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TEXAS PROPERTY AND CASUALTY EXAM A ND
PRACTICE QUESTIONS NEWEST ACTUAL
EXAM COMPLETE QUESTIONS AND CORRECT
DETAILED ANSWERS |ALREADY GRADED A+
What type of policy insures against open perils of loss that are not specifically excluded?
- named peril B) broad peril C) special peril D) full coverage
ANSWER: C) special peril
Which is an example of a consequential or indirect loss?
- theft of a bike from the garage B) loss of income from a
rental unit due to tornado damage to the roof C) loss of rental income due to the house not being rented due to real estate market D) carpet damage caused by water from a wind/hail damaged roof
ANSWER: B) loss of income from a rental unit due to tornado
damage to the roof
The freezer was purchased new for the amount of $350.00. The day of the fire the value had depreciated $100.00. The same
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cubic-foot capacity freezer today would cost $500.00. If the insured has ACV coverage, how much will he be paid?
A) $250 B) $350 C) $400 D) $450
ANSWER: C) $400
(ACV = Replacement Cost - Depreciation = $500 - $100 = $400)
Actual Cash Value is
- market value minus depreciation B) purchase price minus
depreciation C) replacement cost minus depreciation D) stated value plus appreciation
ANSWER: C) replacement cost minus depreciation
In a property and casualty insurance policy, the insurable
interest must exist:
- when the binder is issued B) when the application is signed
and at the time of the loss C) when the loss occurs D) when the insurer approves the application
ANSWER: C) when the loss occurs
The valuation clause is:
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- the clause that describes the exclusions B) the clause that
gives the rules and the duties of the policy C) the clause that determines how the value of the loss will be settled D) the clause that settles disputes about the value of the loss
ANSWER: C) the clause that determines how the value of the
loss will be settled
In which of the following would Tom not have an insurable interest?
- a house Tom owns but is renting to someone else B) Tom's
furniture C) a house on which Tom is making mortgage payments D) a house Tom sold yesterday but is still residing
ANSWER: D) a house Tom sold yesterday but is still residing in
(Insurable interest requires ownership or financial stake at the time of loss, which Tom no longer has after selling the house.)
Which of the following describes a blanket form?
- provides a specific amount of coverage at a specific location
- provides a single amount of insurance for different types of
property or different locations C) provides a fluctuating limit of insurance D) provides a schedule of buildings and property insurance
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ANSWER: B) provides a single amount of insurance for
different types of property or different locations
What is the name of the policy form that provides coverage for all property losses not specifically excluded?
- blanket B) special C) multi-peril D) named peril
ANSWER: B) special
Which of the following best describes a proximate cause?
- when two policies cover the same building B) when two
losses occur at the same time C) a continuous chain of events that cause damage D) both business and personal exposures exist for indirect losses
ANSWER: C) a continuous chain of events that cause damage
All of the following would be true about indirect losses,
EXCEPT:
- loss of rental income of a rent house would be an indirect
loss B) loss of the money to fix a roof because of a hail storm C) it is the type of loss that is a consequence of a covered direct loss D) both business and personal exposures exist for indirect losses