Montana Property & Casualty Insurance Practice Exam Free - 2026

• A. At least 10 days before the due date
• B. Not more than 90 days nor less than 45 days before the due date
• C. Not more than 60 days nor less than 30 days before the due date, stating the effect of nonpayment
• D. Any time before the due date

Correct answer: C. Not more than 60 days nor less than 30 days before the due date, stating the effect of nonpayment

Explanation: An insurer must give notice of the renewal premium due not more than 60 days nor less than 30 days before the due date, and the notice must clearly state the effect of failing to pay on or before that date; the same section requires at least 45 days' notice of an intention not to renew. A is the midterm cancellation notice period; B has no basis in the statute; D is wrong because the statute fixes both an earliest and a latest date for the premium notice. See Mont. Code Ann. § 33-15-1105.

• A. The insurer need not respond unless ordered by the commissioner
• B. The insurer must respond within 60 days if the request is made within 10 days
• C. The insurer must respond only if the nonrenewal was for nonpayment
• D. If her written request is made within 60 business days of the notice, the insurer or producer must furnish the information used within 21 days

Correct answer: D. If her written request is made within 60 business days of the notice, the insurer or producer must furnish the information used within 21 days

Explanation: When an insured makes a written request within 60 business days of the date the insurer mailed a cancellation or nonrenewal notice, the insurer or producer must, within 21 days of receiving the request, furnish the information it used to make the decision, and the notice itself is ineffective unless it adequately explains this right. A is wrong because the duty is statutory; B reverses and misstates both periods; C is backwards, since the section does not apply when the ground is nonpayment stated in the notice. See Mont. Code Ann. § 33-15-1107.

• A. Prohibited; an insurer may not deny, cancel, or nonrenew homeowners insurance principally because the insured operates a qualifying day-care facility, though it may exclude business-pursuits losses
• B. Permitted, because home businesses are always uninsurable under homeowners forms
• C. Permitted, provided 45 days' notice is given
• D. Prohibited only if the day care has fewer than three children

Correct answer: A. Prohibited; an insurer may not deny, cancel, or nonrenew homeowners insurance principally because the insured operates a qualifying day-care facility, though it may exclude business-pursuits losses

Explanation: No insurer writing homeowners insurance in Montana may deny an applicant or cancel or refuse to renew a homeowners policy for the principal reason that the insured operates at the insured location a day-care facility that satisfies the state's registration or licensing requirements; the insurer may still exclude or limit liability and property losses arising from the business pursuit. B is wrong because the statute makes day-care operation an impermissible principal ground; C is wrong because notice does not cure an unlawful ground; D invents a headcount threshold the statute does not contain. See Mont. Code Ann. § 33-15-1111.

• A. $320,000, the actual cash value at the time of loss
• B. $400,000, because on a total loss the amount written in the policy is conclusively the true value and the measure of damages
• C. The replacement cost as determined by appraisal
• D. $320,000 plus a 10% penalty

Correct answer: B. $400,000, because on a total loss the amount written in the policy is conclusively the true value and the measure of damages

Explanation: When a policy insures improvements on real property in Montana and the property is a total loss without criminal fault on the part of the insured, the amount of insurance written in the policy is taken conclusively to be the true value of the property and the true amount of loss and measure of damages, although the insurer may still assert fraud in obtaining the policy as a defense. A and C are wrong because the statute fixes the amount at the face of the policy rather than actual cash value or an appraisal; D adds a penalty the statute does not impose. See Mont. Code Ann. § 33-24-102.

• A. Restaurants are ineligible for business income coverage
• B. Spoilage is never an insurable loss
• C. Business income has a one-week waiting period for all closures
• D. The utility failure originated away from the insured premises, an exposure that requires a utility services endorsement

Correct answer: D. The utility failure originated away from the insured premises, an exposure that requires a utility services endorsement

Explanation: Standard commercial property and business income coverage responds to direct physical damage at or affecting the insured premises; failure of utility service caused by damage away from the premises is excluded. A utility services endorsement extends coverage for losses caused by off-premises interruption of power, water, or communications. Waiting periods exist but are much shorter and are not the reason for denial here.

