Property & Casualty Insurance
License Test
Question 1
Which of the following is an example of a peril covered under a standard
homeowners insurance policy?
A. Wear and tear
B. Fire
C. Neglect
D. Earthquake
Answer: B. Fire
Question 2
An insured has an auto policy with liability coverage limits of 25/50/25. What does
the "50" represent?
A. The maximum amount the insurer will pay for bodily injury per person
B. The maximum amount the insurer will pay for property damage
C. The maximum amount the insurer will pay for bodily injury per accident
D. The maximum amount the insurer will pay for collision
Answer: C. The maximum amount the insurer will pay for bodily injury per accident
Question 3
What is the primary purpose of coinsurance in a property insurance policy?
A. To encourage insureds to insure property for its full value
B. To limit the liability of the insurance company
C. To avoid paying deductibles
D. To provide guaranteed replacement cost
,Answer: A. To encourage insureds to insure property for its full value
Question 4
Which type of policy provides coverage for any loss not specifically excluded?
A. Named peril policy
B. Open peril policy
C. Blanket policy
D. Scheduled policy
Answer: B. Open peril policy
Question 5
In a liability insurance policy, the term "occurrence" refers to:
A. An accident that happens at a specific point in time
B. A gradual and repeated exposure to harmful conditions
C. Either an accident or continuous exposure resulting in a loss
D. A specific loss defined in the policy exclusions
Answer: C. Either an accident or continuous exposure resulting in a loss
Question 6
Under a commercial general liability (CGL) policy, "personal and advertising injury"
coverage would apply to:
A. Physical damage to the insured's property
B. Defamation or slander
C. Employee injuries
D. Theft of personal property
,Answer: B. Defamation or slander
Question 7
Which of the following is a requirement for insurable interest in property insurance?
A. The policyholder must directly own the property.
B. The policyholder must benefit financially from the property.
C. The property must be free of liens or encumbrances.
D. The policyholder must be a resident of the insured property.
Answer: B. The policyholder must benefit financially from the property.
Question 8
What is the purpose of a deductible in an insurance policy?
A. To reduce the premium by limiting coverage
B. To transfer all risk to the insurer
C. To eliminate the need for coinsurance
D. To prevent small claims and reduce premiums
Answer: D. To prevent small claims and reduce premiums
Question 9
Which of the following best describes "subrogation"?
A. The insurer's right to recover payment from a third party responsible for a loss
B. The process of assessing the value of damaged property
C. The insured's transfer of policy rights to another party
D. The insurer's decision to cancel a policy due to non-payment
Answer: A. The insurer's right to recover payment from a third party responsible for
a loss
, Question 10
A business owner's policy (BOP) typically includes which of the following types of
coverage?
A. Auto liability and worker's compensation
B. Property and liability coverage
C. Health and life insurance
D. Umbrella and inland marine coverage
Answer: B. Property and liability coverage
Question 11
Which of the following would be covered under a commercial property policy's
"debris removal" provision?
A. Cleaning up after a covered fire loss
B. Removing hazardous materials
C. Repairing structural damage caused by an earthquake
D. Costs associated with upgrading to current building codes
Answer: A. Cleaning up after a covered fire loss
Question 12
What is the primary function of an umbrella policy?
A. To provide coverage for damages not covered by underlying policies
B. To replace the primary insurance policy
C. To cover damage to the insured's property
D. To insure against catastrophic weather events only
Answer: A. To provide coverage for damages not covered by underlying policies
License Test
Question 1
Which of the following is an example of a peril covered under a standard
homeowners insurance policy?
A. Wear and tear
B. Fire
C. Neglect
D. Earthquake
Answer: B. Fire
Question 2
An insured has an auto policy with liability coverage limits of 25/50/25. What does
the "50" represent?
A. The maximum amount the insurer will pay for bodily injury per person
B. The maximum amount the insurer will pay for property damage
C. The maximum amount the insurer will pay for bodily injury per accident
D. The maximum amount the insurer will pay for collision
Answer: C. The maximum amount the insurer will pay for bodily injury per accident
Question 3
What is the primary purpose of coinsurance in a property insurance policy?
A. To encourage insureds to insure property for its full value
B. To limit the liability of the insurance company
C. To avoid paying deductibles
D. To provide guaranteed replacement cost
,Answer: A. To encourage insureds to insure property for its full value
Question 4
Which type of policy provides coverage for any loss not specifically excluded?
A. Named peril policy
B. Open peril policy
C. Blanket policy
D. Scheduled policy
Answer: B. Open peril policy
Question 5
In a liability insurance policy, the term "occurrence" refers to:
A. An accident that happens at a specific point in time
B. A gradual and repeated exposure to harmful conditions
C. Either an accident or continuous exposure resulting in a loss
D. A specific loss defined in the policy exclusions
Answer: C. Either an accident or continuous exposure resulting in a loss
Question 6
Under a commercial general liability (CGL) policy, "personal and advertising injury"
coverage would apply to:
A. Physical damage to the insured's property
B. Defamation or slander
C. Employee injuries
D. Theft of personal property
,Answer: B. Defamation or slander
Question 7
Which of the following is a requirement for insurable interest in property insurance?
A. The policyholder must directly own the property.
B. The policyholder must benefit financially from the property.
C. The property must be free of liens or encumbrances.
D. The policyholder must be a resident of the insured property.
Answer: B. The policyholder must benefit financially from the property.
Question 8
What is the purpose of a deductible in an insurance policy?
A. To reduce the premium by limiting coverage
B. To transfer all risk to the insurer
C. To eliminate the need for coinsurance
D. To prevent small claims and reduce premiums
Answer: D. To prevent small claims and reduce premiums
Question 9
Which of the following best describes "subrogation"?
A. The insurer's right to recover payment from a third party responsible for a loss
B. The process of assessing the value of damaged property
C. The insured's transfer of policy rights to another party
D. The insurer's decision to cancel a policy due to non-payment
Answer: A. The insurer's right to recover payment from a third party responsible for
a loss
, Question 10
A business owner's policy (BOP) typically includes which of the following types of
coverage?
A. Auto liability and worker's compensation
B. Property and liability coverage
C. Health and life insurance
D. Umbrella and inland marine coverage
Answer: B. Property and liability coverage
Question 11
Which of the following would be covered under a commercial property policy's
"debris removal" provision?
A. Cleaning up after a covered fire loss
B. Removing hazardous materials
C. Repairing structural damage caused by an earthquake
D. Costs associated with upgrading to current building codes
Answer: A. Cleaning up after a covered fire loss
Question 12
What is the primary function of an umbrella policy?
A. To provide coverage for damages not covered by underlying policies
B. To replace the primary insurance policy
C. To cover damage to the insured's property
D. To insure against catastrophic weather events only
Answer: A. To provide coverage for damages not covered by underlying policies
