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CT Property & Casualty study materials
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CT Property & Casualty practice questions

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Question 1Insurance Regulation

Under Connecticut law, the Insurance Commissioner is selected in which manner?

  1. Elected by the voters in a statewide race
  2. Selected by the executive committee of the NAIC
  3. Appointed by the Governor Correct answer.
  4. Chosen by a vote of the General Assembly

Explanation

Connecticut's Insurance Commissioner heads the Connecticut Insurance Department and is a gubernatorial appointee rather than a statewide elected official. The Commissioner administers the insurance laws of the state, including licensing, rate review, market conduct exams, and enforcement of unfair trade practice rules.

Question 2Insurance Regulation

Which of the following must a person hold before soliciting, negotiating, or selling insurance policies in Connecticut for compensation?

  1. A producer license issued by the Insurance Commissioner Correct answer.
  2. A real estate broker license
  3. A certificate of authority from the Secretary of the State
  4. A surety bond filed with the State Treasurer

Explanation

Connecticut licenses individuals who sell, solicit, or negotiate insurance as insurance producers, and that license is issued by the Insurance Commissioner. Transacting insurance without the required license is a violation of state law and grounds for administrative penalty.

Question 3Insurance Regulation

A producer offers a prospective client a $100 gift card, paid from the producer's own funds, to persuade the client to buy a homeowners policy. This conduct is best described as:

  1. A lawful business promotion
  2. Permissible, as long as the gift is disclosed to the insurer
  3. An unlawful rebate under the unfair trade practice laws Correct answer.
  4. Permissible, because the money comes from the producer rather than the insurer

Explanation

A rebate is any inducement not stated in the policy that is offered to persuade a buyer to purchase insurance, and Connecticut prohibits it regardless of who funds the inducement. The rule protects price competition from being distorted by side payments and keeps the cost of coverage transparent.

Question 4Insurance Regulation

An insurer wants to begin writing property and casualty policies in Connecticut. What must the insurer obtain first from the Insurance Commissioner?

  1. A domestic charter, regardless of where it is domiciled
  2. A certificate of deposit
  3. A certificate of authority Correct answer.
  4. A surplus lines broker bond

Explanation

An insurer must be admitted, meaning it holds a certificate of authority from the Insurance Commissioner, before it may transact insurance in Connecticut. Insurers without a certificate of authority are unauthorized insurers and may be used only through the surplus lines process when the admitted market cannot respond.

Question 5Insurance Regulation

A producer deposits a client's $1,200 premium into a personal checking account and uses part of the money for office rent before forwarding it to the insurer. This conduct is best characterized as:

  1. Breach of the duty to bind coverage
  2. Breach of fiduciary duty Correct answer.
  3. Breach of continuing education rules
  4. Breach of the duty to countersign

Explanation

Premiums collected on behalf of an insurer are held in trust, so a producer must keep them in a separate account and remit them promptly without commingling with personal or business funds. Using collected premium for the producer's own expenses is a fiduciary breach that can lead to license suspension or revocation.

Question 6Insurance Regulation

Connecticut's continuing education requirement for licensed insurance producers is best described as:

  1. 40 hours each year, all in ethics
  2. No continuing education is required once a producer is licensed
  3. 24 credit hours every two years, including ethics Correct answer.
  4. 8 hours every four years

Explanation

Connecticut requires producers to complete 24 credit hours of approved continuing education during each two-year license term, and a portion of those hours must be in ethics instruction. Credits must come from approved providers and are reported before the license is renewed.

Question 7Insurance Regulation

A Connecticut surplus lines broker wishes to place a commercial property risk with an insurer that is not authorized in the state. Before placing the business, the broker must:

  1. Hold the premium in escrow for 90 days
  2. Place the risk with an admitted insurer first and cancel that policy later
  3. Obtain written approval from the Governor's office
  4. Conduct and document a diligent search of the admitted market Correct answer.

Explanation

Surplus lines placement is available only when admitted insurers have declined or cannot write the coverage, so the broker must make and document a diligent effort to place the risk in the admitted market. The broker must also use an insurer that meets the state's eligibility standards and must handle premium, taxes, and disclosure as required.

Question 8Insurance Regulation

An insurer files property rates that are so low that they are likely to impair the insurer's ability to pay future claims. Under Connecticut rating law, such rates would be characterized as:

  1. Inadequate Correct answer.
  2. Competitive
  3. Unfairly discriminatory
  4. Excessive

Explanation

Rates must be neither excessive, nor inadequate, nor unfairly discriminatory. Inadequate rates are those insufficient to sustain expected losses and expenses and to preserve insurer solvency, which is the concern raised when rates are set too low.

