IPCI - Indiana Property and Casualty Insurance Exam

Question 1: A consumer is burned when a coffee maker's handle breaks apart during normal use. In the lawsuit against the manufacturer, the consumer must show the product was defective and caused the injury, but need not prove carelessness. Which concept applies?

Assumption of risk

Vicarious liability

Intervening cause

Strict liability

Question 2: A homeowner asks her producer how to lower the annual cost of her property policy without dropping any coverage. The producer suggests raising the amount she would absorb herself on any claim. What effect does that change have on premium?

Premium rises with the deductible

Premium is unaffected by deductibles

Premium falls as the deductible rises

Premium changes only at renewal

Question 3: Four months into a one year policy, a homeowner telephones her insurer and asks that the policy be terminated immediately because she sold the house. She had prepaid the whole year. How is the return premium she receives normally calculated?

On a pro rata basis

On a short rate basis

As a flat cancellation

As a nonrenewal at expiration

Question 4: A collector insures a set of antique furniture that would be difficult to value after a fire. Before the policy is issued the insurer and the collector settle on a dollar figure the collector is guaranteed to receive, revisited yearly. Which valuation basis applies?

Stated amount

Functional replacement cost

Actual cash value

Agreed value

Question 5: In a policy glossary a term is defined three ways: the unintended and unforeseen damage to property, an injury sustained, or the amount an insurer pays out. Which of the following terms used throughout property policies carries all three of those meanings?

Loss

Exposure

Hazard

Risk

Question 6: Two drivers collide. A jury decides the claimant was thirty percent at fault for the crash and the insured was seventy percent at fault. In a jurisdiction that follows the comparative negligence rule, what happens to the claimant's recovery?

Recovery is barred completely

Recovery is reduced by her share

Recovery doubles as a penalty

Recovery is paid in full

Question 7: A homeowner pays a modest annual premium so that an insurance company, rather than the homeowner, will bear the cost of a fire that destroys the house. This exchange of a small certain cost for a large uncertain one describes which arrangement?

Avoidance of the fire exposure

Reduction of the chance of loss

Sharing the loss among partners

Transfer of risk to the insurer

Question 8: An insurer attaches a form to a commercial policy at renewal that removes coverage for a certain type of loss the base form used to include. The insured objects that only added coverages count. Which statement about endorsements is correct?

Endorsements may only broaden coverage

Endorsements are advisory and not binding

Endorsements can add, change or delete coverage

Endorsements expire after one policy term

Question 9: A liability policy defines a covered event broadly enough to include both a sudden car collision and injury developing from repeated exposure to lead paint in an old rental home over several years. Which term describes that broader definition used in liability coverage?

Occurrence

Accident

Tort

Negligence

Question 10: A client asks his producer to write a policy covering the money he expects to lose on a weekend of poker in Las Vegas, and separately asks about coverage for a kitchen fire. Which explanation correctly sorts these two exposures?

Both exposures are insurable pure risks

Both are speculative and therefore uninsurable

The fire is speculative; gambling is pure

Gambling is speculative; the fire is pure

Question 11: A tenant sues a landlord after breathing mold spores in a basement apartment every day for three years. No single sudden event caused the illness. Under the wording most liability policies use, how would the insurer most likely classify this loss?

An occurrence involving continued repeated exposure

One accident, since harm was physical

Three separate accidents, one yearly

Not a covered event at all

Question 12: An insurer decides it no longer wants a particular commercial account. Rather than stopping the coverage midstream, it lets the current term run out and tells the insured the contract will not be continued for another term. Which action has the insurer taken?

Cancellation

Rescission of the contract

Flat cancellation

Nonrenewal

Question 13: A landlord's rental house burns and is uninhabitable for four months. The building damage is one item on the claim; the rent the landlord no longer collects during repairs is another item entirely. How is that lost rental income properly classified?

An indirect loss

A direct loss

A physical hazard

A speculative risk

Question 14: A homeowner routinely leaves the front door unlocked and the car running outside the store, saying the policy will cover whatever happens. This careless attitude, rather than any dishonesty or visible defect, increases the chance of loss. Which hazard is present?

Physical hazard

Moral hazard

Pure risk

Morale hazard

Question 15: The owner of a restored classic car sets the value himself, has the vehicle appraised before the policy is issued, and learns that after a total loss the insurer will pay the lesser of the declared figure or actual cash value. Which basis is this?

Agreed value

Stated amount

Blanket valuation

Market value

Question 16: A retired couple close up their coastal condominium each spring and travel north for four months, leaving all their furniture and belongings inside. Their agent explains how the absence affects their property coverage during those months. Which statement is accurate?

The dwelling is unoccupied, not vacant

The dwelling is vacant after sixty days

All coverage stops while they travel

The policy converts to named peril

Question 17: A property owner sold her house in March, moved away, and forgot to cancel the homeowners policy still listing that address. The house burned in June and she filed a claim. Why will the insurer refuse to pay her?

