What Do You Know About Fire And Casualty Insurance? Trivia Quiz

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What Do You Know About Fire And Casualty Insurance? Trivia Quiz - Quiz

What do you know about Fire and Casualty Insurance and what falls under it? In case of fire, come loss of property and a lot of substantial damage and with this, comes the importance of Fire and Casualty Insurance to assist in the coverage in terms of loss of property and casualty in regards to people and human life.


Questions and Answers
  • 1. 

    What course of action does a party to a contract have if the other party is found to be in breach of that contract ?

    • A.

      Nothing, unless the injured party can prove the damages are substantial

    • B.

      Reasonable attorney fees and costs only

    • C.

      Damages for breach, reasonable attorney fees and costs

    • D.

      Damages caused by the breach only

    Correct Answer
    C. Damages for breach, reasonable attorney fees and costs
    Explanation
    If a party to a contract is found to be in breach, the injured party has the course of action to claim damages for the breach. This means that they can seek compensation for any losses or harm suffered as a result of the breach. Additionally, they may also be entitled to reasonable attorney fees and costs incurred in pursuing legal action to enforce the contract or seek remedies for the breach.

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  • 2. 

    A representation in an insurance contract qualifies as which of the following ?

    • A.

      An amendment

    • B.

      An express warranty

    • C.

      A policy provision

    • D.

      An implied warranty

    Correct Answer
    D. An implied warranty
    Explanation
    An implied warranty refers to a guarantee that is not explicitly stated in the insurance contract but is assumed to be present based on the nature of the agreement or the intentions of the parties involved. In the context of an insurance contract, an implied warranty could be a promise made by the insurer to provide coverage for certain risks or to act in good faith when handling claims. This type of warranty is inferred from the circumstances and is binding on both the insurer and the insured, even if it is not explicitly written in the policy.

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  • 3. 

    What does it mean if an agen'ts license is inactive ?

    • A.

      The agent can transact insurance business if it is done with another agents approval

    • B.

      The agent can transact any insurance business for which the agent is licensed

    • C.

      The agent can still transact insurance business in CA, but not in any other state until it is reactivated

    • D.

      The agent cannot transact any insurance business for which a valid, active license is required

    Correct Answer
    D. The agent cannot transact any insurance business for which a valid, active license is required
    Explanation
    If an agent's license is inactive, it means that the agent is not authorized to conduct any insurance business that requires a valid and active license. This means that the agent cannot engage in any transactions that require a license, such as selling insurance policies or providing insurance advice. The agent must reactivate their license before they can resume transacting insurance business.

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  • 4. 

    The ordinance or law exclusion found in property policies such as the commercial property coverage, and in the homeowner's policy have the following effect:

    • A.

      It warrants that an insured has not knowingly violated an ordinance or law

    • B.

      The insured may not remove or modify the effect of the exclusion

    • C.

      It reduces the coverage on any loss if the loss was caused by the insured violating the ordinance or law

    • D.

      It excludes that part of the loss resulting from the enforcement of a building ordinance or law

    Correct Answer
    D. It excludes that part of the loss resulting from the enforcement of a building ordinance or law
    Explanation
    The correct answer is that the ordinance or law exclusion in property policies excludes the part of the loss that is a result of the enforcement of a building ordinance or law. This means that if a loss occurs due to the enforcement of a building ordinance or law, that specific part of the loss will not be covered by the insurance policy. This exclusion is in place to ensure that the insured does not knowingly violate any ordinances or laws and to reduce coverage if such violations occur.

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  • 5. 

    Extra expense insurance covers:

    • A.

      Increased expense of repairing property to appreciated assets

    • B.

      The extra expense that a business incurs to continue a business while damage to the premises are being restored

    • C.

      The loss of profit a business incurs when it is shut down after a loss by a covered peril

    • D.

      Payroll and other overhead incurred when a business is shut down after a loss

    Correct Answer
    B. The extra expense that a business incurs to continue a business while damage to the premises are being restored
    Explanation
    Extra expense insurance covers the additional costs that a business incurs to continue operations while the premises are being restored after damage. This can include expenses such as renting temporary facilities, purchasing equipment, or hiring additional staff. It is designed to help businesses minimize the financial impact of a loss and ensure that they can continue operating during the restoration process.

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  • 6. 

    A plate glass/glass coverage form is needed by some insureds.  Which of the following statements about the coverage for the peril of glass breakage in commercial property for a "building and personal property" basic, broad and special causes of loss forms is true ?

    • A.

