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ARKANSAS PROPERTY & CASUALTY PRACTICE EXAM
WITH 100% CORRECT ANSWERS | VERIFIED & UPDATED
"A Certificate of Authority - CORRECT ANSWER The document permitting an insurer to transact
insurance in Arkansas is known as:"
"Licensed local agents, who represent the Federal Flood Insurance Program. - CORRECT ANSWER
Flood insurance may only be purchased through:"
"Block Policy - CORRECT ANSWER A policy providing very broad coverage for dealers, whether the
property is on the premises, being transported, or temporarily being tried by customer is known as:"
"Employers Liability - CORRECT ANSWER Which of the following coverages would be written with
Workers Compensation?"
"The Federal Emplooyer's Liability Act - CORRECT ANSWER Workers Compensation coverage for
persons involved in interstate transportation, such as railroad workers, comes under:"
"The President of the United States. - CORRECT ANSWER Which of the following is NOT a source of
insurance regulation?"
"A passenger in an automobile; getting into an automobile; walking across the street. - CORRECT
ANSWER Automobile medical payments coverage applies when an insured person is injured while:"
"Breakage of a plate glass window by vandals. - CORRECT ANSWER A dwelling policy with the V&MM
endorsement attached does not cover which of the following:"
"Replacement cost minus depreciation. - CORRECT ANSWER Which of the following best describes
actual cash value?"
"Accumulating Risk - CORRECT ANSWER Which of the following is not a reaction to risk?"
"An increase in the possibility that a loss may occur. - CORRECT ANSWER Which of the following
describes a hazard?"
"Requiring the policyholder to carry insurance to value. - CORRECT ANSWER Which of the following
best meets the test of the "Principle of Indemnity"?"
"Overpayment of a claim - CORRECT ANSWER The principle of indemnity is designed to avoid:"
"Crime Insurance - CORRECT ANSWER The Fair Plan offers what kind of coverage for individuals and
businesses in high hazard areas?"
"Embezzlement - CORRECT ANSWER An agent who collects premiums and converts those premiums to
his own personal use is guilty of:"
"The agent must be appointed by each company. - CORRECT ANSWER To be licensed by more than
one insurance company:"
"The covered perils - CORRECT ANSWER The basic difference between the DP-1 and the DP-3 is:"
"The client - CORRECT ANSWER Which of the following has the unlimited right to cancel an insurance
policy?"
"Endorsement - CORRECT ANSWER What is used to change an insurance policy from its original
wording?"
"Surplus Lines Insurance - CORRECT ANSWER A certificate of authority is not required for transacting:"
"Retained Limit - CORRECT ANSWER An umbrella liability policy has a form of deductible called:"
"A retired person. - CORRECT ANSWER Which of the following may be competent?"
"$7,250 - CORRECT ANSWER A 15 year old dwelling valued at $100,000 is insured for $60,000 on an
HO-3 with an HO-15 encorsement. A $250 deductible applies. If the insured had a $10,000 loss, how much would he be paid?"
"Appealed to the Courts - CORRECT ANSWER An order of the Commissioner may be:"
"Professional Liability is used in lieu of General Liability - CORRECT ANSWER All of the following are
true about Professional Liability except:"
"On the biennial anniversary of your birthday. - CORRECT ANSWER Property and Casualty licenses
must be renewed:"
"Risk - CORRECT ANSWER Which of the following terms is defined as the uncertainty of future
outcome?"
"Unilateral - CORRECT ANSWER Because the exact terms of an insurance policy are not the subject of
negotiation with the companym the contract of insurance is said to be:"
"Perils insured against. - CORRECT ANSWER Which policy part does not apply to Section II of a
Homeowner's policy?"
"Offer and Acceptance - CORRECT ANSWER A contract in which there is an act for a promise is
referred to as:"
"Appointed for a four year term. - CORRECT ANSWER The Commissioner of Insurance:"
"Automobiles - CORRECT ANSWER Inland Marine insurance is commonly used to insure all of the
following items EXCEPT:"
"Boiler and Machinery - CORRECT ANSWER Which of the following is an optional coverage on S.M.P?"
"Coverage for hired autos. - CORRECT ANSWER Which of the following endorsements would insure
trucks which have been temporarily leased by the insured's house painting business?"
"A faulty toaster manufactured by the insured sets fire to a consumer's home. - CORRECT ANSWER
Which of the following would be covered by a C.G.L. policy?"
"Claims made coverage is not offered for Professional Liability. - CORRECT ANSWER Which of the
following is not true about the claims made liability form?"
“Pay the claims covered under the policy. - CORRECT ANSWER A primary obligation of an insurance
company is to:"
"Flood - CORRECT ANSWER Which of the following losses would not be covered on an "all-risk" crop
insurance policy?"
"Deductible - CORRECT ANSWER Which of the following terms describes what is subtracted from a
claim payment to the insured?"
