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PEARSON VUE: PROPERTY INSURANCE PRACTICE EXAM,
STUDY QUESTIONS INSURANCE, CASUALTY FL
WITH 100% VERIFIED CORRECT ANSWERS
"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? A. Declarations B. Insuring Agreement C. Conditions
D. Exclusions - CORRECT ANSWER B"
"An insured has an HO-3 Form. When using a snowblower borrowed from a neighbor, the insured strikes a large rock and causes $2,000 worth of damage to the snowblower. Under which section of the policy could payment be made on the insured's behalf? A. Personal Property B. Building C. Personal Liability
D. Loss of Use - CORRECT ANSWER C"
"What organization offers coverage on properties in areas of Florida deemed especially susceptible to
windstorm damages? - CORRECT ANSWER Citizens Property Insurance Corporation"
"What type of insurance can be obtained through a surplus lines insurer? - CORRECT ANSWER Coverage
that is unavailable through authorized insurers"
"All of the following may be covered by the miscellaneous type vehicle endorsement EXCEPT - CORRECT
ANSWER Rented recreational vehicles"
"Joe has tried to obtain automobile insurance in the voluntary market multiple times, but is always turned down. He meets all the general qualifications for auto insurance. Who can Joe go to for auto insurance
now? - CORRECT ANSWER Florida Automobile Joint Underwriting Association"
"The operation of the Florida Financial Responsibility Law could be triggered by any of the following events
EXCEPT - CORRECT ANSWER Registering a vehicle with the Motor Vehicle Department"
"In insurance, which of the following terms refers to continuous or repeated exposure to conditions that may result in bodily injury or damage neither expected nor intended? A.An accident B.An occurrence C.An event
D.A condition - CORRECT ANSWER b"
"J drives L's car. Both J and L have a Personal Auto Policy. Which of the following statements is CORRECT concerning coverage if J causes an accident? A.J's policy only will pay for any damage B.L's policy only will pay for any damage C.L's policy is primary and J's is excess
D.J's policy is primary and L's is excess - CORRECT ANSWER c"
"In a state where minimum auto bodily injury liability limits are 20/40, S is driving with limits of 20/40. S is responsible for an accident with T in which T suffers bodily injury in the amount of $120,000. T has non- stacked Underinsured Motorists limits of 100/300. How much will T's policy pay toward T's injuries? A.$ 20, A. $ 20, B.$ 80, B. $ 80, C.$ 100, C. $ 100, D.$ 120, D.
$ 120,000 - CORRECT ANSWER b"
"In a Commercial General Liability policy, medical payment expenses MUST be: A.caused by the negligence of the insured A. caused by the negligence of the insured B.caused by a product manufactured by the insured B. caused by a product manufactured by the insured C.reported within one year of the date of the accident
C.Owners and Contractors Protective Liability (OCP) C. Owners and Contractors Protective Liability (OCP) D.Bodily Injury Liability (BI) D.
