Property and Casualty Insurance Exam 2025-2026 with 280
Practice Questions and Answers/ P & C License Test 2025
Prep Qs and As/ P and C Insurance General Qs
Johnson offers potential clients courtside tickets to a professional basketball game
in exchange for purchasing an insurance policy. Which unethical sales practice is
Johnson committing?
-Controlled business
-Rebating
-False advertising
-Unfair discrimination - ANSWER-Rebating
Twenty years ago, Eldon bought a one-acre lot at a good location for $20,000 and
paid a contractor $100,000 to build a house on it. Somebody recently offered to
buy the house from Eldon for $400,000. Building the same house on that lot today
would cost $250,000. What is the current replacement cost value of Eldon's house?
- ANSWER-250,000
Corinne purchased her home with a 10 percent down payment and a 90 percent
mortgage from Sidney Bank. Why does Sidney Bank have an insurable interest in
Corinne's house?
-The mortgage documents Corinne signed make the bank a -coinsured.
-The bank faces the possibility of a loss if Corinne's house is damaged or
destroyed.
-Corinne cannot afford to make mortgage payments on her own.
-The mortgage holder (bank) is responsible for paying insurance premiums on a
mortgaged house. - ANSWER-The bank faces the possibility of a loss if Corinne's
house is damaged or destroyed.
pg. 1
,Which of the following is NOT a basic type of construction by which insurance
policies classify buildings and structures?
-Masonry
-Steel and glass
-Frame
-Masonry veneer - ANSWER-Steel Glass
For an insurer to pay a property insurance claim, when must the policyholder have
an insurable interest exist in the insured property?
-At the time of the loss
-Any time during the past year
-When the insurance was purchased
-When the claim is submitted - ANSWER-At the time of the loss
Morton was restocking the merchandise in Discount Store at 1 a.m. when an alarm
went off. Morton rushed to the back room and discovered that the normally locked
exit door was open, and a carton of valuable merchandise was missing. Using
appropriate insurance terminology, what did Morton call the police to report? -
ANSWER-Burglary
Gina was the only employee in OK Convenience Store at 3 a.m. when a gunman
entered the store and made her give him all the money in the cash register. The
gunman left, and Gina was not injured. Using appropriate insurance terminology,
what did Gina then report to the police? - ANSWER-Robbery
Which one of the following perils is least likely to be covered under a property
insurance policy that covers buildings and contents against the basic causes of
loss?
-fire
pg. 2
,-explosion
-falling objects
-lightning - ANSWER-Falling Objects
Elias's store is covered by a property insurance policy that provides named-perils
coverage. When Elias enters the store on Monday morning, he discovers that much
of the merchandise was damaged over the weekend, and he submits a property
insurance claim. Which of the following statements correctly describes the burden
of proof with respect to this claim?
-The insurer must pay the claim unless the insurer can prove that an exclusion in
Elias's policy applies to this loss.
-Elias needs only to prove that the property was damaged; he does not need to
show what caused the damage.
-Elias has the burden of proving that the damage was caused by a covered peril.
-Elias must be able to prove that a difference in conditions existed before and after
the loss. - ANSWER-Elias has the burden of proving that the damage was caused
by a covered peril.
Allan's Carpet Cleaning Service removed the stains from Cleo's red family room
carpet—and also removed most of the color. To prove that the damage to her
carpet was caused by Allen's negligence, Cleo must be able to prove all the
following, EXCEPT:
-Cleo is entitled to recover money damages as compensation for her damaged
carpet.
-Allan's breach of duty was the cause of the damage to Cleo's carpet.
-The cleaning solution Allan used contained chlorine.
-Allan had a duty not to damage Cleo's carpet. - ANSWER-The cleaning solution
Allan used contained chlorine.
pg. 3
, Francisco's children have grown up and moved away, but the tree house that
Francisco built for them now draws other neighborhood children despite
Francisco's handmade "No Trespassing" sign. If a neighbor's child is injured by
falling from the tree house, Francisco might be held liable for the child's injuries
under what legal doctrine or principle?
-attractive nuisance
-contributory negligence
-vicarious liability
-absolute liability - ANSWER-Attractive Nuisance
Fabian let his 12-year-old daughter Ashley use his motorboat even though she had
no experience operating powered watercraft. When Ashley causes a boating
accident, Fabian could be held responsible on this basis of his:
-vicarious liability
-comparative negligence
-strict (absolute) liability
-assumption of risk - ANSWER-Vicarious Liability
Rosalie was attacked by her neighbor's dog. As a result, she was hospitalized for
ten days and spent another painful month at home recovering from her injuries. In
addition to paying her an amount as compensation for her pain and suffering, the
neighbor's insurer was required to pay for her medical expenses and lost wages.
What is the money paid for Rosalie's lost wages considered?
