Florida Pearson VUE Property and
Casualty Practice Test 1 with 300+
Questions and Correct Answers/ FL 20-44
Pearson VUE Property and Casualty
Latest Practice Exam (New!)
SECTION 1: GENERAL INSURANCE CONCEPTS & CONTRACT
LAW
1. Which principle states that an insured should be restored to the same financial
condition as before a loss, without the opportunity for profit?
• A. Subrogation
• B. Adhesion
• C. Indemnity
• D. Estoppel
Rationale: The principle of indemnity ensures that insurance is used to make the
insured "whole" again, not to provide financial gain from a loss .
2. In Florida, the "Valued Policy Law" applies specifically to which scenario?
• A. Partial losses to personal property
• B. Total loss of a building or structure by a covered peril
• C. Liability claims involving bodily injury
• D. Replacement cost of a vehicle in a total loss
Rationale: Florida Statute 627.702 (Valued Policy Law) requires that in the event of a
total loss of a structure by a covered peril, the insurer must pay the full face amount of
the policy .
,3. A condition that increases the probability of a loss occurring, such as leaving
oily rags near a furnace, is defined as a:
• A. Peril
• B. Risk
• C. Hazard
• D. Occurrence
Rationale: A peril is the cause of loss (fire), whereas a hazard is a condition (oily rags)
that increases the likelihood that the peril will occur .
4. Under the Florida Automobile No-Fault Law, what is the standard minimum
limit for Personal Injury Protection (PIP) benefits?
• A. $5,000
• B. $10,000
• C. $25,000
• D. $50,000
Rationale: Florida law requires all motor vehicle owners to carry a minimum of $10,000
in PIP coverage to pay for their own injuries regardless of fault .
5. A "Binder" is a temporary insurance contract. How long is a binder usually valid
unless replaced by a permanent policy?
• A. 10 days
• B. 30 days
• C. 60 days
• D. 90 days
Rationale: Per Florida law, a binder is valid for up to 60 days or until the policy is issued
or canceled .
6. Which of the following is a "Social" hazard?
• A. Icy roads
• B. Smoking in bed
• C. A thief stealing a car
• D. A careless driver
Rationale: A social hazard involves the dishonest or unlawful behavior of individuals.
The other choices are examples of physical, moral, or morale hazards .
,7. Which legal concept describes an insurance contract where only one party (the
insurer) makes a legally enforceable promise?
• A. Conditional
• B. Aleatory
• C. Unilateral
• D. Adhesion
Rationale: In a unilateral contract, only the insurer is legally bound to perform their part
of the agreement once the premium is paid .
8. In Florida, what is the maximum amount the Florida Insurance Guaranty
Association (FIGA) will typically pay for a single residential property claim?
• A. $100,000
• B. $300,000 (standard)
• C. $500,000
• D. $1,000,000
Rationale: FIGA protects policyholders of insolvent insurers. While most claims are
capped at $300,000, Florida recently increased structural damage caps for homeowners .
9. A policyholder has 100/300/50 Auto limits. What is the maximum the policy will
pay for "Property Damage" in a single accident?
• A. $100,000
• B. $300,000
• C. $50,000
• D. $50
Rationale: Split limits are expressed as three numbers: the first is per person bodily
injury ($100,000), the second is per accident bodily injury ($300,000), and the third is per
accident property damage ($50,000) .
10. Florida's "Comparative Negligence" rule means that if an individual is 20% at
fault for their own $10,000 loss, they can recover:
• A. Nothing
• B. $2,000
• C. $8,000
• D. $10,000
, Rationale: Comparative negligence reduces the award by the percentage of the
plaintiff's own fault (100% - 20% = 80% of $10,000 = $8,000) .
11. A Commercial Property policy specifies which of the following responsibilities
as a duty of the insured?
• A. To return the policy if it is canceled by the insurer
• B. To provide a sworn Proof of Loss statement if requested by the company
• C. To pay the mortgagee in full in the event of a total loss
• D. To pay premiums within thirty days after receiving an invoice
Rationale: The insured has a duty to provide a sworn Proof of Loss statement if
requested by the company .
12. Which of the following statements about a mortgagee's rights under a
property policy is INCORRECT?
• A. No act by the insured will jeopardize the mortgagee's rights
• B. The mortgagee may file a Proof of Loss if the insured fails to do so
• C. The mortgagee is entitled to receive prior notice of a policy's cancellation
• D. The mortgagee may abandon the insured property to the insurer
Rationale: The mortgage clause protects the lender's interest even if the insured's claim
is denied due to the insured's dishonest acts .
13. A company's promise to pay for damage caused by or resulting from any
covered Cause of Loss would be found in which section of a Commercial Property
policy?
• A. Declarations
• B. Insuring Agreement
• C. Conditions
• D. Exclusions
Rationale: The Insuring Agreement contains the insurer's promise to pay for covered
losses .
14. The procedure for resolving a disagreement between an insured and an insurer
about a loss is described in which part of an insurance policy?
