FREE Property & Casualty Insurance License Test Property Policy Provisions Questions and Answers

Question 1

Which of the following property policy provisions allows an insurer to take possession of damaged property after paying a total loss, often to sell it for salvage value?

Accepted Answer

Abandonment

Answer

Subrogation

Answer

Appraisal

Answer

Salvage Clause

Question 2

A homeowner's policy includes a Coinsurance clause requiring the insured to maintain coverage equal to at least 80% of the property's value. If a home valued at $300,000 is insured for $200,000, and suffers a $50,000 covered loss, how much will the policy pay (ignoring deductible)?

Accepted Answer

$33,333

Answer

$50,000

Answer

$41,667

Answer

$40,000

Question 3

The 'No Benefit to Bailee' provision in a property policy states that a bailee cannot benefit from the insured's policy. What is the primary purpose of this provision?

Accepted Answer

To encourage bailees to carry their own insurance for property in their care, custody, or control

Answer

To prevent the bailee from being held liable for damages

Answer

To ensure the insured always receives full reimbursement for losses

Answer

To allow the insurer to subrogate against the bailee for damages

Question 4

An insured's garage is damaged by a fire. The insured and the insurer cannot agree on the amount of loss. Which policy provision would typically be invoked to resolve this dispute?

Accepted Answer

Appraisal clause

Answer

Arbitration clause

Answer

Subrogation clause

Answer

Salvage clause

Question 5

The 'Other Insurance' provision in a property policy is designed to:

Accepted Answer

Prevent an insured from collecting more than the actual loss when multiple policies cover the same property.

Answer

Increase the total amount of coverage an insured can receive from multiple policies.

Answer

Allow an insured to choose which policy pays for a loss.

Answer

Ensure that all concurrent policies contribute equally to a loss, regardless of their limits.

Question 6

Which policy provision allows an insurer to recover payment from a third party who caused a loss, after the insurer has paid its insured?

Accepted Answer

Subrogation

Answer

Assignment

Answer

Severability

Answer

Liberalization