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Free New Mexico Casualty Insurance Practice Questions

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Sample Practice Questions

Try these 10 sample questions from the New Mexico Casualty Insurance practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

  1. 1A New Mexico resident applies for a casualty producer license. Who prescribes the individual license application form?

    1. A. The superintendent of insurance
    2. B. The appointing insurer
    3. C. The county clerk
    4. D. The national producer registry

    Answer: A

    Explanation: Section 59A-11-2(A) says the application must be filed on "a form prescribed by the superintendent." The superintendent therefore controls the form.

    Reference: 13.4.2 NMAC — 59A-11-2(A) NMSA 1978

  2. 2An insurer raises an applicant's rate partly because of information in a consumer report. What FCRA step must the insurer take?

    1. A. Send a cancellation notice to the producer
    2. B. Send a claim-settlement notice to the applicant
    3. C. Send an adverse-action notice to the applicant
    4. D. Send a renewal notice to the reporting agency

    Answer: C

    Explanation: "the decision  is based partly or completely on information in a consumer report, Section 615(a) of the FCRA requires you to provide a notice of the adverse action to the consumer." A report need only contribute to the adverse decision to trigger notice to the consumer.

    Reference: FTC, Consumer Reports: What Insurers Need to Know — Adverse Action Notice

  3. 3A shop owner buys liability insurance so that many insureds share the potential cost of a large accidental claim. Which risk-handling method is illustrated?

    1. A. Risk transfer through pooling
    2. B. Risk retention through reserves
    3. C. Risk avoidance through withdrawal
    4. D. Risk reduction through controls

    Answer: A

    Explanation: "Insurance - an economic device transferring risk from an individual to a company and reducing the uncertainty of risk via pooling." The owner shifts the loss exposure to an insurer that pools many risks; the other methods retain, eliminate, or reduce exposure.

    Reference: NAIC Glossary of Insurance Terms — Insurance

  4. 4A liability verdict includes an additional award specifically to deter future misconduct, separate from compensation for the injured party's loss. What type of damages is that additional award?

    1. A. Compensatory damages
    2. B. General damages
    3. C. Special damages
    4. D. Punitive damages

    Answer: D

    Explanation: "Punitive damages, additional penalties and charges assessed against you or your business to deter future bad behavior." Punitive damages serve deterrence; compensatory and its general/special components address loss.

    Reference: NAIC, Small Business Insurance — Liability damages, punitive damages

  5. 5A driver causes a crash that injures another motorist and damages the other motorist's vehicle. Which personal auto coverage addresses the driver's legal liability for those third-party harms?

    1. A. Bodily-injury and property-damage liability
    2. B. Collision and other-than-collision damage
    3. C. Medical payments for the driver's passengers
    4. D. Uninsured-motorist bodily-injury benefits

    Answer: A

    Explanation: "Bodily injury: pays for costs related to another person's injuries when the driver is at fault Property damage: pays for damage done by the driver to another person's property while driving" Liability coverage pays for injury and property damage caused to others by an at-fault driver.

    Reference: NAIC, Auto Insurance Topic — Auto coverage types, bodily injury and property damage

  6. 6A bakery uses a delivery van primarily for customer deliveries and other business operations. Which auto policy form matches the vehicle's principal use?

    1. A. Personal auto policy form
    2. B. Garage business coverage form
    3. C. Motor carrier coverage form
    4. D. Commercial auto coverage form

    Answer: D

    Explanation: "A commercial auto policy provides coverage for vehicles that are used primarily in connection with commercial establishments or business activities." The van's principal business use calls for commercial auto coverage; garage and motor-carrier forms address different business vehicle operations.

    Reference: Insurance Information Institute, Insurance Handbook — Insurance Handbook, Commercial Vehicle Insurance

  7. 7A customer slips in a store and sues the business for her bodily injury. Which commercial general liability coverage category addresses the business's potential liability?

    1. A. Personal-and-advertising injury
    2. B. Auto physical damage
    3. C. Bodily-injury liability
    4. D. Property-damage liability

    Answer: C

    Explanation: "CGL policies cover claims in four basic categories of business liability: • Bodily injury • Property damage" The alleged harm is bodily injury to a third party, one of CGL's basic liability categories.

    Reference: Insurance Information Institute, Insurance Handbook — Insurance Handbook, Commercial General Liability

  8. 8An engineering firm is sued after a faulty design recommendation injures its client. Which specialty liability coverage addresses the alleged failure to perform professional services properly?

