Property and Casualty Insurance Practice test
questions PREP Exam 350 Questions with 100% Correct
Answers | Latest Version (2026/2027) Expert Verified
OVERVIEW
This exam covers homeowners insurance and workers’ compensation, focusing on how
coverage applies, what is excluded, and how claims are paid in real-life situations.
It tests your understanding of policy limits, vacancy vs. unoccupancy, different homeowners
forms (HO-2, HO-3, HO-4, HO-8), and coverage sections like dwelling and other
structures. You’ll also apply knowledge to claim calculations and coverage decisions.
In addition, it covers workers’ compensation, including employee benefits, disability types,
employer liability, and legal responsibilities, along with topics like umbrella policies,
professional liability, surety bonds, and excess coverage—helping you understand how
protection works for both individuals and businesses. This exam evaluates understanding of
homeowners insurance policies, liability coverage, and workers’ compensation by applying key
concepts to practical scenarios. It focuses on how different homeowners forms and coverages—
such as dwelling, other structures, personal property, and loss of use—respond to various types
of losses, while emphasizing common exclusions like vacancy, business use, and non-insured
property. The exam also tests knowledge of liability principles, including negligence, proximate
cause, and legal responsibility, along with what is covered under personal liability and medical
payments. In addition, it covers workers’ compensation benefits, employer obligations, and types
of disability. Overall, the exam requires the ability to interpret policy provisions, determine
coverage, and calculate claim payments accurately in real-world situations.
Which of the following laws requires commercial property to be insured for losses caused by
terrorism?
a. Gramm-Leach-Bliley Act.
b. Terrorism Risk Act.
c. Unfair Trade Practices Act.
d. Unfair Claim Settlement Act. - correct answer -Terrorism Risk Act
Wind blows over a large sign which in turn damages a structure. Wind is the:
a. Intervening cause.
b. Proximate cause.
c. Approximate cause.
d. Consequential loss. - correct answer -Proximate Cause
,. All of the following perils are on the Basic Form, EXCEPT:
a. Fire.
b. Accidental discharge of appliance or plumbing.
c. Vehicle damage.
d. A firefighter breaks out windows to exhaust flames. - correct answer -accidental discharge of
appliance or plumbing
Liability policies cover damage to:
a. Property owned by the insured.
b. Property used by the insured.
c. Property in the care, custody or control of the insured.
d. Property of others - correct answer -Property to others
A liability policy provides coverage for all of the following, EXCEPT:
a. Expenses incurred by the insured on behalf of the insurer.
b. Damage to property owned or rented to the insured.
c. Defense of the insured against real or alleged claims.
d. Payment of judgments against the insured when they are legally liable - correct answer -Damage to
property owned or rented to the insured.
Failure to do what an ordinary, reasonable, or prudent person would do under the same or similar
circumstances is the definition of:
a. Proximate cause.
b. Intervening cause.
c. Assumption of risk.
d. Negligence - correct answer -Negligence
,All of the following are essential in establishing negligence, EXCEPT:
a. Negligence must be the proximate cause of damage.
b. Premeditation of the act on the part of one party must exist.
c. Negligence must result from failure to act in a reasonable prudent manner.
d. Injury or damage to the claimant must result. - correct answer -Premeditation of the act on the part
of one party must exist.
All of the following are necessary for establishing legal liability, EXCEPT:
a. The insured fails to do what a reasonable prudent person would do under the circumstances.
b. The insured's negligence is the proximate cause of an occurrence.
c. Injury or damage to another person or property results from the occurrence.
d. Legal liability must be established by the claim's adjuster - correct answer -Legal liability must be
established by the claim's adjuster
The doctrine that prevents someone from recovering for an injury caused by a negligent person if they
are also negligent is called:
a. Negligence per se.
b. Contributory negligence.
c. Comparative negligence.
d. Respondent negligence. - correct answer -Contributory negligence.
, A doctrine that determines the amount recovered due to an injured person by comparing the degree of
negligence of both parties is:
a. Negligence per se.
b. Contributory negligence.
c. Comparative negligence.
d. Respondent negligence. - correct answer -Comparative negligence.
Proximate Cause is defined as:
a. Any act that disrupts a chain of events.
b. A direct cause or the relationship between a peril and a loss.
c. The proximate time and place of a loss.
d. The probability of a loss - correct answer -b. A direct cause or the relationship between a peril and a
loss.
Intervening Cause as a legal defense:
a. Is used when the plaintiff knew about the exposure to danger and therefore assumed the risk when
the injury occurred.
b. Is the doctrine of Last Clear Chance.
c. Uses Comparative Negligence.
d. Is an interruption of the chain of events freeing the defendant from liability for the original act. -
correct answer -Is an interruption of the chain of events freeing the defendant from liability for the
original act.
