Maryland Property & Casualty Insurance Practice Exam Free - 2026

• A. 15 working days; send the claimant a written notice explaining why more time is needed, and repeat the notice after each additional 45-day period
• B. 5 working days; close the claim automatically
• C. 30 working days; pay the claim in full regardless of investigation
• D. 10 calendar days; refer the claim to the Commissioner

Correct answer: A. 15 working days; send the claimant a written notice explaining why more time is needed, and repeat the notice after each additional 45-day period

Explanation: COMAR requires an insurer to acknowledge receipt of a claim within 15 working days (unless paid within that time), to affirm or deny coverage within 15 working days after receiving proof of loss, and to reply to claimant and MIA correspondence within 15 working days; if a first-party claim is not resolved within 45 days of notification, the insurer must send written notice of the reason for the delay and repeat it after each additional 45-day period. Options B, C and D state periods and actions that do not appear in the regulations. See COMAR 31.15.07.03 and 31.15.07.04.

• A. Report the son to the Motor Vehicle Administration
• B. Offer to continue the policy with the son excluded as a named driver, and not reflect his record in the premium for the policy
• C. Obtain the Commissioner's written approval
• D. Give 90 days' notice to every listed driver

Correct answer: B. Offer to continue the policy with the son excluded as a named driver, and not reflect his record in the premium for the policy

Explanation: For a private passenger auto policy with more than one insured, Maryland requires the insurer, instead of cancelling, nonrenewing or increasing the premium because of one driver's record, to offer to exclude that driver by endorsement; the premium for a policy with a named driver exclusion may not reflect the excluded driver's claims history or driving record, though statutory PIP and UM benefits remain available to the excluded driver if not covered elsewhere. Option A is not a statutory prerequisite. Option C is wrong because no Commissioner approval is required. Option D uses a notice period that does not exist in the statute. See Md. Code, Ins. § 27-609.

• A. May cancel, because payment to a producer is not payment to the insurer
• B. May cancel unless the producer is an exclusive agent
• C. May not cancel for nonpayment, because the premium due on the policy was paid to the insurance producer
• D. May cancel only after suspending the producer's appointment

Correct answer: C. May not cancel for nonpayment, because the premium due on the policy was paid to the insurance producer

Explanation: Maryland provides that an insurer may not cancel a policy for nonpayment of premiums if the premium due on the policy has been paid to the insurance producer. Option A is wrong because the statute treats payment to the producer as protecting the insured. Option B is wrong because the statute makes no distinction based on the producer's exclusivity. Option D has no basis in the statute. See Md. Code, Ins. § 10-127.

• A. A penalty not exceeding $500
• B. A penalty not exceeding $5,000
• C. A penalty not exceeding $10,000
• D. A penalty not exceeding $25,000 for each act of insurance fraud, plus restitution to the insurer

Correct answer: D. A penalty not exceeding $25,000 for each act of insurance fraud, plus restitution to the insurer

Explanation: Presenting a claim statement known to contain false or misleading material information is a fraudulent insurance act; besides criminal penalties (a felony with up to 15 years' imprisonment when the value is $300 or more), the Commissioner may impose an administrative penalty not exceeding $25,000 for each act of insurance fraud and order restitution. Option A is not a fraud penalty. Option B is the maximum general licensing penalty under § 10-126, not the fraud penalty. Option C is the criminal fine ceiling under § 27-408 for certain violations, not the administrative penalty. See Md. Code, Ins. § 27-403 and § 27-408.

• A. equipment breakdown with spoilage coverage
• B. business income with an ordinance or law endorsement
• C. commercial property with fire legal liability
• D. products liability with a recall expense endorsement

Correct answer: A. equipment breakdown with spoilage coverage

Explanation: Equipment breakdown and spoilage coverage may address mechanical failure and resulting spoilage if included in the policy.

• A. non-owned auto coverage for employee vehicles
• B. hired auto liability and physical damage needs
• C. garagekeepers legal liability for customer vehicles
• D. uninsured motorist coverage on the owned fleet

Correct answer: B. hired auto liability and physical damage needs

Explanation: A rented vehicle creates a hired auto exposure. The business should review both liability and physical damage coverage needs.

• A. the deductible disappears
• B. the claim must be paid under auto liability
• C. the loss may require separate flood coverage
• D. the exclusion automatically becomes invalid

Correct answer: C. the loss may require separate flood coverage

Explanation: Flood is commonly excluded or limited in many property policies and may require separate flood coverage or endorsement.

• A. they extend coverage to any newly acquired location for a full year
• B. they eliminate the coinsurance requirement for scheduled locations
• C. they allow the insured to move limits between locations after a loss
• D. coverage and limits may apply differently by listed location

Correct answer: D. coverage and limits may apply differently by listed location

Explanation: Commercial property policies often identify covered locations, buildings, and limits. Unlisted or newly acquired locations may have limited coverage.

• A. CGL addresses liability claims, while inland marine may cover tools or equipment in transit or at job sites
• B. CGL covers tools and equipment at job sites, while inland marine addresses liability for injury to others
• C. CGL covers work performed on the premises, while inland marine covers liability arising off the premises
• D. CGL covers the contractor's own building and contents, while inland marine covers vehicles used on the job

Correct answer: A. CGL addresses liability claims, while inland marine may cover tools or equipment in transit or at job sites

Explanation: Contractors often have liability exposures and mobile property exposures. These are commonly handled by different coverage forms.

• A. adding comprehensive auto coverage to a personal car
• B. an extended reporting period if available
• C. naming a life insurance beneficiary
• D. changing the building deductible

Correct answer: B. an extended reporting period if available

Explanation: Claims-made policies can leave reporting gaps after cancellation. An extended reporting period may allow certain later-reported claims to be submitted.

• A. to one specifically described item at a stated insurance amount
• B. to all locations, but at no more than the value of any one
• C. over more than one item or location, depending on policy wording
• D. to property away from the premises for a stated period of days

Correct answer: C. over more than one item or location, depending on policy wording

Explanation: Blanket coverage can apply one limit across multiple covered items or locations, subject to policy terms.

• A. the insurer may pay more than the face limit when values rise
• B. the insured is required to pay a share of every loss regardless of limit
• C. premium credits apply once the insured value exceeds the coinsurance amount
• D. underinsurance may reduce claim payment after a partial loss

Correct answer: D. underinsurance may reduce claim payment after a partial loss

Explanation: A coinsurance clause can penalize the insured for carrying less insurance than required by the policy formula.