Free Practice
Real questions in the style of the Kentucky Property & Casualty licensing exam, pulled straight from the TESTivity course, each with a plain-English explanation. Start with the Kentucky-specific rules below, then work the rest, and unlock the full simulator when you're ready to drill.
Question 1
In Kentucky, a resident property and casualty producer must complete how many hours of continuing education each 2-year renewal period (including 3 hours of ethics)?
Kentucky requires 24 hours of continuing education every 2 years, including 3 hours of ethics, to renew a producer license. The 20-hour figure is Kentucky's pre-licensing education, not CE. Hook: Kentucky CE is 24 every 2 years, 3 of them ethics.
Question 2
The insurance commissioner who heads the Kentucky Department of Insurance is:
Kentucky's Insurance Commissioner is appointed by the Governor, leading the Kentucky Department of Insurance, which administers Title XXIX of the Kentucky Revised Statutes. Hook: in Kentucky, the Governor appoints the insurance commissioner.
Question 3
In Kentucky, how many days of advance notice must an insurer give before nonrenewing a personal homeowners policy?
Kentucky requires at least 75 days of advance notice to nonrenew a homeowners policy, and no reason is required. Personal auto nonrenewal requires 30 days. Hook: Kentucky homeowners nonrenewal notice is 75 days.
Question 4
Kentucky's mandatory minimum auto liability limits are:
Kentucky requires $25,000 per person / $50,000 per occurrence bodily injury and $25,000 property damage (written 25/50/25). Kentucky uses pure comparative fault, allowing proportional recovery at any fault percentage. Hook: Kentucky auto minimums are 25/50/25.
Question 5
A Kentucky property and casualty insurer becomes insolvent. Whose policyholders does the state property and casualty guaranty association protect?
State guaranty associations cover the policyholders of admitted (licensed) insurers, which participate in and fund the association. Surplus lines (non-admitted) insurers are not backed by state guaranty funds, so their policyholders are not protected. Hook: admitted insurers are guaranty-backed; surplus lines are not.
Question 6
In Kentucky, once a property policy has been in force more than 60 days, an insurer that cancels mid-term for fraud or material misrepresentation must give the insured how many days' notice?
After 60 days, Kentucky permits mid-term cancellation only for limited reasons: nonpayment (10 days' notice), fraud or material misrepresentation (30 days), and a substantial change in the risk (30 days). For fraud or material misrepresentation, the required notice is 30 days. Hook: Kentucky mid-term cancel - nonpayment 10 days, fraud and risk-change 30 days.
Question 7
How does Kentucky's auto insurance system handle no-fault versus tort?
Kentucky is a CHOICE no-fault state: basic PIP is $10,000, but a driver may reject the no-fault system with a written rejection form and keep traditional tort rights. Hook: Kentucky lets drivers choose - no-fault PIP or reject in writing for tort.
Question 8
The use of credit-based insurance scores in underwriting and rating is:
Credit-based insurance scoring is allowed in many states but governed by the FCRA at the federal level and by state laws that differ on how and whether it may be used. Hook: credit scoring lives under the FCRA plus a patchwork of state rules.
Question 9
The Gramm-Leach-Bliley Act (GLBA) is primarily concerned with:
The GLBA's privacy provisions require financial institutions, including insurers, to protect customers' nonpublic personal information and to explain their information-sharing practices. Hook: GLBA is the financial-privacy law guarding nonpublic personal information.
Question 10
Under the GLBA, an insurer (as a financial institution) must generally give customers:
The GLBA requires a privacy notice that explains what information is collected, how it is used, and with whom it is shared, typically given at the start of the relationship and periodically after. Hook: GLBA means customers get a privacy notice explaining how their data is handled.
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Question 1
Which type of risk is the only kind that insurance is designed to cover?
Insurance only deals with pure risk: situations where there's a chance of loss or no loss, but no chance of gain (like your house burning down). Speculative risk involves a chance of loss, no loss, OR gain. That's gambling and investing, and insurers won't touch it. If there's an upside, it's not insurable.
Question 2
An insured who becomes careless about safety simply because they know they have insurance is displaying a:
Morale hazard is the 'eh, I'm covered' attitude: indifference or carelessness that creeps in because insurance exists. It's not dishonesty (that's moral hazard) and it's not a physical condition (physical hazard). Trick to remember: moralE hazard is about a person's lazy attitudE.