      There is limited glass breakage coverage in both of the broad and special forms

    • B.

      There is limited glass breakage coverage in the basic form

    • C.

      No policy limits apply to glass breakage coverage in the special form, all named perils

    • D.

      There is no glass breakage coverage in the broad or special forms

    Correct Answer
    A. There is limited glass breakage coverage in both of the broad and special forms
    Explanation
    There is limited glass breakage coverage in both the broad and special forms of the "building and personal property" basic, broad, and special causes of loss forms.

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  • 7. 

    In the state of CA, no rate will remain in effect if it is considered to be any of the following, except:

    • A.

      Impartial

    • B.

      Unfairly discriminatory

    • C.

      Excessive

    • D.

      Inadequate

    Correct Answer
    B. Unfairly discriminatory
    Explanation
    In the state of CA, rates will not remain in effect if they are considered to be impartial, excessive, or inadequate. However, rates can remain in effect if they are unfairly discriminatory. This means that while rates cannot be impartial, excessive, or inadequate, they can still be unfairly discriminatory and still be allowed to remain in effect.

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  • 8. 

    The amount paid for damage to property which is equal to the price for which it could have been sold is

    • A.

      Actual cash value

    • B.

      Replacement amount

    • C.

      Stated amount

    • D.

      Market Value

    Correct Answer
    D. Market Value
    Explanation
    Market Value refers to the amount paid for damage to property, which is equal to the price for which it could have been sold. This means that the payment is based on the current market value of the property, taking into account factors such as depreciation and condition. It is different from Actual Cash Value, which may consider the property's depreciated value, and Replacement Amount, which may involve the cost of replacing the property with a similar one. Stated Amount, on the other hand, is a predetermined value agreed upon by the parties involved, and may not necessarily reflect the market value.

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  • 9. 

    The limited Mexico endorsement applies to trips to Mexico with a duration of

    • A.

      7 days or less

    • B.

      10 days or less

    • C.

      2 days or less

    • D.

      14 days or less

    Correct Answer
    B. 10 days or less
    Explanation
    The limited Mexico endorsement applies to trips to Mexico that have a duration of 10 days or less. This means that if someone is planning to travel to Mexico for a period of 10 days or less, they can obtain this endorsement. It is likely that this endorsement provides certain benefits or coverage specifically tailored for shorter trips to Mexico, such as emergency medical coverage or travel assistance services.

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  • 10. 

    Which of the following types of coverage would pay for losses which occurred during the policy period and are found for up to one year after policy termination?

    • A.

      Occurrence

    • B.

      Loss sustained

    • C.

      Claims made

    • D.

      Discovery

    Correct Answer
    B. Loss sustained
    Explanation
    Loss sustained coverage is a type of insurance coverage that pays for losses that occurred during the policy period and are discovered up to one year after the policy termination. This means that even if the policy has ended, any losses that are found within one year after the termination will still be covered by the insurance. This type of coverage provides extended protection for potential losses that may not be immediately discovered or reported.

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  • 11. 

    Which coverage is needed to protect physicians, surgeons, and dentists for their professional activities

    • A.

      Commercial general liability

    • B.

      Malpractice coverage

    • C.

      Employer's liability

    • D.

      Errors and omissions coverage

    Correct Answer
    B. Malpractice coverage
    Explanation
    Malpractice coverage is needed to protect physicians, surgeons, and dentists for their professional activities. This type of coverage specifically addresses the risks and liabilities associated with medical errors, negligence, or omissions that may result in harm to patients. It provides financial protection for professionals in the event of malpractice claims, including legal expenses and potential settlements or judgments. Commercial general liability, employer's liability, and errors and omissions coverage may offer different types of protection, but they do not specifically address the unique risks faced by healthcare professionals in their professional activities.

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  • 12. 

    What must an insurer do who accepts an application from an agent who is not specifically appointed that insurer, and then issues a policy from that application?

    • A.

      The agent must become an employee of the company within 30 days ofpolicy issuance

    • B.

      Name the agent to the list of the company's approved agents

    • C.

      Send the agent an appointment approval notice within 30 days of policy issuance

    • D.

      Forward to the commissioner a notice of appointment within 14 days of receipt of application

    Correct Answer
    D. Forward to the commissioner a notice of appointment within 14 days of receipt of application
    Explanation
    The insurer must forward to the commissioner a notice of appointment within 14 days of receipt of the application. This is necessary to inform the regulatory authority about the agent's acceptance and issuance of the policy on behalf of the insurer. It ensures transparency and compliance with regulatory requirements.

