TheoryProperty Casualty
Practice Test
Practice for the Property Casualty with realistic exam questions, full explanations, timed mock exams and progress tracking — fully offline.
Heads up: the app and the web exam use separate accounts — a web unlock and an in-app purchase do not carry over. Buy on the web to practice on the web.
Property Casualty exam — full Q&A walkthrough
Every question read aloud with the answer explained. Play it on your commute, then test yourself.
30 free Property Casualty questions
Sampled across every topic area — not just the first page. Try them as a quiz or flip them as flashcards.
-
Property Insurance
For a property insurance policy to be valid, the insured generally must have an insurable interest in the covered property at what point?
Correct — B. Property insurance is a contract of indemnity, so the insured must have an insurable interest (a financial stake) in the property at the time of loss in order to collect, unlike life insurance where interest need only exist at inception. -
Property Insurance
In insurance terminology, the actual cause of a loss, such as fire or windstorm, is called a:
Correct — A. A peril is the immediate cause of loss (fire, theft, hail). A hazard is a condition that increases the chance or severity of a peril, so the two terms are distinct. -
Property Insurance
Oily rags stored next to a furnace, which increase the likelihood of a fire, are an example of which type of hazard?
Correct — C. A physical hazard is a tangible condition of the property or surroundings that increases the chance of loss. Moral and morale hazards relate to a person's dishonesty or carelessness, not physical conditions. -
Property Insurance
An insured who leaves a house unlocked and the keys in the car because 'insurance will cover it' is displaying which type of hazard?
Correct — B. Morale hazard is carelessness or indifference to loss because the insured has coverage. Moral hazard, by contrast, involves deliberate dishonesty such as arson or fraud. -
Property Insurance
Under most standard property policies, actual cash value (ACV) is generally calculated as:
Correct — C. ACV equals the cost to replace the property with new property of like kind and quality, less depreciation for age, wear, and obsolescence. This prevents the insured from profiting from a loss. -
Property Insurance
A property loss is settled on a replacement cost basis. This means the claim is paid:
Correct — A. Replacement cost coverage pays to repair or replace damaged property with new property of like kind and quality, with no deduction for depreciation, subject to policy limits and any conditions. -
Property Insurance
A building valued at $500,000 carries an 80% coinsurance clause. The owner insured it for $300,000 and suffers a $100,000 loss. Ignoring any deductible, how much will the insurer pay?
Correct — B. Required amount is 80% of $500,000 = $400,000. The payment equals (carried / required) x loss = ($300,000 / $400,000) x $100,000 = $75,000. The insured shares the remainder as a coinsurance penalty. -
Property Insurance
A structure worth $200,000 has an 80% coinsurance requirement. It is insured for $160,000 and sustains a $40,000 loss with a $1,000 deductible. What does the insurer pay?
Correct — C. Carried ($160,000) meets the required amount (80% x $200,000 = $160,000), so no coinsurance penalty applies. The insurer pays the full loss less the deductible: $40,000 - $1,000 = $39,000. -
Property Insurance
A property form that covers all causes of loss except those specifically excluded is known as a(n):
Correct — B. An open perils, or all-risk, form covers any cause of loss unless it is excluded. A named perils form covers only the perils that are specifically listed in the policy. -
Property Insurance
Under a named perils policy, the burden of proving that a loss was caused by a covered peril rests with the:
Correct — A. Under a named perils form, the insured must show the loss resulted from a listed peril. Under open perils, the insurer must prove an exclusion applies to deny coverage. -
Property Insurance
The primary purpose of a deductible in a property policy is to:
Correct — C. Deductibles eliminate frequent small claims, reducing the insurer's administrative costs and the policyholder's premium while keeping the insured financially involved in the loss. -
Property Insurance
A valued policy differs from an indemnity-based property policy in that, in the event of total loss, it pays:
Correct — C. A valued policy pays a predetermined, agreed amount upon total loss rather than requiring proof of actual value. Many states mandate valued policy treatment for total fire losses to real property. -
Property Insurance
Two insurers cover the same property: Company A for $300,000 and Company B for $100,000. A $40,000 loss occurs and both contribute on a pro rata (proportional) basis. How much does Company A pay?