Question 9Insurance Regulation

Which of the following is an unfair claim settlement practice under Connecticut law?

  1. Requesting a written proof of loss from the insured
  2. Failing to acknowledge and act promptly on claim communications Correct answer.
  3. Sending an adjuster to inspect the damaged property
  4. Explaining in writing the policy provision relied on for a denial

Explanation

Unfair claim settlement practice rules require insurers to acknowledge and act reasonably promptly on communications about a claim; repeated delay or failure to respond is a violation. Investigation steps such as proof of loss requests and inspections are legitimate tools when handled in good faith.

Question 10Insurance Regulation

The Connecticut Insurance Guaranty Association exists primarily to:

  1. Set the rates charged by all admitted insurers in the state
  2. License and supervise surplus lines brokers
  3. Guarantee that every policyholder of a member insurer receives an annual dividend
  4. Pay covered claims of insolvent property and casualty insurers Correct answer.

Explanation

The guaranty association is funded by assessments on member insurers and responds when a member property and casualty insurer becomes insolvent, paying covered claims up to statutory limits. It is a safety net for policyholders and claimants, not a rate-setting or licensing body.

Question 11Insurance Regulation

A producer pays 30 percent of the commission on a commercial policy to an unlicensed friend who negotiated the coverage terms with the client. Under Connecticut law, this payment is:

  1. Permissible, if the payment is disclosed to the insured
  2. Prohibited, because the friend is not licensed Correct answer.
  3. Permissible, because the friend never spoke directly with the insurer
  4. Prohibited only if the friend refers more than one client

Explanation

Commissions for selling, soliciting, or negotiating insurance may be shared only with a person who holds the required license, since paying an unlicensed person for that activity would circumvent producer licensing. Negotiating coverage terms with the client is exactly the activity that requires a license.

Question 12Insurance Regulation

To persuade a client to replace her existing policy, an agent falsely states that her current insurer is on the verge of bankruptcy, a claim the agent knows to be untrue. This conduct is best identified as:

  1. A permitted use of a sales illustration
  2. Lawful competitive selling
  3. Permissible, if the replacement premium is lower
  4. Twisting, a prohibited unfair trade practice Correct answer.

Explanation

Twisting is the use of misrepresentation or incomplete comparison to induce a policyholder to lapse, surrender, or replace coverage. Because the statement is knowingly false and made to drive a replacement, it violates the state's unfair trade practice provisions and can support license action.

Question 13General Insurance Concepts

A business owner purchases a commercial property policy. In insurance terms, the primary effect of the transaction is that the owner:

  1. transfers risk of loss to the insurer Correct answer.
  2. retains the entire cost of each covered loss
  3. eliminates any chance that a covered peril will occur
  4. guarantees the business a steady annual profit

Explanation

Insurance transfers the financial uncertainty of loss from the insured to the insurer in exchange for a premium. The physical chance that a peril will occur remains, and the insured still bears deductibles and any uninsured exposures.

Question 14General Insurance Concepts

An insurer's ability to predict losses accurately improves as it insures a larger number of similar, independent exposure units. This concept is known as the:

  1. principle of indemnity
  2. doctrine of subrogation
  3. rule of adverse selection
  4. law of large numbers Correct answer.

Explanation

The law of large numbers holds that observed loss experience converges on expected results as the number of similar exposure units increases, allowing insurers to price risk with confidence. It underlies ratemaking and the pooling and spreading of risk.

Question 15General Insurance Concepts

Which term describes a condition that increases the chance or severity of a loss?

  1. Proximate cause
  2. Exposure unit
  3. Hazard Correct answer.
  4. Peril

Explanation

A hazard is a condition that raises the likelihood or size of a loss, such as oily rags stored in a workshop. A peril, by contrast, is the actual cause of the loss, such as fire or windstorm.

Question 16General Insurance Concepts

The principle of indemnity is intended to:

  1. penalize an insurer that denies a valid claim
  2. let the insured profit from a covered loss
  3. spread the cost of losses across all policyholders
  4. restore the insured to the pre-loss position Correct answer.

Explanation

Indemnity means the insured is made whole for the actual amount of the loss, no more and no less, so recovery cannot exceed the financial value of the damaged interest. This deters moral hazard and prevents insurance from becoming a source of gain.

