Property & Casualty Insurance - static.kaplanlearn.com

1 Property & Casualty Insurance 1st Edition, Revised License Exam Manual 1st Edition, Revised Property and Casualty Insurance License Exam Manual Property and Casualty Insurance LEM 1 5/9/2014 12:41:00 PM. At press time, this edition contains the most complete and accurate information currently available. Owing to the nature of license examinations, however, information may have been added recently to the actual test that does not appear in this edition. Please contact the publisher to verify that you have the most current edition. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought. Property AND Casualty Insurance . LICENSE EXAM MANUAL, 1ST EDITION, REVISED.

2 2010 Kaplan, Inc. All rights reserved. The text of this publication, or any part thereof, may not be reproduced in any manner whatsoever without written permission from the publisher. If you find imperfections or incorrect information in this product, please visit and submit an errata report. Published in April 2010 by Kaplan Financial Education. Revised April 2016. Printed in the United States of America. ISBN: 978-1-4277-2506-6 / 1-4277-2506-3. PPN: 1000-0557. P&C LEM - 2 4/7/2016 1:21:01 PM. Contents Introduction ix U n i t 1 Principles of Insurance 1. Objectives of this Course 2 Elements of Insurability 5. Risk, Exposure 2 Other Insurance Terms 8. Managing Risk 3 Unit Test 10. Insurance 4 Answers and Rationales to Unit Test 12. Law of Large Numbers 5. U n i t 2 The Insurance Contract 15. Elements of a Valid Contract 16 Unit Test 22. Characteristics of an Insurance Answers and Rationales Contract 18 to Unit Test 23. Parts of the Insurance Contract: Declarations, Insuring Agreements, Conditions, Exclusions, and Definitions 20.

3 U n i t 3 Insurance Company Organization and Regulation 25. Types of Insurance Organizations 26 Regulation 38. Lines of Insurance 28 Unit Test 49. Insurance Company Answers and Rationales Organization 30 to Unit Test 52. iii Property and Casualty Insurance LEM 3 5/9/2014 12:41:01 PM. iv Contents U n i t 4 The Insurance Transaction 55. Application 56 Representations and Warranties 62. Binders 56 Waiver and Estoppel 62. Underwriting the Policy 57 Cancellation and Nonrenewal 62. Rating the Policy 60 Unit Test 65. Certificate of Insurance 61 Answers and Rationales to Unit Test 67. Misrepresentation, Concealment, and Fraud 61. U n i t 5 Introduction to Property Insurance 69. Standardized Policies 71 Exclusions and Limitations 75. How the Remainder of the Course Conditions 77. Is Organized 71. Unit Test 87. Declarations 72. Answers and Rationales Insuring Agreement 74 to Unit Test 89. U n i t 6 Introduction to liability Insurance 93. liability Losses 94 Vicarious liability 99.

4 Negligence 95 liability Insurance 99. Defenses Against Negligence 97 Unit Test 106. Absolute/Strict liability 98 Answers and Rationales to Unit Test 108. U n i t 7 Dwelling Insurance 111. The Dwelling Policy 112 Dwelling Policy Endorsements 130. Basic Form (DP-1) 113 Unit Test 134. Broad Form (DP-2) and Answers and Rationales Special Form (DP-3) 122 to Unit Test 137. Dwelling Forms Comparison 128. Property and Casualty Insurance LEM 4 5/9/2014 12:41:01 PM. Contents v U n i t 8 Homeowners Insurance 141. The Homeowners Policy 143 Homeowners Forms Comparison 169. Section I Property 145. Unit Test 170. Section II liability 160. Answers and Rationales Homeowners Endorsements 166 to Unit Test 173. U n i t 9 Personal Auto Insurance 177. Introduction 178 Parts E and F Conditions 195. Organization and Eligibility 180 Underinsured Motorists Coverage 197. Definitions 180. Personal Auto Policy Part A liability Coverage 182 Endorsements 197. Part B Medical Payments No-Fault Insurance 198.

5 Coverage 187. Assigned Risk Plans 199. Part C Uninsured Motorists Coverage 188 Unit Test 200. Part D Coverage for Damage to Answers and Rationales Your Auto 191 to Unit Test 203. U n i t 1 0 Miscellaneous Personal Insurance 207. Introduction 209 Personal Watercraft Insurance 216. Flood Insurance 209 Personal Umbrella Insurance 218. Earthquake Insurance 212 Fair Plans 219. Mobile Home Insurance 213 Unit Test 221. Personal Inland Marine Answers and Rationales Insurance 213 to Unit Test 223. U n i t 1 1 The Commercial Package Policy 227. Introduction 228 Unit Test 233. Eligible Coverages 228 Answers and Rationales to Unit Test 234. Common Policy Declarations 230. Common Policy Conditions 230. Property and Casualty Insurance LEM 5 5/9/2014 12:41:01 PM. vi Contents U n i t 1 2 The Businessowners Policy 237. Introduction 238 Endorsements 263. Eligibility, Policy Organization 239 Comparison of Commercial Package Policy and Businessowners Property Coverage 241 Policy 265.

