Montana Property Question and Answer [2026]
| UPDATED ACTUAL Exam | Detailed Answer
Explanations
• Who would be most likely to apply to the Commissioner for a nonresident
license?
A. Individual who has recently moved to Montana
B. Individual licensed in another state and who resides in that state
C. Individual who would like to sell for a foreign insurer
D. Individual who has lived in Montana for less than 10 years -✓✓ B.
• An unauthorized company writing business in the state that is not subject to state
approved policy forms, rates, or rules is known as a(n):
A. stock insurer.
B. mutual insurer.
C. reciprocal insurer.
D. surplus lines insurer. -✓✓ D. Surplus lines companies can charge whatever they
want and their policies can say whatever they want. They are NOT authorized to
do business in the state and therefore not subject to state approved policy forms,
rules, and rates
• Since the policy is written by the insurer and the insured has no input in the
wording, any vagueness or ambiguity will always be ruled in favor of the insured.
This is known as:
A. the indemnification agreement.
B. the doctrine of utmost good faith.
C. the doctrine of adhesion.
,D. a unilateral policy. -✓✓ C. The customer is "stuck" with the way the policy is
worded, so any vague wording will be ruled in the customers favor
• All of the following are elements of an insurable risk, EXCEPT:
A. ascertainable losses.
B. non catastrophic losses.
C. losses causing economic hardship.
D. catastrophic perils. -✓✓ D. Risk must fit into a large number of homogenous
units, losses must be measurable and uncertain and they must cause an economic
hardship. Catastrophic perils cannot be measured
• The amount of risk presented by the insured to the insurer is known as:
A. exposure.
B. losses.
C. predictability.
D. hazard. -✓✓ A. Risk is the chance that a loss will occur. The amount of risk
presented by the insured is the exposure. Underwriting will determine if that is
something the insurer is willing to accept and what to charge in premium for it
• Who makes the initial offer in an insurance contract?
A. agent
B. insurance company
C. applicant
D. home office underwriter -✓✓ C
• All of the following are a type of agent authority, EXCEPT:
A. reasonable inference
,B. implied
C. express
D. apparent -✓✓ A.
• Which of the following best describes a Lloyd's Association and Risk Retention
Groups?
A. insurers authorized to do business in the state
B. groups of individuals who band together to accept risks and are responsible for
the risks they accept
C. domestic insurers writing high risk auto insurance
D. alien insurers -✓✓ B.
• Which of the following is not an essential element of a contract?
A. adverse selection
B. competent parties
C. legal purpose
D. consideration -✓✓ A. Adverse selection occurs when the only people who buy
the insurance are those who will have claims. Nothing to do with the essential
elements of a contract
• A professional photographer would consider purchasing which inland marine
coverage form to cover their cameras and related equipment?
A. camera and musical instruments dealers form
B. commercial articles coverage form
C. camera floater
D. equipment dealers form -✓✓ B.
, • Which of the following is not an element of a legal contract?
A. consideration
B. legal purposes
C. competent parties
D. risk -✓✓ D. They are competent, legal purposes, offer and acceptance, and
consideration
• Only one of the parties, the insurer, can be legally bound to honor their promise.
This is an example of a(n):
A. Unilateral Contract.
B. Contract of Utmost Good Faith.
C. Aleatory Contract.
D. Contract of Adhesion. -✓✓ A.
• Sarah wants to find out how financially sound her insurance company is. She can
check all of the following sources, EXCEPT:
A. Standard and Poors.
B. Moodys.
C. AM Best Company.
D. Department of Insurance. -✓✓ D.
• Concealment is BEST defined as:
A. answering incorrectly on an insurance application.
B. having someone else fill out your insurance application.
C. giving one word answers to the agent.
D. the deliberate omission of a material fact from the agent or the company. -✓✓ D
| UPDATED ACTUAL Exam | Detailed Answer
Explanations
• Who would be most likely to apply to the Commissioner for a nonresident
license?
A. Individual who has recently moved to Montana
B. Individual licensed in another state and who resides in that state
C. Individual who would like to sell for a foreign insurer
D. Individual who has lived in Montana for less than 10 years -✓✓ B.
• An unauthorized company writing business in the state that is not subject to state
approved policy forms, rates, or rules is known as a(n):
A. stock insurer.
B. mutual insurer.
C. reciprocal insurer.
D. surplus lines insurer. -✓✓ D. Surplus lines companies can charge whatever they
want and their policies can say whatever they want. They are NOT authorized to
do business in the state and therefore not subject to state approved policy forms,
rules, and rates
• Since the policy is written by the insurer and the insured has no input in the
wording, any vagueness or ambiguity will always be ruled in favor of the insured.
This is known as:
A. the indemnification agreement.
B. the doctrine of utmost good faith.
C. the doctrine of adhesion.
,D. a unilateral policy. -✓✓ C. The customer is "stuck" with the way the policy is
worded, so any vague wording will be ruled in the customers favor
• All of the following are elements of an insurable risk, EXCEPT:
A. ascertainable losses.
B. non catastrophic losses.
C. losses causing economic hardship.
D. catastrophic perils. -✓✓ D. Risk must fit into a large number of homogenous
units, losses must be measurable and uncertain and they must cause an economic
hardship. Catastrophic perils cannot be measured
• The amount of risk presented by the insured to the insurer is known as:
A. exposure.
B. losses.
C. predictability.
D. hazard. -✓✓ A. Risk is the chance that a loss will occur. The amount of risk
presented by the insured is the exposure. Underwriting will determine if that is
something the insurer is willing to accept and what to charge in premium for it
• Who makes the initial offer in an insurance contract?
A. agent
B. insurance company
C. applicant
D. home office underwriter -✓✓ C
• All of the following are a type of agent authority, EXCEPT:
A. reasonable inference
,B. implied
C. express
D. apparent -✓✓ A.
• Which of the following best describes a Lloyd's Association and Risk Retention
Groups?
A. insurers authorized to do business in the state
B. groups of individuals who band together to accept risks and are responsible for
the risks they accept
C. domestic insurers writing high risk auto insurance
D. alien insurers -✓✓ B.
• Which of the following is not an essential element of a contract?
A. adverse selection
B. competent parties
C. legal purpose
D. consideration -✓✓ A. Adverse selection occurs when the only people who buy
the insurance are those who will have claims. Nothing to do with the essential
elements of a contract
• A professional photographer would consider purchasing which inland marine
coverage form to cover their cameras and related equipment?
A. camera and musical instruments dealers form
B. commercial articles coverage form
C. camera floater
D. equipment dealers form -✓✓ B.
, • Which of the following is not an element of a legal contract?
A. consideration
B. legal purposes
C. competent parties
D. risk -✓✓ D. They are competent, legal purposes, offer and acceptance, and
consideration
• Only one of the parties, the insurer, can be legally bound to honor their promise.
This is an example of a(n):
A. Unilateral Contract.
B. Contract of Utmost Good Faith.
C. Aleatory Contract.
D. Contract of Adhesion. -✓✓ A.
• Sarah wants to find out how financially sound her insurance company is. She can
check all of the following sources, EXCEPT:
A. Standard and Poors.
B. Moodys.
C. AM Best Company.
D. Department of Insurance. -✓✓ D.
• Concealment is BEST defined as:
A. answering incorrectly on an insurance application.
B. having someone else fill out your insurance application.
C. giving one word answers to the agent.
D. the deliberate omission of a material fact from the agent or the company. -✓✓ D
