District of Columbia Property & Casualty Insurance Practice Exam Free - 2026

• A. Any ground stated in the policy, with 10 days' notice
• B. Nonpayment of premium; a material and willful misstatement or omission in an application or claim; or transfer of the property or a material change in insurability
• C. Nonpayment of premium or two claims within three years
• D. Any underwriting reason, provided the Commissioner approves the cancellation in advance

Correct answer: B. Nonpayment of premium; a material and willful misstatement or omission in an application or claim; or transfer of the property or a material change in insurability

Explanation: For policies other than automobile policies, no cancellation is effective unless the insured has refused or failed to pay a premium, has made a material and willful misstatement or omission of fact in an application or claim, or the property or interest has been transferred or materially changed in insurability; the insurer must also give 30 days' notice with reasons and a copy to the Commissioner. A and D describe no District rule, and C confuses the homeowners nonrenewal claims-frequency standard with the cancellation grounds. See 26-A DCMR § 300.

• A. Yes; any claim in the preceding three years justifies nonrenewal
• B. Yes, provided the insurer gives 45 days' notice
• C. No; homeowners policies in the District may never be nonrenewed for claims history
• D. No; nonrenewal solely for claim frequency requires two or more claims in the preceding three years, and a first weather claim and an unpaid inquiry may not be counted

Correct answer: D. No; nonrenewal solely for claim frequency requires two or more claims in the preceding three years, and a first weather claim and an unpaid inquiry may not be counted

Explanation: An insurer may not refuse to renew a homeowners policy solely due to claim or loss frequency unless there have been two or more claims during the preceding three-year period, and it may not count the first weather-caused claim (absent evidence of failure to maintain), inquiries on which nothing was paid, losses with no claim activity, or catastrophe losses. A misstates the threshold, B invents a notice cure, and C is wrong because nonrenewal is allowed once the standard is met and the insurer has given the required claims-history notice. See 26-A DCMR § 5000.

• A. A one-year term; up to $1,500,000 at one location
• B. A three-year term; up to $250,000 at one location
• C. A one-year term; up to $500,000 at one location
• D. A six-month term; up to $1,000,000 at one location

Correct answer: A. A one-year term; up to $1,500,000 at one location

Explanation: All Facility policies are written for Basic Property Insurance or Homeowners Insurance on standard forms for a term of one year, continued year to year on a continuation application, and the Facility writes up to the reasonable insurable value subject to a maximum of $1,500,000 on all interests at one location, with the Board able to set sub-limits. The terms and dollar caps in B, C, and D are not those in the Facility's regulations. See 26-A DCMR § 1315.

• A. $400,000 on the loss and $600 of unearned premium
• B. Not more than $300,000 on the loss, and unearned premium only to the extent it exceeds $100, up to $10,000 per policy
• C. $100,000 on the loss and nothing for unearned premium
• D. $300,000 on the loss and the full $600, provided the claim is filed within 3 years

Correct answer: B. Not more than $300,000 on the loss, and unearned premium only to the extent it exceeds $100, up to $10,000 per policy

Explanation: The Association pays the full amount of covered workers' compensation claims, not more than $10,000 per policy for return of unearned premium (and only the amount exceeding $100), and not more than $300,000 per claimant for all other covered claims, never more than the insolvent insurer's own obligation; claims filed after the earlier of the liquidator's bar date or 18 months after the liquidation order are not covered. A ignores the caps, C uses the wrong limit, and D misstates both the premium deductible and the filing cutoff. See D.C. Code § 31-5505.

• A. Special damages
• B. Punitive damages
• C. Property damages
• D. General damages

Correct answer: D. General damages

Explanation: Compensatory damages divide into special damages - measurable economic losses such as medical bills and lost wages - and general damages, which compensate non-economic harm such as pain and suffering, disfigurement, and loss of consortium. Punitive damages are different altogether: they punish egregious conduct rather than compensate, and some states do not allow them to be insured.

