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South Carolina Property & Casualty Practice Exam

20 exam-style questions drawn from the same bank as our full South Carolina Property & Casualty course (South Carolina Property, Casualty, Surety and Marine Insurance Producer — 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. A commercial building has a replacement cost of $500,000 at the time of loss. The policy carries an 80% coinsurance clause, a policy limit of $300,000, and a $1,000 deductible. A covered fire causes $100,000 of damage. How much does the insurer pay?
$100,000$75,000$99,000$74,000
2. 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.
3. Under South Carolina's personal lines rating article, a rate change of what size may take effect without prior approval?
Any amount, because personal lines rates are use-and-file in this stateUp to 10 percent, with notice to the Consumer Advocate requiredUp to 7 percent, subject to two increases in any twelve-month periodUp to 5 percent, and only once in any twelve-month period
4. Which statement correctly compares the DP-1 Basic Form and the DP-3 Special Form?
Both cover the same named perils on the dwelling, but the DP-3 adds built-in personal liability and medical paymentsThe DP-1 is open-peril with ACV settlement; the DP-3 is a named-peril form with replacement cost settlement on the dwellingDP-1 is a narrow named-peril form settling dwelling losses on ACV; DP-3 is open-peril and pays replacement cost on the dwellingBoth are open-peril on the dwelling, but the DP-1 settles losses on ACV while the DP-3 pays replacement cost
5. An insured's HO-3 has an 'ordinance or law' exclusion. What type of loss does this exclusion apply to?
Theft 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 resultDamage from a lawful demolition ordered before any covered loss occurs, plus debris removalThe added cost to rebuild to meet current building codes after a covered loss
6. On a commercial auto quote, the underwriter raises the premium because of the MVR (motor vehicle report) for the business's principal driver. What notice must be given to comply with FCRA?
No notice is required, because an MVR is a public driving record and not a consumer report, so FCRA rules do not apply to it.A copy of the underwriter's rating worksheet showing the surcharge, delivered only if the driver submits a written request for it.A GLBA privacy notice describing the information collected and the driver's right to opt out of sharing with affiliated companies.Adverse-action notice identifying the reporting agency and informing the consumer of the right to a free report and to dispute inaccuracies.
7. An investigation determines the named insured deliberately set fire to her dwelling. A $210,000 mortgage balance is outstanding and the policy contains a standard (union) mortgage clause. The dwelling coverage limit is $250,000. How should the insurer handle the claim?
Pay the mortgagee up to the loan balance of $210,000 and deny the insured; the insurer may then pursue subrogation against the insured.Pay the full $250,000 dwelling limit to the mortgagee, then refund the insured's premium for the remaining policy term.Deny the entire claim, because the insured's intentional act voids coverage for every party with an interest in the dwelling.Pay the insured the full $250,000 and leave the mortgagee to recover its $210,000 balance from the insured directly.
8. The declarations page of a property policy contains all of the following EXCEPT:
Named insured and mailing address.List of covered perils with detailed coverage triggers.Policy period (effective and expiration dates).Premium and policy limits for each coverage.
9. Which perils are automatically included in the DP-1 Basic Form WITHOUT adding the Extended Coverage (EC) endorsement?
Fire, lightning, and theftFire, lightning, and internal explosionAll risk of direct physical loss except what is excludedFire, lightning, windstorm, and hail
10. A manufacturer of defective kitchen knives is held liable for injuries regardless of whether the plaintiff can prove negligence or intent. This liability theory is called:
Vicarious liability.Contributory negligence.Strict liability.Comparative negligence.
11. A Commercial Package Policy (CPP) combines what, at minimum, under one policy number?
Any two personal-lines policies issued to the same named insured, such as a homeowners and personal-auto combination under one accountAuto and workers' compensation only, packaged together because both lines are commonly written on the same renewal cycle for fleet accountsExactly one commercial line, typically commercial property only, combined with the matching set of state-mandated forms and endorsementsTwo or more commercial coverage parts (e.g., property + CGL, property + crime, etc.) under common declarations and conditions
12. A producer issues an oral binder for homeowners insurance. Which statement is true?
Oral binders are never enforceable; coverage begins only when the written policy is delivered to the insured and the first premium has been paid.Oral binders are enforceable only if the insured signs a notarized acknowledgment within 10 days and the insurer countersigns the binder before any loss occurs.An oral binder is a temporary contract of insurance that is enforceable for a limited period (often 30–90 days) until the policy is issued or declined.Oral binders extend coverage indefinitely until the insurer gives written notice of cancellation, and the terms are whatever the agent and applicant discussed.
13. What are South Carolina's compulsory auto liability minimum limits?
$30,000 / $60,000 / $25,000$25,000 / $50,000 / $25,000$15,000 / $30,000 / $10,000$20,000 / $40,000 / $15,000
14. Unlike insurance, if a surety pays a claim on a bond, the surety has the right to:
Cancel the bond retroactively and recover the premium previously paid by the obligee.Raise the bond premium at renewal, but not seek any reimbursement of the loss paid.Seek INDEMNIFICATION (reimbursement) from the principal, who has signed an indemnity agreement.Subrogate against the obligee for any portion of the loss that the obligee caused.
15. Which homeowners form covers a tenant's personal property and liability but does NOT cover the structure of the dwelling itself?
HO-4HO-8HO-6HO-3
16. A thief picks the lock on a warehouse door at night and takes inventory without any signs of forcible entry. Under typical commercial crime policy definitions, is this BURGLARY?
No, burglary requires VISIBLE signs of forcible entry or exit.Yes, burglary is defined as any theft committed at night.Yes, any unlawful taking from a building is burglary.No, burglary requires a direct confrontation with a person.
17. An 'Extended Reporting Period' (ERP) on a claims-made CGL:
Extends coverage for an additional year after expiration for both new wrongful acts and claims arising from acts that occurred during the policy period, at no additional premium.Moves the retroactive date back to the start of the insured's business, so claims for wrongful acts at any prior time are covered once reported during the policy period.Allows claims to be REPORTED after policy expiration for wrongful acts that occurred during or prior to the policy period (after the retro date); does NOT extend coverage for new wrongful acts.Allows the insured to report claims after policy expiration only for wrongful acts that occur after expiration, while claims from acts during the policy period must be reported before it ends.
18. During a covered windstorm, a tree falls and breaks a window. Rain then enters through the broken window and ruins interior carpet. The insurer pays for the carpet damage under the wind peril. This reflects which doctrine?
The doctrine of concurrent causation (any cause).The proximate cause doctrine (first efficient cause).The doctrine of utmost good faith (uberrimae fidei).The strict liability doctrine (absolute liability).
19. A sworn statement detailing the facts and amount of a loss that the insured submits to the insurer, typically within 60 days of request, is called:
A proof of loss.A certificate of insurance.A binder.A subrogation release.
20. A manufacturer's CGL declarations show: Each Occurrence $1M, General Aggregate $2M, Products–Completed Operations Aggregate $2M, Personal and Advertising Injury $1M, Medical Expense $10,000. Earlier in the policy year the insured paid $1.5M in premises-related claims and $1.8M in product-recall bodily injury claims. A new slip-and-fall on the premises results in a $400,000 settlement. How much of that $400,000 does the CGL pay?
$200,000, the general aggregate and products aggregate share capacity proportionally.$400,000, the claim is under the $1M each-occurrence limit and under the $500,000 of general aggregate that remains, so it is paid in full.$0, both the general aggregate and products–completed operations aggregate have been considered and the general aggregate is exhausted at $1.5M plus this loss.$500,000, the entire remaining general aggregate is paid out on this claim even though the settlement is smaller.

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