FLORIDA PROPERTY AND CASUALTY
INSURANCE LICENSE EXAM PREP 2026
1. Which of the following principles 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 a financial gain or
profit from a loss.
2. In Florida, the "Valued Policy Law" applies specifically to
which of the following scenarios?
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. Which part of an insurance policy contains the insurer’s
promise to pay and lists the perils covered?
A) Declarations
B) Conditions
C) Insuring Agreement
D) Exclusions
Rationale: The Insuring Agreement is the core of the contract where the
insurer outlines the promises made to the insured and defines the scope
of coverage.
6. If an insured’s home has a replacement value of $200,000
and a 80% Coinsurance clause, what is the minimum amount
of insurance they must carry to avoid a penalty for partial
losses?
A) $100,000
B) $160,000
C) $180,000
D) $200,000
Rationale: Coinsurance requires the insured to carry a limit equal to a
percentage of the value (0.80 x $200,000 = $160,000).
7. A "Binder" is a temporary insurance contract. In Florida,
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/canceled.
8. Which of the following is a "Social" hazard?
A) Icy roads
B) Smoking in bed
C) A thief stealing a car
,D) A broken burglar alarm
Rationale: Social or "Morale" hazards arise from a state of mind or
careless attitude, such as smoking in bed or leaving doors unlocked.
9. In Florida, the "Financial Responsibility Law" is typically
triggered by which event?
A) Buying a new car
B) Applying for a driver's license
C) An accident involving bodily injury or property damage
where a citation is issued
D) Getting a speeding ticket in a school zone
Rationale: While No-Fault (PIP) is required to register a car, Financial
Responsibility (Bodily Injury Liability) is triggered after an accident or
certain serious violations.
10. Which Dwelling Policy (DP) form provides the broadest
coverage (Open Perils) for the dwelling?
A) DP-1 Basic
B) DP-2 Broad
C) DP-3 Special
D) DP-4 Contents
Rationale: The DP-3 Special Form provides "Open Perils" coverage for
the structure and "Named Perils" for the personal property.
11. The transfer of the right of recovery from the insured to the
insurance company after a loss is called:
A) Assignment
B) Subrogation
C) Arbitration
D) Liberalization
Rationale: Subrogation allows the insurer to "step into the shoes" of the
insured to sue a negligent third party to recover the money paid for a
claim.
12. In Florida, an insurer must provide how many days' notice
before canceling a homeowners policy for non-payment of
premium?
A) 10 days
B) 20 days
C) 45 days
) 120 days
, Rationale: Florida law requires a 10-day written notice for cancellation
due to non-payment.
13. A policy that covers all perils except those specifically listed
as excluded is known as:
A) Named Peril
B) Open Peril
C) Basic Form
D) Limited Form
Rationale: Open Perils (formerly "All Risk") policies cover everything
unless the insurer explicitly excludes the cause of loss.
14. What is the maximum death benefit provided under
Florida Personal Injury Protection (PIP)?
A) $2,500
B) $5,000
C) $10,000
D) $15,000
Rationale: PIP provides $5,000 in death benefits in addition to the
$10,000 medical/disability benefit.
15. Which of the following organizations was created by the
Florida Legislature to provide property insurance to those
unable to find coverage in the private voluntary market?
A) FIGA
B) Citizens Property Insurance Corporation
C) FAJUA
D) FWCJUA
Rationale: Citizens is Florida’s "government-backed" insurer of last
resort for homeowners.
16. An Inland Marine policy designed to cover a specific, high-
value item like an engagement ring is called a:
A) Personal Effects Floater
B) Personal Articles Floater
C) Commercial Property Floater
D) Bailee’s Customer Policy
Rationale: The Personal Articles Floater provides scheduled coverage
for high-value items on an open-peril basis.
17. What is the purpose of the "Liberalization" clause in a
policy?
A) It allows the insured to cancel at any time.
INSURANCE LICENSE EXAM PREP 2026
1. Which of the following principles 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 a financial gain or
profit from a loss.
2. In Florida, the "Valued Policy Law" applies specifically to
which of the following scenarios?
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. Which part of an insurance policy contains the insurer’s
promise to pay and lists the perils covered?
A) Declarations
B) Conditions
C) Insuring Agreement
D) Exclusions
Rationale: The Insuring Agreement is the core of the contract where the
insurer outlines the promises made to the insured and defines the scope
of coverage.
6. If an insured’s home has a replacement value of $200,000
and a 80% Coinsurance clause, what is the minimum amount
of insurance they must carry to avoid a penalty for partial
losses?
A) $100,000
B) $160,000
C) $180,000
D) $200,000
Rationale: Coinsurance requires the insured to carry a limit equal to a
percentage of the value (0.80 x $200,000 = $160,000).
7. A "Binder" is a temporary insurance contract. In Florida,
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/canceled.
8. Which of the following is a "Social" hazard?
A) Icy roads
B) Smoking in bed
C) A thief stealing a car
,D) A broken burglar alarm
Rationale: Social or "Morale" hazards arise from a state of mind or
careless attitude, such as smoking in bed or leaving doors unlocked.
9. In Florida, the "Financial Responsibility Law" is typically
triggered by which event?
A) Buying a new car
B) Applying for a driver's license
C) An accident involving bodily injury or property damage
where a citation is issued
D) Getting a speeding ticket in a school zone
Rationale: While No-Fault (PIP) is required to register a car, Financial
Responsibility (Bodily Injury Liability) is triggered after an accident or
certain serious violations.
10. Which Dwelling Policy (DP) form provides the broadest
coverage (Open Perils) for the dwelling?
A) DP-1 Basic
B) DP-2 Broad
C) DP-3 Special
D) DP-4 Contents
Rationale: The DP-3 Special Form provides "Open Perils" coverage for
the structure and "Named Perils" for the personal property.
11. The transfer of the right of recovery from the insured to the
insurance company after a loss is called:
A) Assignment
B) Subrogation
C) Arbitration
D) Liberalization
Rationale: Subrogation allows the insurer to "step into the shoes" of the
insured to sue a negligent third party to recover the money paid for a
claim.
12. In Florida, an insurer must provide how many days' notice
before canceling a homeowners policy for non-payment of
premium?
A) 10 days
B) 20 days
C) 45 days
) 120 days
, Rationale: Florida law requires a 10-day written notice for cancellation
due to non-payment.
13. A policy that covers all perils except those specifically listed
as excluded is known as:
A) Named Peril
B) Open Peril
C) Basic Form
D) Limited Form
Rationale: Open Perils (formerly "All Risk") policies cover everything
unless the insurer explicitly excludes the cause of loss.
14. What is the maximum death benefit provided under
Florida Personal Injury Protection (PIP)?
A) $2,500
B) $5,000
C) $10,000
D) $15,000
Rationale: PIP provides $5,000 in death benefits in addition to the
$10,000 medical/disability benefit.
15. Which of the following organizations was created by the
Florida Legislature to provide property insurance to those
unable to find coverage in the private voluntary market?
A) FIGA
B) Citizens Property Insurance Corporation
C) FAJUA
D) FWCJUA
Rationale: Citizens is Florida’s "government-backed" insurer of last
resort for homeowners.
16. An Inland Marine policy designed to cover a specific, high-
value item like an engagement ring is called a:
A) Personal Effects Floater
B) Personal Articles Floater
C) Commercial Property Floater
D) Bailee’s Customer Policy
Rationale: The Personal Articles Floater provides scheduled coverage
for high-value items on an open-peril basis.
17. What is the purpose of the "Liberalization" clause in a
policy?
A) It allows the insured to cancel at any time.
