15 Most Common P&C Exam Questions (And How to Answer Them)

5/21/2026

Studying for the Property & Casualty insurance licensing exam can feel overwhelming. The test spans dozens of topics — from homeowners coverage to liability exclusions to underwriting principles — and the sheer volume of material trips up many first-time test-takers. One of the most effective ways to prepare is to practice with realistic p&c exam questions that mirror what you'll encounter on test day.

Below, we break down 15 representative exam-style questions across three major topic areas: Property Concepts, Casualty & Liability, and Policy & Coverage. Each includes a detailed explanation of the correct answer, plus test-taking strategies for similar questions on the real exam. Whether you're weeks from sitting for the test or just starting your P&C pre-licensing coursework, these practice questions will sharpen your understanding of the concepts that matter most.

How to use this guide: Try answering each question before reading the explanation. Pay attention to why wrong answers are wrong — the exam often tests your ability to distinguish between similar concepts.

Property Concepts (Questions 1–5)

Property insurance is a cornerstone of the P&C exam. Expect questions on homeowners policies, named perils versus open perils, valuation methods, and coverage extensions.

1. Replacement Cost vs. Actual Cash Value

Question: Which correctly describes the difference between Replacement Cost Value (RCV) and Actual Cash Value (ACV)?

A) RCV pays market price; ACV pays the original purchase price.
B) RCV pays the cost to replace with like kind and quality; ACV deducts depreciation from replacement cost.
C) RCV and ACV are identical but apply to different policy types.
D) ACV always pays more than RCV because it factors in appreciation.

Correct Answer: B — RCV covers full replacement without deducting depreciation. ACV starts with that same figure and subtracts depreciation for age, wear, and condition. Example: a 10-year-old roof destroyed in a storm gets full replacement under RCV, but reduced payment under ACV.

Test-Taking Tip: Watch for distractors that confuse "market value" with "replacement cost." Market value includes land; replacement cost does not.

2. HO-3 Homeowners Coverage Type

Question: An HO-3 homeowners policy provides which type of coverage for the dwelling?

A) Named perils only
B) Open perils for the dwelling; named perils for personal property
C) Open perils for both dwelling and personal property
D) No peril coverage without an endorsement

Correct Answer: B — The HO-3 provides open-perils (all-risk) coverage on the dwelling, meaning any cause of loss is covered unless specifically excluded. Personal property is covered on a named-perils basis only. The HO-5, by contrast, provides open perils for both.

3. The Coinsurance Clause

Question: An 80% coinsurance clause applies. The building's replacement cost is $500,000, but coverage is only $300,000. A fire causes $100,000 in damage. How much does the insurer pay (before deductible)?

A) $100,000 — B) $75,000 — C) $80,000 — D) $60,000

Correct Answer: B — Formula: Amount carried ÷ Amount required × Loss. Here: $300,000 ÷ $400,000 × $100,000 = $75,000. The insured absorbs $25,000 as an underinsurance penalty.

Test-Taking Tip: Memorize this formula. Always multiply property value by the coinsurance percentage first to find the required amount.

4. The Mortgage Clause

Question: What does a standard mortgage clause do?

A) Requires the insured to notify the mortgagee before filing a claim.
B) Protects the mortgagee's insurable interest independently from the named insured's coverage.
C) Allows the mortgage company to cancel the policy.
D) Eliminates the deductible for mortgaged property.

Correct Answer: B — The standard mortgage clause gives the lender independent protection. Even if the insurer denies the homeowner's claim due to fraud, the mortgagee can still collect. This differs from a simple "loss payable clause," which does not provide independent protection.

5. Subrogation in Property Insurance

Question: An insurer pays a $30,000 fire claim and then sues the negligent contractor who caused the fire. This process is:

A) Indemnification — B) Contribution — C) Subrogation — D) Arbitration

Correct Answer: C — Subrogation is the insurer's right to step into the insured's shoes and pursue recovery from the responsible third party. It prevents double recovery and helps control insurance costs.