Question 3
Adverse selection refers to the tendency of:
Adverse selection is the insurer's headache: the people most likely to have a loss are also the most eager to buy and keep coverage. If underwriting didn't push back, the risk pool would fill up with bad risks and the math would collapse. It's exactly why underwriting and exclusions exist.
Question 4
The primary purpose of reinsurance is to:
Reinsurance is insurance for insurance companies. The original insurer (the ceding company) hands off part of its risk to a reinsurer so one giant loss doesn't sink it. Individuals never deal with reinsurers directly; it all happens behind the scenes between carriers.
Question 5
A reinsurance arrangement in which the reinsurer automatically accepts all risks of a certain type from the ceding insurer is called:
Treaty reinsurance is the automatic, blanket deal: the reinsurer agrees in advance to take a whole category of risks. Facultative is the opposite, case-by-case, where the reinsurer can accept or decline each risk individually. Treaty equals automatic and broad; facultative equals optional and specific.
Question 6
A policy that pays dividends to its policyholders is referred to as a:
Participating policies 'participate' in the insurer's profits by paying policy dividends, and are typically issued by mutual companies. Nonparticipating policies don't pay dividends and are typically issued by stock companies. The word 'participate' is your tell.
Question 7
An insurer that has been granted a certificate of authority to do business in a state is known as a(n):
An admitted (or authorized) insurer holds a certificate of authority from the state and plays by that state's rules. A non-admitted (unauthorized) insurer hasn't been granted one, which is where surplus lines come in for hard-to-place risks. Also worth knowing: domestic equals home state, foreign equals another state, alien equals another country.
Question 8
A reciprocal insurance company is managed by a(n):
A reciprocal (an unincorporated group of members who insure each other) is run by an attorney-in-fact. The members are both insureds and insurers to one another. Niche, but the exam likes the 'attorney-in-fact' detail, so tuck it away.
Question 9
Insurance contracts are considered 'unilateral' because:
Unilateral means only one side makes a legally enforceable promise, and it's the insurer, who promises to pay covered claims. The insured doesn't actually promise to keep paying premiums; they just won't get coverage if they stop. One enforceable promise equals unilateral.
Question 10
Which of the following is NOT one of the four essential elements of a valid contract?
The four elements are agreement (offer and acceptance), consideration, competent parties, and legal purpose. A notarized signature isn't on the list, so it's the odd one out. Consideration, by the way, is what each side brings to the table: the insured's premium and the insurer's promise to pay.
Question 1
Actual cash value (ACV) is generally calculated as what?
ACV pays what the damaged property was actually worth at the time of loss: replacement cost minus depreciation for age and wear. It leaves the insured to absorb the depreciation. Hook: ACV equals replacement cost minus depreciation, today's worn-down value.
Question 2
Under an agreed value method, the insurer and insured do what?
With agreed value, the parties set the insured amount up front (often for hard-to-value items like fine art), and that agreed figure is paid for a total loss, with the coinsurance requirement waived. Hook: agreed value locks in the payout amount ahead of time, no coinsurance fight later.
Question 3
A direct loss in property insurance is best described as what?
A direct loss is the immediate physical damage a peril causes, like a fire burning a building. It contrasts with indirect (consequential) losses that follow from it. Hook: direct loss is the physical damage itself, the fire burning the house.
Question 4
The coinsurance clause in a property policy is designed to do what?
The coinsurance clause pushes insureds to insure their property to an agreed percentage of value (commonly 80%). Carry less, and a penalty reduces partial-loss payments. It keeps premiums fair across policyholders. Hook: coinsurance nudges you to insure to value, or share the loss.
Question 5
A deductible in a property policy primarily does what?
The deductible is the amount the insured absorbs on each loss, which screens out small, frequent claims and reduces the premium. Hook: the deductible knocks out the small stuff and trims your premium.
Question 6
To establish negligence, a claimant must generally prove all of the following EXCEPT:
The four elements of negligence are a duty owed, a breach of that duty, the breach being the proximate cause, and actual damages. Intent is not required; in fact, negligence is unintentional, which separates it from an intentional tort. Hook: duty, breach, causation, damages, but never intent for negligence.
Question 7
Punitive damages differ from compensatory damages in that punitive damages are intended to do what?
Compensatory damages reimburse the victim's actual losses (special damages like medical bills and lost wages, plus general damages like pain and suffering). Punitive damages go beyond that to punish egregious conduct and deter others. Hook: compensatory makes the victim whole; punitive punishes the wrongdoer.
