Step2Study

Property & Casualty Insurance Exam (National Portion) practice questions

257 free questions with answers and explanations.

Practice test
  1. 101.A client has a Personal Auto Policy (PAP) with Uninsured Motorist (UM) Bodily Injury limits of $50,000 per person / $100,000 per accident. The client is severely injured in an accident caused by an uninsured driver, incurring $75,000 in medical bills and lost wages. How much will the client's UM coverage pay?Casualty Insurance
  2. 102.A client has a Personal Auto Policy (PAP) with liability limits of $100,000 per person / $300,000 per accident for bodily injury, and $50,000 for property damage. The client causes an accident, resulting in $150,000 in bodily injury to one person, $50,000 in bodily injury to a second person, and $30,000 in property damage. How much will the policy pay in total for this accident?Casualty Insurance
  3. 103.A client has a Personal Auto Policy (PAP) with a Combined Single Limit (CSL) of $300,000. The client causes an accident resulting in $150,000 in bodily injury to one person, $75,000 in bodily injury to a second person, and $100,000 in property damage. What is the maximum amount the policy will pay for this accident?Casualty Insurance
  4. 104.A state insurance department is conducting a market conduct examination of an insurer. During this examination, the department discovers that the insurer has consistently used an unapproved rating algorithm, resulting in higher premiums for a specific demographic group without any actuarial justification. Which type of unfair trade practice is the insurer committing?Producers and Adjusters
  5. 105.A client has a Personal Auto Policy (PAP) with liability limits of $50,000 per person / $100,000 per accident for bodily injury and $25,000 for property damage. The insured causes an accident that results in $70,000 in bodily injury to one person and $10,000 in property damage. The client is found legally liable. How much will the policy pay in total for this accident?Casualty Insurance
  6. 106.A client's auto policy has a Combined Single Limit (CSL) of $300,000 for bodily injury and property damage liability. The insured causes an accident where two people are injured, incurring $150,000 and $100,000 in bodily injury respectively, and $75,000 in property damage. How much will the policy pay in total for this accident?Casualty Insurance
  7. 107.A client has an auto insurance policy with Uninsured Motorist (UM) Bodily Injury limits of $50,000 per person / $100,000 per accident. If the client is hit by an uninsured driver and sustains $60,000 in medical bills and lost wages, how much would their UM policy pay for their injuries?Casualty Insurance
  8. 108.A client approaches their insurance producer to request a change in coverage on their homeowner's policy. The producer, without consulting the insurer, tells the client that the change is approved and issues a temporary binder. The insurer later denies the change, stating the producer lacked the authority to do so. What type of authority did the client reasonably believe the producer possessed, which led to this misunderstanding?Producers and Adjusters
  9. 109.A client's homeowner's policy includes personal liability coverage. The insured is sued for libel after posting negative comments about a neighbor online. Which of the following statements is true regarding coverage for this claim?Casualty Insurance
  10. 110.A business owner has a Commercial General Liability (CGL) policy. A customer slips and falls on a wet floor inside the business, sustaining a broken arm. Which part of the CGL policy would primarily respond to the customer's medical bills, regardless of fault?Casualty Insurance
  11. 111.A client's Personal Auto Policy (PAP) includes Supplementary Payments. Which of the following would be covered under this provision?Casualty Insurance
  12. 112.A client has a Personal Auto Policy (PAP) with Uninsured Motorist Property Damage (UMPD) coverage with a limit of $10,000 and a $250 deductible. The client's vehicle sustains $8,000 in damages after being hit by an identifiable uninsured driver. How much will the UMPD coverage pay?Casualty Insurance
  13. 113.An insurance producer, licensed in one state, wishes to conduct insurance business in a neighboring state. What is generally required for this producer to legally sell insurance in the neighboring state?Producers and Adjusters
  14. 114.Under a standard commercial property policy, which of the following is a common exclusion that requires a separate, specialized policy for coverage?Property Insurance
  15. 115.A client has two Personal Auto Policies (PAPs). Policy A has a bodily injury liability limit of $100,000 per person / $300,000 per accident. Policy B has a bodily injury liability limit of $50,000 per person / $150,000 per accident. The client causes an accident resulting in $75,000 in bodily injury to a single third party. Both policies contain a 'pro-rata' other insurance clause. How much will Policy A pay?Casualty Insurance
  16. 116.A client's business has a Commercial General Liability (CGL) policy. A customer slips and falls on a wet floor inside the business, sustaining a minor injury that requires emergency room treatment. The CGL policy has a Medical Payments (Coverage C) limit of $10,000. The customer's medical bills total $8,000. What is the maximum the CGL policy will pay under Medical Payments (Coverage C) for this claim?Casualty Insurance