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  • 13. 

    Under a major medical plan, coinsurance equals a percentage

    • A.

      The employee pays after the deductible is met

    • B.

      The plan pays after the deductible is met

    • C.

      The employer pays after the deductible

    • D.

      The spouses' insurance company pays after the deductible

    Correct Answer
    A. The employee pays after the deductible is met
    Explanation
    In a major medical plan, coinsurance refers to the percentage that the employee is responsible for paying after the deductible has been met. This means that once the employee has paid the required deductible amount, they are then required to pay a percentage of the remaining costs for their medical expenses. The plan itself may also contribute to the costs, but the employee is responsible for their portion after the deductible is met.

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  • 14. 

    If an insured borrows a neighbor's vehicle to run a personal errand, how do the policies respond in the event of an auto accident ?

    • A.

      Both policies respon on a pro-rate basis

    • B.

      Only the neighbor's policy provides coverage; there is no coverage by the driver's policy

    • C.

      The driver's policy is primaty and the neighbor's policy is excess

    • D.

      The neighbor's policy is primary and the driver's policy is excess

    Correct Answer
    D. The neighbor's policy is primary and the driver's policy is excess
    Explanation
    When an insured borrows a neighbor's vehicle to run a personal errand and gets into an auto accident, the neighbor's policy is considered primary and provides coverage for the accident. The driver's policy is considered excess, meaning it only provides coverage if the neighbor's policy limits are exhausted. This means that the neighbor's policy will be the first to respond and pay for damages, while the driver's policy will only come into play if the neighbor's policy is not sufficient to cover all the expenses.

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  • 15. 

    The equipment dealer's coverage form covers all of the following types of property, except:

    • A.

      Dealer's used stock

    • B.

      Motor vehicles designed for highway use

    • C.

      Customer's equipment in for service

    • D.

      Dealer's new stock

    Correct Answer
    B. Motor vehicles designed for highway use
    Explanation
    The equipment dealer's coverage form provides coverage for all types of property, including the dealer's used stock, customer's equipment in for service, and the dealer's new stock. However, it does not cover motor vehicles designed for highway use. This means that if any motor vehicles designed for highway use are damaged or stolen, the coverage form will not provide any compensation or coverage for those vehicles.

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  • 16. 

    A self-insured group qualifies for stop-loss after claims:

    • A.

      Equal the anticipated loss per month

    • B.

      Meet the out-of-pocket expense during the policy period

    • C.

      Exceed a specified limit in a set period of time

    • D.

      Average the maximum amount stated on the master policy

    Correct Answer
    C. Exceed a specified limit in a set period of time
    Explanation
    A self-insured group qualifies for stop-loss after claims exceed a specified limit in a set period of time. This means that the group's claims must go beyond a predetermined threshold within a certain timeframe in order for stop-loss coverage to be activated. This ensures that the group is protected against excessively high claims and provides a safety net for their self-insured healthcare expenses.

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  • 17. 

    A reporting form is used for property insurance

    • A.

      To maintain the correct limits of coverage without over or under insuring when the value of volume of the property varies during the policy term

    • B.

      To report losses and adjust insurance in force to conform

    • C.

      When the insured's premises are subject to periodic safety inspections

    • D.

      To establish a guaranteed amount of insurance based upon a report of values submitted the beginning of the policy term

    Correct Answer
    A. To maintain the correct limits of coverage without over or under insuring when the value of volume of the property varies during the policy term
    Explanation
    A reporting form is used for property insurance to ensure that the correct limits of coverage are maintained throughout the policy term, especially when the value or volume of the property fluctuates. This allows the insured to avoid over-insuring or under-insuring their property. By regularly reporting the changes in property value, the insurance coverage can be adjusted accordingly to accurately reflect the current value of the property. This helps to ensure that the insured is adequately protected in the event of a loss or damage to their property.

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  • 18. 

    All of the following contribute to the rising cost of Worker's Compensation Insurance, except:

    • A.

      The growing population

    • B.

      Employers who fail to secure the payment of workers compensation as required by law

    • C.

      Under-reported payroll by employers

    • D.

      Fraudulent claims

    Correct Answer
    A. The growing population
    Explanation
    The growing population is not a factor that contributes to the rising cost of Worker's Compensation Insurance. The cost of insurance is typically determined by factors such as the number of claims, the severity of those claims, and the overall risk profile of the workforce. While a growing population may result in an increase in the number of workers, it does not directly impact the cost of insurance.

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  • 19. 

