Free casualty insurance practice questions

These are the casualty questions from our free sample: liability policies, auto and workers compensation, casualty terms, and the provisions that decide how a liability claim is handled. The answer and the full explanation are shown on each one.

Casualty carries the largest single block of scored questions on the examination, so it repays attention out of proportion to how much of a study guide it usually occupies.

1. A customer is injured by a faulty appliance three months after buying it. Which commercial general liability exposure does this involve?

• A. Premises and operations liability
• B. Products and completed operations
• C. Personal and advertising injury
• D. Fire legal liability coverage

Answer: B. Products and completed operations covers injury arising away from the insured's premises from a product no longer in the insured's possession or from work already finished. Premises and operations concerns injury on the premises or from ongoing work, personal and advertising injury covers offenses such as libel, and fire legal liability concerns damage to rented premises.

2. Coverage A of a commercial general liability policy insures which of the following?

• A. Medical costs for the insured's own employees
• B. The insured's damaged business property
• C. Bodily injury and property damage liability
• D. Libel and slander committed by the insured

Answer: C. Coverage A responds to sums the insured becomes legally obligated to pay as damages for bodily injury or property damage. Employee injury is covered by workers compensation, the insured's own property needs a property policy, and libel or slander falls under Coverage B personal and advertising injury.

3. Under personal auto physical damage, which loss is covered by other than collision rather than collision?

• A. Striking a guard rail
• B. Colliding with another vehicle
• C. A hailstorm denting the roof
• D. Rolling the vehicle on a bend

Answer: C. Other than collision, often called comprehensive, covers perils such as hail, fire, theft, glass breakage and animal strikes. Hitting a guard rail, colliding with another vehicle and overturning are all collision losses regardless of fault.

4. Which two coverages form the core of a Business Owners Policy?

• A. Workers compensation and employers liability
• B. Property and general liability
• C. Professional liability and cyber
• D. Surety and fidelity bonds

Answer: B. A Business Owners Policy packages commercial property and general liability into one contract for eligible small and medium businesses. Workers compensation is written separately, and professional liability, cyber and bonds are added by endorsement or separate policy where needed.

5. Which four elements must a claimant establish to prove negligence?

• A. Offer, acceptance, consideration and legal purpose
• B. Duty, breach, proximate cause and actual damages
• C. Notice, proof of loss, appraisal and subrogation
• D. Intent, motive, opportunity and the outcome

Answer: B. Negligence requires a legal duty, a breach of it, a causal connection between the breach and the harm, and damages the claimant actually suffered. The first option lists contract elements, the third lists policy conditions, and the fourth describes criminal rather than tort analysis.

6. What is a certificate of insurance?

• A. A contract creating coverage for the holder
• B. An endorsement amending the terms of the policy
• C. A sworn statement of the amount of the loss
• D. Evidence for a third party that a policy exists

Answer: D. A certificate summarises coverage for someone with an interest, such as a landlord or a general contractor. It is evidence only: it does not itself create coverage, does not amend the policy the way an endorsement does, and is not a proof of loss.

7. Which relationship most clearly creates an insurable interest in property?

• A. Admiring a neighbor's well-kept house
• B. Holding a mortgage secured on the building
• C. Having once worked in the building
• D. Living on the same street as the owner

Answer: B. Insurable interest arises where a person would suffer genuine financial loss if the property were damaged, and a mortgagee plainly would. Admiration, past employment and proximity create no financial stake and therefore no insurable interest.

8. Under a commercial liability form, when is an employee of the named insured an insured?

• A. At all times, on duty or off
• B. For acts within the scope of their employment
• C. Only if the employee is named on the declarations
• D. Never, employees having workers compensation instead

Answer: B. Commercial forms give employees insured status for acts within the scope of employment or duties related to the conduct of the business, which is why an employee driving on company business is covered. Coverage is not around the clock, does not require naming each employee, and workers compensation addresses the employee's own injury rather than their liability to others.

9. Why does a policy require prompt notice of a claim?

• A. To allow the insurer to raise the premium at once
• B. To pass the claim to the state guaranty association
• C. To let the insurer investigate while evidence lasts
• D. To mark the beginning of the policy period

Answer: C. Prompt notice lets the insurer investigate, preserve evidence, interview witnesses and control defense costs while the facts are fresh. Notice does not trigger a rate change, does not transfer the claim elsewhere, and has nothing to do with when coverage begins.

10. How does a limitation differ from an exclusion?

• A. A limitation applies only to liability coverage forms
• B. An exclusion removes cover, a limitation caps it
• C. They are wholly interchangeable terms
• D. A limitation can only be added by endorsement

Answer: B. An exclusion takes an exposure out of the policy altogether, while a limitation leaves coverage in place but caps the amount or narrows the circumstances, such as an internal limit on jewelry theft. Limitations appear in property and liability forms alike, are distinct from exclusions, and are often in the base form.

Casualty and liability provisions together carry more scored questions than any other pair of domains. What the exam actually tests gives the published count for each one, and the full practice sample runs ten questions across all eight domains with the answers withheld until you submit.