P&C Exam Practice: 5 Questions on Commercial Property, Auto, and Liability

P&C Exam Practice: 5 Questions on Commercial Property, Auto, and Liability

Practice questions are one of the fastest ways to find gaps in your P&C exam knowledge. Try each question before reading the answer, then use the explanation to reinforce the rule behind it.

Question 1: Commercial Property Valuation

A commercial building is insured under a replacement cost settlement provision. After a covered loss, the replacement cost is $400,000 and the building's actual cash value is $300,000. The insured replaces the building for $380,000. Which amount is generally the maximum payable for the building loss, before applying the deductible?

A. $300,000 B. $380,000 C. $400,000 D. The policy limit, regardless of the replacement cost

Answer: B. $380,000. Replacement cost coverage is intended to repair or replace the damaged property, but payment generally cannot exceed the amount actually spent to replace it or the applicable limit, whichever is less. The deductible still applies.

Question 2: Personal Auto Liability

An insured's covered auto causes an accident that injures another driver. Which coverage in a Personal Auto Policy responds to the insured's legal responsibility for the other driver's bodily injury?

A. Medical Payments B. Uninsured Motorists C. Bodily Injury Liability D. Collision

Answer: C. Bodily Injury Liability. Liability coverage applies when the insured is legally responsible for bodily injury or property damage to others. Medical Payments covers certain injuries to the insured and passengers, while collision covers damage to the insured auto.

Question 3: Commercial General Liability Trigger

A customer slips and falls in a retailer's store during the policy period. The retailer receives a lawsuit two months later. Under a typical occurrence-based Commercial General Liability policy, what is the key event for determining whether coverage may apply?

A. When the lawsuit is filed B. When the injury or damage occurred C. When the insurer receives notice D. When the settlement is paid

Answer: B. When the injury or damage occurred. An occurrence policy generally responds when the bodily injury or property damage takes place during the policy period, subject to the policy's terms, conditions, and exclusions.

Question 4: Workers Compensation

Which principle is most closely associated with workers compensation benefits?

A. The employee must prove the employer was negligent B. Benefits are provided for covered work-related injuries, generally without proving employer fault C. Only injuries caused by a third party are covered D. Benefits are available only after a civil trial

Answer: B. Workers compensation is generally a no-fault system for covered work-related injuries and occupational illnesses. Employees usually do not need to prove employer negligence, and employers receive protection from many employee lawsuits, subject to state law and policy provisions.

Question 5: Umbrella Liability

What is a primary purpose of a personal umbrella policy?

A. To insure routine maintenance of the home B. To replace every underlying insurance policy C. To provide additional liability limits above scheduled underlying policies D. To cover intentional acts

Answer: C. An umbrella provides excess liability protection above specified underlying policies, subject to its own terms and exclusions. It does not replace the underlying policies and does not generally cover intentional wrongdoing.

Study Takeaway

When you miss a practice question, write down the rule—not just the letter of the answer. On exam day, look for trigger words such as legally responsible, during the policy period, replacement cost, and work-related injury. Those phrases often point directly to the tested coverage concept.

This is general guidance — not legal or coverage advice. Consult a licensed professional.

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