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South Carolina Property Practice Exam

20 exam-style questions drawn from the same bank as our full South Carolina Property course (South Carolina Insurance Producer - Property - 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. On a P&C application, false statements made by the applicant generally:
Eliminate the per-occurrence deductible stated on the declarations page as a statutory remedyHave no impact on the coverage issued, regardless of whether the misstatement is materialMay allow the insurer to rescind the policy if the misstatement is materialAlways result in a larger claim payment at the time of loss, because the insurer is estopped
2. Under a Business Income Coverage Form (CP 00 30), the period of restoration begins:
Immediately after direct physical loss occurs (subject to any waiting period)When the insured submits a sworn proof of loss to the carrier under the BPPOn the policy inception date stated on the declarations page (CP DS 00)72 hours after direct physical loss under the Extended Period option only
3. An insurance policy is described as a 'contract of adhesion' because:
It can never be modified by either party once it has been issued, even by a written endorsementIt attaches to the structure of the insured residence as a recorded encumbrance, like a mechanic's lienBoth the carrier and the applicant jointly draft the policy language at the time coverage is boundIt is drafted by the insurer and presented to the applicant on a take-it-or-leave-it basis
4. A South Carolina dwelling is totally destroyed by WINDSTORM. Does the valued policy law in 38-75-20 require payment of the full amount of insurance?
Yes, but only where the dwelling sits inside the coastal area defined in 38-75-310No; the section applies to no peril at all unless a replacement rider has been attachedYes; a total loss by any covered peril triggers payment of the stated amount of insuranceNo; the section is a fire insurance provision and does not by its terms reach windstorm
5. Which of the following is NOT among the standard HO-3 dwelling exclusions?
Earth movementVehicle damage caused by a non-residentFloodNuclear hazard
6. Pure risk is distinguished from speculative risk in that pure risk:
Always involves three possible outcomes, including the chance of gainCannot be insured under any standard policy, because it cannot be predictedInvolves only the chance of loss or no loss, with no opportunity for gainAlways involves a chance of financial gain, which suits an indemnity contract
7. A 1920s Craftsman-style house has ornate plaster moldings and solid oak trim. After a fire, the insurer offers to pay to rebuild using modern drywall and stained MDF trim that serves the same function. This settlement method is called:
Actual cash value.Market value.Replacement cost.Functional replacement cost.
8. Under an NFIP Dwelling Form, basement contents coverage is:
Covered up to the full Coverage C limit, with no restriction on the type of itemExcluded entirely, because the dwelling forms never cover contents of any kindCovered only on an actual cash value basis after a $1,000 special deductibleLimited to certain appliances and items (washer, dryer, freezer, food, portable AC)
9. An insured's HO-3 has an 'ordinance or law' exclusion. What type of loss does this exclusion apply to?
Damage from a lawful demolition ordered before any covered loss occurs, plus debris removalTheft committed by a municipal employee during a code-enforcement inspection of the homeCivil authority orders to evacuate ahead of a hurricane, plus the living expenses that resultThe added cost to rebuild to meet current building codes after a covered loss
10. An insured's home is damaged by a negligent contractor. The insurer pays the $40,000 repair under the homeowners policy and then sues the contractor to recover what it paid. What doctrine allows this?
SubrogationEstoppelAssignmentAbandonment
11. After a total fire loss, an insured receives a check marked 'payable to John Smith and First National Bank.' This is an example of what claims-handling concept?
Subrogation against the mortgage lender after payment.Pro rata apportionment between two separate insurers.Abandonment of the damaged property to the insurer.Loss-payable (two-name) check / joint-payee settlement.
12. A 'pro rata' other insurance clause provides that when two or more policies cover the same loss, each insurer pays:
The full amount of the loss, with no apportionment between the carriersNothing until the other carrier's policy has been exhausted to its limitExactly half of the deductible shown on each policy's declarations pageAn amount in proportion to its limit relative to total coverage
13. Under a replacement cost policy for a dwelling, an insured has a $20,000 loss. The insurer initially pays how much, and under what condition will the depreciation holdback be released?
ACV initially; the depreciation holdback is released once the insured files a sworn proof of loss, whether or not repairs are made.ACV initially; the depreciation holdback is released once the insured actually repairs or replaces the damaged property.Full replacement cost immediately on proof of loss; no conditions apply and no holdback is withheld by the insurer.Nothing is paid until repairs are fully complete and inspected; the insurer then pays replacement cost in a single payment.
14. Under a DP-1 Basic Form, how are losses settled by default?
Replacement cost with no coinsuranceAgreed valueActual cash valueReplacement cost subject to 80% coinsurance
15. A HO-3 insuring agreement uses 'open perils' wording for Coverage A (dwelling). This means:
All direct physical losses to the dwelling are covered UNLESS specifically excluded.Only the perils specifically named in the policy or declarations page are covered.Every conceivable loss to the dwelling is covered, with no exclusions of any kind.The insured may select which perils apply to the dwelling at each policy renewal.
16. Vicarious liability holds one party legally responsible for another's actions, most commonly when:
A stranger is injured by an unknown third party with no employment, agency, or other legal relationship connecting them to the insuredAn insured commits arson against the insured's own covered property to trigger a fraudulent fire-loss claim under the homeowners policyAn employer is held liable for an employee's negligent acts within the scope of employmentA motorist runs a red light and personally causes a collision, which is direct first-person negligence rather than vicarious responsibility
17. The insurer and insured disagree on the AMOUNT of loss but not on whether the loss is covered. Which policy provision provides a mechanism for resolving the dispute short of litigation?
The abandonment clause.The arbitration clause.The appraisal clause.The subrogation clause.
18. A homeowner adds the 'Personal Injury' endorsement (HO 24 82) to their HO-3. This endorsement broadens Coverage E to include damages for:
Libel, slander, defamation, false arrest, malicious prosecution, and wrongful evictionProperty damage to the insured's own house and contents, paid in addition to the Coverage A limitBodily injury to resident family members of the household, including the insured's spouse and childrenCar accidents the insured causes while driving a personal auto, including injury to others
19. Actual cash value (ACV) is most commonly defined as:
Replacement cost without depreciationReplacement cost minus depreciationMarket value at the time of saleOriginal purchase price plus inflation
20. A producer hands every office visitor a branded pen worth about $3. How does South Carolina's rebating rule treat this?
It is permitted only if the producer reports each novelty to the SCDOI yearlyIt is rebating, unless the insurer lists the novelty as a benefit in the policyIt is permitted, because small advertising novelties of nominal value are exceptedIt is rebating, because any item of value given to a prospect is banned

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