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Louisiana Property and Casualty Insurance
Exam 2025 | ALL CURRENT EXAM VERSIONS
2025 | ACCURATE REAL EXAM QUESTIONS
AND ANSWERS | ACCURATE AND VERIFIED
FOR GUARANTEED PASS | GRADED A
Charla wants to serve as a producer for Commissions Galore Insurance Company. In addition to obtaining her producer's license, what else must happen before she can officially transact insurance for CGIC? a) She must submit a list of 5 references to CGIC. b) She must be appointed by the Commissioner. c) She must be appointed specifically by CGIC. d) She must get a certificate of authority.
- ANSWER c) She must be appointed specifically by CGIC. Before a producer can serve as an agent for a given insurance company, the producer must first be appointed by the company. The main difference between an HO-4 and an HO-6 is a) HO-6 provides limited dwelling coverage as well as contents coverage. b) HO-4 does not cover additional living expenses. c) HO-6 does not cover additional living expenses.
d) HO-4 provides limited dwelling coverage as well as contents coverage. - ANSWER a) HO-6 provides limited dwelling coverage as well as contents coverage. HO-4 provides no dwelling coverage because a tenant does not own the dwelling; the condo owner does own the condo and is provided with coverage for improvements. Both HO-4 and HO-6 cover theft and additional living expenses. Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses? a) Insuring agreement b) Additional coverage c) Exclusions d) Declarations
- ANSWER b) Additional coverage The additional coverage portion of a policy provides an additional amount of coverage for specific loss expense, at no additional premium. Which of the following would not be a violation of Louisiana insurance regulations? a) Producer B charges his clients, in addition to the premium, a consulting fee. b) Producer C uses her license to write uncontrolled business only.
d) The Safe Depository Direct Loss Provisions
- ANSWER c) The Safe Depository General Provisions When this coverage is written, the Safe Depository General Provisions must be attached to the policy instead of the general provisions. Which of the following is NOT a goal of risk retention? a) To increase control of claim reserving and claims settlements b) To fund losses that cannot be insured c) To minimize the insured's level of liability in the event of loss d) To reduce expenses and improve cash flow - ANSWER c) To minimize the insured's level of liability in the event of loss Retention usually results from three basic desires of the insured: to reduce expenses and improve cash flow, to increase control of claim reserving and claims settlements, and to fund losses that cannot be insured. Workers compensation statutes require employers to meet capital reserves requirements sufficient to pay any claims that might arise. Employers can meet such obligations through all of the following EXCEPT a) Self-insurance plans. b) Assigned risk plans. c) Competitive state funds. d) Second injury funds programs.
- ANSWER d) Second injury funds programs. Second injury funds are a method by which employers manage the risks associated with the hiring of previously injured potential employees. What is a definition of a unilateral contract? a) Two or more parties go into a contract understanding there may be an unequal exchange of value. b) One author: the company wrote the contract; the insured must accept it as written. c) If one party makes a condition, the other party can counteroffer. d) One-sided: only one party makes an enforceable promise. - ANSWER d) One-sided: only one party makes an enforceable promise. An insurance contract is unilateral in that only one of the parties to the contract is legally bound to do anything. The premises liability exposure exists when there is use of the premises. Operations liability exposure relates to activities in addition to use. Product liability exposure is the possibility that the public might be injured by the product. Completed operations liability refers to liability for work already performed or completed. For a boutique retail store, the only possible liability would arise from customer injury while on the premises. All of the following are true of Coverage B - Other Structures EXCEPT a) It must be added by endorsement to a homeowners policy.
a) $1,000. b) $2,000. c) $3,000. d) $4,000. Antennas, towers, and satellite dishes attached to the dwelling are covered under Coverage A, but have a special limit of insurance of $1,000 in any 1 occurrence. - ANSWER a) $1,000. Antennas, towers, and satellite dishes attached to the dwelling are covered under Coverage A, but have a special limit of insurance of $1,000 in any 1 occurrence. If a guest's property is lost or damaged while on the insured's premises or in their control, Crime Coverage Form L - Liability for Guests' Property - Premises covers the insured's a) General liability. b) Crime liability. c) Employee liability. d) Legal liability.