Question 17General Insurance Concepts

An insurable interest exists when the insured:

  1. holds a lawful financial stake in the preserved property Correct answer.
  2. has listed the property for sale with a broker in the past year
  3. expects to inherit the property at some future date under a will
  4. lives in the same state where the property is located

Explanation

Insurable interest is a lawful, financial relationship to the property such that its loss or damage causes the insured a genuine economic loss. Requiring it prevents insurance from being used as a wagering device.

Question 18General Insurance Concepts

Under the principle of utmost good faith, an applicant's answers on an insurance application are treated as:

  1. guarantees enforceable without regard to materiality
  2. statements automatically incorporated into the policy
  3. absolute warranties that must be literally and exactly true
  4. representations of facts the applicant believes to be true Correct answer.

Explanation

Application answers are generally representations, understood to be true to the best of the applicant's knowledge rather than literal guarantees. A misrepresentation typically allows rescission only when it is material to the insurer's decision to accept the risk.

Question 19General Insurance Concepts

An agent issues an endorsement the insurer never authorized, but company brochures and prior dealings led the applicant to reasonably believe the agent had that power. The insurer is most likely bound by the agent's:

  1. ratification by the insured
  2. implied authority
  3. express authority
  4. apparent authority Correct answer.

Explanation

Apparent authority arises when the insurer's own words or conduct lead a third party to reasonably believe the agent has power to act, and the insured relies on that belief. The insurer is then bound even though no actual authority was granted.

Question 20General Insurance Concepts

After paying a covered collision claim, an insurer pursues the at-fault driver to recover the amount it paid. This right is called:

  1. subrogation Correct answer.
  2. salvage
  3. contribution
  4. coinsurance

Explanation

Subrogation transfers the insured's right of recovery against a responsible third party to the insurer once the insurer has paid the loss. It helps hold the party who caused the loss accountable and prevents the insured from collecting twice.

Question 21General Insurance Concepts

A building with a $1,000,000 replacement cost is insured for $600,000 under a policy with an 80% coinsurance clause. A covered loss of $100,000 occurs and no deductible applies. How much does the insurer pay?

  1. $100,000
  2. $60,000
  3. $75,000 Correct answer.
  4. $80,000

Explanation

The coinsurance requirement is 80% of $1,000,000, or $800,000. Because $600,000 of insurance was carried, the insurer pays 600,000 divided by 800,000, or 75% of the loss, which equals $75,000.

Question 22General Insurance Concepts

Which part of an insurance policy identifies the named insured, the policy period, the applicable limits, and the property insured?

  1. the declarations Correct answer.
  2. the insuring agreement
  3. the exclusions
  4. the conditions

Explanation

The declarations page personalizes the contract by stating who is insured, what is covered, the limits, the term, and the premium. It is the reference point for applying the rest of the policy.

Question 23General Insurance Concepts

A policy carries a $1,000 deductible and a $50,000 limit. A covered loss of $4,000 occurs. What does the insured collect?

  1. $4,000
  2. $0
  3. $1,000
  4. $3,000 Correct answer.

Explanation

The deductible is subtracted from the covered loss before the insurer pays, and the remaining amount falls within the policy limit. The insured therefore receives $4,000 minus $1,000, or $3,000.

Question 24General Insurance Concepts

A windstorm knocks down a wall, and the falling wall ruptures the building's plumbing, causing water damage. In this chain of events, the windstorm is the:

  1. concurrent cause excluded by the policy
  2. proximate cause of the loss Correct answer.
  3. remote cause of the loss
  4. intervening cause of the loss

Explanation

Proximate cause is the dominant, efficient cause that sets an unbroken chain of events in motion resulting in the loss. Damage flowing from that cause is covered unless a policy exclusion interrupts the chain.

Question 25General Insurance Concepts

Because a policy is drafted by the insurer and offered to the insured on a take-it-or-leave-it basis, courts generally:

  1. enforce ambiguous terms against the insured
  2. rewrite the policy to broaden coverage
  3. construe ambiguous wording against the insurer Correct answer.
  4. void the policy whenever wording is disputed

Explanation

A contract of adhesion is prepared by the stronger party, so ambiguity is construed against the drafter, the insurer, under the rule of contra proferentem. The rule encourages clear drafting and protects the insured's reasonable expectations.

Question 26General Insurance Concepts

A ten-year-old roof has a replacement cost of $20,000 and has depreciated 40%. Under an actual cash value policy with a $1,000 deductible, a total loss to the roof pays:

  1. $11,000 Correct answer.
  2. $19,000
  3. $12,000
  4. $20,000

Explanation

Actual cash value is replacement cost less depreciation, so the loss value is $20,000 times 60%, or $12,000. The $1,000 deductible is then subtracted, producing a payment of $11,000.

