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Free Casualty examination Practice Questions

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Sample Practice Questions

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

  1. 1A producer compares four exposures for insurance. Which one is a pure risk?

    1. A. A retailer may earn a profit or incur a loss on a new product line.
    2. B. A homeowner's house may be damaged by fire or remain unharmed.
    3. C. A trader may gain or lose value on a commodity position.
    4. D. A startup may make or lose money after entering a new market.

    Answer: B

    Explanation: "Pure Risk - circumstance including possibility of loss or no loss but no possibility of gain." The homeowner faces loss or no loss, with no gain from the event. The other exposures include a chance of profit.

    Reference: NAIC Glossary of Insurance Terms — Glossary, Pure Risk

  2. 2An insurer tells applicants that its policyholders own the organization. Which organizational form does that describe?

    1. A. A stock insurance company
    2. B. A captive insurance company
    3. C. A mutual insurance company
    4. D. A government insurance fund

    Answer: C

    Explanation: "Mutual Insurance Company - a privately held insurer owned by its policyholders" A mutual insurer is owned by its policyholders. The other organizational forms have distinct owners.

    Reference: NAIC Glossary of Insurance Terms — Glossary, Mutual Insurance Company

  3. 3An auto insurer first decides whether to accept an applicant's risk, then assigns a premium. Which function assigns the price?

    1. A. Rating uses the assessed risk to set the price.
    2. B. Underwriting uses the assessed risk to set the price.
    3. C. Claims adjustment uses the assessed risk to set the price.
    4. D. Loss settlement uses the assessed risk to set the price.

    Answer: A

    Explanation: "Based on the results of the underwriting process, the rating assigns a price" Underwriting assesses and selects the risk; rating assigns the price. Claims functions concern losses after coverage begins.

    Reference: NAIC Consumer Auto Insurance — Specific Factors that Affect Your Rate

  4. 4A visitor slips on a homeowner's walkway and claims the homeowner is legally responsible for the visitor's injuries. Which homeowners coverage addresses that liability claim?

    1. A. Coverage A — Dwelling
    2. B. Coverage C — Personal Property
    3. C. Coverage D — Loss of Use
    4. D. Coverage E — Personal Liability

    Answer: D

    Explanation: "This coverage protects you against claims arising from accidents to others on property that you own or rent." The accident to a visitor raises the homeowner's personal liability. The other named coverages insure the residence, contents, or loss of use.

    Reference: NAIC Consumer Homeowners Insurance — Types of Coverage, Comprehensive Personal Liability

  5. 5A passenger is hurt while aboard the insured's boat and brings an injury claim against the boat owner. Which protection is directed at that liability exposure?

    1. A. Boatowners liability coverage
    2. B. Boat hull physical damage coverage
    3. C. Personal auto liability coverage
    4. D. Homeowners dwelling coverage

    Answer: A

    Explanation: "A boat insurance policy provides liability coverage if someone is injured on your boat." The passenger's injury claim against the boat owner is boat liability. Hull, auto, and dwelling protections cover different interests.

    Reference: NAIC Summer Safety: Are You Insured for Summer Fun? — Boats

  6. 6A business plans a commercial package policy with property and liability coverage parts. Which layout matches the typical CPP structure?

    1. A. Separate declarations, common conditions, and two coverage parts
    2. B. Common declarations, separate conditions, and two coverage parts
    3. C. Common declarations, common conditions, and two coverage parts
    4. D. Common declarations, common conditions, and one coverage part

    Answer: C

    Explanation: "The typical commercial package policy contains a common policy declarations page, a common policy conditions page and two or more coverage parts." A typical CPP uses common declarations and conditions with two or more coverage parts. The other layouts change one of those structural elements.

    Reference: NAIC A Regulator's Introduction to the Insurance Industry — Insurance Lines and Products, Commercial Multi-peril Insurance, p. 44

  7. 7A plumbing contractor completes a customer's repair and leaves. The next day, defective completed work damages the customer's property. Which CGL exposure category fits?

