FreeExam

Property Insurance Producer Examination

Dwelling, homeowners, commercial property, and loss valuation.

Insurance exams are administered by state insurance departments, designation sponsors, and actuarial societies. FreeExam is not affiliated with those organizations, and these questions are original practice, not an official test.

  1. 1.In property insurance, what is a peril?

  2. 2.A hazard in property insurance is best described as which of the following?

  3. 3.An applicant deliberately gives a false answer about a material fact on a property application. Which term fits that behavior?

  4. 4.When must an insurable interest in property exist for a property claim to be paid?

  5. 5.Why is a property policy called a contract of indemnity?

  6. 6.A storage shed would cost $24,000 to replace. Depreciation is $6,000. What is its actual cash value?

  7. 7.Which statement describes a standard HO-3 homeowners policy?

  8. 8.Nora rents an apartment and wants coverage for her furniture, clothing, and extra living costs if a covered loss makes the unit unlivable. Which form fits?

  9. 9.Which homeowners form covers both the dwelling and personal property on an open-perils basis?

  10. 10.Luis owns a condominium unit and wants a policy aimed at his interior, his belongings, and loss assessment. Which form is that?

  11. 11.An older house cannot be insured for full replacement cost because ornate plaster and custom millwork would cost far more than the home's market value. Which form is built for that situation?

  12. 12.Which statement is true of a standard HO-2?

  13. 13.On a homeowners policy, Coverage A applies to which property?

  14. 14.A detached studio behind an insured house is damaged by a covered windstorm. Which homeowners coverage applies to that studio?

  15. 15.A covered kitchen fire destroys a family's clothing, pots, and a sofa. Which coverage part pays for those items?

  16. 16.After a covered fire, the Chen family stays in a rented house for two months while their home is rebuilt. Which coverage is meant for that extra housing cost?

  17. 17.A river overflows and floodwater enters the first floor of a house insured on a standard homeowners policy. How does that policy treat the flood damage?

  18. 18.An earthquake cracks the foundation and walls of a home insured on a standard homeowners policy. What is the usual result?

  19. 19.A supply line inside a wall suddenly bursts and soaks the floor. No river, lake, or surface water is involved. How should this be distinguished from flood?

  20. 20.Which dwelling form covers the building for a basic list of named perils, such as fire, lightning, and internal explosion?

  21. 21.Which dwelling policy is the broad named-perils form?

  22. 22.On which dwelling form is the dwelling covered for open perils, while personal property, if insured, is covered for named perils?

  23. 23.The coinsurance value of a warehouse is $200,000. The policy limit is $120,000, coinsurance is 80 percent, and there is no deductible. A covered fire loss is $40,000. What is payable?

  24. 24.A standard mortgage clause is attached for North Bank. The insured later commits an act that bars the insured's own claim. What can the clause still do?

  25. 25.After paying a covered fire claim, the insurer seeks recovery from a contractor whose torch started the fire. What is that right called?

  26. 26.The insured and the insurer agree that a wind loss is covered, but they disagree about the dollar amount of the damage. Which clause is used?

  27. 27.A house on a standard homeowners policy has been vacant for 70 days. Vandals then break windows and damage walls. What is the usual coverage result?

  28. 28.Worn electrical wiring in a dry-cleaning shop increases the chance of a fire. The wiring is which of the following?

  29. 29.A shopkeeper stops locking the storeroom because insurance will pay. Nobody has lied on an application. Which hazard is this?

  30. 30.Replacement cost coverage on a building pays which amount, assuming the loss is covered and coinsurance is satisfied?

  31. 31.A fire burns a retail store's stock. The store also loses two weeks of sales while it is closed. The burned stock is which kind of loss?

  32. 32.A covered fire closes a small bakery for three weeks. Customers cannot come in, so sales are lost. The lost sales are:

  33. 33.Open perils coverage on a dwelling means the insurer pays for a direct physical loss unless:

  34. 34.A named-perils property form pays a loss when:

  35. 35.A log rolls out of a fireplace and ignites a rug. The fire in the grate had been intentional. The rug fire is:

  36. 36.Maya sells her cottage on Monday and the deed transfers that day. Lightning destroys it on Friday. She still holds the old policy and files a claim. What is the result?

  37. 37.Pike Mercantile carries $180,000 on a store with an insured value of $300,000. Coinsurance is 80 percent and there is no deductible. A covered fire causes a $48,000 loss. What is payable?