Correct — B. Total coverage is $400,000; Company A carries 75% ($300,000/$400,000). On a pro rata basis it pays 75% of the $40,000 loss = $30,000, with Company B paying the remaining $10,000. -
Property Insurance
Loss of business income while a damaged store is repaired is best classified as a(n):
Correct — A. Direct loss is physical damage to property. Indirect or consequential loss, such as lost income or extra expense, results from the direct loss and is covered under time-element coverages. -
Property Insurance
After paying a property claim, an insurer pursues recovery from the negligent party who caused the damage. This right is called:
Correct — C. Subrogation allows the insurer, after indemnifying the insured, to step into the insured's legal rights and recover from the at-fault third party, preventing the insured from collecting twice. -
Property Insurance
A standard mortgagee (mortgage) clause in a property policy protects the lender by:
Correct — B. Under the standard mortgage clause, the mortgagee's interest is protected separately, so the lender can still collect even if the insured's act or neglect would otherwise void the insured's claim. -
Property Insurance
Many property forms reduce or suspend coverage when a building has been vacant for more than a stated period, commonly:
Correct — C. Standard commercial property forms typically suspend certain perils and reduce other loss payments by a set percentage once a building has been vacant beyond 60 consecutive days before the loss. -
Property Insurance
Business income coverage typically begins paying:
Correct — A. Business income (interruption) coverage commonly includes a 72-hour waiting period after a covered direct physical loss before income loss is reimbursed, then pays for the restoration period. -
Property Insurance
Extra expense coverage is designed primarily to pay for:
Correct — B. Extra expense coverage reimburses the added costs a business incurs to keep operating or to speed resumption after a covered loss, such as renting temporary space or equipment. -
Property Insurance
Most property policies provide an additional coverage for debris removal that applies to:
Correct — C. Debris removal is an additional coverage that pays the cost to remove the debris of covered property damaged by a covered peril, usually subject to a percentage cap and time limit. -
Property Insurance
A tenant who negligently causes a fire that damages the landlord's rented building may be protected by:
Correct — D. Damage to premises rented to you (fire legal liability) covers the tenant's liability for fire damage to a building they rent, an exposure not covered by their personal property coverage. -
Property Insurance
Ordinance or law coverage is purchased to address the gap created when:
Correct — A. Standard property forms exclude the increased cost of complying with updated building codes. Ordinance or law coverage funds the added expense of demolition and code-compliant rebuilding. -
Property Insurance
Standard homeowners and commercial property policies generally treat damage caused by flood as:
Correct — B. Flood is excluded under standard property forms; coverage is obtained separately, typically through the National Flood Insurance Program or a private flood policy. -
Property Insurance
Coverage for earth movement such as an earthquake under a standard property policy is usually:
Correct — C. Earth movement, including earthquakes, is excluded by standard forms. It can be added back through an endorsement or purchased as a separate earthquake policy. -
Property Insurance
Inland marine floater coverage is most appropriate for:
Correct — B. Inland marine forms cover property that moves or is portable, or that is hard to value under standard property forms, such as fine art, contractors' equipment, and personal valuables. -
Property Insurance
Builders risk insurance covers:
Correct — A. Builders risk covers buildings or structures while under construction, including materials and supplies intended to become part of the structure, until the project is completed or occupied. -
Property Insurance
A single property limit that applies across several buildings or locations, rather than a separate limit for each, is called:
Correct — B. Blanket insurance applies one limit to multiple items or locations, giving flexibility because the full limit is available wherever the loss occurs. Specific insurance assigns a separate limit to each item. -
Property Insurance
Under a pair and set clause, if one item of a matched pair is lost, the insurer may:
Correct — C. The pair and set clause lets the insurer pay the reduction in value of the set caused by losing one part, rather than the full set value, and may require surrender of the remaining items. -
Property Insurance
A protective safeguards endorsement on a commercial property policy generally requires the insured to:
Correct — A. The protective safeguards endorsement makes coverage contingent on the insured maintaining specified protective systems (sprinklers, alarms, guards). Failure to maintain them can suspend coverage. -
Property Insurance
Under a property insurance condition prohibiting abandonment, the insured may not:
Correct — D. The no-abandonment condition prevents the insured from abandoning damaged property to the insurer and demanding the full amount; the insurer is not required to take title to damaged goods.
