P&C Trivia 2

Question 1

Which type of insurance policy covers the insured's legal liability for bodily injury or property damage caused to third parties?

Accepted Answer

Liability coverage

Answer

Liability coverage protects the insured against claims made by third parties for bodily injury or property damage the insured caused.

Question 2

What does the term 'subrogation' mean in property and casualty insurance?

Accepted Answer

The insurer's right to pursue a third party that caused an insurance loss

Answer

Subrogation gives the insurer the right to recover claim payments from the responsible third party after compensating the insured.

Question 3

An insured's home is destroyed by fire. Under a standard homeowners policy, which coverage pays for temporary housing while repairs are made?

Accepted Answer

Coverage D – Loss of Use

Answer

Coverage D (Loss of Use) pays additional living expenses when a covered loss makes the home uninhabitable.

Question 4

Which of the following perils is typically EXCLUDED from a standard homeowners policy?

Accepted Answer

Flood

Answer

Flood is a standard exclusion in homeowners policies; separate coverage must be purchased through the NFIP or a private insurer.

Question 5

Under the principle of indemnity, the purpose of insurance is to:

Accepted Answer

Restore the insured to the same financial position as before the loss

Answer

Indemnity means the insurer restores the insured to their pre-loss financial condition, no better and no worse.

Property & Casualty Insurance License Test Practice Test