-special damages
-punitive damages
-general damages
-indirect damages - ANSWER-Special Damages
Which one of the following is not a component of an insurance rate?
pg. 4
Practice Questions and Answers/ P & C License Test 2025
Prep Qs and As/ P and C Insurance General Qs
Johnson offers potential clients courtside tickets to a professional basketball game
in exchange for purchasing an insurance policy. Which unethical sales practice is
Johnson committing?
-Controlled business
-Rebating
-False advertising
-Unfair discrimination - ANSWER-Rebating
Twenty years ago, Eldon bought a one-acre lot at a good location for $20,000 and
paid a contractor $100,000 to build a house on it. Somebody recently offered to
buy the house from Eldon for $400,000. Building the same house on that lot today
would cost $250,000. What is the current replacement cost value of Eldon's house?
- ANSWER-250,000
Corinne purchased her home with a 10 percent down payment and a 90 percent
mortgage from Sidney Bank. Why does Sidney Bank have an insurable interest in
Corinne's house?
-The mortgage documents Corinne signed make the bank a -coinsured.
-The bank faces the possibility of a loss if Corinne's house is damaged or
destroyed.
-Corinne cannot afford to make mortgage payments on her own.
-The mortgage holder (bank) is responsible for paying insurance premiums on a
mortgaged house. - ANSWER-The bank faces the possibility of a loss if Corinne's
house is damaged or destroyed.
pg. 1
,Which of the following is NOT a basic type of construction by which insurance
policies classify buildings and structures?
-Masonry
-Steel and glass
-Frame
-Masonry veneer - ANSWER-Steel Glass
For an insurer to pay a property insurance claim, when must the policyholder have
an insurable interest exist in the insured property?
-At the time of the loss
-Any time during the past year
-When the insurance was purchased
-When the claim is submitted - ANSWER-At the time of the loss
Morton was restocking the merchandise in Discount Store at 1 a.m. when an alarm
went off. Morton rushed to the back room and discovered that the normally locked
exit door was open, and a carton of valuable merchandise was missing. Using
appropriate insurance terminology, what did Morton call the police to report? -
ANSWER-Burglary
Gina was the only employee in OK Convenience Store at 3 a.m. when a gunman
entered the store and made her give him all the money in the cash register. The
gunman left, and Gina was not injured. Using appropriate insurance terminology,
what did Gina then report to the police? - ANSWER-Robbery
Which one of the following perils is least likely to be covered under a property
insurance policy that covers buildings and contents against the basic causes of
loss?
-fire
pg. 2
,-explosion
-falling objects
-lightning - ANSWER-Falling Objects
Elias's store is covered by a property insurance policy that provides named-perils
coverage. When Elias enters the store on Monday morning, he discovers that much
of the merchandise was damaged over the weekend, and he submits a property
insurance claim. Which of the following statements correctly describes the burden
of proof with respect to this claim?
-The insurer must pay the claim unless the insurer can prove that an exclusion in
Elias's policy applies to this loss.
-Elias needs only to prove that the property was damaged; he does not need to
show what caused the damage.
-Elias has the burden of proving that the damage was caused by a covered peril.
-Elias must be able to prove that a difference in conditions existed before and after
the loss. - ANSWER-Elias has the burden of proving that the damage was caused
by a covered peril.
Allan's Carpet Cleaning Service removed the stains from Cleo's red family room
carpet—and also removed most of the color. To prove that the damage to her
carpet was caused by Allen's negligence, Cleo must be able to prove all the
following, EXCEPT:
-Cleo is entitled to recover money damages as compensation for her damaged
carpet.
-Allan's breach of duty was the cause of the damage to Cleo's carpet.
-The cleaning solution Allan used contained chlorine.
-Allan had a duty not to damage Cleo's carpet. - ANSWER-The cleaning solution
Allan used contained chlorine.
pg. 3
, Francisco's children have grown up and moved away, but the tree house that
Francisco built for them now draws other neighborhood children despite
Francisco's handmade "No Trespassing" sign. If a neighbor's child is injured by
falling from the tree house, Francisco might be held liable for the child's injuries
under what legal doctrine or principle?
-attractive nuisance
-contributory negligence
-vicarious liability
-absolute liability - ANSWER-Attractive Nuisance
Fabian let his 12-year-old daughter Ashley use his motorboat even though she had
no experience operating powered watercraft. When Ashley causes a boating
accident, Fabian could be held responsible on this basis of his:
-vicarious liability
-comparative negligence
-strict (absolute) liability
-assumption of risk - ANSWER-Vicarious Liability
Rosalie was attacked by her neighbor's dog. As a result, she was hospitalized for
ten days and spent another painful month at home recovering from her injuries. In
addition to paying her an amount as compensation for her pain and suffering, the
neighbor's insurer was required to pay for her medical expenses and lost wages.
What is the money paid for Rosalie's lost wages considered?
-special damages
-punitive damages
-general damages
-indirect damages - ANSWER-Special Damages
Which one of the following is not a component of an insurance rate?
pg. 4
