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Nebraska Property & Casualty Practice Exam

20 exam-style questions drawn from the same bank as our full Nebraska Property & Casualty course (Nebraska 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. After a covered loss, the insured must 'protect the property from further damage.' If the insured ignores this duty and the damage worsens:
The insurer may cancel the policy but must still pay the original damage in full, under the broader consumer-protection construction sometimes applied hereThe insured's failure has no effect because mitigation is the insurer's job, consistent with the model regulation but inapplicable to this scenarioThe insurer is still obligated to pay for all damage, including the worsening — applies if the loss is partial; this question describes a constructive total lossThe insurer can reduce or deny the claim for the portion attributable to the insured's failure to mitigate.
2. A binder is best described as:
A premium discount applied to insurance policies that cover more than one property location at onceA filed endorsement attached to the policy that binds the insured to a specific list of warranties on the formThe permanent policy document that collects every coverage term, condition, and exclusion in one placeA temporary agreement providing coverage until the formal policy is issued or declined.
3. Parol evidence rule, as applied to insurance contracts, generally provides that:
All insurance contracts must be oral, per the safe-harbor exception that activates only for primary-state filingsParol evidence applies only to criminal cases.Oral statements made before the policy was issued can modify the final written policy.Once a written policy is issued, oral statements or negotiations prior to its issuance cannot typically be used to alter its terms.
4. Which of the following is NOT a standard post-loss duty of the insured?
Cooperate with the insurer's investigation, per the safe-harbor exception that activates only for primary-state filingsAccept the first settlement offer without negotiation.Provide prompt notice to the insurer — applicable to commercial scenarios only, not the personal-lines contextProtect the property from further damage — required under a separate compliance provision that doesn't reach this fact pattern
5. When does a Nebraska examination report on an insurer become a public document?
After the insurer has had a chance to review and respondFive years after the examination cycle in which it beganOnly after the Nebraska Attorney General clears its releaseImmediately when the examiners complete their field work
6. Under the PAP's Part E (Duties After an Accident or Loss), the insured must generally do which of the following?
Promptly notify the insurer, cooperate in investigation, submit to examinations under oath, protect the property from further damage, and provide requested documents and authorizations.Obtain three estimates before the insurer is required to pay, under the broader consumer-protection construction sometimes applied hereRepair the vehicle first and seek reimbursement afterward — applicable to commercial scenarios only, not the personal-lines contextPay the other driver's damages directly out of pocket before filing a claim — only when the contract was issued before the regulatory amendment described above
7. An annual policy with an $1,800 premium is cancelled by the INSURED at the six-month mark. The short-rate cancellation table (used when the insured initiates) returns 50% of the unearned premium minus a penalty. Approximately how much premium refund does the insured receive, compared to a pro-rata refund?
Short-rate refund is zero; insureds forfeit all unearned premium.Short-rate refund is HIGHER than pro-rata because the insurer absorbs setup costs.Short-rate refund is LOWER than pro-rata because of the insurer's penalty/retention.Short-rate refund is EQUAL to pro-rata; the term is just another name.
8. A warehouse worker is seriously injured on the job and collects statutory workers' compensation benefits from his employer's WC policy. His spouse then files a separate loss-of-consortium lawsuit against the employer. Which part of the standard Workers' Compensation and Employers Liability policy responds to the spouse's suit, if any?
Neither part responds; exclusive remedy bars every claim arising out of the injury.Part Two — Employers Liability, because consortium claims by a spouse are one of the gaps EL is designed to cover.Part Three — Other States Insurance, because it expands coverage to third parties.Part One — Workers Compensation Insurance, because the spouse's claim arises from the same injury.
9. An insured's underlying CGL pays a $1,000,000 BI liability limit in full on a single $4,000,000 verdict. The $5,000,000 umbrella sits over the CGL with no SIR for claims covered by the underlying. How much does the umbrella pay on this loss?
$0 — limits exhausted, under the alternative procedure that applies only when both parties stipulate to it in writing$5,000,000 — umbrella pays its full limit — required under the federal preemption framework that yields here to the state-law rule$3,000,000 — umbrella pays excess of the underlying limit.$4,000,000 — umbrella pays the full verdict.
