NEW YORK STATE PROPERTY AND CASUALTY
INSURANCE EXAM 17-56 QUESTIONS WITH
CORRECT ANSWERS 2026 (A+)
Average Value Method -CORRECT ANSWERS- A loss reserve established based on average settlements of
particular claim types.
Personal Producing General Agent -CORRECT ANSWERS- -Does not recruit career agents.
-Sells insurance for carriers it is contracted with.
-Maintains its own office and staff.
Conditional Contract -CORRECT ANSWERS- Both parties to a contract must perform certain duties and
follow rules of conduct to make the contract enforceable.
Alien Insurer -CORRECT ANSWERS- An insurer organized under the laws of any jurisdiction outside of the
United States, whether or not it is admitted to do business in this state.
Insurable Events -CORRECT ANSWERS- Any event, whether past or present, that may cause loss or
damage to a person having an insurable interest or create a liability against him/her.
Personal Injury Liability -CORRECT ANSWERS- Legal liability arising from the wrongful conduct of the
insured resulting in injury other than bodily injury.
Example: Libel, slander, defamation, false arrest.
Compensatory Damages -CORRECT ANSWERS- Awarded to the injured party for the actual loss
sustained.
-Special damages: Award for actual expenses such as bills, loss of earnings, and the costs of repairing or
replacing damaged property.
-General Damages: Award for pain, suffering, disfigurement, and similar types of losses.
Commercial Ocean Marine Insurance -CORRECT ANSWERS- Coverage is called Protection and Indemnity.
,Covers legal liability imposed on the insured for damages arising out of the operation of the insured
vessel.
Apparent Authority -CORRECT ANSWERS- Authority created when a producer exceeds expressed
authority, and the insurer does nothing to counter it.
Discovery Form -CORRECT ANSWERS- Provides coverage for losses that are discovered during the policy
period, but that did not necessarily occur during the policy period.
Requires the use of a retroactive date.
Contract of Adhesion -CORRECT ANSWERS- One party prepares a contract (insurer) and submits it to the
other party on a take-it-or-leave-it basis (insured).
Pollution Extension Endorsement -CORRECT ANSWERS- Deletes the Pollution Exclusion for bodily injury
and property damage liability, but continues to exclude clean up costs.
Underinsured Motorists Coverage -CORRECT ANSWERS- Protects the insured against drivers who do
have auto liability insurance, but whose coverage limits are inadequate or insufficient to respond to
claims.
The coverage pays only up to the amount that exceeds the limit of liability of the at-fault party.
Contract of Utmost Good Faith -CORRECT ANSWERS- Both parties bargain in good faith in forming the
contract, and rely upon the statements and promises of each other.
Employee Dishonesty -CORRECT ANSWERS- Coverage provides insurance for Business Personal Property,
including money and securities, resulting from dishonest acts committed by any of the insured's
employees acting alone or in collusion with other persons.
Direct Loss -CORRECT ANSWERS- Damage to property in which the proximate cause of the loss is an
insured peril.
Medical Payments Coverage -CORRECT ANSWERS- -Coverage for the bodily injury of third parties
sustained on an insured location or as a result of the insured's activities.
,-Coverage provided for the payment of necessary medical, surgical, x-ray, dental, ambulance, hospital,
professional nursing, and funeral expenses.
-Payments made without regard to fault or negligence.
Joint Underwriting Association -CORRECT ANSWERS- Requires insurers writing specific coverage lines in
a given state to assume the profits/losses accruing their share of the total voluntary market premiums
written in that state.
Participating insurers accept every eligible risk, and then may choose to reinsure some risks.
Transit Coverage Forms -CORRECT ANSWERS- -Annual Transit — Used to protect all property/shipments
being shipped or received from other shippers during the year via any common carrier.
-Trip Transit — Used for irregular shipments, to insure a single shipment.
Bodily Injury Liability -CORRECT ANSWERS- Legal liability arising from physical injury to a person,
including sickness, disease, and death caused by the negligent or purposeful acts or omissions of an
insured.
Binder -CORRECT ANSWERS- A document that temporarily provides insurance coverage until a policy is
issued.