Bodily Injury Liability (BI) - CORRECT ANSWER a"
"An insured's HO-2 Form has a $100,000 coverage limit on the dwelling and a $50,000 Personal Property limit with the standard deductible. If a sailboat valued at $1,500 is stolen from the insured's premises, the insured will collect a MAXIMUM of which of the following amounts? A. $1, B. $1, C. $1,
D. $1,500 - CORRECT ANSWER B"
"The MAXIMUM amount a policy will pay in the event of a loss is called the: A. coinsurance amount B. deductible C. limit of liability
D. pro rata return - CORRECT ANSWER C"
"The National Flood Insurance Program provides coverage for losses caused by all of the following occurrences EXCEPT: A. mudslides B. runoff from heavy rain C. overflow of tidal waters
D. water-main breakage - CORRECT ANSWER D"
"Special Form or Open Perils coverage: A. Provides coverage against the named perils
B. Provides coverage against scheduled risks C. Is limited by the named exclusions
D. Includes no exclusions - CORRECT ANSWER C"
"A fire in an insured's restaurant burns the kitchen walls and causes smoke damage to the entire interior. Water used to extinguish the fire causes extensive damage to floors and furnishings. The water damage is best described as: A. a time element loss B. a consequential loss C. a direct loss
D. an indirect loss - CORRECT ANSWER C"
"Which of the following terms is defined as the uncertainty of future outcome? A. Risk B. Hazard C. Peril
D. Cause - CORRECT ANSWER A"
"The Personal Liability section of a Homeowners policy covers which of the following options? A. Damage to an insured's property caused by a visitor B. Bodily injury to a resident caused by a neighbor's dog C. Property damage caused by war
D. Bodily injury caused by the personal activities of an insured - CORRECT ANSWER D"
"Which of the following sources may be used to provide property insurability information? A. Police records
A. a policy is nonrenewed B. a mortgage has been satisfied C. an insured cancels a policy at inception
D. an insurer cancels a policy at any time - CORRECT ANSWER D"
"Inland Marine insurance is commonly used to insure all of the following items EXCEPT: A. automobiles B. stamps C. camera equipment
D. jewelry - CORRECT ANSWER A"
"A primary obligation of an insurer is to: A. pay the claims covered under the policy B. provide a financial statement with each policy C. make inspections and surveys of insured property
D. prepare an inventory after a loss - CORRECT ANSWER A"
"Which of the following terms BEST describes continuous and repeated exposure to conditions that are neither expected nor intended by the insured? A. Negligence B. Liability C. Accident
D. Occurrence - CORRECT ANSWER D"
"Which of the following statements about a mortgagee's rights under the Dwelling Property Basic Form (DP-1) is INCORRECT? A. No act by the insured will jeopardize the mortgagee's rights.
B. The mortgagee may file a Proof of Loss if the insured fails to do so. C. The mortgagee is entitled to receive prior notice of a policy's cancellation.
D. The mortgagee may abandon the insured property to the insurer. - CORRECT ANSWER D"
"A Commercial Property policy specifies which of the following responsibilities as a duty of the insured? A. To return the policy if it is canceled by the insurer B. To provide a sworn Proof of Loss statement if requested by the company C. To pay the mortgagee in full in the event of a total loss
D. To pay premiums within thirty days after receiving an invoice - CORRECT ANSWER B"
"Under a Homeowners policy, an insured is required to take all of the following actions when a covered loss occurs EXCEPT: A. give prompt notice to the insurer or its producer B. hire an appraiser to determine the amount of loss C. notify the police if the loss is the result of theft
D. protect the property from further loss - CORRECT ANSWER B"
"All of the following options are examples of insurable interest EXCEPT: A. a person's interest in property she is buying on contract B. a tenant's interest in improvements she has made to a leased building C. a TV repairman's interest in a customer's TV which has been repaired but is still on premises
D. an individual's interest in property her parents will someday leave to her - CORRECT ANSWER D"
"Which of the following policy forms would BEST protect a business that must keep operating after a loss? A. Extra Expense
C. in the United States or Canada only
D. anywhere in the world - CORRECT ANSWER C"
"Which of the following perils is covered under the Commercial Property Basic Cause of Loss form? A. Collapse B. Sinkhole collapse C. Falling objects
D. Breakage of glass - CORRECT ANSWER B"
"All of the following items are included in the Nationwide Marine definition EXCEPT: A. imports and exports B. fine arts C. furs
D. real property - CORRECT ANSWER D"
"A deer jumps through the window of an insured's home, damaging the interior and exterior walls. Which of the following Homeowners Forms listed below is the LEAST comprehensive form that will still provide coverage for this loss? A. HO-1 Form B. HO-2 Form C. HO-3 Form
