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Pearson VUE: Property Insurance
Practice Exam / Complete Study Guide /
Actual Exam Questions & Correct
Answers (Verified Detailed Answers) A
Grade.
_____________Quiz____________? S is purchasing a Commercial Property policy to cover a commercial building with a replacement cost of $100,000. The policy includes an 80 percent Coinsurance clause. To avoid a coinsurance penalty in the event of a partial loss, S should purchase a policy with minimum limits of AT LEAST which of the following amounts? A. $100, B. $90, C. $80, D. $20,000 -
Answer โโ
C
_____________Quiz____________? 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 -
Answer โโ
C
_____________Quiz____________? 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 -
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D
_____________Quiz____________? Special Form or Open Perils coverage: A. Provides coverage against the named perils
B. collapse of the wall C. tornado D. smoke -
Answer โโ
C
_____________Quiz____________? 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 -
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C
_____________Quiz____________? Which of the following terms is defined as the uncertainty of future outcome? A. Risk
B. Hazard C. Peril D. Cause -
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A
_____________Quiz____________? 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 -
Answer โโ
D
_____________Quiz____________? An insured owns an antique marble statue valued at $3,000, which is covered under a Personal Articles Floater. Damage to the statue would be covered in all of the following situations EXCEPT: A. it was accidentally damaged by a housekeeper
C. sinkhole collapse D. earth movement -
Answer โโ
D
_____________Quiz____________? X insures a home for $100,000 under a Dwelling Property Broad Form (DP-2). If a flood causes $1,000 in damage to the home's contents, which of the following MAXIMUM amounts will X's insurer pay? A. $ B. $ C. $ D. $1,000 -
Answer โโ
A
_____________Quiz____________? In order to issue a written binder for a commercial property policy, what is the MINIMUM consideration a producer must secure from an applicant? A. A promise to pay the premium
B. A signature on a premium finance agreement C. Payment of six months' premium D. Payment of twelve months' premium -
Answer โโ
A
_____________Quiz____________? An insured owns a set of six drawing pens designed and used by Benjamin Franklin. Each pen is worth $1,000 alone, but the set is worth $12,000. One pen is destroyed by a covered peril. Under the Pair and Set clause, the insurer will pay a MAXIMUM of which of the following amounts? A. $1, B. $2, C. $7, D. $12,000 -
Answer โโ
C
_____________Quiz____________? Pro-rata cancellation occurs when: A. a policy is nonrenewed
C. make inspections and surveys of insured property D. prepare an inventory after a loss -
Answer โโ
A
_____________Quiz____________? An applicant's statement included in the insurance contract that the property to be insured has an operable sprinkler system is: A. agency binding authority B. a warranty C. a representation D. an affidavit -
Answer โโ
B
_____________Quiz____________? 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 -
Answer โโ
D
_____________Quiz____________? 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. -
Answer โโ
D
_____________Quiz____________? 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. notify the police if the loss is the result of theft D. protect the property from further loss -
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B
_____________Quiz____________? 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 -
Answer โโ
B
_____________Quiz____________? 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 -
Answer โโ
D
_____________Quiz____________? A family takes their 50 horsepower outboard motor boat to the lake on a trailer towed behind their personal auto. The pleasure boat is appropriately covered for physical damage under which of the following policies? A. Dwelling B. Homeowners C. Boatowners D. Yacht -
Answer โโ
C
_____________Quiz____________? Which of the following policy forms would BEST protect a business that must keep operating after a loss? A. Extra Expense B. Business Income
C. The cause of a loss D. An unexpected loss -
Answer โโ
A
_____________Quiz____________? A building adjacent to an insured's business is severely damaged by fire. Because of the nature of the damage to the adjoining property, the insured is denied access to the business by the fire department. If the insured's property is covered under a Business Income Coverage Form, the insurer will cover the loss of earnings for a MAXIMUM of: A. three weeks B. thirty days C. sixty days D. six months -
Answer โโ
A
_____________Quiz____________? Which of the following statements is CORRECT about the Fair Credit Reporting Act? A. It requires an insurer to send to an applicant a copy of the applicant's credit report. B. It requires an insurer to obtain a credit report on an applicant.
C. It allows an insurer to obtain a credit report without the applicant's permission. D. It provides a method for an applicant to correct any incorrect information in the credit report. -
Answer โโ
D
_____________Quiz____________? The procedure for resolving a disagreement between an insured and an insurer about a loss is described in which of the following parts of an insurance policy? A. Declarations B. Insuring Agreement C. Conditions D. Exclusions -
Answer โโ
C
_____________Quiz____________? Under a Personal Property Floater, a loss is covered when it occurs: A. in the insured's home only B. in the United States only
D. real property -
Answer โโ
D
_____________Quiz____________? 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 -
Answer โโ
C
_____________Quiz____________? G insures G's television repair shop under a Building and Personal Property Coverage Form with limits of $100,000 on the building and $50,000 on business personal property. A fire causes $10,000 in damage to the building and $20,000 in losses to the contents. G also has to pay $1,000 for debris removal. If the policy has a deductible of $250, G will receive a MAXIMUM of which of the following amounts from the insurer? A. $29, B. $30,
C. $30,
D. $31,000 -
Answer โโ
C
_____________Quiz____________? 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 -
Answer โโ
D
_____________Quiz____________? Actual cash value is most often defined as which of the following options? A. Replacement cost less depreciation B. Amount paid less depreciation
