PROPERTY AND CASUALTY INSURANCE
LICENSE TEST STUDY GUIDE WITH FULL
SOLUTIONS 2026
◉ Which of the following terms refers to such disabilities the loss of
a limb, hearing , or eye sight? Answer: Permanent partial disability
◉ Who is NOT considered an employee in an commercial general
liability (CGL) policy? Answer: Temporary worker
◉ The major portion of the premium of an equipment breakdown
policy pays? Answer: For inspections and examinations
◉ An insured owns a building valued at $400,000. To comply with
the 80% coinsurance provision of his insurance policy, how , much
should he insure the property for? Answer: 80% of the property's
replacement cost or more
◉ Under the Fair Credit Reporting Act, if the consumer challenges
the accuracy of the information contained in his or her report, the
reporting agency must Answer: Respond to the consumer's
complaint.
,◉ All of the following are found in the declarations section of a
policy EXCEPT the Answer: Exclusions.
◉ The cost of restoring farm records is an additional coverage
offered under a farm policy. How much will the policy pay to restore
the records? Answer: Up to $2,000
◉ All of the following could be considered rebates if offered to an
insured in the sale of insurance EXCEPT Answer: Dividends from a
mutual insurer.
◉ Which of the following may be covered by electronic data
processing coverage form under an inland marine policy? Answer: a)
Computer hardware that is specifically scheduled.
b) Extra expense the insured incurs to continue the business
following a loss.
c) Data processing media, including magnetic tapes or paper tapes,
punch cards and discs
◉ The party to a surety or fidelity bond who promises to fulfill the
obligation is the Answer: Principal
,◉ The transfer of money from inside a banking premises to a person
other than a messenger outside those premises or to a place outside
those premises is covered under which commercial crime coverage?
Answer: Computer fraud
◉ Which of the following would NOT be covered under the liability
section of a personal auto policy? Answer: Bodily injury is caused by
the insured's negligence while driving a three-wheel all-terrain
vehicle.
◉ When a producer holding a certificate or a broker's license has a
change in his/her residence or business address, he/she must notify
the Department of Insurance and any company for which the
producer holds an appointment within Answer: 30 days.
◉ What will happen if a house covered by a standard mortgage
clause is a total loss? Answer: The insurer pays the mortgagee
according to the mortgagee's interest in the property.
◉ What is the civil penalty for violating a cease and desist order of
the Commissioner? Answer: $10,000
◉ The Business Pursuits endorsement under Section II of a
homeowners policy will cover all of the following EXCEPT Answer:
Business liability.
, ◉ If a property is covered by Company A for $20,000 and Company
B covers the same property for $40,000, how much will Company A
pay on a $24,000 loss? Answer: $8,000
◉ The risk management technique that is used to prevent a specific
loss by not exposing oneself to that activity is called Answer:
Avoidance.
◉ In a farm policy, any cost incurred by the insurer for the
investigation or defense of a claim will be paid by Answer: The
insurer.
◉ Which of the following entities must approve all continuing
education courses in this state? Answer: The Commissioner
◉ An applicant knowingly fails to communicate information that
would help an underwriter make a sound decision regarding
coverage. This is an example of Answer: Concealment
◉ A common exclusion found under physical damage to your auto
includes Answer: Mechanical breakdown.
◉ Which of the following is true regarding a risk retention group?
Answer: It is a liability insurance company owned by its members.
LICENSE TEST STUDY GUIDE WITH FULL
SOLUTIONS 2026
◉ Which of the following terms refers to such disabilities the loss of
a limb, hearing , or eye sight? Answer: Permanent partial disability
◉ Who is NOT considered an employee in an commercial general
liability (CGL) policy? Answer: Temporary worker
◉ The major portion of the premium of an equipment breakdown
policy pays? Answer: For inspections and examinations
◉ An insured owns a building valued at $400,000. To comply with
the 80% coinsurance provision of his insurance policy, how , much
should he insure the property for? Answer: 80% of the property's
replacement cost or more
◉ Under the Fair Credit Reporting Act, if the consumer challenges
the accuracy of the information contained in his or her report, the
reporting agency must Answer: Respond to the consumer's
complaint.
,◉ All of the following are found in the declarations section of a
policy EXCEPT the Answer: Exclusions.
◉ The cost of restoring farm records is an additional coverage
offered under a farm policy. How much will the policy pay to restore
the records? Answer: Up to $2,000
◉ All of the following could be considered rebates if offered to an
insured in the sale of insurance EXCEPT Answer: Dividends from a
mutual insurer.
◉ Which of the following may be covered by electronic data
processing coverage form under an inland marine policy? Answer: a)
Computer hardware that is specifically scheduled.
b) Extra expense the insured incurs to continue the business
following a loss.
c) Data processing media, including magnetic tapes or paper tapes,
punch cards and discs
◉ The party to a surety or fidelity bond who promises to fulfill the
obligation is the Answer: Principal
,◉ The transfer of money from inside a banking premises to a person
other than a messenger outside those premises or to a place outside
those premises is covered under which commercial crime coverage?
Answer: Computer fraud
◉ Which of the following would NOT be covered under the liability
section of a personal auto policy? Answer: Bodily injury is caused by
the insured's negligence while driving a three-wheel all-terrain
vehicle.
◉ When a producer holding a certificate or a broker's license has a
change in his/her residence or business address, he/she must notify
the Department of Insurance and any company for which the
producer holds an appointment within Answer: 30 days.
◉ What will happen if a house covered by a standard mortgage
clause is a total loss? Answer: The insurer pays the mortgagee
according to the mortgagee's interest in the property.
◉ What is the civil penalty for violating a cease and desist order of
the Commissioner? Answer: $10,000
◉ The Business Pursuits endorsement under Section II of a
homeowners policy will cover all of the following EXCEPT Answer:
Business liability.
, ◉ If a property is covered by Company A for $20,000 and Company
B covers the same property for $40,000, how much will Company A
pay on a $24,000 loss? Answer: $8,000
◉ The risk management technique that is used to prevent a specific
loss by not exposing oneself to that activity is called Answer:
Avoidance.
◉ In a farm policy, any cost incurred by the insurer for the
investigation or defense of a claim will be paid by Answer: The
insurer.
◉ Which of the following entities must approve all continuing
education courses in this state? Answer: The Commissioner
◉ An applicant knowingly fails to communicate information that
would help an underwriter make a sound decision regarding
coverage. This is an example of Answer: Concealment
◉ A common exclusion found under physical damage to your auto
includes Answer: Mechanical breakdown.
◉ Which of the following is true regarding a risk retention group?
Answer: It is a liability insurance company owned by its members.