  38. 38.A commercial property basic causes of loss form is best described as:

  39. 39.Compared with the basic commercial causes of loss form, the broad form generally:

  40. 40.The commercial property special causes of loss form covers which of the following?

  41. 41.What does an agreed value option do to a coinsurance penalty on commercial property when its conditions are met?

  42. 42.A matched pair of lamps is insured. One lamp is smashed in a covered loss. The pair was worth $4,000, and the remaining lamp alone is worth $1,000. Under a typical pair and set clause, the insurer may:

  43. 43.A covered building loss is $9,000. The policy has a $1,000 deductible and no coinsurance shortfall. What does the insurer pay?

  44. 44.On a standard HO-3, Coverage A is $200,000. Other structures are insured at the usual percentage of Coverage A, and no endorsement changes it. What is the Coverage B limit?

  45. 45.Helena meets the coinsurance requirement on her house. The insured value is $100,000, the limit is $80,000, coinsurance is 80 percent, and the deductible is $1,000. Wind causes a $20,000 loss. What is paid?

  46. 46.A family is away on a two-week trip. Furniture, food, and clothing remain in the house, and they intend to return. The house is:

  47. 47.A standard HO-3 has a $300,000 Coverage A limit and no endorsement that changes contents. What is the usual Coverage C limit?

  48. 48.Coverage A on a standard HO-3 is $240,000. No endorsement changes loss of use. What is the usual Coverage D limit?

  49. 49.Elena owns a diamond ring worth far more than a homeowners theft sublimit. She wants that ring insured for a stated amount, often against broader causes of loss. Which approach fits?

  50. 50.Inland marine insurance is especially suited to which property?

  51. 51.Which item is a peril rather than a hazard?

  52. 52.After a covered total loss to stock, the insurer pays the claim and takes the damaged goods to sell for scrap. That right is:

  53. 53.The same building is insured for $60,000 with one insurer and $40,000 with a second insurer. Both cover a $20,000 fire and share pro rata by limits. What does the first insurer pay?

  54. 54.A renter's HO-4 has a $40,000 personal property limit. Loss of use is set at the usual percentage of that contents limit. What is Coverage D?

  55. 55.An HO-6 lists $80,000 of Coverage C personal property. The usual loss-of-use limit on that condominium unit-owner form is:

  56. 56.A loft has an insured value of $250,000 and a limit of $150,000. Coinsurance is 80 percent and the deductible is $2,000. A covered loss is $40,000. What is paid?

  57. 57.HO-8 settles a damaged plaster wall by paying the cost of modern drywall that does the same job, not the cost of artisans recreating historic plaster. This settlement is:

  58. 58.The insured lives in the house. After a covered fire, the family rents a similar house nearby. Coverage D additional living expense pays:

  59. 59.Omar lives upstairs and rents the downstairs flat. A covered fire makes only the flat unlivable, and the tenant moves out. Coverage D can pay Omar:

  60. 60.A commercial building has obsolete custom windows. Modern windows would close and seal the same way at a much lower cost. Functional replacement cost pays:

  61. 61.A business wants earthquake coverage on its warehouse. On a standard commercial property policy, earthquake is:

  62. 62.A covered windstorm tears open a roof. The homeowner buys tarps the same day so rain will not ruin the rooms below. The reasonable-repairs provision does which of the following?

  63. 63.On a named-perils contents form, a camera vanishes from a hotel room. The insured cannot show theft or any other listed peril. The usual result is:

  64. 64.A standard mortgage clause usually requires the insurer to do what before the lender's interest is cut off for nonpayment of premium?

  65. 65.A simple loss payable clause, unlike a standard mortgage clause, generally:

  66. 66.Which situation is vacancy under a typical homeowners policy?

  67. 67.Which peril is commonly suspended on a homeowners policy after a dwelling has been vacant for more than 60 consecutive days?

  68. 68.Water backs up through a sewer into a basement. No creek or surface water entered. On an unendorsed homeowners policy, this backup is usually:

  69. 69.A property policy condition that asks the insured to submit a sworn statement of the loss, including values and the cause, is the:

  70. 70.A barn's insured value is $200,000. The limit is $160,000, coinsurance is 80 percent, and the deductible is $1,000. A covered loss is $180,000. What is paid?

  71. 71.A covered fire uses the entire Coverage A limit of $200,000 to pay for rebuilding a house. Debris from that fire still must be removed. On a standard homeowners policy, what extra debris help is typical?