Question 27General Insurance Concepts

A primary insurer cedes part of its risk portfolio to a reinsurer mainly to:

  1. avoid the need to maintain policyholder surplus
  2. increase its capacity to write additional business Correct answer.
  3. comply with state rate-filing requirements
  4. transfer all claim-handling duties to the reinsurer

Explanation

Reinsurance lets a primary insurer share large or catastrophic exposures, which frees surplus and allows it to accept more business than it could safely retain on its own. The primary insurer generally remains the party that handles claims and deals with the insured.

Question 28General Insurance Concepts

An adjuster tells an insured in writing that a late notice of claim will be accepted, and the insured relies on that statement. The insurer is later barred from denying the claim under the doctrine of:

  1. utmost good faith
  2. res ipsa loquitur
  3. estoppel Correct answer.
  4. contribution

Explanation

Estoppel prevents a party from asserting a right after its conduct or promise has led another party to rely on it to that party's detriment. When an insurer's representative waives a policy requirement and the insured relies on that waiver, the insurer may be barred from later enforcing the requirement.

Question 29Property Insurance Basics

A person may buy property insurance only if damage to the property would cause that person a financial loss. This requirement is known as:

  1. Indemnity
  2. Subrogation
  3. Insurable interest Correct answer.
  4. Coinsurance

Explanation

Insurable interest requires that the purchaser of property insurance stand to suffer a direct financial loss if the insured property is damaged or destroyed. It exists in ownership, leasehold, and secured-lender relationships, among others. Without it, a policy would be an unenforceable wager.

Question 30Property Insurance Basics

The principle of indemnity provides that, after a covered loss, the insured should:

  1. be restored to approximately the same financial position as before the loss Correct answer.
  2. receive enough to replace the property with a superior model
  3. recover the loss from both the insurer and the negligent party
  4. collect the full policy limit regardless of the size of the loss

Explanation

Indemnity means the insured is made whole financially, no better and no worse off than before the loss. It prevents an insured from profiting from insurance. Policy limits, deductibles, and valuation methods are all tools used to enforce this principle.

Question 31Property Insurance Basics

What is the purpose of a coinsurance clause in a property policy?

  1. It requires insurance equal to a stated percentage of value to avoid a penalty. Correct answer.
  2. It requires the insured to carry insurance equal to the full market value of the property at all times.
  3. It caps the insurer's total liability at a fixed dollar amount.
  4. It allows the insured to collect an amount greater than the actual loss.

Explanation

A coinsurance clause requires the insured to carry limits at least equal to a specified percentage of the property's value, often 80 or 90 percent. If the insured carries less, any loss payment is reduced in proportion to the shortfall. The clause discourages underinsurance and helps keep premium rates equitable.

Question 32Property Insurance Basics

A policy carries a $1,000 deductible and a covered loss of $4,500 occurs. The insured collects:

  1. $3,500 Correct answer.
  2. $4,500
  3. $1,000
  4. $5,500

Explanation

A deductible is the amount of a covered loss the insured absorbs before the insurer pays. The payment equals the covered loss minus the deductible, so $4,500 less $1,000 is $3,500, subject to the policy limit. Deductibles reduce small claims and lower premium.

Question 33Property Insurance Basics

Actual cash value is best described as:

  1. replacement cost minus depreciation Correct answer.
  2. replacement cost plus depreciation
  3. market value plus depreciation
  4. the original purchase price of the property

Explanation

Actual cash value measures the value of property at the time of loss: replacement cost less an allowance for depreciation. It reflects the used value of the damaged item. Some policies define ACV differently, for example as fair market value, so the policy definition controls.

Question 34Property Insurance Basics

Which part of a property policy identifies the named insured, the covered locations, the limits of insurance, and the policy period?

  1. The conditions section
  2. The insuring agreement
  3. The declarations Correct answer.
  4. The exclusions section

Explanation

The declarations page personalizes the policy by stating who is insured, what and where is covered, the limits and deductibles, and the effective dates. It is the quick reference for the policy's basic facts. The remaining sections describe the promise to pay, exclusions, and duties.

Question 35Property Insurance Basics

A building has a replacement value of $400,000 and the policy contains an 80% coinsurance clause. The insured carries $240,000 of insurance and a covered loss of $80,000 occurs with no deductible. How much does the insurer pay?

