PENNSYLVANIA PROPERTY AND CASUALTY
LICENSING TEST PAPER 2026 FULL SOLUTION
VERIFIED
◉ Which of the following is not a typical provision in a property or
casualty insurance policy. Answer: Endorsement (Endorsements are
added to modify the original policy provisions)
◉ The standard mortgage clause in a property insurance policy
covering real property gives certain rights to a mortgagee named in
the declarations. Which of the following is NOT one of these rights.
Answer: Any exclusion that applies to the insured will not apply to
the mortgagee
◉ What type of endorsement must an insurer allow an insured to
buy after the insured's claims-made policy has been canceled?.
Answer: Extended Reporting Coverage
◉ Rob submitted a $1,000 claim against Steve's auto insurance
policy, alleging Steve was negligent and caused the accident. When
Steve's insurer paid Rob's claim, it only paid $800 because it had
determined that Rob was 20 percent responsible for the accident.
What defense against negligence did the insurer use?. Answer:
Comparative Negligence
,◉ Comparative Negligence. Answer: A theory in tort law under
which the liability for injuries resulting from negligent acts is shared
by all parties who were negligent (including the injured party), on
the basis of each person's proportionate negligence.
◉ What typically provides temporary coverage for a specified time
period until an insurance policy is accepted or denied?. Answer:
Binder
◉ What is the threshold for declaring a certified act of terrorism
under the Terrorism Risk Insurance Act (TRIA) and its 2005
extension?. Answer: $5 million
◉ Exclusions help to keep premiums reasonable and affordable.
Which of the following is not a purpose of exclusions?. Answer:
Reducing coverage to sufficiently earn a profit
◉ What is the difference between a mortgage clause and a loss
payable clause in a property insurance policy covering real
property?. Answer: A loss payable clause usually is not as broad as
the mortgage clause and does not give the loss payee any rights
other than a right to share in a claim settlement
◉ Tabitha lives in a residential neighborhood where most of the
homeowners have small children. Immediately after purchasing her
home, Tabitha fenced her back yard because it contains an attractive
,nuisance. Which of the following structures in Tabitha's back yard
could be the attractive nuisance?. Answer: Swimming Pool
◉ Attractive Nuisance. Answer: A hazardous condition that can
attract and injure children
◉ For how many days may a binder or other contract for temporary
insurance be made?. Answer: Up to 30 days
◉ Donaldson Insurance Company wrote premiums of $100 million
last year and incurred expenses of $40 million in that same time
period. What is this insurer's expense ratio?
A. 25%
B. 40%
C. 75%
D. 66⅔%. Answer: 40%
◉ Expense Ratio. Answer: Calculated by dividing incurred expenses
by written premiums
, ◉ What type of state plan provides access to basic property
insurance to individuals who might not be able to obtain coverage
because their property is located in high risk areas or there are
other high risk problems?. Answer: FAIR Plan
◉ FAIR plans (Fair Access to Insurance Requirements). Answer: This
plan addresses the issue of property insurance availability. This plan
makes insurance available to risks that were previously considered
uninsurable because of environmental hazards.
this plan states that no application can be denied simply because of
environmental factors beyond the applicants control.
◉ Master Care Plumbing Supplies has a standard property insurance
policy and operates out of a 100-year-old building. After the building
is almost destroyed by an explosion, the insured is told that he must
rebuild with new electrical wiring, masonry construction, and fire
walls to comply with current building codes. Although the direct
damage caused by the explosion is covered, what exclusion might
apply to rule out coverage for the reconstruction costs to get the
building up to code?. Answer: Ordinance or Law Exclusion
◉ Ordinance or Law Exclusion. Answer: Eliminates coverage for the
extra expenses, over and above the cost of replacing damaged
property that might be necessary to comply with such ordinances
LICENSING TEST PAPER 2026 FULL SOLUTION
VERIFIED
◉ Which of the following is not a typical provision in a property or
casualty insurance policy. Answer: Endorsement (Endorsements are
added to modify the original policy provisions)
◉ The standard mortgage clause in a property insurance policy
covering real property gives certain rights to a mortgagee named in
the declarations. Which of the following is NOT one of these rights.
Answer: Any exclusion that applies to the insured will not apply to
the mortgagee
◉ What type of endorsement must an insurer allow an insured to
buy after the insured's claims-made policy has been canceled?.
Answer: Extended Reporting Coverage
◉ Rob submitted a $1,000 claim against Steve's auto insurance
policy, alleging Steve was negligent and caused the accident. When
Steve's insurer paid Rob's claim, it only paid $800 because it had
determined that Rob was 20 percent responsible for the accident.
What defense against negligence did the insurer use?. Answer:
Comparative Negligence
,◉ Comparative Negligence. Answer: A theory in tort law under
which the liability for injuries resulting from negligent acts is shared
by all parties who were negligent (including the injured party), on
the basis of each person's proportionate negligence.
◉ What typically provides temporary coverage for a specified time
period until an insurance policy is accepted or denied?. Answer:
Binder
◉ What is the threshold for declaring a certified act of terrorism
under the Terrorism Risk Insurance Act (TRIA) and its 2005
extension?. Answer: $5 million
◉ Exclusions help to keep premiums reasonable and affordable.
Which of the following is not a purpose of exclusions?. Answer:
Reducing coverage to sufficiently earn a profit
◉ What is the difference between a mortgage clause and a loss
payable clause in a property insurance policy covering real
property?. Answer: A loss payable clause usually is not as broad as
the mortgage clause and does not give the loss payee any rights
other than a right to share in a claim settlement
◉ Tabitha lives in a residential neighborhood where most of the
homeowners have small children. Immediately after purchasing her
home, Tabitha fenced her back yard because it contains an attractive
,nuisance. Which of the following structures in Tabitha's back yard
could be the attractive nuisance?. Answer: Swimming Pool
◉ Attractive Nuisance. Answer: A hazardous condition that can
attract and injure children
◉ For how many days may a binder or other contract for temporary
insurance be made?. Answer: Up to 30 days
◉ Donaldson Insurance Company wrote premiums of $100 million
last year and incurred expenses of $40 million in that same time
period. What is this insurer's expense ratio?
A. 25%
B. 40%
C. 75%
D. 66⅔%. Answer: 40%
◉ Expense Ratio. Answer: Calculated by dividing incurred expenses
by written premiums
, ◉ What type of state plan provides access to basic property
insurance to individuals who might not be able to obtain coverage
because their property is located in high risk areas or there are
other high risk problems?. Answer: FAIR Plan
◉ FAIR plans (Fair Access to Insurance Requirements). Answer: This
plan addresses the issue of property insurance availability. This plan
makes insurance available to risks that were previously considered
uninsurable because of environmental hazards.
this plan states that no application can be denied simply because of
environmental factors beyond the applicants control.
◉ Master Care Plumbing Supplies has a standard property insurance
policy and operates out of a 100-year-old building. After the building
is almost destroyed by an explosion, the insured is told that he must
rebuild with new electrical wiring, masonry construction, and fire
walls to comply with current building codes. Although the direct
damage caused by the explosion is covered, what exclusion might
apply to rule out coverage for the reconstruction costs to get the
building up to code?. Answer: Ordinance or Law Exclusion
◉ Ordinance or Law Exclusion. Answer: Eliminates coverage for the
extra expenses, over and above the cost of replacing damaged
property that might be necessary to comply with such ordinances
