Property And Casualty Practice Exam

76 Questions | Total Attempts: 59222

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Property And Casualty Practice Exam

Many people don’t think they need insurance. In reality, you can never predict what might happen to you, your belongings, or the place you live, and so it’s essential to take preliminary measures, so you haven't left up a creek without a panel when tragedy strikes! Insurance is the way to do that, and today we’ll be testing your knowledge on property and casualty insurance licenses! Go ahead with the quiz and learn interesting trivia.


Questions and Answers
  • 1. 
    What is meant by a contract of adhesion?
    • A. 

      Both parties are required to provide services for the other.

    • B. 

      One party draws up the contract provisions, and the other party adheres to the terms.

    • C. 

      The contract can be revoked by any party at any time for any reason.

    • D. 

      A contract that is formed without any consideration by either party.

  • 2. 
    Which part of an insurance policy describes what property and/or perils will be covered by the contract?
    • A. 

      Definitions

    • B. 

      Exclusions

    • C. 

      Insuring agreement

    • D. 

      Conditions

  • 3. 
    What is the consideration that an insurer gives to the insured under an insurance contract?
    • A. 

      Stated benefits and the dates on which they are to be paid

    • B. 

      The premium

    • C. 

      A promise to pay for certain losses if they occur

    • D. 

      A promise to be conscientious about the customer's situation

  • 4. 
    Under an insurance contract, the uncertainty of events can lead to unequal financial results for the two parties. This means that insurance is what kind of contract?
    • A. 

      Unilateral

    • B. 

      Aleatory

    • C. 

      Conditional

    • D. 

      Utmost good faith

  • 5. 
    The "ground rules" are described in which part of an insurance policy?
    • A. 

      Definitions

    • B. 

      Exclusions

    • C. 

      Insuring agreement

    • D. 

      Conditions

  • 6. 
    A mutual insurance company
    • A. 

      Is managed by an attorney-in-fact.

    • B. 

      Pays dividends to its stockholders.

    • C. 

      Is owned by its insureds.

    • D. 

      Is a voluntary association of individuals that shares in writing insurance contracts for a variety of risks.

  • 7. 
    A nonexclusive agent
    • A. 

      Represents a single insurance company.

    • B. 

      Works for a direct writer.

    • C. 

      Is an independent businessperson.

    • D. 

      Does not collect commissions.

  • 8. 
    Solicitors may not
    • A. 

      Issue or countersign policies.

    • B. 

      Sell insurance.

    • C. 

      Collect premiums.

    • D. 

      Sign an application.

  • 9. 
    At DEF Insurance Company, agents are employees of the company who are paid a salary plus commissions. This is an example of what type of insurance marketing system?
    • A. 

      Captive

    • B. 

      Independent

    • C. 

      Direct writer

    • D. 

      Direct response

  • 10. 
    Which insurance company department is responsible for accepting and rejecting applications based on company standards?
    • A. 

      Underwriting

    • B. 

      Loss Control

    • C. 

      Claims

    • D. 

      Agency

  • 11. 
    Which insurance company department is responsible for paying insureds' covered losses?
    • A. 

      Audit

    • B. 

      Claims

    • C. 

      Underwriting

    • D. 

      Reinsurance

  • 12. 
    Who is responsible for licensing insurance agents?
    • A. 

      Lloyd's Associations

    • B. 

      State insurance department

    • C. 

      Interstate Commerce Commission

    • D. 

      Insurance Services Office

  • 13. 
    Agent Blondell is offering a free television to every applicant who agrees to buy insurance through his agency. In most states, this is an illegal practice known as
    • A. 

      Rebating.

    • B. 

      Twisting.

    • C. 

      Misrepresentation.

    • D. 

      Failure of fiduciary responsibility.

  • 14. 
    J&M Industries does not have a group health insurance plan for its employees. Instead, it pays employees' medical expenses out of a fund specifically created for this purpose. This is an example of
    • A. 

      Fraternal insurance.

    • B. 

      Self-insurance.

    • C. 

      Reinsurance.

    • D. 

      Government insurance.

  • 15. 
    Which of the following statements concerning regulation of the insurance industry is correct?
    • A. 

      The insurance industry is regulated exclusively by the federal government.

    • B. 

      The insurance industry is very loosely regulated.

    • C. 

      The state insurance department is responsible for controlling insurance matters within the state.

    • D. 

      The state insurance department serves only the interests of the insurance industry.

  • 16. 
    Which of the following is not one of the duties of an agent?
    • A. 

      Making appropriate coverage recommendations to prospective customers

    • B. 

      Writing the provisions of a customer's policy

    • C. 

      Helping prospective customers complete the application

    • D. 

      Assuring that customers understand the coverage they are purchasing

  • 17. 
    The written agency contract between an insurer and an agent constitutes the agent's
    • A. 

      Express authority.

    • B. 

      Implied authority.

    • C. 

      Assertive authority.

    • D. 

      Apparent authority.

  • 18. 
    The Excel Insurance Company is incorporated in the state of Tennessee. It is also authorized to do business in Georgia. In Georgia, Excel is known as what type of company?
    • A. 

      Alien

    • B. 

      Foreign

    • C. 

      Domestic

    • D. 

      Non-admitted

  • 19. 
    Can states require insurance companies to use certain forms or rates in connection with certain types of insurance?
    • A. 

      No, that would be a violation of the principle of open competition.

    • B. 

      No, they can only require that forms and rates be subject to prior approval.

    • C. 

      No, insurers can always begin using forms and rates as soon as they are properly filed with the state.

    • D. 

      Yes, some states have mandatory forms or rates for certain coverages.

  • 20. 
    Which of the following statements concerning binders is correct?
    • A. 

      They guarantee that a policy will be issued.

    • B. 

      They can be issued by insurance companies, but not agents.

    • C. 

      They expire on the effective date of the policy to which they apply, or on the expiration date of the binder if the policy is not issued.

    • D. 

      They show an intent to consider issuing insurance, but do not include any commitment to provide coverage.

  • 21. 
    What rating method makes modifications to manual rates to reflect the unique characteristics of each risk?
    • A. 

      Judgment

    • B. 

      Merit

    • C. 

      Certification

    • D. 

      Manual

  • 22. 
    To void a policy, misrepresentation or concealment must be which of the following?
    • A. 

      Concern material facts.

    • B. 

      Be intentional.

    • C. 

      Both A and B are correct.

    • D. 

      Neither A nor B are correct.

  • 23. 
    An agreement between the insured and the insurer that certain conditions will be met is which of the following?
    • A. 

      Misrepresentation

    • B. 

      Warranty

    • C. 

      Estoppel

    • D. 

      Certificate of insurance

  • 24. 
    Which one of these statements about the Fair Credit Reporting Act is not correct?
    • A. 

      Prenotification is required for both regular and investigative reports.

    • B. 

      Postnotification is required when insurance coverage is denied because of adverse information in a credit report.

    • C. 

      An agent who obtains information from a reporting agency under false pretenses can be sent to jail and fined.

    • D. 

      Consumers have the right to challenge information in investigative reports and to have incorrect information removed.

  • 25. 
    The insured's policy is nearing the expiration date. The insurance company doesn't want to continue the insured's coverage, so it sends the insured a notice that the policy will not continue beyond the expiration date of the policy. This is considered which of the following?
    • A. 

      Flat cancellation

    • B. 

      Nonrenewal

    • C. 

      Pro rata cancellation

    • D. 

      Unearned renewal

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