FREE Property & Casualty Insurance License Questions and Answers

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Through her neighborhood agent, Anna has an insurance policy. A buddy of Anna's started his own insurance company and offered Anna lower rates if she changed her policy to his business. Which method of cancellation will Anna's existing agent employ after receiving her request to cancel her coverage?

Correct! Wrong!

Explanation:
Short rate method. If Anna canceled her policy before it expired, she would be charged a fee. The short-rate approach would be applied to the policy's unused premium by Andrea's carrier. The fine is meant to deter insured parties from switching insurance carriers mid-term and canceling their policies.

Coverage for commercial exposures that move around is called a "commercial property floater." Which kind of commercial exposure might you be interested in purchasing a floater policy on?

Correct! Wrong!

Explanation:
A food cart that makes weekly stops in various places and sells food on it. An insurance type that can be added to a property insurance policy is a commercial property floater. This insurance is made to cover business exposures that move around rather than being retained in one place.

Due to a deer darting out into the road in front of John and colliding with the front of his car, John was in an accident. The first $250 of any loss incurred must be covered by John as part of his other-than-collision insurance policy. In the world of insurance, what is John's $250 payment demand known as?

Correct! Wrong!

Explanation:
The deductible is the amount of the loss settlement that falls under the insured's financial responsibility. Prior to submitting its portion of the remaining loss payment, the insurance carrier requires that the deductible be satisfied. The purpose of the deductible is to hold the insured partially accountable for incurred losses.

Which kind of homeowners insurance is intended for people whose residences are listed on the town's historic registry?

Correct! Wrong!

Explanation:
The HO-8 modified homeowners form is a homeowners product made specifically for the special requirements of historic or other special residences, whose replacement cost exceeds their market value. The fundamental form of coverage is offered by this policy.

Can a warranty that isn't expressly stated in the contract nevertheless be considered enforceable?

Correct! Wrong!

Explanation:
A warranty may not always need to be declared or assumed. A warranty must be in writing, expressed, or inferred depending on the circumstances for it to be enforceable. A warranty is a legal commitment that ensures the accomplishment of a certain sale or its performance.

The following exposures can all be covered by a personal articles floater, which can be a standalone insurance or an endorsement to a homeowners policy, EXCEPT:

Correct! Wrong!

Explanation:
Fine arts, silverware, jewelry, and stamps can be covered by a personal articles floater, which can be a standalone policy or an addition to a homeowners policy. As opposed to what homeowners insurance without the personal items floater endorsement might be able to offer, these types of exposures may have special characteristics or call for greater coverage limits.

In the department of personal lines, Paul worked as an underwriter. He was given an application for a personal umbrella that was filled out completely but was not signed. Paul could offer a provisional notice of coverage in accordance with departmental regulations, but he could not completely issue the policy until the insured had signed the application. What is the full name of this temporary notice of coverage?

Correct! Wrong!

Explanation:
A binder. Until the application was signed, Paul could give his insured a binder. A temporary form indicating that coverage is in place is called a binder. Although a policy must still be issued in full, the binder can be used as a temporary document of insurance protection.

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