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FREE Property and Casualty Insurance Exam Questions & Answers Guide (2025) Your Key to Passing Faster, Smarter, & Stress-Free!

Updated: 2 days ago

What to Expect from FREE Property and Casualty Insurance Exam Questions & Answers Guide

Preparing for the Property and Casualty Insurance Exam can be overwhelming, but this strategic resource simplifies everything. This guide isn’t just another study tool. It’s a strategic weapon that helps you focus on real exam questions, understand answer logic, and retain key concepts with minimal stress.


This FREE P&C Q&A Guide is equipped with multiple categorized questions, answer keys, and explanations. Whether you’re reviewing on a laptop or cramming on your phone, it's built for flexibility!


Who This FREE Property and Casualty Insurance Exam Questions & Answers Guide is designed for:

  • First-time test takers

  • Students retaking the P&C exam

  • Career changers entering insurance


How This Guide Helps You Prepare

This Q&A Guide helps you:

  • Practice with realistic, test-aligned questions

  • Study the correct answer rationales

  • Track progress by topic or difficulty

  • Learn through repetition and active recall

It complements pre-licensing courses, not replaces them. Use it after studying each module to test your retention and expose knowledge gaps before exam day.


Overview of Question Styles Included (MCQ, Scenario-Based)

This FREE Property and Casualty Insurance Exam Questions & Answers Guide includes:

  • Multiple-choice questions (MCQ): Choose the most accurate answer from 4 options

  • Scenario-based questions: Apply known knowledge to situation


Each question is crafted to mimic real test style so you can walk into the testing center with confidence.


FREE Property and Casualty Questions and Answers

📘 Sample Questions on Homeowners, Auto, and Commercial Policies


Q1. Which homeowner's policy provides the broadest coverage?

a) HO-1

b) HO-2

c) HO-3

d) HO-8


✅ Correct Answer: c) HO-3 – This is an open-peril policy for dwellings and broad for contents (personal property). If HO-5 was an option, the correct answer choice would be an HO-5 as the HO-5 is the MOST comprehensive form. Of the answer choices here, the HO-3 is the broadest coverages available of the choices provided.


Q2. What is typically covered under a Personal Auto Policy (PAP)?

a) Collision and comprehensive

b) Bodily injury, Property Damage, Medical payments, UM/UIM

c) Life insurance

d) Workers’ compensation


✅ Correct Answer: b) You may have thought Collision and comprehensive at first glance, which is why it was listed as answer choice A. But Auto coverage is not limited to just Property Damage, you also have liability (BI and PD), Property Damage (Collision and Comprehensive), Medical payments, and UM and UIM). Which makes answer choice B the correct answer choice!


Q3. What does a Business Owners Policy (BOP) generally include?

a) Only liability insurance

b) Property, liability, and business interruption

c) Health insurance

d) Vehicle insurance only


✅ Correct Answer: b) A BOP is structured similar to a Homeowners Policy, where it includes property coverage (section 1) and liability coverage (Section 2).


Q4. Optional coverages offered under a BOP policy include each of the following EXCEPT:

a) Indoor Signs

b) Mechanical Breakdown

c) Money and Securities

d) Exterior Glass


✅ Correct Answer: a) Indoor Signs. Just like homeowners anything INSIDE would be considered Business Personal Property or "Contents" coverage. If it was an attached Sign, it would be considered Part A, Building coverage. Outdoor Signs are NOT covered. All of the other answer choices are optional coverages.


Q5. Which of the following types of businesses would a BOP be BEST suited?

a) A take-out only restaurant.

b) An Apartment complex with 3 locations

c) An auto repair shop

d) A waterproofing contractor


✅ Correct Answer: A) A take-out only restaurant. BOP are designed for ONE location businesses, so an apartment complex with 3 locations is not eligible. Auto repair shop would need a Commercial Auto policy (THINK: NO Bars, NO Cars) A waterproofing contractor, technically speaking, we do not have enough information here, some contractors are eligible for a BOP, if it fits the criteria of having: Annual sales of less than $3 million and an annual payroll under $300,000. But the BEST answer choice is A


⚖️ Regulatory & Legal Insurance Questions with Answers


Understanding insurance laws and ethical duties is KEY to passing the exam. These questions test your comprehension of fiduciary duty, rebating, and compliance.


