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Virginia Property & Casualty Practice Exam

20 exam-style questions drawn from the same bank as our full Virginia Property & Casualty course (Virginia Property and Casualty Insurance Agent — 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. An eligible non-admitted (surplus lines) insurer:
Cannot be sued in U.S. courts because the §38.2-4800 surplus-lines carve-out bars direct-action suits under §38.2-1822 producer-licensure-conditioned standing rulesFiles all forms and rates with the home state for prior approval under §38.2-2120 commercial-package filing rules applied to all commercial-package risks in Virginia under §38.2-1903 proceduresCannot pay claims to U.S. policyholders under §38.2-4800 surplus-lines indemnity-payment restriction applied to non-admitted carriers writing commercial-package coverage in VirginiaIs not subject to the same form/rate filing requirements but must meet capital, surplus, and eligibility standards under the Nonadmitted and Reinsurance Reform Act
2. Which DP form covers the dwelling on an open perils basis and personal property on a named perils basis?
DP-2 BroadDP-3 SpecialDP-1 BasicAll three
3. An insurer that has been formally licensed by the Virginia State Corporation Commission's Bureau of Insurance to transact business in Virginia is referred to as:
An admitted (authorized) insurerA nonadmitted insurerA surplus lines insurerA reciprocal exchange
4. An admitted Virginia auto insurer is declared insolvent. A Virginia policyholder has a $400,000 covered claim. What is the maximum the Virginia Property and Casualty Insurance Guaranty Association will pay on the claim, exclusive of unearned premium?
$300,000Unlimited, the Guaranty Association pays the full claim amount$100,000$500,000
5. The Mortgage Clause in an HO-3 provides which of the following protections to the mortgagee?
The mortgagee shares any deductible 50/50 with the insured under the §38.2-2118 mortgagee-cost-sharing provision applied to first-party property losses involving any lender-listed property in the mortgage clauseThe mortgagee may cancel the policy at any time under the §38.2-2114 Bureau-prescribed lender-cancellation authority that gives the mortgagee unilateral termination power independent of the named insured's continued occupancyLoss is payable to the mortgagee even if the named insured's act or neglect would otherwise void coverage, provided the mortgagee meets its obligationsThe mortgagee must rely entirely on the insured's claim filing under the §38.2-2118 standard mortgagee-as-loss-payee rule that subordinates the mortgagee's notice and proof rights to the named insured's claim submission
6. An owner-occupant of a single-family home in Norfolk asks for a DP-3 instead of an HO-3 because his neighbor told him 'DP is cheaper.' What is the producer's best response?
Write the DP-3, coverage is essentially identical and the savings are real on the §38.2-1903 rate filing for owner-occupied risks in Virginia's personal-lines property market for NorfolkRefuse to write either; suggest a Commercial Package Policy because owner-occupied single-family homes in coastal areas trigger §38.2-4805 surplus-lines treatment under VirginiaWrite an HO-3, the DP omits liability and theft by default, narrows personal property coverage, and is generally inappropriate for owner-occupants who qualify for an HOWrite a DP-1 because owner-occupants get broader perils than tenants under the §38.2-2120 Bureau-prescribed perils-schedule applied to all owner-occupied DP-1 risks issued in Virginia
7. An insured obtains a Virginia FAIR Plan policy after multiple voluntary-market declinations. Which statement about coverage is most accurate?
The FAIR Plan automatically includes liability coverage equal to $300,000 under the §38.2-2700 standard residual-market Section II Coverage E personal-liability schedule applied to every Virginia Property Insurance Association policy issued in the residual-market property line in Virginia regardless of voluntary-market loss historyFAIR Plan rates are always lower than the voluntary market under §38.2-2700 statutory rate-cap that pegs Virginia Property Insurance Association rates at 75% of the median voluntary-market filed rate for the corresponding §38.2-1903 residential-property rate-filing classThe FAIR Plan offers only an open-perils HO-3 form, with full §38.2-2700 Section II Coverage E personal-liability protection included automatically on every policy at standard $300,000 limits regardless of insured's prior loss history or voluntary-market declination patternThe FAIR Plan typically offers basic-form (named perils, e.g., fire, lightning, EC, V&MM) and may offer a broader (broad-form) option, but does NOT offer the full breadth of an HO-3 / DP-3 voluntary market product, and does not include liability, that must be obtained separately
8. An insured intentionally overstates the value of items destroyed in a covered fire by 40%. The carrier discovers the inflation during examination under oath. Which policy provision most directly applies?
Subrogation, the carrier collects from the insured later under the §38.2-2118 standard transfer-of-rights provision applied to first-party recoveriesConcealment, Misrepresentation, or Fraud, the entire policy can be void as to the insured who committed the fraudOther Insurance, payment is reduced pro-rata under the §38.2-2204 dual-coverage proration ruleAppraisal, the dispute goes to a neutral umpire and is paid under the standard appraisal clause governing amount-of-loss disputes between the parties
9. Virginia's Motor Vehicle Financial Responsibility Law historically permitted some motorists to register an uninsured vehicle by paying a fee instead of buying liability coverage. As of July 1, 2024, what is the status of that uninsured motor vehicle (UMV) fee?
