Property & Casualty Insurance Exam Questions and Correct
Answers (Verified by Expert)
In which of the following situations would off-premises coverage in a broad theft
endorsement of the insured's dwelling policy apply?
A) The insured's camera is stolen from his suitcase while he is on vacation
B) The insured's live-in maid's quarters are burglarized
C) The insured's china set is stolen from her home while she's traveling on business
D) The insured's vacuum cleaner is stolen from her apartment ✔✔ A) The insured's
camera is stolen from his suitcase while he is on vacation
In insurance contracts, when does acceptance usually occur? ✔✔ When the insurer
approves a prepaid application
What does the term reasonable expectations mean in insurance? ✔✔ Certain
expectations for coverage that a reasonable person would have based on sources other
than just the policy language
In forming an insurance contract, when does acceptance usually occur? ✔✔ When an
insurer's underwriter approves coverage
Subrogation ✔✔ The right of the insurer to seek out damages from a third party after it
has paid out for a loss
In property insurance, what is actual cash value? ✔✔ Replacement cost at the time of
loss, minus depreciation
A policy that covers all causes of loss except for those specifically excluded is known as
what type of policy? ✔✔ Open peril (or special) form
What sublimit in a liability policy puts a ceiling on the payment for all claims that arise
from a single accident? ✔✔ per occurrence
Which part of an insurance policy covers claims-related expenses, reasonable
expenses incurred by an insured to protect damaged property from further loss, or
defense expenses? ✔✔ Additional coverage
Duties of the insurer found in property policy conditions do not include what? ✔✔ Notify
the insured in the event of financial difficulty
According to the standard mortgage clause, who has the right to bring a suit in their own
name to recover damages, pay policy premiums, and submit a proof of loss? ✔✔
Mortgagee
,What type of information would be found in a policy's insuring agreement?
A) Insurer's address
B) Renewal dates
C) Location of premises
D) Policy limits ✔✔ B) Renewal dates
The insuring agreement lists the parties to the contract, effective and renewal dates, the
description of coverage provided, and perils.
Location of premises, policy limits, supplemental representations, and insurer's name
and address can all be found in the Declarations
All of the following are conditions commonly found in the insurance policy EXCEPT
A) Subrogation
B) Appraisal
C) Insuring agreement
D) Cancellation and nonrenewal ✔✔ C) Insuring agreement
With regard to fire insurance premiums, structures with which type of construction would
most likely have a the most favorable premium rate for the peril of fire? ✔✔ Fire-
resistive
Which of the following is a mandatory part of an insurance policy that varies with each
individual policy?
A) Exclusions
B) Insuring agreement
C) Declarations
D) Conditions ✔✔ C) Declarations
Rates that are established based on the similarities of the risk with other risks are
known as ✔✔ Manual rates
Which of the following terms refers to other insurance that is written on the same risk,
but not on the same coverage basis?
A) Primary and excess
B) Pro rata
C) Contribution by equal shares
D) Nonconcurrency ✔✔ D) Nonconcurrency
The loss ratio compares ✔✔ Earned premium to losses
Equation: Loss ratio = (incurred losses + loss adjusting expense) / earned premium
Which of the following coverages in dwelling and homeowners policies is for indirect
losses?
