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Free Casualty Practice Questions

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Sample Practice Questions

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

  1. 1A visitor slips on a wet floor while a retailer is open for business. Which CGL exposure best describes the resulting liability claim?

    1. A. Premises and operations
    2. B. Products and completed operations
    3. C. Employment practices liability
    4. D. Professional errors and omissions

    Answer: A

    Explanation: "Premises liability covers liability for accidental injury or property damage" The injury arose from conditions at an operating location.

    Reference: California Department of Insurance, Commercial Insurance Guide — CGL, premises liability

  2. 2A business pays a premium so an insurer assumes specified accidental-loss exposures under a policy. What risk-management method is the business using?

    1. A. Risk retention by the business
    2. B. Risk avoidance by closing operations
    3. C. Risk reduction through loss controls
    4. D. Risk transfer through insurance

    Answer: D

    Explanation: "A method of shifting risk from a person, business, or organization to an insurance company" The covered financial risk shifts from the business to the insurer under the contract.

    Reference: California Department of Insurance, Commercial Insurance Guide — Glossary, Insurance

  3. 3A producer needs to confirm a policy's effective date, expiration date, premium, and coverage limits. Which part of the policy should be checked first?

    1. A. Conditions
    2. B. Exclusions
    3. C. Insuring agreement
    4. D. Declarations

    Answer: D

    Explanation: "policy number, effective and expiration dates, premium payable, the amount and types of coverage" Declarations state the policy-specific dates, premium, coverage and limits.

    Reference: California Department of Insurance, Commercial Insurance Guide — Glossary, Declarations

  4. 4Under Alaska law, who has the duty to enforce Title 21?

    1. A. The director of insurance
    2. B. The attorney general alone
    3. C. The Alaska Insurance Guaranty Association
    4. D. Each admitted insurer

    Answer: A

    Explanation: AS 21.06.080(a) states, "The director shall enforce the provisions of this title." Therefore the director is responsible.

    Reference: As 21.06 — AS 21.06.080(a)

  5. 5An insurer covers an employer's legal liability for accidental bodily injury to another person. Under Alaska's classification statute, this is which kind of insurance?

    1. A. Casualty insurance
    2. B. Property insurance
    3. C. Marine and transportation insurance
    4. D. Title insurance

    Answer: A

    Explanation: AS 21.12.070(2) includes "insurance against legal liability for the death, injury or disability of a human being, or for damage to property" within casualty insurance. The stated liability therefore falls in the casualty class.

    Reference: Alaska Statutes Title 21 — AS 21.12.070(2)

  6. 6A store sells a defective countertop appliance that later injures its buyer at home. Which CGL exposure is involved?

    1. A. Completed operations liability
    2. B. Premises and operations liability
    3. C. Products liability
    4. D. Employers liability

    Answer: C

    Explanation: "A products liability hazard exists for any business that manufactures, sells, handles, or distributes goods or products." The injury arose from a distributed product after sale.

    Reference: California Department of Insurance, Commercial Insurance Guide — CGL, products liability

  7. 7An insured is careless about locking a vehicle because insurance will pay if it is stolen, but has no plan to cause the theft. Which hazard best describes that attitude?

    1. A. Physical hazard
    2. B. Moral hazard
    3. C. Morale hazard
    4. D. Legal hazard

    Answer: C

    Explanation: "Morale hazard, as contrasted with moral hazard, does not imply a propensity to cause a loss" Indifference to loss prevention without intent to cause loss is a morale hazard; the other hazard types concern physical conditions, intentional dishonesty, or legal environment.

    Reference: West Virginia Offices of the Insurance Commissioner, Auto Survey — Auto Survey, moral and morale hazards

  8. 8A claims examiner needs to locate the policy language granting coverage for a stated type of loss. Which part identifies what the insurer agrees to cover?

    1. A. Insuring agreement
    2. B. Policy conditions
    3. C. Declarations page
    4. D. Exclusions schedule

    Answer: A

    Explanation: "The portion of an insurance contract that describes what is covered." The insuring agreement describes the policy's coverage grant.

    Reference: California Department of Insurance, Commercial Insurance Guide — Glossary, Insuring Agreement

  9. 9The Alaska director has reasonable cause to suspect a producer violated the insurance code. What may the director do?

