WEBCE TEST FINAL TEST 2026
QUESTIONS WITH CORRECT
ANSWERS GRADED A+
◍ Ned just bought a homeowners policy from Main Street Insurance
Company. However, he did not disclose that he operated a lawn mower
repair business in his garage and that he employed two mechanics. On what
grounds might the insurer deny coverage in the event of a claim?- warranty
violation- waiver and estoppel- concealment- failure to indemnify.
Answer: - concealmentExplanation:Concealment is the deliberate
withholding of material facts. If the concealed facts about the lawnmower
repair business and employees would have changed the insurer's decision to
offer the insurance policy, the insurer may void the insurance contract if the
failure to disclose information was intentional and the withheld information
concerned a material fact.
◍ Risk Management.
Answer: using strategies to reduce the amount of risk
◍ Risk.
Answer: The chance of loss from an event that cannot be entirely controlled
◍ Which of the following statements correctly describes the earthquake
coverage in a standard property insurance policy?- Earthquake damage is
covered.- Earthquake damage cannot be covered under any circumstances.-
It is excluded only in select geographical regions, but otherwise is a covered
peril.- It is generally excluded but may be covered by endorsement..
Answer: - It is generally excluded but may be covered by
endorsement.Explanation:Property insurance policies contain an earthquake
exclusion and only offer coverage by endorsement.
,◍ Which of the following is not true if a driver is covered under the Personal
Auto Insurance Plan?- The driver must accept physical damage based on
actual cash value- The driver must prove he or she was declined for
coverage in the last 60 days- The driver must fall into one of the categories
of ineligible drivers defined under the law- The driver can purchase either a
standard or a basic insurance policy..
Answer: - The driver must fall into one of the categories of ineligible drivers
defined under the lawExplanation:The PAIP often covers drivers that are
ineligible-for example they have too many point-but it is not a requisite.
Anyone who has been declined in the voluntary market can be covered
◍ Pure risk.
Answer: The possibility of loss with no chance of gain. That which can
result only in a loss to the person at risk.
◍ Speculative risk.
Answer: Chance of loss or gain
◍ Candace submitted an application for a producer license and paid the
licensing fee on June 1. She also obtained a temporary work authority on the
same date. When will Candace's work authority expire?- June 30- July 30-
August 30- November 30.
Answer: - July 30Explanation:The Commissioner may issue a temporary
work authority which allows an applicant to work for 60 days after
submitting an application. (In contrast, a temporary substitute authority
given to someone to act in place of a disabled or deceased producer lasts
180 days.)
◍ loss.
Answer: unplanned reduction in economic value. can be either direct or
indirect.
◍ Underwriting.
Answer: The process that determines if the risk proposed for insurance
should be accepted or rejected.
,◍ peril.
Answer: A condition that involves either danger or risk and is the cause of a
loss.
◍ hazard.
Answer: a condition that increases the number of or severity of loss
◍ All of the following are elements of negligence EXCEPT:- duty of care-
breach of the duty of care- intent- damages.
Answer: - intentExplanation:The four elements of negligence are a duty of
care, breach of that duty of care, causation, and damages (in other words, a
loss or injury) resulting from the breach. Negligence does not require intent
on the defendant's part.
◍ Risk Avoidance.
Answer: avoiding an act that would create a risk
◍ Risk Retention.
Answer: Choosing to use assets to pay for any losses if the risk becomes a
reality
◍ Under the DP 1 Basic Form of the dwelling policy, coverage for vandalism
and malicious mischief is available only if coverage is purchased for:- fire-
explosion- extended coverage perils- theft.
Answer: - extended coverage perilsExplanation:Coverage for vandalism and
malicious mischief may only be purchased on a DP 1 Basic Form if the
Extended Coverage perils are also purchased.
◍ risk sharing.
Answer: One of the oldest ways to manage risks; similar to buying insurance
in that a part of the risk is transferred to others
◍ Risk transfer.
Answer: An individual or business transfers the risk of loss to an insurance
company in return for a premium
◍ Which of the standard homeowners policies includes malicious mischief as
, a named peril?- only HO 3- all forms except HO 5 and HO 8- all forms
except HO 5- all forms.
Answer: - all forms except HO 5Explanation:The perils covered by the
homeowners policy vary by form. Vandalism and malicious mischief is a
named peril in all of the standard homeowners policies except HO 5
(Comprehensive Form) because it is the only homeowners policy that
provides open perils coverage for all types of covered property.
◍ insurable risk.
Answer: An applicant is an insurable risk to the insurer if he or she meets
certain criteria for insurability; if these criteria are met, then the applicant is
insurable.
◍ Law of Large Numbers.
Answer: A method of predicting future losses with great accuracy.
◍ mortality.
Answer: Is the rate of death in the target population; it is a significant factor
in calculating life insurance premiums
◍ Jackson Hardware has a basic property policy. Which of the following perils
is NOT typically covered under such a policy?- riot- earthquake- smoke-
sprinkler leakage.
Answer: - earthquakeExplanation:Loss by earthquake is typically excluded
in basic, if not most, property policies.
◍ The New Jersey Insurance Underwriting Association may cancel a policy
written through the Association with five days' notice to the insured for any
of the following reasons EXCEPT:- Premiums have not been paid.- The
property is used for farming.- Property taxes have not been paid.- The
insured was convicted of arson..
Answer: - Premiums have not been paid.Explanation:The Association can
give five days' notice if the property is ineligible, the insurable interest of
the insured is weak, and there is evidence of moral hazard. Cancellation for
nonpayment of the premium requires a 10-day notice.
