New York State Exam New York State Insurance License Exam 2 — Questions and Answers
Question 1: Under New York's no-fault auto insurance law, what is the minimum required Personal Injury Protection (PIP) coverage per person?
- $25,000
- $30,000
- $50,000 (Correct answer)
- $100,000
Correct answer: $50,000
New York requires a minimum of $50,000 in Personal Injury Protection (no-fault) coverage per person for all personal auto insurance policies.
Question 2: What type of life insurance provides a death benefit only if the insured dies within a specified period and accumulates no cash value?
- Whole life insurance
- Universal life insurance
- Term life insurance (Correct answer)
- Variable life insurance
Correct answer: Term life insurance
Term life insurance provides pure death benefit protection for a defined period with no cash value accumulation; if the insured outlives the term, coverage ends with no payout.
Question 3: What is 'subrogation' in insurance?
- The policyholder's right to cancel a policy within the free-look period
- The insurer's legal right to pursue a negligent third party after paying a claim (Correct answer)
- The process of transferring a life insurance policy to a new owner
- The method of calculating the replacement cost of insured property
Correct answer: The insurer's legal right to pursue a negligent third party after paying a claim
Subrogation is the insurer's right to step into the insured's shoes and seek reimbursement from the negligent third party responsible for the loss, after paying the claim.
Question 4: Which type of liability policy covers losses based on when the incident occurred, regardless of when the claim is submitted?
- Claims-made policy
- Occurrence policy (Correct answer)
- Aggregate policy
- Blanket policy
Correct answer: Occurrence policy
An occurrence policy covers any loss event that happens during the policy period, even if the claim is filed months or years after the policy has expired.
Question 5: In commercial property insurance, what does a coinsurance clause require of the insured?
- The insured and insurer share all losses equally
- Two separate insurers must cover the same property
- The insured must carry coverage equal to a specified percentage of the property's value or bear a proportionate penalty at claim time (Correct answer)
- The insured must pay the same premium regardless of coverage amount
Correct answer: The insured must carry coverage equal to a specified percentage of the property's value or bear a proportionate penalty at claim time
A coinsurance clause (commonly 80%) requires the insured to maintain adequate coverage relative to the property's value; failing to do so results in the insured bearing a share of any loss.
Question 6: Which peril is typically EXCLUDED from a standard New York homeowners insurance policy and requires a separate policy?
- Fire and smoke damage
- Theft of personal property
- Flood damage (Correct answer)
- Liability for injuries to guests on the premises
Correct answer: Flood damage
Flood damage is excluded from standard homeowners policies and requires separate flood insurance, typically through the National Flood Insurance Program (NFIP).
Question 7: What is the primary purpose of a personal umbrella liability insurance policy?
- To replace an auto insurance policy with broader coverage at lower cost
- To cover only weather-related property losses not covered by homeowners insurance
- To provide excess liability coverage above the limits of underlying policies such as auto and homeowners (Correct answer)
- To insure multiple properties under a single blanket policy
Correct answer: To provide excess liability coverage above the limits of underlying policies such as auto and homeowners
An umbrella policy provides additional liability protection that activates after the underlying policy limits (auto, homeowners, etc.) are exhausted.
New York State Exam New York State Insurance License Exam 2
Under New York's no-fault auto insurance law, what is the minimum required Personal Injury Protection (PIP) coverage per person?