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Nevada Property & Casualty Practice Exam

20 exam-style questions drawn from the same bank as our full Nevada Property & Casualty course (Nevada 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. Which statement correctly describes the key structural difference between a commercial umbrella policy and a pure follow-form excess liability policy?
An umbrella only provides higher limits; an excess policy can drop down to cover gaps in underlying coverage — only when the contract was issued before the regulatory amendment described aboveA pure follow-form excess policy has its own broader terms; an umbrella must follow the underlying form exactly — applicable to commercial scenarios only, not the personal-lines contextAn umbrella can drop down (subject to a self-insured retention) to cover some losses the underlying excluded; a pure follow-form excess mirrors the underlying's exclusions and only provides higher limits.An umbrella and a pure follow-form excess are functionally identical; the names are just marketing, under the broader consumer-protection construction sometimes applied here
2. A controller embezzles $180,000 from her employer between 2023 and 2024. She resigns in December 2024 and the employer's crime policy is non-renewed on December 31, 2024. The embezzlement is discovered during a routine audit on November 15, 2025. The crime policy was written on the ISO Discovery Form. Is the loss covered?
No — the discovery form only covers losses that were both sustained and discovered during the policy period.Yes — the discovery form's post-expiration reporting window is one year, so November 2025 is timely.No — the discovery form's post-expiration discovery window is only 60 days, so November 2025 is far outside it.Yes — any embezzlement discovered after non-renewal is automatically covered by the last policy in force.
3. Under the ISO Building and Personal Property Coverage Form (CP 00 10), which of the following is NOT included as Covered Property under Your Business Personal Property?
Furniture and fixtures owned by the insuredLabor, materials, or services the insured has furnished on personal property of othersLand, water, or growing cropsStock (raw materials and finished goods)
4. An auditable policy is non-renewed. Which statement is MOST accurate about the final audit?
Only the insured may initiate the audit, per the safe-harbor exception that activates only for primary-state filingsThe insurer forfeits all deposit premium — though only when the underlying contract contains an explicit waiver, which the scenario doesn't establishA final audit is still conducted to determine actual exposure; any additional premium is billed and any return premium is refunded.No audit is conducted because the policy is no longer active — required under a separate compliance provision that doesn't reach this fact pattern
5. Comprehensive coverage (Other Than Collision) on a PAP typically covers all of the following EXCEPT:
Fire damage.Theft of the vehicle.Collision with another vehicle.Collision with a deer.
6. An agent declines a homeowners applicant after a CLUE Property report reveals two undisclosed prior water-damage claims. Under the Fair Credit Reporting Act, what must the agent provide to the applicant?
An adverse-action notice identifying the consumer reporting agency, the applicant's right to a free copy of the report within 60 days, and the right to dispute the information.A copy of the agent's underwriting guidelines and rating worksheet — under the older rule that was superseded by the post-2018 model amendmentsNothing — FCRA applies only to credit reports, not CLUE reports — required under the federal preemption framework that yields here to the state-law ruleA GLBA privacy notice describing the categories of nonpublic personal information collected — required if and only if the policy includes a co-insurance penalty endorsement
7. A homeowner deliberately burns down his own house to collect the insurance proceeds. This conduct reflects which type of hazard?
Moral hazard.Catastrophic hazard.Morale hazard.Physical hazard.
8. A binder is best described as:
The permanent policy document that collects every coverage term, condition, and exclusion in one placeA filed endorsement attached to the policy that binds the insured to a specific list of warranties on the formA premium discount applied to insurance policies that cover more than one property location at onceA temporary agreement providing coverage until the formal policy is issued or declined.
9. For property and casualty risks, Nevada's unfair discrimination prohibition bars refusing to insure a person solely because of the person's:
Prior paid claims, credit history, or years of continuous coverageRace, color, creed, religion, national origin, ancestry, or marital statusBusiness occupancy, protection class, or age of the heating systemRoof age, wiring type, distance to a hydrant, or square footage
10. A court awards a plaintiff $80,000 compensatory damages and $320,000 punitive damages. The defendant's standard CGL:
Pays the $80,000 compensatory (subject to limits and exclusions); coverage for the $320,000 punitive is limited or excluded in many jurisdictions and often excluded by the policy as a matter of public policy.Pays neither because liability policies exclude all tort damages — only when the contract was issued before the regulatory amendment described abovePays both in full without question — required under the federal preemption framework that yields here to the state-law rule — applicable to surplus-lines placements, which the scenario explicitly excludesPays only the punitive because punitive is always covered — required if and only if the policy includes a co-insurance penalty endorsement
11. The homeowners Section II medical payments to others coverage (Coverage F) pays medical expenses for injuries to whom?
