P&C Casualty Insurance Policies 3

Question 1

The 'insuring agreement' in a casualty insurance policy is best described as:

Accepted Answer

The insurer's promise to pay covered losses in exchange for the premium

Answer

The insuring agreement is the section of the policy where the insurer makes its promise to pay, defend, or indemnify the insured for covered losses.

Question 2

Under a commercial auto policy, a 'symbol 1' designation means:

Accepted Answer

Any auto is covered, including those newly acquired

Answer

Symbol 1 is the broadest coverage symbol in a commercial auto policy and extends coverage to any auto, including those acquired during the policy period.

Question 3

Workers compensation insurance is required in most states because:

Accepted Answer

State statutes mandate employers provide no-fault wage replacement and medical benefits to injured workers

Answer

Workers compensation is a statutory program — nearly every state requires employers to carry it, providing injured employees with medical care and wage replacement on a no-fault basis in exchange for the employee giving up the right to sue the employer.

Question 4

In homeowners insurance, 'replacement cost' coverage differs from 'actual cash value' in that replacement cost:

Accepted Answer

Pays the cost to repair or replace the property with like kind and quality without deducting for depreciation

Answer

Replacement cost coverage pays the full cost to repair or replace damaged property with new materials of like kind and quality, without subtracting depreciation.

Question 5

Which of the following describes a 'non-owned auto' exposure?

Accepted Answer

An employee using their personal vehicle for company business

Answer

Non-owned autos are vehicles used in the business but not owned or leased by the insured — most commonly employees' personal cars used on company business. The employer has vicarious liability for accidents in these vehicles.

Property & Casualty Insurance License Test Practice Test

Property & Casualty Insurance License Test Practice Test

P&C Casualty Insurance Policies 3