"Parol Evidence rule - CORRECT ANSWER Oral discussion prior to the development of a written
contract can not be used to extend the terms of the final document. This because of the:"
"The trigger - CORRECT ANSWER The main difference between a claims made liability coverage and an
occurence for liability coverage is:"
"A claim by the mortgagee can be denied. - CORRECT ANSWER An insured hires someone to burn his
home. The insurance company can prove this fact. All of the following are true except:"
"The insured building is vacant for over 60 days. - CORRECT ANSWER Coverage against loss by some
perils (vandalism, theft, etc.) under the Building and Personal Property Coverage form is suspended if:"
"Damages caused by products after their sale. - CORRECT ANSWER Which of the following exposures
is covered under the basic Commercial General Liability policy?"
"The Zone Exam - CORRECT ANSWER The kind of examination performed of a foreign insurer for the
benefit of all licensing states is called:"
"Stolen. - CORRECT ANSWER Under the physical damage portion of the personal auto policy,
transportation expnses are provided if the insured's car is:"
"25/50 BI and 25 PD - CORRECT ANSWER Minimum automobile financial responsibility requirements
in Arkansas are:"
"A building which has been vacant for 2-1/2 months is vandalized. - CORRECT ANSWER Which of the
following losses is not covered by the Vandalism and Malicious Mischief endorsement?"
"Liberalization Clause. - CORRECT ANSWER Which condition of a Commercial Package Policy may
broaden the insured's coverage, if the company develops a newer policy form?"
"Per Person, Per Accident - CORRECT ANSWER In auto insurance, medical payments limits apply:"
"For each separate accident. - CORRECT ANSWER The liability limits on a Personal Auto Policy may be
paid:"
"The insured while driving his own auto on the company business. - CORRECT ANSWER Which of the
following would not be eligible for auto medical payments coverage?"
"A 1/2 ton pickup used by a farmer. - CORRECT ANSWER Which of the following are eligible for
coverage under the Personal Auto Policy?"
"Extended Non-Ownership Liability - CORRECT ANSWER A sales person is furnished a vehicle from the
office motor pool on a regular basis. Which auto policy endorsement is recommended?"
"Continuous until cancelled. - CORRECT ANSWER When does a fidelity bond expire?"
"Goods stolen by someone gaining entrance to the premises after closing hours by sneaking through an
unlocked window. - CORRECT ANSWER The Premises Burglary coverage form will cover all of the
following except:"
"Contractual Liability - CORRECT ANSWER Which of the following coverages would be BEST suited for
a prospective insured who wants coverage against liability assumed by written and oral agreements?"
"HO-8 - CORRECT ANSWER Which of the following forms covers actual cash value on both dwelling
and personal property?"
"Insuring Agreement - CORRECT ANSWER A company's promise to pay for damage caused by or
resulting from any covered Cause of Loss would be found in which of the following sections of a Commercial Property Policy?"
"Form 3 - CORRECT ANSWER Which Homeowners Policy would you buy for the best protection?"
"Auto dealers and body repair shops; Machinery and implement dealers and storage garages; service
stations and public parking places. - CORRECT ANSWER Which of the following are eligible to buy
garage liability insurance?"
"Professional liability coverages. - CORRECT ANSWER Which of the following is NOT eligible to be
included in the Commercial Package Policy?"
"A large steel manufacturer. - CORRECT ANSWER Which of the following would not be eligible to
purchase credit insurance?"
"Four seasons. - CORRECT ANSWER Under a Crop Hail Policy, the term and coverage may not be
written as which of the following?"
"The Inchmaree Clause. - CORRECT ANSWER The Ocean Marine Policy endorsement that provides
coverage for neglect of the crew to maintain equipment is:"
"Employee dishonesty, 3-D and forgery. - CORRECT ANSWER Which of the following below are not
types of surety bonds?"
"The obligee, principal and guarantor. - CORRECT ANSWER The three parties to a surety bond are:"
"Falling objects. - CORRECT ANSWER On commercial policies, basic coverage does not insure loss
against which peril?"
"The 165 line New York Standard Fire Policy of 1943. - CORRECT ANSWER The standard fire policy
issued in most states is known as:"
"Short Rate Basis - CORRECT ANSWER When an insurance policy is cancelled by the insured, the
premium is usually refunded on a:"
"An Alien Company, Admitted Insurer, and Stock - CORRECT ANSWER A company licensed in Arkansas,
incorporated in Argentina, and owned by investors, who may or not be the policyholders is called:"
"Replacement cost less depreciation: - CORRECT ANSWER Actual cash value is most often defined as
which of the following options?"
"An auto rented by an insured when the insured's car is in a garage for repairs. - CORRECT ANSWER
Which of the following vehicles is considered a temporary substitute under a Personal (Family) Auto Policy?" "$25,000 bodily injury for each person, $50,000 bodily injury for each accident, $25,000 property
damage per accident. - CORRECT ANSWER Automobile limits of liability expressed as
$25,000/$50,000/$25,000 means:"