    Which type of exposure can be best defined as a condition or situation where the exposure to finance loss is presented to an individual or family from causes such as injury, disability, death, sickness, or unemployment ?

    • A.

      Personnel loss exposure

    • B.

      Personal property loss exposure

    • C.

      Personal loss exposure

    • D.

      Liability loss exposure

    Correct Answer
    C. Personal loss exposure
    Explanation
    Personal loss exposure can be best defined as a condition or situation where the exposure to financial loss is presented to an individual or family from causes such as injury, disability, death, sickness, or unemployment. It refers to the potential financial impact that individuals or families may face due to personal circumstances or events that can result in a loss of income or increased expenses. This type of exposure highlights the risks and vulnerabilities individuals and families may encounter in their personal lives, which can have significant financial consequences.

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  • 20. 

    All of the following would be considered benefits of Insurance, except:

    • A.

      The source of investment funds

    • B.

      Retention of the loss by the insured

    • C.

      Redemption of the financial uncertainity of the insured

    • D.

      Payment for the cost of covered losses

    Correct Answer
    B. Retention of the loss by the insured
    Explanation
    Insurance provides various benefits such as payment for the cost of covered losses, redemption of financial uncertainty for the insured, and serving as a source of investment funds. However, the retention of the loss by the insured is not a benefit of insurance. In fact, insurance is designed to protect individuals or organizations from financial losses by transferring the risk to the insurer. Therefore, the insured should not bear the burden of retaining the loss.

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  • 21. 

    Which of the following is also known as a human loss exposure ?

    • A.

      Personnel loss exposure

    • B.

      Personal loss exposure

    • C.

      Indirect loss exposure

    • D.

      Liability loss exposure

    Correct Answer
    A. Personnel loss exposure
    Explanation
    Personnel loss exposure refers to the risk of losing human resources within an organization due to various factors such as death, disability, retirement, or resignation. This can lead to a loss of skills, knowledge, and experience, and can also impact the overall productivity and efficiency of the organization. Therefore, personnel loss exposure is also known as a human loss exposure as it involves the potential loss of valuable human assets.

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  • 22. 

    If a tenant is insured under a building personal property coverage form, when is the property considered vacant ?

    • A.

      When the structure is being renovated as the result of a fire

    • B.

      When the Insured's operation is halted due to a strike

    • C.

      When there is insufficient business personal property present to conduct customary operations

    • D.

      When less that 31% of the total building space is rented to others or in use by the insured

    Correct Answer
    C. When there is insufficient business personal property present to conduct customary operations
  • 23. 

    A commercial property policy can provide coverage for all of the following, except:

    • A.

      Tangible losses

    • B.

      Indirect losses

    • C.

      Intangible losses

    • D.

      Direct losses

    Correct Answer
    C. Intangible losses
    Explanation
    A commercial property policy is designed to provide coverage for physical damage or loss to a business's property, such as buildings, equipment, and inventory. Tangible losses refer to physical losses that can be seen or touched, and a commercial property policy would cover these types of losses. Indirect losses are losses that result from the physical damage or loss, such as loss of income or additional expenses, and a commercial property policy would typically cover these as well. However, intangible losses are losses that do not involve physical damage or loss, such as reputation damage or loss of customer goodwill, and a commercial property policy would not typically provide coverage for these types of losses. Therefore, the correct answer is intangible losses.

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  • 24. 

    Which of the following types of coverage would be needed to cover a contract's bulldozers which are used in the contract's business but are not held for sale ?

    • A.

      Older truck cargo floater

    • B.

      Annual transit policy

    • C.

      Contract's equipment floater

    • D.

      Installment sales floater

    Correct Answer
    C. Contract's equipment floater
    Explanation
    A contract's equipment floater would be needed to cover a contract's bulldozers which are used in the contract's business but are not held for sale. A contract's equipment floater is a type of insurance coverage specifically designed to protect equipment that is used in the course of a contract. It provides coverage for equipment that is owned, rented, or leased by the contract holder, and it typically covers a wide range of perils such as theft, damage, and vandalism. This type of coverage would be necessary to ensure that the bulldozers used in the contract's business are protected in case of any unforeseen events or accidents.

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  • 25. 

    It is a violation of the CA insurance Code to act as a producer for a non-admitted carrier unless:

    • A.

      The producer is an insurance solicitor

    • B.

      It is always a violation, no matter what type of producer

    • C.

      The producer is dually licensed in at least two states

    • D.

