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Arizona Property & Casualty Practice Exam

20 exam-style questions drawn from the same bank as our full Arizona Property & Casualty course (Arizona Insurance Producer — Property and Casualty — Exam Prep). Answer all 20, then grade yourself — most state exams require 70% to pass. Explanations for every question are part of the full course.

1. An association assesses unit owners after uninsured flood damage to common elements. A unit owner's HO-6 loss assessment coverage will:
Not pay, because loss assessment coverage never applies to damage involving the common elements at allPay in full, because the special assessment arises directly from physical damage to the building's common elementsPay, but only up to one-half of the total special assessment that the association charges to each unit ownerNot pay, because the assessment must arise from a peril covered under the unit owner's own form, and flood is not
2. An insured's follow-form excess policy denies a claim the insured expected it to pay. The most likely reason is:
Follow-form policies cover only property damage, never bodily injuryThe SIR was set higher than the judgment amountThe excess insurer must always reprice and re-underwrite the risk before paying any claimThe underlying policy did not cover the claim, so the follow-form excess does not either
3. A claim is covered by the umbrella but by no underlying policy. Payment under the umbrella begins:
Only after a court judgment is enteredAbove the self-insured retention paid by the insuredFrom the first dollar of lossAbove the exhausted underlying aggregate limit
4. A mutual insurer is owned by:
Its policyholdersIndividual underwriters who each accept a share of riskIts subscribers through an attorney-in-factIts shareholders
5. A $250,000 covered loss is shared pro rata by three policies: A ($100,000 limit), B ($200,000 limit), and C ($200,000 limit). How much does Policy C pay?
$83,333$50,000$100,000$125,000
6. Under a replacement-cost settlement, the carrier releases the recoverable depreciation holdback when the insured:
Actually repairs or replaces the property and submits documentationPays the policy deductible to the carrier before any work beginsSigns and submits the initial sworn proof of loss to the carrierObtains and submits three separate licensed contractor bids
7. How is business income coverage provided in the ISO BOP program?
Automatically, on an actual loss sustained basis for up to 12 consecutive monthsIt is not available at all on a businessowners policy and must be written elsewhereBy a separately purchased business income coverage form written at a scheduled dollar limitOnly by endorsement to the property section, and then subject to a coinsurance requirement
8. The DP-3 Special Form (DP 00 03) provides:
Open perils on Coverage C onlyNamed perils on all coveragesOpen perils on Coverages A and B, named perils on Coverage COpen perils on all coverages, including personal property
9. A stock insurer is owned by:
Its subscribers through an attorney-in-factIts shareholdersIndividual underwriters who each accept a share of riskIts policyholders
10. In the national ISO Personal Auto Policy architecture, which part provides first-party physical damage coverage for the policyholder's own vehicle?
Part D, Coverage for Damage to Your AutoPart A, Liability CoveragePart C, Uninsured Motorists CoveragePart B, Medical Payments Coverage
11. Which statement about the reasonable expectations doctrine is accurate for a state-neutral course?
It always overrides the plain meaning of clear and unambiguous policy text everywhere nationwideIts availability is state-specific, some states apply it, some only when the policy is ambiguous, and others reject itIt applies only to commercial policies that were individually negotiated between sophisticated business partiesIt is a single mandatory federal rule that is applied identically in every state across the country
12. Which vehicle fits the PAP definition of an uninsured motor vehicle?
A vehicle insured at exactly the state minimum limitsA hit-and-run vehicle whose operator cannot be identifiedA city-owned bus involved in a collisionA vehicle available for the insured's regular use
13. The two aggregate limits carried by the standard CGL are:
A per-person aggregate and a per-accident aggregateA general aggregate and a products-completed operations aggregateA defense aggregate and an indemnity aggregateA premises liability aggregate and an operations aggregate
14. Which of the following correctly lists the four elements required for an insurance policy to be an enforceable contract?
Consideration, legal purpose, insurable interest, premium paymentOffer and acceptance, consideration, notarized signatures, policy deliveryOffer and acceptance, consideration, competent parties, legal purposeCompetent parties, legal purpose, written form, agent countersignature
15. Under a replacement-cost settlement, an insured receives the ACV payment but decides never to repair or replace the damaged roof. What happens to the recoverable depreciation?
It is added to the next renewal premium as a creditIt is forfeited, and the recovery stops at ACVIt is paid automatically 12 months after the ACV paymentIt must still be released because the loss was covered
16. In a proprietary manufactured-home program, what is the difference between a “stated amount” and an “agreed value” provision?
Stated amount always pays full replacement cost, while agreed value pays only actual cash valueStated amount is a cap on recovery; agreed value is a promise to pay the dec-page amount on total lossThey are simply two interchangeable labels describing the exact same manufactured-home loss-settlement basisAgreed value applies only to partial losses, while stated amount applies only to declared total losses
17. A modular home, factory-built but assembled on site to the local building code on a conventional foundation, is insured under:
An inland marine floaterA proprietary mobile-home program onlyAn HO form with a mobilehome endorsementStandard HO forms, like any site-built home
18. Which endorsement provides replacement cost settlement on personal property (contents)?
Ordinance or Law increased amountHO 04 95 Water Back-Up and Sump DischargeHO 04 90 Personal Property Replacement CostHO 04 61 Scheduled Personal Property
19. Under the Business Income coverage form (CP 00 30), the period of restoration begins:
After a stated waiting period, commonly 72 hours, following the direct lossOnly once any civil authority order restricting access to the premises is finally liftedImmediately at the moment the direct physical loss or damage to the property occursOnly after the insured files a complete and signed proof of loss with the carrier
20. HO-6 Coverage A default limits are typically:
Small (often a $5,000 minimum) and must be increased deliberatelyLarge by default, roughly equal to the full replacement value of the buildingFixed permanently at fifty percent of the Coverage C limitZero by default, because an HO-6 form carries no Coverage A at all

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