ExamFX Property and Casualty Insurance

Question 1

What does a homeowners insurance policy typically cover?

Accepted Answer

The dwelling, personal property, liability, and additional living expenses

Answer

Only the dwelling structure

Answer

The dwelling and automobile damages

Answer

Only theft and fire-related incidents

Question 2

What is the primary purpose of liability coverage in an auto insurance policy?

Accepted Answer

To pay for damages or injuries the insured causes to others

Answer

To pay for the insured's car repairs

Answer

To cover medical expenses for the insured

Answer

To replace a stolen vehicle

Question 3

What is the difference between replacement cost and actual cash value?

Accepted Answer

Replacement cost reimburses for the full cost to replace damaged property, while actual cash value subtracts depreciation

Answer

Replacement cost considers depreciation, while actual cash value does not

Answer

Actual cash value is always higher than replacement cost

Answer

Replacement cost applies only to liability claims

Question 4

What type of insurance policy covers businesses against losses due to employee dishonesty?

Accepted Answer

Fidelity Bond

Answer

Commercial General Liability (CGL)

Answer

Business Owner’s Policy (BOP)

Answer

Inland Marine Policy

Question 5

Which of the following is an example of a peril covered by property insurance?

Accepted Answer

Fire damage to the dwelling

Answer

Negligence by the homeowner

Answer

Wear and tear over time

Answer

Intentional damage caused by the insured