      The producer is a surplus lines broker

    Correct Answer
    D. The producer is a surplus lines broker
    Explanation
    According to the given information, it is a violation of the CA insurance Code to act as a producer for a non-admitted carrier unless the producer is a surplus lines broker. This means that if a producer wants to work with a non-admitted carrier, they must be specifically licensed as a surplus lines broker.

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  • 26. 

    In California, excess and surplus lines coverage needs to be placed through:

    • A.

      An admitted insurer

    • B.

      An excess and surplus lines solicitor

    • C.

      Lloyds of London

    • D.

      A surplus lines broker

    Correct Answer
    D. A surplus lines broker
    Explanation
    In California, excess and surplus lines coverage needs to be placed through a surplus lines broker. A surplus lines broker is a licensed professional who specializes in placing coverage with non-admitted insurers, such as Lloyds of London. These brokers have the expertise and knowledge to navigate the complexities of the surplus lines market and ensure that clients receive the necessary coverage from reputable insurers. Therefore, a surplus lines broker is the appropriate choice for placing excess and surplus lines coverage in California.

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  • 27. 

    Under a scheduled personal property endorsement, loss to stamps are excluded when they are:

    • A.

      Located in Canada

    • B.

      Being shipped with a freight company

    • C.

      Being shipped by registered mail

    • D.

      While the insured is temporarily in Japan

    Correct Answer
    B. Being shipped with a freight company
    Explanation
    The correct answer is "Being shipped with a freight company." This means that if the stamps are being transported or shipped using a freight company, they will not be covered under the scheduled personal property endorsement. This exclusion suggests that the risk associated with shipping stamps through a freight company is considered higher, and therefore, the insurance coverage does not apply in such cases.

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  • 28. 

    Which of the following is most likely to be eligible for the CA Fair Plan ?

    • A.

      An insured with a very bad driving record

    • B.

      A poorly maintained dwelling with faulty wiring

    • C.

      An insured who has had a drives license for less than two years

    • D.

      A well-maintained dwelling located in a hazardous brush area

    Correct Answer
    D. A well-maintained dwelling located in a hazardous brush area
    Explanation
    A well-maintained dwelling located in a hazardous brush area is most likely to be eligible for the CA Fair Plan. The CA Fair Plan is a program that offers insurance coverage to property owners who are unable to obtain insurance through traditional means due to high-risk factors such as location. In this case, the well-maintained dwelling suggests that the property is in good condition, which may make it more insurable. However, the hazardous brush area indicates a higher risk, which aligns with the purpose of the CA Fair Plan to provide coverage in such situations.

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  • 29. 

    What items of personal property are included in Coverage A under a HO-3 policy ?

    • A.

      Detached fences

    • B.

      Lawnmower used to maintain the exterior premises

    • C.

      Paint on the premises to be applied to the interior

    • D.

      Decorative fountains

    Correct Answer
    C. Paint on the premises to be applied to the interior
    Explanation
    Coverage A under a HO-3 policy typically includes personal property that is permanently attached or built in to the structure of the insured premises. This includes items like built-in appliances, fixtures, and permanently installed carpeting. However, paint on the premises to be applied to the interior is not considered personal property that is permanently attached or built in, as it is a temporary item that can be easily removed or replaced. Therefore, it is not included in Coverage A under a HO-3 policy.

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  • 30. 

    Mitchell's (unendorsed) personal auto policy liability coverage would pay for:

    • A.

      Mitchell's brokern windshielf caused by a rock thrown by the tire of a passing car

    • B.

      Mitchell's rental car expense, when his car is unusable due to a collision that was not his fault

    • C.

      The cost of repairing the neighbor's fence that Mitchell damaged due to the negligent operation of his car

    • D.

      Damage or injury caused intentionally by Mitchel

    Correct Answer
    C. The cost of repairing the neighbor's fence that Mitchell damaged due to the negligent operation of his car
    Explanation
    Mitchell's personal auto policy liability coverage would pay for the cost of repairing the neighbor's fence that Mitchell damaged due to the negligent operation of his car. This is because liability coverage typically covers damages caused by the insured's negligent actions, such as damaging someone else's property.

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  • 31. 

    All Workers Compensation policies provide

    • A.

      Major medical coverage with 20% co-payment; co-payment has an annual stop-loss of $1,500

    • B.

      Compensation for worker related injuries without regard to fault

    • C.

      Adequate retirement benefits

    • D.

