Free Property and Casualty Exam Questions That Helps Candidates Pass

Quota-share treaties divide premiums and losses between ceding insurers and reinsurers at a fixed percentage. Excess-of-loss and stop-loss are non-proportional, while facultative applies to individual risks. Quota-share ensures balanced participation in underwriting results.

Cyber liability insurance covers notification costs, credit monitoring, forensic investigations, and legal defense following a breach. Physical damage to equipment or buildings is covered under property insurance, while employee benefits are covered by workers compensation. Customer notification is one of the most immediate and costly consequences of a breach, making this coverage critical.

Umbrella liability policies require the insured to maintain certain minimum limits of underlying coverage (such as general liability and auto liability). If these limits are not maintained, the insured may be responsible for the gap. This ensures umbrellas act as excess coverage rather than replacing primary policies.

Mutual insurers are owned by policyholders, and profits are often returned as dividends or reduced premiums. Stock insurers are owned by shareholders, reciprocals are managed by attorney-in-fact arrangements, and captives are created by parent companies for self-insurance. Understanding ownership structures is crucial for clients evaluating insurer incentives and financial practices.

Commercial property policies often include automatic coverage for newly acquired or constructed buildings, typically for a limited time (e.g., 30 days) and up to a specified limit. This prevents gaps while the insured notifies the insurer and arranges permanent coverage. Extra Expense Coverage ensures continuity after a loss, Ordinance or Law addresses compliance costs after rebuilding, and the Vacancy Clause reduces coverage for unoccupied properties. This extension is critical for growing businesses, preventing exposure during expansion.