Iowa Property & Casualty Insurance Practice Exam Free - 2026

• A. The Iowa automobile insurance plan, which also writes dwelling fire
• B. The Iowa FAIR plan, which provides basic property insurance such as standard fire and extended coverage, vandalism, and homeowners, but not automobile or inland marine insurance
• C. The Iowa Insurance Guaranty Association, which writes coverage when insurers decline a risk
• D. A state-funded residual pool operated as an agency of the Insurance Division

Correct answer: B. The Iowa FAIR plan, which provides basic property insurance such as standard fire and extended coverage, vandalism, and homeowners, but not automobile or inland marine insurance

Explanation: Iowa Code sections 515F.31 through 515F.36 establish the FAIR plan to assure fair access to insurance requirements, whose purpose is to make basic property insurance available to qualified applicants. Section 515F.32 defines basic property insurance as coverage under the standard fire policy and extended coverage, vandalism and malicious mischief endorsements, homeowners insurance, and other classes the commissioner adds, expressly excluding automobile and inland marine insurance. All licensed property insurers must be members (515F.34), and the plan is not a state agency and receives no general fund money (515F.35). The auto plan handles auto risks, and the guaranty association pays claims of insolvent insurers rather than writing new business. See Iowa Code § 515F.32.

• A. Rates must be approved by the FAIR plan governing committee
• B. Rates must be identical to those of the advisory organization
• C. Rates shall not be excessive, inadequate, or unfairly discriminatory
• D. Rates must produce a loss ratio of at least 50 percent

Correct answer: C. Rates shall not be excessive, inadequate, or unfairly discriminatory

Explanation: Iowa Code section 515F.4(1) states that rates shall not be excessive, inadequate, or unfairly discriminatory. Section 515F.4(3) adds that risks may be classified, but a classification may not be based on race, creed, national origin, or religion, and 515F.5(1)(a) requires insurers to file every manual, rate, and rating plan with the commissioner. The FAIR plan committee does not approve insurer rates, insurers need not copy advisory organizations, and the 50 percent loss ratio in 515F.4A applies only to credit personal property insurance. See Iowa Code § 515F.4.

• A. No; all domestic employees are exempt from Iowa workers' compensation
• B. No; only employers with three or more employees must insure
• C. No; workers' compensation coverage is optional for household employers
• D. Yes; a domestic employee who earned $1,500 or more from the employer in the prior 12 months is covered, and section 87.1 requires the employer to insure that liability

Correct answer: D. Yes; a domestic employee who earned $1,500 or more from the employer in the prior 12 months is covered, and section 87.1 requires the employer to insure that liability

Explanation: Iowa Code section 85.1(1) excludes household employees only if they earned less than one thousand five hundred dollars from that employer during the twelve months before the injury or are regular members of the household; a housekeeper earning $12,000 is covered. Section 87.1(1) then requires every employer subject to chapter 85 to insure its liability with an insurer approved by the commissioner unless relieved (for example, as an approved self-insurer), and an uninsured employer becomes liable under the common law as modified by statute (87.1(3)). Iowa has no three-employee threshold, and coverage is not optional for covered employment. See Iowa Code § 85.1.

• A. The suit is barred; workers' compensation is the exclusive remedy against the employer and co-employees, except a co-employee whose gross negligence amounts to wanton neglect
• B. The worker may sue the employer for any negligence in addition to receiving benefits
• C. The worker may sue only if damages exceed $10,000
• D. The worker may sue the employer after benefits are exhausted

Correct answer: A. The suit is barred; workers' compensation is the exclusive remedy against the employer and co-employees, except a co-employee whose gross negligence amounts to wanton neglect

Explanation: Iowa Code section 85.20 makes the rights and remedies under chapters 85, 85A, and 85B the exclusive and only remedies of the employee and dependents against the employer, and against any other employee of the employer, for an injury arising out of and in the course of employment, unless the co-employee's conduct was gross negligence amounting to wanton neglect for the safety of another. Ordinary negligence by the supervisor does not open the door to a tort suit against the employer, and no dollar threshold or exhaustion rule exists. See Iowa Code § 85.20.

• A. Personal inland marine coverage
• B. Homeowners liability coverage
• C. A life insurance rider
• D. Commercial auto coverage

Correct answer: D. Commercial auto coverage

Explanation: Commercial auto coverage addresses business vehicle liability and physical damage needs, depending on the selected forms and symbols.

• A. show which categories of autos are covered for a coverage
• B. identify each covered auto by its vehicle identification number
• C. assign a rating classification based on vehicle size and use
• D. indicate the physical damage deductible that applies to each auto

Correct answer: A. show which categories of autos are covered for a coverage

Explanation: Covered auto symbols indicate which types of autos apply to each coverage, such as owned, hired, or nonowned autos.

• A. ocean marine liability
• B. nonowned auto liability
• C. workers compensation medical-only benefits
• D. equipment breakdown spoilage

Correct answer: B. nonowned auto liability

Explanation: Nonowned auto liability can address the employer's liability exposure when employees use personally owned vehicles for business purposes.

• A. uses only as employee personal property
• B. owns and lists as inventory only
• C. leases, rents, hires, or borrows
• D. sells to customers after repairs

Correct answer: C. leases, rents, hires, or borrows

Explanation: Hired auto coverage applies to autos the business leases, hires, rents, or borrows, subject to the policy terms.

• A. to cover physical damage to vehicles the business rents for short periods
• B. to protect employees' personal auto policies from being cancelled after a loss
• C. to cover vehicles the business owns but has not yet listed on the schedule
• D. to address rented vehicles and employee-owned vehicles used for business

Correct answer: D. to address rented vehicles and employee-owned vehicles used for business

Explanation: Hired auto coverage addresses rented or borrowed autos, while nonowned auto coverage addresses vehicles the business does not own, such as employee vehicles used for business.

• A. loss to covered autos themselves
• B. dishonest acts by partners only
• C. injury to employees covered by workers compensation
• D. loss of business income from all causes

Correct answer: A. loss to covered autos themselves

Explanation: Commercial auto physical damage coverage helps pay for damage to covered vehicles, depending on selected causes of loss and deductibles.

• A. collision and comprehensive damage to the insured's own covered autos regardless of which driver caused the accident
• B. bodily injury or property damage the insured is legally responsible for because of a covered auto accident
• C. medical expenses for the insured's employees injured while driving a covered auto on company business
• D. bodily injury to the insured's driver caused by an at-fault motorist who carries no liability insurance

Correct answer: B. bodily injury or property damage the insured is legally responsible for because of a covered auto accident

Explanation: Auto liability coverage addresses covered legal liability arising from auto accidents. It does not pay for damage to the insured's own autos, employee injuries, or losses caused by uninsured drivers, which require physical damage, workers compensation, or uninsured motorists coverage.

• A. collision damage to the business's own truck
• B. injury to a pedestrian struck by a truck
• C. damage to a parked car hit by a truck
• D. attorney fees to defend a covered lawsuit

Correct answer: A. collision damage to the business's own truck

Explanation: Liability coverage protects against covered third-party claims. Damage to the insured's own vehicle usually requires physical damage coverage.