• A. Covered, because money is business personal property
• B. Denied, because dishonest acts of employees are excluded; the exposure is insured under commercial crime or fidelity coverage
• C. Covered, but only for the most recent policy year
• D. Denied, because the loss was not reported to police within 60 days

Correct answer: B. Denied, because dishonest acts of employees are excluded; the exposure is insured under commercial crime or fidelity coverage

Explanation: Property forms exclude loss caused by dishonest or criminal acts of employees. The employee-theft exposure is written under commercial crime insurance or a fidelity bond, which covers an employer's loss from an employee's dishonest acts such as embezzlement. The exclusion, not the reporting timeline, is what defeats the property claim.

• A. Damage from a military attack during an armed conflict
• B. A kitchen fire that spreads to the roof
• C. A burglar breaking through a wall to steal equipment
• D. A delivery truck accidentally backing into the loading dock

Correct answer: A. Damage from a military attack during an armed conflict

Explanation: Even open perils forms carry absolute exclusions for war and military action and for nuclear hazard, catastrophic exposures the private insurance market cannot absorb. Fire, burglary damage, and vehicle impact are all covered causes of loss under a special form.

• A. Customers must claim under their own health insurance first
• B. Assault claims are covered only under umbrella policies
• C. The CGL excludes bodily injury expected or intended from the standpoint of the insured
• D. The CGL covers property damage only, not bodily injury

Correct answer: C. The CGL excludes bodily injury expected or intended from the standpoint of the insured

Explanation: The CGL's first exclusion removes coverage for injury or damage the insured expected or intended; liability insurance responds to accidents, not deliberate harm. An occurrence is defined as an accident resulting in injury neither expected nor intended. CGL Coverage A expressly covers bodily injury, so option D is wrong for a different reason.

• A. Covered, because the injury occurred away from the premises
• B. Excluded, because the liquor liability exclusion applies to insureds in the business of selling or serving alcohol; a separate liquor liability policy is needed
• C. Covered, because all CGL policies automatically include dram shop coverage
• D. Excluded, because auto accidents can never create liability for a bar

Correct answer: B. Excluded, because the liquor liability exclusion applies to insureds in the business of selling or serving alcohol; a separate liquor liability policy is needed

Explanation: The CGL liquor liability exclusion applies to insureds in the business of manufacturing, selling, distributing, or serving alcohol, so a tavern must buy a separate liquor liability policy for this exposure. A business NOT in the alcohol business - say, an office hosting a holiday party - retains so-called host liquor protection because the exclusion does not reach it. Location of the injury is irrelevant.

• A. The clerk's only, because employees get priority
• B. Both injuries, split equally
• C. Neither, because glass injuries are excluded
• D. The customer's only; the employee's injury is excluded from the CGL and belongs to workers compensation

Correct answer: D. The customer's only; the employee's injury is excluded from the CGL and belongs to workers compensation

Explanation: CGL medical payments cover injuries to persons other than employees that occur on the insured's premises, without regard to fault. Injuries to the insured's own employees arising out of employment are excluded from the CGL because workers compensation is the intended source of recovery. Nothing about glass injuries is separately excluded.

• A. The CGL excludes liability arising from the ownership or use of autos; a commercial auto policy is required
• B. The employee, not the shop, is the only proper defendant
• C. Pedestrian injuries fall under the products-completed operations hazard
• D. The CGL covers vehicle claims only when the vehicle is parked

Correct answer: A. The CGL excludes liability arising from the ownership or use of autos; a commercial auto policy is required

Explanation: The CGL excludes bodily injury arising out of the ownership, maintenance, use, or entrustment of any auto (and aircraft or watercraft) operated by an insured. Business vehicle exposure is insured under a commercial auto policy. Employers can be vicariously liable for employees driving on business, so option B is wrong.

• A. A commercial umbrella over the CGL
• B. Professional liability (errors and omissions) coverage, because the CGL excludes claims arising from rendering professional services
• C. Builders risk insurance
• D. Contractual liability coverage

Correct answer: B. Professional liability (errors and omissions) coverage, because the CGL excludes claims arising from rendering professional services

Explanation: The CGL is not intended to cover claims arising from providing professional services, advice, or design work, so errors like faulty calculations fall to a professional liability (E&O) policy. An umbrella sitting over the CGL generally follows the same professional-services gap, and builders risk is first-party property coverage during construction.