Q1. What is considered "Twisting" in insurance sales?

a) Changing coverage mid-term b) Offering unauthorized discounts

c) Misleading a client to switch policies

d) Canceling without notice


✅ Correct Answer: c) Twisting is the unethical act of persuading a client to lapse or cancel their current policy to buy another under pretenses.  (THINK: your twisting the truth), you are half giving the information, you are telling the client what they want to hear for them to switch policies.


Q2. Who must maintain fiduciary responsibility in an agency?

a) The client

b) The insurance commissioner

c) The agent or producer

d) The insurer only


✅ Correct Answer: c) A FIDUCIARY is an individual who holds a position of public trust and confidence. Producers are Fiduciaries, as they are held with a high degree of trust & confidence, handling monies in trust for the insurers they represent and for the consumer who gives premium monies to the producer.


Q3. What does rebating mean in insurance ethics?

a) Charging extra fees

b) Giving part of the commission to a buyer illegally

c) Discounting the deductible

d) Filing false claims


✅ Correct Answer: b) Rebating is an illegal practice of returning part of the commission to the customer in return for the customer’s placement of the policy. It’s a form of discrimination. It can also include things like: Agent paying commissions to an unlicensed individual,

Offering an incentive if a person buys a policy from you, reducing the premium, or giving/accepting something of material value (Barter).


Q4. Which of the following would be considered discrimination?

a) A person who works as a race car driver has a higher life insurance premium than that of his neighbor who is an insurance agent.

b) An insurance company charges woman lower premiums than men because women generally live longer.

c) A life insurance company charges obese people a higher premium when it can prove actuarially that obese people have a greater risk for heart disease and will therefore die sooner than others.

d) An insurance company decides to increase the premium charge on insurance policies issued to non-Catholics because of difference in beliefs.


✅ Correct Answer: D. An insurance company decides to increase the premium charge on insurance policies issued to non-Catholics because of difference in beliefs. Discrimination is charging different rates for the same exposure based on non-actuarial data. Treating insured’s differently, non-actuarial based (Race, age, religion, sex, origin ) The other answer choices are incorrect because there is actuarial data behind the statements.  


Q5. In carrying your duties of agency, the insurance producer represents which of the following?

a) The insured

b) The community in which you live

c) The Insurance company

d) The state Department of Insurance


✅ Correct Answer: C. When carrying out their duties of agency, a Producer/Agent is representing the insurance company, not the insured or any other party.  Producers work closely with clients; they are legally Agents of the Principle (Insurance company). The community in which you live is just incorrect as this is not a legal relationship in context, this is simply a throw-away answer. The state Department of Insurance is Incorrect because even though Producers are licensed by the state, they are not representing the department, they are representing the Company in which they work for, who they signed a contract with.



5 BONUS Questions Covering Even More Topics (Auto, Regulations, Dwelling, Homeowners, & Inland Marine !


Q1. If Chelsea is struck by a vehicle while crossing the road to pick up her mail, her injuries can be covered by:

a) Her Homeowners Medical Payments

b) Per PAP Medical Payments 

c) Her personal auto liability

d) The Driver’s personal Auto medical Payments


✅ Correct Answer: B. Your initial thought may be the HO’s medical payments since Angela was presumably at home walking across the street to get her mail. But no, HO Medical payments would never cover the Insured, it ONLY covers 3rd parties. The correct answer is that her medical payments on her AUTO policy would pay because your medical payments (Med Pay) on your Auto Policy are 1st party benefits meaning they pay for the insured. They do not just cover the insured while IN/Driving a vehicle, but ANY involvement with a vehicle. So because Chelsea was hit by a car, it would be covered by her auto (MedPay)



