P-C Exam Secrets Test Prep Staff - Property & Casualty Exam Practice Questions: P-C Practice Tests & Review for the Property & Casualty Insurance Exam

Table of Contents

1. A surety bond is a contract between three parties.Which of the three parties guarantees the contract will be fulfilled in itsentirety?

a. The guarantee
b. The guarantor
c. The reinsurance carrier
d. The guarantee and guarantor

2. A surety bond is a type of insurance contract thatinvolves at least three parties. Which party is responsible for actuallyperforming the work being insured?

a. The principal
b. The guarantor
c. The obligee
d. The obligee and principal

3. What makes a fidelity bond different from a regularbond?

a. Fidelity bonds can be traded.
b. Fidelity bonds can accrue interest.
c. Fidelity bonds cannot be traded.
d. Regular bonds cannot be traded.

4. Trevor recently purchased his first home. Trevor issearching for an insurance policy to protect his home, which is valued at$250,000. One carrier is requiring Trevor to purchase limits of at least 80% ofwhat his home is worth. What requirement does this insurance carrier have whichrequires 80% of the value to be insured?

a. Coinsurance clause
b. Co-pay clause
c. Deductible clause
d. Valued added clause

5. In order for a person to purchase an insurance policy,what is the potential insured required to have in relation to the exposurebeing insured?

a. Signed proof of ownership
b. Full premium payment up front
c. Proof of funds to pay future premium payments
d. An insurable interest in the exposure

6. Insurance carriers use different means of collectingdata in order to determine the rates for their products. What is one conceptinsurance carriers use that believes that as the sample size in question grows,the average of results obtained from this sample will be closer to the expectedvalue?

a. Probability theory
b. Law of large numbers
c. Insurance rate probability
d. Law of probability

7. Scott purchased stocks as a means of investing hismoney in hopes of a great return. What type of risk is Scott taking bypurchasing stocks?

a. Pure risk
b. Stable risk
c. Assumed risk
d. Speculative risk

8. Simon purchased a car with his savings from the pastthree years. What type of risk is Simon taking by purchasing his new car?

a. Pure risk
b. Stable risk
c. Assumed risk
d. Speculative risk

9. Builders risk insurance is often a requirement ofwhich party the contractor has a contract with?

a. The future homeowner
b. The owner of the land
c. Local city government
d. Builders risk insurance is never a requirement but rather just somethingpreferred by builders.

10. Builders risk insurance policies typically excludeall the following exposures EXCEPT

a. flood.
b. wind in coastal areas.
c. theft.
d. earthquake.

11. Martin was the owner of a large media corporation thatoperated out of a single building downtown. Martins building was badly damagedfrom a hurricane and had to close for several weeks for repair. Which of thefollowing was an indirect loss of the hurricane?

a. The building damage
b. Lost wages from employees not being able to work
c. The sidewalk requiring repair outside of Martins building
d. The roof leaking from strong winds

12. Kendalls house was located right on the beach in apopular shore town. Kendalls town sustained significant wind damage andflooding following a tropical storm. Which of the following is a direct lossKendall suffered from the tropical storm?

a. Hotel costs while her house is repaired
b. Damage to her roof requiring repair
c. Inconvenience of having a longer commute to work due to living in a hotel
d. Increased cost of food due to having to eat at restaurants instead of beingable to cook at home

13. All of the following are types of hazards which causeconcern for insurance companies as they assume different risks EXCEPT

a. age hazard.
b. moral hazard.
c. morale hazard.
d. physical hazard.

14. Peter was cleaning up his yard after a heavy storm hithis area the previous night. The storm brought damage such as broken treelimbs, branches, and leaves scattered across Peters yard. Peter raked up allthe debris but left it on his sidewalk without properly putting it in trashbags for removal. Peter leaving the debris on his sidewalk where the publicwalks through represents what type of hazard?

a. Moral hazard
b. Physical debris removal hazard
c. Morale hazard
d. Physical hazard

15. What type of hazard exists when the insureds attitudeis poor towards the care or maintenance of the property because the insuredknows insurance will cover any losses that may occur?

a. Moral hazard
b. Ethical hazard
c. Morale hazard
d. Physical hazard

16. Brenton needed to obtain an insurance policy in orderto rent an apartment. Brenton has a terrible credit score but knew he needed tolie about his credit in order to get this apartment. He lied on his insuranceapplication about his credit history in hopes that the company would not checkhis credit report. What type of hazard did Brenton participate in?

a. Moral hazard
b. Ethical hazard
c. Morale hazard
d. Physical hazard

17. The declarations page, or dec page, of an insurancepolicy contains all the following information EXCEPT

a. the name of the insured.
b. policy limits.
c. location of risk being insured.
d. policy exclusions.

18. Which section of the insurance policy will indicatewhat hazards the insured is protected against through the policy?

a. The declarations
b. The insuring agreement
c. The exclusions
d. The hazards agreement

19. The insurance contract contains multiple sections toaddress what the policy covers, who is covered and when coverage will end. Whatsection of the insurance contract or policy states how the policy will handlechanges in coverage during the policy period?

a. The declarations
b. The insuring agreement
c. Policy conditions
d. Policy exclusions

20. Terrance was reading over his insurance policy to seeif he had the proper coverage he felt his exposures required. Terrance readthat his vehicle was covered except if he was driving the vehicle for a reasonother than personal use. Which section is Terrance reading which would say thisvehicle did not have coverage during specific times?