  17. 117.A client has an auto policy with Medical Payments (Med Pay) coverage with a limit of $10,000. The client is injured in an accident and incurs $12,000 in medical bills. The client also has personal health insurance, which pays $8,000 of the medical bills. If the auto policy's Med Pay coverage is primary, how much will it pay?Casualty Insurance
  18. 118.A homeowner's policy includes a deductible of $1,000. If a covered loss occurs resulting in $8,500 worth of damage to the dwelling, how much will the insurance company pay?Property Insurance
  19. 119.A client operates a small manufacturing business. They are concerned about damage to their specialized machinery due to electrical surges. Which type of commercial property coverage would typically address this specific concern?Property Insurance
  20. 120.A client's homeowner's policy has a personal liability limit of $300,000. While the client is away on vacation, a pipe bursts in their home, causing $50,000 in water damage to their neighbor's attached property. The neighbor makes a claim against the client for the damages. How much will the client's homeowner's policy pay for the neighbor's property damage under personal liability?Casualty Insurance
  21. 121.A client's business is sued for product liability. Their Commercial General Liability (CGL) policy contains a standard subrogation clause. After settling a claim for $500,000 with the injured party, the insurer discovers that a component manufactured by a third-party supplier was defective and directly caused the injury. What action would the insurer likely take next, based on the subrogation clause?Casualty Insurance
  22. 122.An insurance producer has been legally appointed by an insurer to act on its behalf and has a written contract outlining their duties and responsibilities, including the authority to bind certain coverages. What type of authority does this represent?Producers and Adjusters
  23. 123.An insurance producer is required to maintain accurate records of all insurance transactions, including applications, policies issued, premiums collected, and claims handled. According to typical state regulations, for how long must these records generally be retained after the policy's effective date or the transaction's completion?Producers and Adjusters
  24. 124.A business owner has a commercial property policy that includes a Civil Authority coverage extension. Their building is undamaged, but access is prohibited by police due to a covered peril (riot) at a neighboring property for 5 days. The business loses $10,000 in income per day. The policy has a 72-hour waiting period for Civil Authority coverage and a $50,000 limit. How much will the policy pay for the loss of business income?Property Insurance
  25. 125.A newly licensed producer is approached by a client seeking coverage for a unique and high-risk commercial venture for which the producer has no prior experience. The producer is eager to secure the business but lacks specific knowledge in this area. What is the most ethical course of action for the producer?Producers and Adjusters
  26. 126.An insured driver causes an accident, resulting in $15,000 in bodily injury to another party. The insured's auto policy has a bodily injury liability limit of $25,000 per person / $50,000 per accident. The policy also includes Supplementary Payments. Which of the following would be covered under Supplementary Payments, in addition to the $15,000 bodily injury payment?Casualty Insurance
  27. 127.An insured's commercial building is damaged by a windstorm. The building is insured for $800,000, and the policy has an 80% coinsurance clause. It is determined that the actual replacement cost of the building at the time of loss was $1,000,000. If the loss is $100,000, how much will the insurer pay, ignoring any deductible?Property Insurance
  28. 128.A client's Personal Auto Policy (PAP) includes a Medical Payments (Med Pay) limit of $5,000. The client is injured in an accident and incurs $7,000 in medical bills. Their own health insurance pays $4,000. How much will the client's Med Pay coverage pay?Casualty Insurance
  29. 129.A client is involved in an auto accident with a driver who has a liability policy with limits of $25,000 per person / $50,000 per accident. The client sustains $60,000 in bodily injuries. The client's own Personal Auto Policy (PAP) has Underinsured Motorist (UIM) Bodily Injury coverage with limits of $100,000 per person / $300,000 per accident. What is the maximum amount the client's UIM coverage will pay for their injuries?Casualty Insurance
  30. 130.An insured's auto policy has bodily injury liability limits of $50,000 per person / $100,000 per accident. The insured causes an accident, injuring three people. Person A has $60,000 in damages, Person B has $40,000, and Person C has $30,000. How much will the policy pay in total for these injuries?Casualty Insurance
  31. 131.A state insurance department receives multiple complaints alleging that a specific insurance producer has been consistently delaying the forwarding of premium payments to insurers, causing policies to lapse unintentionally for clients. Which of the following ethical responsibilities is this producer primarily violating?Producers and Adjusters
  32. 132.A client has a Personal Auto Policy (PAP) with a bodily injury liability limit of $25,000 per person / $50,000 per accident. The insured causes an accident injuring two people for $30,000 and $15,000 respectively. How much will the policy pay for the person with $30,000 in injuries?Casualty Insurance
