National University
Property and Liability Insurance
SAMPLE QUIZ #01
Here are 20 multiple-choice questions (MCQs) for Property and Liability Insurance:
1. What does Property Insurance primarily cover?
A) Personal injuries
B) Damage to physical assets
C) Legal liabilities
D) Medical expenses
Answer: B) Damage to physical assets
2. Which of the following is an example of property covered by Property Insurance?
A) Emotional distress
B) Intellectual property
C) Automobiles
D) Professional liability
Answer: C) Automobiles
3. Liability Insurance provides coverage for:
A) Damages caused to one's own property
B) Legal obligations to third parties
C) Loss of income due to business interruption
D) Medical expenses for injuries sustained by the policyholder
Answer: B) Legal obligations to third parties
4. Which of the following is NOT typically covered by Liability Insurance?
A) Bodily injury to others
B) Damage to property owned by the policyholder
C) Legal defense costs
D) Personal injury claims such as defamation or invasion of privacy
Answer: B) Damage to property owned by the policyholder
5. What type of property is covered by Property Insurance?
A) Tangible assets only
B) Intangible assets only
C) Both tangible and intangible assets
D) Only property located outside the country
Answer: C) Both tangible and intangible assets
6. In Property Insurance, what does "actual cash value" refer to?
A) The cost to replace damaged property with new property of similar kind and quality
B) The current market value of the damaged property
C) The original purchase price of the damaged property
D) The total loss of the damaged property
Answer: B) The current market value of the damaged property
7. Which of the following is NOT a common type of Liability Insurance?
A) General Liability Insurance
B) Professional Liability Insurance
C) Automobile Liability Insurance
D) Property Liability Insurance
Answer: D) Property Liability Insurance
8. Property Insurance typically covers losses caused by which of the following perils?
A) Theft
B) Earthquakes
C) Floods
D) All of the above
Answer: D) All of the above
9. What does a deductible represent in Property and Liability Insurance?
A) The maximum amount the insurer will pay for a claim
B) The portion of the loss that the insured must cover out of pocket before the insurer pays
C) The premium paid by the insured to the insurer
D) The percentage of the claim covered by the insurer
Answer: B) The portion of the loss that the insured must cover out of pocket before the
insurer pays
10. Which of the following is a characteristic of Property Insurance?
A) Provides coverage for legal liabilities
B) Protects against financial losses due to negligence
C) Covers damage to physical assets caused by covered perils
D) Offers compensation for injuries sustained by third parties
Answer: C) Covers damage to physical assets caused by covered perils
11. What does a Liability Insurance policy limit indicate?
A) The maximum amount the insurer will pay for all claims during the policy period
B) The minimum amount the insured must pay out of pocket for a claim
C) The number of liability claims covered by the policy
D) The premium amount charged by the insurer
Answer: A) The maximum amount the insurer will pay for all claims during the policy period
12. Which of the following is an example of a liability risk covered by Liability Insurance?
A) Damage to the insured's own property
B) Injury sustained by the policyholder
C) Lawsuits filed by third parties for negligence
D) Theft of personal belongings
Answer: C) Lawsuits filed by third parties for negligence
13. What is "subrogation" in the context of Property and Liability Insurance?
A) The process of transferring risk from the insured to the insurer
B) The right of the insurer to pursue legal action against third parties responsible for a loss
C) The requirement for the insured to provide truthful information when applying for insurance
D) The calculation of insurance premiums based on risk factors
Answer: B) The right of the insurer to pursue legal action against third parties responsible
for a loss
14. Which of the following statements about Property Insurance is true?
A) It primarily covers liabilities arising from professional services.
B) It provides compensation for bodily injuries sustained by the insured.
C) It offers protection against financial losses due to damage or destruction of property.
D) It excludes coverage for damage caused by fire or theft.
Answer: C) It offers protection against financial losses due to damage or destruction of
property.
15. What is "public liability" in Liability Insurance?
A) Liability coverage for individuals engaged in hazardous occupations
B) Liability coverage for businesses that sell products to the public
C) Liability coverage for damage to property owned by the public
D) Liability coverage for injuries sustained by members of the public on the insured's premises
Answer: D) Liability coverage for injuries sustained by members of the public on the
insured's premises
16. Which of the following types of coverage is commonly included in a Property Insurance
policy?
A) Professional Liability Insurance
B) Workers' Compensation Insurance
C) Business Interruption Insurance
D) Automobile Liability Insurance
Answer: C) Business Interruption Insurance
17. What does "occurrence-based" coverage mean in Liability Insurance?
A) Coverage is triggered when a claim is filed during the policy period.
B) Coverage is based on the occurrence of a specific event, regardless of when the claim is
filed.
C) Coverage is provided only if the insured takes specific preventive measures.
D) Coverage is limited to certain occurrences specified in the policy.
Answer: B) Coverage is based on the occurrence of a specific event, regardless of when the
claim is filed.
18. Which of the following is an example of a liability risk covered by Liability Insurance for
businesses?
A) Damage to company-owned vehicles
B) Injury to employees while on the job
C) Theft of office equipment
D) Loss of income due to natural disasters
Answer: B) Injury to employees while on the job
19. How does "replacement cost" coverage differ from "actual cash value" coverage in Property
Insurance?
A) Replacement cost coverage provides compensation based on the property's original
purchase price, while actual cash value coverage considers depreciation.
B) Replacement cost coverage offers compensation for the cost to replace damaged property
with new property of similar kind and quality, while actual cash value coverage provides
compensation based on the current market value of the damaged property.
C) Replacement cost coverage only applies to tangible assets, while actual cash value
coverage applies to both tangible and intangible assets.
D) Replacement cost coverage is more expensive than actual cash value coverage.
Answer: B) Replacement cost coverage offers compensation for the cost to replace
damaged property with new property of similar kind and quality,
