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Sample Practice Questions

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

  1. 1A repair shop stores open containers of solvent near a heater. A fire later damages its inventory. Which fact is the hazard in this loss sequence?

    1. A. The fire that burned the inventory
    2. B. The resulting damage to the inventory
    3. C. The solvent vapors gathering near the heater
    4. D. The uncertainty that any fire would occur

    Answer: C

    Explanation: NAIC defines a hazard as a "circumstance which tends to increase the probability or severity of a loss." Solvent vapors near the heater increase the chance or severity of a fire; the fire is the peril and damaged inventory is the loss.

    Reference: NAIC Glossary of Insurance Terms — Hazard; Peril

  2. 2The insured's listed sedan is being repaired, so the insured borrows a neighbor's sedan for the repair period. Under the described personal auto damage coverage, how is the borrowed sedan classified?

    1. A. As a newly acquired owned automobile
    2. B. As a temporary substitute automobile
    3. C. As a regularly furnished automobile
    4. D. As an auto scheduled by the neighbor

    Answer: B

    Explanation: NC DOI includes "any auto or trailer you do not own while being used as a temporary substitute for your covered auto because of its breakdown, repair, servicing, loss or destruction." Borrowing a nonowned sedan during repair fits that condition; the insured did not acquire ownership or gain regular use.

    Reference: North Carolina Department of Insurance, Basic and Miscellaneous Auto Coverages — Coverage for Damage to Your Auto, non-owned and temporary substitute automobiles

  3. 3An electrical contractor finishes a customer's installation and leaves the site. Weeks later, faulty wiring causes a fire that damages the customer's building. Which CGL hazard does the claim chiefly involve?

    1. A. Products liability
    2. B. Premises operations
    3. C. Completed operations
    4. D. Personal advertising injury

    Answer: C

    Explanation: CDI explains, "Completed operations covers your potential liability for bodily injury or property damage that arises out of your completed work." The installation was complete before the fire; the facts do not center on ongoing work, a sold product, or an advertising offense.

    Reference: California Department of Insurance, Commercial Insurance Guide — Commercial General Liability, Coverage

  4. 4A North Carolina casualty producer is deciding whether an agreement fits the statutory definition of insurance. Which feature is essential under G.S. 58-1-10?

    1. A. The insurer promises money, its equivalent, or an act of value as indemnity or reimbursement for loss to something in which the other party has an interest
    2. B. The insurer promises a fixed investment return without reference to loss or injury
    3. C. The insured promises to reimburse the insurer for every payment made to a third party
    4. D. The parties exchange services without transferring any risk of destruction, loss, or injury

    Answer: A

    Explanation: The agreement has the required risk-and-indemnity character. G.S. 58-1-10 states: "A contract of insurance is an agreement by which the insurer is bound to pay money or its equivalent or to do some act of value to the insured upon, and as an indemnity or reimbursement for the destruction, loss, or injury of something in which the other party has an interest."

    Reference: Ncgs Chapter 58 — G.S. 58-1-10

  5. 5A shop owner knows that a loose floor tile can trip visitors but leaves it unrepaired. A customer trips on it and is injured. Which liability concept describes the owner's failure to use reasonable care?

    1. A. Vicarious liability
    2. B. Contractual liability
    3. C. Strict liability
    4. D. Negligence

    Answer: D

    Explanation: NAIC defines negligence as "failure to exercise reasonable consideration resulting in loss or damage to oneself or others." Leaving a known tripping hazard can meet that description; the facts do not describe liability for another person's act, a contractual promise, or liability without fault.

    Reference: NAIC Glossary of Insurance Terms — Negligence

  6. 6A named insured lends a covered auto to a friend and expressly permits the friend to drive it. The friend negligently injures another driver. How does the described personal auto liability coverage treat the friend?

    1. A. The friend is covered only for damage to the friend's own vehicle.
    2. B. The friend is covered only after the owner is held liable.
    3. C. The friend is covered only for medical expenses paid to others.
    4. D. The friend is an insured for liability arising from that use.

    Answer: D

    Explanation: NC DOI states that the policy covers "any person using your covered automobile with permission" under liability coverage. The friend satisfies that condition, so the friend's liability for the other driver's injury may be covered, subject to policy terms.

    Reference: North Carolina Department of Insurance, Basic and Miscellaneous Auto Coverages — Liability Coverage, persons covered

  7. 7A business has a claims-made liability policy that expires on June 30 with no extended reporting period. A covered injury happened in May, but the injured person first makes a claim in August. Assuming all other terms are satisfied, what follows for the expired claims-made policy?