    1. A. Products-completed operations liability
    2. B. Premises and ongoing operations liability
    3. C. Personal and advertising injury liability
    4. D. Contractual liability

    Answer: A

    Explanation: "bodily injury or property damage from defective work or operations completed or abandoned by or for the insured, away from the insured's premises." The work was completed before the later damage at the customer's premises, so this is a completed-operations exposure rather than ongoing operations or another liability category.

    Reference: NAIC Glossary of Insurance Terms — Glossary, Completed Operations Liability

  8. 8A firm's bookkeeper diverts employer funds into a personal account. Which protection is designed for the employer's loss from that dishonest act?

    1. A. A contract surety bond
    2. B. Employee dishonesty fidelity coverage
    3. C. Commercial burglary insurance
    4. D. Employee benefits liability coverage

    Answer: B

    Explanation: "Fidelity - a bond or policy covering an employer's loss resulting from an employee's dishonest act" The loss is the employer's money taken by its own employee. Fidelity addresses that dishonesty; surety, burglary, and benefits liability have different triggers.

    Reference: NAIC Glossary of Insurance Terms — Glossary, Fidelity

  9. 9Under the Kentucky Department of Insurance's stated general rule, what is the minimum employee headcount that triggers an employer's duty to maintain workers' compensation coverage?

    1. A. One employee
    2. B. Two employees
    3. C. Five employees
    4. D. Ten employees

    Answer: A

    Explanation: "All Kentucky employers with one or more employees are required to maintain workers’ compensation coverage." The Department states the general duty begins with one employee. These larger headcounts are not the stated minimum.

    Reference: Kentucky Department of Insurance: Workers' Compensation — Workers' Compensation

  10. 10Which organization does Kentucky place outside the Insurance Code's general provisions except as specifically stated in the organization's governing subtitle?

    1. A. An insurance premium finance company
    2. B. An authorized casualty insurer
    3. C. A licensed surplus-lines broker
    4. D. A signatory to the Kentucky automobile insurance plan

    Answer: A

    Explanation: KRS 304.1-120(5) states that no provision of the code applies to "Insurance premium finance companies (as identified in Subtitle 30), except as stated in Subtitle 30." That organization receives the stated scope treatment.

    Reference: Krs 304 1 120 — KRS 304.1-120(5)

Topics in this practice bank

These topics describe the available practice for Casualty examination. Review the examination outline and its sources for scope and allocation details.

