Property And Casualty Insurance License Property Insurance Basics 3

Question 1

Which of the following best describes 'subrogation' in property insurance?

Accepted Answer

The insurer's right to recover from a negligent third party after paying a claim

Answer

Subrogation allows the insurer to step into the insured's legal shoes and pursue recovery from the party responsible for causing the loss.

Question 2

What is an 'inland marine' policy primarily designed to cover?

Accepted Answer

Goods in transit and movable property

Answer

Inland marine insurance covers goods being transported overland or by air, as well as certain types of movable property like cameras, jewelry, and contractor's equipment.

Question 3

What is the primary purpose of a deductible in a property insurance policy?

Accepted Answer

To reduce small claims and encourage loss prevention by the insured

Answer

Deductibles reduce small, frequent claims and give the insured a financial stake in preventing losses, thereby lowering overall premiums.

Question 4

A 'scheduled personal property endorsement' is used to:

Accepted Answer

Provide higher limits and broader coverage for specific high-value items

Answer

A scheduled personal property endorsement individually lists valuable items (e.g., jewelry, fine art) with their appraised values and covers them on an open-perils basis.

Question 5

Under a standard homeowners policy, Coverage E (Personal Liability) covers:

Accepted Answer

Legal liability for bodily injury or property damage caused to others by the insured

Answer

Coverage E pays for claims and defense costs when the insured is legally liable for bodily injury or property damage to a third party.

Property And Casualty Insurance License Practice Test

Property And Casualty Insurance License Practice Test

Property And Casualty Insurance License Property Insurance Basics 3