10. An insured owns a 1910 Victorian whose replacement cost is $1.2M and market value is $380,000. If the home is written on an HO-8 and suffers a total loss, how will the dwelling claim be settled?
Full replacement cost using like kind and quality materials matching the original Victorian construction, provided the insured carried at least 80% to valueActual cash value only on both partial and total losses, with depreciation calculated using the home's 1910 original construction dateThe cost to repair with common construction materials and methods functionally equivalent to the original, up to the policy limitMarket value at the time of loss, with no adjustment for the spread between replacement cost and the home's depressed real-estate value
11. What does Nebraska require of a licensed producer who wants to place surplus lines business?
A personal lines endorsement added to the existing licenseNothing beyond the property and casualty lines of authorityA separate surplus lines license plus a separately filed bondWritten approval from the Nebraska Attorney General each year
12. Inland marine insurance evolved to cover what general category of property?
Ocean cargo outside territorial waters, covering containerized goods aboard vessels engaged in international maritime commerceProperty in transit, property held by bailees, 'instrumentalities of transportation/communication,' and mobile/portable propertyReal property and buildings only, such as commercial offices, retail stores, warehouses, and other permanently affixed structuresLivestock and farm produce only, including cattle, poultry, growing crops, and harvested grain stored on the insured's premises
13. Two homeowners policies happen to cover the same dwelling — the original owner's policy was never cancelled after sale, and the new owner bought his own policy. After a $60,000 fire loss, both policies apply. Under the 'pro-rata by limits' method, Company A (carrying $200K limit) and Company B (carrying $300K limit) each pay:
A: $60,000; B: $0 — first policy pays in full.$30,000 each — an equal split.Neither — double coverage voids both policies.A: $24,000; B: $36,000 — pro-rata by limits.
14. Under the homeowners Section I perils, 'theft' has a special exclusion that removes coverage for theft committed by which party?
A person who breaks in while the insured is away on vacationA contractor hired to perform repairsA resident relative of the insuredA guest the insured has invited onto the premises
15. A claims-made professional liability policy has a retroactive date of 1/1/2020. An insured event occurred in 2019 but the claim was not made until 2024 while the policy was in force. Is there coverage?
Yes — if the insured paid a nose premium — applicable to commercial scenarios only, not the personal-lines contextOnly if the insured purchased a tail.No — the event occurred before the retroactive date, so coverage is excluded even though the claim is timely.Yes — claims-made policies respond based on when the claim is made.
16. A CGL uses PAYROLL and GROSS SALES as exposure bases. This means the premium will likely be:
Calculated only from the named insured's prior-year tax return data with no further adjustment after policy expiration, a one-time historical method not used in the standard CGL audit processFixed at the deposit amount regardless of any change in actual business activity during the annual policy term, a non-auditable structure not used on a CGL with payroll-and-sales ratingPaid in full at policy inception with absolutely no end-of-term adjustment regardless of actual payroll or sales during the period, which contradicts the auditable nature of CGL exposure basesAdjusted at audit based on actual payroll and sales during the policy period — with additional billing or return premium as applicable.
17. Your client rents a condominium unit from its owner and wants coverage for his personal belongings, liability to guests, and the built-in bookshelves he installed himself. Which homeowners form fits his situation?
HO-8, because built-in improvements require modified settlementHO-4, because he is a tenant and does not own the unitHO-6, because he lives in a condominiumHO-3, with a tenant endorsement
18. Within how many days must an insurer notify the Nebraska Director of Insurance of the termination of a producer's appointment for cause?
60 days10 days15 days30 days
19. Under Nebraska law on the use of credit information in personal insurance, a Nebraska personal-lines insurer that takes adverse action based in whole or in part on a credit report must:
Provide the applicant with an adverse-action notice identifying the action and the consumer reporting agency usedSubmit the credit-based scoring model to the Director for re-approvalRefer the file to the Nebraska Attorney General, consistent with the model regulation but inapplicable to this scenarioRefund all premium paid in the prior 12 months, under the broader consumer-protection construction sometimes applied here
20. A building is insured for $400,000 with a 90% coinsurance clause. The replacement cost is $500,000. The insured suffers a $50,000 covered loss (no deductible). How much will the insurer pay?
$44,444$40,000$45,000$50,000

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