Property & Casualty Insurance — Practice Questions flashcards

6 of 70 questions free to study here · 21 topics · the whole deck is built into Willys

Multiple-choice practice questions, one best answer each, on insurance basics, contract law, valuation and coinsurance, homeowners, dwelling, flood, personal auto, commercial property, marine, crime, liability, workers compensation and bonds.

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Practice deck · part of Property and casualty insurance producer licence (national portion) · written against: Property and casualty concepts common to state producer exams; ISO personal and commercial forms as commonly taught; state law excluded. Updated 2026-10-10.

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A homeowner leaves oily rags piled next to the furnace in his garage. In insurance terms, how are the rags best described?

A) A peril
B) A physical hazard
C) A moral hazard
D) A speculative risk

B) A physical hazard

The rags are a tangible condition that makes a fire more likely, which is a physical hazard; the fire itself would be the peril. A moral hazard is about dishonesty, not the condition of property.
Insurance Basics
A building worth 600,000 dollars is insured for 360,000 dollars under a policy with an 80 percent coinsurance clause and a 1,000-dollar deductible. A fire causes 80,000 dollars of damage. How much does the insurer pay?

A) 60,000 dollars
B) 79,000 dollars
C) 59,000 dollars
D) 47,000 dollars

C) 59,000 dollars

Required insurance is 80 percent of 600,000, or 480,000; 360,000 ÷ 480,000 = 0.75, and 0.75 × 80,000 = 60,000, less the 1,000 deductible. Forgetting the deductible gives the tempting 60,000.
Valuation · Limits & Coinsurance
A homeowner with no mortgage buys an NFIP flood policy, with no flood map change involved. When does coverage generally take effect?

A) As soon as the premium is paid
B) After a 30-day waiting period
C) After a 5-day waiting period
D) At the next policy anniversary date

B) After a 30-day waiting period

The NFIP's standard waiting period is 30 days. The exceptions, such as a purchase tied to a loan or a recent map revision, do not apply here.
Flood & Earthquake
A fire closes a restaurant for two months. Which of these does business income coverage pay?

A) The cost to rebuild the kitchen
B) The value of food destroyed in the fire
C) Fines for health code violations
D) Lost net income and continuing payroll

D) Lost net income and continuing payroll

Business income pays the net income lost and continuing normal operating expenses, including payroll. Rebuilding the kitchen and replacing the food are direct property losses under the property coverage.
Business Income
A plaintiff suffers 200,000 dollars of damages and is found 40 percent at fault. In a modified comparative negligence state with a 50 percent bar, what does the plaintiff recover?

A) Nothing
B) 80,000 dollars
C) 120,000 dollars
D) 200,000 dollars

C) 120,000 dollars

Her 40 percent fault is below the bar, so her award is reduced by her share: 200,000 × 0.60 = 120,000. Recovering nothing would be the result under contributory negligence.
Tort Law
In a construction performance bond, which party is the obligee?

A) The project owner
B) The contractor
C) The surety company
D) The subcontractor

A) The project owner

The obligee is the party protected by the bond, here the project owner. The contractor is the principal, whose performance the surety guarantees.
Surety Bonds

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More Property and casualty insurance producer licence (national portion) decks

Basics & Policy Structure Homeowners, Dwelling & Flood Personal Auto & Umbrella Commercial Property & Package Liability, Workers Comp & Bonds

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About these cards

Review status: Second-reader reviewed, with corrections applied.

Checked against:

Policy provisions described from the ISO personal and commercial forms as commonly taught on licensing exams (homeowners, dwelling, personal auto, commercial property, CGL), in our own words; no form text reproduced. Edition differences and state amendatory endorsements vary.
NFIP items checked against FEMA flood insurance publications (public domain U.S. government source).
Original questions written for this deck; no official exam, textbook, prep-course or question-bank items were copied. All worked math uses hypothetical numbers computed by the author. National content only: state insurance law, fees and figures indexed yearly are excluded.

These are independent study notes written for Willys. They are not official exam material, may contain mistakes, and are no substitute for your course, your teacher or the exam owner's own publications. Found an error? Tell us — corrections ship as a new version of the deck.

Not insurance or legal advice. These cards cover the national portion of the producer licensing exam only. State insurance law and your state's exam content are not included; check your state's insurance department and its candidate handbook.

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