It was reduced to $250 but only for low-income drivers under the §46.2-706.1 means-tested-UMV-fee schedule applied to Virginia DMV registrationsIt remains $500 and continues to be available to any motorist regardless of insurance status under the §46.2-706.1 grandfathered-UMV-fee ruleIt was eliminated; Virginia now requires every registered motor vehicle to carry liability insuranceIt is now collected only on commercial vehicles under the §46.2-706.1 commercial-only-UMV-fee restriction applied to Virginia commercial-class registrations
10. A Virginia delivery driver contracts a respiratory illness that the Commission determines arose from prolonged occupational exposure to a chemical used at his job. Which provision of the Act provides his benefits?
His health insurance carrier, because WC excludes disease under the §65.2-400 group-health-pays-first rule for occupational-exposure illnesses arising from on-site chemical handling at the employer's job siteThe Virginia Uninsured Employer's Fund only under §65.2-1100, with all employer-sponsored WC coverage suspended for chronic-exposure occupational disease claims arising from on-site chemical handling at the job siteVa. Code §65.2-400 et seq. (occupational disease), covered diseases caused by employment are compensable on the same basis as accidental injuriesVa. Code §65.2-300 (general benefits) only, there is no occupational disease coverage in Virginia, with all chronic-exposure claims rerouted to the worker's separate group health plan under §65.2-300(c)
11. A Virginia accountant is sued by a client who claims a tax error caused $80,000 in IRS penalties. Which specialty policy is designed to respond?
Errors & Omissions (E&O) / Professional LiabilityCommercial General Liability (CGL) coverageDirectors and Officers (D&O) Liability coverageEmployment Practices Liability Insurance (EPLI)
12. A DP-1 Basic Form, with no optional perils added, covers loss to the dwelling caused by which of the following?
Fire, lightning, and internal explosion onlyOpen perils except for the standard exclusionsVandalism and theft, automatically includedFire, lightning, internal explosion, and a long list of broad perils
13. Coverage A on a Dwelling Policy covers:
Loss of rentsThe structure of the dwellingPersonal propertyOther structures detached from the dwelling
14. Maria buys a vacation cottage on Smith Mountain Lake. She rents it on Airbnb most weekends but uses it herself about 6 weeks a year. Her agent recommends a DP policy rather than an HO. The most defensible reason is:
HO forms presume owner-occupancy as a residence; the cottage is primarily held for rental, which falls outside HO eligibilityDP forms are always cheaper than HO forms under the Bureau of Insurance §38.2-1903 rate-filing schedule applied to lakefront propertiesDP policies automatically include flood coverage on lakefront homes under the §38.2-2129 mandatory-flood-endorsement rule for coastal-zone risksVirginia statute prohibits HO forms on properties built before 1990 under §38.2-2120 form-eligibility cutoffs for older residential dwellings
15. A 'peril' is best described as which of the following?
The uncertainty about whether a loss will occurThe reduction in value of property after a lossA direct cause of loss such as fire or windstormA condition that increases the chance of loss
16. Who is covered under PAP Part B?
Pedestrians struck by the covered auto only, under the §38.2-2204 pedestrian-only first-party medpay ruleOnly the named insured under the §38.2-2204 single-insured first-party medpay coverage definitionOnly passengers in the covered auto and only if they are family members residing in the named insured's household under §38.2-2204The named insured and family members while occupying any auto, plus any other person while occupying the covered auto
17. A 'domestic' insurer in Virginia is one that:
Was organized outside the United StatesWrites only personal linesWas organized in another U.S. state but is licensed in VirginiaWas organized under the laws of Virginia
18. Part B Medical Payments coverage of the PAP pays for:
Damage to the insured's own auto under the §38.2-2204 first-party physical-damage settlement scheduleReasonable medical and funeral expenses for the insured and passengers caused by an auto accidentBodily injury to others caused by the insured under the §38.2-2204 third-party liability provisionLost wages of the insured under the §38.2-2206 wage-loss endorsement on every Virginia PAP
19. A detached storage shed on the insured's premises, used by the named insured to store lawn equipment for his own home, is destroyed by a covered peril. Which DP coverage responds first?
Coverage A, the shed is part of the dwellingCoverage D, Fair Rental ValueCoverage B, Other StructuresCoverage C, the shed is treated as personal property
20. A Virginia construction worker is killed in a covered work accident. His employer turns out to have illegally failed to carry workers' compensation insurance. What recourse do the surviving spouse and minor children most likely have under the Act?
None, without coverage, no benefits are payable in Virginia under §65.2-805 carrier-only-payment rule applied to all death and dependency claims arising from any Virginia work-related fatal accident where the employer has failed to comply with the §65.2-803 mandatory-coverage requirement at the date of accidentThey may pursue death/dependency benefits under §65.2-512 from the employer directly AND make a claim against the Virginia Uninsured Employer's Fund under §65.2-1100 et seq., which can pay benefits and pursue recovery from the employerThey are limited to filing a tort lawsuit only under §65.2-310 exclusive-tort-remedy rule applied where the employer has failed to comply with the §65.2-803 mandatory-coverage requirement at the date of accident, with all WC benefits permanently foreclosedThey may collect only burial expenses, capped at $1,000 under §65.2-512 burial-only sub-limit applied to all Virginia uninsured-employer death claims where the employer has failed to comply with the §65.2-803 mandatory-coverage requirement at the date of accident

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