Question 8
Absolute (strict) liability holds a party liable for harm regardless of what?
Strict (absolute) liability holds a party responsible for harm without proof of negligence or fault, typically for inherently dangerous activities (like blasting) or, in some contexts, defective products. Hook: strict liability means liable even without fault.
Question 9
Under an excess other insurance provision, a policy pays how?
An excess provision makes that policy pay only after other primary coverage has been used up; it sits on top as a second layer. Hook: excess coverage waits its turn, paying only after the primary is exhausted.
Question 10
A physical hazard is best illustrated by which of the following?
A physical hazard is a tangible condition of property or environment that increases risk, like icy steps, faulty wiring, or stored chemicals. It exists in the physical world, unlike moral or morale hazards. Hook: a physical hazard is a real-world condition you could point to.
Question 1
The HO-2 (Broad Form) covers the dwelling and personal property on what basis?
The HO-2 Broad Form covers both the dwelling and personal property on a named-perils basis, using the broad list of covered perils. It is narrower than the HO-3, which opens the dwelling up to open perils. Hook: HO-2 is named perils on everything, the broad list applied to both house and contents.
Question 2
Coverage A under a homeowners policy insures what?
Coverage A insures the dwelling itself, the house and structures attached to it. Hook: Coverage A is the dwelling, the house itself.
Question 3
Damage to the dwelling under Coverage A is generally settled on what basis when the insured carries enough coverage?
The dwelling under Coverage A is generally settled on a replacement cost basis, as long as the insured carries at least the required percentage, usually 80%, of replacement cost. Personal property defaults to actual cash value unless a replacement-cost endorsement is added. Hook: the dwelling is replacement cost if insured to value; contents default to ACV.
Question 4
A standard homeowners liability section covers bodily injury and property damage. To add coverage for offenses like libel, slander, and defamation, the insured would add what?
The base liability section covers bodily injury and property damage. A personal injury endorsement broadens it to cover offenses such as libel, slander, defamation, and invasion of privacy. Hook: the personal injury endorsement adds the reputation harms, libel and slander.
Question 5
Coverage C (Personal Property) covers the insured's belongings:
Coverage C follows the insured's personal property anywhere in the world, so belongings are covered while traveling or temporarily off premises, often subject to a percentage limit when away from home. Hook: your stuff is covered worldwide, not only at the house.
Question 6
An insured owns a $12,000 engagement ring, but the homeowners policy caps theft of jewelry at $1,500. The best way to fully insure the ring against theft is to:
Raising Coverage C does not lift the special jewelry theft sublimit. Scheduling the ring on a personal articles floater (scheduled personal property endorsement) insures it for its full appraised value, usually on an open-perils basis and often with no deductible. Hook: beat the jewelry sublimit by scheduling the item, not by raising Coverage C.
Question 7
Unless a replacement cost endorsement is added, personal property (Coverage C) losses are typically settled on what basis?
By default, Coverage C pays actual cash value, replacement cost minus depreciation, for personal property. A replacement-cost-on-contents endorsement upgrades it to pay full replacement with no depreciation. Hook: contents default to ACV; add the endorsement to get replacement cost.
Question 8
If a homeowner insures the dwelling for less than the required 80% of replacement cost, a partial loss will be paid:
Underinsuring below 80% drops the insured to the larger of the actual cash value of the loss or a reduced amount figured by the loss-settlement proportion, but never the full replacement cost. Hook: under 80%, you fall back to the greater of ACV or the prorated amount, not full replacement.
Question 9
Loss of Use (Coverage D) benefits are generally triggered when:
Coverage D responds when a covered peril renders the home unfit to live in, paying the additional living expenses incurred while it is repaired or rebuilt. A voluntary remodel does not trigger it. Hook: Loss of Use kicks in when a covered loss forces you out, not when you choose to leave.
Question 10
An ordinance or law endorsement helps pay for what?
After a covered loss, current building codes may require costlier rebuilding than the original construction. An ordinance or law endorsement covers that added expense, which the base policy may limit or exclude. Hook: ordinance or law pays the code-upgrade costs when you rebuild.
Question 1
Under a 25/50/25 split limit, three people are injured in one at-fault accident with bodily injury claims of $30,000, $20,000, and $15,000. How much will the bodily injury portion pay?