    1. A. It responds because the injury occurred during its term.
    2. B. It responds because the claimant discovered the loss later.
    3. C. It responds because no suit was filed before expiration.
    4. D. The expired form does not respond because the claim was first made after its reporting window.

    Answer: D

    Explanation: NAIC explains that for a claims-made form, "a policy in effect at the time a claim is reported responds for the loss, while the policy remains in force and during any applicable extended reporting period." With first claim after expiration and no extended reporting period, the expired policy's reporting trigger is unmet. The accident date alone is the occurrence-form logic, not the specified claims-made trigger.

    Reference: NAIC, Medical Malpractice Insurance — Claims-made and occurrence policy forms

  8. 8After a licensed producer violates Chapter 58, the Commissioner elects to impose a civil monetary penalty under G.S. 58-2-70 rather than suspend the license. What range applies to each violation?

    1. A. $50 to $500
    2. B. $100 to $1,000
    3. C. $1,000 to $5,000
    4. D. $5,000 to $10,000

    Answer: B

    Explanation: The permissible range is $100 through $1,000. G.S. 58-2-70(d) provides: "the penalty shall not be less than one hundred dollars ($100.00) nor more than one thousand dollars ($1,000)."

    Reference: Ncgs Chapter 58 — G.S. 58-2-70(d)

  9. 9A covered equipment loss is $3,000. The policy has a $500 deductible, and the insurer pays the rest of this covered loss. After the insured pays the deductible, how much does the insurer pay?

    1. A. $500
    2. B. $2,500
    3. C. $3,000
    4. D. $3,500

    Answer: B

    Explanation: NAIC defines a deductible as the "portion of the insured loss (in dollars) paid by the policy holder." The insured pays $500 of the $3,000 covered loss, leaving $2,500 for the insurer. $500 omits the insurer's share; $3,000 ignores the deductible; $3,500 adds rather than subtracts it.

    Reference: NAIC Glossary of Insurance Terms — Deductible

  10. 10A family member insured under a North Carolina personal auto policy is struck by an insured motorist while walking across a street. Which coverage in the family member's own policy is designed to pay reasonable accident-related medical expenses?

    1. A. Medical Payments coverage
    2. B. Property Damage Liability coverage
    3. C. Damage to Your Auto coverage
    4. D. Underinsured Motorists coverage

    Answer: A

    Explanation: NC DOI lists as covered under Medical Payments "You or any family member while occupying any automobile, or as a pedestrian when struck by a motor vehicle; or". The family member was a pedestrian struck by a motor vehicle; the other coverages address different loss or driver conditions.

    Reference: North Carolina Department of Insurance, Basic and Miscellaneous Auto Coverages — Medical Payments Coverage, covered persons

