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Free Property and Casualty Insurance Basics Practice Questions

Michigan Property & Casualty exam — 61 practice questions.

Subtopics: Indemnity, Insurable interest, Subrogation, Actual cash value, Coinsurance clause, Peril vs hazard, Loss valuation, Coinsurance, Negligence, Damages, Types of loss, Insurer provisions, Other insurance, Liability, Limits of liability, Deductibles, Policy structure, Policy conditions, Replacement cost, Pair and set clause, Vacancy provision, Mortgagee rights, Appraisal condition, Proof of loss, Salvage and abandonment, Liberalization clause, Assignment condition, Binder, Sublimit, Named perils vs open perils, Burden of proof, Direct vs indirect loss, Comparative negligence, Strict liability, Vicarious liability, Punitive damages, Special vs general damages, Proximate cause, Absolute liability, Hold harmless, Bailee liability, Attractive nuisance, Res ipsa loquitur, Coinsurance calculation, Actual cash value calculation, Split limits application

Read the Property and Casualty Insurance Basics study guide

Sample questions & answers

1. The principle that an insured should be restored but not profit from a loss is:

Indemnity

Indemnity restores the insured to the pre-loss financial position without profit.

2. For property insurance, insurable interest must exist:

At the time of loss

For property insurance, insurable interest must exist at the time of the loss.

3. After paying a claim, an insurer's right to recover from a responsible third party is:

Subrogation

Subrogation lets the insurer pursue a negligent third party after paying the insured's claim.

4. Actual cash value is generally calculated as:

Replacement cost minus depreciation

Actual cash value generally equals replacement cost minus depreciation.

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Practice: Property and Casualty Insurance Basics

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Practice questions are study aids generated for exam preparation and are not actual exam questions. Content is provided for educational purposes and is not legal advice. Verify current statutes, rules, and exam specifications with the Insurance Department and the exam administrator before relying on it.