  • Unit 1 — Principles of Insurance
    • Risk
    • Managing Risk
    • Law of Large Numbers
    • Elements of Insurability
    • Elements of Insurability / Pure Risk, Speculative Risk
    • Elements of Insurability / Insurable Interest
    • Elements of Insurability / Other Elements of Insurability
    • Other Insurance Terms
    • Other Insurance Terms / Peril
    • Other Insurance Terms / Hazard
  • Unit 2 — The Insurance Contract
    • Elements of a Valid Contract
    • Elements of a Valid Contract / Offer and Acceptance
    • Elements of a Valid Contract / Consideration
    • Characteristics of an Insurance Contract
    • Characteristics of an Insurance Contract / Principle of Indemnity
    • Characteristics of an Insurance Contract / Personal
    • Characteristics of an Insurance Contract / Unilateral
    • Parts of the Insurance Contract
    • Parts of the Insurance Contract / Policy Organization
  • Unit 3 — Insurance Company Organization and Regulation
    • Types of Insurance Organizations
    • Types of Insurance Organizations / Stock and Mutual Companies
    • Insurance Company Organization
    • Insurance Company Organization / The Agent
    • Insurance Company Organization / Insurance Marketing Systems
    • Insurance Company Organization / Other Insurance Functions
    • Regulation
    • Regulation / Regulation and the Company
    • Regulation / Regulation and the Agent
  • Unit 4 — The Insurance Transaction
    • Application
    • Binders
    • Underwriting the Policy
    • Underwriting the Policy / Fair Credit Reporting Act
    • Rating the Policy
    • Rating the Policy / Judgment and Manual Rating
    • Certificate of Insurance
    • Misrepresentation, Concealment, and Fraud
    • Representations and Warranties
    • Waiver and Estoppel
    • Cancellation and Nonrenewal
  • Unit 6 — Introduction to Liability Insurance
    • Negligence
    • Negligence / Definition
    • Negligence / Establishing Negligence
    • Defenses Against Negligence
    • Defenses Against Negligence / Contributory and Comparative Negligence
    • Absolute Liability
    • Vicarious Liability
    • Liability Insurance
    • Liability Insurance / Third Party Losses
    • Liability Insurance / Insuring Agreement
    • Liability Insurance / Exclusions
    • Liability Insurance / Conditions
  • Unit 8 — Homeowners Insurance
    • Section II - Liability
    • Section II - Liability / Coverage E - Personal Liability
    • Section II - Liability / Coverage F - Medical Payments to Others
    • Section II - Liability / Exclusions
    • Section II - Liability / Additional Coverages
  • Unit 9 — Personal Auto Insurance
    • Definitions
    • Part A - Liability Coverage
    • Part A - Liability Coverage / Coverage
    • Part A - Liability Coverage / Who is an Insured
    • Part A - Liability Coverage / Supplementary Payments
    • Part A - Liability Coverage / Exclusions
    • Part B - Medical Payments Coverage
    • Part B - Medical Payments Coverage / Exclusions
    • Part C - Uninsured Motorists Coverage
    • Part C - Uninsured Motorists Coverage / Definition of Uninsured Motor Vehicle
    • Part C - Uninsured Motorists Coverage / Exclusions
    • Part C - Uninsured Motorists Coverage / Other Insurance
    • Part D - Coverage for Damage to Your Auto
    • Part D - Coverage for Damage to Your Auto / Coverage
    • Part D - Coverage for Damage to Your Auto / Transportation Expenses
    • Part D - Coverage for Damage to Your Auto / Exclusions
    • Parts E and F - Conditions
    • Underinsured Motorists Coverage
    • Personal Auto Policy Endorsements
  • Unit 10 — Miscellaneous Personal Insurance
    • Personal Watercraft Insurance
    • Personal Watercraft Insurance / Boatowners and Outboard Motor and Boat Policies
    • Personal Watercraft Insurance / Personal Yacht Policies
    • Personal Umbrella Insurance
    • Personal Umbrella Insurance / Coverage for Excluded Losses
  • Unit 11 — The Commercial Package Policy
    • Eligible Coverages
    • Common Policy Declarations
    • Common Policy Conditions
    • Common Policy Conditions / Cancellation
    • Common Policy Conditions / Changes, Premiums
    • Common Policy Conditions / Examination of Books and Records, Inspections, and Surveys
    • Common Policy Conditions / Transfer of Rights and Duties
  • Unit 12 — The Businessowners Policy
    • Eligibility, Policy Organization
    • Eligibility, Policy Organization / Ineligible Risks
    • Liability and Medical Expenses Coverage