      24-hour on and off the job coverage for workers

    Correct Answer
    B. Compensation for worker related injuries without regard to fault
    Explanation
    Workers Compensation policies provide compensation for worker-related injuries without regard to fault. This means that regardless of who is at fault for the injury, the policy will provide financial compensation to the injured worker. This is important because it ensures that workers are protected and taken care of in the event of an injury while on the job. It helps to cover medical expenses, lost wages, and other related costs, providing support and financial stability for the injured worker and their family.

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  • 32. 

    All of the following are principal rating factors under Proposition 103 for personal auto policies, except;

    • A.

      Years of driving experience

    • B.

      Annual miles driven

    • C.

      Driver's safety record

    • D.

      Number of listed drivers

    Correct Answer
    D. Number of listed drivers
    Explanation
    The number of listed drivers is not a principal rating factor under Proposition 103 for personal auto policies. This means that the number of drivers listed on the policy does not directly affect the premium or cost of the policy. Factors such as years of driving experience, annual miles driven, and the driver's safety record are considered more important in determining the premium for a personal auto policy.

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  • 33. 

    Under a builders risk form, how much insurance is required to pay any loss without a penalty for underinsurance?

    • A.

      100% of the completed value

    • B.

      100% of the value at the time of the loss

    • C.

      80% of the value at the time of the loss

    • D.

      80% of the completed value

    Correct Answer
    A. 100% of the completed value
    Explanation
    In a builders risk form, the insurance is required to pay any loss without a penalty for underinsurance by covering 100% of the completed value. This means that the insurance coverage should be equal to the total value of the project once it is completed. This ensures that there is no penalty for underinsurance, meaning that the policyholder will receive full compensation for any loss or damage that occurs during the construction process.

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  • 34. 

    Which of the following persons is not an insured under Section I of a homeowner's policy?

    • A.

      The named insured

    • B.

      The named insured's (resident) spouse

    • C.

      The named insured's (resident) 25 year old nephew

    • D.

      The named insured's (non-resident) spouse

    Correct Answer
    D. The named insured's (non-resident) spouse
    Explanation
    The named insured's (non-resident) spouse is not an insured under Section I of a homeowner's policy because the policy only covers residents of the insured's household. Since the spouse is a non-resident, they are not eligible for coverage under the policy.

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  • 35. 

    An unbrella Policy

    • A.

      Provides coverage for outdoor fairs and exhibitions in case of bad weather

    • B.

      Provides excess physical damage coverage

    • C.

      Provides broad primary coverage for most personal or commercial loss exposures

    • D.

      Provides broad excess liability coverage over one or more primary policyes

    Correct Answer
    D. Provides broad excess liability coverage over one or more primary policyes
    Explanation
    An umbrella policy provides broad excess liability coverage over one or more primary policies. This means that it offers additional coverage beyond the limits of the primary policies, such as homeowners or auto insurance. It acts as a safety net, providing extra protection in case of a lawsuit or large claim that exceeds the limits of the primary policies. This coverage is typically applicable to both personal and commercial loss exposures.

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  • 36. 

    All of the following expenses are covered in addition to the limits of liability under Coverage A of a personal auto policy, except:

    • A.

      Pre-judment interest

    • B.

      Premium for appeal bonds

    • C.

      Loss of earnings to attend trials at the company's request

    • D.

      Cost of bail bonds related to covered accident

    Correct Answer
    C. Loss of earnings to attend trials at the company's request
    Explanation
    Loss of earnings to attend trials at the company's request is not covered under Coverage A of a personal auto policy. Coverage A typically includes liability coverage for bodily injury and property damage caused by the insured. However, loss of earnings to attend trials at the company's request is not a direct expense related to a covered accident, but rather a personal inconvenience or obligation that is not covered by the policy.

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  • 37. 

    Under a commercial property coverage form, all of the following properties are included in the definition of "building." except:

    • A.

      Patio

    • B.

      Outdoor fixtures

    • C.

      Permanently installed fixtures

    • D.

      Personal property used to maintain the premises

    Correct Answer
    D. Personal property used to maintain the premises
    Explanation
    Under a commercial property coverage form, the definition of "building" typically includes the physical structure of the property, such as walls, roofs, and floors, as well as permanently installed fixtures and outdoor fixtures. However, personal property used to maintain the premises, such as cleaning supplies or gardening tools, would not be considered part of the building.

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  • 38. 

    Carmen is driving her own car on behalf of her employer.  Carmen's negligent operation of her car injured member of the public.  The employer may be held liable because of what is called:

    • A.

      Vicarious liability

    • B.

      Gross negligence

    • C.

      Absolute liability

    • D.

