Download Property and Casualty License in Arkansas Questions and Answers 2025 and more Exams Advanced Education in PDF only on Docsity!
Property and Casualty License in
Arkansas
What is Insurance? - answer Transfers the risk of loss from individual to insurance co. What is Risk? - answer Chance of loss occurring What are 3 types of Hazzard’s? - answer Physical, Moral, Morale What is a Peril? - answer Causes of loss insured against What does Indemnify mean? - answer Right for Reimbursement but only to the extent of the loss. Cannot gain from loss. Define Subrogation - answer Right to seek damages from 3rd party so that the insured cannot collect 2xs. What is an accident? - answer Sudden unplanned event resulting in a loss What is an occurrence? - answer Repeated action or event that results in a loss What is a direct loss? - answer Things physically loss. For ex. If a fire burned down a house that would be a direct loss of the fire. What is an indirect loss? - answer A loss resulting from the direct loss. For Ex. If a fire burned down a house and you had to rent a hotel room the added expense of the hotel would be an indirect loss of the fire. What is a vacancy? - answer When someone has been absent and no property is stored on the premises for 60 days consecutively. What is unoccupied? - answerWhen someone has been absent from the premises for more than 60 consecutive days but still has property stored there. What type of insurance provides coverage for multiple classes of property at one location? - answerBlanket Insurance Explain the actual cash value method of valuation - answerCurrent replacement cost- depreciation = ACV
When absolute liability is involved, does the injured party have to prove negligence? - answerNo If a product is unsafe, what kind of liability applies to the manufacturer. - answerStrict liability What is proximate cause? - answerA reasonable cause or reason why a loss occurred. What type of policies may include insurance to value provision? - answerCoinsurance What is a certificate of insurance? - answerWritten evidence a policy has been written and is in effect. What information is included in a policy's declarations? - answer(who, What, Where, when, how much, why) Name, Address, Location described, Amt of coverage and premiums and any supplemental representations. What are the four elements of an insurance contract? - answer1. Agreement (offer and acceptance)
- Consideration (the exchange of money for coverage)
- competent parties
- Legal purpose What does Representation mean? - answerSomething that is believed to be true to the best of ones knowledge but is not guaranteed to be true. Will not void the policy. What does Warranty mean? - answerSomething that is an absolute truth. If found out to be false it could void the policy. What are additional or supplementary payments? - answerA provision that provides add coverage for a specific loss expense at no additional premium. What is included in the conditions section of a policy? - answerThe general rules that the insurer & insured agree to follow under the terms of the policy. What is the term used to describe printed addendum's to a contract that are used to change the policy's original terms, conditions, or coverage's? - answerEndorsements What does the exclusions section of a policy specify? - answerPerils and persons not insured against When is an appraisal needed? - answerWhen there is a disagreement between the insured and insurer on the value of the property. How is an appraisal requested? - answerEither the insurer or the insured can request an appraisal by written demand.
What is not covered under the worldwide personal property coverage? - answerRowboats or canoes or property of guest/servants if away from the insured premises. If more than one person has an insurable interest in the property, is the insurer liable for more than the insured's interest in the loss or damaged property? - answerNo What happens when the automatic increase in insurance endorsement is added to a policy? - answerIncrease the amount of insurance by an annual % to offset effects of inflation. What coverage forms are available under the homeowners program? - answerHO Broad HO3 Special HO4 contents broad(tenant broad) HO5 comprehensive HO Condo unit owners HO8 Modified Define insured - answerThe policy defines the insured as the named insured and residents of the premises who are relatives or under 21 and in the care of the insured. Define insured location - answerThe insured location is the residence premises or any other premises at the same location, or part of it used by the insured as a home and described in the declarations; a premises not owned by the insured, but where the insured is temp living; vacant land owned or rented by insured but not farmland; land owned or rented by the insured where a residential dwelling is being constructed; individual or family cemetery plots or burial vaults; any part of premises occasionally rented to an insured, except for business purposes. What is the purpose of a homeowners policy? - answerTo cover dwellings primarily used as private homes. What homeowners form provides protection for losses from named perils? - answerHO broad form What type of coverage is expanded upon HO-2 to HO-3? - answerVehicle damage to fences, driveways or walks is covered even if caused by an insured or resident. What type of coverage does the HO-4 provide? - answerInsures personal property for the same perils as the HO2 form except for tenants. What is covered under the HO-5 form? - answerComprehensive covers both the dwelling & other structures on an open peril basis. Under HO-6, where may business property be stored? - answerA structure that contains business property solely owned by an insured or tenant of the dwelling provided that the business property does not contain gaseous or liquid fluid other than fuel in a permanently installed fuel tank of a vehicle or craft parked or stored in the structure.
