Free Arizona Property & Casualty Insurance License Exam Practice Test

Sample AZ P&C practice questions

Try a few representative questions below. Each includes the correct answer and a short explanation — the same style you'll see in the full practice test.

1. Question 1Commercial General Liability

   A commercial general liability (CGL) policy with an aggregate limit of $2,000,000 and a per-occurrence limit of $1,000,000 has paid out $900,000 for a single occurrence. How much of the aggregate limit remains available for future claims?

   • A.$2,000,000
   • B.$1,100,000(Correct)
   • C.$100,000
   • D.$1,000,000

   Explanation

   The per-occurrence limit limits the payout for any single event. The aggregate limit is the total maximum payout for all covered occurrences during the policy period. After paying $900,000 for one occurrence, $1,100,000 remains available from the $2,000,000 aggregate limit, as the per-occurrence limit of $1,000,000 has not been reached.

2. Question 2Commercial Property Insurance

   An Arizona business owner has a commercial property policy covering their building. The policy has a replacement cost valuation and a 90% coinsurance clause. The building's replacement cost is $800,000, and it has a current market value of $700,000. If a loss of $100,000 occurs, and the policy has an $800,000 limit, how much will the policy pay for this loss, assuming no deductible?

   • A.$88,888.89
   • B.$80,000
   • C.$90,000
   • D.$100,000(Correct)

   Explanation

   The coinsurance clause requires the insured to carry insurance equal to at least 90% of the replacement cost. The required insurance is 0.90 * $800,000 = $720,000. Since the policy limit of $800,000 exceeds the required amount, the policy will pay the actual loss amount of $100,000, assuming no deductible applies.

3. Question 3Arizona Insurance Law

   Under Arizona law, what is the primary purpose of the Unfair Claims Settlement Practices Act?

   • A.To regulate the rates that insurance companies can charge for policies.
   • B.To protect policyholders from unfair or deceptive claims handling by insurers.(Correct)
   • C.To mandate specific coverage levels for all property and casualty policies.
   • D.To establish minimum financial reserve requirements for insurers.

   Explanation

   The Unfair Claims Settlement Practices Act specifically addresses how insurance companies must handle claims. Its core objective is to ensure that policyholders are treated fairly and are not subjected to deceptive or unreasonable claim denial or settlement practices.

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