• A. $40,000
• B. $60,000
• C. Nothing
• D. $100,000

Correct answer: C. Nothing

Explanation: Under a 51% bar, a plaintiff recovers only if her share of fault does not exceed 50% - at 60% she recovers nothing. Had she been 40% at fault she would have recovered $60,000, her damages reduced by her own percentage. In a pure comparative negligence state, a 60%-at-fault plaintiff would still recover $40,000.

• A. A defense that the plaintiff's own carelessness contributed to the injury
• B. A defense that too much time has passed for the plaintiff to file the lawsuit
• C. A defense that the plaintiff knowingly accepted the risks of an activity
• D. A defense that the defendant's act was not the proximate cause of the injury

Correct answer: C. A defense that the plaintiff knowingly accepted the risks of an activity

Explanation: Assumption of risk is a defense arguing the plaintiff cannot recover because they voluntarily exposed themselves to a known danger. It can be express (signed waiver) or implied (participating in risky activities).

• A. Fines and penalties imposed by the state in a criminal prosecution of the defendant
• B. Court costs and attorney fees awarded to the prevailing party at the end of the lawsuit
• C. Compensatory damages that reimburse the plaintiff's medical bills, lost wages, and repairs
• D. Damages awarded to punish the defendant for egregious conduct, not just compensate the plaintiff

Correct answer: D. Damages awarded to punish the defendant for egregious conduct, not just compensate the plaintiff

Explanation: Punitive damages are awarded on top of compensatory damages to punish particularly egregious, willful, or malicious conduct and to deter similar behavior. Compensatory damages reimburse the claimant's actual loss, criminal penalties are imposed by the state rather than awarded to a plaintiff, and court costs and attorney fees are litigation expenses rather than a punishment. Whether punitive damages can be insured is governed by each state's public policy, so it varies from state to state.

• A. The time period within which a legal action must be filed
• B. The time period the insurer has to accept or deny a submitted claim
• C. The maximum number of years a liability policy can remain in force
• D. The time after a loss within which the insured must notify the insurer

Correct answer: A. The time period within which a legal action must be filed

Explanation: The statute of limitations sets the maximum time after an event within which a lawsuit can be filed. This varies by state and type of claim, affecting how long potential liability exposure exists.

• A. From any licensed private insurer
• B. From the state's own workers compensation fund
• C. From the federal government
• D. From its industry trade association

Correct answer: B. From the state's own workers compensation fund

Explanation: Most states let employers buy workers compensation from private insurers or qualify to self-insure. A few monopolistic states - North Dakota, Ohio, Washington, and Wyoming - require coverage to be bought from an exclusive state fund. Because those funds generally do not include employer's liability coverage, employers there often add 'stop gap' liability coverage to another policy.

• A. The employer may purchase workers' compensation only from the state fund, not from private insurers
• B. An injured employee may collect benefits only from the employer's policy, not from a negligent third party
• C. Workers' compensation is the only remedy for workplace injuries, barring lawsuits against employers
• D. An injured employee must choose between workers' compensation benefits and a negligence lawsuit against the employer

Correct answer: C. Workers' compensation is the only remedy for workplace injuries, barring lawsuits against employers

Explanation: The exclusive remedy doctrine means workers' compensation is typically the only remedy for employees injured on the job, generally preventing them from suing their employer for negligence.

• A. A factor adjusting premiums based on the number of years the employer has been in business
• B. A plan adjusting the final premium after the policy period based on losses during that same period
• C. A credit applied to the premium when the employer adopts a formal workplace safety program
• D. A factor adjusting premiums based on an employer's actual loss history compared to expected losses

Correct answer: D. A factor adjusting premiums based on an employer's actual loss history compared to expected losses

Explanation: Experience modification (mod) compares an employer's actual losses to expected losses for their industry. A mod above 1.0 increases premiums; below 1.0 decreases them, incentivizing workplace safety.