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Tennessee Casualty Practice Exam

20 exam-style questions drawn from the same bank as our full Tennessee Casualty course (Tennessee Insurance Producer - 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. A PERFORMANCE bond guarantees:
The contractor against its own losses on the project.That the bidder will sign the contract if it is awarded.Payment of all subcontractors and material suppliers.Completion of a contract project according to contract terms.
2. In casualty insurance, 'pure risk' is distinguished from 'speculative risk' because pure risk involves:
Only losses within the insured's direct control.Only losses caused by criminal acts.The possibility of loss or no loss, no chance of gain.The possibility of loss OR gain, such as stock investments.
3. During a TDCI market conduct examination an agency owner refuses to give the examiners access to her claim and complaint files. What is the consequence?
Nothing, because access to agency records is voluntary in TennesseeThe refusal is a separate violation that may result in license actionThe refusal shifts the cost of the examination onto the state insteadThe examination simply ends and the file closes without any findings
4. What age must Tennessee's regular operators exceed to earn the accident prevention course premium reduction?
Sixty-fiveFifty-fiveFiftyForty-five
5. The coverage territory of a typical personal umbrella is BEST described as:
Worldwide (a genuine advantage over the underlying HO and PAP, which are more geographically limited).The United States, its territories, and Canada, but only while the insured is operating a covered auto.Limited to the United States and its territories, the same as the underlying homeowners policy.Limited to the insured's state of residence and any state where the insured owns real property.
6. A customer at a hardware store is struck on the head by a falling display sign and is treated at the ER. He sends the $1,800 bill to the store and signs no release. The store wants the bill paid without a lawsuit being filed. Which CGL coverage applies?
Coverage C, Medical Payments, paid without regard to fault up to the sub-limitCoverage A, Bodily Injury, after a determination of legal liabilityCoverage B, Personal and Advertising InjuryCoverage D, Supplementary Payments only
7. Special damages and general damages differ in that:
Special damages are punitive in nature and intended to punish the defendant, while general damages are compensatory in nature and intended to make the plaintiff wholeSpecial damages are paid only by the insurer under the liability coverage part, while general damages are paid by the insured personally with no carrier indemnitySpecial damages are easily calculated (medical bills, lost wages, repair costs); general damages are intangible (pain and suffering, emotional distress, loss of consortium)There is no recognized distinction between the two categories in modern tort practice, an inaccurate framing that contradicts the standard plead-and-prove rules in every jurisdiction in the United States today
8. A business is rated for auto insurance based largely on:
The business's annual gross receipts and the number of employees on its payroll.The owner's personal credit score and the total value of the business's real property.The age of the business and the claims history of its general liability policy.Number and classification of vehicles and drivers, territory of operation, and use.
9. The insured drives a friend's car with the friend's permission for a grocery run. She causes an accident and injures a third party. The friend's PAP has 50/100/25 liability; the insured's own PAP has 250/500/100 liability. Damages to the third party are $140,000. How does coverage typically coordinate?
The insured's PAP is primary because she was driving, and the friend's PAP is excess, responding only after the insured's $250,000 limit is exhausted.The owner's PAP (the friend's) is primary up to its limits; the insured's PAP is excess over that, responding up to its own limits.Only the friend's PAP responds, paying its $50,000 limit; the insured's own PAP never covers her while driving a car she does not own, so she owes the rest.The two policies share the loss pro rata by limits, so the insured's PAP pays most of the $140,000 because its limits are five times higher.
10. Under strict liability (e.g., abnormally dangerous activities like blasting, or product liability), what does the plaintiff NOT need to prove?
That the activity or product caused the harm.The extent of the plaintiff's damages.That the defendant was negligent, i.e., breached a duty of care.That the defendant engaged in the activity or sold the product.
11. Which of the following is typically required by a personal umbrella policy as an 'underlying limit'?
Any auto policy that meets the state minimum financial-responsibility limits, with no homeowners or watercraft liability requirement at all.Proof that the insured has purchased the same limit of coverage from a second umbrella carrier, which then shares losses pro rata with it.Only a homeowners policy with at least $100K personal liability; auto liability is never required beneath a personal umbrella policy.Specified minimum limits on auto liability, personal liability (HO), and sometimes watercraft/RV, often 250/500/100 for auto and $300K for HO.