The first claim is capped at the 25,000 per-person limit, the other two ($20,000 and $15,000) are under that cap and paid in full, summing to 60,000. But the 50,000 per-accident bodily injury limit caps the total payout at 50,000. Hook: apply the per-person cap first, then the per-accident cap can still trim the total.
Question 2
In addition to paying damages up to the limit, auto liability coverage typically also provides:
Liability coverage includes the insurer's duty to defend the insured against covered claims, and those defense costs are usually paid in addition to the policy limits, not subtracted from them. Hook: liability buys you a lawyer, and the defense cost normally sits on top of your limit.
Question 3
Uninsured motorist bodily injury coverage generally covers:
UM bodily injury pays for the insured's injuries caused by an at-fault driver who is uninsured or who flees the scene. Whether UM also covers property damage varies by state. Hook: UM-BI is for your injuries when the other driver is uninsured or a hit-and-run.
Question 4
Other-than-collision (comprehensive) coverage pays for losses such as:
Other-than-collision, often called comprehensive, covers the non-crash perils: theft, fire, hail, falling objects, vandalism, glass breakage, and animal strikes. Crashing or overturning is collision, not comprehensive. Hook: comprehensive is everything but the crash, fire, theft, hail, and Bambi.
Question 5
A deductible on physical damage (collision or comprehensive) coverage is:
A deductible is the insured's share of each physical damage loss, paid before the insurer pays the remainder. Choosing a higher deductible lowers the premium. Hook: the deductible is your slice of the loss you pay first.
Question 6
An insured's car has an actual cash value of $8,000. It is damaged in a collision with repairs estimated at $9,500, and the collision deductible is $500. The insurer will most likely:
When repair cost exceeds the vehicle's actual cash value, the insurer totals the car and pays the ACV rather than the higher repair bill, less the deductible. Here that is 8,000 minus 500, or 7,500. Hook: if repairs cost more than the car is worth, you get ACV minus deductible, not the repair bill.
Question 7
The newly acquired auto provision in the PAP:
The newly acquired auto rule automatically extends the policy to a car the insured buys during the term, for a limited window (commonly up to 14 days), so the insured is not driving uninsured before reporting it. Hook: buy a new car and you get an automatic grace period to add it.
Question 8
A temporary substitute auto, such as a loaner driven while the insured's car is in the shop, is generally:
A temporary substitute auto used because the insured's vehicle is out of service for repair, service, breakdown, or loss is treated as a covered auto, so the policy's coverages extend to it. Hook: a loaner while yours is being fixed is covered like your own car.
Question 9
An insured wants coverage for the cost of a tow truck after a breakdown on the highway. They should add:
Towing and labor coverage, sometimes called roadside assistance, pays for towing and on-site labor costs after a disablement. It is a low-cost optional endorsement. Hook: towing and labor is the tow-truck and roadside endorsement.
Question 10
In a no-fault auto insurance state, an injured person's own:
In a no-fault system, each injured party turns to their own Personal Injury Protection coverage for medical bills and related expenses without first proving who was at fault, which speeds payment and limits lawsuits. Hook: no-fault means you collect from your own PIP, no blame needed.
Question 1
How does a dwelling policy differ from a homeowners policy regarding liability coverage?
Unlike the homeowners policy, the dwelling policy is primarily a property form and does not build in personal liability. An insured who wants it adds a liability endorsement. Hook: the DP is property-only out of the box; liability is a bolt-on.
Question 2
A person who lives in their own single-family house and wants broad protection would normally buy:
An owner-occupant of a typical home is the target customer for a homeowners policy, which bundles broad property and liability coverage. The dwelling policy is the fallback for homes that do not fit homeowners. Hook: live there yourself and qualify, you want homeowners, not a DP.
Question 3
A landlord wants the broadest dwelling form, insuring the rental structure against the widest range of perils. Of the standard forms, the best fit is:
Among dwelling forms, the DP-3 gives the broadest protection on the structure by covering open perils. The DP-2 is broad but still named-perils, and the DP-1 is the narrowest. Hook: broadest dwelling form is the DP-3, open perils on the building.
Question 4
The DP-1 Basic Form, in its most basic version, covers which perils?
In its base form the DP-1 covers fire, lightning, and internal explosion. Extended Coverage and optional endorsements broaden it from there. Hook: the bare DP-1 starts with fire, lightning, and internal explosion.
Question 5
Under a DP-3 Special Form, personal property (when covered) is insured on what basis?
