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Louisiana Property & Casualty Exam - PSI &
Exam FX EXAM 2025 | ACTUAL REAL EXAM
ACCURATE QUESTIONS AND ANSWERS
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1. Which provision defines how the policy will respond if there is other valid insurance written on the same risk? a) Primary and excess coverage b) Coinsurance clause c) Other insurance ✅ d) Contribution by equal shares Rationale: The "Other Insurance" provision outlines how a policy will respond when multiple insurance policies cover the same risk. 2. An insurer must notify the consumer in writing that an investigative consumer report has been requested, within how many days of the initial request? a) 3 days ✅ b) 5 days c) 7 days d) 10 days Rationale: According to the Fair Credit Reporting Act, insurers must notify consumers within 3 days of requesting an investigative report. 3. The obligation to compensate injured workers without regard to fault or negligence is known as... a) Absolute liability ✅ b) Comparative fault c) Strict negligence d) Vicarious liability
Rationale: Absolute liability means compensation must be provided regardless of negligence or fault, often applied in workers' compensation.
4. Under Coverage B – Other Structures in a homeowners policy, which of the following statements is NOT true? a) It covers structures detached from the dwelling b) Any loss paid under Coverage B reduces the Coverage A limit of liability ❌ c) It includes structures like detached garages d) Coverage is 10% of Coverage A Rationale: Coverage B does not reduce the Coverage A limit. It provides a separate automatic 10% of Coverage A. 5. An applicant may challenge information discovered in an investigative consumer report under which Act? a) Fair Credit Reporting Act ✅ b) Consumer Rights Protection Act c) Credit Information Privacy Act d) Federal Privacy Disclosure Act Rationale: The Fair Credit Reporting Act gives consumers the right to dispute inaccurate information in consumer reports. 6. Two men own a moving company and use two trucks for business. Which policy should they use? a) Business auto policy ✅ b) Personal auto policy c) Garagekeepers policy d) Fleet insurance policy Rationale: A business auto policy is appropriate for vehicles used in a business, especially when not part of a larger fleet. 7. Which of the following risks is eligible under a dwelling policy form? a) A duplex with each family renting a bedroom to a boarder ✅ b) A 4-family apartment complex
c) Robbery inside premises d) Computer fraud Rationale: The Extortion endorsement applies when property is surrendered under threat of harm.
12. Which of the following would qualify as a competent party in an insurance contract? a) A minor applying for life insurance b) A person under the influence c) An individual declared mentally incompetent d) An applicant with a prior felony conviction ✅ Rationale: A felony conviction does not bar someone from entering a contract if they are otherwise competent. 13. If a producer allows a license to lapse, within how long may it be reinstated without retesting? a) 1 year b) 2 years ✅ c) 3 years d) 6 months Rationale: Most states allow reinstatement within 2 years, provided CE and fees are current. 14. Who is eligible for Homeowners Coverage F – Medical Payments? a) A friend living rent-free in the home b) A live-in boyfriend c) The insured’s minor child d) A full-time maid ✅ Rationale: Coverage F applies to guests and resident employees, not to residents or family members. 15. Which of the following is NOT true of commercial umbrella liability policies? a) It would automatically cover all losses as they occur ❌ b) They require minimum primary coverage
c) They may include self-insured retention d) They provide excess liability protection Rationale: Umbrella policies don’t automatically cover all losses; coverage depends on retention and underlying coverage.
16. Which of the following perils is NOT covered by DP-2? a) Falling objects b) Weight of ice or snow c) Damage to pets, birds, or fish ✅ d) Accidental discharge of water Rationale: Animals such as pets, birds, or fish are excluded under all dwelling forms. 17. Which is NOT true of workers’ compensation coverage? a) Covers job-related injuries b) Provides disability benefits c) Medical payment benefits are limited ❌ d) Is required by law in most states Rationale: Workers' compensation provides unlimited medical benefits for covered injuries. 18. Which of the following is NOT included in a garage policy? a) Liability for vehicles being serviced b) Physical damage on a customer's auto ✅ c) Garagekeeper’s legal liability d) Dealers’ blanket coverage Rationale: A garage policy does not automatically include coverage for damage to customers’ vehicles unless garagekeepers coverage is added. 19. Which of the following groups may NOT be insured under a group life insurance policy? a) Employees of a single employer b) Members of a labor union c) Members of a professional association d) Individuals who are related by blood ✅
c) Less restrictive in triggering events ✅ d) No difference in claims handling Rationale: “Accidental bodily injury” requires only that the injury be accidental, not the cause, making it less restrictive than “accidental means.”
