Free Tennessee Property & Casualty Insurance License Exam Practice Test

Sample TN 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 Property - Policy Provisions

   A commercial property policy is written on an occurrence basis. A building is damaged by fire on January 15, 2023. The insured discovers additional damage related to the same fire on March 10, 2023, which was not apparent on January 15. Under the policy's terms, when would the loss be considered to have 'occurred' for the purpose of determining which policy period applies?

   • A.March 10, 2023, when the additional damage was discovered.
   • B.The later of January 15, 2023, or March 10, 2023, depending on the policy's specific language.
   • C.The date the claim is reported to the insurer, regardless of when the damage occurred.
   • D.January 15, 2023, when the fire initially caused damage to the building.(Correct)

   Explanation

   For occurrence-based policies, a loss is considered to have occurred on the date the event causing the damage actually happened, not when the damage is discovered or reported. Therefore, the fire on January 15, 2023, is the date of occurrence.

2. Question 2Commercial General Liability - Choice of Law

   An insurance company is reviewing a large commercial general liability claim involving a product manufactured by one of its policyholders. The product was sold in Tennessee but caused injury to a customer in Arkansas. The lawsuit was filed in Tennessee. Which state's laws will most likely govern the interpretation of the insurance policy's coverage for this claim?

   • A.Arkansas, because that is where the injury occurred.
   • B.Tennessee, because that is where the policyholder is domiciled and the lawsuit was filed.(Correct)
   • C.The state where the insurance company is headquartered, regardless of other factors.
   • D.The state with the most favorable interpretation for the insured, as determined by the court.

   Explanation

   In insurance contract disputes, courts often apply the 'most significant relationship' test. This typically considers the place of contracting, negotiation, subject matter, and the domicile of the parties. Given the policyholder's domicile in Tennessee and the lawsuit's location there, Tennessee law is most likely to govern.

3. Question 3Business Interruption Insurance

   A Tennessee business has a Business Interruption policy that covers 'actual loss sustained' due to a covered peril. A fire damages their main production facility. The business also has a second, smaller facility that was not damaged but is now operating at full capacity to handle the overflow from the damaged facility. The insurer denies coverage for the increased operating expenses at the second facility. Is this denial likely valid?

   • A.No, because the policy covers all losses sustained by the business, regardless of location.
   • B.No, because the increased expenses are a direct result of the covered loss and mitigate further business interruption.(Correct)
   • C.Yes, because the policy specifically excludes expenses incurred at undamaged locations.
   • D.Yes, because the second facility was not directly damaged by the covered peril.

   Explanation

   Business Interruption policies are designed to cover the 'actual loss sustained.' Expenses incurred at an undamaged facility to mitigate the impact of a covered loss (like a fire at the main facility) are generally considered a necessary consequence of the interruption and are often covered as part of the loss.

Want the full exam? Start the free practice test →

Frequently asked questions

Related practice tests

• Series 7
• SIE
• Series 63
• Series 65