Insurance Property & Casualty Insurance

Question 1

Which peril is typically covered under a standard homeowners insurance policy (HO-3) on an open-perils basis?

Accepted Answer

Fire damage

Answer

Flood damage

Answer

Earthquake damage

Answer

Sewer backup

Question 2

What does 'subrogation' mean in the context of property and casualty insurance?

Accepted Answer

The insured transfers their right to recover losses from a third party to the insurer

Answer

The insurer cancels a policy mid-term

Answer

The policyholder increases their coverage limit

Answer

The insurer shares risk with another carrier

Question 3

In homeowners insurance, what is the purpose of 'loss of use' coverage?

Accepted Answer

Pays for additional living expenses if the home is uninhabitable after a covered loss

Answer

Covers theft of personal belongings

Answer

Replaces the home's structure

Answer

Covers liability for injuries on the property

Question 4

What is the difference between 'actual cash value' (ACV) and 'replacement cost value' (RCV) in property insurance?

Accepted Answer

ACV pays to replace the item new; RCV deducts depreciation

Answer

ACV pays more than RCV

Answer

RCV deducts depreciation; ACV does not

Answer

They are identical in most states

Question 5

Under a standard auto insurance policy, which coverage pays for damage to the insured's own vehicle caused by a collision?

Accepted Answer

Collision coverage

Answer

Comprehensive coverage

Answer

Uninsured motorist property damage

Answer

Medical payments coverage

Question 6

What is 'inland marine' insurance primarily designed to cover?

Accepted Answer

Property in transit and movable property away from a fixed location

Answer

Boats docked at inland lakes

Answer

Flood damage to coastal homes

Answer

Commercial fishing vessels