Topics in this practice bank

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

  • I. TERMS AND CONCEPTS
    • A. Risk
    • B. Hazard
    • C. Peril
    • D. Economic Loss
    • E. Indemnity
    • F. Deductible
    • G. Misrepresentation, breach of warranty, concealment
    • H. Negligence, liability, and supplementary payments
    • I. Bodily injury, property damage, personal injury
    • J. Accident/Occurrence
    • K. Deposit premium/audit
    • L. Liability limits: single, split, aggregate
    • M. Certificate of insurance
    • N. Binder
    • O. Endorsement
    • P. Liberalization clause
    • Q. First named insured
    • R. Monoline vs. package policies
    • S. Major classes of policy provisions
    • S. Major classes of policy provisions / 1. Declarations
    • S. Major classes of policy provisions / 2. Definitions
    • S. Major classes of policy provisions / 3. Insuring agreements
    • S. Major classes of policy provisions / 4. Exclusions/Waiver
    • S. Major classes of policy provisions / 5. Conditions
    • T. Insurance
    • U. Application
    • V. Subrogation
    • W. Adhesion
    • X. Unilateral
    • Y. Consent to Rate
  • II. PERSONAL INSURANCE COVERAGES
    • A. Personal Auto Policy (North Carolina Rate Bureau Form)
    • A. Personal Auto Policy (North Carolina Rate Bureau Form) / 1. General nature and eligibility
    • A. Personal Auto Policy (North Carolina Rate Bureau Form) / 2. Definitions
    • A. Personal Auto Policy (North Carolina Rate Bureau Form) / 2. Definitions / a. Named insured
    • A. Personal Auto Policy (North Carolina Rate Bureau Form) / 2. Definitions / b. An insured
    • A. Personal Auto Policy (North Carolina Rate Bureau Form) / 2. Definitions / c. Covered automobile
    • A. Personal Auto Policy (North Carolina Rate Bureau Form) / 2. Definitions / c. Covered automobile / (1) Non-owned
    • A. Personal Auto Policy (North Carolina Rate Bureau Form) / 2. Definitions / c. Covered automobile / (2) Temporary substitute
    • A. Personal Auto Policy (North Carolina Rate Bureau Form) / 3. Standard coverages, parts A through D (The candidate should have knowledge of the insuring agreement, exclusions and other items of the coverage listed below.)
    • A. Personal Auto Policy (North Carolina Rate Bureau Form) / 3. Standard coverages, parts A through D (The candidate should have knowledge of the insuring agreement, exclusions and other items of the coverage listed below.) / a. Liability
    • A. Personal Auto Policy (North Carolina Rate Bureau Form) / 3. Standard coverages, parts A through D (The candidate should have knowledge of the insuring agreement, exclusions and other items of the coverage listed below.) / b. Medical payments
    • A. Personal Auto Policy (North Carolina Rate Bureau Form) / 3. Standard coverages, parts A through D (The candidate should have knowledge of the insuring agreement, exclusions and other items of the coverage listed below.) / c. Uninsured motorists/underinsured motorists
    • A. Personal Auto Policy (North Carolina Rate Bureau Form) / 3. Standard coverages, parts A through D (The candidate should have knowledge of the insuring agreement, exclusions and other items of the coverage listed below.) / d. Damage to your auto (physical damage)
    • A. Personal Auto Policy (North Carolina Rate Bureau Form) / 3. Standard coverages, parts A through D (The candidate should have knowledge of the insuring agreement, exclusions and other items of the coverage listed below.) / e. Insured’s duties
    • A. Personal Auto Policy (North Carolina Rate Bureau Form) / 3. Standard coverages, parts A through D (The candidate should have knowledge of the insuring agreement, exclusions and other items of the coverage listed below.) / f. General provisions
    • A. Personal Auto Policy (North Carolina Rate Bureau Form) / 3. Standard coverages, parts A through D (The candidate should have knowledge of the insuring agreement, exclusions and other items of the coverage listed below.) / g. Cancelation provision
    • A. Personal Auto Policy (North Carolina Rate Bureau Form) / 3. Standard coverages, parts A through D (The candidate should have knowledge of the insuring agreement, exclusions and other items of the coverage listed below.) / g. Cancelation provision / 1) Pro rata
    • A. Personal Auto Policy (North Carolina Rate Bureau Form) / 3. Standard coverages, parts A through D (The candidate should have knowledge of the insuring agreement, exclusions and other items of the coverage listed below.) / g. Cancelation provision / 2) Short rate
    • A. Personal Auto Policy (North Carolina Rate Bureau Form) / 4. Other coverages available
    • A. Personal Auto Policy (North Carolina Rate Bureau Form) / 4. Other coverages available / a. Towing and labor Ref: NC 03 03
