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PEARSON VUE: PROPERT Y
INSURANCE PRACTICE E XAM
QUESTIONS AND ANSWER S
Question : S is purchasing a Commercial Property policy
to cover a commercial building with a replacement cost of $100,000. The policy includes an 80 percent Coinsurance clause. To avoid a coinsurance penalty in the event of a partial loss, S should purchase a policy with minimum limits of AT LEAST which of the following amounts?
A. $100,000
B. $90,000
C. $80,000
D. $20,000
CORRECT ANSWER: C
Question : The MAXIMUM amount a policy will pay in
the event of a loss is called the:
- coinsurance amount
- deductible
- limit of liability
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- pro rata return
CORRECT ANSWER: C
Question : The National Flood Insurance Program
provides coverage for losses caused by all of the
following occurrences EXCEPT:
- mudslides
- runoff from heavy rain
- overflow of tidal waters
- water-main breakage
CORRECT ANSWER: D
Question : Special Form or Open Perils coverage:
- Provides coverage against the named perils
- Provides coverage against scheduled risks
- Is limited by the named exclusions
- Includes no exclusions
CORRECT ANSWER: C
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Question : Which of the following businesses would be
eligible for a Businessowners policy?
- Auto body shop
- Theater
- Branch bank
- Barber shop
CORRECT ANSWER: D
Question : During a tornado, a barn is destroyed when a
section of its wall is blown down, knocking over a lantern, which sets the barn on fire. The proximate cause
of loss is the:
- fire
- collapse of the wall
- tornado
- smoke
CORRECT ANSWER: C
Question : A fire in an insured's restaurant burns the
kitchen walls and causes smoke damage to the entire
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interior. Water used to extinguish the fire causes extensive damage to floors and furnishings. The water
damage is best described as:
- a time element loss
- a consequential loss
- a direct loss
- an indirect loss
CORRECT ANSWER: C
Question : Which of the following terms is defined as the
uncertainty of future outcome?
- Risk
- Hazard
- Peril
- Cause
CORRECT ANSWER: A
Question : The Personal Liability section of a
Homeowners policy covers which of the following options?