Download PSI Practice Property and Casualty Exam Questions and Answers and more Exams Insurance law in PDF only on Docsity!
PSI PRACTICE PROPERTY AND CASUALTY EXAM QUESTIONS AND VERIFIED ANSWERS
"Which policy condition is invoked when parties to an insured loss cannot agree? - CORRECT
ANSWER Arbitration"
"Which of the following is the special limit of coverage on the homeowners policy form for
property damage to personal watercraft? - CORRECT ANSWER $1,500"
"An injured employee covered under workers' compensation is entitled to reasonably justifiable
expenses for retraining. This benefit falls under which of the following? - CORRECT ANSWER
Vocational rehabilitation" "The Causes of Loss form for farm property lists which of the following?
- the type of property insured
- the amount of insurance provided
- perils property is insured against
4. exclusions to named insureds - CORRECT ANSWER 3. perils property is insured against"
"Which of the following created The National Flood Insurance Program? - CORRECT ANSWER
the United States Congress" "A bank customer's identity was compromised and the thieves made numerous purchases from a retailer by signing the customer's checks. When the bank refused to make payment for the goods, the retailer brought suit against the bank. Which coverage indemnified the bank for liability in the
suit? - CORRECT ANSWER forgery and alteration"
"For the purpose of workers' compensation insurance all of the following are subject to the workers' compensation laws, either as an employer or employee EXCEPT
- an insurance agent.
- a building contractor.
- the employee of a party store.
4. a crew member of an ocean going vessel. - CORRECT ANSWER 4. a crew member of an
ocean going vessel."
"Which of the following types of crime best describe the unlawful act of taking property from the
care and custody of another person while threatening to cause bodily harm? - CORRECT
ANSWER Robbery"
"Which of the following describes why the insuring agreement is the heart of an insurance policy?
- CORRECT ANSWER It describes property covered and perils insured."
"Which of the following limits of insurance on the dwelling are available and apply to Coverage D-
Fair Rental Value? - CORRECT ANSWER 20%"
"All of the following are responsibilities of the insured listed in the loss provisions for most property insurance contracts EXCEPT
- to give prompt notice of claim.
- to submit to examination under oath.
- to protect property from further damage.
4. to determining adequate indemnification. - CORRECT ANSWER 4. to determining adequate
indemnification."
"When does the coverage begin for a builders risk form? - CORRECT ANSWER On the date
construction starts above the lowest basement floor if there is a basement" "Which of the following provides insurance for employers when workers not covered by workers'
compensation insurance are injured on the job and sue for compensation? - CORRECT
ANSWER employer liability"
"Bodily injury includes all of the following EXCEPT
- disease.
- sickness.
- comprehensive.
4. death from injury. - CORRECT ANSWER 3. comprehensive."
"All of the following are methods of limiting liability EXCEPT
- split limit.
- singe limit.
"Which of the following professionals would purchase Errors And Omissions insurance to manage the liability risk associated with their business endeavors?
- attorney
- caregiver
- doctor
4. fireman - CORRECT ANSWER 1. attorney"
"A woman slips on icy steps and breaks her leg. Which of the following is the peril in this situation?
- the fall
- the icy steps
- the broken leg
4. the season of the year - CORRECT ANSWER 1. The fall"
"What does an application for insurance contractually represent for the insured? - CORRECT
ANSWER an offer"
"Which of the following would trigger coverage under business income form with extra expense coverage?
- Carpet cleaning after a water main break
- Employee pay after a building structure is damaged
- Building inspectors fees after a loss
4. Unit rent when tenant is liable - CORRECT ANSWER 1. Carpet cleaning after a water main
break" "When an insured is driving his covered automobile causes an accident that results in injury, his automobile medical payments will pay medical expenses for all of the following EXCEPT
- the insured's own injuries.
- the brother's injury, an occupant in insured's vehicle.
- his daughter's injuries, an occupant in insured's vehicle.
4. any occupant of the other not at fault vehicle. - CORRECT ANSWER 4. any occupant of the
other not at fault vehicle."
