ILLINOIS PROPERTY & CASUALTY INSURANCE
EXAM|QUESTIONS AND ANSWERS WITH
RATIONALE|GRADED A+|2026 UPDATE|100% CORRECT
1. A commercial general liability policy has a Coverage A each occurrence limit of $1,000,000, a
general aggregate limit of $2,000,000, and a products-completed operations aggregate of
$2,000,000. During the policy period, the insured pays $500,000 to settle a bodily injury claim
(occurrence 1) and $700,000 to settle a property damage claim (occurrence 2). Later, a third
occurrence causes $800,000 in bodily injury. How much remains under the general aggregate
for this third occurrence?
A. $0, because the general aggregate is exhausted by the prior payments.
B. $500,000, because the general aggregate is reduced by the total of prior payments ($1.2M) leaving
$800,000, but the per occurrence limit is $1M, so the full $800,000 is covered.
C. $800,000, because the general aggregate is not reduced by payments for occurrences that are also subject
to the products-completed operations aggregate.
D. $300,000, because the general aggregate is reduced by the prior payments, leaving $800,000, but the per
occurrence limit applies, so the maximum available is $1M, leaving $300,000 after the $700,000 property
damage claim is considered.
Answer: B. $500,000, because the general aggregate is reduced by the total of prior payments
($1.2M) leaving $800,000, but the per occurrence limit is $1M, so the full $800,000 is covered.
2. A commercial property policy includes a Building and Personal Property Coverage Form with
a replacement cost endorsement and a coinsurance requirement of 80%. The building's
replacement cost is $1,000,000, but the insured carries only $700,000 in coverage. A fire causes
$200,000 in damage to the building. The insured files a claim. What is the amount the insurer
will pay, assuming no deductible?
A. $200,000, because replacement cost coverage pays the full cost to repair or replace, regardless of
coinsurance.
B. $175,000, because the coinsurance penalty applies: the insured carried 70% of the required amount, so
only 70% of the loss is covered.
C. $140,000, because the coinsurance formula is (amount carried / amount required) x loss, which is (700,000
/ 800,000) x 200,000 = 175,000, but the replacement cost endorsement reduces the payment by 20%.
D. $175,000, because the coinsurance formula is (amount carried / amount required) x loss, which is (700,000
/ 800,000) x 200,000 = 175,000.
Answer: D. $175,000, because the coinsurance formula is (amount carried / amount required) x
loss, which is (700,,000) x 200,000 = 175,000.
3. A manufacturer has a commercial general liability policy with a general aggregate limit of
$2,000,000 and a products-completed operations aggregate of $2,000,000. They have already
paid $1,500,000 for a product liability claim earlier in the policy period. A separate occurrence, a
slip-and-fall in their store, results in a judgment of $600,000. How much will the policy pay for
the slip-and-fall claim?
A. $600,000, because the slip-and-fall is subject to the general aggregate, which has $500,000 remaining, and
that is the limit.
B. $500,000, because the general aggregate is reduced by the product claim payment, leaving only $500,000
for the slip-and-fall.
C. $600,000, because the slip-and-fall is covered under the products-completed operations aggregate, and
, that has not been reduced.
D. $0, because the product liability claim exhausted the general aggregate, leaving no coverage for the
slip-and-fall.
Answer: B. $500,000, because the general aggregate is reduced by the product claim payment,
leaving only $500,000 for the slip-and-fall.
4. A homeowner's policy provides $200,000 in dwelling coverage, $20,000 in other structures,
$100,000 in personal property, and $50,000 in loss of use. A tornado destroys the dwelling and
a detached garage. The cost to rebuild the dwelling is $180,000, and the garage is valued at
$25,000. The insured also incurs $15,000 in additional living expenses while the home is rebuilt.
Assuming adequate coverage, what is the total amount the insurer will pay for these losses?
A. $220,000, because the dwelling and garage are both covered under the dwelling and other structures limits,
plus loss of use.
B. $200,000, because the dwelling coverage limit is $200,000, and the garage is covered under other
structures with its own limit.
C. $180,000 for the dwelling and $15,000 for loss of use, but the garage is not covered because it is a
separate structure.