  1. $80,000
  2. $48,000
  3. $64,000
  4. $60,000 Correct answer.

Explanation

The required amount of insurance is 80% of $400,000, or $320,000. Because only $240,000 was carried, the payment is ($240,000 / $320,000) × $80,000, which equals $60,000, and that amount is below the policy limit. The insured bears the remaining $20,000 as the coinsurance penalty.

Question 36Property Insurance Basics

Under the standard mortgage clause attached to a property policy, the mortgagee is entitled to:

  1. take over the policy and add additional insureds at will
  2. receive the unearned premium if the insured cancels the policy
  3. receive loss payment to the extent of its interest despite the insured's acts Correct answer.
  4. deny coverage to the insured by notifying the insurer

Explanation

The standard mortgage clause protects the lender's interest: the mortgagee receives loss payment to the extent of its interest, and its rights are not defeated by the acts or neglect of the insured. In return, the mortgagee must notify the insurer of any change in ownership or occupancy and may pay premium on demand. This protection is broader than that given by a simple loss payable clause.

Question 37Property Insurance Basics

Subrogation refers to:

  1. the insurer's right to recover from a negligent third party after paying a claim Correct answer.
  2. the insured's right to collect from two insurers for the same loss
  3. the insurer's right to cancel a policy midterm for nonpayment of premium
  4. the insured's duty to report a loss promptly to the insurer

Explanation

After paying a covered loss, the insurer is subrogated to the insured's legal right of recovery against the party that caused the damage. This keeps the cost of insurance down and prevents the insured from collecting twice. The insured must not impair the insurer's subrogation rights.

Question 38Property Insurance Basics

Two policies with limits of $100,000 each cover the same property on a pro rata basis. A covered loss of $60,000 occurs. How much does each insurer pay?

  1. $60,000
  2. $100,000
  3. $30,000 Correct answer.
  4. $0, because duplicate insurance voids both policies

Explanation

Under pro rata other insurance, each insurer pays the proportion of the loss that its limit bears to the total insurance applicable. Here each policy represents one-half of the $200,000 total, so each pays one-half of the $60,000 loss, or $30,000. Total recovery does not exceed the actual loss.

Question 39Property Insurance Basics

Which of the following is an obligation of the insured after a covered property loss?

  1. The insured must complete permanent repairs before the insurer inspects the damage.
  2. The insurer must provide a sworn proof of loss within 60 days.
  3. The insured must submit a signed and sworn proof of loss. Correct answer.
  4. The insurer must inspect the damaged property before any payment is made.

Explanation

Standard property forms require the insured to give prompt notice, protect the property from further damage, cooperate with the investigation, and submit a signed and sworn proof of loss. These duties after loss are conditions of coverage. Failing to comply can jeopardize the claim.

Question 40Property Insurance Basics

The insured and the insurer agree that a loss is covered but disagree on the amount of the loss. The policy provides a procedure in which each party selects a competent appraiser and the appraisers choose an umpire. This procedure is called:

  1. Appraisal Correct answer.
  2. Arbitration
  3. Mediation
  4. Litigation

Explanation

The appraisal provision resolves disputes about the amount of loss, not about whether coverage applies. Each side chooses a competent and disinterested appraiser, and an umpire selected by the appraisers decides any difference between them. An agreement in writing by any two of them sets the amount of loss.

Question 41Property Insurance Basics

A written or oral binder given before a policy is issued provides:

  1. permanent coverage that cannot be cancelled by either party
  2. a guarantee that the final policy will contain identical terms
  3. coverage only after the first premium is fully earned
  4. temporary evidence that insurance is in force until the policy is issued or the binder expires Correct answer.

Explanation

A binder is temporary evidence of coverage that bridges the gap until the policy is issued. It is subject to the terms of the policy to be issued and to any stated expiration. Binders are typically issued by an agent acting within authority.

Question 42Property Insurance Basics

Many property forms suspend or restrict coverage when a building has been vacant beyond a stated number of consecutive days. The main reason for this provision is that vacancy:

  1. increases the hazard of loss and the chance that damage goes undetected Correct answer.
  2. transfers the risk of loss to the mortgagee
  3. reduces the insurer's exposure to liability claims
  4. eliminates the insured's insurable interest in the property

Explanation

Vacant buildings present increased hazards such as vandalism, theft of fixtures, and undetected water or fire damage. The vacancy provision limits or suspends certain coverage after a stated period, often 60 consecutive days. Insureds who need coverage during vacancy usually must obtain an endorsement.

