Arizona Property & Casualty Insurance Practice Exam Free - 2026

• A. Nothing; any P&C producer may bind an unauthorized insurer directly
• B. Written approval from the director for each policy
• C. Only a signed disclosure from the insured
• D. Placement through a licensed surplus lines broker after diligent effort to obtain the coverage from authorized insurers

Correct answer: D. Placement through a licensed surplus lines broker after diligent effort to obtain the coverage from authorized insurers

Explanation: Surplus lines coverage must be procured through a surplus lines broker licensed in Arizona and, unless it is a recognized surplus line, only after diligent effort to procure it from authorized insurers, and not to gain a rate or term advantage. See A.R.S. § 20-407.

• A. Deduct compensation costs from employee wages
• B. Sign an unfunded promise to pay claims as they arise
• C. Insure with an authorized workers compensation carrier or qualify as an approved self-insurer
• D. Buy a group disability income policy for employees

Correct answer: C. Insure with an authorized workers compensation carrier or qualify as an approved self-insurer

Explanation: Employers secure compensation either by insuring with an insurance carrier authorized to write workers compensation or by showing the financial ability to self-insure under Industrial Commission oversight (minimum $100,000 deposit); substitutes violate the chapter. See A.R.S. § 23-961.

• A. $15,000 / $30,000 / $10,000
• B. $25,000 / $50,000 / $15,000
• C. $30,000 / $60,000 / $15,000
• D. $50,000 / $100,000 / $25,000

Correct answer: B. $25,000 / $50,000 / $15,000

Explanation: For policies issued or renewed beginning July 1, 2020, Arizona requires at least $25,000 for bodily injury to one person, $50,000 for two or more persons, and $15,000 for property damage in one accident. See A.R.S. § 28-4009.

• A. Yes, for any reason with proper notice
• B. Yes, at any time during the first policy year
• C. No; after 60 days it may cancel only on statutory grounds such as nonpayment, fraud, or license suspension
• D. No; auto policies can never be cancelled midterm

Correct answer: C. No; after 60 days it may cancel only on statutory grounds such as nonpayment, fraud, or license suspension

Explanation: Once an auto policy has been in effect sixty days (or immediately on renewal), cancellation is effective only on enumerated grounds — nonpayment, fraudulent misrepresentation, driver's license suspension or revocation, specified convictions and similar causes — and a not-at-fault claim is not one. See A.R.S. § 20-1631.

• A. A state where the at-fault driver's insurer must pay every party's injury and vehicle losses in full
• B. A state where injured drivers may sue the at-fault party for any amount without any threshold or limit
• C. A state where each driver's own insurance pays all vehicle damage but injury claims are settled by fault
• D. A state where each driver's own insurance pays their injury and related economic losses regardless of fault

Correct answer: D. A state where each driver's own insurance pays their injury and related economic losses regardless of fault

Explanation: In a no-fault state each driver's own policy pays personal injury protection benefits such as medical expenses and lost wages regardless of who caused the accident, which limits lawsuits and speeds payment. In most no-fault states vehicle property damage is still handled on a fault basis or through the owner's own collision coverage; Michigan is an exception, limiting recovery for vehicle damage to a small capped mini-tort claim. No-fault does not mean the at-fault driver's insurer pays everyone's losses in full, it restricts rather than expands the right to sue, and it applies to injury benefits, not to a reversal where vehicle damage is no-fault and injuries are fault-based.

• A. Dwelling, other structures, personal property, loss of use, liability, and medical payments
• B. Dwelling, personal property, collision, comprehensive, liability, and uninsured motorist
• C. Dwelling, other structures, personal property, loss of use, flood, and earthquake
• D. Dwelling, other structures, personal property, loss of use, liability, and workers compensation

Correct answer: A. Dwelling, other structures, personal property, loss of use, liability, and medical payments

Explanation: A standard homeowners policy includes: Coverage A (dwelling), Coverage B (other structures), Coverage C (personal property), Coverage D (loss of use), Coverage E (personal liability), and Coverage F (medical payments).

• A. The home's structure plus any detached buildings on the lot
• B. The structure of your home and attached structures
• C. Your furniture, clothing, and other contents of the home
• D. The land under the home and its landscaping

Correct answer: B. The structure of your home and attached structures

Explanation: Dwelling coverage (Coverage A) protects the physical structure of your home and any structures attached to it, such as an attached garage or deck, against covered perils.

• A. Structures attached to the dwelling like an attached garage or deck
• B. Structures on your property that are rented to others or used for a business
• C. Detached structures on your property like fences, sheds, or detached garages
• D. Personal property stored in outbuildings like sheds or detached garages

Correct answer: C. Detached structures on your property like fences, sheds, or detached garages

Explanation: Other structures coverage (Coverage B) protects structures on your property that are not attached to the dwelling, such as detached garages, fences, storage sheds, and pools.

• A. Your belongings while they are inside the home
• B. Your belongings and any motor vehicles kept at home
• C. Your belongings and the building's fixtures
• D. Your belongings both at home and while traveling

Correct answer: D. Your belongings both at home and while traveling

Explanation: Personal property coverage (Coverage C) protects your personal belongings, including furniture, clothing, and electronics, whether at home or temporarily away from home (like while traveling).

• A. Coverage for additional living expenses if your home is uninhabitable
• B. Coverage for lost business income if your home office is damaged
• C. Coverage for the mortgage payments due while your home is being repaired
• D. Coverage for the loss in market value of your home after a covered loss

Correct answer: A. Coverage for additional living expenses if your home is uninhabitable

Explanation: Loss of use coverage (Coverage D) pays for additional living expenses like hotel stays and restaurant meals if your home becomes uninhabitable due to a covered loss.

• A. The broad form homeowners policy with named-peril coverage for the dwelling and personal property
• B. The most common homeowners policy with open-peril dwelling and named-peril personal property coverage
• C. The comprehensive homeowners policy with open-peril coverage for the dwelling and personal property
• D. The modified coverage homeowners policy with basic named perils and actual cash value settlement

Correct answer: B. The most common homeowners policy with open-peril dwelling and named-peril personal property coverage

Explanation: HO-3 is the most common homeowners policy. It provides open-peril (all-risk) coverage for the dwelling and named-peril coverage for personal property.

• A. A unit-owners policy for condominium owners
• B. A broad form policy for homeowners
• C. A renter's insurance policy for tenants
• D. A policy for older or historic homes

Correct answer: C. A renter's insurance policy for tenants

Explanation: HO-4 is renter's insurance. It covers the tenant's personal property and liability but not the building structure (which is the landlord's responsibility).