P&C Property & Casualty Insurance License MCQ 2 — Questions and Answers
Question 1: Under a standard homeowners policy, which of the following losses would typically be EXCLUDED?
- Fire damage to the dwelling
- Theft of personal property
- Flood damage from a rising river (Correct answer)
- Liability for a guest injured on the premises
Correct answer: Flood damage from a rising river
Flood damage caused by rising bodies of water is excluded under standard homeowners policies and requires a separate NFIP or private flood policy.
Question 2: The 'other structures' coverage in a homeowners policy typically provides what percentage of the dwelling coverage limit?
- 5%
- 10% (Correct answer)
- 20%
- 25%
Correct answer: 10%
Coverage B (Other Structures) is typically set at 10% of the Coverage A (dwelling) limit under standard HO policies.
Question 3: An insured's car is damaged by a hit-and-run driver. Which auto coverage would pay for the insured's vehicle repairs?
- Bodily Injury Liability
- Collision coverage
- Uninsured Motorist Property Damage (Correct answer)
- Medical Payments coverage
Correct answer: Uninsured Motorist Property Damage
Uninsured Motorist Property Damage (UMPD) covers vehicle damage caused by an uninsured or unidentified (hit-and-run) driver.
Question 4: Which insurance principle prevents an insured from profiting from a loss by collecting from both their own insurer and a negligent third party for the same damage?
- Indemnity
- Subrogation (Correct answer)
- Contribution
- Insurable interest
Correct answer: Subrogation
Subrogation allows the insurer to recover from a negligent third party after paying the insured, preventing the insured from receiving a double recovery.
Question 5: A Commercial General Liability (CGL) policy's 'occurrence' trigger means coverage applies when:
- The claim is filed during the policy period
- The injury or damage occurs during the policy period (Correct answer)
- The policy is in force at the time of the lawsuit
- The negligent act is committed during the policy period
Correct answer: The injury or damage occurs during the policy period
Under an occurrence-based CGL, coverage is triggered when the bodily injury or property damage actually occurs, regardless of when the claim is made.
Question 6: What does the term 'named perils' mean in a property insurance policy?
- The policy covers all risks except those specifically excluded
- The policy only covers losses caused by perils explicitly listed in the policy (Correct answer)
- The insured must name all perils at the time of application
- Coverage is limited to perils named by the insurer after a loss
Correct answer: The policy only covers losses caused by perils explicitly listed in the policy
A named perils policy only provides coverage for losses caused by perils that are specifically listed and identified in the policy.
Question 7: Under personal auto policies, 'stacking' of uninsured motorist limits refers to:
- Adding bodily injury and property damage limits together
- Combining UM limits from multiple vehicles or policies to increase available coverage (Correct answer)
- Applying both collision and UM coverage to the same loss
- Staggering deductibles across multiple claims
Correct answer: Combining UM limits from multiple vehicles or policies to increase available coverage
Stacking allows an insured to combine UM/UIM limits from multiple insured vehicles or policies, though many states prohibit or restrict this practice.
P&C Property & Casualty Insurance License MCQ 2
Under a standard homeowners policy, which of the following losses would typically be EXCLUDED?