Named Insured -CORRECT ANSWERS- Any person, firm, or organization specifically designated by name
on the Declarations Page of the policy.
Exclusive or Captive Agency System -CORRECT ANSWERS- -Agent represents solely one company or
group of companies having common ownership.
Insurer retains ownership rights to the business written by the agent.
-The agent is an employee or a commissioned independent contractor.
-Insurer may or may not provide office and agency support services.
deductible -CORRECT ANSWERS- A specified dollar amount of each covered property loss that an insured
must pay.
, Financial Rating Services -CORRECT ANSWERS- Producers are responsible for placing business with
insurers that are financially sound.
(A.M. Best, Standard & Poor, Moody, Duff & Phelps, Weiss Insurance Ratings)
Performance Bond -CORRECT ANSWERS- Guarantee that the contractor will perform, as agreed in the
contract.
Premium Assumptions -CORRECT ANSWERS- -Must charge an adequate premium for the risk based on
the same factors used in evaluating the risk.
-Premium rates are considered inadequate when they do not cover projected losses and expenses.
-Rates must not be excessive or unfairly discriminatory.
Financial Anti-Terrorism Act
(USA Patriot Act) -CORRECT ANSWERS- Imposes record keeping and government reporting requirements
on banks, financial institutions and non-financial businesses for specific financial transactions and
customer financial records.
Non-Admitted -CORRECT ANSWERS- An insurer that has not sought approval (or) has not been able to
obtain approval to transact business from the insurance regulator in this state.
Contractors Equipment Floater -CORRECT ANSWERS- Contractors equipment coverage provides open
perils coverage on the insured's equipment, such as mobile tools, equipment, and machinery, including
forklifts, compressors, generators, and small hand tools.
Yacht Policy -CORRECT ANSWERS- Ocean marine form, designed for larger vessels.
Coverage:
-Property and liability
-Bodily injury and damage to property of others
-Coverage for fuel spills, commercial towing, and dinghies
Annual Transit Coverage Form -CORRECT ANSWERS- Used to protect all property/shipments being
shipped or received from other shippers during the year via any common carrier.
INSURANCE EXAM 17-56 QUESTIONS WITH
CORRECT ANSWERS 2026 (A+)
Average Value Method -CORRECT ANSWERS- A loss reserve established based on average settlements of
particular claim types.
Personal Producing General Agent -CORRECT ANSWERS- -Does not recruit career agents.
-Sells insurance for carriers it is contracted with.
-Maintains its own office and staff.
Conditional Contract -CORRECT ANSWERS- Both parties to a contract must perform certain duties and
follow rules of conduct to make the contract enforceable.
Alien Insurer -CORRECT ANSWERS- An insurer organized under the laws of any jurisdiction outside of the
United States, whether or not it is admitted to do business in this state.
Insurable Events -CORRECT ANSWERS- Any event, whether past or present, that may cause loss or
damage to a person having an insurable interest or create a liability against him/her.
Personal Injury Liability -CORRECT ANSWERS- Legal liability arising from the wrongful conduct of the
insured resulting in injury other than bodily injury.
Example: Libel, slander, defamation, false arrest.
Compensatory Damages -CORRECT ANSWERS- Awarded to the injured party for the actual loss
sustained.
-Special damages: Award for actual expenses such as bills, loss of earnings, and the costs of repairing or
replacing damaged property.
-General Damages: Award for pain, suffering, disfigurement, and similar types of losses.
Commercial Ocean Marine Insurance -CORRECT ANSWERS- Coverage is called Protection and Indemnity.
,Covers legal liability imposed on the insured for damages arising out of the operation of the insured
vessel.
Apparent Authority -CORRECT ANSWERS- Authority created when a producer exceeds expressed
authority, and the insurer does nothing to counter it.
Discovery Form -CORRECT ANSWERS- Provides coverage for losses that are discovered during the policy
period, but that did not necessarily occur during the policy period.
Requires the use of a retroactive date.
Contract of Adhesion -CORRECT ANSWERS- One party prepares a contract (insurer) and submits it to the
other party on a take-it-or-leave-it basis (insured).