Q2. The basis for many state statutes regulating insurance advertising is called the:

a) NAIC Model Unfair Trade Practices Act.

b) Society of CLU Agreed Advertising Pact

c) Federal Insurance Act of 1997

d) NAIC Ethics in Marketing Act


✅ Correct Answer: A. You may see the other answer choices and assume "Advertising Pact or Marketing Act" solely based on the name, but the correct answer is the NAIC Model Unfair Trade Practices Act. Under the NAIC, there is the NAIC Unfair Trade Practices and NAIC Unfair Claim Practices that you will be tested on. The trade practices consist of, but not limited to, discrimination, boycotting, redlining, defamation, false advertising, monopoly in the insurance business, etc..


Q3.  All but which of the following is a characteristic of Dwelling insurance policies?

a) The dwelling can house an incidental professional office, such as an accountant.

b) Mobile homes cannot be included on a dwelling form policy.

c) They are  mono-line policies.

d) The dwelling does not need to be owner-occupied


✅ Correct Answer: B. *These questions can be tricky because of the wording, but what it is saying is that 3 of these statements are true, which one is false? So B is FALSE, because Mobile homes CAN be included on a dwelling form policy as long as they are permanently located.  The dwelling can house an incidental professional office, they are mono-line policies, the dwelling does not need to be owner-occupied- these 3 are all TRUE statements.


Q4.  Carlos and Denise have an HO-3 policy with the building insured for $100,000. How much coverage of personal property do Carlos and Denise have for property they keep stored at a second residence they own?

a) $250

b) $50,000

c) 1,000

d) 0


✅ Correct Answer: D. Because the property is stored a second residence, that Personal property would then be covered under that secondary residence policy. Had the question just read, how much personal property coverage do Carlos and Denise have if their building is insured at $100,000? The answer would be $50,000 because coverage C is 50% of coverage A. But, because it's at the second residence, the answer is ZERO.


Q5. A floater policy is a type of inland marine policy that covers eligible personal property that is located where?

a) At the home listed on the application

b) Wherever the personal property may be (The only restriction being the policy territory)

c) Worldwide coverage exists

d) Only while in possession of the insured


✅ Correct Answer: B. A Floater is a type of policy that covers easily movable personal property. HINT: Coverage that "floats" with the property = FLOATER. Covers the property anywhere it comes.


🧠 Answer Key Explained


One of the strongest benefits of this FREE Property and Casualty Insurance Exam Questions & Answers Guide is the detailed answer key. It does more than just give you the correct response—it explains why it’s correct and why the other choices are wrong.  Take your prep to the next level and get access to P&CP's full Property & Casualty Practice Exam with over 100 exam-style questions, detailed answer explanations, and a FREE bonus course lesson to reinforce key concepts. This is the secret to your best shot at passing the P&C Exam.


Benefits of Detailed Answer Rationales:

  • Deepens understanding of complex insurance topics

  • Helps you recognize distractor choices used in real exams

  • Reinforces retention through logical reasoning

  • Accelerates the correction of repeated mistakes

This insight is critical when studying independently. It ensures you're not just guessing but truly mastering the logic behind each answer.



 🧰 Tools to Pair with Your Guide for Higher Retention

To make the most of your exam prep and to assure that passing score, combine it with:

On-Demand Lessons: Get P&CP’s ON-Demand Course provided from the best of the best P&C Instructors that has helped hundreds of students pass the exam by breaking down these complex concepts into digestible concepts. There’s various packages to choose from, the PREMIUM package gets you the best deal where you’ll get all 11 chapter videos, the full study guide, practice exam, more example questions, and so much more!

 

Study Guide and Practice Exam Bundle: Don’t need the whole on-demand program, no problem, P&CP has a bundle package made just for you that has a study guide with all key elements and a practice exam with over 100 questions with detailed answers just like you found here! Plus, this includes a FREE lesson to strengthen your understanding even more!


These tools make passive reading into active learning.








Real Results from Real People


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