If these property concepts are challenging, AB Training Center's P&C pre-licensing course covers every major topic with practice exams and detailed explanations.

Casualty & Liability Concepts (Questions 6–10)

Liability questions make up a significant portion of the P&C exam, covering negligence, CGL policies, auto insurance, and workers' compensation.

6. The Four Elements of Negligence

Question: Which correctly lists the four elements of negligence?

A) Duty, breach, proximate cause, damages
B) Duty, intent, causation, injury
C) Liability, fault, breach, loss
D) Duty, breach, comparative fault, punitive damages

Correct Answer: A — All four — duty, breach, proximate cause, damages — must be proven. If any element is missing, the claim fails. Watch for answers that include "intent," which applies to intentional torts, not negligence.

Test-Taking Tip: For scenario questions, mentally check off each element. Missing one? The answer is no negligence.

7. CGL "Occurrence" vs. "Claims-Made" Triggers

Question: Under an occurrence-based CGL policy, when does coverage apply?

A) Only if the claim is filed during the policy period.
B) If the injury or damage occurs during the policy period, regardless of when the claim is filed.
C) Only for claims from products sold during the policy period.
D) Only if the incident is reported within 30 days.

Correct Answer: B — An occurrence-based policy covers injury or damage that happens during the policy period, even if the claim comes years later. A claims-made policy covers claims filed during the policy period.

8. Comparative vs. Contributory Negligence

Question: A jaywalking pedestrian is struck by a speeding driver. In a contributory negligence state, the pedestrian's recovery is:

A) Reduced by their percentage of fault.
B) Barred entirely because they were partially at fault.
C) Unaffected because the driver was speeding.
D) Limited to medical expenses only.

Correct Answer: B — Contributory negligence bars recovery when the plaintiff has any fault. Most states use comparative negligence, which reduces recovery by the plaintiff's fault percentage. Know the difference between pure comparative (recovery even at 99% fault) and modified comparative (barred at 50% or 51% fault).

9. Vicarious Liability

Question: An employee causes an accident during a delivery for their employer. The doctrine holding the employer liable is:

A) Strict liability — B) Vicarious liability (respondeat superior) — C) Contractual liability — D) Joint and several liability

Correct Answer: B — Respondeat superior holds employers liable for employees' negligent acts committed within the scope of employment. Key nuance: if the employee was on a personal errand, vicarious liability typically doesn't apply.

10. Products-Completed Operations Coverage

Question: A plumber finishes a renovation. Two weeks later, a pipe fails, causing $15,000 in water damage. Which CGL coverage part responds?

A) Premises and operations — B) Products-completed operations — C) Personal and advertising injury — D) Medical payments

Correct Answer: B — Products-completed operations covers damage from the insured's work after it's been completed. If the pipe burst while the plumber was still on-site, it would fall under premises and operations.

Test-Taking Tip: Ask: "Was the work done and the insured gone?" If yes → completed operations. If no → premises and operations.

Policy & Coverage Concepts (Questions 11–15)

These questions cover policy structure, exclusions, endorsements, and how coverage applies in practice.

11. What Is an Endorsement?

Question: A policyholder adds earthquake coverage via a written modification attached to their policy. This is:

A) A rider — B) An endorsement — C) A binder — D) A declaration

Correct Answer: B — An endorsement modifies policy terms — adding, removing, or changing coverage. A binder is temporary evidence of coverage; a declaration page summarizes policy details but doesn't modify terms.

12. The "Other Insurance" Clause

Question: Policy A ($100,000 limit) and Policy B ($50,000 limit) both cover the same vehicle. A loss totals $60,000. Under pro-rata "other insurance," each policy pays:

A) A: $60,000; B: $0
B) A: $40,000; B: $20,000
C) A: $30,000; B: $30,000
D) A: $50,000; B: $10,000

Correct Answer: B — Pro-rata divides by each policy's share of total coverage. A: $100K/$150K × $60K = $40,000. B: $50K/$150K × $60K = $20,000.