    1. A. Professional errors-and-omissions liability
    2. B. Employment-practices liability
    3. C. Directors-and-officers liability
    4. D. Cyber network-protection liability

    Answer: A

    Explanation: "the business’ failure to perform a job properly has injured them. Errors and omissions or professional liability insurance covers these situations." The alleged harm flows from faulty professional advice, the defining errors-and-omissions exposure.

    Reference: Insurance Information Institute, Insurance Handbook — Insurance Handbook, Errors and Omissions Insurance/Professional Liability

  9. 9A New Mexico worker has a compensable workplace injury and needs treatment that is reasonable and necessary to relieve its effects. Which workers' compensation benefit applies?

    1. A. Permanent impairment benefits for the necessary care
    2. B. Vocational rehabilitation benefits for the necessary care
    3. C. Medical benefits for the necessary care
    4. D. Temporary total disability for the necessary care

    Answer: C

    Explanation: "law requires claims adjusters to authorize care that is reasonable and necessary (medical benefits) for relieving the effects of any compensable workplace injury or illness." The WCA guidance's medical benefit addresses reasonable and necessary care for a compensable workplace injury.

    Reference: New Mexico Workers' Compensation Administration, Injured Workers' Workbook — Chapter 4: Medical Care

  10. 10When must a New Mexico individual producer application be signed under oath?

    1. A. Whenever an insurer requests it
    2. B. Only when the prescribed form requires it
    3. C. Only for a nonresident application
    4. D. After the examination is passed

    Answer: B

    Explanation: Section 59A-11-2(A) requires the application to be signed "under oath if required by the form." The form, not the insurer or exam result, triggers the oath.

    Reference: Chapter 59 a Nmsa — 59A-11-2(A) NMSA 1978

Topics in this practice bank

These topics describe the available practice for New Mexico Casualty Insurance. Review the examination outline and its sources for scope and allocation details.

