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Pearson Vue Property Insurance Exam
Practice Questions with Verified Answers
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Consist of 50 multichoice Questions with Answers
- S is purchasing a Commercial Property policy to cover a commercial build- ing 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, Answer: C
- 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: C
- 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 Answer: D
- Special Form or Open Perils coverage:
A. fire
B. collapse of the wall
C. tornado
D. smoke Answer: C
- 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 exten- sive 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 Answer: C
- Which of the following terms is defined as the uncertainty of future out-
come?
A. Risk
A. it was accidentally damaged by a housekeeper
B. it was damaged in a flood
C. a guest of the insured maliciously damaged it
D. the insured threw it Answer: D
- Which of the following sources may be used to provide property insurabil- ity information?
A. Police records
B. Physical inspections
C. Checking account statements
D. Lie detector tests Answer: B
- All of the following perils are covered under a Building and Business Personal Property Coverage Form with a Causes of Loss-Basic Form attached
EXCEPT:
A. smoke
B. sprinkler leakage
C. sinkhole collapse
D. earth movement Answer: D
- 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. $0 B. $800 C. $ D. $1, Answer: A
- In order to issue a written binder for a commercial property policy, what is the MINIMUM consideration a producer must secure from an applicant?
C. $7,
D. $12,
Answer: C
- Pro-rata cancellation occurs when:
A. a policy is nonrenewed
B. a mortgage has been satisfied
C. an insured cancels a policy at inception
D. an insurer cancels a policy at any time Answer: D
- Inland Marine insurance is commonly used to insure all of the following items EXCEPT:
A. automobiles
B. stamps
C. camera equipment
D. jewelry
Answer: A
- A primary obligation of an insurer is to:
A. pay the claims covered under the policy
B. provide a financial statement with each policy
C. make inspections and surveys of insured property
D. prepare an inventory after a loss Answer: A
- An applicant's statement included in the insurance contract that the prop- erty to be insured has an operable sprinkler system is:
A. agency binding authority
B. a warranty
Answer: D
- A Commercial Property policy specifies which of the following responsi- bilities 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. To pay the mortgagee in full in the event of a total loss
D. To pay premiums within thirty days after receiving an invoice Answer: B
- An insured's HO-2 Form has a $100,000 coverage limit on the dwelling and a $50,000 Personal Property limit with the standard deductible. If a sailboat valued at $1,500 is stolen from the insured's premises, the insured will collect a MAXIMUM of which of the following amounts?
A. $1,
B. $1,
C. $1,400 D.
Answer: B
- Under a Homeowners policy, an insured is required to take all of the following actions when a covered loss occurs EXCEPT:
A. give prompt notice to the insurer or its producer
B. hire an appraiser to determine the amount of loss
C. notify the police if the loss is the result of theft
D. protect the property from further loss Answer: B
- 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
covered for physical damage under which of the following policies?
A. Dwelling
B. Homeowners
C. Boatowners
D. Yacht Answer: C
- 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. Gross Earnings
D. Contingent Business Interruption Answer: A
- Which of the following perils is covered by Broad Form perils but is not covered by the Basic Form?
A. Vandalism
B. Weight of ice and snow
C. Riot
D. Windstorm Answer: B
- Which of the following phrases BEST defines a hazard?
A. A condition that increases the chance of a loss
B. The uncertainty of a loss
C. The cause of a loss
D. An unexpected loss Answer: A
D. It provides a method for an applicant to correct any incorrect information in the credit report. Answer: D
- The procedure for resolving a disagreement between an insured and an in- surer 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: C
- 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
C. in the United States or Canada only
D. anywhere in the world Answer: C
- Which of the following perils is covered under the Commercial Property Basic Cause of Loss form?
A. Collapse
B. Sinkhole collapse
C. Falling objects
D. Breakage of glass Answer: B
- All of the following items are included in the Nationwide Marine definition EXCEPT:
A. imports and exports
