2024 Edition

Property and Casualty Insurance Agent Licensing Practice Exam

Take this free practice test to get an idea of what is on your state's property and casualty insurance agent licensing exam.
As an insurance agent, one is allowed to offer many different lines of coverage – provided that the required training and testing qualifications have been met. Those who wish to sell property and casualty insurance are required to possess the proper licensing for each state in which they conduct business. In order to obtain a P&C insurance license, individuals must take and successfully pass an exam that is offered by the state licensing boards.

The actual exam tests your knowledge, skills and abilities in: Types of policies, bonds, and related terms, Insurance terms and related concepts, and Policy provisions and contract law under national and state insurance law.

To prepare for your licensing exam, use our full-length 500 question Property & Casulty Insurance Agent Practice Exam with answers fully explained for ideal study. 

Insurance Terms and Related Concepts

1. Which of the following statements about personal liability coverage (Coverage E) of an unendorsed HO-3 homeowners policy is true?
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2. The term for an insurance company that is not backed by a state government is called:
3. A condominium owner installed wall-to-wall carpeting over the hardwood floors in their unit. If there was a total loss, the carpeting would be covered as:
4. A home buyer learns they need to get insurance on the home they are buying before the closing. They apply for a policy and learn that the policy may not issue until a week or so after the closing. What document would the insurance agent give the customer to show proof of homeowner insurance on the date of the closing?
5. An applicant for a DP-3 landlord policy told the insurance agent their rental property was rented on a long-term lease. An insurance investigation showed that the property had been vacant for a year. What is the insurance term for the insured's actions?
6. A homeowner wanted insurance to cover a potential water backup in their basement. What would they need to do to get this type of coverage?
7. ___________ refers to what had the most significant impact in causing the loss, when two or more perils, independently, bring about the loss at the same time. It also considers whether the insured peril caused it.
8. Covered costs under a liability policy aside from the costs paid for any injuries or damages are:
9. Michelle, who lives in a subdivision with a Homeowners' Association, had a large living oak tree blow down in a windstorm and damage her neighbor's Porsche. She has an unendorsed Special Form HO-3 homeowners' policy and a $1 million-dollar personal umbrella policy. Under which policy can the neighbor expect to find coverage for his loss?
10. Something that might increase the likelihood that a loss will occur is called a:
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11. A device that is used to minimize small claims and lower premiums is called a(n):
12. Which homeowners policy is not designed for owner-occupied dwellings?
13. Another name for compensatory damages is:
14. Rex has a personal auto policy with bodily injury liability limits of $100,000 per person, $300,000 per accident, and property damage limit of $100,000. His personal umbrella policy has a limit of $1,000,000 and requires underlying auto limits to be $250,000 per person, $500,000 per accident for bodily injury, and $100,000 for property damage. Rex is found negligent in a car accident. The jury awards the plaintiff a total of $950,000 in damages, of which $150,000 were for the claimant's 2018 Bentley automobile. How much will the umbrella pay for this loss?
15. Jeff Smith has a personal auto policy. Select the coverage that would apply when a deer leaps in front of his car and causes damage.
16. A hazard where a party protected from risk acts differently than if they did not have protection is called what?