"The Gramm-Leach-Bliley Act was enacted to protect consumer's right to privacy and made
mandatory which of the following? - CORRECT ANSWER financial institutions must have a
privacy policy in place" "Which characteristic of an insurance contract states that when a loss occurs the insured should
be restored to the financial condition he was in before the loss? - CORRECT ANSWER contract
of indemnity"
"Which of the following business liability exposures does a slip and fall loss fall under? -
CORRECT ANSWER premises and operations"
"Which of the following terms refers to the transfer of the insured's right of recovery against
others to his insurance company? - CORRECT ANSWER subrogation"
"Which policy condition applies when an insurer covers property losses at cash value rather than
an amount that exceeds the repair or replacement value? - CORRECT ANSWER loss settlement
condition" "Employees are barred from suing employers in court to obtain compensation for injuries
covered by workers' compensation because of which of the following doctrines? - CORRECT
ANSWER exclusive remedy"
"Which type of hazard is an example of a person who increases the chance of loss through
carelessness or by irresponsible actions? - CORRECT ANSWER morale hazard"
"Under the insured's personal auto policy, which of the following is CORRECT for a newly acquired car to be covered prior to reporting it to the insurance company?
- for physical damage coverage to extend it must be a brand new vehicle.
- for liability coverage to extend it must only be driven by an insured.
- all coverage extends if the insured reports the car within fourteen days.
4. for uninsured motorist coverage to extend the driver must be the insured. - CORRECT
ANSWER 3. all coverage extends if the insured reports the car within fourteen days."
"Which of the following does HO-6 provide? - CORRECT ANSWER coverage for personal
property of a condominium owner"
4. damage to property in the insured's care, custody, or control. - CORRECT ANSWER 3.
damage caused by acts of civil disobedience and riots."
What will happen if a house covered by a standard mortgage clause is a total loss? - CORRECT
ANSWER The insurer pays the mortgage according to the mortgagee's interest in the property"
"Which coverage form would provide coverage for all incoming and outgoing shipments? -
CORRECT ANSWER Annual transit"
"What is the maximum amount an insurer will pay under the equipment dealers pollution
cleanup and removal extension of an inland marine policy? - CORRECT ANSWER $10,000 for
all expenses incurred during a 12 month period"
"Persons covered under an insurance policy, whether named or not, are known as the -
CORRECT ANSWER insured"
"The legal process that gives an insurer, after a payment of a loss, the right to seek recovery from
a third party that was responsible for the loss is known as: - CORRECT ANSWER subrogation"
"Unfair Claims Settlement Practices - CORRECT ANSWER advise the insured that if the claim
goes to settlement, the insured would get less that what is currently being offered" "According to the loss payment condition in HO policies, losses must be paid within how many
days of the insurer receiving proof of loss? - CORRECT ANSWER 60"
"A licensee serving in the military is unable to fulfill her CE requirement. What would the licensee
have to do to renew her license? - CORRECT ANSWER licensee may submit a request to the
department to have requirements and fees waived. The Dept will then determine if the request is permissible" "Erroneous Publishing copied all the material from Angels Inc.'s book. The only changes made by Erroneous were to rename the title and chapters, put a different cover on it, and distribute it as its own. Angels Inc. files a claim against Erroneous and seeks damages. Will a commercial general
liability policy cover the claim? - CORRECT ANSWER No, because that is copyright
infringement, not slander from advertising"
"symbols used in business auto coverage - CORRECT ANSWER Symbol 1 = any auto
symbol 2 = owned autos only Symbol 7 = Specifically described autos only Symbol 9 = non owned autos only"
"The major portion of the premium for an equipment breakdown policy pays: - CORRECT
ANSWER For inspections and examinations"
"ABC trucking recently purchased XYZ manufacturing co. ABC wants to transport the new company's freight with their trucking division. The company also wants to continue to haul freight
for the clients it has served for many years. In regard to coverage, which is true? - CORRECT
ANSWER Motor carrier coverage is needed. It covers anyone who transports goods.
