Pennsylvania Property and Casualty Licensing Exam Prep Questions And
Answers (202472025)
Law of Large Numbers - ✔✔Recognizes that as the number of exposure units increases, the more
likely it is to predict accurately the expected outcome.
What must an insurance producer do to apply for a nonresident license in Pennsylvania? -
✔✔Prove that their license is in good standing in their home state
Which best describes the responsibilities an agent owes when they sell a policy? - ✔✔To provide
the agreed-upon insurance and to place coverage with a solvent insurer
Which of the following is not a prohibited marketing practice? - ✔✔Discrimination among risks
Which law, act, or regulation governs how insurers and their producers treat personal financial
information from individuals? - ✔✔Privacy of Consumer Financial Information Regulation
Retention - ✔✔"do nothing" option; a person becomes personally responsible for the consequences
of risk
Can an insurer change their assumed name? - ✔✔Yes, but they must notify the Commissioner
before using the assumed name?
Contract of Adhesion - ✔✔"take-it-or-leave-it," drafted by one party; other party has no
opportunity to negotiate terms and prices. Party must "adhere" to provisions as presented
Tad used unauthorized material to assist him on his examination for his insurance producer license.
He justified this by saying the materials would be available to him in a real life situation. Which
statement is true? - ✔✔Tad committed a prohibited act.
,What is the maximum fine that may be imposed upon a producer for violating two of the
Commissioner's orders? - ✔✔$20,000; A fine of up to $10,000 for each violation of an order issued
by the commissioner.
Admitted Insurer - ✔✔An insurance company authorized and licensed to transact business in a
particular state.
Which of the following is not acting as an insurance producer? - ✔✔Brian, who is a VP at AllPro's
human resources department and does not receive commissions
Edwin has decided not to retain the risk of home ownership himself. What method of risk does he
choose when he purchases homeowners insurance? - ✔✔Transfer: the risk of loss is transferred
from the insured to the insurance company in exchange for a premium payment
Alien Insurer - ✔✔Incorporated in a country other than the United States
What fine will the Commissioner impose for the practice of unfair methods of competition? -
✔✔Up to $5,000 for each violation (but not more than $50,000 in a 6 month period)
Which of the following is not an unfair claims settlement practice if committed by an insurance
company in Pennsylvania? - ✔✔Failing to promptly settle a claim for which liability is uncertain.
(An insurer is not obligated to settle a claim for which it's not clearly liable)
Which of the following would NOT be considered misrepresentation of an insurance policy? -
✔✔Enthusiastically promoting an insurance product
Which of the following statements BEST describes the transfer of risk via an insurance contract?
- ✔✔Not all risks are transferable via insurance contracts
Must the Commissioner conduct an examination of every foreign or alien insurer licensed in
Pennsylvania? - ✔✔The Commissioner may choose to waive examinations under certain
circumstances
,Aleatory Contract - ✔✔One party may receive a benefit that is out of proportion to the
consideration he or she paid for.
Bill failed to satisfy the continuing education requirements to keep his producer's license active in
Pennsylvania. Two years later, he decides to renew his license. Can he do so? - ✔✔No, he must
apply for a new license.
Which of the following is NOT the action of an agent considering the best interests of an applicant
or insured? - ✔✔Making a misrepresentation of the terms of a proposed policy
Who is the head of the Pennsylvania Insurance Department? - ✔✔Insurance Commissioner
May a producer charge a service fee for completing a consumer's insurance application? - ✔✔No
What must an insurance company do to employ someone as a producer? - ✔✔*File a notice of
appointment with the Department.* The department then will verify if the producer is eligible for
appointment. If ineligible, they will notify the insurer. The insurer pays a fee for every
appointment.
To boost her insurance sales at the end of the year, Trudy started offering potential clients a $250
cash gift card in exchange for purchasing an insurance policy. Which prohibited sales practice has
she committed? - ✔✔Rebating (offering anything of value in exchange for the purchase of
insurance)
Within how many days must the Commissioner approve or disapprove rates? - ✔✔30
The federal Fair Credit Reporting Act protects the rights of: - ✔✔Consumers
, Larry submitted a claim under his homeowners insurance policy. The insurance company has the
burden of proof to show that the loss is excluded; otherwise, it must pay Larry's claim. What causes
of loss are contained on Larry's policy. - ✔✔Open Perils
Open Peril - ✔✔All perils except those specifically excluded
Sara sustains a water damage loss to her home due to torrential rains that flooded her
neighborhood. She reports the loss to her agent and says that according to the insuring agreement
of her policy, she is insured against risks of direct loss to her property. Is she covered for this
damage to her property? - ✔✔No, this kind of loss is typically excluded.
Are losses by flood covered in homeowners policies? - ✔✔No, this type of loss is specifically
excluded in homeowners policies. It can be obtained in some cases by endorsement or through the
National Flood Insurance Program (NFIP)
Which of the following is NOT an example of a peril, or cause of loss? - ✔✔Blocked exit in a
burning building delaying entry to firefighters (this is a hazard, not a peril)
What is the maximum amount for which the Pennsylvania Property and Casualty Insurance
Guaranty Association can be liable for on a covered claim? - ✔✔$300,000
For a loss to be covered under a property insurance policy, a covered peril must be a(n) -
✔✔Proximate cause of loss (cause that sets in motion an unbroken chain of events leading to the
loss; may or may not be the immediate cause of the loss)
If an insurer initiates a midterm cancellation of a commercial property or casualty risk insurance
policy, the unearned premium must be returned to the insured within how many business days after
the effective date of termination? - ✔✔10 days
If an insured initiates a midterm cancellation of a commercial property or casualty risk insurance
policy, the unearned premium must be return to the insured within how many business days after
the effective date of termination? - ✔✔30 days
Answers (202472025)
Law of Large Numbers - ✔✔Recognizes that as the number of exposure units increases, the more
likely it is to predict accurately the expected outcome.
