Property & Casualty Insurance Practice Test
P&C Insurance Policy Provisions & Conditions Practice Questions
Policy Provisions & Conditions makes up 7 of every 50 questions on a Tigertest P&C Insurance practice test. Here are 10 of the 28 questions on it, each with the answer and the reason.
Updated by the Tigertest team. Based on the general (national) portion of the property and casualty producer exam outlines. State laws and the state portion are not covered.
1. Which part of an insurance policy identifies the named insured, policy period, covered locations and limits?
- A.Exclusions
- B.Declarations
- C.Insuring agreement
- D.Conditions
Answer: B. The declarations page personalizes the policy with who, what, where, when and how much. The insuring agreement states what the insurer promises to do.
2. The part of the policy that states the insurer's promise to pay for covered losses is the:
- A.Conditions
- B.Definitions
- C.Declarations
- D.Insuring agreement
Answer: D. The insuring agreement is the heart of the policy, describing the perils or liabilities covered. Conditions set out the rules both parties must follow.
3. Duties after a loss, such as giving prompt notice and protecting property from further damage, are found in the policy's:
- A.Conditions
- B.Declarations
- C.Definitions
- D.Insuring agreement
Answer: A. Conditions spell out the obligations of the insured and insurer, including duties after loss, subrogation and appraisal. The insuring agreement describes coverage, not duties.
4. Exclusions in a property policy are used mainly to:
- A.Describe the insured's duties after a loss
- B.List the property that is covered at replacement cost
- C.Remove uninsurable or separately insured perils
- D.State the premium and payment schedule
Answer: C. Exclusions eliminate perils such as flood, war and nuclear hazard that are catastrophic or better handled by other policies. Duties and premium belong in the conditions and declarations.
5. A written form attached to a property or casualty policy that changes its terms is a(n):
- A.Declarations page
- B.Binder
- C.Endorsement
- D.Certificate of insurance
Answer: C. Endorsements add, delete or modify coverage. A certificate of insurance only shows evidence of coverage and changes nothing.
6. When an endorsement conflicts with the printed policy language, which controls?
- A.The endorsement
- B.The application
- C.Whichever is more favorable to the insurer
- D.The original policy wording
Answer: A. An endorsement is a later, specific agreement and overrides the general printed form. Ambiguities, if any, are read in favor of the insured, not the insurer.
7. A policy that covers all direct physical loss except what it specifically excludes is written on which basis?
- A.Named perils
- B.Blanket coverage
- C.Scheduled coverage
- D.Open perils
Answer: D. Open perils coverage, the special form, pays for any cause of loss not excluded. Named perils forms such as the broad form cover only the perils listed.
8. Under an open perils policy, who has the burden of proving whether a loss is covered?
- A.The producer who placed the coverage
- B.The insurer, by showing an exclusion applies
- C.The insured, who must show the peril is listed
- D.The adjuster, who must find a covered cause
Answer: B. With open perils, the insured only shows a direct physical loss occurred; the insurer must prove an exclusion. Under named perils the burden flips to the insured.
9. A fire closes a bakery for two months. The profit lost while it is closed is a(n):
- A.Direct loss
- B.Indirect loss
- C.Collateral loss
- D.Proximate loss
Answer: B. Indirect, or consequential, losses follow from the direct damage, such as lost income or extra expense. The direct loss is the physical fire damage itself.
10. Wind tears off a roof and rain then ruins the interior. The wind is considered the:
- A.Secondary peril that is not covered
- B.Hazard that increased the risk
- C.Concurrent cause excluded by the policy
- D.Proximate cause of the loss
Answer: D. The proximate cause is the peril that sets the unbroken chain of events in motion. Because wind is a covered peril, the resulting rain damage is covered too.
Practice all 28 policy provisions & conditions questions, and the rest of the 200-question bank, in the free P&C Insurance training sets. Questions you miss come back until you have mastered them.
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