WV LICENSING TEST STUDY
QUESTIONS AND ANSWERS
2026/2027
1. Methods of risk management include:
A. Transfer
B. Sharing
C. Avoidance
D. All of the above. - ANSWERSD. All of the above.
2. An insured has suffered a fire loss to his/her dwelling. This insured is which party to
the claim?
A. Third party
B. First party
C. Second party
D. Loss payee - ANSWERSB. First party
3. Mr. Jones, a pedestrian, was injured by Mr. Smith while driving his vehicle. Mr. Smith
is insured by I Am Bogus Insurance Company. The insurance company would be which
party to the claim?
A. First party since they are the one that has to pay
B. The second party
C. The third party
D. Guarantor - ANSWERSB. The second party
4. Which of the following is NOT included in the Declarations section of an insurance
contract?
A. The identity of the named insured
B. The policy period
C. The covered perils
D. The policy premium - ANSWERSC. The covered perils
5. Which of the following is the section of an insurance contract that contains the
provisions, rules of conduct, duties and obligations of the parties?
A. The Insuring Agreement
B. The Conditions
C. The Exclusions
D. The Limitations - ANSWERSB. The Conditions
6. A loss that is a direct consequence of a particular peril is called a(n):
A. Indirect loss
B. Peril
,C. Hazard
D. Direct loss - ANSWERSD. Direct loss
7. Which of the following is a clause in property and casualty contracts which states that
if policy or endorsement forms are broadened and no additional premium is required,
then all existing similar policies or endorsements will be construed to include the
broadened coverage?
A. Liberalization
B. Assignment
C. Binder
D. Coinsurance - ANSWERSA. Liberalization
8. Which of the following provides written evidence of coverage pending the issuance of
a policy?
A. Cause of Loss Form
B. Assignment
C. Binder
D. Blanket coverage - ANSWERSC. Binder
9. Which of the following is an example of a Loss Evaluation Method?
A. Liberalization
B. Cause of Loss form
C. Stated amount
D. Conditions - ANSWERSC. Stated amount
10. The cost of replacement minus depreciation is the definition of:
A. Valued Policy
B. Market Value
C. Replacement Cost
D. Actual Cash Value - ANSWERSD. Actual Cash Value
11. Which of the following is a method of requiring the insured to insure at least 80% of
the value of the covered commercial property?
A. Cause of Loss Form
B. Standard Mortgage clause
C. Loss Payable clause
D. Coinsurance clause - ANSWERSD. Coinsurance clause
12. Which of the following is a basis for insuring property that allows the insured to
report the value of the building contents to the insurance company on a monthly basis?
A. Blanket Basis
B. Reporting Form
C. Specific Basis
D. Agreed Value - ANSWERSB. Reporting Form
, 13. Which of the following is NOT a factor in determining negligence on the part of the
insured?
A. Legal duty is owed
B. There is a breach of protection
C. Proximate cause
D. Damage - ANSWERSB. There is a breach of protection
14. In liability insurance, policy limits that apply one limit to each person injured, another
for bodily injury claims of all persons injured in a single accident, and a separate limit for
all property damage arising out of a single accident is:
A. Aggregate limits
B. Split limits
C. Single limit
D. Total limits - ANSWERSB. Split limits
15. An insurance contract that is contingent on an uncertain event is referred to as?
A. Executory
B. Aleatory
C. Contract of adhesion
D. Conditional - ANSWERSB. Aleatory
16. Mr. Jones is involved in an at-fault accident. The other party was also at fault. The
method to determine damages due to each party based on a percentage of negligence
is known as:
A. Contributory negligence
B. Intervening cause
C. Comparative negligence
D. Assumption of risk - ANSWERSC. Comparative negligence
17. The insured owns a filling station and an employee causes bodily injury to a third
party. The insured is held legally liable for the employee's acts. This is called:
A. Contributory negligence
B. Joint and several
C. Contingent liability
D. Vicarious liability - ANSWERSD. Vicarious liability
18. One characteristic of an insurance contract is that both parties must perform certain
acts to make the contract legally enforceable. This is called:
A. Personal aspect
B. Aleatory
C. Executory
D. Utmost good faith - ANSWERSC. Executory
19. A church has hired a painting contractor to stain and varnish the woodwork in the
building. He leaves the rags and brushes used to apply the painting materials in a small
storage area. This is an example of:
QUESTIONS AND ANSWERS
2026/2027
1. Methods of risk management include:
A. Transfer
B. Sharing
C. Avoidance
D. All of the above. - ANSWERSD. All of the above.
2. An insured has suffered a fire loss to his/her dwelling. This insured is which party to
the claim?
