Property & Casualty Insurance License Test Property & Casualty Insurance License Test Surety Bonds and Specialty Lines Questions and Answers 3

Question 1

Title insurance protects against which type of loss?

Accepted Answer

Defects in the title to real property that existed before the policy was issued

Answer

Physical damage to a home caused by fire or storm

Answer

A homeowner's failure to make mortgage payments

Answer

Liability for injuries that occur on the property

Question 2

Private Mortgage Insurance (PMI) is designed primarily to protect which party?

Accepted Answer

The lender in the event the borrower defaults on the mortgage

Answer

The borrower against becoming unable to make loan payments

Answer

The real estate agent if the sale falls through

Answer

The title company against claims on the property

Question 3

Earthquake insurance is most commonly sold as which of the following?

Accepted Answer

A separate policy or endorsement added to a standard property policy

Answer

A standard included peril under every homeowners policy

Answer

A government-backed program similar to the NFIP

Answer

A commercial lines coverage only, not available for residences

Question 4

A payment bond in a construction project guarantees which of the following?

Accepted Answer

That the contractor will pay all subcontractors, laborers, and material suppliers

Answer

That the project owner will release payment upon project completion

Answer

That the general contractor will complete the project on schedule

Answer

That the surety will fund the project if the owner becomes insolvent

Question 5

Which of the following best describes a court (judicial) bond?

Accepted Answer

A bond required by a court to protect parties involved in legal proceedings

Answer

A bond guaranteeing a contractor's bid on a courthouse construction project

Answer

A bond ensuring a judge's impartiality in a financial dispute

Answer

A bond covering a lawyer's professional liability in litigation

Question 6

Which specialty line of insurance covers losses to livestock and is considered part of the agricultural insurance market?

Accepted Answer

Animal mortality insurance

Answer

Inland marine livestock floater

Answer

Commercial general liability with animal riders

Answer

Farm owners business interruption policy