Like the HO-3, the DP-3 splits its basis: the dwelling and other structures get open perils, but personal property is covered on a named-perils basis. Hook: DP-3 is open perils on the building, named perils on the contents, just like HO-3.
Question 6
A dwelling insured under a DP-3 to at least the required percentage of replacement cost suffers a partial fire loss. The dwelling loss is generally settled:
When a DP-2 or DP-3 dwelling is insured to the required percentage of replacement cost (commonly 80%), partial losses are paid at replacement cost without a depreciation deduction. Underinsuring drops the insured back toward ACV or a prorated amount. Hook: insure a DP-3 to value and partial losses pay full replacement cost.
Question 7
Which of the following is typically EXCLUDED under a dwelling policy, just as under a homeowners policy?
Like homeowners, dwelling policies exclude flood and earth movement (including earthquake). Flood is insured through the NFIP or a private flood policy, and earthquake can be added by endorsement or separate policy. Hook: DP and HO both exclude flood and earth movement, buy those separately.
Question 8
A seasonal or secondary home that the owner occupies only part of the year is often insured under:
Seasonal and secondary residences often fail homeowners occupancy requirements, so they are written on a dwelling policy instead. Hook: the vacation or seasonal home usually lands on a dwelling policy.
Question 9
On a dwelling policy covering a rental, Coverage C (Personal Property) would insure:
Coverage C protects the named insured's (owner's) personal property kept at the dwelling, like appliances or upkeep equipment. The tenant insures their own belongings under a renters (HO-4) policy. Hook: on a rental DP, Coverage C is the owner's property; the tenant buys HO-4.
Question 10
The DP-2 Broad Form differs from the DP-1 mainly because it:
The DP-2 keeps the named-perils approach but lengthens the peril list and, unlike the DP-1, settles the dwelling on a replacement cost basis. Open perils is the DP-3, not the DP-2. Hook: DP-2 adds perils and upgrades the dwelling to replacement cost, still named perils.
Question 1
Which of the following is a common advantage of writing coverages in a package policy rather than separate monoline policies?
Packaging usually lowers the premium (a package credit) and reduces the chance of gaps or overlaps between separately written policies. It does not erase deductibles, conditions, or exclusions. Hook: packages save money and close the gaps between separate policies.
Question 2
Under the Common Policy Conditions, the insurer's right to inspect the insured's premises and operations is found in the:
The Inspections and Surveys condition reserves the insurer's right (but not a duty) to inspect the premises and operations and to make safety recommendations. Hook: the right to walk the premises lives in Inspections and Surveys.
Question 3
Under the BPP, Your Business Personal Property includes:
Business personal property is the contents the business owns and uses: furniture, fixtures, machinery, equipment, and stock (inventory) located at the described premises. The building itself is insured separately. Hook: business personal property is the contents, furniture, fixtures, machinery, and stock.
Question 4
Under the BPP, property of others left in the insured's care, custody, or control is:
The BPP has a separate Personal Property of Others category for property of others in the insured's care, custody, or control, such as customers' goods left for service. Hook: customers' property in your care goes under Personal Property of Others.
Question 5
Under the BPP, the building coverage would include:
Building coverage takes in the structure, completed additions, permanently installed fixtures and machinery, and equipment used to maintain or service the building (like heating and air conditioning). Movable contents and stock are business personal property instead. Hook: building is the structure plus what is bolted in to run it.
Question 6
The period of restoration for business income coverage generally:
The period of restoration runs from the date of the direct physical loss (after any waiting period) until the property is or should be repaired or replaced with reasonable speed. That window defines how long business income is paid. Hook: restoration runs from the loss to when repairs should be done.
Question 7
CGL Coverage B insures:
Coverage B covers personal and advertising injury offenses: libel, slander, false arrest, wrongful eviction, and infringing on copyright or slogans in the insured's advertising. Hook: Coverage B is the reputation and advertising offenses, libel and slander.
Question 8
How does a claims-made CGL form differ from an occurrence form?
A claims-made form is triggered by when the claim is first reported, not when the injury happened, and a retroactive date sets the earliest loss date it will respond to. Extended reporting (tail) coverage can fill gaps at expiration. Hook: claims-made looks at when the claim is reported, bounded by the retro date.
Question 9
Commercial inland marine coverage is typically used to insure:
Inland marine covers property that moves or is hard to value at a fixed location: contractors' equipment, fine arts, goods in transit, and similar floating risks. Despite the name, it is largely land-based. Hook: inland marine insures property on the move and hard-to-rate items.