When replacement coverage cost is not reasonable, what type of HO coverage is applicable? - answerHO-8 Modified What is the purpose of Coverage D- Loss of use? - answerWill pay for additional living expenses related to maintaining the normal standard of living for the house or fair rental value if the premises becomes uninhabitable due to a covered loss. Is liability coverage provided with all HO forms? - answerYes What type of coverage is provided by Coverage E- Personal Liability? - answerIf a claim is maid or a suit is brought forth for damages to bodily injury or property damage caused by an occurrence to which the coverage applies What additional coverage's are included with the liability section of the HO policy? - answer1. Claims Expense
- First Aid to others
- Damage to property of others
- Loss assessment coverage What must an insured do if a loss occurs? - answer1. prompt notice
- notify police if caused by theft
- notify C.C. if covered by C.C. coverage
- Protect property from further damage and keep records of repairs and expenses
- inventory damaged and undamaged property
- allow insurer to inspect property as often as reasonably necessary
- submit to an examination under oath within 60 days of the insurer's request (if requested)
- Send a signed sworn proof of loss What type of property would not be covered under the dwelling policy special form Coverage A-dwelling? - answerLand on which the dwelling is located Individuals in the business of selling construction equipment and mobile equipment should insure with - answeran Equipment dealers coverage form An installation floater is used to insure - answerAppliances intended to become a permanent part of the building An insured's home is mortgaged by a local bank. The insured is required to carry insurance on the home, showing the bank as the mortgagee. If the bank is damaged by a covered peril which of the following is true? A. The mortgagee must settle with the mortgagor in the event of a loss. B. The additional premium required for the mortgage endorsement must be paid by the mortgagee. C. Losses will be paid to the mortgagee and the mortgagor as their interest appears.
A. Deterioration of a film B. Exposure of a negative film to light C. Electrical Erasure of a tape D. None of the above - answerD. None of the above Which of the following limits, shown in the declarations page of a policy, applies to medical expenses? A. Per injury B. Per person C. Per incident D. Per occurence - answerB. Per person All of the following are essential elements of a Commercial Package policy (CPP) except? A. Valuations and/or Settlement provisions B. Interline endorsments C. Declarations page D. Policy conditions - answerA. Valuations and/ or settlement provisions An individuals construction company leave mobile equipment and construction machinery on the job site until the job is completed. What could this individual use to insure it? - answerContractor's equipment form Both the broad theft and limited theft endorsements on the dwelling program exclude all of the following types of properties except? A. Aircraft B. Watercraft C. Creditcards D. Motor vehicles licensed for the road - answerB. Watercraft Uncle Billy's burger bar was forced to close for 10 days in August when the power company's transformer was destroyed by lightning, and Uncle billy was without electricity. Which of the following endorsements could be added to Billy's business owners policy that would provide protection against loss of income from such events? A. Personal Injury endorsement B. Protective safeguards endorsement C. Utility Services- Time element endorsement D. Utility Services- Direct damage endorsement - answerC. Utility Services- Time element endorsement
The endorsement that provides coverage for losses arising from sudden collapse of earth arising from underground limestone created by the action of water on rock formation is a/an - answerSinkhole collapse endorsement Which of the following examples of losses paid under an HO-3 also would be paid under an HO-2 policy? A. interior damage caused by water seeping under the shingles on the roof. B. Damage caused by ash or dust from a volcanic eruption C. Damage to the dwelling caused by the insured moving furniture D. Accidentally scorching caused by a hot iron placed on a built in counter top - answerB. Damage caused by ash or dust from a volcanic eruption Which of the following is covered under the Theatrical floater on an Inland Marine policy? A. Admission tickets B. Animals C. Jewelry used with precious stones D. Vehicles used on stage - answerD. Vehicles Used on stage If the insured is in the process of moving to a new location, his personal property coverage under the dwelling policy will apply on a pro rata basis on both locations for - answer30 days An advertising company has it's annual holiday party for employees and customers, after which a customer who had too much to drink is involved in an automobile accident. Occupants in the other car involved in the accident sue the company for serving the customer too much alcohol. Will the company's businessowners policy will provide coverage? Do any exclusions apply? - answerYes, no exclusions apply Which of the following is not covered under the accounts receivable coverage form? A. interest on loans required to offset noncollectable amounts pending payment of the insurance proceeds B. Sums due the insured that are uncollectable due to a covered loss C. Expenses to reestablish the records, if possible, and collection expenses that are in excess of normal cost D. Any loans required to offset noncollectable amounts - answerD. Any loans required to offset uncollectible amounts Which of the following is true regarding the fire department service charge under the builders risk form? A. It is an automatic coverage for $ B. It's not available in this form