      Contributory Negligence

    Correct Answer
    A. Vicarious liability
    Explanation
    Vicarious liability is the legal doctrine that holds an employer responsible for the actions of their employees while they are acting within the scope of their employment. In this case, Carmen was driving her own car on behalf of her employer, which means she was acting within the scope of her employment. Therefore, if Carmen's negligent operation of her car injured a member of the public, the employer may be held liable under the principle of vicarious liability.

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  • 39. 

    Which of the following perils is insured against in the Special form but not in the Basic form ?

    • A.

      Friendly fire smoke

    • B.

      Weight of snow

    • C.

      Plumbing system leakage

    • D.

      Collapse

    Correct Answer
    D. Collapse
    Explanation
    The Special form of insurance covers the peril of collapse, while the Basic form does not. Collapse refers to the sudden falling down or caving in of a building or structure. This peril can occur due to various reasons, such as structural defects, foundation issues, or natural disasters like earthquakes. The Basic form of insurance typically covers more common perils like fire or theft, but does not provide coverage for collapse.

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  • 40. 

    Which of the following types of policies pays for bodily injury or property damage which occurs or is discovered during the policy period ?

    • A.

      Pollution liability policy

    • B.

      Claims made commercial liability policy

    • C.

      Auto liability policy

    • D.

      Occurrence general liability policy

    Correct Answer
    D. Occurrence general liability policy
    Explanation
    An occurrence general liability policy pays for bodily injury or property damage that occurs or is discovered during the policy period. This means that the policy covers any incidents that happen within the specified time frame, regardless of when the claim is actually made. This type of policy provides coverage for accidents or events that may have long-term effects or may not be immediately apparent. It is a broad form of coverage that offers protection for a wide range of potential liabilities.

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  • 41. 

    If an armored car carrying an insured's bank deposit is robbed, what Insurance would the insured need to be covered?

    • A.

      Monery orders and counterfeit money

    • B.

      Funds transfer fraud

    • C.

      Outside the premises-theft of money and securities

    • D.

      Employee theft

    Correct Answer
    C. Outside the premises-theft of money and securities
    Explanation
    The insured would need coverage for "Outside the premises-theft of money and securities" in case the armored car carrying their bank deposit is robbed. This coverage would protect them against theft of money and securities that occurs outside their premises, such as during transportation.

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  • 42. 

    Under the liability portion of an unendorsed personal auto policy, what coverage is available fi the namedinsured is operating a company car ?

    • A.

      The coverage of the vehicle primarily operated by the named insured

    • B.

      The financial responsibility coverage limitations

    • C.

      The broadest coverage of any of the autos listed in the declarations

    • D.

      The policy excludes this usuage

    Correct Answer
    A. The coverage of the vehicle primarily operated by the named insured
    Explanation
    The correct answer is the coverage of the vehicle primarily operated by the named insured. This means that under the liability portion of the personal auto policy, the named insured will have coverage for the vehicle they primarily operate, even if it is a company car. This coverage applies regardless of whether the vehicle is listed in the policy declarations or not. The policy does not exclude coverage for this usage.

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  • 43. 

    A possibility of financial loss resulting from the ownership of property is knowns as:

    • A.

      Insurable interest

    • B.

      Valuation

    • C.

      Indemnity

    • D.

      Legal liability

    Correct Answer
    A. Insurable interest
    Explanation
    Insurable interest refers to the financial stake or potential loss that an individual has in a property. It is the basis for purchasing insurance, as it ensures that the policyholder will suffer a financial loss if the property is damaged or destroyed. Insurable interest is necessary for a valid insurance contract, as it demonstrates the relationship between the insured and the property being insured. Valuation refers to determining the monetary worth of a property, indemnity refers to compensation for a loss or damage, and legal liability refers to the responsibility to pay for damages or injuries caused to others.

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  • 44. 

    If the vacancy permit endorsement is added to a building and personal property coverage form, the vacancy conditions under the basic policy is:

    • A.

      Waived only for designated perils during the permit period

    • B.

      Waived during the perimit period

    • C.

      Waived during the policy period

    • D.

      Waived only for designed perils during the policy period

    Correct Answer
    D. Waived only for designed perils during the policy period
    Explanation
    The correct answer is "Waived only for designated perils during the policy period." This means that the vacancy conditions under the basic policy are only waived for specific perils during the policy period, not for all perils or for the entire permit period.

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  • 45. 