The named insured and resident family members, as long as the injury occurs at the insured location or while travelingPersons on the insured location with permission, or off the location if caused by the insuredAnyone injured anywhere in the world at the insured's fault, including resident relatives and household employeesOnly invited guests while physically inside the dwelling, and only when the injury arises from a defect in the structure
12. In casualty insurance, 'pure risk' is distinguished from 'speculative risk' because pure risk involves:
The possibility of loss or no loss — no chance of gain.Only losses caused by criminal acts.Only losses within the insured's direct control.The possibility of loss OR gain, such as stock investments.
13. A Nevada homeowners policy is 45 days old when the insurer decides to cancel for a reason in its filed underwriting guidelines. Is the cancellation allowed?
Yes, but only if the insured has filed no claim on the policyNo, because the underwriting period ends after only 30 daysNo, because cancellation requires nonpayment or fraud onlyYes, because the first 70 days are the underwriting period
14. In modern P&C insurance, the primary difference between a WARRANTY and a REPRESENTATION is:
A warranty is oral; a representation is written.A warranty must be absolutely true; a representation need only be substantially true to the best of the insured's knowledge.They are interchangeable terms with no distinction — applicable to surplus-lines placements, which the scenario explicitly excludesA warranty applies to property only; a representation applies to casualty only.
15. A Nevada producer receives a written inquiry from the Division asking for her client file on a disputed transaction, and she never answers it. What is the consequence?
The failure to respond is itself a violation that supports license disciplineThe Division must refer the file to the Attorney General before actingThe inquiry lapses automatically if the producer does not reply on timeNo discipline is possible unless the underlying conduct is first proven
16. Commercial crime policies typically offer coverage on one of two triggers — 'discovery' or 'loss sustained.' The DISCOVERY trigger means:
The policy responds to losses DISCOVERED during the policy period (or ERP), regardless of when the underlying acts occurred.The policy requires a DA's indictment for coverage to apply.The policy responds only to losses discovered by law enforcement.The policy responds to losses sustained during the policy period, regardless of when they are discovered.
17. The CGL's 'damage to your work' exclusion eliminates coverage for:
Damage to all contractors on the job site — applicable to surplus-lines placements, which the scenario explicitly excludesDamage to other people's property caused by the insured's work — required under the federal preemption framework that yields here to the state-law ruleDamage caused by products of other manufacturers — required if and only if the policy includes a co-insurance penalty endorsementDamage to the INSURED's own completed work product when the damage arises out of that work.
18. Which is NOT eligible for a standard BOP?
A small accounting firm occupying 1,500 sq ft — applicable to surplus-lines placements, which the scenario explicitly excludesA dentist's office of 2,000 sq ft — under the older rule that was superseded by the post-2018 model amendmentsA neighborhood hardware store with $800,000 annual receipts — required if and only if the policy includes a co-insurance penalty endorsementAn auto repair garage specializing in engine rebuilds (auto service operation).
19. Under the Gramm-Leach-Bliley Act Financial Privacy Rule, when must an insurance agency first deliver a privacy notice to a new customer, and what key consumer right must the notice describe?
Only if the agency plans to share data with nonaffiliates; no consumer opt-out is required — applicable to commercial scenarios only, not the personal-lines contextWithin 30 days after the first claim is filed; the right to receive a free credit report — applies if the loss is partial; this question describes a constructive total lossAt or before the time the customer relationship is established (policy issuance); the right to opt out of disclosure of nonpublic personal information to nonaffiliated third parties.Only at policy renewal; the right to cancel the policy without penalty, under the broader consumer-protection construction sometimes applied here
20. When an insurer terminates a producer's appointment for cause in Nevada, within what period must the insurer notify the Commissioner?
10 days60 days15 days30 days

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