  • Insurance Regulation
    • Licensing
    • Licensing / Process (59A-11-2, 3, 59A-12-12; Reg 13.4.2.8, .9)
    • Licensing / Types of Licensees (Reg 13.4.2.7, .11)
    • Licensing / Types of Licensees (Reg 13.4.2.7, .11) / Insurance Producers (59A-12-2)
    • Licensing / Types of Licensees (Reg 13.4.2.7, .11) / Brokers (59A-12-3)
    • Licensing / Types of Licensees (Reg 13.4.2.7, .11) / Consultants (59A-11A-1-8)
    • Licensing / Types of Licensees (Reg 13.4.2.7, .11) / Nonresident (59A-12-25) (59A-11-24)
    • Licensing / Types of Licensees (Reg 13.4.2.7, .11) / Temporary (59A-11-4; 59A-12-19; Reg 13.4.2.12)
    • Licensing / Maintenance and Duration
    • Licensing / Maintenance and Duration / Expiration and Renewal (59A-11-10, 11)
    • Licensing / Maintenance and Duration / Address Change (59A-12-17) (59A-11-24)
    • Licensing / Maintenance and Duration / Continuing Education (59A-12-26; Reg 13.4.7.9, .12)
    • Licensing / Disciplinary Actions
    • Licensing / Disciplinary Actions / Suspension, Revocation, or Refusal to Renew (59A-11-8, 10, 14–16, 18)
    • Licensing / Disciplinary Actions / Cease and Desist Orders (59A-16-27)
    • Licensing / Disciplinary Actions / Penalties and Fines (59A-1-18, 59A-11- 17, 21)
    • State Regulation
    • State Regulation / Superintendent's General Duties and Powers (59A-2-8-10)
    • State Regulation / Company Regulation
    • State Regulation / Company Regulation / Certificate of Authority (59A-5-10)
    • State Regulation / Company Regulation / Unfair Claims Settlement Practices (59A-16-20)
    • State Regulation / Company Regulation / Complaint Record (59A-16-22)
    • State Regulation / Company Regulation / Appointment of Insurance Producer (59A- 11-12; Reg 13.4.2.17)
    • State Regulation / Company Regulation / Termination of Insurance Producer Appointment (59A-11-13; Reg 13.4.2.29)
    • State Regulation / Insurance Producer Regulation
    • State Regulation / Insurance Producer Regulation / Shared Commissions (59A-12-24)
    • State Regulation / Insurance Producer Regulation / Fiduciary Duties (59A-12-22)
    • State Regulation / Insurance Producer Regulation / Prohibited Premiums or Charges (59A-16- 24)
    • State Regulation / Unfair Insurance Trade Practices
    • State Regulation / Unfair Insurance Trade Practices / Misrepresentation (59A-16-4, 23)
    • State Regulation / Unfair Insurance Trade Practices / False Advertising (59A-16-4, 5)
    • State Regulation / Unfair Insurance Trade Practices / Twisting (59A-16-6)
    • State Regulation / Unfair Insurance Trade Practices / Defamation (59A-16-10)
    • State Regulation / Unfair Insurance Trade Practices / Unfair Discrimination (59A-16, 13, 17(D))
    • State Regulation / Unfair Insurance Trade Practices / Rebating (59A-16-16–18)
    • State Regulation / Unfair Insurance Trade Practices / Boycott, Coercion, or Intimidation (59A- 16-19)
    • State Regulation / Examination of Books and Records (59A-4-3, 4)
    • State Regulation / Insurance Fraud Act (59A-16C-1-16)
    • State Regulation / Consumer Information Privacy (59A-2-9.3; Reg 13.1.3.1-.28)
  • Federal Laws and Regulations
    • Fair Credit Reporting Act
    • 18 United States Code (USC) Sections 1033 and 1034 - Purpose
  • General Insurance Concepts
    • Risk
    • Risk / Methods of Handling Risk (e.g., Avoidance, Retention, Sharing, Reduction, Transfer)
    • Risk / Elements of Insurable Risks
    • Risk / Definitions (e.g., Risk, Hazard, Peril, Loss)
    • Classifications of Insurers
    • Classifications of Insurers / Mutual, Stock
    • Classifications of Insurers / Admitted, Non-Admitted
    • Classifications of Insurers / Foreign, Domestic, Alien
    • Elements of a Contract
    • Elements of a Contract / Consideration
    • Elements of a Contract / Competent Parties
    • Elements of a Contract / Legal Purpose
    • Elements of a Contract / Offer
    • Elements of a Contract / Acceptance
    • Authority and Powers of Producers - Definitions
    • Authority and Powers of Producers - Definitions / Express
    • Authority and Powers of Producers - Definitions / Implied
    • Authority and Powers of Producers - Definitions / Apparent
    • Authority and Powers of Producers - Definitions / The Law of Agency
    • Legal Interpretations Affecting Contracts
    • Legal Interpretations Affecting Contracts / Reasonable Expectations
    • Legal Interpretations Affecting Contracts / Indemnity
    • Legal Interpretations Affecting Contracts / Good Faith
    • Legal Interpretations Affecting Contracts / Fraud
    • Legal Interpretations Affecting Contracts / Warranties, Representations, Misrepresentations, and Concealment
  • Casualty Insurance Basics
    • Damages
    • Damages / Compensatory versus Punitive
    • Damages / General versus Special
    • Liability
    • Liability / Absolute
    • Liability / Strict
    • Liability / Vicarious
    • Underwriting (Purpose, Process, Results)
    • Types of Hazards
    • Types of Hazards / Moral
    • Types of Hazards / Morale
    • Types of Hazards / Physical
    • Negligence
    • Negligence / Torts
    • Negligence / Elements of a Negligent Act
    • Negligence / Defense Against Negligence
    • Accident versus Occurrence
    • Policy Structure
    • Policy Structure / Declarations
    • Policy Structure / Definitions
    • Policy Structure / Insuring Agreement
    • Policy Structure / Additional/Supplementary Coverage
    • Policy Structure / Conditions
    • Policy Structure / Exclusions
    • Policy Structure / Endorsements
    • Policy Clauses