,A) Structures
B) Contents
C) Loss of use
D) Dwelling ✔✔ C) Loss of use
What are the 3 dwelling property forms? ✔✔ Basic, broad, and special
All of the following are characteristics of the dwelling policy EXCEPT
A) Incidental occupancy of limited service type exposure is permitted
B) Dwellings up to four family units are eligible
C) The dwelling must be owner-occupied
D) Coverage includes the dwelling only, contents only, or both ✔✔ C) The dwelling
must be owner-occupied
Dwelling coverage includes all of the following EXCEPT
A) Land on which the dwelling is located
B) The dwelling used principally for residential purposes
C) Materials on the described location used to alter or repair the dwelling
D) Building and outdoor equipment used to service the described location ✔✔ A) Land
on which the dwelling is located
What is the maximum number of roomers or boarders for properties insured under the
dwelling policy? ✔✔ 5
A basic dwelling policy automatically provides coverage against fire, lightning, and
✔✔ internal explosion
All of the following would be eligible for coverage under the dwelling policy EXCEPT
A) A duplex with one primary owner
B) A house that has 5 residential units
C) A tenant-occupied dwelling
D) A dwelling in the course of construction ✔✔ B) A house that has 5 residential units
In dwelling policies, the following acronyms can be used to describe which extended
coverage perils? WHARVES or WCSHAVER ✔✔ Windstorm or hail, aircraft, riots or
civil commotion, volcanic eruption and vehicles, explosion, smoke
What kind of perils does dwelling property 1 - basic form cover? ✔✔ named perils
Which form of dwelling property coverage does the notation DP-1 or DP 00 01
represent? ✔✔ Basic
Which extended coverage perils can be added to a basic form dwelling policy in addition
to WHARVES? ✔✔ Vandalism or malicious mischief
, Which form of dwelling property coverage does the notation DP-2 or DP 00 02
represent? ✔✔ Broad
The acronym BB BICE-GOLF can be used to remember which additional broad form
coverage perils? ✔✔ Bursting of heating systems;
burglary damage;
breaking of water heaters;
ice, snow or sleet weight;
collapse of building or part of building;
electrical damage (artificially generated);
glass breakage;
objects falling from outside;
Leakage of water or steam damage; freezing of plumbing
Which of the following dwelling policy forms primarily insures a structure on an actual
cash value basis?
A) DP-1
B) DP-2
C) DP-3
D All DP forms ✔✔ A) DP-1
Which of the following would be covered under the Broad Form (DP-2) policy's falling
object peril?
A) Interior building damage if the exterior was damaged first
B) Damage to the building's awnings
C) Damage to outdoor tv antennas if there is no interior damage
D) Exterior pavement and patio damage ✔✔ A) Interior building damage if the exterior
was damaged first
Which of the following losses would NOT be covered by the dwelling policy if the
dwelling is vacant for over 60 days?
A) Fire
B) Windstorm
C) Internal explosion
D) Vandalism ✔✔ D) Vandalism
Which dwelling form provides open peril coverage on the building? ✔✔ Special form
DP-3
On a DP-3 Dwelling Property Special Form policy, the coverage provided for personal
property is ✔✔ The same as provided on the DP-2 Broad Form
Which of the following claims would be included under the dwelling policy?
A) Fire damage to the insured's rowboat stored in an attached garage
Answers (Verified by Expert)
In which of the following situations would off-premises coverage in a broad theft
endorsement of the insured's dwelling policy apply?
A) The insured's camera is stolen from his suitcase while he is on vacation
B) The insured's live-in maid's quarters are burglarized
C) The insured's china set is stolen from her home while she's traveling on business
D) The insured's vacuum cleaner is stolen from her apartment ✔✔ A) The insured's
camera is stolen from his suitcase while he is on vacation
In insurance contracts, when does acceptance usually occur? ✔✔ When the insurer
approves a prepaid application
What does the term reasonable expectations mean in insurance? ✔✔ Certain
expectations for coverage that a reasonable person would have based on sources other
than just the policy language
In forming an insurance contract, when does acceptance usually occur? ✔✔ When an
insurer's underwriter approves coverage
Subrogation ✔✔ The right of the insurer to seek out damages from a third party after it
has paid out for a loss
In property insurance, what is actual cash value? ✔✔ Replacement cost at the time of
loss, minus depreciation
A policy that covers all causes of loss except for those specifically excluded is known as
what type of policy? ✔✔ Open peril (or special) form
What sublimit in a liability policy puts a ceiling on the payment for all claims that arise
from a single accident? ✔✔ per occurrence
Which part of an insurance policy covers claims-related expenses, reasonable
expenses incurred by an insured to protect damaged property from further loss, or
defense expenses? ✔✔ Additional coverage
Duties of the insurer found in property policy conditions do not include what? ✔✔ Notify
the insured in the event of financial difficulty
According to the standard mortgage clause, who has the right to bring a suit in their own
name to recover damages, pay policy premiums, and submit a proof of loss? ✔✔
Mortgagee
,What type of information would be found in a policy's insuring agreement?
A) Insurer's address
B) Renewal dates
C) Location of premises
D) Policy limits ✔✔ B) Renewal dates
The insuring agreement lists the parties to the contract, effective and renewal dates, the
description of coverage provided, and perils.