Question 43Property Insurance Basics

A policy that pays the cost to repair or replace damaged property with new property of like kind and quality, without deducting for depreciation, provides:

  1. replacement cost Correct answer.
  2. functional replacement cost
  3. actual cash value
  4. agreed value

Explanation

Replacement cost coverage pays what it costs today to repair or replace with new property of like kind and quality, with no depreciation deduction, up to the policy limit. Many forms require the insured to carry insurance to at least a specified percentage of replacement cost to receive full payment. Payment may also be withheld until repair or replacement is completed.

Question 44Property Insurance Basics

A loss payable clause differs from a mortgagee clause in that a loss payable clause:

  1. requires the lender to pay the premium if the insured fails to do so
  2. does not protect the lender against defenses the insurer could raise against the insured Correct answer.
  3. gives the lender rights superior to those of the named insured
  4. extends coverage to the lender as a named insured

Explanation

A simple or open loss payable clause directs payment to the lender to the extent of its interest, but the lender's rights rise and fall with the insured's. The standard mortgage clause goes further by protecting the mortgagee even when the insured's acts would otherwise defeat coverage. Lenders therefore generally insist on the mortgagee clause.

Question 45Property Insurance Basics

A building is valued at $500,000 and the policy has an 80% coinsurance clause. The insured carries $300,000 of insurance, a covered loss of $100,000 occurs, and a $1,000 deductible applies. What amount is payable?

  1. $100,000
  2. $75,000
  3. $99,000
  4. $74,000 Correct answer.

Explanation

The required insurance is 80% of $500,000, or $400,000. The coinsurance calculation gives ($300,000 / $400,000) × $100,000 = $75,000, and the $1,000 deductible is then subtracted to produce $74,000. The insured absorbs the coinsurance penalty plus the deductible.

Question 46Property Insurance Basics

Blanket insurance differs from specific insurance in that blanket insurance:

  1. applies only to property owned by others in the insured's care
  2. replaces the coinsurance requirement with a deductible
  3. insures a single item at one location under a separate limit
  4. insures two or more items of property under a single limit Correct answer.

Explanation

Blanket insurance covers two or more items or locations under one limit of insurance, with coinsurance applied to the total value of all covered property. Specific insurance covers each item or location separately, with coinsurance tested item by item. Blanket coverage gives the insured flexibility when values shift among locations.

Question 47Property Insurance Basics

A policy contains an anti-concurrent causation clause. When a covered peril and an excluded peril combine to cause a loss, the clause provides that:

  1. the entire loss is excluded Correct answer.
  2. only the portion of the loss attributable to the covered peril is paid
  3. the loss is covered because a covered peril contributed to it
  4. the insurer must pay the full policy limit

Explanation

An anti-concurrent causation clause excludes loss caused by an excluded peril even when a covered peril contributes concurrently, regardless of the sequence of events. It prevents recovery where the excluded peril is part of the causal chain. Courts enforce these clauses according to their wording and applicable state law.

Question 48Property Insurance Basics

Business income coverage pays for lost earnings during the period of restoration. That period ends when:

  1. the policy period expires, regardless of the state of repairs
  2. the insured reopens for business, even if rebuilding was delayed by the insured's own choices
  3. the damaged property could reasonably be repaired or replaced with due diligence Correct answer.
  4. the insured receives the final settlement from the insurer

Explanation

The period of restoration runs from the date of loss until the property should reasonably have been repaired, rebuilt, or replaced with due diligence. It is not extended by delays the insured could have avoided. This limits the insurer's exposure to the time reasonably needed to restore operations.

Question 49Casualty Insurance Basics

Which of the following is a required element of a negligence claim?

  1. An intent to cause harm to the claimant
  2. A written contract between the parties
  3. A duty of care owed to the claimant Correct answer.
  4. A prior criminal conviction of the defendant

Explanation

Negligence requires a duty of care, a breach of that duty, proximate cause, and actual damages. The defendant's intent, a contract, or a criminal record are not elements of the tort.

Question 50Casualty Insurance Basics

Damages intended to reimburse a claimant for medical expenses and lost earnings are best described as:

  1. Compensatory damages Correct answer.
  2. Punitive damages meant to punish the wrongdoer
  3. Nominal damages of a token amount
  4. Liquidated damages set by contract

Explanation

Compensatory damages make the injured party whole by paying for actual losses such as medical bills and lost wages, and may also include general damages for pain and suffering.