All of the following are true of Coverage B- Other structures EXCEPT? A. It must be added by endorsement to a homeowners policy B. This coverage is not applicable on the HO-4 form C. The amount of coverage provided on Coverage B is an amount equal to 10% of the Coverage A. D. Land where other structures are located is not covered. - answerA. It must be added by endorsement to a homeowners policy. All of the following types of property are covered by a standard builders risk form EXCEPT A. Machinery that will be permanently attached to the building B. Tools 50 feet away from the building C. The building itself D. Temporary structures - answerB. Tools 50 feet away from the building Which of the following is not true concerning the Fair Rental Value coverage provided in a dwelling policy? A. It pays for the loss of rent you would have collected less any expense that would have not continued. B. Coverage continues until repairs are completed. C. The period of time to repair or replace is not limited by the expiration date of the policy. D. Loss or expense created by the cancellation of a lease is covered. - answerD. Loss or expense created by the cancellation of a lease is covered. Which of the following dwelling coverage forms would pay replacement cost for a dwelling? A. DP-3 only B. All dwelling property coverage forms C. DP- D. DP-2 & DP-3 - answerD. DP2 & DP DP2 and DP3 will pay replacement cost as long as the house is insured for? - answerAt least 80 % of it's value at the date of loss The HO-3 Homeowners policy provides - answerOpen peril coverage on the dwelling and broad peril coverage on personal property A business using it's own trucks to move it's own cargo would insure the cargo using? A. Motor Truck Cargo - Owners form
B. Motor Truck Cargo- Truckers form C. Motor carrier form D. Trip transit coverage - answerA. Motor truck cargo-owners form The members of a limited liability company are insureds under a business owners policy (BOP) if A. Each individual is listed as named on the policy B. A single individual member of the limited liability company is listed as named on the policy C. Members of a limited liability company cannot be insured under a business owners policy D. The limited liability company is designated as the named insured - answerD. The limited liability company is designated as the named insured. A Business owners policy (BOP) is most similar to A. Umbrella B. Cargo C. Homeowners D. Auto - answerC. Homeowners If the actual values exceed the limit of insurance, the business owners policy (BOP) contains a seasonal increase provision that automatically increases the limit of insurance for business personal property by A. 10% B. 25% C. 30% D. 50% - answerB. 25% Which of the following claims does not fall under the scope of liability coverage of section 2 of a homeowners policy? A. The named insured's dog bites the neighbor, tearing his clothes and causing him to be treated by a dr. B. A visitor slips on some ice causing him to be injured when falling down the porch steps C. The named insured is borrowing a friends jacket which is later damaged D. The named insured's 8 year old son throws a rock and strikes a neighbors child, breaking her eye glasses and cutting her face. - answerC. The named insured is borrowing a friends jacket which is later damaged. Under a business owners policy an insured can cancel the policy - answerAt any time by mailing a written notice of cancellation
The insured purchased a $200,000 extra expense policy. If the percentages applying to the limit of insurance are 40%, 80% and 100% what would be the maximum payable for a 47 day loss. - answer$160, In which of the following situations would the jewelers block extension cover a loss? A. A jeweler fixes a necklace and sends it by registered mail to the owner. When the necklace arrives, it has been damaged. B. A jewelery store is robbed while displaying bracelets and necklaces at a public exhibition. C. A jeweler agrees to exhibit a necklace and earrings in a show case away from the premises. The case is broken into and the set is stolen. D. An employee of a jewelery store is wearing a cameo brooch and ring set to display to customers. During the day she discovered the brooch had fallen off and she can't find it.
- answerA. A jeweler fixes a necklace and sends it by registered mail to the owner. When the necklace arrives, it has been damaged. On a DP3 dwelling property specialty form the coverage provided for personal property is A. The same as provided on the DP1 basic form B. The same as provided on the DP2 broad form C. All risk D. Open peril - answerB. The same as provided on the DP2 broad form. Which situation would NOT be covered by the basic causes of loss form under a commercial property policy? A. Gordon's Motorcycle Heaven is damaged by the sudden sinking of land created by the action of water on limestone. B. The Surf Side Club Waterfront Restaurant is damaged when flood water rises and seeps into the Restaurant C. Piccolo Pete's Cafe has it's door broken by vandals trying to get inside. D. The automatic fire protector sprinkler system inside New Realities bookshop leaks, causing damage to the store. - answerB. The Surf Side Club Waterfront restaurant is damaged when flood water rises and seeps into the restaurant. Which of the following is not found in a commercial Package policy? A. Certificate of authority B. common Policy Conditions C. Common Policy declerations D. Interline Endorsements - answerA. Certificate of authority Which of the following Dwelling policy forms primarily insures the structure on an actual cash value basis?
