General Practice Flashcards
7 cards from real P&C practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 General Practice flashcards as text
Which of the following best describes the principle of indemnity in property and casualty insurance?
Answer: The insured is restored to the same financial position as before the loss
The principle of indemnity states that insurance should restore the insured to the same financial position they were in before the loss, no better and no worse.
A homeowner's policy excludes flood damage. After a storm, the insured's home suffers both wind and flood damage. What doctrine determines how losses are settled when a covered and excluded peril combine?
Answer: Doctrine of concurrent causation
The doctrine of concurrent causation addresses how insurers handle losses caused by a combination of covered and excluded perils occurring simultaneously.
Under a standard commercial general liability (CGL) policy, which coverage part pays for property damage caused by the insured's operations that occurs away from the insured's premises?
Answer: Premises and operations coverage
Premises and operations coverage under the CGL protects against bodily injury or property damage arising from the insured's ongoing operations, whether on or off the insured's premises.
An insured purchases a $500,000 liability policy with a $1,000 per-occurrence deductible. A covered claim results in a $250,000 judgment. How much does the insurer pay?
Answer: $249,000
With a per-occurrence deductible, the insurer pays the claim amount minus the deductible: $250,000 − $1,000 = $249,000.
Which of the following is NOT a component typically found in a standard insurance policy?
Answer: Arbitration tribunal ruling
A standard insurance policy consists of the declarations, insuring agreement, conditions, exclusions, and definitions — an arbitration tribunal ruling is not a policy component.
A business owner's policy (BOP) combines which two primary coverages?
Answer: Commercial property and commercial general liability
A BOP packages commercial property insurance and commercial general liability insurance into a single policy designed for small to mid-sized businesses.
What is the purpose of a 'sunset clause' in a claims-made liability policy?
Answer: It limits the time period after policy expiration during which claims can still be reported
A sunset clause (also called an extended reporting period tail) limits how long after the policy expires the insured may report claims arising from covered acts during the policy period.