TEXAS PROPERTY AND CASUALTY

TEXAS PROPERTY AND CASUALTY

INSURANCE EXAM VERSION 2 WITH 400 REAL

EXAM PRACTICE QUESTIONS AND CORRECT

ANSWERS/ ACTUAL TEXAS PROPERTY &

CASUALTY INSURANCE EXAM -

ANSWERED (BRAND NEW!!)

The coverages offered by an insurance policy are described in the ____. - ANSWER-insuring agreement

What is the maximum that an insurer will pay in case of a loss? - ANSWER-the limit of liability

The conditions section of an insurance contract sets forth the ____ of the insured and the insurance company. - ANSWER-duties

Which of the following terms describes a building in which no one is present but to which the occupants intend to return? - ANSWER-Unoccupied

Faulty wiring causes a fire that destroys a building. The faulty wiring is considered

to be a(n): - ANSWER-hazard

A policy under which the insured and insurer agree on the property value and list the value in the policy is known as ________. - ANSWER-an agreed value policy

The furniture Harold purchased 10 years ago was destroyed in a fire. The furniture cost $9,000 when new and has depreciated by $5,000. It would cost $12,000 to 1 / 4

replace this furniture today. What is the actual cash value of Harold's destroyed furniture? - ANSWER- $7000

What is Actual Cash Value? - ANSWER-Replacement cost less depreciation.

When a small restaurant is damaged by a tornado, the owners are forced to close for 1 month while the property is repaired. The building suffers damages of $20,000. The owners estimate they will lose $50,000 in business receipts. In order to keep their staff, the owners must continue to pay salaries totaling $5,000.Ignoring any deductible, how much of the direct loss will the business owners policy pay? - ANSWER-$20,000

TWIA is the _____. - ANSWER-Texas Windstorm Insurance Association

TAIPA is the _____. - ANSWER-Texas Auto Insurance Plan Association

What does the liberalization clause do to a property policy? - ANSWER-Broadens coverage.

When the insurer and the insured cannot agree on the value of a loss, the matter is submitted to disinterested parties for resolution. Under a standard appraisal clause, how many parties are involved in determining the value of the loss? - ANSWER-3

An all-risk or open-perils policy protects against any peril except those specifically ____. - ANSWER-excluded Fire, lightening and internal explosions are covered by ____. - ANSWER-DP1 - the basic form

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The ____ covers the same as DP1 plus vandalism, and malicious mischief, air conditioners, heaters, plumbing, ice/snow, falling objects, and plumbing issues. - ANSWER-DP2 - the broad form

Additional living expenses are covered with an endorsement on DP1 by _____. It is included on DP2 and DP3, but limited to 20% of coverage A. - ANSWER- Coverage E

The Replacement cost equation is the insurance carried divided by the insurance required times the amount of the loss equals the amount of _______. - ANSWER- reimbursement

All of your belongings in the house are covered by ____ in a dwelling policy. - ANSWER-Coverage C

Which of the following legal principles allows insurance companies to collect from a negligent third party damages it paid to an insured? - ANSWER-subrogation

A parking valet at a hotel uses a guest's car to do a personal errand and damages the car in a collision. The guest has a personal auto policy (PAP). The insurance company will pay the claim and ____ against the valet. - ANSWER-subrogate

Which of the following policy provisions restricts certain risks from coverage? - ANSWER-exclusions

Which of the following terms is used to describe an empty building that is not being used? - ANSWER-Vacant

A condition or situation that presents a possibility of loss is a (an): - ANSWER- exposure 3 / 4

The purpose of insurance is to: - ANSWER-transfer risk

Which hazard can be described as a careless attitude or general indifference on the part of the insured toward the occurrence of loss? - ANSWER-morale

Which risk is insurable? - ANSWER-pure

With regard to insurance, risk can be defined as: - ANSWER-uncertainty regarding loss

Treating risk by purchasing insurance is an example of what type of risk management? - ANSWER-transfer

Robert and Carolyn live in a busy city and decide that not owning a car is the solution to not experience having a car stolen. What method describes this philosophy? - ANSWER-avoidance

Dishonesty on the part of an insured is an example of what? - ANSWER-a moral hazard

What is an example of reduction as a method of handling risk? - ANSWER- Installing a burglar alarm

Driving too fast and not wearing a seat belt are examples of? - ANSWER-morale hazard

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