    • Policy Clauses / Insureds
    • Policy Clauses / Policy Period
    • Policy Clauses / Policy Territory
    • Policy Clauses / Cancellation and Non-Renewal
    • Policy Clauses / Deductibles/Self-Insured Retention
    • Policy Clauses / Other Insurance
    • Policy Clauses / Other Insurance / Nonconcurrency
    • Policy Clauses / Other Insurance / Primary and Excess
    • Policy Clauses / Other Insurance / Pro Rata
    • Policy Clauses / Other Insurance / Contribution by Equal Shares
    • Limits of Liability
    • Limits of Liability / Per Accident
    • Limits of Liability / Per Occurrence
    • Limits of Liability / Per Person
    • Limits of Liability / Aggregate
    • Limits of Liability / Split limits
    • Limits of Liability / Combined Single Limit
    • Named Insured Provisions
    • Named Insured Provisions / First Named Insured versus Other Insureds
    • Named Insured Provisions / Duties After Loss
    • Named Insured Provisions / Assignment
    • Named Insured Provisions / Waiver of Rights
    • Insurer Provisions
    • Insurer Provisions / Liberalization
    • Insurer Provisions / Subrogation
    • Insurer Provisions / Claim Settlement Options
    • Insurer Provisions / Duty to Defend
    • Insurer Provisions / Arbitration
  • Personal Automobile Policy
    • Definitions
    • Liability Coverage
    • Liability Coverage / Bodily Injury and Property Damage
    • Liability Coverage / Supplementary Payments
    • Liability Coverage / Exclusions
    • Liability Coverage / Liability Extension to Towed Vehicle
    • Medical Payments Coverage
    • Uninsured and Underinsured Motorists Coverage
    • Uninsured and Underinsured Motorists Coverage / Definitions
    • Uninsured and Underinsured Motorists Coverage / Bodily Injury
    • Uninsured and Underinsured Motorists Coverage / UM and UIM Rejection
    • Coverage for Damage to your Automobile
    • Coverage for Damage to your Automobile / Collision
    • Coverage for Damage to your Automobile / Other than Collision (Comprehensive)
    • Coverage for Damage to your Automobile / Deductibles
    • Coverage for Damage to your Automobile / Exclusions
    • Duties after an Accident or Loss
    • General Provisions
    • Endorsements
    • Endorsements / Towing and Labor Costs
    • Endorsements / Extended Non-Owned Coverage - Vehicles Furnished or Available for Regular Use
    • Endorsements / Joint Ownership Coverage
    • Endorsements / Rental Vehicle Coverage
  • Commercial Automobile Policy
    • Commercial Automobile Coverage Forms
    • Covered Automobiles
    • Covered Automobiles / Hired Automobiles
    • Covered Automobiles / Non-owned Automobiles
    • Liability
    • Physical Damage
    • Exclusions
    • Conditions
    • Definitions
    • Selected Endorsements
    • Selected Endorsements / Lessor - Additional Insured and Loss Payee
    • Selected Endorsements / Mobile Equipment
  • Commercial General Liability
    • Commercial Policy Components
    • Commercial Policy Components / Declarations
    • Commercial Policy Components / Conditions
    • Commercial Policy Components / Interline Endorsements
    • Commercial General Liability Coverages
    • Commercial General Liability Coverages / Bodily Injury and Property Damage
    • Commercial General Liability Coverages / Personal and Advertising Injury
    • Commercial General Liability Coverages / Medical Payments
    • Commercial General Liability Coverages / Conditions
    • Commercial General Liability Coverages / Definitions
    • Commercial General Liability Coverages / Exclusions
    • Occurrence versus Claims-made
    • Occurrence versus Claims-made / Trigger
    • Occurrence versus Claims-made / Retroactive Date
    • Commercial General Liability Exposures
    • Commercial General Liability Exposures / Premises and Operations
    • Commercial General Liability Exposures / Products and Completed Operations
    • Commercial General Liability Exposures / Contractual Liability
  • Other Types of Casualty Insurance
    • Specialty Liability Insurance
    • Specialty Liability Insurance / Directors and Officers
    • Specialty Liability Insurance / Professional and Errors and Omissions
    • Specialty Liability Insurance / Employment Practices
    • Specialty Liability Insurance / Employee Benefits
    • Specialty Liability Insurance / Cyber Liability and Network Protection
    • Personal Umbrella, Commercial Umbrella, and Excess Policies
    • Personal Umbrella, Commercial Umbrella, and Excess Policies / Underlying Limits
    • Personal Umbrella, Commercial Umbrella, and Excess Policies / Self-Insured Retention
    • Surety Contracts
    • Surety Contracts / Differences between Surety and Insurance
    • Surety Contracts / Obligation of the Surety
    • Surety Contracts / Parties to the Surety Bond
    • Surety Contracts / Parties to the Surety Bond / Principal
    • Surety Contracts / Parties to the Surety Bond / Obligee
    • Surety Contracts / Parties to the Surety Bond / Surety
  • Workers' Compensation Laws
    • Workers' Compensation Coverages and Benefits
    • Rating and Job Classification
    • Workers' Compensation Definitions
    • Workers' Compensation Definitions / Occupational Accident versus Occupational Disease and Illness
    • Workers' Compensation Definitions / Levels of Disability
    • Federal Laws

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These are independent study questions, not actual examination items. For examination requirements and official information, view New Mexico Casualty Insurance details.