• A. Declarations
• B. Insuring Agreement
• C. Conditions
Casualty Practice Test 1 with 300+
Questions and Correct Answers/ FL 20-44
Pearson VUE Property and Casualty
Latest Practice Exam (New!)
SECTION 1: GENERAL INSURANCE CONCEPTS & CONTRACT
LAW
1. Which principle states that an insured should be restored to the same financial
condition as before a loss, without the opportunity for profit?
• A. Subrogation
• B. Adhesion
• C. Indemnity
• D. Estoppel
Rationale: The principle of indemnity ensures that insurance is used to make the
insured "whole" again, not to provide financial gain from a loss .
2. In Florida, the "Valued Policy Law" applies specifically to which scenario?
• A. Partial losses to personal property
• B. Total loss of a building or structure by a covered peril
• C. Liability claims involving bodily injury
• D. Replacement cost of a vehicle in a total loss
Rationale: Florida Statute 627.702 (Valued Policy Law) requires that in the event of a
total loss of a structure by a covered peril, the insurer must pay the full face amount of
the policy .
,3. A condition that increases the probability of a loss occurring, such as leaving
oily rags near a furnace, is defined as a:
• A. Peril
• B. Risk
• C. Hazard
• D. Occurrence
Rationale: A peril is the cause of loss (fire), whereas a hazard is a condition (oily rags)
that increases the likelihood that the peril will occur .
4. Under the Florida Automobile No-Fault Law, what is the standard minimum
limit for Personal Injury Protection (PIP) benefits?
• A. $5,000
• B. $10,000
• C. $25,000
• D. $50,000
Rationale: Florida law requires all motor vehicle owners to carry a minimum of $10,000
in PIP coverage to pay for their own injuries regardless of fault .
5. A "Binder" is a temporary insurance contract. How long is a binder usually valid
unless replaced by a permanent policy?
• A. 10 days
• B. 30 days
• C. 60 days
• D. 90 days
Rationale: Per Florida law, a binder is valid for up to 60 days or until the policy is issued
or canceled .
6. Which of the following is a "Social" hazard?
• A. Icy roads
• B. Smoking in bed
• C. A thief stealing a car
• D. A careless driver
Rationale: A social hazard involves the dishonest or unlawful behavior of individuals.
The other choices are examples of physical, moral, or morale hazards .
,7. Which legal concept describes an insurance contract where only one party (the
insurer) makes a legally enforceable promise?
• A. Conditional
• B. Aleatory
• C. Unilateral
• D. Adhesion
Rationale: In a unilateral contract, only the insurer is legally bound to perform their part
of the agreement once the premium is paid .
8. In Florida, what is the maximum amount the Florida Insurance Guaranty
Association (FIGA) will typically pay for a single residential property claim?
• A. $100,000
• B. $300,000 (standard)
• C. $500,000
• D. $1,000,000
Rationale: FIGA protects policyholders of insolvent insurers. While most claims are
capped at $300,000, Florida recently increased structural damage caps for homeowners .
9. A policyholder has 100/300/50 Auto limits. What is the maximum the policy will
pay for "Property Damage" in a single accident?
• A. $100,000
• B. $300,000
• C. $50,000
• D. $50
Rationale: Split limits are expressed as three numbers: the first is per person bodily
injury ($100,000), the second is per accident bodily injury ($300,000), and the third is per
accident property damage ($50,000) .
10. Florida's "Comparative Negligence" rule means that if an individual is 20% at
fault for their own $10,000 loss, they can recover:
• A. Nothing
• B. $2,000
• C. $8,000
• D. $10,000
, Rationale: Comparative negligence reduces the award by the percentage of the
plaintiff's own fault (100% - 20% = 80% of $10,000 = $8,000) .
11. A Commercial Property policy specifies which of the following responsibilities
as a duty of the insured?
• A. To return the policy if it is canceled by the insurer
• B. To provide a sworn Proof of Loss statement if requested by the company
• C. To pay the mortgagee in full in the event of a total loss
• D. To pay premiums within thirty days after receiving an invoice
Rationale: The insured has a duty to provide a sworn Proof of Loss statement if
requested by the company .
12. Which of the following statements about a mortgagee's rights under a
property policy is INCORRECT?
• A. No act by the insured will jeopardize the mortgagee's rights
• B. The mortgagee may file a Proof of Loss if the insured fails to do so
• C. The mortgagee is entitled to receive prior notice of a policy's cancellation
• D. The mortgagee may abandon the insured property to the insurer
Rationale: The mortgage clause protects the lender's interest even if the insured's claim
is denied due to the insured's dishonest acts .
13. A company's promise to pay for damage caused by or resulting from any
covered Cause of Loss would be found in which section of a Commercial Property
policy?
• A. Declarations
• B. Insuring Agreement
• C. Conditions
• D. Exclusions
Rationale: The Insuring Agreement contains the insurer's promise to pay for covered
losses .
14. The procedure for resolving a disagreement between an insured and an insurer
about a loss is described in which part of an insurance policy?
• A. Declarations
• B. Insuring Agreement
• C. Conditions