6 liability and Medical Expenses Unit Test 2664. Coverage 256. Answers and Rationales Conditions 262 to Unit Test 268. U n i t 1 3 Commercial Property Insurance 271. Commercial Property Coverage Extra Expense and Legal liability Part 273 Coverage Forms 289. Building and Personal Property Causes of Loss Forms 290. Coverage Form 275. Endorsements 298. Builders Risk Coverage Form 283. Unit Test 299. Condominium Coverage Forms 285. Answers and Rationales Business Income Coverage to Unit Test 303. Forms 286. U n i t 1 4 Ocean and Inland Marine Insurance 307. Ocean Marine Insurance 310 Nonfiled Forms 328. Inland Marine Insurance 313 Unit Test 332. Filed Forms 316 Answers and Rationales to Unit Test 335. Property and Casualty Insurance LEM 6 5/9/2014 12:41:01 PM. Contents vii U n i t 1 5 Commercial General liability Insurance 339. Business liability Exposures 341 Coverage C Medical Payments 353. Commercial General liability Coverage Part 342 Who Is an Insured 353.

7 Occurrence and Claims-Made Limits of Insurance 355. Forms 342. Conditions 356. Definitions 346. Other Commercial General Coverage A Bodily Injury and liability Coverage Forms and Property Damage liability 349 Endorsements 358. Coverage B Personal and Unit Test 359. Advertising Injury liability 351. Answers and Rationales Coverage A and B Supplementary to Unit Test 362. Payments 352. U n i t 1 6 Commercial Auto Insurance 367. Commercial Auto Coverage Motor Carrier Coverage Form 381. Part 369. Endorsements 382. Business Auto Coverage Form 369. Unit Test 385. Garage Coverage Form 378. Answers and Rationales Truckers Coverage Form 380 to Unit Test 388. U n i t 1 7 Commercial Crime Insurance 391. Types of Crime Forms 393 Other Crime Forms and Endorsements 405. Definitions 395. Fidelity Bonds 406. Insuring Agreements 397. Unit Test 408. Exclusions 400. Answers and Rationales Conditions 402 to Unit Test 410. Property and Casualty Insurance LEM 7 5/9/2014 12:41:01 PM.

8 Viii Contents U n i t 1 8 Workers' Compensation 413. Workers' Compensation Laws 414 Rating Workers' Compensation Coverage 423. Funding 419. Unit Test 424. Workers' Compensation and Employers liability Policy 420 Answers and Rationales to Unit Test 425. Federal Workers' Compensation Laws 423403. U n i t 1 9 Miscellaneous Commercial Insurance 427. Introduction 429 Commercial Umbrella Insurance 447. Farm Insurance 429 Surety Bonds 448. Boiler and Machinery Insurance 433 Surplus Lines 451. Aviation Insurance 443 Federal Terrorism Risk Insurance Act of 2002 451. Professional liability Insurance 444. Unit Test 455. Employment Practices liability Insurance 445 Answers and Rationales to Unit Test 458. Difference in Conditions Insurance 446. Glossary 463. Index 481. Property and Casualty Insurance LEM 8 5/9/2014 12:41:01 PM. Introduction Important: Check for Updates States sometimes revise their exam content outlines unexpectedly or on short notice.

9 To see whether there is an update for this product because of an exam change, please go to and check the Insurance Licensing Blog. If there is an update, it will be clearly noted in the blog entries. We suggest that you check for updates when you first receive the course, again during your study period, upon completion of your studies, and one last time just before you take your Insurance license exam. Hints for Successful Exam Preparation An examination must be taken and passed before an Insurance pro- ducer's license is issued. This examination is designed to measure your basic knowledge of Insurance coverages and practices to ensure that the public is served in a professionally responsible manner. The examination will also test your understanding of state laws and regulations pertaining to the Insurance industry. The Licensing Examination All examination questions are four-part multiple-choice. The number of questions on the exam and the amount of time allowed to complete the exam varies depending on the state and the exam provider.

10 Your exam may contain anywhere from 50 150 questions and have a time limit of 1 3 hours. Check with your state's license exam administrator for details. Be sure to read each question carefully. While several of the possible answers may be partially correct, you must select the best answer to each question. Watch for words such as all, never, and always. They may help you eliminate some of the choices. There is no penalty for guessing. If you can narrow the choice of four answers down to three or even two logical possibilities, you have a good chance of making an educated guess and picking the right answer. Do not spend too much time on any one question. It is best to skip very difficult questions and return to them after you have completed all of the easier ones. Other questions on the exam may contain information that helps you answer more difficult questions. Study Techniques You may have a lot of experience taking training courses and their exami- nations or it may have been years since you've taken a course.