D. HO-5 Form - CORRECT ANSWER C"
"N's next door neighbor, S, dumps hot ashes in N's trash dumpster, starting a fire and causing severe damage to N's home. N's company pays the loss and then goes after S for payment. This is an example of: A. pro rata liability B. assignment
C. appraisal
D. subrogation - CORRECT ANSWER D"
"Actual cash value is most often defined as which of the following options? A. Replacement cost less depreciation B. Amount paid less depreciation C. Fair market value plus appreciation
D. Appraised value - CORRECT ANSWER A"
"The owner-operator of a computer store often leaves expensive computers balanced negligently on the edges of tables, believing that any damage to the computers will be paid by the insurance policy. This situation is BEST described as a: A. moral hazard B. morale hazard C. catastrophic hazard
D. psychological hazard - CORRECT ANSWER B"
"Information provided by the insured in a Proof of Loss is considered: A. a warranty B. a representation C. an assignment
D. an agreement - CORRECT ANSWER B"
"A Commercial Building and Personal Property form provides coverage for: A. a patio attached to the building B. business personal property
"Which of the following Homeowners coverages does NOT generally contain a deductible? A. Personal property B. Other structures C. Liability
D. Dwelling - CORRECT ANSWER C"
"In a Commercial Property form, if a building is left vacant, coverage for vandalism will continue for up to how many days? A. Thirty B. Forty-five C. Sixty
D. Ninety - CORRECT ANSWER C"
"When an insurer plans to nonrenew a commercial property insurance policy, it must give the policyholder
a written notice of its intent to nonrenew at least how many days in advance? - CORRECT ANSWER 45"
"What is the maximum service charge a general lines agent may charge per year for financial insurance
premiums on policies issued by the agent? - CORRECT ANSWER 36
The service charge cannot exceed $3 per installment, up to the $36 maximum per year"
"Which of the following perils is covered by the HO-2 and HO-3? - CORRECT ANSWER Sudden and
accidental rupture of a heating system"
"Within how many days must a property insurer pay on a claim after the settlement is reached? -
CORRECT ANSWER 20 days"
"What is the maximum limit of liability that is available under the Florida Automobile Joint Underwriting
Association? - CORRECT ANSWER B100/300/50"
"Can an insurer cancel a property policy for nonpayment of premium? - CORRECT ANSWER DYes, with
10 days' written notice and reason of cancellation given to the insured" "In a store, all of the following situations would be considered theft EXCEPT:
A.merchandise being stolen with evidence of forced entry B.a clerk witnessing a customer shoplifting merchandise C.a clerk being robbed at gunpoint
D.the store's year-end inventory coming up short by 5 percent - CORRECT ANSWER d"
"Which of the following vehicles is considered a temporary substitute auto under a Personal Auto policy? A.A neighbor's pickup truck borrowed by an insured to run an errand B.An auto purchased by an insured to replace a previously owned vehicle C.An auto rented by an insured when the insured is on vacation
D.An auto rented by an insured when the insured's car is in a garage for repairs - CORRECT ANSWER d"
"W, an electrician, caused damage to the main wiring of a shopping center while working on another building. As a result, the shopping center was forced to close early for the day. The loss resulting from this damage would be considered which of the following types under W's Commercial General Liability policy? A.Products B.Completed Operations C.Premises
D.Operations - CORRECT ANSWER d"
"Which of the following policies is intended to broaden the coverages and increase the limits of underlying insurance? A.Owners and Contractors Protective Liability B.Umbrella Liability C.Excess Liability
D.Commercial General Liability - CORRECT ANSWER b"
"The Arbitration clause in a Personal Auto policy would be used in which of the following circumstances? A.The insurance company and a pedestrian struck by the insured's auto cannot reach an agreement regarding the settlement of a claim. B.The insured and an injured third party cannot reach an agreement regarding the settlement of a claim.
A company car provided to the insured by an employer - CORRECT ANSWER c"
"A policyholder would expect to find which of the following information in the Insuring Agreement section of an auto policy? A.Bodily Injury limits of liability A. Bodily Injury limits of liability B.The insurance company's promise to pay on the behalf of the insured B. The insurance company's promise to pay on the behalf of the insured C.Exclusions regarding certain uses of the auto C. Exclusions regarding certain uses of the auto D.The obligations of the insured in the event of a loss D.
