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South Dakota Property Practice Exam

20 exam-style questions drawn from the same bank as our full South Dakota Property course (South Dakota 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. Under SDCL 58-24-6.1, a rate is unfairly discriminatory when it:
Fails to reflect equitably differences in expected lossesProduces an underwriting profit in excess of five percentVaries at all between two different rating territories filedApplies a deductible larger than the insured had requested
2. A general contractor is building a $3M custom home and wants to insure the structure WHILE it is under construction, including materials stored on site and in transit to the job. Which coverage fits?
A builders risk policy on inland marine or commercial property formA contractors equipment floater extended to the partially completed structureA commercial property policy (CP 00 10) in the owner's name with no endorsementAn HO-3 on the homeowner, written at the $3M replacement cost of the finished home
3. A Commercial General Liability (CGL) policy is most commonly issued on which ISO form number?
CA 00 01BP 00 03CP 00 10CG 00 01
4. An insured carries an HO-3 with $200,000 of Coverage A. What is the default Coverage C limit?
$100,000$20,000$60,000$160,000
5. An 'occurrence' is most commonly defined in liability policies as:
Only an intentional act of the insured, which is the textbook definition of an excluded intentional injury rather than an occurrenceAn accident, including continuous or repeated exposure to substantially the same general harmful conditionsA formal written claim served on the insured by the third-party claimant, which is the trigger for a claims-made (not occurrence) formA civil suit filed against the insured in any court of competent jurisdiction, which is the duty-to-defend trigger and not the occurrence definition
6. Under SDCL 58-11-29, may a South Dakota binder be given orally?
No, every binder must be in writing and signed by the insurerNo, unless the director has approved an oral binding procedureYes, but only for commercial property risks and not personal onesYes, a binder may be either oral or written in South Dakota
7. Under SDCL 58-30-145, the South Dakota producer licensing examination must test knowledge of:
The lines applied for, producer duties, and South Dakota lawFederal insurance regulation and interstate commerce principlesNational insurance principles and NAIC model acts exclusivelyThe insurer's own underwriting guidelines and rating manuals
8. Under the Terrorism Risk Insurance Act (TRIA) as currently reauthorized, what is a commercial P&C insurer's obligation to its commercial insureds regarding terrorism coverage?
The insurer must make terrorism coverage available on substantially the same terms as the underlying policy; the insured may accept or reject, and the premium for terrorism coverage must be separately and conspicuously disclosed.The insurer must include terrorism coverage automatically in every commercial policy at no additional premium, and the commercial insured has no right to reject or decline that coverage.The insurer must offer terrorism coverage only to commercial insureds located in designated high-risk cities, with the terrorism premium set by a federal rate schedule rather than the insurer.The insurer is prohibited from offering terrorism coverage on commercial policies, because the federal government pays certified terrorism losses directly to the affected policyholders.
9. Commercial Auto coverage is most commonly issued on which ISO form?
CA 00 01CG 00 01CP 00 10BP 00 03
10. Insurance contracts are 'unilateral.' What does this mean?
Neither party is bound by any promise until a covered loss actually occurs during the policy period.Only the insurer makes an enforceable promise; the insured can stop paying at any time without breaching.Both parties make equally enforceable promises, and either party can be sued for failing to perform.Only the insured makes an enforceable promise; the insurer may refuse to pay any claim it chooses.
11. What is the legal effect of a certificate of insurance?
It amends the policy to match whatever the certificate statesIt evidences coverage and does not alter the policy at allIt makes the certificate holder an insured under the policyIt creates temporary coverage until the policy is issued
12. 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.
13. The Law of Large Numbers states that as the number of similar exposure units increases:
Reserves can be eliminatedThe probability of any one loss decreasesGroup loss experience becomes more predictablePremium per insured falls automatically
14. Section II of a homeowners policy provides coverage for:
Personal property and loss of usePersonal liability and medical payments to othersAdditional living expense and fair rental valueDwelling and other structures
15. Punitive damages are intended to:
Cover the plaintiff's attorney fees that exceed the contingency percentage set in the fee agreement.Punish the defendant for egregious or intentional misconduct and deter similar conduct.Reimburse the plaintiff for future medical costs that are expected to arise from the injury.Compensate the plaintiff for pain and suffering that goes beyond the measurable economic loss.
16. Under the ISO Homeowners form, a dwelling left vacant for more than 60 CONSECUTIVE days before a loss has coverage EXCLUDED for which of the following perils?
Only the peril of theft, with every other vacancy-sensitive peril remaining fully covered under the standard ISO homeowners vacancy provision in forceAll perils whatsoever, the entire policy terminates automatically the instant the dwelling becomes vacant for any extended consecutive periodFire, lightning, and explosion, the core perils every homeowners form excludes once a dwelling crosses the 60-day vacancy thresholdVandalism/malicious mischief, glass breakage, water damage, theft, and a few related perils.
17. Which claim would the South Dakota Property and Casualty Insurance Guaranty Association NOT cover?
A liability claim against an admitted insurer now in liquidationA claim against an insolvent non-admitted surplus lines insurerAn unearned premium claim on a policy of an insolvent memberA workers' compensation claim against an insolvent member insurer
18. Who bears the cost of a South Dakota Division of Insurance examination?
The South Dakota Insurance Guaranty Association fundThe Division, from its general appropriation each yearThe complainant whose complaint prompted the examinationThe person or company being examined by the Division
19. Under a standard ISO HO-3, the special limit for theft of jewelry, watches, and furs is:
$1,000$2,500$5,000$1,500
20. A commercial property insurer denies a claim because the insured waited five months to report a break-in and never produced the requested inventory of stolen items. The peril (theft) is clearly listed as covered. Which part of the policy supplies the insurer's basis for denial?
The exclusionsThe declarations pageThe insuring agreementThe conditions

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