Free Washington Property & Casualty Insurance License Exam Practice Test

Sample WA 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 has a per-occurrence limit of $500,000 and a general aggregate limit of $1,000,000. If a single claim occurs that exceeds the per-occurrence limit, and subsequent claims arise from the same occurrence, how will the insurer typically respond to these additional claims?

   • A.The insurer will pay up to the general aggregate limit for all claims arising from the same occurrence.(Correct)
   • B.The insurer will deny all subsequent claims as the per-occurrence limit has already been met.
   • C.The insurer will pay the remaining amount of the per-occurrence limit for each subsequent claim until the general aggregate is exhausted.
   • D.The insurer will pay up to the per-occurrence limit for each subsequent claim, provided the general aggregate has not been exhausted.

   Explanation

   The per-occurrence limit applies to damages arising from a single event or cause. If multiple claims stem from that same event, they are all aggregated under that single per-occurrence limit. Once that limit is exhausted, no further payments will be made for that occurrence, even if the general aggregate limit has not been reached. Subsequent claims are not treated as separate occurrences.

2. Question 2Business Owner's Policy (BOP)

   A business owner's policy (BOP) is designed to offer a package of essential coverages for small to medium-sized businesses. Which of the following is a key characteristic that differentiates a BOP from purchasing individual commercial policies?

   • A.It is designed for large corporations with complex risk management needs.
   • B.It combines property and general liability coverage into a single, simplified policy with often reduced premiums.(Correct)
   • C.It offers broader coverage triggers and higher limits than most stand-alone policies.
   • D.It typically includes professional liability and workers' compensation insurance.

   Explanation

   A BOP simplifies insurance for eligible small businesses by bundling essential property and general liability coverages into one policy. This package approach often results in cost savings and streamlined administration compared to purchasing separate policies. Professional liability and workers' compensation are typically excluded and must be added as endorsements or purchased separately.

3. Question 3Commercial Property Insurance

   Under a commercial property policy, the 'sue and labor' clause is included. What is the primary purpose of this clause?

   • A.To cover legal defense costs associated with third-party lawsuits arising from the property damage.
   • B.To reimburse the insured for expenses incurred to minimize or prevent further damage after a loss.(Correct)
   • C.To provide coverage for the cost of temporary relocation while repairs are made.
   • D.To allow the insured to sue the insurer if the claim payment is deemed insufficient.

   Explanation

   The 'sue and labor' clause obligates the insured to take reasonable steps to protect insured property from further damage following a loss. It reimburses the insured for reasonable expenses incurred in these efforts, such as hiring a security guard or boarding up a damaged building, to mitigate the overall loss. It does not cover legal defense or relocation costs.

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