Chapter 22: Practice Exam 2

46 Questions | Total Attempts: 1330

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Practice Exam Quizzes & Trivia

Property and Casualty Insurance License Exam Cram™Practice Exam 2 Questions


Questions and Answers
  • 1. 
    The term "time element coverage" is used when the amount of loss depends on which of the following?
    • A. 

      The time between the date of loss and the policy expiration date

    • B. 

      The time between the policy effective date and date of loss

    • C. 

      The time of year when a seasonal business suffers a loss

    • D. 

      The time it takes to repair, rebuild, or restore damaged property

  • 2. 
    Which of the following is not one of the common law defenses against an employer's liability?
    • A. 

      Assumption of risk

    • B. 

      Fellow servant rule

    • C. 

      Proximate cause

    • D. 

      Contributory negligence

  • 3. 
    Vehicles that might be insured by a personal auto policy are described in the eligibility rules and the policy definitions. Each of the following is true about vehicles eligible for PAP coverage except
    • A. 

      Vehicles with fewer than four wheels are not eligible.

    • B. 

      Vehicles owned by an individual or married couple may be insured.

    • C. 

      Private passenger autos, pickup trucks, and vans used for personal transportation may be insured.

    • D. 

      Vans used in a delivery business are eligible for coverage.

  • 4. 
    Businessowners policies provide an additional coverage for preservation of property when it is removed from the premises to protect it from loss by a covered peril. The coverage will apply at other locations for up to
    • A. 

      60 days

    • B. 

      30 days

    • C. 

      20 days

    • D. 

      15 days

  • 5. 
    • A. 

      Loss of custom furnishings in a customized van

    • B. 

      Loss caused by freezing of the cooling system

    • C. 

      Damage to equipment designed for the detection of radar

    • D. 

      Damage to a covered auto while being used as part of a car pool

  • 6. 
    Under the business auto coverage part, liability insurance applies to mobile equipment while which of the following occurs?
    • A. 

      It is being operated on public roads.

    • B. 

      It is being carried or towed by a covered auto.

    • C. 

      It is being operated away from the insured's premises and work sites.

    • D. 

      It is being used for the purpose for which it was designed.

  • 7. 
    Insurance is a mechanism used to manage which of the following types of risk?
    • A. 

      Pure risks

    • B. 

      Speculative risks

    • C. 

      Both pure and speculative risks

    • D. 

      Neither pure nor speculative risks

  • 8. 
    Under the 1989 dwelling policy forms, if coverage for vandalism and malicious mischief is attached to a policy, it will be suspended whenever the building has been vacant for more than how many days?
    • A. 

      45 consecutive days

    • B. 

      30 consecutive days

    • C. 

      20 consecutive days

    • D. 

      10 consecutive days

  • 9. 
    Commercial general liability coverage provides medical expense payments for accidental injuries if the expenses are incurred and reported to the insurer within what date?
    • A. 

      Six months after the accident date

    • B. 

      One year after the accident date

    • C. 

      Two years after the accident date

    • D. 

      Three years after the accident date

  • 10. 
    An employer purchases a fidelity bond to protect against potential losses by employee dishonesty. In this situation, each of the employees covered by the bond is considered which of the following?
    • A. 

      A fiduciary

    • B. 

      A principal

    • C. 

      A guarantor

    • D. 

      An obligee

  • 11. 
    • A. 

      A storage shed connected to the dwelling by a utility line

    • B. 

      A laundry room attached to the dwelling

    • C. 

      Building equipment and outdoor equipment

    • D. 

      Materials and supplies used for construction or repair of the dwelling

  • 12. 
    On homeowners policies, "insured location" is a broad term describing where liability coverages apply. It includes each of the following except which one?
    • A. 

      Family cemetery plots

    • B. 

      Any newly acquired premises

    • C. 

      Structures on farm land owned by an insured

    • D. 

      A nonowned premises used as a temporary residence by an insured

  • 13. 
    The most common definition of actual cash value (ACV) in the property insurance field is which of the following?
    • A. 

      Original cost, plus depreciation

    • B. 

      Original cost, less depreciation

    • C. 

      Replacement cost, plus depreciation

    • D. 

      Replacement cost, less depreciation

  • 14. 
    Each of the following is true about the National Flood Insurance Program except which one?
    • A. 

      There are maximum limits on the amount of coverage available.

    • B. 

      Coverage may be written by private insurance carriers.

    • C. 

      Eligibility requirements are set by private insurance carriers.

    • D. 

      The federal government reimburses insurance companies for losses that exceed premiums collected.

  • 15. 
    • A. 

      Underwriting practices that discriminate against applicants in certain geographical areas

    • B. 

      Selling types of insurance to applicants who do not need that particular kind of coverage

    • C. 

      Agency marketing practices that promote only the policies that pay the highest commissions

    • D. 

      The tendency of people with greater than average exposure to loss to purchase insurance

  • 16. 
    • A. 

      $60,000

    • B. 

      $49,500

    • C. 

      $40,000

    • D. 

      $39,500

  • 17. 
    Under homeowners coverage for medical payments to others, necessary medical expenses for treating an accidental injury will be covered if it incurred within how many days?
    • A. 

      90 days of the accident date

    • B. 

      1 year of the accident date

    • C. 

      3 years of the accident date

    • D. 

      5 years of the accident date

  • 18. 
    Under a Personal Umbrella policy, a self-insured retention is an amount that
    • A. 

      Is in effect a deductible for insured losses.

    • B. 

      Reflects the maximum the insurer will pay for a particular loss.

    • C. 

      Applies between underlying coverage and the umbrella coverage.

    • D. 

      Reduces the amount of underlying coverage available to cover insured losses.

  • 19. 
    Ocean marine protection and indemnity (P&I) coverage usually insures the ship owner against liability for all of the following except which one?
    • A. 

      Cargo lost or damaged through negligence

    • B. 

      Damage to other vessels when caused by collision

    • C. 

      Damage to or loss of the insured ship

    • D. 

      Job-related injuries to sailors

  • 20. 
    National flood insurance is available for which of the following?
    • A. 

      Private residences only

    • B. 

      Private residences and residential contents only

    • C. 

      Residential and nonresidential buildings only

    • D. 

      Residential and nonresidential buildings and contents

  • 21. 
    Which dwelling forms can provide replacement cost coverage for buildings?
    • A. 

      The basic and broad forms only

    • B. 

      The broad and special forms only

    • C. 

      The special form only

    • D. 

      The basic, broad, and special forms

  • 22. 
    Under the commercial property conditions, the coverage territory includes all of the following except which one?
    • A. 

      United States

    • B. 

      Mexico

    • C. 

      Puerto Rico

    • D. 

      Canada

  • 23. 
    Which of the following risks might qualify for coverage under a businessowners policy?
    • A. 

      A bank or saving and loan association

    • B. 

      A bar and grill

    • C. 

      An office building of any size

    • D. 

      An apartment building of any size

  • 24. 
    Under business auto liability coverage, if an insured takes time off from work at the request of the insurer and suffers loss of earnings, as a supplementary payment, the insurer will pay up to how much?
    • A. 

      $150 a day for lost earnings

    • B. 

      $200 a day for lost earnings

    • C. 

      $250 a day for lost earnings

    • D. 

      $300 a day for lost earnings

  • 25. 
    The primary purpose of insurance is to do which of the following?
    • A. 

      Avoid risk

    • B. 

      Eliminate risk

    • C. 

      Transfer risk

    • D. 

      Reduce risk