Test-Taking Tip: Identify the method first (pro-rata, equal shares, or excess) before calculating.

13. Standard Homeowners Exclusions

Question: Which loss is typically EXCLUDED from a standard HO-3?

A) Fire from lightning — B) Gradual water seepage through foundation walls — C) Wind from a thunderstorm — D) Theft from the home

Correct Answer: B — Standard policies exclude gradual conditions like water seepage, settling, and wear and tear. Other key exclusions include flood, earthquake, intentional loss, war, and earth movement. Lightning, wind, and theft are covered perils.

14. Named Insured vs. Additional Insured

Question: A general contractor is added as additional insured on a subcontractor's CGL. What does this provide?

A) A separate policy from the sub's insurer.
B) Coverage under the sub's policy for liability arising from the sub's work.
C) Increased limits on the contractor's own policy.
D) Exemption from all project liability.

Correct Answer: B — An additional insured shares the named insured's policy for claims arising from the named insured's operations. They don't get a separate policy, and coverage only applies to the named insured's work — not the additional insured's own negligence.

15. How Deductibles Work

Question: A homeowners policy has a $2,500 deductible and $300,000 dwelling limit. Hail causes $18,000 in damage. The insurer pays:

A) $18,000 — B) $15,500 — C) $300,000 — D) $2,500

Correct Answer: B — Loss minus deductible: $18,000 − $2,500 = $15,500. The dwelling limit is the maximum payout, not the per-claim amount. Know the difference between flat dollar, percentage, and aggregate deductibles.

Test-Taking Tip: Percentage deductible questions are common traps. A 2% deductible on a $400,000 home = $8,000, not $2,000.

Bottom Line

The P&C insurance licensing exam tests real-world application, not rote memorization. These 15 p&c exam questions represent the reasoning the exam demands across property, casualty, and policy coverage topics.

Keys to passing:

Understand the "why" behind each concept, not just the definition.
Drill the math — coinsurance, pro-rata, and deductible calculations should be automatic.
Eliminate wrong answers first — narrow from four to two, then apply your knowledge.
Study in topic blocks — group sessions by category, just like this guide.

For a full study strategy, read our guide on how to pass your insurance licensing exam on the first try. Also review how hard the P&C exam really is and the study mistakes that guarantee failure. For questions about exam format and state requirements, visit the P&C licensing FAQ.

Ready to Start Your P&C Exam Prep?

Practicing with sample p&c exam questions is a smart first step, but passing requires complete mastery of the material. AB Training Center's Property & Casualty pre-licensing courses cover every topic area with state-approved curriculum, hundreds of practice questions, and self-paced online access.

Preparing for a specific state? Jump to your state's course:

Also considering a Life & Health license? Many agents pursue both to expand their career options. Study on your own schedule and get exam-ready with expert support.

Browse P&C Pre-Licensing Courses →

Frequently Asked Questions

What topics are covered on the P&C insurance exam?

The exam covers general insurance concepts, property insurance (homeowners, dwelling, commercial), casualty and liability insurance (CGL, auto, workers' comp), policy structure (declarations, conditions, exclusions, endorsements), underwriting basics, and state-specific regulations. Property and casualty concepts each make up roughly 30-40% of the exam.

How many questions are on the P&C exam?

Most states have between 100 and 150 questions with a passing score of 70-75%. You'll typically have 2 to 3 hours. Check the P&C licensing FAQ for your state's specifics.

Are these the actual questions from the P&C exam?

No. Actual exam questions are copyrighted. These are representative practice questions designed to cover the same concepts and reasoning. Practicing with them helps identify knowledge gaps and builds comfort with the question format.

What is the best way to study for the P&C exam?

Combine a state-approved pre-licensing course, timed practice exams, and review of incorrect answers. Study consistently — 35 to 60 hours over two to four weeks works for most candidates.

Recommended Course(s)

Property and Casualty Licensing Courses

Enroll