D. $180,000 for the dwelling, $25,000 for the garage, and $15,000 for loss of use, totaling $220,000.
Answer: D. $180,000 for the dwelling, $25,000 for the garage, and $15,000 for loss of use,
totaling $220,000.
5. An insured has a personal auto policy with liability limits of 100/300/50. The insured is at fault
in an accident causing bodily injury to three people: A has $150,000 in injuries, B has $100,000,
and C has $75,000. What is the maximum the policy will pay for bodily injury liability?
A. $300,000, because the 300 in 100/300/50 is the maximum per accident.
B. $250,000, because the per person limit for A is $100,000, so A gets $100,000, and B and C split the
remaining $200,000? Actually, no, the policy pays up to $100,000 per person and $300,000 per accident, so
for A: $100,000 (cap), B: $100,000, C: $75,000, total $275,000? That is less than $300,000, so the policy pays
$275,000.
C. $275,000, because A is capped at $100,000, B at $100,000, and C at $75,000, totaling $275,000.
D. $300,000, because the policy pays up to $300,000 per accident, regardless of individual limits.
Answer: C. $275,000, because A is capped at $100,000, B at $100,000, and C at $75,000, totaling
$275,000.
6. An insured has a personal umbrella policy with a $1 million limit and a $500,000 underlying
auto liability limit. The insured is found liable for $1.2 million in damages from an auto accident.
The underlying policy pays its limit of $500,000, and the umbrella policy has a self-insured
retention (SIR) of $10,000. How much will the umbrella policy pay?
A. $700,000, because the umbrella pays the excess up to its limit, which is $1.2M - $500,000 = $700,000, and
the SIR is not applicable because the underlying policy paid.
B. $690,000, because the umbrella pays the excess over the underlying limit, minus the SIR: $1.2M -
$500,000 - $10,000 = $690,000.
C. $700,000, because the umbrella pays the excess up to its $1M limit, and the SIR is usually not applied
when underlying insurance pays.
D. $690,000, because the umbrella pays $700,000 but the insured must pay the SIR of $10,000, so the
umbrella pays $690,000 and the insured pays $10,000.
Answer: D. $690,000, because the umbrella pays $700,000 but the insured must pay the SIR of
$10,000, so the umbrella pays $690,000 and the insured pays $10,000.
EXAM|QUESTIONS AND ANSWERS WITH
RATIONALE|GRADED A+|2026 UPDATE|100% CORRECT
1. A commercial general liability policy has a Coverage A each occurrence limit of $1,000,000, a
general aggregate limit of $2,000,000, and a products-completed operations aggregate of
$2,000,000. During the policy period, the insured pays $500,000 to settle a bodily injury claim
(occurrence 1) and $700,000 to settle a property damage claim (occurrence 2). Later, a third
occurrence causes $800,000 in bodily injury. How much remains under the general aggregate
for this third occurrence?
A. $0, because the general aggregate is exhausted by the prior payments.
B. $500,000, because the general aggregate is reduced by the total of prior payments ($1.2M) leaving
$800,000, but the per occurrence limit is $1M, so the full $800,000 is covered.
C. $800,000, because the general aggregate is not reduced by payments for occurrences that are also subject
to the products-completed operations aggregate.
D. $300,000, because the general aggregate is reduced by the prior payments, leaving $800,000, but the per
occurrence limit applies, so the maximum available is $1M, leaving $300,000 after the $700,000 property
damage claim is considered.
Answer: B. $500,000, because the general aggregate is reduced by the total of prior payments
($1.2M) leaving $800,000, but the per occurrence limit is $1M, so the full $800,000 is covered.
2. A commercial property policy includes a Building and Personal Property Coverage Form with
a replacement cost endorsement and a coinsurance requirement of 80%. The building's
replacement cost is $1,000,000, but the insured carries only $700,000 in coverage. A fire causes
$200,000 in damage to the building. The insured files a claim. What is the amount the insurer
will pay, assuming no deductible?
A. $200,000, because replacement cost coverage pays the full cost to repair or replace, regardless of
coinsurance.
B. $175,000, because the coinsurance penalty applies: the insured carried 70% of the required amount, so
only 70% of the loss is covered.
C. $140,000, because the coinsurance formula is (amount carried / amount required) x loss, which is (700,000
/ 800,000) x 200,000 = 175,000, but the replacement cost endorsement reduces the payment by 20%.