  33. 133.A business owner has a Commercial General Liability (CGL) policy with a per-occurrence limit of $500,000 and a General Aggregate Limit of $1,500,000. In the first quarter, a single accident results in $600,000 in bodily injury claims. How much will the CGL policy pay for this single accident?Casualty Insurance
  34. 134.A client has a Personal Auto Policy (PAP) with liability limits of $50,000 per person / $100,000 per accident. The client causes an accident, injuring three people. Person 1 incurs $60,000 in bodily injuries, Person 2 incurs $30,000, and Person 3 incurs $20,000. How much will the policy pay for bodily injuries in total?Casualty Insurance
  35. 135.A commercial property owner wants to ensure that if their building is damaged, the insurance will cover the cost to rebuild it using current construction materials and methods, even if that means exceeding the original building's cost due to updated building codes. Which valuation method or endorsement would best address this concern?Property Insurance
  36. 136.A client has two homeowner's policies, Policy A with a liability limit of $300,000 and Policy B with a liability limit of $200,000. Both policies have an 'Other Insurance' clause stating they pay on a pro-rata basis. The client is found legally liable for $100,000 in damages. How much will Policy A pay?Casualty Insurance
  37. 137.A client's personal auto policy (PAP) includes Uninsured Motorist Property Damage (UMPD) with a limit of $10,000 and a $250 deductible. The client's car is hit by an uninsured driver, resulting in $8,000 in damage to their vehicle. How much would the UMPD coverage pay for this loss?Casualty Insurance
  38. 138.A property and casualty insurance producer is found to have intentionally misrepresented the terms of a policy to a prospective client to induce them to purchase coverage. This action is a clear example of which of the following unfair trade practices?Producers and Adjusters
  39. 139.An insured's commercial building sustained damage from a burst pipe, causing extensive water damage to the interior. The policy is a Broad Cause of Loss form. Which of the following perils would specifically cover this type of damage?Property Insurance
  40. 140.A tenant operates a small retail store. Their landlord's commercial property policy covers the building structure. Which type of property coverage would the tenant need to protect their inventory and fixtures within the leased space?Property Insurance
  41. 141.A client files a claim for property damage due to a fire. The insurance adjuster investigates the claim, determines the extent of the loss, and calculates the appropriate settlement amount based on the policy terms. Which of the following best describes this specific role of the adjuster?Producers and Adjusters
  42. 142.A commercial building sustains significant damage due to a sudden and accidental discharge of water from an automatic sprinkler system. Under which commercial property Cause of Loss form would this damage typically be covered?Property Insurance
  43. 143.A client has a homeowner's policy with a personal liability limit of $300,000. A fire originating in their garage spreads to a neighbor's property, causing $100,000 in damage to the neighbor's house and $20,000 in damage to their personal belongings. How would the client's policy respond to the neighbor's property damage claim?Casualty Insurance
  44. 144.A client operates a small manufacturing business and is concerned about potential damage to their specialized machinery due to electrical surges or mechanical breakdown. Their standard commercial property policy does not adequately cover these types of losses. Which of the following coverages would best address the client's concern?Property Insurance
  45. 145.A homeowner's policy includes a special limit of liability for theft of jewelry. If the policy has a standard $1,500 sub-limit for jewelry theft, and a thief steals $2,500 worth of jewelry, how much will the policy pay for the jewelry loss, assuming no deductible applies to this specific loss?Property Insurance
  46. 146.A client's Personal Auto Policy (PAP) has Uninsured Motorist Property Damage (UMPD) coverage with a limit of $10,000 and a $250 deductible. The client's vehicle sustains $8,000 in damages after being hit by an uninsured driver. How much will the UMPD coverage pay?Casualty Insurance
  47. 147.A property and casualty producer is convicted of a felony involving dishonesty and a breach of trust. According to federal law (18 U.S.C. § 1033), what must this producer obtain before they can continue to engage in the business of insurance?Producers and Adjusters
  48. 148.A state insurance department is investigating a complaint against a producer. During the investigation, the producer intentionally conceals relevant documents and provides misleading information to the investigators. What type of unfair trade practice or ethical violation is this producer committing, specifically related to the investigation itself?Producers and Adjusters
  49. 149.Which of the following perils is typically covered under a Basic Cause of Loss form in a commercial property policy?Property Insurance
  50. 150.A client has two Personal Auto Policies (PAPs). Policy A has a bodily injury liability limit of $100,000 per person / $300,000 per accident. Policy B has a bodily injury liability limit of $50,000 per person / $150,000 per accident. Both policies have a 'pro-rata' other insurance clause. If the insured causes an accident with $90,000 in bodily injury to a single person, how much will Policy B pay?Casualty Insurance