- ANSWER d) Legal liability. This coverage is similar to Coverage K, except that it covers the insured's legal liability for loss or damage to guest's property while on the insured's premises or in their control.
Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information? a) Consumer Privacy Act b) The Fair Credit Reporting Act c) Unfair Trade Practices Law d) The Guaranty Association
- ANSWER b) The Fair Credit Reporting Act The purpose of the Fair Credit Reporting Act is to protect consumers against the circulation of inaccurate or obsolete information and to ensure that consumer reporting agencies are fair and equitable in their treatment of consumers. 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 period? a) Loss sustained form b) Retroactive form c) Mysterious disappearance form d) Discovery form - ANSWER a) Loss sustained form Loss sustained crime coverage pays for losses that occur during the policy period and are found for up to 1 year after the policy is terminated.
c) Open peril coverage on the dwelling and basic form coverage on personal property. d) Basic coverage for the dwelling and broad form coverage for personal property.
- ANSWER b) Open peril coverage on the dwelling and broad form coverage on personal property. The open peril coverage applies to property insured under Coverages A and B only. The Gramm-Leach-Bliley Act was passed to a) Protect private customer information filed with a financial institution. b) Define insurance as interstate commerce. c) Allow consumers access to credit and private consumer reports. d) Allow insurance companies access to medical information for underwriting purposes. - ANSWER a) Protect private customer information filed with a financial institution. The Gramm-Leach-Bliley Act was passed to protect private customer information that is filed with a financial institution. Customers must be given two disclosure notices (one at the onset of business and one before information is disclosed), as well as a yearly updated disclosure notice. An insured carries a property policy on her home in the amount of $250,000. A bank is shown as the mortgagor in the policy. Last month the insured made her final mortgage payment, but did not remove the bank from the policy. In the event of a covered loss to her home, how much will the bank receive? a) The standard minimum of 10% that is paid to lenders
b) All of the payment would be made to the mortgagor shown in the policy. c) Nothing d) Up to the amount of debt that the insured has with the bank - ANSWER c) Nothing Because the bank does not have a financial interest in the house at the time of loss, they will receive nothing. A building insured with commercial property insurance has been vacant 90 days. Which of the following is NOT true? a) Payment for unnamed perils is reduced by 15%. b) Payment for unnamed perils is reduced by 25%. c) The insured has no coverage for losses caused by theft. d) The insured has no coverage for losses caused by glass breakage. - ANSWER b) Payment for unnamed perils is reduced by 25%. If the building has been vacant for more than 60 consecutive days before the loss, the insurer will not pay for damage caused by vandalism, sprinkler leakage, glass breakage, water damage, theft, or attempted theft. If the loss is caused by any other peril, the insurer will reduce the amount they would have otherwise paid by 15%. Personal property coverage under a homeowners policy would cover a) Property moved to a newly acquired residence after 60 days. b) A pet that the insured is temporarily keeping for a friend.
