Property and Casualty Exam Cheat Sheet: 5 Most Tested Topics You Need to Know

If you're preparing for your Property and Casualty Exam, you've probably realized that passing isn't just about memorizing definitions. Many candidates spend weeks studying, complete their pre-licensing course, and still struggle when they sit down for the actual insurance licensing exam.

At P&CP Academy, we've worked with thousands of students preparing for the Property and Casualty Insurance Exam. One thing we've noticed is that the same topics consistently trip people up—regardless of how much they've studied.

The good news? These concepts can be mastered once you understand how they're tested on the exam.

The Property and Casualty Exam covers dozens of insurance concepts, but not all topics are tested equally. Over the years, we've found that certain topics appear repeatedly on state licensing exams and are often responsible for incorrect answers.

If you're serious about passing your Property and Casualty Insurance Exam, make sure you're comfortable with these five commonly missed areas.

Let's break down what they are, why students struggle with them, and how you can avoid making the same mistakes on exam day.

1. Coinsurance Clause

The Coinsurance Clause is one of the most misunderstood topics on the Property and Casualty Exam.

FORMULA: Amount of insurance carried / Amount of insurance required x Amount of loss = Amount Payable. (Minus any deductible)

However, on the P&C exam, you'll often see coinsurance discussed in the context of homeowners and BOP insurance.

A coinsurance clause requires property owners to insure their property to a certain percentage of its value—Typically 80%. And if the property is underinsured, the insured may have to share in the loss through a coinsurance penalty.

Exam questions often test:

• Coinsurance Formula

• How coinsurance works

• Why coinsurance penalties occur

• Basic coinsurance calculations

• The purpose of the coinsurance requirement

Study Tip: Practice working through sample coinsurance calculations until you understand the logic behind them. And don't panic if you are not great at math, you won't have a ton of these math questions, once you have the formula memorized, it's just a quick plug and play of the information!

2. Subrogation on the Property and Casualty Exam

Subrogation appears frequently on Property and Casualty Exam questions because it's a fundamental insurance principle.

Subrogation gives an insurer the right to recover money from a responsible third party after the insurer has already paid a claim.

For example, if another driver causes an accident and your insurer pays for your damages, the insurer may later pursue the at-fault driver to recover the money it paid.

Students commonly confuse subrogation with indemnity and the exam writers know that! So look out for trick questions between these two terms!

Remember:

• Indemnity = Restoring the insured to their financial position before the loss.

• Subrogation = The insurer seeking reimbursement after paying the claim.

Quick Memory Trick: Subrogation happens AFTER the claim payment NOT before!

Quick Check Before You Move On

If these topics already feel tricky, you're not alone—these are some of the most commonly missed areas on the Property and Casualty Exam.

This is exactly why so many students use structured exam prep programs instead of trying to piece everything together from a pre-licensing course alone.

The key is learning how these concepts are actually tested on the exam—not just memorizing definitions.

3. Inland Marine vs. Ocean Marine Insurance

This topic can be slightly confusing simply because of the terminology.

When candidates hear the term "marine insurance," they often assume it only applies to boats and transportation over water. While that's true for Ocean Marine Insurance, it's not necessarily true for Inland Marine Insurance.

Ocean Marine Insurance: Primarily covers ships, cargo, and transportation over water.

Inland Marine Insurance: Covers property that is transported over land or property that is mobile.

For example:

• Contractor equipment

• Fine art

• Camera equipment

• Valuable items that move from place to place.

  
  

The reason this topic confuses so many students is because of the name. Inland Marine Insurance actually evolved from Ocean Marine Insurance as railroads, trucks, and airplanes became common methods of transporting goods across the country. As transportation expanded beyond waterways, insurance coverage evolved to protect property moving inland or "over land."

The Property and Casualty Exam will test whether you understand this distinction or not.

Study Tip: Don't get hung up on the word "marine." For exam purposes, think of Inland Marine Insurance as coverage for property that moves over land (Not tied to one permanent location). Think of Ocean Marine Insurance as coverage for transportation over water.

4. Additional Insured vs. Loss Payee

This is another area where exam writers love to create tricky questions. Although these terms sound similar, they serve very different purposes.

Loss Payee

A loss payee is a person or organization that has a financial interest in insured property and may receive payment if that property is damaged by a covered loss.

A common example is a bank or finance company that provides a loan for a vehicle. Because the lender has a financial interest in the vehicle, they may require the borrower to maintain insurance and list the lender as the loss payee on the policy.

Under a Loss Payable Clause, the loss payee is protected by the policy and is typically notified if the policy is canceled or not renewed.

Example:

You finance a car through a bank. The bank is listed as the loss payee because it has a financial interest in the vehicle. If the car is totaled in a covered loss, the insurer may pay the bank for its interest in the vehicle before any remaining payment is made to you.

