FREE ExamFX Property and Casualty Insurance Questions and Answers
What does a homeowners insurance policy typically cover?
A standard homeowners insurance policy provides coverage for the dwelling structure, personal property, liability for injuries or damages, and additional living expenses if the home becomes uninhabitable due to a covered peril.
What is the primary purpose of liability coverage in an auto insurance policy?
Liability coverage in auto insurance protects the insured financially by covering damages or injuries they are legally responsible for causing to others. It does not cover the insured’s own vehicle or medical expenses.
What is the difference between replacement cost and actual cash value?
Replacement cost pays for the cost to replace damaged property with a new one of similar kind and quality. Actual cash value reimburses based on the item's value at the time of loss, factoring in depreciation.
What type of insurance policy covers businesses against losses due to employee dishonesty?
A fidelity bond is a type of insurance that protects a business from financial losses due to fraudulent acts or dishonesty by its employees, such as theft or embezzlement.
Which of the following is an example of a peril covered by property insurance?
A peril refers to a specific cause of loss, such as fire, theft, or windstorm. Property insurance typically covers losses caused by these perils, but it does not cover damages resulting from wear and tear, negligence, or intentional acts.