APCI - Arizona Property and Casualty Insurance Exam

Question 1: An instructor tells an Arizona class that one exposure can produce only a loss or no change at all, while another can produce a loss, no change, or a gain. Which of the following identifies the first of those two exposures?

Pure risk

Speculative risk

Moral hazard

Adverse selection

Question 2: A producer explains to a new client that lightning striking a Prescott cabin is one thing, while a stack of dry brush piled against the cabin wall is quite another. Which of the following correctly labels those two items in order?

Hazard and peril

Loss and peril

Exposure and loss

Peril and hazard

Question 3: An underwriter reviews two files. In the first, an insured has a documented history of padding claims. In the second, an insured admits he drives less carefully because he carries full coverage. Which term best describes the attitude in the second file?

Morale hazard

Moral hazard

Physical hazard

Speculative risk

Question 4: A Phoenix manufacturer installs a sprinkler system, decides against building a plant in a wash that floods, absorbs small equipment losses out of operating cash, and buys a commercial package policy. Which of the following names the risk management method the package policy represents?

Reduction

Avoidance

Retention

Transfer

Question 5: An actuary explains to a room of new Arizona producers that an insurer can predict losses for a very large group of similar homes far more accurately than it can predict a loss for any single home. Which principle is she describing?

Adverse selection

Indemnity

The law of large numbers

Subrogation

Question 6: An insurer notices that people whose homes sit in a Pinal County wash buy flood coverage far more often than people on higher ground, and that its flood book therefore performs worse than the general population would suggest. Which of the following explains that pattern?

Moral hazard

Concealment

The law of large numbers

Adverse selection

Question 7: A Tucson policyholder receives a distribution from the company that insures her home, and her neighbor receives a dividend from a company in which he holds shares rather than a policy. Which of the following correctly identifies those two insurers in order?

Stock and mutual

Reciprocal and stock

Mutual and stock

Fraternal and reciprocal

Question 8: A group of independent Arizona trucking companies forms an unincorporated organization in which each member exchanges insurance contracts with the others, and an attorney in fact administers the arrangement on their behalf. Which type of insurer have they created?

A reciprocal insurer

A mutual insurer

A fraternal benefit society

A risk purchasing group

Question 9: A producer in Glendale reviews three carriers on an account. One was incorporated in Arizona, one in another state, and one under the laws of Canada. Which of the following correctly labels those three insurers in the order presented?

Admitted, nonadmitted, surplus

Domestic, alien, foreign

Foreign, domestic, alien

Domestic, foreign, alien

Question 10: An Arizona business is placed with a carrier that has met all of the state's financial and legal requirements and now holds a certificate of authority allowing it to transact insurance business in Arizona. Which of the following best describes that carrier?

An admitted insurer

A nonadmitted insurer

An alien insurer

A reciprocal insurer

Question 11: An Arizona producer holds a written agency agreement with an insurer stating that she may bind personal lines risks up to a stated limit and may issue certificates of insurance. Which type of authority does that written grant create?

Apparent authority

Implied authority

Express authority

Assumed authority

Question 12: An Arizona producer's agency contract says nothing about advertising, yet she orders business cards and a small newspaper advertisement naming the insurer because doing so is necessary to carry out the selling authority she was granted. Which type of authority covers that activity?

Implied authority

Express authority

Apparent authority

Ratified authority

Question 13: An Arizona producer has no written authority to bind commercial coverage, but the insurer has for years let him keep supplies of its binders, signs and stationery. A commercial client reasonably believes he can bind coverage. Which doctrine most likely binds the insurer?

Express authority

Implied authority

Waiver

Apparent authority

Question 14: An applicant completes an application for commercial property coverage on a Sedona building and pays the first premium. Her producer explains that each side has now given up something of value in the exchange. Which element of a valid contract does that describe?

Legal purpose

Competent parties

Consideration

Acceptance

Question 15: An insurer declines to contract with an applicant who is fifteen years old and with a second applicant who was visibly intoxicated when he signed. Which element of a valid contract is missing in both of those situations?

Consideration

Competent parties

Legal purpose

Offer and acceptance

Question 16: An Arizona insured argues that ambiguous wording in his homeowners policy should be read in his favor because the insurer wrote every word of the contract and he was given no chance to negotiate any of it. Which characteristic supports his argument?

Aleatory

Unilateral

Conditional

Adhesion

Question 17: A producer explains that an Arizona insured may pay a modest annual premium for years and collect nothing, or may pay one premium and collect a very large claim, so the values exchanged are deliberately unequal. Which characteristic is she describing?

Conditional

Personal

Aleatory

Unilateral

Question 18: An applicant for commercial property insurance in Bullhead City never mentions that the building's roof was condemned last year, and the insurer would have declined the risk had it known. Which of the following best describes what the applicant did?

