Free Maryland Property & Casualty Insurance License Exam Practice Test

Sample MD 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 policy has a General Aggregate Limit of $2,000,000 and a Products-Completed Operations Aggregate Limit of $1,000,000. During the policy period, the insured incurs $800,000 in claims related to an occurrence during the policy period that happened after the products were completed, and $1,500,000 in claims related to an occurrence during the policy period that happened before products were completed. How much aggregate limit remains available for the Products-Completed Operations Aggregate?

   • A.$300,000
   • B.$500,000
   • C.$1,000,000
   • D.$200,000(Correct)

   Explanation

   The Products-Completed Operations Aggregate Limit is specifically for claims arising out of the insured's products or completed operations. The $800,000 claim falls under this aggregate. Therefore, $1,000,000 (limit) - $800,000 (claim) = $200,000 remaining.

2. Question 2Commercial Property

   An insured's business is damaged by a fire. The Building and Personal Property form of a commercial property policy covers the building at a replacement cost of $500,000 and the business personal property at a replacement cost of $300,000. The policy has a coinsurance clause of 80% and a $10,000 deductible. The insured had an actual cash value (ACV) loss of $100,000 to the building. If the insured carried insurance equal to 80% of the building's replacement cost, how much will the insurer pay for the building loss?

   • A.$100,000
   • B.$70,000
   • C.$90,000(Correct)
   • D.$80,000

   Explanation

   First, calculate the required insurance amount: 80% of $500,000 = $400,000. The insured carried $400,000, which meets the coinsurance requirement. Since the loss is to the building and the policy covers replacement cost for the building, the insurer will pay the ACV loss ($100,000) less the deductible ($10,000), assuming the policy has been settled on an ACV basis due to the nature of the loss or policy conditions. However, if the policy is on a replacement cost basis and the building is repaired or replaced, the payout would be the replacement cost. Given the question states 'actual cash value (ACV) loss,' we subtract the deductible from the ACV loss: $100,000 - $10,000 = $90,000. If the policy was strictly replacement cost and the building was replaced, the payout would be $100,000 (assuming ACV loss is the actual replacement cost). The phrasing implies ACV payout is considered. Thus, $90,000 is the most logical answer considering the ACV loss and deductible.

3. Question 3Business Owners Policy (BOP)

   Which of the following situations would most likely be excluded under a standard Business Owners Policy (BOP)?

   • A.A slip-and-fall accident on the insured's premises resulting in bodily injury to a customer.
   • B.Loss of income due to a business interruption caused by a covered peril.
   • C.Professional errors or omissions leading to a client's financial loss.(Correct)
   • D.Damage to the insured's business property caused by a fire originating from an adjacent building.

   Explanation

   A standard BOP is designed for small to medium-sized businesses and typically excludes coverage for professional liability (errors and omissions), which requires a separate Errors & Omissions (E&O) policy. The other options represent perils or liabilities that are generally covered under a BOP.

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