Fire was not a covered peril

The loss was indirect, not direct

She had no insurable interest at loss

She created a morale hazard by moving

Question 18: An adjuster must decide which event in a sequence triggered coverage: a windstorm tore shingles off a roof, rain then entered through the opening, and ceilings collapsed two days later. The windstorm set the whole sequence in motion. Which doctrine governs this analysis?

Proximate cause of the loss

Insurable interest at the time of loss

The distinction between direct and indirect loss

Classification of the risk as pure

Question 19: After a covered loss, an insurer restores a damaged plaster wall using modern drywall rather than matching the original plaster material, because the drywall performs the same job just as efficiently. Which valuation approach best describes what the insurer did here?

Actual cash value

Agreed value

Salvage value

Functional replacement cost

Question 20: In a state that still bars recovery from anyone who contributed to his own injury, a partly careless pedestrian still wins because the driver had the final realistic opportunity to avoid the collision. Which doctrine allowed that recovery to stand?

Assumption of risk

Last clear chance

Comparative negligence

Statute of limitations

IPCI Indiana Property and Casualty Insurance Exam - Set 3 - Part 1

Question 1: A consumer is burned when a coffee maker's handle breaks apart during normal use. In the lawsuit against the manufacturer, the consumer must show the product was defective and caused the injury, but need not prove carelessness. Which concept applies?

Question 2: A homeowner asks her producer how to lower the annual cost of her property policy without dropping any coverage. The producer suggests raising the amount she would absorb herself on any claim. What effect does that change have on premium?

Question 3: Four months into a one year policy, a homeowner telephones her insurer and asks that the policy be terminated immediately because she sold the house. She had prepaid the whole year. How is the return premium she receives normally calculated?

Question 4: A collector insures a set of antique furniture that would be difficult to value after a fire. Before the policy is issued the insurer and the collector settle on a dollar figure the collector is guaranteed to receive, revisited yearly. Which valuation basis applies?

Question 5: In a policy glossary a term is defined three ways: the unintended and unforeseen damage to property, an injury sustained, or the amount an insurer pays out. Which of the following terms used throughout property policies carries all three of those meanings?

Question 6: Two drivers collide. A jury decides the claimant was thirty percent at fault for the crash and the insured was seventy percent at fault. In a jurisdiction that follows the comparative negligence rule, what happens to the claimant's recovery?

Question 7: A homeowner pays a modest annual premium so that an insurance company, rather than the homeowner, will bear the cost of a fire that destroys the house. This exchange of a small certain cost for a large uncertain one describes which arrangement?

Question 8: An insurer attaches a form to a commercial policy at renewal that removes coverage for a certain type of loss the base form used to include. The insured objects that only added coverages count. Which statement about endorsements is correct?

Question 9: A liability policy defines a covered event broadly enough to include both a sudden car collision and injury developing from repeated exposure to lead paint in an old rental home over several years. Which term describes that broader definition used in liability coverage?

Question 10: A client asks his producer to write a policy covering the money he expects to lose on a weekend of poker in Las Vegas, and separately asks about coverage for a kitchen fire. Which explanation correctly sorts these two exposures?

Question 11: A tenant sues a landlord after breathing mold spores in a basement apartment every day for three years. No single sudden event caused the illness. Under the wording most liability policies use, how would the insurer most likely classify this loss?

Question 12: An insurer decides it no longer wants a particular commercial account. Rather than stopping the coverage midstream, it lets the current term run out and tells the insured the contract will not be continued for another term. Which action has the insurer taken?

Question 13: A landlord's rental house burns and is uninhabitable for four months. The building damage is one item on the claim; the rent the landlord no longer collects during repairs is another item entirely. How is that lost rental income properly classified?

Question 14: A homeowner routinely leaves the front door unlocked and the car running outside the store, saying the policy will cover whatever happens. This careless attitude, rather than any dishonesty or visible defect, increases the chance of loss. Which hazard is present?

Question 15: The owner of a restored classic car sets the value himself, has the vehicle appraised before the policy is issued, and learns that after a total loss the insurer will pay the lesser of the declared figure or actual cash value. Which basis is this?

Question 16: A retired couple close up their coastal condominium each spring and travel north for four months, leaving all their furniture and belongings inside. Their agent explains how the absence affects their property coverage during those months. Which statement is accurate?

Question 17: A property owner sold her house in March, moved away, and forgot to cancel the homeowners policy still listing that address. The house burned in June and she filed a claim. Why will the insurer refuse to pay her?

Question 18: An adjuster must decide which event in a sequence triggered coverage: a windstorm tore shingles off a roof, rain then entered through the opening, and ceilings collapsed two days later. The windstorm set the whole sequence in motion. Which doctrine governs this analysis?

Question 19: After a covered loss, an insurer restores a damaged plaster wall using modern drywall rather than matching the original plaster material, because the drywall performs the same job just as efficiently. Which valuation approach best describes what the insurer did here?

Question 20: In a state that still bars recovery from anyone who contributed to his own injury, a partly careless pedestrian still wins because the driver had the final realistic opportunity to avoid the collision. Which doctrine allowed that recovery to stand?

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