What must an insurance producer do to apply for a nonresident license in Pennsylvania? -
✔✔Prove that their license is in good standing in their home state
Which best describes the responsibilities an agent owes when they sell a policy? - ✔✔To provide
the agreed-upon insurance and to place coverage with a solvent insurer
Which of the following is not a prohibited marketing practice? - ✔✔Discrimination among risks
Which law, act, or regulation governs how insurers and their producers treat personal financial
information from individuals? - ✔✔Privacy of Consumer Financial Information Regulation
Retention - ✔✔"do nothing" option; a person becomes personally responsible for the consequences
of risk
Can an insurer change their assumed name? - ✔✔Yes, but they must notify the Commissioner
before using the assumed name?
Contract of Adhesion - ✔✔"take-it-or-leave-it," drafted by one party; other party has no
opportunity to negotiate terms and prices. Party must "adhere" to provisions as presented
Tad used unauthorized material to assist him on his examination for his insurance producer license.
He justified this by saying the materials would be available to him in a real life situation. Which
statement is true? - ✔✔Tad committed a prohibited act.
,What is the maximum fine that may be imposed upon a producer for violating two of the
Commissioner's orders? - ✔✔$20,000; A fine of up to $10,000 for each violation of an order issued
by the commissioner.
Admitted Insurer - ✔✔An insurance company authorized and licensed to transact business in a
particular state.
Which of the following is not acting as an insurance producer? - ✔✔Brian, who is a VP at AllPro's
human resources department and does not receive commissions
Edwin has decided not to retain the risk of home ownership himself. What method of risk does he
choose when he purchases homeowners insurance? - ✔✔Transfer: the risk of loss is transferred
from the insured to the insurance company in exchange for a premium payment
Alien Insurer - ✔✔Incorporated in a country other than the United States
What fine will the Commissioner impose for the practice of unfair methods of competition? -
✔✔Up to $5,000 for each violation (but not more than $50,000 in a 6 month period)
Which of the following is not an unfair claims settlement practice if committed by an insurance
company in Pennsylvania? - ✔✔Failing to promptly settle a claim for which liability is uncertain.
(An insurer is not obligated to settle a claim for which it's not clearly liable)
Which of the following would NOT be considered misrepresentation of an insurance policy? -
✔✔Enthusiastically promoting an insurance product
Which of the following statements BEST describes the transfer of risk via an insurance contract?
- ✔✔Not all risks are transferable via insurance contracts
Must the Commissioner conduct an examination of every foreign or alien insurer licensed in
Pennsylvania? - ✔✔The Commissioner may choose to waive examinations under certain
circumstances
,Aleatory Contract - ✔✔One party may receive a benefit that is out of proportion to the
consideration he or she paid for.
Bill failed to satisfy the continuing education requirements to keep his producer's license active in
Pennsylvania. Two years later, he decides to renew his license. Can he do so? - ✔✔No, he must
apply for a new license.
Which of the following is NOT the action of an agent considering the best interests of an applicant
or insured? - ✔✔Making a misrepresentation of the terms of a proposed policy
Who is the head of the Pennsylvania Insurance Department? - ✔✔Insurance Commissioner
May a producer charge a service fee for completing a consumer's insurance application? - ✔✔No
What must an insurance company do to employ someone as a producer? - ✔✔*File a notice of
appointment with the Department.* The department then will verify if the producer is eligible for
appointment. If ineligible, they will notify the insurer. The insurer pays a fee for every
appointment.
To boost her insurance sales at the end of the year, Trudy started offering potential clients a $250
cash gift card in exchange for purchasing an insurance policy. Which prohibited sales practice has
she committed? - ✔✔Rebating (offering anything of value in exchange for the purchase of
insurance)
Within how many days must the Commissioner approve or disapprove rates? - ✔✔30
The federal Fair Credit Reporting Act protects the rights of: - ✔✔Consumers
, Larry submitted a claim under his homeowners insurance policy. The insurance company has the
burden of proof to show that the loss is excluded; otherwise, it must pay Larry's claim. What causes
of loss are contained on Larry's policy. - ✔✔Open Perils
Open Peril - ✔✔All perils except those specifically excluded
Sara sustains a water damage loss to her home due to torrential rains that flooded her
neighborhood. She reports the loss to her agent and says that according to the insuring agreement
of her policy, she is insured against risks of direct loss to her property. Is she covered for this
damage to her property? - ✔✔No, this kind of loss is typically excluded.
Are losses by flood covered in homeowners policies? - ✔✔No, this type of loss is specifically
excluded in homeowners policies. It can be obtained in some cases by endorsement or through the
National Flood Insurance Program (NFIP)
Which of the following is NOT an example of a peril, or cause of loss? - ✔✔Blocked exit in a
burning building delaying entry to firefighters (this is a hazard, not a peril)
What is the maximum amount for which the Pennsylvania Property and Casualty Insurance
Guaranty Association can be liable for on a covered claim? - ✔✔$300,000
For a loss to be covered under a property insurance policy, a covered peril must be a(n) -
✔✔Proximate cause of loss (cause that sets in motion an unbroken chain of events leading to the
loss; may or may not be the immediate cause of the loss)
If an insurer initiates a midterm cancellation of a commercial property or casualty risk insurance
policy, the unearned premium must be returned to the insured within how many business days after
the effective date of termination? - ✔✔10 days
If an insured initiates a midterm cancellation of a commercial property or casualty risk insurance
policy, the unearned premium must be return to the insured within how many business days after
the effective date of termination? - ✔✔30 days