Truckers coverage form does not cover private carriers. MCC covers private, contract, and common." "A loss occurred before the first report has been filed on a value reporting coverage form. Which
is NOT true? - CORRECT ANSWER Never more than 75% of the loss is paid
(True: if loss occurred before the first report is due the full amount of loss is paid. BC provisional premium is based on 75% of the full amount of coverage , only 75% of the loss is paid if the first report is overdue or after first report." "Which of the following would be covered under the crime coverage inside the premises - theft of
money and securities? - CORRECT ANSWER loss or damage to a locked safe, vault, register"
"What term best describes the act of withholding material information that would be crucial to an
underwriting decision? - CORRECT ANSWER concealment"
"Which of the following liability coverages must be added by endorsement to a HO policy in order
to apply? - CORRECT ANSWER Personal injury
(applies only if added by endorsement and an additional premium is paid)" "Which of the following is incorrect?
- a licensee may charge a fee in addition to commission. the fee must be disclosed in advance
- a licensee is barred from charging a fee in addition to a commission to a person for the sale, solicitation, or negotiation of a contract of insurance for commercial business
"When would uninsured motorist coverage apply? - CORRECT ANSWER When the other party
is legally liable but has no insurance (does not apply if the insured is at fault, it applies only if the other driver is at fault but has no coverage)"
"All of the following are characteristics of the dwelling policy EXCEPT: - CORRECT ANSWER the
dwelling must be owner occupied (correct: dwelling can be owner or tenant occupied)" "in equipment breakdown coverage, all accidents would be considered a single accident if they
occur: - CORRECT ANSWER at the same time, same place, same cause"
“Which of the following represents the primary amount of insurance for the HO-4? - CORRECT
ANSWER 3. Coverage C"
"The claims-made liability form provides coverage from a date that precedes the policy effective
date. Which of the following defines that date? - CORRECT ANSWER Retroactive date"
"If the insured has a loss with a private passenger nonowned temporary substitute vehicle how
will the loss be treated by the insured's own policy for physical damage? - CORRECT ANSWER
The broadest coverage available extends from the insured's policy." "Mobile homes can be insured in all of the following ways EXCEPT
- with a HO-8 Modified Coverage form.
- on a separate mobile homeowners package policy.
- with a DP-1 if the mobile home is on a foundation.
4. on a mobile homeowners endorsement to a HO-3 form. - CORRECT ANSWER 1. with a HO-
Modified Coverage form." "Exclusions common to liability coverage for both the personal auto policy and the business auto policy include all of the following EXCEPT
- work related injuries to insured's employees.
- vehicles used in prearranged racing or speed contests.
- for bodily injury or property damage caused intentionally by the insured.
4. for liability arising while the insured auto is being used in an auto business. - CORRECT
ANSWER 4. for liability arising while the insured auto is being used in an auto business."
"Which of the following makes use of market value in determining loss valuation? - CORRECT
ANSWER Property is evaluated for what it sells for at the time of the loss."
"Homeowner Form HO-2 provides coverage for loss of appliances, carpeting, and other
household furnishings for a maximum of how much? - CORRECT ANSWER $2,500"
"Workers' compensation coverage is rated on the basis of which of the following? - CORRECT
ANSWER Employer's payroll"
"Liability arising out of any of the following is excluded from the personal and advertising injury liability coverage EXCEPT
- unknowingly inflicting injury that violates the rights of another.
- oral or written publication of material that the insured knows is false.
- criminal acts committed by or at the direction of the insured.
4. failure of goods or products to conform with advertised quality. - CORRECT ANSWER 1.
unknowingly inflicting injury that violates the rights of another."
"Absolute liability can be imposed by law and exist in the absence of which of the following? -
CORRECT ANSWER negligence"
"All of the following losses are excluded from the DP-1 basic policy form EXCEPT
- earth movement
- lightning strike
- power interruption
4. water damage - CORRECT ANSWER 2. lightning strike"
"All of the following are elements of a valid contract EXCEPT
- competent parties.
- consideration.