When a loss occurs and the insurer must pay regardless of negligence, the type of liability the loss is paid
under is called:
a. Unilateral.
b. Subrogation.
c. Strict or Absolute liability.
questions PREP Exam 350 Questions with 100% Correct
Answers | Latest Version (2026/2027) Expert Verified
OVERVIEW
This exam covers homeowners insurance and workers’ compensation, focusing on how
coverage applies, what is excluded, and how claims are paid in real-life situations.
It tests your understanding of policy limits, vacancy vs. unoccupancy, different homeowners
forms (HO-2, HO-3, HO-4, HO-8), and coverage sections like dwelling and other
structures. You’ll also apply knowledge to claim calculations and coverage decisions.
In addition, it covers workers’ compensation, including employee benefits, disability types,
employer liability, and legal responsibilities, along with topics like umbrella policies,
professional liability, surety bonds, and excess coverage—helping you understand how
protection works for both individuals and businesses. This exam evaluates understanding of
homeowners insurance policies, liability coverage, and workers’ compensation by applying key
concepts to practical scenarios. It focuses on how different homeowners forms and coverages—
such as dwelling, other structures, personal property, and loss of use—respond to various types
of losses, while emphasizing common exclusions like vacancy, business use, and non-insured
property. The exam also tests knowledge of liability principles, including negligence, proximate
cause, and legal responsibility, along with what is covered under personal liability and medical
payments. In addition, it covers workers’ compensation benefits, employer obligations, and types
of disability. Overall, the exam requires the ability to interpret policy provisions, determine
coverage, and calculate claim payments accurately in real-world situations.
Which of the following laws requires commercial property to be insured for losses caused by
terrorism?
a. Gramm-Leach-Bliley Act.
b. Terrorism Risk Act.
c. Unfair Trade Practices Act.
d. Unfair Claim Settlement Act. - correct answer -Terrorism Risk Act
Wind blows over a large sign which in turn damages a structure. Wind is the:
a. Intervening cause.
b. Proximate cause.
c. Approximate cause.
d. Consequential loss. - correct answer -Proximate Cause
,. All of the following perils are on the Basic Form, EXCEPT:
a. Fire.
b. Accidental discharge of appliance or plumbing.
c. Vehicle damage.
d. A firefighter breaks out windows to exhaust flames. - correct answer -accidental discharge of
appliance or plumbing
Liability policies cover damage to:
a. Property owned by the insured.
b. Property used by the insured.
c. Property in the care, custody or control of the insured.
d. Property of others - correct answer -Property to others
A liability policy provides coverage for all of the following, EXCEPT:
a. Expenses incurred by the insured on behalf of the insurer.
b. Damage to property owned or rented to the insured.
c. Defense of the insured against real or alleged claims.
d. Payment of judgments against the insured when they are legally liable - correct answer -Damage to
property owned or rented to the insured.
Failure to do what an ordinary, reasonable, or prudent person would do under the same or similar
circumstances is the definition of:
a. Proximate cause.
b. Intervening cause.
c. Assumption of risk.
d. Negligence - correct answer -Negligence
,All of the following are essential in establishing negligence, EXCEPT:
a. Negligence must be the proximate cause of damage.
b. Premeditation of the act on the part of one party must exist.
c. Negligence must result from failure to act in a reasonable prudent manner.
d. Injury or damage to the claimant must result. - correct answer -Premeditation of the act on the part
of one party must exist.
All of the following are necessary for establishing legal liability, EXCEPT:
a. The insured fails to do what a reasonable prudent person would do under the circumstances.
b. The insured's negligence is the proximate cause of an occurrence.
c. Injury or damage to another person or property results from the occurrence.
d. Legal liability must be established by the claim's adjuster - correct answer -Legal liability must be
established by the claim's adjuster
The doctrine that prevents someone from recovering for an injury caused by a negligent person if they
are also negligent is called:
a. Negligence per se.
b. Contributory negligence.
c. Comparative negligence.
d. Respondent negligence. - correct answer -Contributory negligence.
, A doctrine that determines the amount recovered due to an injured person by comparing the degree of
negligence of both parties is:
a. Negligence per se.
b. Contributory negligence.
c. Comparative negligence.
d. Respondent negligence. - correct answer -Comparative negligence.
Proximate Cause is defined as:
a. Any act that disrupts a chain of events.
b. A direct cause or the relationship between a peril and a loss.
c. The proximate time and place of a loss.
d. The probability of a loss - correct answer -b. A direct cause or the relationship between a peril and a
loss.
Intervening Cause as a legal defense:
a. Is used when the plaintiff knew about the exposure to danger and therefore assumed the risk when
the injury occurred.
b. Is the doctrine of Last Clear Chance.
c. Uses Comparative Negligence.
d. Is an interruption of the chain of events freeing the defendant from liability for the original act. -
correct answer -Is an interruption of the chain of events freeing the defendant from liability for the
original act.
When a loss occurs and the insurer must pay regardless of negligence, the type of liability the loss is paid
under is called:
a. Unilateral.
b. Subrogation.
c. Strict or Absolute liability.