24. Why would the insurance commissioner examine an insurance company's records every five years? a) To approve new policy forms b) To enforce underwriting guidelines c) To calculate market share d) To determine the company’s solvency ✅ Rationale: Regular examinations ensure that insurers remain financially sound and can meet obligations. 25. Which of the following is TRUE about Medicaid? a) It is funded solely by the state b) It is funded by both state and federal governments ✅ c) It is only for people over 65 d) It provides only emergency coverage Rationale: Medicaid is a joint federal-state program offering health coverage to low-income individuals of all ages. What type of policy, which may be added by endorsement or purchased separately, may an insured purchase in order to provide coverage for other types of contracts? - ANSWER a) A contractual liability policy In order to provide coverage for other types of contracts, the insured may purchase a contractual liability policy, which may be added by endorsement or purchased separately. With this coverage, the insurer agrees to pay for bodily injury or property damage liability that the insured has agreed to assume under a written contractual agreement.
A small appliance manufacturer in this state provides products around the globe. A customer in Switzerland is injured using one of its products. If the appliance manufacturer is found liable for the damage, why would its commercial general liability policy cover the customer's claim for bodily injury?
- ANSWER b) The appliance was manufactured in the U.S. Coverage territory means anywhere in the world if injury or damage results from goods or products manufactured or sold in a coverage territory. Insureds covered under a Mobile Homeowners Policy move their mobile home to prevent it from being damaged by a fire. What is the maximum amount the policy will pay for this?
- ANSWER b) $ A Mobile Homeowners Policy will pay up to $500 if the insured moves the mobile home to a safer area to protect it from loss by a covered peril. The garage policy has a care, custody and control exclusion which would eliminate coverage for any damage to a customer's auto. This exposure would need to be covered under a garagekeepers policy. Which of the following injuries under Coverage C - Medical Payments of a commercial general liability policy? - ANSWER b) Injuries to a member of the general public that occurs on premises Medical payments coverage makes payment of necessary medical & first aid for injuries to third parties occurring on the insured premises, regardless...
The defendant has made a promise to show up in court at the specified time. The principal makes a promise to perform. Which of the following types of property would be covered under Coverage C - Personal Property in a dwelling policy? - ANSWER d) Rowboats Aircraft designed for flights 7 carrying people, motor vehicles, and motor-powered boats are excluded. However, rowboats & canoes would be covered. Which of the following terms means termination of an insurance policy at its expiration date by not offering a policy continuation or replacement? - ANSWER d) Nonrenewal Nonrenewal is the termination of an insurance policy at its expiration date by not offering a continuation of the existing policy or a replacement policy. According to the Insured Duties after a Loss provision in homeowners policies, in the event of loss, the insured must do all of the following EXCEPT... - ANSWER a) Promptly hire an adjuster to evaluate the property damage. Hiring an adjuster is not one of the requirements for the insured. The rest of the options are required insured's duties. How long is the period of time in which a licensee must renew his or her license? - ANSWER c) 90 days prior to expiration Licensees may renew their license 90 days prior to its expiration.
Which of the following would NOT be eligible for coverage under a personal auto policy? - ANSWER b) A vehicle purchased 90 days ago A covered auto includes automobiles listed in the declarations, owned trailers, newly acquired autos (for 30 days), nonowned temporary substitute vehicles, and additional temporary vehicles due to repair, servicing, breakdown, or loss. What is the waiting period for transportation expenses coverage for a loss other than theft of a covered vehicle? - ANSWER b) 24 hours Expense payments begin after a 24- hour waiting period for reasons other than theft. In order to get a nonresident license in Louisiana, producers must - ANSWER a) Apply & pay a fee to a nonresident state that reciprocates In order to get a nonresident license in this state, producers must apply & pay a fee to a nonresident state that reciprocates. All of the following are true about the cancellation provision of a commercial insurance policy EXCEPT... - ANSWER a) The insurer is required to provide proof that the insured received the cancellation notice prior to cancelling the policy. If the notice of cancellation is mailed, the insurance company is not required to prove that the insured actually received the notice. It is required to prove only it was mailed to the first named insured at the mailing address as shown on the policy.