    You are to meet with a small furniture manufacturer and make property and liability insurance recommendations.  You have insured many risks of this type in the past and have a good idea of what their needs may be.  there are several populat ways of determining business loss exposures.  Which of the following ways are the least professional and the least likely to correctly identify the loss exposures?  You:

    • A.

      Take a walk through the business to observe operations and work flow, and ask their key people about the company and its operations

    • B.

      Meet with key people and complete a loss exposure questionnaire developed for their general type of risk

    • C.

      Get a copy of all current policies and determine what coverage they have been carrying and how much they have been paying

    Correct Answer
    C. Get a copy of all current policies and determine what coverage they have been carrying and how much they have been paying
    Explanation
    Getting a copy of all current policies and determining what coverage they have been carrying and how much they have been paying is the least professional and least likely to correctly identify the loss exposures. This approach does not involve directly observing the business operations or gathering information from key people. It solely relies on the information provided in the policies, which may not accurately reflect the actual risks and exposures faced by the business.

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  • 46. 

    Where would an insured who is in the business of importing exotic animals from Africa most likely go to obtain insurance coverage?

    • A.

      State Competitive Fund

    • B.

      Foreign insurer

    • C.

      Alien insurer

    • D.

      Excess and surplus lines insurer

    Correct Answer
    D. Excess and surplus lines insurer
    Explanation
    An insured who is in the business of importing exotic animals from Africa would most likely go to an excess and surplus lines insurer to obtain insurance coverage. Excess and surplus lines insurers specialize in providing coverage for unique or high-risk exposures that traditional insurance companies may not cover. Importing exotic animals from Africa would be considered a high-risk activity, and therefore, an insured would need to seek coverage from a specialized insurer like an excess and surplus lines insurer.

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  • 47. 

    A commercial building and a personal property coverage form covers three kinds of property, one which has "your business peronal property," "Your" refers to:

    • A.

      Only the first named insured shown in the declarations

    • B.

      Any party who has an insurable interest in the property located at the insured address

    • C.

      The named insured and others whose property is in the care, custody or control of the insured

    • D.

      Only the named insured(s) shown in the declarations

    Correct Answer
    D. Only the named insured(s) shown in the declarations
    Explanation
    The term "your" in the context of the commercial building and personal property coverage form refers to only the named insured(s) shown in the declarations. This means that the coverage is specifically for the individuals or entities that are listed as named insured(s) in the policy declarations.

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  • 48. 

    Which of the following losses is not covered by either the personal auto policy collision or other than collision coverage?

    • A.

      Sean's Car is severely damaged by a storm when a sign is blown off the roof of a building and hits his car

    • B.

      Sean's car is washed away during a flood

    • C.

      Sean's car is stolen when he leaves the keys in the ignition, and the doors and windows are unlocked while he runs into the grocery store.

    • D.

      Sean leaves his personal (non-business) laptop computer in his car overnight. His car is parked in the driveway in front of his house. the computer is stolen from his car.

    Correct Answer
    D. Sean leaves his personal (non-business) laptop computer in his car overnight. His car is parked in the driveway in front of his house. the computer is stolen from his car.
    Explanation
    The loss of Sean's personal laptop computer is not covered by either the personal auto policy collision or other than collision coverage.

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  • 49. 

    Self-funding of employee benefit plans cannot be used for:

    • A.

      Short-term disability benefits

    • B.

      Death benefits

    • C.

      Hospital benefits

    • D.

      Health benefits

    Correct Answer
    B. Death benefits
    Explanation
    Self-funding of employee benefit plans cannot be used for death benefits because death benefits typically involve a lump sum payment to the beneficiary upon the death of an employee. Self-funding refers to the practice of an employer bearing the financial risk of providing benefits to its employees rather than purchasing insurance. While self-funding can be used for short-term disability, hospital, and health benefits, it is not typically used for death benefits as the financial risk associated with such benefits can be significant and unpredictable.

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  • 50. 

    How much additional coverage is provided under Homeowners 3 for ordinance or law ?

    • A.

      10% of the coverage A limit

    • B.

      25% of the coverage A limit

    • C.

      No coverage

    • D.

      Replacement cost of the Coverage a limit

    Correct Answer
    C. No coverage
    Explanation
    Homeowners 3 does not provide any additional coverage for ordinance or law. This means that if there are any expenses related to complying with building codes or laws during the repair or rebuilding of the insured property, the policy will not cover those costs. It is important for homeowners to be aware of this limitation and consider purchasing additional coverage if they want to be protected against such expenses.

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Quiz Review Timeline +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Mar 22, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Nov 15, 2009
    Quiz Created by
    Pchinna
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