Location of premises, policy limits, supplemental representations, and insurer's name
and address can all be found in the Declarations
All of the following are conditions commonly found in the insurance policy EXCEPT
A) Subrogation
B) Appraisal
C) Insuring agreement
D) Cancellation and nonrenewal ✔✔ C) Insuring agreement
With regard to fire insurance premiums, structures with which type of construction would
most likely have a the most favorable premium rate for the peril of fire? ✔✔ Fire-
resistive
Which of the following is a mandatory part of an insurance policy that varies with each
individual policy?
A) Exclusions
B) Insuring agreement
C) Declarations
D) Conditions ✔✔ C) Declarations
Rates that are established based on the similarities of the risk with other risks are
known as ✔✔ Manual rates
Which of the following terms refers to other insurance that is written on the same risk,
but not on the same coverage basis?
A) Primary and excess
B) Pro rata
C) Contribution by equal shares
D) Nonconcurrency ✔✔ D) Nonconcurrency
The loss ratio compares ✔✔ Earned premium to losses
Equation: Loss ratio = (incurred losses + loss adjusting expense) / earned premium
Which of the following coverages in dwelling and homeowners policies is for indirect
losses?
,A) Structures
B) Contents
C) Loss of use
D) Dwelling ✔✔ C) Loss of use
What are the 3 dwelling property forms? ✔✔ Basic, broad, and special
All of the following are characteristics of the dwelling policy EXCEPT
A) Incidental occupancy of limited service type exposure is permitted
B) Dwellings up to four family units are eligible
C) The dwelling must be owner-occupied
D) Coverage includes the dwelling only, contents only, or both ✔✔ C) The dwelling
must be owner-occupied
Dwelling coverage includes all of the following EXCEPT
A) Land on which the dwelling is located
B) The dwelling used principally for residential purposes
C) Materials on the described location used to alter or repair the dwelling
D) Building and outdoor equipment used to service the described location ✔✔ A) Land
on which the dwelling is located
What is the maximum number of roomers or boarders for properties insured under the
dwelling policy? ✔✔ 5
A basic dwelling policy automatically provides coverage against fire, lightning, and
✔✔ internal explosion
All of the following would be eligible for coverage under the dwelling policy EXCEPT
A) A duplex with one primary owner
B) A house that has 5 residential units
C) A tenant-occupied dwelling
D) A dwelling in the course of construction ✔✔ B) A house that has 5 residential units
In dwelling policies, the following acronyms can be used to describe which extended
coverage perils? WHARVES or WCSHAVER ✔✔ Windstorm or hail, aircraft, riots or
civil commotion, volcanic eruption and vehicles, explosion, smoke
What kind of perils does dwelling property 1 - basic form cover? ✔✔ named perils
Which form of dwelling property coverage does the notation DP-1 or DP 00 01
represent? ✔✔ Basic
Which extended coverage perils can be added to a basic form dwelling policy in addition
to WHARVES? ✔✔ Vandalism or malicious mischief
, Which form of dwelling property coverage does the notation DP-2 or DP 00 02
represent? ✔✔ Broad
The acronym BB BICE-GOLF can be used to remember which additional broad form
coverage perils? ✔✔ Bursting of heating systems;
burglary damage;
breaking of water heaters;
ice, snow or sleet weight;
collapse of building or part of building;
electrical damage (artificially generated);
glass breakage;
objects falling from outside;
Leakage of water or steam damage; freezing of plumbing
Which of the following dwelling policy forms primarily insures a structure on an actual
cash value basis?
A) DP-1
B) DP-2
C) DP-3
D All DP forms ✔✔ A) DP-1
Which of the following would be covered under the Broad Form (DP-2) policy's falling
object peril?
A) Interior building damage if the exterior was damaged first
B) Damage to the building's awnings
C) Damage to outdoor tv antennas if there is no interior damage
D) Exterior pavement and patio damage ✔✔ A) Interior building damage if the exterior
was damaged first
Which of the following losses would NOT be covered by the dwelling policy if the
dwelling is vacant for over 60 days?
A) Fire
B) Windstorm
C) Internal explosion
D) Vandalism ✔✔ D) Vandalism
Which dwelling form provides open peril coverage on the building? ✔✔ Special form
DP-3
On a DP-3 Dwelling Property Special Form policy, the coverage provided for personal
property is ✔✔ The same as provided on the DP-2 Broad Form
Which of the following claims would be included under the dwelling policy?
A) Fire damage to the insured's rowboat stored in an attached garage