Types of Policies

17. All of the following are basic perils covered under all Homeowners' policies except:
18. Which of the following statements about DP-3 policies is false?
19. A homeowner owns a 100-year-old log cabin in the woods with no electricity, heating, air conditioning, or plumbing. The home is in reasonably good condition and it is owner-occupied. The owner gets water from an outdoor pump and uses an outhouse. The home has a wood-burning stove for heat. What type of homeowner policy is appropriate for this home?
20. A driver swerved to avoid hitting a car that was backing out of a parking lot and hit a telephone pole. The driver and one of the passengers took an ambulance to the emergency room to be treated for minor injuries. What part of a personal auto insurance policy would respond to the loss concerning injuries?
21. A cyber liability insurance policy covers all of the following except:
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22. A sudden hailstorm severely damaged ten cars in an employer's parking lot. Which type of insurance would respond to the loss?
23. George's rental home is covered under a basic dwelling form DP-1 policy. The weight of snow and ice causes $15,000 of damage to his roof, $10,000 of damage to his interior walls, and $2,000 of damage to the tenants' contents. George has a $1,000 deductible. What is the total dollar amount of damage covered under his policy?
24. Jenny's Flower Shop has an unendorsed Business Owners Policy (BOP), and an unendorsed commercial auto policy in force. Deb, one of Jenny's employees, takes her personal vehicle to the bank to make a deposit for Jenny's Flowers. En route, Deb hits a pedestrian in the bank parking lot while the pedestrian is getting out of her car, causing permanent bodily injury to the pedestrian. Which policy will respond to the loss?
25. The ABC Construction Company is transporting a crane to a building under construction in the city. While en route, the boom hits a utility pole, knocking out power to a popular steakhouse restaurant and causing it to close and suffer a loss of income. Which one of ABC's insurance policies will respond to the loss?
26. Under an HO-3 homeowners policy coverage, C - personal property is covered in which countries?
27. Hank's Excavating Company has a bulldozer worth $200,000 which is stolen off the back of one of the company's flatbed trailers parked overnight at a job site. Which one of Hank's insurance policies will respond to the loss?

Policy Provisions and Contract Law

28. What is a statement of fact given to an insurer by the insured concerning the insured's risk, which, if untrue, voids the policy?
29. A policy provision that holds that an insurance company agrees to pay for losses according to the policy, defend the insured in a liability lawsuit, and provide certain other services is called:
30. All of the following are considered duties of the insured after a loss in an insurance contract except:
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31. A married couple turned their passenger van into a camper van. They sold their home and decided to live in the van as their primary residence as they toured the country. What type of insurance is appropriate to insure their van and their personal property?
32. What type of coverage does a business owner need to insure all drivers of fleet vehicles on their commercial auto policy?
33. A provision that states that the insurance company will pay to restore a pair or set of items to its original value before the loss took place is called:
34. All of the following are excluded under a HO-3 homeowners' policy, except:
35. Joey did not pay his auto insurance premium and as a result, his coverage lapsed. This is an example of what policy provision?
36. This form states that you own a specific item or items.
37. Sam was stopped at a traffic light and was rear ended by another driver. The driver of the other vehicle was given a citation by police. Sam turned in a claim with his insurance company and they paid to repair Sam's car. The insurance company can recoup its claim cost by what policy provision?
38. A form that documents damaged or destroyed items is:
39. Which part of an insurance policy lists the name and address of the named insured on the policy?
40. An insurance policy is a contract between:
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Types of Policies, Bonds, and Related Items

41. Eric's bike shop has a business owner's policy (BOP). Eric runs an ad in the local newspaper indicating that Mike's Bikes sells inferior products. As a result, Mike's Bikes sues Eric's bike shop. Which of the following will provide coverage for any liability incurred by Eric's bike shop?
42. When a covered automobile is damaged in an accident which causes it to be unusable for a period of time, a personal auto policy will provide coverage for transportation expenses at the rate of $20 per day for up to how much total?
43. If an insurer decides not to renew a Commercial General Liability policy, how many days' notice must they give the first named insured?
44. This employer coverage pays wage and medical benefits to workers who become injured or ill while on the job. Each state mandates coverage and the wages and medical benefits differ from state to state.
45. A new insurance agent tells his client that he has bound coverage on his home. However, he did not follow through with binding coverage making it an ineligible risk. His home burns down. Where can the homeowner seek coverage?
46. Mr. Smith found out that an employee had been stealing money from the cash register. Fortunately, Mr. Smith had purchased a bond that protected his business from this type of criminal activity. What kind of bond did Mr. Smith purchase?
47. A farm owner's policy covers all of the following except:
48. A customer entered the garage of an auto mechanic shop to speak to a mechanic about their car. The customer slipped and fell on an oil spill and had to be taken to the emergency room for treatment. What type of commercial insurance would have covered this type of loss?
49. What are the three parties to a bond?
50. A business owner learned that the government would be shutting down the road to his business for several weeks for road construction. The business was located on a dead-end street and customers would not be able to reach the business during the construction. What type of commercial insurance would protect the business?