Pollution Extension Endorsement -CORRECT ANSWERS- Deletes the Pollution Exclusion for bodily injury
and property damage liability, but continues to exclude clean up costs.
Underinsured Motorists Coverage -CORRECT ANSWERS- Protects the insured against drivers who do
have auto liability insurance, but whose coverage limits are inadequate or insufficient to respond to
claims.
The coverage pays only up to the amount that exceeds the limit of liability of the at-fault party.
Contract of Utmost Good Faith -CORRECT ANSWERS- Both parties bargain in good faith in forming the
contract, and rely upon the statements and promises of each other.
Employee Dishonesty -CORRECT ANSWERS- Coverage provides insurance for Business Personal Property,
including money and securities, resulting from dishonest acts committed by any of the insured's
employees acting alone or in collusion with other persons.
Direct Loss -CORRECT ANSWERS- Damage to property in which the proximate cause of the loss is an
insured peril.
Medical Payments Coverage -CORRECT ANSWERS- -Coverage for the bodily injury of third parties
sustained on an insured location or as a result of the insured's activities.
,-Coverage provided for the payment of necessary medical, surgical, x-ray, dental, ambulance, hospital,
professional nursing, and funeral expenses.
-Payments made without regard to fault or negligence.
Joint Underwriting Association -CORRECT ANSWERS- Requires insurers writing specific coverage lines in
a given state to assume the profits/losses accruing their share of the total voluntary market premiums
written in that state.
Participating insurers accept every eligible risk, and then may choose to reinsure some risks.
Transit Coverage Forms -CORRECT ANSWERS- -Annual Transit — Used to protect all property/shipments
being shipped or received from other shippers during the year via any common carrier.
-Trip Transit — Used for irregular shipments, to insure a single shipment.
Bodily Injury Liability -CORRECT ANSWERS- Legal liability arising from physical injury to a person,
including sickness, disease, and death caused by the negligent or purposeful acts or omissions of an
insured.
Binder -CORRECT ANSWERS- A document that temporarily provides insurance coverage until a policy is
issued.
Named Insured -CORRECT ANSWERS- Any person, firm, or organization specifically designated by name
on the Declarations Page of the policy.
Exclusive or Captive Agency System -CORRECT ANSWERS- -Agent represents solely one company or
group of companies having common ownership.
Insurer retains ownership rights to the business written by the agent.
-The agent is an employee or a commissioned independent contractor.
-Insurer may or may not provide office and agency support services.
deductible -CORRECT ANSWERS- A specified dollar amount of each covered property loss that an insured
must pay.
, Financial Rating Services -CORRECT ANSWERS- Producers are responsible for placing business with
insurers that are financially sound.
(A.M. Best, Standard & Poor, Moody, Duff & Phelps, Weiss Insurance Ratings)
Performance Bond -CORRECT ANSWERS- Guarantee that the contractor will perform, as agreed in the
contract.
Premium Assumptions -CORRECT ANSWERS- -Must charge an adequate premium for the risk based on
the same factors used in evaluating the risk.
-Premium rates are considered inadequate when they do not cover projected losses and expenses.
-Rates must not be excessive or unfairly discriminatory.
Financial Anti-Terrorism Act
(USA Patriot Act) -CORRECT ANSWERS- Imposes record keeping and government reporting requirements
on banks, financial institutions and non-financial businesses for specific financial transactions and
customer financial records.
Non-Admitted -CORRECT ANSWERS- An insurer that has not sought approval (or) has not been able to
obtain approval to transact business from the insurance regulator in this state.
Contractors Equipment Floater -CORRECT ANSWERS- Contractors equipment coverage provides open
perils coverage on the insured's equipment, such as mobile tools, equipment, and machinery, including
forklifts, compressors, generators, and small hand tools.
Yacht Policy -CORRECT ANSWERS- Ocean marine form, designed for larger vessels.
Coverage:
-Property and liability
-Bodily injury and damage to property of others
-Coverage for fuel spills, commercial towing, and dinghies
Annual Transit Coverage Form -CORRECT ANSWERS- Used to protect all property/shipments being
shipped or received from other shippers during the year via any common carrier.