Concealment

Warranty

Waiver

Estoppel

Question 19: An investor buys a warehouse in Tolleson and insures it, then sells the building six months later but keeps the policy in force. A fire damages the warehouse the following week. Which of the following best explains why the insurer will not pay him?

He failed to give timely notice

The policy was not assigned

He no longer has an insurable interest

The building was vacant at the time

Question 20: An Arizona insurer pays its own policyholder for hail damage to her roof under one policy, and under a different policy pays a pedestrian the insured injured with her car. Which of the following correctly labels those two payments in order?

Third party and first party

First party and third party

Direct and indirect

Indirect and direct

APCI Arizona Property and Casualty Insurance Exam - Set 2 - Part 1

Question 1: An instructor tells an Arizona class that one exposure can produce only a loss or no change at all, while another can produce a loss, no change, or a gain. Which of the following identifies the first of those two exposures?

Question 2: A producer explains to a new client that lightning striking a Prescott cabin is one thing, while a stack of dry brush piled against the cabin wall is quite another. Which of the following correctly labels those two items in order?

Question 3: An underwriter reviews two files. In the first, an insured has a documented history of padding claims. In the second, an insured admits he drives less carefully because he carries full coverage. Which term best describes the attitude in the second file?

Question 4: A Phoenix manufacturer installs a sprinkler system, decides against building a plant in a wash that floods, absorbs small equipment losses out of operating cash, and buys a commercial package policy. Which of the following names the risk management method the package policy represents?

Question 5: An actuary explains to a room of new Arizona producers that an insurer can predict losses for a very large group of similar homes far more accurately than it can predict a loss for any single home. Which principle is she describing?

Question 6: An insurer notices that people whose homes sit in a Pinal County wash buy flood coverage far more often than people on higher ground, and that its flood book therefore performs worse than the general population would suggest. Which of the following explains that pattern?

Question 7: A Tucson policyholder receives a distribution from the company that insures her home, and her neighbor receives a dividend from a company in which he holds shares rather than a policy. Which of the following correctly identifies those two insurers in order?

Question 8: A group of independent Arizona trucking companies forms an unincorporated organization in which each member exchanges insurance contracts with the others, and an attorney in fact administers the arrangement on their behalf. Which type of insurer have they created?

Question 9: A producer in Glendale reviews three carriers on an account. One was incorporated in Arizona, one in another state, and one under the laws of Canada. Which of the following correctly labels those three insurers in the order presented?

Question 10: An Arizona business is placed with a carrier that has met all of the state's financial and legal requirements and now holds a certificate of authority allowing it to transact insurance business in Arizona. Which of the following best describes that carrier?

Question 11: An Arizona producer holds a written agency agreement with an insurer stating that she may bind personal lines risks up to a stated limit and may issue certificates of insurance. Which type of authority does that written grant create?

Question 12: An Arizona producer's agency contract says nothing about advertising, yet she orders business cards and a small newspaper advertisement naming the insurer because doing so is necessary to carry out the selling authority she was granted. Which type of authority covers that activity?

Question 13: An Arizona producer has no written authority to bind commercial coverage, but the insurer has for years let him keep supplies of its binders, signs and stationery. A commercial client reasonably believes he can bind coverage. Which doctrine most likely binds the insurer?

Question 14: An applicant completes an application for commercial property coverage on a Sedona building and pays the first premium. Her producer explains that each side has now given up something of value in the exchange. Which element of a valid contract does that describe?

Question 15: An insurer declines to contract with an applicant who is fifteen years old and with a second applicant who was visibly intoxicated when he signed. Which element of a valid contract is missing in both of those situations?

Question 16: An Arizona insured argues that ambiguous wording in his homeowners policy should be read in his favor because the insurer wrote every word of the contract and he was given no chance to negotiate any of it. Which characteristic supports his argument?

Question 17: A producer explains that an Arizona insured may pay a modest annual premium for years and collect nothing, or may pay one premium and collect a very large claim, so the values exchanged are deliberately unequal. Which characteristic is she describing?

Question 18: An applicant for commercial property insurance in Bullhead City never mentions that the building's roof was condemned last year, and the insurer would have declined the risk had it known. Which of the following best describes what the applicant did?

Question 19: An investor buys a warehouse in Tolleson and insures it, then sells the building six months later but keeps the policy in force. A fire damages the warehouse the following week. Which of the following best explains why the insurer will not pay him?

Question 20: An Arizona insurer pays its own policyholder for hail damage to her roof under one policy, and under a different policy pays a pedestrian the insured injured with her car. Which of the following correctly labels those two payments in order?

Need Guaranteed Results?