A. Third party
B. First party
C. Second party
D. Loss payee - ANSWERSB. First party
3. Mr. Jones, a pedestrian, was injured by Mr. Smith while driving his vehicle. Mr. Smith
is insured by I Am Bogus Insurance Company. The insurance company would be which
party to the claim?
A. First party since they are the one that has to pay
B. The second party
C. The third party
D. Guarantor - ANSWERSB. The second party
4. Which of the following is NOT included in the Declarations section of an insurance
contract?
A. The identity of the named insured
B. The policy period
C. The covered perils
D. The policy premium - ANSWERSC. The covered perils
5. Which of the following is the section of an insurance contract that contains the
provisions, rules of conduct, duties and obligations of the parties?
A. The Insuring Agreement
B. The Conditions
C. The Exclusions
D. The Limitations - ANSWERSB. The Conditions
6. A loss that is a direct consequence of a particular peril is called a(n):
A. Indirect loss
B. Peril
,C. Hazard
D. Direct loss - ANSWERSD. Direct loss
7. Which of the following is a clause in property and casualty contracts which states that
if policy or endorsement forms are broadened and no additional premium is required,
then all existing similar policies or endorsements will be construed to include the
broadened coverage?
A. Liberalization
B. Assignment
C. Binder
D. Coinsurance - ANSWERSA. Liberalization
8. Which of the following provides written evidence of coverage pending the issuance of
a policy?
A. Cause of Loss Form
B. Assignment
C. Binder
D. Blanket coverage - ANSWERSC. Binder
9. Which of the following is an example of a Loss Evaluation Method?
A. Liberalization
B. Cause of Loss form
C. Stated amount
D. Conditions - ANSWERSC. Stated amount
10. The cost of replacement minus depreciation is the definition of:
A. Valued Policy
B. Market Value
C. Replacement Cost
D. Actual Cash Value - ANSWERSD. Actual Cash Value
11. Which of the following is a method of requiring the insured to insure at least 80% of
the value of the covered commercial property?
A. Cause of Loss Form
B. Standard Mortgage clause
C. Loss Payable clause
D. Coinsurance clause - ANSWERSD. Coinsurance clause
12. Which of the following is a basis for insuring property that allows the insured to
report the value of the building contents to the insurance company on a monthly basis?
A. Blanket Basis
B. Reporting Form
C. Specific Basis
D. Agreed Value - ANSWERSB. Reporting Form
, 13. Which of the following is NOT a factor in determining negligence on the part of the
insured?
A. Legal duty is owed
B. There is a breach of protection
C. Proximate cause
D. Damage - ANSWERSB. There is a breach of protection
14. In liability insurance, policy limits that apply one limit to each person injured, another
for bodily injury claims of all persons injured in a single accident, and a separate limit for
all property damage arising out of a single accident is:
A. Aggregate limits
B. Split limits
C. Single limit
D. Total limits - ANSWERSB. Split limits
15. An insurance contract that is contingent on an uncertain event is referred to as?
A. Executory
B. Aleatory
C. Contract of adhesion
D. Conditional - ANSWERSB. Aleatory
16. Mr. Jones is involved in an at-fault accident. The other party was also at fault. The
method to determine damages due to each party based on a percentage of negligence
is known as:
A. Contributory negligence
B. Intervening cause
C. Comparative negligence
D. Assumption of risk - ANSWERSC. Comparative negligence
17. The insured owns a filling station and an employee causes bodily injury to a third
party. The insured is held legally liable for the employee's acts. This is called:
A. Contributory negligence
B. Joint and several
C. Contingent liability
D. Vicarious liability - ANSWERSD. Vicarious liability
18. One characteristic of an insurance contract is that both parties must perform certain
acts to make the contract legally enforceable. This is called:
A. Personal aspect
B. Aleatory
C. Executory
D. Utmost good faith - ANSWERSC. Executory
19. A church has hired a painting contractor to stain and varnish the woodwork in the
building. He leaves the rags and brushes used to apply the painting materials in a small
storage area. This is an example of:
