P&C Exam Q&A Practice: 5 Questions With Step-by-Step Explanations

P&C Exam Q&A Practice — 5 Questions With Step-by-Step Explanations

The best way to prepare for the P&C exam isn't just reading — it's answering questions and understanding why each answer is correct. Here are 5 practice questions covering common exam topics.

Question 1: Liability Coverage

Under a Commercial General Liability (CGL) policy, which of the following would be covered as bodily injury?

A) An employee injured on the job B) A customer slipping on a wet floor in the insured's store C) The insured injuring themselves on their own property D) Damage to the insured's own product

Answer: B

Explanation: The CGL covers bodily injury to third parties caused by the insured's business operations. An employee injury would be covered under workers compensation, not CGL. Self-inflicted injury and damage to the insured's own product are excluded under CGL.

Question 2: Homeowners Forms

Which homeowners form provides coverage on an open perils basis for the dwelling?

A) HO-2 (Broad) B) HO-3 (Special) C) HO-4 (Contents Broad) D) HO-6 (Condominium)

Answer: B

Explanation: The HO-3 (Special Form) covers the dwelling on an open perils (all-risk) basis, meaning all perils are covered except those specifically excluded. Personal property under HO-3 is covered on a named perils basis. HO-2 covers both dwelling and contents on a named perils basis. HO-4 is for renters and covers contents only. HO-6 is for condo owners.

Question 3: Auto Coverage

Under a Personal Auto Policy, medical payments coverage applies to which of the following?

A) Only the named insured B) The named insured, resident relatives, and passengers in the covered auto C) Only passengers in the covered auto D) The at-fault driver in a two-car accident

Answer: B

Explanation: Part B — Medical Payments Coverage applies to the named insured, resident family members, and any passengers occupying the covered auto. It also applies to the insured if struck by a vehicle as a pedestrian. It's no-fault coverage — payment is made regardless of who caused the accident.

Question 4: Workers Compensation

The exclusive remedy provision in workers compensation means:

A) The employer can choose which benefits to pay B) The employee cannot sue the employer for the injury C) Only one claim can be filed per injury D) The insurer has exclusive rights to investigate

Answer: B

Explanation: The exclusive remedy doctrine is the foundation of workers compensation. In exchange for guaranteed benefits regardless of fault, the employee gives up the right to sue the employer for the injury. This is the trade-off that makes the system work.

Question 5: Insurance Principles

The principle of indemnity means that:

A) The insured can profit from a loss B) The insurer restores the insured to their financial position before the loss C) The insured must pay a deductible before receiving benefits D) The insurer can cancel the policy at any time

Answer: B

Explanation: Indemnity is a core principle of insurance. The goal is to restore the insured to the same financial position they were in immediately before the loss — no better, no worse. This is why actual cash value (replacement cost minus depreciation) is used in many policies, and why insurance prevents profiting from a loss.

The Bottom Line

Don't just memorize the answers — understand the reasoning. The exam will ask the same concepts in different ways. If you understand why an answer is correct, you can handle any variation they throw at you.

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