    1. A. Refer a criminal matter for prosecution
    2. B. Examine the producer or require a written report
    3. C. Hold a hearing on the suspected violation
    4. D. Issue a written compliance order

    Answer: B

    Explanation: AS 21.06.130(a) provides that "the director may, as often as the director has reasonable cause, examine or require a written report" concerning a producer's insurance affairs. This directly supports examining the producer or requiring the report.

    Reference: As 21.06 — AS 21.06.130(a)

  10. 10For Alaska purposes, surplus lines insurance is generally coverage placed through which market?

    1. A. Only domestic mutual insurers
    2. B. A nonadmitted insurer under the surplus-lines chapter
    3. C. The guaranty association
    4. D. A self-insured employer

    Answer: B

    Explanation: AS 21.34 governs insurance placed with a "nonadmitted insurer" through a licensed surplus lines broker when its placement requirements are met.

    Reference: As 21.34 — AS 21.34.020 and AS 21.34.900

Topics in this practice bank

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

  • I. TYPES OF POLICIES, BONDS, AND RELATED TERMS — 23
    • A. Commercial general liability
    • A.1. Exposures
    • A.1.a. Premises and Operations
    • A.1.b. Products and Completed Operations
    • A.2. Coverage
    • A.2.a. Coverage A: Bodily Injury and Property Damage Liability (Occurrence, Claims made including Retroactive Date)
    • A.2.b. Coverage B: Personal Injury and Advertising Injury
    • A.2.c. Coverage C: Medical Payments
    • A.2.d. Supplemental Payments
    • A.2.e. Who is an insured
    • A.2.f. First named insured
    • A.2.g. Limits (Per occurrence, Annual Aggregate)
    • A.2.h. Damage to Property of Others
    • B. Automobile: personal auto and business auto
    • B.1. Liability
    • B.1.a. Bodily Injury
    • B.1.b. Property Damage
    • B.1.c. Split Limits
    • B.1.d. Combined Single Limit
    • B.2. Medical Payments
    • B.3. Physical Damage (collision; other than collision; specified perils)
    • B.4. Uninsured motorists
    • B.5. Underinsured motorists
    • B.6. Who is an insured
    • B.7. Types of Auto
    • B.7.a. Owned
    • B.7.b. Non-owned
    • B.7.c. Hired
    • B.7.d. Temporary Substitute
    • B.7.e. Newly Acquired Autos
    • B.7.f. Transportation Expense and Rental Reimbursement Expense
    • B.8. Auto Dealers Coverage Form, including Garagekeepers Insurance
    • B.9. Exclusions
    • B.10. Individual Insured and Drive Other Car (DOC)
    • B.11. Mobile equipment
    • C. Workers Compensation Insurance, Employers Liability Insurance, and Related Issues (This section does not deal with specifics of state law, which are addressed elsewhere in this outline.)
    • C.1. Standard policy concepts
    • C.1.a. Who is an employee/employer
    • C.1.b. Compensation
    • C.2. Work-related vs. non-work-related
    • C.3. Other states’ insurance
    • C.4. Employers Liability
    • C.5. Exclusive remedy
    • C.6. Premium Determination
    • D. Crime
    • D.1. Employee Dishonesty
    • D.2. Theft
    • D.3. Robbery
    • D.4. Burglary
    • D.5. Forgery and Alteration
    • D.6. Mysterious disappearance
    • E. Bonds
    • E.1. Surety
    • E.2. Fidelity
    • F. Professional liability
    • F.1. Errors and Omissions
    • F.2. Medical Malpractice
    • F.3. Directors and Officers (D&O)
    • F.4. Employment Practices Liability (EPLI)
    • F.5. Cyber liability and data breach, funds transfer
    • F.6. Liquor liability
    • G. Umbrella/Excess Liability
    • H. Business Owners Policy (BOP)
  • II. INSURANCE TERMS AND RELATED CONCEPTS — 15
    • A. Risk
    • B. Hazards
    • B.1. Moral
    • B.2. Morale
    • B.3. Physical
    • C. Indemnity
    • D. Insurable interest
    • E. Loss valuation
    • E.1. Actual cash value
    • E.2. Replacement cost