A.DP
B.DP
C. Dp D. All of the above - answerA. DP The broad theft coverage endorsement on the dwelling form specifies all of the following limitations except? A. $1000 on silverware B. $1500 on Jewelery C. $1500 on Securities D. $200 on money - answerA. $1000 on Silverware Under the commercial property coverage program, the basic cause of loss form insures against loss caused by? - answerSprinkler leakage The limit of the equipment breakdown policy applies to property of the insured, property of others, and expediting expenses in any combinations as long as expediting expenses does not exceed? - answer$25, A business owners policy is - answerA self contained prepackaged policy Under a dwelling policy, which of the following is NOT a factor in determining a loss? A. The policy limit B. The amount reflecting the insured's interest in the property at the time of loss C. The amount necessary to repair or replace the property D. The amount negotiated by the insured - answerD. The amount negotiated by the insured What parts make up a commercial policy? - answer1. Policy Cover
- Common policy Declarations
- Interline endorsements
- Line(s) of insurance declaration page(s)
- Line(s) of insurance coverage form(s)
- Common policy conditions
- Line(s) of insurance conditions
- Causes of loss forms
- Endorsements Who has the responsibility for payment of premium in a commercial package policy? - answerThe first named insured
First Aid What is excluded from business liability coverage? - answerExpected or intended injury contractual liability liquor liability What coverage is provided by the hired and non-owned auto liability endorsement? - answerCoverage for liability arising out of the use or maintenance of a hired non-owned auto. How does the protective safeguards endorsement modify the policy? - answerCondition requiring insured to maintain protective safeguards What do utility services include? - answerCoverage for direct damage caused by utility service disruption stemming from a covered peril. What is a "personal floater"? - answerAn inland marine policy designed to cover moveable personal property What is a commercial floater? - answerAn inland marine policy designed to cover moveable commercial property What is a WYO insurance company and how is it used? - answerWrite Your own Insurance company...Private insurer's that participate in a WYO program and service policies on a no risk-bearing basis through a special arrangment with FIA. They get part of the flood premium for commissions and administrative cost and the rest are used to cover losses. The government picks up the remaining cost. When does the federal emergency flood insurance program go into effect and end? - answerWhen a community applies for the program and end when all NFIP criteria have been met and the regular program can begin. How does the mobile home endorsement change the homeowners policy? - answerCovers a mobilehome and other structures on land owned or leased by the resident of the mobile home. A customer was injured in a supermarket parking lot when a grocery cart collided with the customer's leg. Coverage for this claim would be provided under A. Premises and Operations B. Completed Operations C. Product Liability D. Contractural liability - answerA. Premises Operations Which of the following statements is true regarding the commercial general liability policy Coverage C- Medical Payments?
A. The coverage applies to bodily injury of the named insured. B. The coverage is liability insurance because it only pays if the insured is legally liable. C. The Coverage provides high levels of insurance to bodily injury losses. D. The coverage is considered good will because payments are made without regard to fault. - answerD. The coverage is considered good will because payments are made without regard to fault. In a liability insurance policy supplementary payments are made - answerIn addition to the limit of liability With respect to commercial auto policies, the garage coverage form provides liability protection for all of the following except? A. The insured's business premises. B. The insured's business auto's. C. The insured's business products and work preformed D. The insured's business income losses due to personal injury - answerD. The insured's business income losses due to personal injury. The Garage Coverage form is used to A. Auto businesses, such as auto dealers, service stations, and auto repair shops B. Businesses that use automobiles to transport property of others or their own property. C. All types of organizations other than auto businesses and motor carriers. D. Owner-operators who use their own trucks to haul property for the motor carriers that hire them. - answerA. Auto businesses, such as auto dealers, service stations and auto repair shops. All of the following statements are false regarding garage physical damage coverage EXCEPT? A. No coverage is provided for an auto stored for more than 45 days at a location not shown in the declarations. B. Specific cause of loss coverage is not available for physical damage coverage C. Autos listed for sell by the dealer are listed individually in the policy D. Collision Coverage is provided only for dealers. - answerA. No coverage is provided for an auto stored for more than 45 days at a location not shown in the declarations. Which of the following policies will help an auto dealership cover most of its liability exposures? A. A commercial general liability policy with a crime endorsement B. A business owners policy C. A garage liability coverage
