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Washington Property & Casualty Practice Exam

20 exam-style questions drawn from the same bank as our full Washington Property & Casualty course (Washington Insurance Producer — Property and 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. An annual policy with an $1,800 premium is cancelled by the INSURED at the six-month mark. The short-rate cancellation table (used when the insured initiates) returns 50% of the unearned premium minus a penalty. Approximately how much premium refund does the insured receive, compared to a pro-rata refund?
Short-rate refund is zero; insureds forfeit all unearned premium.Short-rate refund is HIGHER than pro-rata because the insurer absorbs setup costs.Short-rate refund is LOWER than pro-rata because of the insurer's penalty/retention.Short-rate refund is EQUAL to pro-rata; the term is just another name.
2. Which of the following is NOT a standard peril on the DP-1 Basic Form?
FireLightningInternal explosionWindstorm
3. An insured has a $600,000 Coverage A limit on an HO-3 with an earthquake endorsement carrying a 15% deductible. A quake damages the home at 9:00 a.m. Tuesday, and a significant aftershock causes additional damage at 7:00 p.m. Wednesday. How will deductibles and occurrences be handled?
Two separate occurrences, each subject to its own $90,000 deductibleOne occurrence with a single $90,000 deductible under the 72-hour clauseTwo occurrences, but only the first-quake deductible appliesOne occurrence with a single $9,000 deductible (1.5% of Coverage A)
4. A Businessowners Policy (BOP) combines property and liability into one policy. BOP eligibility is generally restricted to:
Large manufacturers with more than $50M in annual revenue, multiple production lines, and significant product-liability exposureAny business regardless of size, classification, or industry, including national chains and Fortune 500 commercial accountsSmall-to-medium businesses meeting the insurer's BOP eligibility rules (class, size, receipts)Heavy industrial operations such as refineries, foundries, chemical processing plants, and primary metal manufacturing facilities
5. Which of these is within the definition of 'limited line credit insurance' in RCW 48.17.010?
A homeowners policy written on an owner-occupied dwellingAn inland marine floater scheduling a customer's jewelleryAutomobile dealer gap insurance sold with a vehicle loanA personal umbrella policy sitting over auto and homeowners
6. On Monday a client buys a house in a non-mandatory flood zone and asks you to bind a new NFIP policy that day because a tropical storm is forecast to make landfall on Friday. The purchase is NOT tied to a mortgage closing. When will coverage be effective?
One day after application, because the property is newly mapped30 days after the application and presentment of premiumAt 12:01 a.m. the day after the application is signedImmediately, because flood coverage binds at application
7. A CGL uses PAYROLL and GROSS SALES as exposure bases. This means the premium will likely be:
Paid in full at policy inception with absolutely no end-of-term adjustment regardless of actual payroll or sales during the period, which contradicts the auditable nature of CGL exposure basesFixed at the deposit amount regardless of any change in actual business activity during the annual policy term, a non-auditable structure not used on a CGL with payroll-and-sales ratingCalculated only from the named insured's prior-year tax return data with no further adjustment after policy expiration, a one-time historical method not used in the standard CGL audit processAdjusted at audit based on actual payroll and sales during the policy period, with additional billing or return premium as applicable.
8. How often must a Washington resident producer renew his or her license?
Every three years on January 1Biennially by the producer's birth monthEvery five yearsAnnually on the anniversary of original issue
9. Which of the following would typically be written on a dwelling policy (DP) rather than a homeowners policy?
A condominium unit the insured lives in year-roundAn owner-occupied single-family home in good repairA tenant's personal property in a leased apartmentA rental house owned by the insured and occupied by tenants
10. 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
11. Commercial crime policies typically offer coverage on one of two triggers, 'discovery' or 'loss sustained.' The DISCOVERY trigger means:
The policy responds to losses sustained during the policy period, regardless of when they are discovered.The policy requires a DA's indictment for coverage to apply.The policy responds only to losses discovered by law enforcement.The policy responds to losses DISCOVERED during the policy period (or ERP), regardless of when the underlying acts occurred.
12. In January, a homeowner sells a rental house to a new buyer but does not cancel her existing homeowners policy on the property. In March, while the policy is still technically in force, a fire destroys the house. The buyer failed to arrange his own coverage. Can the former owner collect under her policy?
Yes, she paid the premium and the policy was in force on the date of the loss, so the insurer must pay her claim in full.No, a property policy automatically terminates the moment the property is sold, so there was no policy in force on the date of loss.No, in property insurance, insurable interest must exist at the time of loss, and she no longer had a financial stake in the house.Yes, in property insurance insurable interest only has to exist at policy inception, and she owned the house when the policy was written.
13. 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.
14. The law of large numbers is the basis for which insurance practice?
Paying claims in the order received until the year's premium runs outUnderwriting each risk individually without regard to past loss dataSetting all rates by state statute regardless of the insurer's lossesRate-setting and loss prediction based on large pools of similar risks
15. Under the NFIP Standard Flood Insurance Policy Dwelling Form (Regular Program), what are the maximum coverage limits available for a residential building and its contents?
$500,000 building / $500,000 contents$250,000 building / $250,000 contents$250,000 building / $100,000 contents$100,000 building / $100,000 contents
16. A building is insured for $400,000 with a 90% coinsurance clause. The replacement cost is $500,000. The insured suffers a $50,000 covered loss (no deductible). How much will the insurer pay?
$44,444$50,000$45,000$40,000
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 subrogation clause.The appraisal clause.The arbitration clause.
18. A homeowner deliberately burns down his own house to collect the insurance proceeds. This conduct reflects which type of hazard?
Moral hazard.Morale hazard.Catastrophic hazard.Physical hazard.
19. An art collector insures a painting under an 'agreed value' endorsement for $50,000. The painting is stolen. The insurer's appraiser later values the painting at $35,000 in the market. How much does the policy pay, before deductible?
The lesser of agreed value or market value ($35,000).The agreed value less the appraiser's depreciation adjustment.$50,000, the agreed value, regardless of later appraisal.$35,000, the appraised market value.
20. A commercial auto applicant states on the application that 'No driver has had a DUI in the last five years.' One driver had a DUI 3 years ago. The insurer discovers this after a major loss. The insurer's likely remedy is based on:
Breach of warranty, which applies only to statements of future conduct and never to statements of past facts.Waiver, because the insurer accepted the premium and therefore gave up its right to contest the application.Concealment, because the insured remained silent about a fact that the application never actually asked about.Material misrepresentation, if the false statement was material to the risk, the insurer may rescind coverage back to inception.

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