Question 10
Equipment breakdown (boiler and machinery) coverage pays for:
Equipment breakdown, the modern boiler and machinery coverage, pays for sudden and accidental breakdown of boilers, pressure vessels, and mechanical or electrical equipment, plus resulting damage. Hook: equipment breakdown covers the machine blowing up, not wear and tear.
Question 1
Compared with assembling separate monoline policies, a key benefit of a BOP for a small business is:
The BOP gives a small business broad, coordinated coverage at a lower bundled cost and with fewer gaps than juggling separate policies. It does not erase exclusions or premiums. Hook: the BOP wins on simplicity and price for the right-sized business.
Question 2
Under a BOP, the property coverage insures:
BOP property coverage protects the business's building (if owned) and its business personal property, such as contents and stock, at the described premises. Hook: BOP property is the building and the business contents.
Question 3
BOP property coverage is most often written on what basis for covered causes of loss?
Modern BOPs commonly insure property on an open-perils (special) basis, covering any cause of loss that is not specifically excluded, which is broader than named-perils. Hook: BOP property usually runs open perils, covered unless excluded.
Question 4
Buildings and business personal property under a BOP are commonly valued on what basis?
BOPs typically settle covered property losses on a replacement cost basis, paying to repair or replace without deducting depreciation, which is a selling point over ACV forms. Hook: BOP property is usually replacement cost, no depreciation taken.
Question 5
The liability section of a BOP provides coverage similar to:
The BOP liability section mirrors a commercial general liability form, covering the business's liability for bodily injury and property damage to third parties, plus defense. Hook: BOP liability works like a CGL, third-party bodily injury and property damage.
Question 6
BOP liability coverage generally includes:
Like the CGL, BOP liability covers bodily injury and property damage, personal and advertising injury, and offers limited medical payments to others, with defense costs. Hook: BOP liability covers BI/PD, personal and advertising injury, and a little med pay.
Question 7
Which of the following is NOT provided by a standard BOP?
Workers compensation is never part of a BOP; it is written on a separate workers comp policy. The BOP does include property, liability, and business income. Hook: a BOP has no workers comp, that is always a separate policy.
Question 8
Professional liability (errors and omissions) for a business is:
BOPs do not cover professional liability; a business needing errors and omissions protection buys a separate professional liability policy or specific endorsement. Hook: E&O is not in the BOP, that needs its own professional liability policy.
Question 9
Apartment buildings, offices, and small retail (mercantile) risks are examples of:
Apartments, offices, and small mercantile (retail) operations are the staple eligible classes the BOP was designed for. Hook: apartments, offices, and small retail are the textbook eligible BOP classes.
Question 10
Business personal property under a BOP includes the insured's:
Business personal property is the contents the business owns and uses, furniture, fixtures, machinery, equipment, and stock, at the described premises. The building is separate, and licensed autos are excluded. Hook: BPP is the contents, furniture, fixtures, machinery, and stock.
Question 1
Workers compensation is described as a no-fault system because:
Under workers compensation, an injured worker collects benefits without proving the employer was negligent, and benefits are generally owed even if the worker was careless. Fault is set aside. Hook: no-fault means benefits flow without proving blame.
Question 2
For an injury to be covered by workers compensation, it generally must:
The two-part test is that the injury must arise out of the employment (be connected to job duties) and occur in the course of employment (during work). Both prongs generally must be met. Hook: covered injuries arise out of and happen in the course of the job.
Question 3
An employee is hurt while intoxicated and violating a clear safety rule. Under many state workers compensation laws, benefits may be:
Although comp is no-fault, most statutes still allow benefits to be reduced or denied where the injury results from the worker's intoxication or willful misconduct. No-fault does not mean no defenses. Hook: no-fault still has limits, intoxication and willful misconduct can cut benefits.
Question 4
The workers compensation benefit that replaces lost wages while an injured worker cannot work at all but is expected to recover and return is:
Temporary total disability (TTD) replaces a portion of wages while the worker is fully unable to work but is expected to recover and return. Once recovery plateaus, the case may move to a permanent classification. Hook: temporary total is off work now, expected back later.
