Property Insurance – P&C License Exam Flashcards
Master the core concepts of Property Insurance for the Property and Casualty License Exam with these 35 targeted flashcards. Topics cover valuation methods, policy types, coinsurance, additional coverages, and key exclusions tested on the state licensing exam.
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Preview Questions
Question 1
What valuation method pays the cost to repair or replace damaged property with new materials of like kind and quality, without deducting for depreciation?
Answer
Replacement Cost Value (RCV). It does not factor in the age or condition of the property at the time of loss.
Question 2
How is Actual Cash Value (ACV) typically calculated?
Answer
ACV is calculated as Replacement Cost minus Depreciation. It reflects the fair market value of the property at the time of the loss.
Question 3
Under a Stated Amount valuation clause, what is the maximum the insurer will pay at the time of a total loss?
Answer
The insurer pays the lesser of the stated amount, the ACV, or the cost to repair or replace. It does not guarantee the full stated amount.
Question 4
What is the 'functional replacement cost' valuation method?
Answer
It pays the cost to replace damaged property with less expensive but functionally equivalent materials, commonly used for older or historic buildings.
Question 5
What valuation method is most commonly used for homeowners insurance policies unless the insured purchases a replacement cost endorsement?
Answer
Actual Cash Value (ACV) is the default valuation method, which deducts depreciation from the replacement cost.
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