    • E.3. Market value
    • E.4. Stated/agreed value
    • E.5. Salvage value
    • F. Negligence
    • G. Liability
    • H. Occurrence
    • I. Binders
    • J. Warranties
    • K. Representations
    • L. Concealment
    • M. Deposit Premium/Audit
    • N. Certificate of Insurance
    • O. Law of Large Numbers
    • P. Pure vs. Speculative Risk
    • Q. Endorsements
    • R. Damages
    • R.1. Compensatory
    • R.1.a. General
    • R.1.b. Special
    • R.2. Punitive
    • S. Compliance with provisions of Fair Credit Reporting Act
  • III. POLICY PROVISIONS — 12
    • A. Declarations
    • B. Insuring agreement
    • C. Conditions
    • D. Exclusions and Limitations
    • E. Definition of the insured
    • F. Duties of the insured after a loss
    • G. Cancellation and nonrenewal provisions
    • H. Supplementary payments
    • I. Proof of loss
    • J. Notice of claim
    • K. Other insurance
    • L. Subrogation
    • M. Loss settlement provisions including consent to settle a loss
    • N. Terrorism Risk Insurance Act (TRIA)
  • I. ALASKA LAWS, RULES AND REGULATIONS COMMON TO LIFE, HEALTH (ACCIDENT AND HEALTH), PROPERTY, CASUALTY AND PERSONAL LINES INSURANCE — 30
    • A. Director of Insurance
    • A.1. Broad powers
    • A.2. Adoption of regulations
    • A.3. Examination of records
    • A.4. Notice and hearing
    • A.5. Penalties
    • B. Definitions
    • B.1. Admitted (authorized) and nonadmitted companies
    • B.2. Domestic, foreign, and alien
    • B.3. Stock and mutual
    • B.4. Premiums
    • B.5. Transacting insurance
    • B.6. Certificate of Authority
    • C. Licensing
    • C.1. License required
    • C.1.a. Insurance producer
    • C.1.b. Managing general agent
    • C.1.c. Surplus lines broker
    • C.1.d. Independent adjusters
    • C.1.e. Firm licenses
    • C.1.f. Compliance Officer (Designated Responsible Producer)
    • C.1.g. Resident
    • C.1.h. Nonresident licensees
    • C.1.i. Exceptions
    • C.1.j. Producer appointments
    • C.2. Maintenance of license
    • C.2.a. Renewal
    • C.2.b. Denial, Nonrenewal, Suspension or Revocation
    • C.2.c. Continuing education
    • D. Marketing Practices
    • D.1. Unfair practices
    • D.1.a. Unfair claims methods and practices
    • D.1.b. Rebating
    • D.1.c. Twisting
    • D.1.d. Misrepresentation
    • D.1.e. Defamation
    • D.1.f. Unfair discrimination
    • D.1.g. Boycott, coercion, and intimidation
    • D.2. Premium financing
    • D.3. Fiduciary responsibilities
    • D.4. Compensation of licensees
    • D.5. Required records and record retention
    • D.6. Advertising
    • D.7. Controlled business
    • D.8. Duty to report fraudulent claims/Immunity from reporting fraudulent claims
    • D.9. Alaska Insurance Guaranty Association
  • II. ALASKA LAWS, RULES, AND REGULATIONS PERTIENT TO CASUALTY INSURANCE ONLY — 10
    • A. Definitions
    • A.1. Casualty insurance
    • A.2. Surplus lines insurance
    • A.3. Business/commercial insurance
    • A.4. Nonpayment of premium
    • A.5. Personal auto insurance
    • B. Binders
    • C. Cancellation/Nonrenewal
    • C.1. Personal
    • C.2. Commercial
    • C.2.a. Renewal
    • D. Civil Rule 82
    • E. Automobile insurance
    • E.1. Financial responsibility
    • E.1.a. Definition of financial responsibility
    • E.1.b. Persons required to show proof
    • E.2. Provisions
    • E.2.a. Required minimum limits
    • E.2.b. Uninsured and underinsured motorists coverage
    • E.2.c. Rental car physical damage
    • E.2.d. Named driver exclusion
    • E.3. Automobile assigned risk
    • E.4. Transportation network company/rideshare
    • F. Workers Compensation
    • F.1. Duties of employer
    • F.2. General provisions
    • F.3. Assigned Risk Pool
    • F.4. Cancellation
    • F.5. Longshore and Harbor Workers’ (USL&H)

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