    • A. Personal Auto Policy (North Carolina Rate Bureau Form) / 4. Other coverages available / b. Extended transportation expenses Ref: NC 03 02
    • A. Personal Auto Policy (North Carolina Rate Bureau Form) / 4. Other coverages available / c. Extended non-owned coverage Ref: NC 03 06
    • A. Personal Auto Policy (North Carolina Rate Bureau Form) / 4. Other coverages available / d. Coverage for Damage to Your Auto Ref: NC 03 15
    • B. Personal umbrella liability
    • B. Personal umbrella liability / 1. General nature
    • B. Personal umbrella liability / 2. Underlying coverages
    • B. Personal umbrella liability / 3. Self-Insured retention
    • C. Watercraft/yacht
    • C. Watercraft/yacht / 1. Liability (protection and indemnity) coverage
    • C. Watercraft/yacht / 2. Hull coverage
  • III. COMMERCIAL INSURANCE COVERAGES
    • A. General liability insurance
    • A. General liability insurance / 1. Basic hazards
    • A. General liability insurance / 1. Basic hazards / a. Premises and operations
    • A. General liability insurance / 1. Basic hazards / b. Products and completed operations
    • A. General liability insurance / 2. Commercial general liability forms
    • A. General liability insurance / 2. Commercial general liability forms / a. Common policy conditions
    • A. General liability insurance / 2. Commercial general liability forms / b. Coverage A: bodily injury and property damage liability
    • A. General liability insurance / 2. Commercial general liability forms / b. Coverage A: bodily injury and property damage liability / (1) Occurrence
    • A. General liability insurance / 2. Commercial general liability forms / b. Coverage A: bodily injury and property damage liability / (2) Claims made
    • A. General liability insurance / 2. Commercial general liability forms / c. Coverage B: personal injury and advertising injury
    • A. General liability insurance / 2. Commercial general liability forms / d. Coverage C: medical payments
    • A. General liability insurance / 2. Commercial general liability forms / e. Supplementary payments
    • A. General liability insurance / 2. Commercial general liability forms / f. Who is an insured?
    • A. General liability insurance / 2. Commercial general liability forms / g. Limits
    • A. General liability insurance / 2. Commercial general liability forms / h. Definitions
    • B. Commercial automobile insurance
    • B. Commercial automobile insurance / 1. Business auto coverage form
    • B. Commercial automobile insurance / 1. Business auto coverage form / a. Types of autos
    • B. Commercial automobile insurance / 1. Business auto coverage form / a. Types of autos / (1) Owned
    • B. Commercial automobile insurance / 1. Business auto coverage form / a. Types of autos / (2) Hired
    • B. Commercial automobile insurance / 1. Business auto coverage form / a. Types of autos / (3) Non-owned
    • B. Commercial automobile insurance / 1. Business auto coverage form / b. Standard coverages
    • B. Commercial automobile insurance / 1. Business auto coverage form / b. Standard coverages / (1) Liability
    • B. Commercial automobile insurance / 1. Business auto coverage form / b. Standard coverages / (2) Physical damage
    • B. Commercial automobile insurance / 1. Business auto coverage form / b. Standard coverages / (3) Medical payments
    • B. Commercial automobile insurance / 1. Business auto coverage form / b. Standard coverages / (4) Uninsured motorists/underinsured motorists
    • B. Commercial automobile insurance / 2. Garage liability coverage form and garage- keepers insurance (The candidate needs to understand to general needs of Garage liability.)
    • C. Workers’ Compensation and Employers Liability insurance
    • C. Workers’ Compensation and Employers Liability insurance / 1. Basic coverages provided
    • C. Workers’ Compensation and Employers Liability insurance / 1. Basic coverages provided / a. Insuring agreements
    • C. Workers’ Compensation and Employers Liability insurance / 1. Basic coverages provided / b. Limitations and exclusions
    • C. Workers’ Compensation and Employers Liability insurance / 2. Other states insurance
    • C. Workers’ Compensation and Employers Liability insurance / 3. Insured’s duties if injury occurs
    • C. Workers’ Compensation and Employers Liability insurance / 4. Premium determination
    • C. Workers’ Compensation and Employers Liability insurance / 4. Assigned risk plan
    • C. Workers’ Compensation and Employers Liability insurance / 5. Definitions-Disabilities
    • C. Workers’ Compensation and Employers Liability insurance / 5. Definitions-Disabilities / a. total permanent
    • C. Workers’ Compensation and Employers Liability insurance / 5. Definitions-Disabilities / b. temporary total