    • Liability and Medical Expenses Coverage / Exclusions
    • Conditions
    • Endorsements
    • Endorsements / Hired Auto and Nonowned Auto Liability
  • Unit 15 — Commercial General Liability Insurance
    • Business Liability Exposures
    • Business Liability Exposures / Premises and Operations Exposure
    • Business Liability Exposures / Products - Completed Operations Exposure
    • Business Liability Exposures / Exposures Covered by Commercial General Liability Insurance
    • Commercial General Liability Coverage Part
    • Occurrence and Claims-Made Forms
    • Occurrence and Claims-Made Forms / Claims-Made Form
    • Coverage A - Bodily Injury and Property Damage Liability
    • Coverage A - Bodily Injury and Property Damage Liability / Coverage
    • Coverage A - Bodily Injury and Property Damage Liability / Exclusions
    • Coverage B - Personal and Advertising Injury Liability
    • Coverage C - Medical Payments
    • Coverage C - Medical Payments / Coverage
    • Limits of Insurance
    • Conditions
    • Conditions / Duties in the Event of Occurrence, Offense, Claim, or Suit
    • Conditions / Other Insurance
  • Unit 16 — Commercial Auto Insurance
    • Commercial Auto Coverage Part
    • Business Auto Coverage Form
    • Business Auto Coverage Form / Definitions
    • Business Auto Coverage Form / Covered Autos
    • Business Auto Coverage Form / Liability Coverage
    • Business Auto Coverage Form / Physical Damage Coverage
    • Garage Coverage Form
    • Garage Coverage Form / Liability Coverage
    • Garage Coverage Form / Garagekeeper Coverage
    • Garage Coverage Form / Physical Damage Coverage
    • Truckers Coverage Form
    • Truckers Coverage Form / Covered Autos
    • Truckers Coverage Form / Trailer Interchange Coverage
    • Motor Carrier Coverage Form
    • Motor Carrier Coverage Form / Motor Carrier Act of 1980
  • Unit 17 — Commercial Crime Insurance
    • Fidelity Bonds
    • Fidelity Bonds / Parties to a Bond
    • Fidelity Bonds / Types of Fidelity Bonds
  • Unit 18 — Workers' Compensation
    • Workers’ Compensation Laws
    • Workers’ Compensation Laws / Occupations Covered
    • Workers’ Compensation Laws / Benefits Provided
    • Workers’ Compensation Laws / Compensable Injuries
    • Workers’ Compensation Laws / Types of Disability
    • Workers’ Compensation Laws / Compulsory vs. Elective
    • Workers' Compensation and Employers Liability Policy
    • Workers' Compensation and Employers Liability Policy / Coverages
    • Workers' Compensation and Employers Liability Policy / Exclusions
  • Unit 19 — Miscellaneous Commercial Insurance
    • Farm Insurance
    • Aviation Insurance
    • Aviation Insurance / Liability Coverage
    • Professional Liability Insurance
    • Employment Practices Liability Insurance
    • Commercial Umbrella Insurance
    • Surety Bonds
    • Surety Bonds / Contract Bonds
    • Surety Bonds / Judicial Bonds
    • Federal Terrorism Risk Insurance Act of 2002 (Extension Act of 2007)
    • Federal Terrorism Risk Insurance Act of 2002 (Extension Act of 2007) / Background
  • Insurance Code — Kentucky Law
    • Scope, General Definitions, and Provisions KRS 304.1
    • Agent Licensing
    • Agent Licensing / Definitions KRS 304.9-020 to 051
    • Agent Licensing / Licensing Requirements KRS 304.9-080 to 120
    • Agent Licensing / Change of Address KRS 304.9-200
    • Agent Licensing / License Renewal KRS 304.9-260
    • Agent Licensing / Continuing Education KRS 304.9-295
    • Agent Licensing / Record Retention KRS 304.9-390
    • Agent Licensing / Suspension or Revocation of License KRS 304.9-440
    • Agent Licensing / Reporting of Criminal or Administrative Actions KRS 304.9-467
    • Agent Licensing / Prohibited Practices in Replacement or Repair of Automobile Glass; Penalties KRS 304.9-470
    • Surplus Lines KRS 304.10
    • Unfair Practices, Advertising, Illegal Inducements KRS 304.12-010 to 110
    • Unfair Claims Settlement Practices KRS 304.12-230
    • Auto Insurance Plan KRS 304.13-151
    • Insurance Contract KRS 304.14
    • Personal Auto Policies Declanation, Nonrenewal, and Cancellation KRS 304.20-040
    • Declination, Nonrenewal, and Cancellation KRS 304.20-300 to 350
    • Insurance Guaranty Fund KRS 304.36-030
    • Motor Vehicle Insurance No-Fault KRS 304.39
    • Insurance Fraud KRS 304.47-020
    • Conversion of Premium KRS 304.99-010
    • Workers' Compensation KRS 342

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