12. An 'Extended Reporting Period' (ERP) on a claims-made CGL:
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.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.
13. The CGL Coverage C, Medical Payments, pays without regard to fault for bodily injury suffered by:
Tenants of the insured occupying space at the named insured location, who are typically excluded from CGL Coverage C medical payments coverageEmployees of the insured injured while at work on the named insured's premises, an exposure that workers' compensation Part One actually addressesThird-party visitors injured on premises owned/rented by the insured (excluding employees and the insured's household)Members of the named insured's own household, who are expressly excluded under the CGL no-fault medical payments coverage provided to third parties
14. An insurer uses a credit-based insurance score to DENY coverage to an applicant. Under FCRA, the insurer must:
Refund any application fee and provide the applicant with a copy of the insurer's underwriting guidelines and rating worksheet.Provide an adverse-action notice identifying the consumer reporting agency and the applicant's right to a free report and dispute process.Provide a GLBA privacy notice describing the information collected and the applicant's right to opt out of sharing it with affiliates.Nothing beyond a verbal explanation, because a credit-based insurance score is a proprietary insurer tool and not subject to any notice requirement.
15. A Tennessee insured carries 100/300 UM. The at-fault driver carries 25/50 liability. Is that driver's vehicle uninsured?
No, unless the at-fault insurer denies the claim or becomes insolventYes, the available limits are less than the insured's own UM limitsNo, the driver carried at least the state minimum liability limitsYes, but only for property damage and not for bodily injury claims
16. The PAP typically excludes use of the insured vehicle:
As a public or livery conveyance (carrying persons or property for a fee), with a narrow exception for ride-sharing arrangements not covered by the policy.By any family member under age 25 who is not specifically listed as a driver on the declarations page, even when that person has the named insured's permission.Outside the state where the auto is principally garaged, unless the named insured notifies the insurer in writing before the trip begins and pays an additional premium.For any business purpose at all, including commuting to work, since personal auto coverage applies only while the auto is used for recreation and household errands.
17. A roofing contractor installs shingles improperly. Two years later the shingles begin leaking, water damages the homeowner's drywall and a leather sofa, and the homeowner sues for $18,000. The CGL 'your work' exclusion under Coverage A applies to which portion of the loss?
Nothing, the policy expired before the leak appeared and the late-manifestation rule shifts liability entirely to the current homeowner's HO policyThe entire loss, because faulty workmanship is excluded in full under the absolute-workmanship-bar rule applied to all contractor CGL formsOnly the cost to tear off and replace the defective shingles themselves, damage to the drywall and sofa remains coveredOnly the sofa, because personal property is excluded from the contractor's own-work carveout under the standard CGL exclusion l language
18. 'Hired autos' under the BAP means:
Autos the named insured owns outright and lends to its employees for business useAny auto that happens to be used at a job site the insured has been hired to work onAutos the named insured leases, hires, rents, or borrows, except from employees or their familiesAutos owned by the insured's competitors that are parked at the insured's premises
19. Punitive damages are most often:
Always covered by liability policies under the standard CGL Coverage A occurrence form regardless of state law, an overbroad reading that ignores state public-policy barsAvailable only as a remedy against insurers themselves rather than against any other defendant, an inversion of how punitive damages actually function under tort lawIdentical in nature to ordinary compensatory damages and intended to make the plaintiff whole, a position contrary to the punish-and-deter purpose of punitive damagesExcluded by liability policies in many states (or barred by public policy in some jurisdictions), to prevent insurance from undermining their deterrent purpose
20. Which cost is NOT within the standard supplementary payments provision?
The cost of bonds to release attachments within the limitAttorneys' fees taxed against the insured in the suitCourt costs taxed against the insured in the suitReasonable expenses the insured incurs at the insurer's request

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