D. $175,000, because the coinsurance formula is (amount carried / amount required) x loss, which is (700,000
/ 800,000) x 200,000 = 175,000.
Answer: D. $175,000, because the coinsurance formula is (amount carried / amount required) x
loss, which is (700,,000) x 200,000 = 175,000.
3. A manufacturer has a commercial general liability policy with a general aggregate limit of
$2,000,000 and a products-completed operations aggregate of $2,000,000. They have already
paid $1,500,000 for a product liability claim earlier in the policy period. A separate occurrence, a
slip-and-fall in their store, results in a judgment of $600,000. How much will the policy pay for
the slip-and-fall claim?
A. $600,000, because the slip-and-fall is subject to the general aggregate, which has $500,000 remaining, and
that is the limit.
B. $500,000, because the general aggregate is reduced by the product claim payment, leaving only $500,000
for the slip-and-fall.
C. $600,000, because the slip-and-fall is covered under the products-completed operations aggregate, and
, that has not been reduced.
D. $0, because the product liability claim exhausted the general aggregate, leaving no coverage for the
slip-and-fall.
Answer: B. $500,000, because the general aggregate is reduced by the product claim payment,
leaving only $500,000 for the slip-and-fall.
4. A homeowner's policy provides $200,000 in dwelling coverage, $20,000 in other structures,
$100,000 in personal property, and $50,000 in loss of use. A tornado destroys the dwelling and
a detached garage. The cost to rebuild the dwelling is $180,000, and the garage is valued at
$25,000. The insured also incurs $15,000 in additional living expenses while the home is rebuilt.
Assuming adequate coverage, what is the total amount the insurer will pay for these losses?
A. $220,000, because the dwelling and garage are both covered under the dwelling and other structures limits,
plus loss of use.
B. $200,000, because the dwelling coverage limit is $200,000, and the garage is covered under other
structures with its own limit.
C. $180,000 for the dwelling and $15,000 for loss of use, but the garage is not covered because it is a
separate structure.
D. $180,000 for the dwelling, $25,000 for the garage, and $15,000 for loss of use, totaling $220,000.
Answer: D. $180,000 for the dwelling, $25,000 for the garage, and $15,000 for loss of use,
totaling $220,000.
5. An insured has a personal auto policy with liability limits of 100/300/50. The insured is at fault
in an accident causing bodily injury to three people: A has $150,000 in injuries, B has $100,000,
and C has $75,000. What is the maximum the policy will pay for bodily injury liability?
A. $300,000, because the 300 in 100/300/50 is the maximum per accident.
B. $250,000, because the per person limit for A is $100,000, so A gets $100,000, and B and C split the
remaining $200,000? Actually, no, the policy pays up to $100,000 per person and $300,000 per accident, so
for A: $100,000 (cap), B: $100,000, C: $75,000, total $275,000? That is less than $300,000, so the policy pays
$275,000.
C. $275,000, because A is capped at $100,000, B at $100,000, and C at $75,000, totaling $275,000.
D. $300,000, because the policy pays up to $300,000 per accident, regardless of individual limits.
Answer: C. $275,000, because A is capped at $100,000, B at $100,000, and C at $75,000, totaling
$275,000.
6. An insured has a personal umbrella policy with a $1 million limit and a $500,000 underlying
auto liability limit. The insured is found liable for $1.2 million in damages from an auto accident.
The underlying policy pays its limit of $500,000, and the umbrella policy has a self-insured
retention (SIR) of $10,000. How much will the umbrella policy pay?
A. $700,000, because the umbrella pays the excess up to its limit, which is $1.2M - $500,000 = $700,000, and
the SIR is not applicable because the underlying policy paid.
B. $690,000, because the umbrella pays the excess over the underlying limit, minus the SIR: $1.2M -
$500,000 - $10,000 = $690,000.
C. $700,000, because the umbrella pays the excess up to its $1M limit, and the SIR is usually not applied
when underlying insurance pays.
D. $690,000, because the umbrella pays $700,000 but the insured must pay the SIR of $10,000, so the
umbrella pays $690,000 and the insured pays $10,000.
Answer: D. $690,000, because the umbrella pays $700,000 but the insured must pay the SIR of
$10,000, so the umbrella pays $690,000 and the insured pays $10,000.