c) It is designed to provide exclusive coverage for the individual owner and provides not coverage for the unit owner. d) This policy form is not approved for use in the states of New York or New Jersey. - ANSWER a) It does not protect the individual owner from loss to personal property owned exclusively by the unit owner. The Residential Condominium Building Association Policy (RCBAP) is used for residential condominium building associations to cover the entire building under one policy, all units, improvements within the units and personal property owned in common is covered with a contents policy. The RCBAP does not protect the individual owner from loss to personal property owned exclusively by the unit owner. With respect to commercial auto policies, the garage coverage form provides liability protection for all of the following EXCEPT a) The insured's business autos. b) The insured's business products and work performed. c) The insured's business income losses due to personal injury. d) The insured's business premises. - ANSWER c) The insured's business income losses due to personal injury. The garage coverage form does NOT cover personal injury and loss of wages from those injuries. Such coverage would be provided by a commercial general liability (CGL) policy. All of the following are unfair claims settlement practices EXCEPT
a) Failing to adopt and implement reasonable standards for settling claims. b) Failing to acknowledge pertinent communication pertaining to a claim. c) Suggesting negotiations in settling the claim. d) Refusing to pay claims without conducting a reasonable investigation. - ANSWER c) Suggesting negotiations in settling the claim. When settling claims, negotiation can come into play. Which of the following statements is true concerning underinsured motorist coverage under a personal auto policy? a) Coverage applies only to the extent that the underinsured motorist limits exceed the bodily injury limits carried by the operator of the other vehicle. b) It will pay up to the limits of insurance for any loss which involves an underinsured driver. c) Limits must equal the bodily injury limits of the policy. d) Limits may differ from the limits for uninsured motorist coverage. - ANSWER a) Coverage applies only to the extent that the underinsured motorist limits exceed the bodily injury limits carried by the operator of the other vehicle. Underinsured motorist coverage will act as excess over the at fault motorist's bodily injury coverage. Bob's home is insured for $100,000 under a dwelling policy. Yesterday his home suffered $20,000 damage from a fire. Today the home was struck by lightning, starting another fire that completely destroyed the structure. Bob's policy will pay
a) Full-time worker b) Part-time worker c) Temporary worker d) Leased worker - ANSWER c) Temporary worker By definition in a CGL, a temporary worker is not considered an employee. Which of the following types of agent authority is also called "perceived authority"? A. Implied B. Fiduciary C. Apparent D. Express - ANSWER C. Apparent Apparent authority (also known as perceived authority) is the appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created. An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied? A. Material misrepresentation B. Waiver
C. Utmost Good Faith D. Estoppel - ANSWER A. Material misrepresentation A material misrepresentation will affect whether or not a policy is issued. If the insured had been truthful, it is very likely that the policy would not be issued. On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are A. Paid at a fixed rate every year. B. Taxable as ordinary income. C. Guaranteed. D. Not taxable since the IRS treats them as a return of a portion of the premium paid. - ANSWER D. Not taxable since the IRS treats them as a return of a portion of the premium paid. With participating policies, policyowners are entitled to dividends, which, in the case of mutual companies, are nontaxable because they are considered a return of excess premiums. In what way can an agent demonstrate a high standard of ethics? A. Recommending qualified retirement plans to each client B. Putting the client's best interests before their own C. Making enough commissions to cover personal expenses
Fiduciary refers to a position of trust. When an agent is handling the premiums that belong to an insurance company, they are acting in a fiduciary capacity. Who might receive dividends from a mutual insurer? A. Stockholders B. Agents C. Policyholders D. Subscribers - ANSWER C. Policyholders A mutual insurer has no stock, and is owned by the policyholders. Since they may receive a dividend (not guaranteed), such policies are known as participating policies. Dividends received by policyholders of a mutual insurer are not taxable. What documentation grants express authority to an agent? A. Fiduciary contract B. State provisions C. Agent's contract with the principal D. Agent's insurance license - ANSWER C. Agent's contract with the principal The principal grants authority to an agent through the agent's contract. If a court ordered payment for a loss that was not covered in the policy even if it was clearly worded, it would be an example of which legal concept?
A. Indemnity B. Reasonable expectations C. Cease and desist D. Nonforfeiture - ANSWER B. Reasonable expectations If, because of advertising or sales literature or statements by an agent, an insured could reasonably expect the coverage, the courts have held that the insurer must provide that coverage. Following a career change, an insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe? A. Reduction B. Transfer C. Avoidance D. Retention - ANSWER A. Reduction The insured's change in lifestyle and habits would likely reduce the chances of health problems. Which of the following does the term proximate cause refer to? A. Duty of the defendant to act