The obligations of the insured in the event of a loss - CORRECT ANSWER b"
"Which of the following losses would be covered under an Inside the Premises - Robbery and Safe Burglary of Other Property Form? A.Valuable papers kept in a locked safe are destroyed by fire. A. Valuable papers kept in a locked safe are destroyed by fire. B.Cash is stolen from a locked safe that shows no signs of forced entry. B. Cash is stolen from a locked safe that shows no signs of forced entry. C.Jewelry is stolen from a locked safe that shows no signs of forced entry. C. Jewelry is stolen from a locked safe that shows no signs of forced entry. D.Gold bars are stolen from a locked safe that shows signs of forced entry. D.
Gold bars are stolen from a locked safe that shows signs of forced entry. - CORRECT ANSWER d"
"In the event of a loss under a Personal Auto Policy, an insured is required to submit to the insurance company all of the following information EXCEPT: A.a Proof of Loss statement if requested A. a Proof of Loss statement if requested B.a Notice of Claim B. a Notice of Claim C.a list of any known witnesses C. a list of any known witnesses
D.an appraisal of the damaged property D.
an appraisal of the damaged property - CORRECT ANSWER d"
"Actual cash value is most often defined as: A.replacement cost less depreciation A. replacement cost less depreciation B.original purchase price less depreciation B. original purchase price less depreciation C.stated amount a policy will pay C. stated amount a policy will pay D.cost to replace D.
cost to replace - CORRECT ANSWER a"
"Under a Fidelity Bond, which of the following individuals is considered the obligee? A.An employer A. An employer B.An employee B. An employee C.A subcontractor C. A subcontractor D.A creditor D.
A creditor - CORRECT ANSWER a"
"The Fair Credit Reporting Act requires the: A.insurance company to review the applicant's credit history prior to underwriting a policy A. insurance company to review the applicant's credit history prior to underwriting a policy B.insurance producer to summarize a policy for the insured B. insurance producer to summarize a policy for the insured C.insurance producer to review the applicant's credit history prior to issuing a policy C. insurance producer to review the applicant's credit history prior to issuing a policy D.insurance company to inform the applicant a credit report may be obtained
"A bond guaranteeing the obligation of one party to another by a third party is known as a: A.municipal bond A. municipal bond B.fiduciary bond B. fiduciary bond C.surety bond C. surety bond D.guarantee bond D.
guarantee bond - CORRECT ANSWER c"
"Which of the following occurrences would be included under the definition of a personal injury? A.A customer injured in a department store when a sign falls on her sues the store for medical costs and pain and suffering. A. A customer injured in a department store when a sign falls on her sues the store for medical costs and pain and suffering. B.An employee injured lifting a heavy carton sues his employer for costs. B. An employee injured lifting a heavy carton sues his employer for costs. C.An individual fired from her job sues her employer for unemployment benefits. C. An individual fired from her job sues her employer for unemployment benefits. D.A tenant evicted by his landlord sues the landlord for invasion of privacy and wrongful eviction. D.
A tenant evicted by his landlord sues the landlord for invasion of privacy and wrongful eviction. -
CORRECT ANSWER d"
"An insurance binder is best described as: A.a large bound volume of rules, rates, and forms A. a large bound volume of rules, rates, and forms B.a rate manual supplied by one of the rating organizations B. a rate manual supplied by one of the rating organizations C.a temporary agreement to pay a claim pending final settlement C. a temporary agreement to pay a claim pending final settlement D.temporary short-term evidence of coverage
D.
temporary short-term evidence of coverage - CORRECT ANSWER d"
"An insured is required to take which of the following actions immediately after an occurence? A.Request a subrogation statement from the producer A. Request a subrogation statement from the producer B.Give notice of claim to the insurance company B. Give notice of claim to the insurance company C.Notify an independent adjuster C. Notify an independent adjuster D.Obtain a written report from the police department D.
Obtain a written report from the police department - CORRECT ANSWER b"
"A Commercial General Liability policy provides coverage for which of the following hazards? A.Professional Liability A. Professional Liability B.Employee Injury Liability B. Employee Injury Liability C.Pollution Liability C. Pollution Liability D.Premises Liability D.
Premises Liability - CORRECT ANSWER d"
"Which of the following coverages may be written with Workers Compensation? A.Products A. Products B.Contractual B. Contractual C.Employers Liability C. Employers Liability D.Completed Operations D.
