CAS CAS Property and Casualty Insurance Fundamentals

Question 1

Which of the following best describes the principle of indemnity in property and casualty insurance?

Accepted Answer

The insured should be restored to the same financial position as before the loss, no more and no less

Answer

The insured is entitled to receive the full policy limit regardless of actual loss

Answer

The insurer must pay the replacement cost of all damaged property

Answer

The insured may collect from multiple insurers for the same loss

Question 2

In US property and casualty insurance, what does 'occurrence basis' coverage mean?

Accepted Answer

Coverage applies to losses that occur during the policy period, regardless of when the claim is filed

Answer

Coverage applies only to claims filed during the policy period

Answer

Coverage is triggered when the insured discovers the loss

Answer

Coverage applies only when the insured reports the loss within 30 days

Question 3

What is the purpose of a deductible in a property and casualty insurance policy?

Accepted Answer

To reduce moral hazard and share risk between insurer and insured

Answer

To increase premium revenue for the insurer

Answer

To penalize insureds who file frequent claims

Answer

To comply with state minimum coverage requirements

Question 4

Which coverage part of a commercial general liability (CGL) policy covers bodily injury and property damage claims arising from the insured's products?

Accepted Answer

Products-completed operations hazard

Answer

Premises and operations coverage

Answer

Personal and advertising injury coverage

Answer

Medical payments coverage

Question 5

What is subrogation in the context of property and casualty insurance?

Accepted Answer

The insurer's right to pursue a third party that caused an insurance loss to the insured

Answer

The process of transferring a policy from one insurer to another

Answer

The insured's right to assign policy benefits to a third party

Answer

The reinsurer's assumption of the primary insurer's obligations

Question 6

In the US, what is the primary purpose of workers' compensation insurance?

Accepted Answer

To provide wage replacement and medical benefits to employees injured on the job, regardless of fault

Answer

To protect employers from OSHA fines and regulatory penalties

Answer

To cover employee lawsuits against employers for unsafe working conditions

Answer

To fund state unemployment insurance programs