  72. 72.A wildfire is approaching, and the insured moves furniture from a covered home to a warehouse to protect it. On a homeowners policy, that removed property is generally:

  73. 73.Which property is insured under Coverage A rather than Coverage B?

  74. 74.A roof has a replacement cost of $16,000 and is 25 percent depreciated. No deductible remains. Actual cash value is:

  75. 75.Who has an insurable interest in a house that secures a loan?

  76. 76.One limit of $500,000 applies to three warehouses at different addresses, and a loss at any one location can draw on that single limit. This arrangement is:

  77. 77.A policy lists Building 1 for $100,000 and Building 2 for $300,000, and each limit stands alone. This is:

  78. 78.A contractor's installation floater is inland marine coverage meant for:

  79. 79.A duplex has an insured value of $90,000 and is insured for $72,000. Coinsurance is 80 percent and the deductible is $500. A covered loss is $18,000. What is paid?

  80. 80.On a standard homeowners policy, theft of jewelry, watches, and furs is subject to a special limit of:

  81. 81.Cash kept at home is stolen in a covered theft. A standard homeowners special limit for money is:

  82. 82.A covered fire triggers a building-code upgrade on a house. On a common unendorsed homeowners policy, ordinance or law additional coverage is:

  83. 83.A tenant installs custom shelves and a built-in counter in a rented shop. A covered fire destroys them. The tenant's insurable interest in those items is an interest in:

  84. 84.A building under construction, with values rising as materials are installed, is typically insured on:

  85. 85.A stock policy requires the insured to report inventory values each month, and the amount of coverage follows the fluctuating stock. This is a:

  86. 86.An endorsement automatically raises the building limit by a set percentage at intervals during the policy year. Its purpose is to:

  87. 87.If an insured conceals a material fact about the property when applying for coverage, the property policy may be:

  88. 88.A distribution center has an insured value of $1,000,000. The owner carries $600,000 with 80 percent coinsurance and no deductible. A covered loss is $80,000. What is paid?

  89. 89.Business income coverage on a commercial property program is designed to pay:

  90. 90.In property insurance, risk is best defined as:

  91. 91.Before a loss, a landlord agrees in the lease to waive recovery rights against a tenant, and the property policy permits that waiver. After paying a covered fire, the insurer's subrogation against the tenant is:

  92. 92.During the policy term, the insurer adopts a broader version of the same property form and charges no extra premium. A liberalization clause generally means:

  93. 93.Wind rips shingles off a roof, and rain from that storm enters through the opening and ruins a ceiling. No river or surface water entered the house. On an HO-3, the rain damage is usually:

  94. 94.A fire department charges a fee to respond to a covered fire at an insured house. On a standard homeowners policy, the fire department service charge is usually:

  95. 95.A chapel has an insured value of $160,000 and carries $96,000. Coinsurance is 80 percent and the deductible is $2,000. A covered loss is $32,000. What is paid?

  96. 96.A homeowners replacement-cost settlement on a large dwelling loss generally requires that the insured:

  97. 97.Homeowners Coverages E and F, as part of the form, deal with:

  98. 98.A DP-1 basic form, without a replacement-cost endorsement, usually settles building losses at:

  99. 99.A standard homeowners policy covers trees, shrubs, and plants for certain named perils. The usual most it pays for any one tree is:

  100. 100.After a partial fire, the insured tells the insurer to take the whole building and pay the full limit, even though much of it can be repaired. The abandonment condition says the insured:

  101. 101.The weight of ice, snow, or sleet collapses a store roof. On commercial causes of loss forms, that peril is:

  102. 102.Water accidentally escapes from an automatic sprinkler system and soaks covered stock. On the commercial property basic and broad causes of loss forms, sprinkler leakage is:

  103. 103.On the broad and special commercial property forms, abrupt collapse from hidden decay or from the weight of contents is generally:

  104. 104.Personal property under a homeowners Coverage C grant is usually covered:

  105. 105.A dry cleaner has customers' clothes on the premises and wants coverage if a covered fire destroys those clothes. The cleaner's exposure is that of:

  106. 106.Lightning strikes a house and starts a fire. Water from the fire hoses then damages the floors. If lightning and fire are covered, the water damage is paid because:

  107. 107.Paint that fades and a roof that wears out over many years, with no sudden event, are:

  108. 108.A property binder issued while the policy is being prepared generally: