Property & Casualty
In this quiz, we’ll be offering up questions on property and casualty insurance in the American state of Kansas. Answer questions on coverage limits, insurance principles, deductibles, collision insurance, fire, policyholders and more. Good luck!
- 1.
If an HO-3 policy has a coverage limit of $100,000 on the dwelling, how much coverage would automatically apply to cover the insured's personal property under Coverage C.
- A.
$20,000
- B.
$25,000
- C.
$50,000
- D.
$100,000
Correct Answer
C. $50,000Explanation
The insurer's limit of liability for personal property is 50% of the limit of liability for Coverage ARate this question:
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- 2.
Which of the following insurance principals permits a policyholder to be reimbursed for losses experienced.
- A.
Subrogation
- B.
Insurable interest
- C.
Direct loss
- D.
Indemnification
Correct Answer
D. IndemnificationExplanation
Indemnity means placing an insured in thr same financial position following a loss that existed before th loss occured. This is the principle that allows reimbursement for loss. Subrogation is the principle allowing an insurance company to use the insured's legal right of recovery against an at-fault party for the purpose of recovering the amount it has paid out for the loss. Insurable interest is a relationship between a person and a property such that if a loss occurs, the person is harmed financially. A direct loss mean that property was damaged or destroyed by the peril insured against without any intervening cause. All of these principles rely on the principle of indemnity to allow recovery.Rate this question:
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- 3.
Deductibles are used for all of the following purposes EXCEPT
- A.
To reduce the cost of insurance
- B.
To eliminate small losses
- C.
To increase the insured's caution
- D.
To eliminate nuisance claims
Correct Answer
B. To eliminate small lossesExplanation
The deductible is intended in part to reduce small claims, since the insured has a reduced incentive to file. However the loss is still suffered by the insured. The deductible does not do anything to reduce the insured's risk.Rate this question:
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- 4.
Uncertainty concerning financial loss best describes the concept of
- A.
Indemnity
- B.
Insurance
- C.
Risk
- D.
Hazards
Correct Answer
C. RiskExplanation
The definition of risk is uncertainty regarding financial loss. Insurance and indemnity are concepts that mitigate risk. Hazards may contribute to risk but do not describe the uncertainty itself.Rate this question:
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- 5.
Collision insurance covers which of the following perils?
- A.
All damage to an auto struck by the insured, if the insured is legally liable.
- B.
Upset of the auto without a deductible applying.
- C.
Direct loss to the auto caused by a collision with another object.
- D.
Collision of the covered vehicle with a large animal.
Correct Answer
C. Direct loss to the auto caused by a collision with another object.Explanation
Collision coverage pays for direct and accidental loss due to upset or collision of the vehicle with another object. Losses are subject to a deductible Animals are a peril covered by other than collision (comprehensive) coverage. Collision does not cover BI and PD liability.Rate this question:
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- 6.
All of the following perils are covered by a basic fire insurance policy EXCEPT
- A.
Fire
- B.
Explosion
- C.
Lightning
- D.
Removal
Correct Answer
B. ExplosionExplanation
The SFP perils include only fire, lightning, and removal. explosion is an extended coverage.Rate this question:
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- 7.
By entering into an insurance contract, a policyholder transfers the right of legal action against a responsible third party to the insurer. This process is known as
- A.
Insurable interest
- B.
Coinsurance
- C.
Subrogation
- D.
Abandonment
Correct Answer
C. SubrogationExplanation
Insured are required to sign their right of recovery against a negligent third party that caused the loss for the amount the insurer paid the insured for the loss to the insurer. This is call subrogation. Insurable interest is a condition in which an individual or entity may suffer economic loss if property is damaged or destroyed. Coinsurance clauses stipulate that if an insured does not carry a specified percentage of coverage in relation to the value of the property, the insured will not collect the entire amount of a partial loss. Abandonment is a condition imposed upon the insured stating that he may not abandon damaged property to the insurance company.Rate this question:
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- 8.
A condition creating or increasing the chance for loss is known as a
- A.
Peril
- B.
Hazard
- C.
Loss
- D.
