Insurance Council of Texas (InsTX) PCRM92 Property and Casualty Risk Manager Exam
Practice Test LATEST
1. **What is the primary purpose of a property insurance policy?**
A) To protect against liability claims
B) To provide compensation for property damage or loss
C) To cover employee injuries
D) To insure against business interruption
**ANSWER:** B
**EXPLANATION:** Property insurance provides financial protection against physical
damage to or loss of property.
2. **Which of the following is NOT a standard peril covered in a basic property insurance
policy?**
A) Fire
B) Lightning
C) Theft
D) Windstorm
**ANSWER:** C
**EXPLANATION:** Theft is typically excluded from basic policies and requires special
endorsement.
3. **The principle of indemnity in insurance means that:**
A) The insured should not profit from a loss
B) The insurer must pay regardless of fault
C) Coverage applies to all parties equally
,D) Premiums are based on loss history
**ANSWER:** A
**EXPLANATION:** Indemnity restores the insured to their pre-loss financial position, not
better.
4. **Which insurance policy specifically covers damage to a building's foundation from
earth movement?**
A) Standard property policy
B) Earthquake endorsement
C) Flood insurance
D) Sinkhole coverage
**ANSWER:** B
**EXPLANATION:** Earthquake damage requires a specific endorsement as it's excluded
from standard policies.
5. **What does the coinsurance clause in a property policy require?**
A) The insured to carry insurance equal to a specified percentage of the property value
B) Multiple insurers to share coverage
C) The insured to pay a percentage of each claim
D) Coverage to be split between building and contents
**ANSWER:** A
**EXPLANATION:** Coinsurance requires the insured to maintain coverage equal to a
specified percentage (usually 80-100%) of the property's value.
6. **Which liability coverage protects against claims for bodily injury or property damage
caused by the insured's operations?**
A) Professional liability
,B) General liability
C) Directors and officers liability
D) Employers liability
**ANSWER:** B
**EXPLANATION:** Commercial General Liability (CGL) covers third-party bodily injury and
property damage.
7. **An Occurrence-based liability policy covers claims:**
A) Made during the policy period regardless of when the incident occurred
B) For incidents that occur during the policy period regardless of when reported
C) Only if reported within 30 days
D) Based on the date the lawsuit is filed
**ANSWER:** B
**EXPLANATION:** Occurrence policies cover incidents that happen during the policy
period, even if reported later.
8. **What is the purpose of a deductible in an insurance policy?**
A) To reduce premiums by having the insured share in losses
B) To limit the insurer's maximum payout
C) To exclude certain types of losses
D) To determine policy limits
**ANSWER:** A
**EXPLANATION:** Deductibles reduce premiums by making the insured responsible for
initial losses.
9. **Which endorsement extends business income coverage to dependent properties?**
A) Contingent business interruption
, B) Extra expense coverage
C) Ordinance or law coverage
D) Utility services coverage
**ANSWER:** A
**EXPLANATION:** Contingent business interruption covers losses from damage to
suppliers' or customers' properties.
10. **In Texas, what is the minimum liability coverage required for auto insurance?**
A) 15/30/5
B) 25/50/25
C) 30/60/25
D) 50/100/50
**ANSWER:** C
**EXPLANATION:** Texas requires minimum liability limits of $30,000 per person, $60,000
per accident for bodily injury, and $25,000 for property damage.
11. **What does an inland marine policy typically cover?**
A) Ocean-going vessels
B) Property in transit or movable property
C) Coastal property only
D) Marine liability
**ANSWER:** B
**EXPLANATION:** Inland marine insurance covers property in transit, movable
equipment, and specialized risks.
12. **Which type of policy provides coverage for employee dishonesty?**
A) Fidelity bond
Practice Test LATEST
1. **What is the primary purpose of a property insurance policy?**
A) To protect against liability claims
B) To provide compensation for property damage or loss
C) To cover employee injuries
D) To insure against business interruption
**ANSWER:** B
**EXPLANATION:** Property insurance provides financial protection against physical
damage to or loss of property.
2. **Which of the following is NOT a standard peril covered in a basic property insurance
policy?**
A) Fire
B) Lightning
C) Theft
D) Windstorm
**ANSWER:** C
**EXPLANATION:** Theft is typically excluded from basic policies and requires special
endorsement.
3. **The principle of indemnity in insurance means that:**
A) The insured should not profit from a loss
B) The insurer must pay regardless of fault
C) Coverage applies to all parties equally
,D) Premiums are based on loss history
**ANSWER:** A
**EXPLANATION:** Indemnity restores the insured to their pre-loss financial position, not
better.
4. **Which insurance policy specifically covers damage to a building's foundation from
earth movement?**
A) Standard property policy
B) Earthquake endorsement
C) Flood insurance
D) Sinkhole coverage
**ANSWER:** B
**EXPLANATION:** Earthquake damage requires a specific endorsement as it's excluded
from standard policies.
5. **What does the coinsurance clause in a property policy require?**
A) The insured to carry insurance equal to a specified percentage of the property value
B) Multiple insurers to share coverage
C) The insured to pay a percentage of each claim
D) Coverage to be split between building and contents
**ANSWER:** A
**EXPLANATION:** Coinsurance requires the insured to maintain coverage equal to a
specified percentage (usually 80-100%) of the property's value.
6. **Which liability coverage protects against claims for bodily injury or property damage
caused by the insured's operations?**
A) Professional liability
,B) General liability
C) Directors and officers liability
D) Employers liability
**ANSWER:** B
**EXPLANATION:** Commercial General Liability (CGL) covers third-party bodily injury and
property damage.
7. **An Occurrence-based liability policy covers claims:**
A) Made during the policy period regardless of when the incident occurred
B) For incidents that occur during the policy period regardless of when reported
C) Only if reported within 30 days
D) Based on the date the lawsuit is filed
**ANSWER:** B
**EXPLANATION:** Occurrence policies cover incidents that happen during the policy
period, even if reported later.
8. **What is the purpose of a deductible in an insurance policy?**
A) To reduce premiums by having the insured share in losses
B) To limit the insurer's maximum payout
C) To exclude certain types of losses
D) To determine policy limits
**ANSWER:** A
**EXPLANATION:** Deductibles reduce premiums by making the insured responsible for
initial losses.
9. **Which endorsement extends business income coverage to dependent properties?**
A) Contingent business interruption
, B) Extra expense coverage
C) Ordinance or law coverage
D) Utility services coverage
**ANSWER:** A
**EXPLANATION:** Contingent business interruption covers losses from damage to
suppliers' or customers' properties.
10. **In Texas, what is the minimum liability coverage required for auto insurance?**
A) 15/30/5
B) 25/50/25
C) 30/60/25
D) 50/100/50
**ANSWER:** C
**EXPLANATION:** Texas requires minimum liability limits of $30,000 per person, $60,000
per accident for bodily injury, and $25,000 for property damage.
11. **What does an inland marine policy typically cover?**
A) Ocean-going vessels
B) Property in transit or movable property
C) Coastal property only
D) Marine liability
**ANSWER:** B
**EXPLANATION:** Inland marine insurance covers property in transit, movable
equipment, and specialized risks.
12. **Which type of policy provides coverage for employee dishonesty?**
A) Fidelity bond