Question 5
Permanent partial disability benefits are paid when an employee:
Permanent partial disability (PPD) applies when the worker is left with a lasting impairment, such as the loss of use of a limb, but retains some ability to work. Benefits often follow a statutory schedule. Hook: permanent partial means a lasting impairment, but still able to work somewhat.
Question 6
If a worker dies from a covered job injury, workers compensation generally provides:
A fatal work injury triggers death benefits to the worker's surviving dependents (often a percentage of wages) along with a burial or funeral allowance set by statute. Hook: a fatal claim pays the dependents plus a burial allowance.
Question 7
Workers compensation premium is primarily based on:
Workers compensation premium is driven by payroll and the job classifications of the workers, since riskier classes carry higher rates. Premium is typically a rate applied to payroll. Hook: comp premium rides on payroll and job classification.
Question 8
In a monopolistic fund state, an employer must buy workers compensation insurance from:
In a monopolistic state, workers compensation must be purchased from the state fund, and private insurers do not write the coverage there. Hook: monopolistic means one seller, the state fund.
Question 9
A competitive (open) state fund differs from a monopolistic fund because in a competitive-fund state:
A competitive state fund coexists with private insurers, so employers can choose between the fund and the private market. A monopolistic fund is the only option. Hook: competitive fund means you get a choice; monopolistic means you do not.
Question 10
The Jones Act provides a remedy for injured:
The Jones Act gives seamen (crew members of vessels) the right to seek damages from their employer for job injuries. Railroad workers use FELA instead. Hook: seamen sail under the Jones Act; railroaders ride FELA.
Question 1
If a covered umbrella claim is not covered at all by the underlying policy, the umbrella may still respond after the insured pays:
When a loss is covered by the umbrella but not the underlying policy, the insured pays a self-insured retention (much like a deductible) and the umbrella covers the rest. Hook: no underlying coverage means the umbrella kicks in after your self-insured retention.
Question 2
A new flood insurance policy through the NFIP generally has a waiting period before coverage takes effect of about:
NFIP flood coverage typically does not take effect until about 30 days after purchase, which discourages buying only when a flood is imminent. Limited exceptions apply (such as loan-related purchases). Hook: NFIP usually makes you wait about 30 days, no buying ahead of the storm.
Question 3
An insured wants protection against earthquake damage to their home. The most accurate statement is:
Standard property forms exclude earth movement, but earthquake coverage can be added by endorsement or bought separately, commonly with a deductible expressed as a percentage of the dwelling limit rather than a flat dollar amount. The NFIP covers flood, not quake. Hook: earthquake is excluded but buy-back-able, usually with a percentage deductible.
Question 4
Aircraft are excluded under standard homeowners and auto policies, so aviation exposures require:
Aviation risks (hull and liability for aircraft) are excluded from standard personal lines and must be written on specialized aviation policies. Hook: planes need aviation insurance, never the home or auto policy.
Question 5
In a surety bond, the party who is protected (the one who receives the guarantee) is the:
The obligee is the party protected by the bond, the one the principal must perform for. The principal is the one who must perform, and the surety backs that promise. Hook: the obligee is owed the obligation, the one the bond protects.
Question 6
When a surety pays a loss because the principal failed to perform, the surety generally:
Unlike insurance, a surety expects the principal to ultimately bear the loss, so after paying the obligee the surety can seek reimbursement from the principal. Hook: the surety pays, then comes back to the principal to be repaid.
Question 7
A contractor required to guarantee it will complete a construction project as agreed would typically provide a:
A performance bond is a surety bond guaranteeing the contractor will complete the project according to the contract; if not, the surety makes the obligee whole. Hook: performance bonds guarantee the job gets finished.
Question 8
Farm and ranch coverage is distinctive because it can combine, in one program:
A farm policy blends personal and business exposures, covering the farm dwelling and personal property along with barns, equipment, livestock, and farm liability, because a farm is both a home and a business. Hook: farm coverage mixes the home and the business under one roof.
Question 9
A mobile or manufactured home that is not permanently affixed is often insured under:
Mobile and manufactured homes have unique construction and transport exposures, so they are commonly written on a specialized mobile-homeowners form rather than a standard HO-3. Hook: mobile homes get their own mobile-homeowners policy.
Question 10
The residual or shared market (such as assigned risk plans and FAIR Plans) exists mainly to:
The residual or shared market is the insurer of last resort, providing coverage (auto through assigned risk plans, property through FAIR Plans) to applicants the voluntary market turns down. Hook: the residual market is the last resort for risks no one else will write.
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