Exam Tip: Whenever you see a lender, bank, mortgage company, or anyone with a financial interest in property, think Loss Payee.

Memory Trick: Property Interest = Loss Payee

Additional Insured

An additional insured receives liability protection under someone else's policy.

Example: A landlord requires a tenant to add them as an additional insured on the tenant's liability policy. If the landlord is sued because of the tenant's operations, the landlord may receive liability coverage under that policy.

Think: Liability protection = Additional Insured

The key difference:

• Loss Payee = Property Interest

• Additional Insured = Liability Protection

  
  

Additional Insured: Individuals that qualify as an insured. (Liability protection)

If you see a lender, bank, mortgage company, or someone with a financial interest in property, think Loss Payee.

If you see someone being added to receive liability coverage under another person's policy, think Additional Insured.

Example Question

A bank finances Jon's leased car and requires protection of its financial interest in the new car. Which of the following is the MOST appropriate designation?

A. Additional Insured

B. Loss Payee

C. First Named Insured

D. Certificate Holder

• Why? The bank has a financial interest in the vehicle itself. If said vehicle is damaged, the bank may be entitled to receive payment for its interest in the car.

  • NOT Additional Insured, don't assume based on the word "protection" only.

  • HINT: The question is about protecting a financial interest in property, NOT liability coverage.

A property owner hires a contractor to perform renovations. The property owner wants liability protection under the contractor's Commercial General Liability policy for claims arising out of the contractor's work. Which of the following should the contractor add to the policy?

A. Mortgagee

B. Loss Payee

C. Additional Insured

D. Beneficiary

• Why? The property owner wants liability protection under someone else's policy, which is exactly what an "Additional Insured" endorsement provides

• People often see "property owner" and think Loss Payee, but it's not asking about damage to property, it's asking about liability protection.

5. The Insuring Agreement

Many students spend most of their study time memorizing exclusions.

While exclusions are important, the insuring agreement deserves just as much attention.

The insuring agreement defines:

• What is covered

• When coverage applies

• Who is covered

• The insurer's promise to pay

Before you can determine whether an exclusion applies, you must first determine whether coverage exists under the insuring agreement.

Exam questions often hide the answer inside the wording of the insuring agreement.

Study Tip: When practicing exam questions, identify the insuring agreement before looking at exclusions.

How to Remember These Concepts Before the Property and Casualty Exam

One of the most effective study techniques is simple:

Write each concept in your own words.

If you can explain coinsurance, subrogation, inland marine insurance, loss payees, and insuring agreements to a friend without reading from your notes, you've likely developed a much deeper understanding than someone who simply memorized definitions.

The Property and Casualty Exam tests comprehension—not just memorization.

Common Property and Casualty Exam Mistakes

Some of the biggest mistakes candidates make include:

• Memorizing definitions without understanding application

• Ignoring policy provisions and insuring agreements

• Confusing similar concepts such as subrogation and indemnity

• Mixing up Additional Insureds and Loss Payees

• Avoiding coinsurance calculations because of math anxiety

Avoiding these mistakes can significantly improve your chances of passing the Property and Casualty Exam on your first attempt.

Frequently Asked Questions About the Property and Casualty Exam

What is the hardest part of the Property and Casualty Exam?

Many students struggle with commercial insurance concepts, including coinsurance clauses, inland marine coverage, and policy provisions. Understanding how these concepts apply in real-world scenarios is often more important than simply memorizing definitions.

How long should I study for the Property and Casualty Exam?

Most candidates spend between 40 and 60 hours preparing for the exam. The exact amount depends on your background, study habits, and familiarity with insurance concepts.

Are Property and Casualty Exam questions mostly memorization?

No. While terminology is important, many exam questions test your ability to apply concepts to real-world situations and identify the best answer. Do not solely rely on memorization!

Why This Matters

The difference between passing and failing the Property and Casualty Exam often comes down to understanding how concepts are applied—not simply memorizing definitions.

That's why we focus on exam strategy, real-world examples, and commonly tested concepts inside our program.

Ready to Pass Your Property and Casualty Exam?

If you've been studying for weeks and still don't feel confident, you're not alone. Many students come to P&CP Academy after completing a pre-licensing course and realizing they need more than just the textbook material.

Our program is designed to help you understand how exam questions are written, identify commonly tested concepts, and walk into exam day with confidence.

Inside the program you'll get:

✔ Over 12 Hours of comprehensive video training

✔ 120+ Property and Casualty practice questions

✔ Study guides and exam strategies

✔ Proven test-taking techniques

✔ Ongoing support from a team that has helped thousands of students prepare for the Property and Casualty Exam

Ready to study smarter and pass faster?

Our Property & Casualty Exam Prep Program includes over 12 hours of video training, 120+ practice questions, study guides, exam strategies, and ongoing support designed to help you pass faster. Start preparing today!

I am Ready to Pass!