Coverage B - Personal and Advertising Injury Liability responds to claims arising from... - ANSWER a) Suits alleging infringement of a copyright. Coverage B combines both personal injury and advertising injury into a single insuring agreement and limit of liability. Which of the following is NOT found in a commercial package policy? - ANSWER a) Common policy declarations b) Interline endorsements c) Certificate of authority d) Common policy conditions A liability policy that provides coverage for a claim for injury or damage if the claim is first reported or filed against the insured during the policy period is called... - ANSWER Claims-made form In which type of commercial crime policy coverage is triggered by a loss that happens during the policy period but is not necessarily discovered during the policy peri - ANSWER Robbery is: - ANSWER Taking of property by use of force, violence, or fear The crime of forced entry into the premises of another by a persons with felonious intent is defined as: - ANSWER Burglary Erroneous Publishing copied all the material from Angel's Inc 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 filed a claim against Erroneous and seeks damages. Will a commercial policy cover the claim? - ANSWER No, because the claim results from copyright infringement and is not in an advertisement Supplemental payments on a CGL provide all of the following EXCEPT: - ANSWER Up to $500 a day for lost earnings and $2,000 for the cost of bail bonds The occurrence form trigger is based on which of the following? - ANSWER When notice is received and recorded by any insured or the insurer, whichever comes first The transfer of money from inside a banking premises to a person other that the messenger outside those premises or to a place outside those premises is covered under which commercial crime coverage? - ANSWER Computer Fraud
- ANSWER A written agreement which indemnifies a person for fire damage to the premises rented to the insured Rita drops off her wedding gown at Vicky's Dry Cleaners for a final pressing. The store's press breaks so Vicky takes Rita's dress to her other store across town. On the way to the other store, Vicky is held at gunpoint until she gives the man the wedding dress. What crime coverage form would pay for the loss of the gown in this situation? - ANSWER Extortion - Commercial Entities A liability policy that provides coverage for a claim for injury or damage if the claim is first reported or filed against the insured during the policy is called: - ANSWER
The claims-made trigger is based on which of the following? - ANSWER
- ANSWER The date the claim is first made in writing against an insured for injury or damage that occurred on or after the policy's retroactive date The commercial general liability coverage form excludes bodily injury or property damage that the insured has assumed under any contract or agreement. However, the exclusion does not apply to certain types of contracts, as long as the injury or damage occurs - ANSWER
- ANSWER After the execution of the contract Which of the following liability exposures is most likely for a small specialty clothing retail boutique? - ANSWER
- ANSWER Premise liability exposure Burglary is defined as - ANSWER
- ANSWER Taking of property from within the premises leaving visible signs of forced entry Which of the following would be covered under the crime coverage inside the premises - theft of money and securities? - ANSWER
- ANSWER Loss or damage to a locked safe, vault, or cash register
Which commercial crime form would provide coverage for a loss that did not necessarily happen during the policy period but was revealed during the policy period? - ANSWER
- ANSWER Discovery form B&B Market was sued when an employee detained a person he believed to be a shoplifter, but the person turned out to be a meter reader. Which coverage would apply to this suit? - ANSWER
- ANSWER Personal and advertising injury liability All of the following are supplemental payments found in a liability policy EXCEPT: - ANSWER
- ANSWER Costs the insured incurred in hiring an attorney Under the workers compensation system, who is responsible for the expenses resulting from work-related injuries and occupational diseases? - ANSWER
- ANSWER The employer, regardless of whether it was at fault for the injury or the disease Which of the following is NOT eligible to elect not to be covered under the Workers Compensation laws? - ANSWER
- ANSWER Permanent partial disability Which of the following terms refers to a person's ability to do some work or the need to do alternative work? - ANSWER
- ANSWER Temporary partial disability If an employer in a state with elective works compensation laws chooses not to be subject to those laws, what does the employer lose? - ANSWER
ANSWER Its common law defense against liability suits The voluntary compensation endorsement provides statutory coverage for which types of employees? - ANSWER
- ANSWER Farmworkers Employment practices liability insurance (EPLI) would NOT cover claims arising from: - ANSWER
- ANSWER Deliberate law violation An insured invites his neighbor out for a day on the water in his boat powered with a 150hp outboard motor. While attempting to tie the boat to the dock, his neighbor's hand is broken when caught between the boat and the dock. What coverage would apply to the broken hand? - ANSWER
- ANSWER The insured's boatowner's policy Which bond is required by a court before allowing one to take the assets of another to satisfy a legal obligation? - ANSWER
- ANSWER Attachment bond Which of the following statements would be correct if an insured failed to maintain the underlying limits as required by a personal umbrella policy? - ANSWER