QUESTIONS WITH CORRECT
ANSWERS GRADED A+
◍ Ned just bought a homeowners policy from Main Street Insurance
Company. However, he did not disclose that he operated a lawn mower
repair business in his garage and that he employed two mechanics. On what
grounds might the insurer deny coverage in the event of a claim?- warranty
violation- waiver and estoppel- concealment- failure to indemnify.
Answer: - concealmentExplanation:Concealment is the deliberate
withholding of material facts. If the concealed facts about the lawnmower
repair business and employees would have changed the insurer's decision to
offer the insurance policy, the insurer may void the insurance contract if the
failure to disclose information was intentional and the withheld information
concerned a material fact.
◍ Risk Management.
Answer: using strategies to reduce the amount of risk
◍ Risk.
Answer: The chance of loss from an event that cannot be entirely controlled
◍ Which of the following statements correctly describes the earthquake
coverage in a standard property insurance policy?- Earthquake damage is
covered.- Earthquake damage cannot be covered under any circumstances.-
It is excluded only in select geographical regions, but otherwise is a covered
peril.- It is generally excluded but may be covered by endorsement..
Answer: - It is generally excluded but may be covered by
endorsement.Explanation:Property insurance policies contain an earthquake
exclusion and only offer coverage by endorsement.
,◍ Which of the following is not true if a driver is covered under the Personal
Auto Insurance Plan?- The driver must accept physical damage based on
actual cash value- The driver must prove he or she was declined for
coverage in the last 60 days- The driver must fall into one of the categories
of ineligible drivers defined under the law- The driver can purchase either a
standard or a basic insurance policy..
Answer: - The driver must fall into one of the categories of ineligible drivers
defined under the lawExplanation:The PAIP often covers drivers that are
ineligible-for example they have too many point-but it is not a requisite.
Anyone who has been declined in the voluntary market can be covered
◍ Pure risk.
Answer: The possibility of loss with no chance of gain. That which can
result only in a loss to the person at risk.
◍ Speculative risk.
Answer: Chance of loss or gain
◍ Candace submitted an application for a producer license and paid the
licensing fee on June 1. She also obtained a temporary work authority on the
same date. When will Candace's work authority expire?- June 30- July 30-
August 30- November 30.
Answer: - July 30Explanation:The Commissioner may issue a temporary
work authority which allows an applicant to work for 60 days after
submitting an application. (In contrast, a temporary substitute authority
given to someone to act in place of a disabled or deceased producer lasts
180 days.)
◍ loss.
Answer: unplanned reduction in economic value. can be either direct or
indirect.
◍ Underwriting.
Answer: The process that determines if the risk proposed for insurance
should be accepted or rejected.
,◍ peril.
Answer: A condition that involves either danger or risk and is the cause of a
loss.
◍ hazard.
Answer: a condition that increases the number of or severity of loss
◍ All of the following are elements of negligence EXCEPT:- duty of care-
breach of the duty of care- intent- damages.
Answer: - intentExplanation:The four elements of negligence are a duty of
care, breach of that duty of care, causation, and damages (in other words, a
loss or injury) resulting from the breach. Negligence does not require intent
on the defendant's part.
◍ Risk Avoidance.
Answer: avoiding an act that would create a risk
◍ Risk Retention.
Answer: Choosing to use assets to pay for any losses if the risk becomes a
reality
◍ Under the DP 1 Basic Form of the dwelling policy, coverage for vandalism
and malicious mischief is available only if coverage is purchased for:- fire-
explosion- extended coverage perils- theft.
Answer: - extended coverage perilsExplanation:Coverage for vandalism and
malicious mischief may only be purchased on a DP 1 Basic Form if the
Extended Coverage perils are also purchased.
◍ risk sharing.
Answer: One of the oldest ways to manage risks; similar to buying insurance
in that a part of the risk is transferred to others
◍ Risk transfer.
Answer: An individual or business transfers the risk of loss to an insurance
company in return for a premium
◍ Which of the standard homeowners policies includes malicious mischief as
, a named peril?- only HO 3- all forms except HO 5 and HO 8- all forms
except HO 5- all forms.
Answer: - all forms except HO 5Explanation:The perils covered by the
homeowners policy vary by form. Vandalism and malicious mischief is a
named peril in all of the standard homeowners policies except HO 5
(Comprehensive Form) because it is the only homeowners policy that
provides open perils coverage for all types of covered property.
◍ insurable risk.
Answer: An applicant is an insurable risk to the insurer if he or she meets
certain criteria for insurability; if these criteria are met, then the applicant is
insurable.
◍ Law of Large Numbers.
Answer: A method of predicting future losses with great accuracy.
◍ mortality.
Answer: Is the rate of death in the target population; it is a significant factor
in calculating life insurance premiums
◍ Jackson Hardware has a basic property policy. Which of the following perils
is NOT typically covered under such a policy?- riot- earthquake- smoke-
sprinkler leakage.
Answer: - earthquakeExplanation:Loss by earthquake is typically excluded
in basic, if not most, property policies.
◍ The New Jersey Insurance Underwriting Association may cancel a policy
written through the Association with five days' notice to the insured for any
of the following reasons EXCEPT:- Premiums have not been paid.- The
property is used for farming.- Property taxes have not been paid.- The
insured was convicted of arson..
Answer: - Premiums have not been paid.Explanation:The Association can
give five days' notice if the property is ineligible, the insurable interest of
the insured is weak, and there is evidence of moral hazard. Cancellation for
nonpayment of the premium requires a 10-day notice.
