Free Casualty Insurance Only Practice Questions

Sample Practice Questions

Try these 10 sample questions from the Casualty Insurance Only practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

1. 1A producer is comparing a client's risks. One exposure can produce a loss or no loss, but never a gain. What type of risk is it?

   1. A. Pure risk
   2. B. Speculative risk
   3. C. Residual risk
   4. D. Investment risk

   Answer: A

   Explanation: "Pure Risk - circumstance including possibility of loss or no loss but no possibility of gain." The outcomes exclude a gain; speculative and investment risks allow gains, while residual risk describes what remains after controls.

   Reference: NAIC Glossary of Insurance Terms — Pure Risk

2. 2A store fails to address a known spill, and a customer is injured. Which liability concept describes failure to use reasonable care causing the injury?

   1. A. Strict liability
   2. B. Subrogation
   3. C. Indemnity
   4. D. Negligence

   Answer: D

   Explanation: "Negligence - failure to exercise reasonable consideration resulting in loss or damage to oneself or others." The ignored spill is a failure of reasonable care causing harm. Strict liability does not require that failure; subrogation is recovery; indemnity addresses compensation.

   Reference: NAIC Glossary of Insurance Terms — Negligence

3. 3An individual insures a family sedan under an ordinary personal auto policy. The individual's company owns a delivery van. How is that van classified under the family policy?

   1. A. A newly acquired auto under the family policy
   2. B. A commercial vehicle outside the family policy
   3. C. A temporary substitute auto under the family policy
   4. D. A nonowned private passenger auto under the family policy

   Answer: B

   Explanation: "Your auto policy will not cover motorcycles, all-terrain vehicles (ATVs), off-road vehicles, recreational vehicles (RVs), or commercial vehicles." The company-owned delivery van is a commercial vehicle outside the ordinary personal policy. It is neither a newly acquired family auto, a temporary substitute, nor a nonowned private passenger auto.

   Reference: NAIC What Does Auto Insurance Cover? — Specialty vehicles

4. 4How does ALDOI characterize business interruption insurance in relation to a commercial multi-peril policy?

   1. A. Optional coverage that may be purchased as part of the policy
   2. B. A mandatory automobile liability coverage
   3. C. A statutory workers-compensation benefit
   4. D. A guaranty-association assessment

   Answer: A

   Explanation: ALDOI states: "Business Interruption Insurance is optional coverage that may be purchased as part of a comprehensive multi-peril commercial policy."

   Reference: ALDOI - Current News Item — FAQ 1

5. 5Which filing proves an Alabama motor carrier has a surety bond for cargo protection?

   1. A. Form E
   2. B. Form K
   3. C. Form J
   4. D. Form L

   Answer: C

   Explanation: Rule 770-X-10-.04-.09 designates Form J as proof of a cargo surety bond The controlling source states: "Proof a motor carrier has in force a surety bond for cargo coverage shall be filed on Form J."

   Reference: Chapter 770-X-10 Motor Carrier General Orders Rules and Regulations Pamphlet No. 2003 — Rule 770-X-10-.04-.09(2)

6. 6An insured factory's electrical control equipment fails internally and is damaged. Which specialized coverage addresses the machinery-failure exposure?

   1. A. Commercial property fire coverage
   2. B. Business income coverage
   3. C. Equipment breakdown coverage
   4. D. Inland marine transit coverage

   Answer: C

   Explanation: "coverage for the failure of boilers, machinery, and other electrical equipment." The direct internal electrical failure is the breakdown trigger. Fire property, income loss, and transit coverage address different perils or loss types.

   Reference: NAIC Glossary of Insurance Terms — Boiler & Machinery or Equipment Breakdown & Machinery

7. 7Which uniform filing proves that an Alabama motor carrier has cargo insurance in force?

   1. A. Form E
   2. B. Form H
   3. C. Form J
   4. D. Form K

   Answer: B

   Explanation: Rule 770-X-10-.04-.09 assigns proof of cargo insurance to Form H The controlling source states: "Proof a motor carrier has in force cargo insurance shall be filed on Form H."

   Reference: Chapter 770-X-10 Motor Carrier General Orders Rules and Regulations Pamphlet No. 2003 — Rule 770-X-10-.04-.09(1)

8. 8An employee is injured on an assigned warehouse shift. Which combination describes ordinary workers-compensation benefits for the worker?

   1. A. Medical care, rehabilitation, and wage benefits
   2. B. Medical care, rehabilitation, and death benefits
   3. C. Medical care, wage benefits, and death benefits
   4. D. Rehabilitation, wage benefits, and death benefits

   Answer: A

   Explanation: "workers' compensation covers the employee's medical expenses, rehabilitation costs and at least some portion of their lost wages." This living injured worker has treatment, rehabilitation, and wage loss. Death benefits are a real workers-comp category but do not answer any stated loss here.

   Reference: NAIC Workers' Compensation Insurance — Workers' Compensation Insurance — benefits

9. 9Who is an insurance producer under Alabama's individual licensing guidance?

   1. A. A natural person required to be licensed to sell, solicit, or negotiate insurance
   2. B. Only an insurer incorporated in Alabama
   3. C. Only a claims adjuster employed by an insurer
   4. D. Any customer who purchases an insurance policy

   Answer: A

   Explanation: A producer is the person Alabama law requires to license for the transaction. The controlling definition is: "A person required to be licensed under the laws of this state to sell, solicit, or negotiate insurance."

   Reference: Code Section 27 7 1 — Code of Alabama §27-7-1(5)

10. 10For Alabama online insurance verification, how may the terms blanket liability policy and commercial automobile liability policy be used?

    1. A. Only for mutually exclusive policy forms
    2. B. Only when a fleet has more than 25 vehicles
    3. C. Interchangeably
    4. D. Only after Department approval for each insured

    Answer: C

    Explanation: Rule 810-5-8-.07 says the two terms may be used interchangeably The controlling source states: "The terms “blanket liability insurance policy” and “commercial automobile liability insurance policy” may be used interchangeably."

    Reference: Chapter 810-5-8 Mandatory Liability Insurance — Rule 810-5-8-.07(3)