Property Casualty sample questions
Tap any question below to reveal the answer and a plain-English explanation.
Property Insurance Functional replacement cost valuation pays to replace damaged property with:
A. Identical materials regardless of cost
B. Less costly but functionally equivalent materials ✓
C. Salvage-grade materials only
D. The depreciated market value
Correct — B. Functional replacement cost allows repair or replacement using modern, functionally equivalent materials that may cost less than exact duplication, useful for older or obsolete construction.
Casualty & Liability To establish negligence, a plaintiff must generally prove duty, breach, causation, and:
A. Intent
B. Fraud
C. Damages ✓
D. Strict liability
Correct — C. Negligence requires a legal duty, a breach of that duty, proximate causation linking the breach to the harm, and actual damages. Intent is required for intentional torts, not negligence.
Personal Auto Which of the following is NOT one of the coverage parts of the standard Personal Auto Policy?
A. Liability coverage
B. Medical payments coverage
C. Workers compensation coverage ✓
D. Uninsured motorists coverage
Correct — C. The PAP contains Liability (Part A), Medical Payments (Part B), Uninsured Motorists (Part C), and Coverage for Damage to Your Auto (Part D). Workers compensation is a separate line of insurance.
Homeowners Which homeowners form is specifically designed for the owners of a condominium unit?
A. HO-2
B. HO-3
C. HO-6 ✓
D. HO-8
Correct — C. HO-6 is the unit-owners form for condominium owners, covering personal property and improvements while the condo association master policy covers the building structure.
Commercial Lines A Businessowners Policy (BOP) is designed to:
A. Cover only commercial auto exposures
B. Provide workers compensation only
C. Combine property and liability coverages for small to mid-size businesses ✓
D. Insure only large manufacturers
Correct — C. A BOP packages commercial property and general liability into a single policy tailored for eligible small and mid-size businesses, simplifying coverage and often lowering cost.
Provisions & Endorsements The declarations page of an insurance policy contains:
A. The list of exclusions
B. The insuring agreement language
C. The named insured, address, limits, premium, and policy period ✓
D. Definitions of key terms
Correct — C. The declarations page summarizes the specifics of the contract: who is insured, the property or risk, coverage limits, deductibles, premium, and policy period. It personalizes the standard policy forms.
General Insurance Concepts In insurance, 'risk' is most precisely defined as:
A. A guaranteed loss
B. A peril
C. The uncertainty of loss ✓
D. A type of coverage
Correct — C. Risk is the uncertainty regarding loss. Insurance addresses pure risk, where only loss or no loss is possible, rather than speculative risk, which includes the chance of gain.
Insurance Law & Ethics Under the McCarran-Ferguson Act, the regulation of the business of insurance is primarily delegated to:
A. The federal government exclusively
B. The courts
C. The individual states ✓
D. Insurance companies themselves
Correct — C. The McCarran-Ferguson Act of 1945 affirms that states have primary authority to regulate the business of insurance, and that federal law generally does not preempt state insurance regulation.
About the Property Casualty test
Property Casualty candidates are tested on Finance & Accounting and Property, in the same format the real exam uses. Every question here comes with a plain-language explanation, so you learn why an answer is right instead of memorising it — with 498 questions to start on.
You will be tested on
- The core topics and terminology you'll be tested on
- Rules, standards and best-practice procedures
- Real-world scenarios and how to respond
- Common mistakes and how to avoid them
How TheoryPractice helps you pass
- Real exam-style questions with instant, detailed explanations
- Full timed mock exams that mirror the real test format
- Flashcards & quiz modes from the same question bank
- Progress tracking so you know exactly when you're ready
Topics in this question bank
The core topics and terminology you'll be tested on
Rules, standards and best-practice procedures
Real-world scenarios and how to respond
Common mistakes and how to avoid them
Full Property Casualty bank + unlimited mocks
Try 30 questions free. Unlock the complete Property Casualty question bank, every explanation, and unlimited timed mock exams. Practice on any device.
Unlock Property Casualty →