Risk
Correct Answer
B. HazardExplanation
A hazard is a condition that increases the chance of a loss occuring. Perils are the happenings or events that cause a loss. Risk is the uncertainty we face that perils will occur and cause us to suffer losses. Loss is unintended, unforseen damage to property, including injury. For example, if a fire caused y oily rags stored in the basement causes $10,000 damage, the peril is the fire, the loss is the $10,000 and the risk is the uncertainty that the houses might be subject to burning by fire.Rate this question:
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- 9.
Aviation hull insurance provides an aircraft with protection while
- A.
In the air only
- B.
In the air or on the ground
- C.
On the ground only
- D.
In the air, including takeoff and touchdown
Correct Answer
B. In the air or on the groundExplanation
Aviation coverage can be provided while the aircraft is in the air or on the ground, on the ground only, or not in motion under its own power.Rate this question:
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- 10.
Replacement cost less depreciation defines.
- A.
Actual cash value
- B.
Market value
- C.
Insurable value
- D.
Liberalization amount
Correct Answer
A. Actual cash valueExplanation
Actual cash value (ACV) is equal to the replacement cost minus depreciation. Market value is not defined by formula, but by market forces. The liberalization amount may be whatever amount of coverage the insurer desires to extend. Insurable value is not a specific term used in property and casualty insurance.Rate this question:
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- 11.
All of the following statements are correct regarding the duties of an insured following a loss EXCEPT
- A.
The insured must reimburse the mortgagee for its interest in the damaged property
- B.
The insured must protect the property from further damage
- C.
The insured must separate the damaged from undamaged property
- D.
The insured must provide immediate written notice to the company
Correct Answer
A. The insured must reimburse the mortgagee for its interest in the damaged propertyExplanation
The duties listed below must be performed by the insured in order for the claim to be settled: notify the insurer promptly; notify the police in the case of theft; notify the credit card company or bank in case of a credit card, electronic funds transfer, forgery or counterfeit loss; protect the property from further damage; cooperate with the company in its investigation; prepare an inventory of damaged property; show the damaged property, provide documentation, and submit to an examination under oath; submit a signed, sworn proof of loss, which is a statement swearing to the facts of the loss. It includes such items as the time, date, and place of the loss, insurable interests in the damaged property, other insurance in force at the time of the loss, receipts, and affadavits. Reimbursement of a mortgage is not a duty of the insured.Rate this question:
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- 12.
A coverage form added to the commercial package policy that provides protection against the direct loss to building under construction is known as
- A.
Rent insurance
- B.
Legal liability
- C.
Builders risk coverage
- D.
General contractors insurance
Correct Answer
C. Builders risk coverage -
- 13.
A building owner purchases a fire policy providing $60,000 worth of coverage with an 80% coinsurance clause for his $100,000 building. He suffers a $10,000 loss. How much of the loss will the company pay.
- A.
$1,667
- B.
$7,500
- C.
$8,000
- D.
$10,000
Correct Answer
B. $7,500 -
- 14.
Which of the following types of property would be insured on a value basis by a personal articles floater?
- A.
Jewelry, watches, and furs
- B.
Fine Arts
- C.
Cameras
- D.
Silverware
Correct Answer
B. Fine Arts -
- 15.
The phrase robbery or holdup, as used in a burglary and robbery insurance, means the felonious taking of property in which of the following ways?
- A.
By someone using a scheme, trick, or device designed to deprive the owner of the property.
- B.
From within an insured premises, safe, or vault, by actual force and violence, leaving visible marks of forced entry
- C.
From insured premises left unguarded and accessible without evidence of forced entry
- D.
By use of or threat of the use of violence with the means to carry it out
Correct Answer
D. By use of or threat of the use of violence with the means to carry it out -
- 16.
All of the following risks are eligible risks under a businessowners policy EXCEPT
- A.
The tenant of an office building
- B.
A general contractor who operates primarily off-premesis
- C.
The owner of a 5 story office building
- D.
A 50 unit apartment complex with a small gift shop on premises
Correct Answer
B. A general contractor who operates primarily off-premesis -
Quiz Review Timeline +
Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.
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Current Version
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Mar 14, 2022Quiz Edited by
ProProfs Editorial Team -
Nov 24, 2009Quiz Created by
Namoxley
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