CALA Property & Casualty Insurance Coverage 1 — Questions and Answers
Question 1: What is typically covered under a standard homeowner's insurance policy?
- Flood damage
- Earthquake damage
- Intentional damage
- Fire damage (Correct answer)
Correct answer: Fire damage
Standard homeowner's insurance generally covers the structure, personal belongings, liability, and additional living expenses in case of a covered loss.
Question 2: Which of the following best describes liability coverage in an auto insurance policy?
- Coverage for theft of the vehicle
- Coverage for weather damage
- Coverage for your own injuries
- Coverage for injuries or damage caused to others (Correct answer)
Correct answer: Coverage for injuries or damage caused to others
Liability coverage pays for bodily injury and property damage to others caused by the insured's negligence.
Question 3: What is the purpose of a deductible in a property insurance policy?
- To increase claim payments
- To eliminate small claims (Correct answer)
- To cover third-party liability
- To provide extra living expenses
Correct answer: To eliminate small claims
The deductible is the amount the insured must pay out-of-pocket before the insurance company covers the rest of the claim.
Question 4: Which of the following is usually NOT covered under a commercial general liability (CGL) policy?
- Bodily injury to a customer
- Property damage to a third party
- Legal defense costs
- Intentional acts by the insured (Correct answer)
Correct answer: Intentional acts by the insured
Intentional acts are excluded from coverage under a CGL policy because they are not considered accidental or negligent.
Question 5: In property insurance, what is 'actual cash value' (ACV)?
- The cost to buy a brand-new item
- The cost to repair the property
- The depreciated value of the item (Correct answer)
- The insured amount on the policy
Correct answer: The depreciated value of the item
Actual cash value is the replacement cost of the item minus depreciation, reflecting the item's current market value.
Question 6: What does comprehensive coverage in an auto policy typically include?
- Damage from a car accident
- Mechanical breakdowns
- Vandalism and theft (Correct answer)
- Driver negligence
Correct answer: Vandalism and theft
Comprehensive coverage protects against damage not involving a collision, such as theft, vandalism, or natural disasters.
CALA Property & Casualty Insurance Coverage 1
What is typically covered under a standard homeowner's insurance policy?