Property & Casualty Insurance License Test Policy Provisions and Options Questions and Answers

Question 1

A policyholder sells their insured home to a new owner and wants to transfer their existing homeowner's policy to the buyer.
Which policy provision requires the insurer's written consent for this transfer to be valid?

Accepted Answer

Assignment Clause

Answer

Subrogation Clause

Answer

Liberalization Clause

Answer

Abandonment Clause

Question 2

When an insured and an insurer disagree on the monetary value of a covered property loss, which policy condition is used to resolve the dispute over the amount of the loss, but not over whether coverage applies?

Accepted Answer

Appraisal Clause

Answer

Arbitration Clause

Answer

Subrogation Clause

Answer

Other Insurance Clause

Question 3

A business owner closes their retail store for a two-month renovation. They move all the inventory and furnishings to a storage unit but leave the building's fixtures in place. In property insurance terms, the building is considered:

Accepted Answer

Vacant

Answer

Abandoned

Answer

Unoccupied

Answer

Non-renewed

Question 4

An insured has two separate property policies covering the same building. Policy A has a limit of $300,000, and Policy B has a limit of $100,000. If a covered loss of $80,000 occurs, how will the "Pro Rata Liability" (Other Insurance) clause apply to the claim?

Accepted Answer

Policy A will pay $60,000, and Policy B will pay $20,000.

Answer

Both policies will pay $40,000 each.

Answer

The insured can choose which policy pays the full amount.

Answer

The policy that was purchased first will pay the entire loss.

Question 5

An insurer revises its standard homeowner's policy form to broaden a specific coverage, and this change does not require an additional premium. According to the Liberalization Clause, how does this affect existing policies?

Accepted Answer

The broadened coverage is automatically applied to existing policies without any action needed from the insured.

Answer

Existing policyholders must wait until renewal to receive the broadened coverage.

Answer

Existing policyholders must formally request the change in writing.

Answer

Only new policies issued after the revision date will include the broadened coverage.

Question 6

An insured's car is damaged when a negligent driver runs a red light and collides with it. The insured's insurance company pays for the repairs. The insurer then seeks to recover the payment amount from the at-fault driver. This process is known as:

Accepted Answer

Subrogation

Answer

Arbitration

Answer

Indemnification

Answer

Contribution

A policyholder sells their insured home to a new owner and wants to transfer their existing homeowner's policy to the buyer.Which policy provision requires the insurer's written consent for this transfer to be valid?

A policyholder sells their insured home to a new owner and wants to transfer their existing homeowner's policy to the buyer.
Which policy provision requires the insurer's written consent for this transfer to be valid?