- legal purpose.
4. provisions. - CORRECT ANSWER 4. provisions."
"Which Homeowner Form covers fixtures, installations, and improvements made or acquired at
the insured's expense? - CORRECT ANSWER HO-4"
"According to the Nationwide Definition of marine insurance, which category is an eligible marine risk?
- to radar or laser detection equipment.
- due to wear and tear, freezing and breakdown.
- due to destruction or confiscation by civil authorities
4. to caps, covers, or bed-liners on pickup trucks. - CORRECT ANSWER 4. to caps, covers, or
bed-liners on pickup trucks."
"Which part of the commercial general liability designates who is an insured? - CORRECT
ANSWER Declarations"
"Which exposure is unique to mobile homes? - CORRECT ANSWER Loss from collision
damage" "Which of the following terms applies to a policy that pays first when two policies cover the same property?
- excess
- pro rata
- primary
4. non-assigned - CORRECT ANSWER 3. primary"
"All of the following are examples of insurable interest EXCEPT
- insuring your home.
- insuring expensive jewelry.
- insuring your friend's automobile.
4. insuring business property you own. - CORRECT ANSWER 3. insuring your friend's
automobile." "Which of the following is an example of risk retention?
- never riding as a passenger in an automobile
- cancelling automobile insurance because of lack of previous accidents
- signing a contract that places the other party at fault in case of an accident
4. always wearing a seat belt when driving or riding in an automobile - CORRECT ANSWER 2.
cancelling automobile insurance because of lack of previous accidents" "Underwriters are permitted to use all of the following when underwriting an application for insurance EXCEPT
- disability.
- inspection services.
- credit reports.
4. claim history. - CORRECT ANSWER 1. disability."
"All of the following specify limits of insurance for the commercial general liability EXCEPT
- legal defense.
- medical expense.
- general aggregate.
4. personal and advertising injury. - CORRECT ANSWER 1. legal defense."
"Which of the following is attached to and used to modify or change the original policy in some way?
- attachment
- change order
- endorsement
4. written request - CORRECT ANSWER 3. endorsement"
"The following are all types of disability categories under workers' compensation insurance EXCEPT
- temporary permanent.
- permanent total.
- permanent partial.
4. temporary total. - CORRECT ANSWER 1. temporary permanent."
"The policy conditions as well as state laws permit the insurance company to cancel or rescind a policy when any of the following exist EXCEPT
- concealment.
- fraud.
- misrepresentation.
4. representations. - CORRECT ANSWER 4. representations."
"The law of large numbers states which of the following? - CORRECT ANSWER statistics are
more reliable with more examples used" "Which of the following defines a loss which is consequential and comes as a result of an original
loss? - CORRECT ANSWER indirect loss"
"When an insured has multiple autos insured, what does stacking the UM and UIM (uninsured
and underinsured Motorist) coverage have in terms of benefits available? - CORRECT
ANSWER increases limit of bodily injury to the total sum of bodily injury available on all autos
insured." "Appraisal, subrogation, and cancellation and nonrenewal are all commonly found in insurance
policy conditions. Conditions state legal obligations and duties of the parties. - CORRECT
ANSWER Insuring agreement is NOT part of policy conditions"
"HO policies will pay _______ of a loss assessment as an additional coverage - CORRECT
ANSWER up to $1,000"
"Farm policy Coverage B - Structures would pay how much for loss of an outside antenna, tower,
or satellite dish? - CORRECT ANSWER Up to $1,000"
"If a licensed person is moving to Pennsylvania, he or she may become licensed as a resident if they submit a completed application within how many days of establishing residence in
Pennsylvania with proof of licensing from their prior home state? - CORRECT ANSWER 90"
"which of the following would be considered an insured under a business/auto coverage form? -
CORRECT ANSWER anyone while using, with permission. a covered auto by the named insured
-does not cover the exposure of autos not owned, hired, leased by the named insured."
"Which of the following authorities participated in creating the National Do Not Call Registry? -
CORRECT ANSWER FTC and the FCC"
