn’t cancel the policy

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35
Q

Which section of the policy requires the Insurer to provide coverage?

Select one:

a.
Declarations

b.
Exclusions

c.
Insuring Agreements

d.
Conditions

A

Insuring agreements

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36
Q

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

A

A direct loss

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37
Q

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.

A

Both insurers will share equally in the loss

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38
Q

An electrical interruption causes a business to temporarily close. The electrical interruption is known as the?

Select one:

a.
proximate cause

b.
catastrophe

A

Proximate cause

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39
Q

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

A

Application

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40
Q

A mortgagee must be given how much notice of cancellation?

Select one:

a.
10 days

b.
20 days

c.
40 days

d.
80 days

A

10 days

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41
Q

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

A

The insured’s obligations if a loss occurs

42
Q

The cause of the loss is:

Select one:

a.
risk

b.
peril

A

Peril

43
Q

A peril is:

Select one:

a.
any factor which increases the likelihood of a loss.

b.
the proximate cause of the loss.

A

The proximate cause of the loss

44
Q

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

A

Insuring agreements

45
Q

A consequential loss is:

Select one:

a.
an indirect loss

b.
a direct loss

A

An indirect loss

46
Q

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

A

Insurable interest

47
Q

Concealment involves intentionally hiding:

Select one:

a.
an immaterial fact.

b.
a material fact.

A

A material fact

48
Q

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.

A

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

49
Q

A promise by the insured that certain future conditions will exist is a?

Select one:

a.
representation

b.
concealment

c.
misrepresentation

d.
warranty

A

Warranty

50
Q

The Actual Cash Value formula is:

Select one:

a.
Replacement cost minus physical depreciation

b.
Original cost minus physical depreciation

A

Replacement cost minus physical depreciation

51
Q

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

A

Abandonment

52
Q

Which section of the policy specifies the Insured’s responsibilities?

Select one:

a.
Declaration

b.
Exclusions

c.
Conditions

d.
Insuring Agreements

A

Conditions

53
Q

The limit payable for all losses in a policy year is the:

Select one:

a.
occurrence limit.

b.
aggregate limit.

A

Aggregate limit

54
Q

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

A

The balance owing on the mortgage

55
Q

The amount an insured may recover under an airplane policy is restricted by the:

Select one:

a.
limit of liability

b.
subrogation provision

A

Limit of liability

56
Q

A tenant is wrongfully evicted. This is an example of:

Select one:

a.
personal injury

b.
bodily injury

A

Personal injury

57
Q

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.

A

Upholds the principle of indemnity

58
Q

An Insurer’s required assignment of rights of recovery after paying a claim is:

Select one:

a.
coinsurance

b.
risk

c.
subrogation

d.
salvage

A

Subrogation

59
Q

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

A

Insuring agreements

60
Q

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

A

Preservation of property

61
Q

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.

A

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

62
Q

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.

A

Two party contract with payment to a third party

63
Q

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.

A

How reasonable a person would have acted under the circumstances

64
Q

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.

A

Lack of insurable intrest

65
Q

Risk is the:

Select one:

a.
cause of the loss

b.
uncertainty or chance of loss

A

Uncertainty or chance of loss

66
Q

“Bodily injury” includes each of the following except:

Select one:

a.
personal injury

b.
pain and suffering

c.
death

d.
disease

A

Personal injury

67
Q

Broad form covers:

Select one:

a.
Glass breakage.

b.
Water damage to the floor due to water backing up through a clogged floor drain.

A

Glass breakage

68
Q

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

A

An other insurance clause

69
Q

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

A

Replacement cost

70
Q

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

A

A certificate of insurance

71
Q

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

A

Binder

72
Q

One who can lose financially in the event of a loss has:

Select one:

a.
an insurable interest

b.
a moral hazard

A

An insurable interest

73
Q

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

A

The amount of the premium

74
Q

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

A

A short-rate refund

75
Q

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.

A

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

76
Q

If your building is destroyed by fire, you must notify the Insurer:

Select one:

a.
within 60 days

b.
promptly

A

Promptly

77
Q

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.

A

Agreed to in writing by the insurer

78
Q

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.

A

Each policy will pay a part of the loss

79
Q

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

A

A fire causes a business to close

80
Q

Concealment is:

Select one:

a.
intentional nondisclosure of material facts

b.
misstating material facts

A

Intentional nondisclosure of material facts

81
Q

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

A

A mutual insurer

82
Q

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

A

Paying a premium

83
Q

Which section of the policy contains the premium?

Select one:

a.
Declaration

b.
Conditions

c.
Exclusions

d.
Insuring Agreements

A

Declaration

84
Q

Uncertainty of future outcomes is:

Select one:

a.
insurance

b.
risk

A

Risk

85
Q

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.

A

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

86
Q

The insurer’s exposure under a policy is restricted by:

Select one:

a.
the Limit of Liability.

b.
reserve requirements

A

The limit of liability

87
Q

Deductibles:

Select one:

a.
eliminate small claims and reduce administrative expenses.

b.
eliminate large claims and increase administrative expenses.

A

Eliminate small claims and reduce administrative expenses

88
Q

Prior to issuing the policy, the agent may provide evidence of temporary insurance. This is a:

Select one:

a.
endorsement

b.
binder

A

Binder

89
Q

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

A

Conditions

90
Q

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

A

Insurer

91
Q

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.

A

The insured can collect for any one loss

92
Q

Indemnification is:

Select one:

a.
making whole.

b.
making a profit.

A

Making whole

93
Q

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.

A

Decay that causes a wall to collapse

94
Q

Which section of the policy requires the insured to assume a stated amount of the loss?

Select one:

a.
Deductible

b.
Risk

A

Deductible

95
Q

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

A

Assists the insurer in settling a loss covered by the policy

96
Q

Depreciated value is:

Select one:

a.
Actual cash value

b.
Replacement cost

A

Actual cash value

97
Q

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.

A

Mail notice to the insured in advance

98
Q

“Acts of God” are best covered by:

Select one:

a.
Basic form

b.
Liability policies

c.
Broad form

d.
Special form

A

Special form

99
Q

The primary concept behind insurance is:

Select one:

a.
risk elimination

b.
transfer of risk

A

Transfer of risk

100
Q

The applicant believes the statement to be true with a/an?

Select one:

a.
concealment

b.
representation

c.
misrepresentation

d.
warranty

A

Representation

Property & Casualty Exam (5 decks)

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