    • C. Workers’ Compensation and Employers Liability insurance / 5. Definitions-Disabilities / c. temporary partial
    • C. Workers’ Compensation and Employers Liability insurance / 5. Definitions-Disabilities / d. permanent partial
    • D. Other coverages
    • D. Other coverages / 1. Surety bonds
    • D. Other coverages / 1. Surety bonds / a. Parties to the contract of surety
    • D. Other coverages / 1. Surety bonds / b. Promise of the surety
    • D. Other coverages / 1. Surety bonds / c. Types of surety bonds
    • D. Other coverages / 2. Fidelity Bonds
    • D. Other coverages / 2. Fidelity Bonds / a. Parties
    • D. Other coverages / 2. Fidelity Bonds / b. Types
    • D. Other coverages / 2. Fidelity Bonds / b. Types / (1) Individual Bond
    • D. Other coverages / 2. Fidelity Bonds / b. Types / (2) Name Schedule Bond
    • D. Other coverages / 2. Fidelity Bonds / b. Types / (3) Position Schedule Bond
    • D. Other coverages / 2. Fidelity Bonds / b. Types / (4) Commercial Blanket Bond
    • D. Other coverages / 2. Fidelity Bonds / b. Types / (5) Blanket Position Bond
    • D. Other coverages / 3. Commercial umbrella liability
    • D. Other coverages / 3. Commercial umbrella liability / a. General nature
    • D. Other coverages / 3. Commercial umbrella liability / b. Underlying coverages
    • D. Other coverages / 3. Commercial umbrella liability / c. Self-insured retention
    • E. Crime coverage forms
    • E. Crime coverage forms / 1. Loss Sustained vs. Discovery Form
    • E. Crime coverage forms / 2. Employee Theft
    • E. Crime coverage forms / 3. Forgery or Alteration
    • E. Crime coverage forms / 4. Computer and Funds Transfer Fraud
    • E. Crime coverage forms / 5. Major crime definitions
    • E. Crime coverage forms / 5. Major crime definitions / a. Employee dishonesty
    • E. Crime coverage forms / 5. Major crime definitions / b. Burglary
    • E. Crime coverage forms / 5. Major crime definitions / c. Safe Burglary
    • E. Crime coverage forms / 5. Major crime definitions / d. Robbery
    • E. Crime coverage forms / 5. Major crime definitions / e. Theft
    • F. Package policies
    • F. Package policies / 1. Commercial package policy
    • F. Package policies / 1. Commercial package policy / a. General nature
    • F. Package policies / 1. Commercial package policy / b. Eligibility for package modification
    • F. Package policies / 2. Businessowner’s policy
    • F. Package policies / 2. Businessowner’s policy / a. General nature
    • F. Package policies / 2. Businessowner’s policy / b. Standard and special coverage forms
    • F. Package policies / 2. Businessowner’s policy / c. Optional section I coverages
    • F. Package policies / 2. Businessowner’s policy / d. Liability coverage
  • IV. NORTH CAROLINA STATUTES AND REGULATIONS PERTINENT TO CASUALTY INSURANCE
    • A. Contract of Insurance Ref: Article 1 (G.S. 58-1-10)
    • B. Commissioner of Insurance Ref: Article 2 (G.S. 58-2-5, 40, 50, 60, 65, 69, 70, 75, 155, 160, 161, 162, 163, 180, 185, 195, 200); 11 NCAC, Chapter 19, Section .0103
    • C. General Regulations for Insurance Ref: Article 3 (G.S. 58-3-10, 25, 30, 40, 115, 120, 130, 145)
    • D. Licensing of Agents, Limited Representatives and Adjusters Ref: Article 33 (G.S. 58-33-1, 5, 10, 15, 17, 20, 26, 30, 31, 32, 40, 46, 50, 56, 60, 66, 75, 80, 82, 83, 85, 90, 95, 100, 105, 110, 120, 125, 130, 132, 135); 11 NCAC, Chapter 4, Section .0423
    • E. Insurance Information & Privacy Protection Act Ref: Article 39 (G.S. 58-39-5 through 58-39-120)
    • F. Unauthorized Insurers Ref: Article 28
    • G. Unfair Trade Practices Ref: Article 63 (G.S. 58-63-15, 20, 50)
    • H. False Pretenses and Cheats Ref: Article 19 (G.S. 14-100)
    • I. Continuing Education Ref: 11NCAC, Chapter 6A, Section .0800
    • J. North Carolina Rate Bureau Ref: Article 36 (G.S. 58-36-1, 15, 20, 25, 30, 45, 55, 65, 75)
    • K. North Carolina Motor Vehicle Reinsurance Facility Ref: Article 37 (G.S. 58-37-1,5, 25, 30, 35, 50, 55, 60)
    • L. Post Assessment Insurance Guaranty Association Ref: Article 48 (G.S. 58-48-5, 10, 25, 35)
    • M. Motor Vehicle Liability Policy Defined Ref: (G.S. 20-279.21); 11 NCAC, Chap. 4, Section .0415
    • N. Cancellation or Nonrenewal of Motor Vehicle Policy Ref: (G.S. 20-310)
    • O. Workers’ Compensation Law Ref: Condensed from Chapter 97, General Statutes of North Carolina and produced as a bulletin titled “Information about the North Carolina Workers’ Compensation Act,” published annually by the North Carolina Industrial Commission.
    • P. Consumer Division Ref: II NCAC, Chapter 4, Subsections .0120, .0121, .0122, .0415, .0423, .0429

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