New Mexico Property & Casualty Insurance Practice Exam Free - 2026

• A. $160,000 and $400,000, the full amounts of both claims
• B. $100,000 on the auto claim and $100,000 on the workers' compensation claim
• C. $160,000 on the auto claim and $100,000 on the workers' compensation claim
• D. $100,000 on the auto claim and the full $400,000 workers' compensation claim

Correct answer: D. $100,000 on the auto claim and the full $400,000 workers' compensation claim

Explanation: NMSA 59A-43-4 defines a covered claim as an unpaid claim in excess of $25 within policy limits and limits each covered claim to $100,000 and each claimant to $100,000 per occurrence, except that the association shall pay the full amount of any covered claim arising under a workmen's compensation policy. The auto liability claim is therefore capped at $100,000 while the workers' compensation claim is paid in full; the other options either ignore the cap or wrongly apply it to workers' compensation. See NMSA 1978, § 59A-43-4.

• A. Fire, extended coverage, and vandalism or malicious mischief
• B. Fire only
• C. Fire, theft and flood
• D. All risks of direct physical loss

Correct answer: A. Fire, extended coverage, and vandalism or malicious mischief

Explanation: 13.13.3.10(A) NMAC requires FAIR plan coverage to include, at a minimum, fire, extended coverage and vandalism or malicious mischief for buildings and contents, with actual cash value coverage offered and rates subject to the superintendent's prior approval; 13.13.3.7 defines extended coverage as windstorm, hail, smoke, explosion, riot or civil commotion, aircraft, vehicle and volcanic eruption. NMSA 59A-29-2 names the underwriting association the New Mexico Property Insurance Program. Fire only is too narrow, and theft, flood and all-risk coverage are not part of the required minimum. See 13.13.3.10 NMAC.

• A. Neither, until each has five or more workers
• B. Only Yolanda, once she has three or more workers
• C. Yolanda once she has three or more workers, and her brother now, because construction-licensed employers are covered regardless of the number of employees
• D. Both now, because every employer with one worker is covered

Correct answer: C. Yolanda once she has three or more workers, and her brother now, because construction-licensed employers are covered regardless of the number of employees

Explanation: NMSA 52-1-6(A) applies the Workers' Compensation Act to employers of three or more workers, and to all employers engaged in activities required to be licensed under the Construction Industries Licensing Act regardless of the number of employees; 52-1-2 lists the covered employers and 52-1-9 makes compensation the exclusive remedy when the employer is insured. Domestic servants and farm labourers are excluded unless coverage is elected. A five-worker threshold and a one-worker rule are not New Mexico law. See NMSA 1978, § 52-1-6.

• A. 30 days
• B. 15 days, extended for cause but never beyond 60 days
• C. 10 days
• D. 90 days

Correct answer: B. 15 days, extended for cause but never beyond 60 days

Explanation: NMSA 52-1-29(A) requires a worker to give written notice of the accident to the employer within fifteen days after the worker knew or should have known of it; if injury or another cause beyond the worker's control prevents timely notice it must be given as soon as reasonably possible and in any event not later than sixty days after the accident, and no written notice is required where the employer or a supervisor had actual knowledge. The employer must post a notice of this requirement, and failure to post tolls the period up to the 60-day maximum. Ten, thirty and ninety days are not the statutory periods. See NMSA 1978, § 52-1-29.

• A. Coverage for your own injuries regardless of who was at fault
• B. Coverage for injuries to your employees while on the job
• C. Coverage for legal liability when you injure someone else
• D. Coverage for damage you cause to another person's property

Correct answer: C. Coverage for legal liability when you injure someone else

Explanation: Bodily injury liability coverage protects the insured when legally responsible for injuring another person. It pays for medical expenses, lost wages, pain and suffering, and legal defense costs.

• A. Coverage for damage to your own vehicle when you collide with another object
• B. Coverage for damage to your property caused by another person
• C. Coverage for injuries you cause to other people in an accident
• D. Coverage for legal liability when you damage someone else's property

Correct answer: D. Coverage for legal liability when you damage someone else's property

Explanation: Property damage liability coverage protects the insured when legally responsible for damaging another person's property, such as their vehicle, home, or belongings.

• A. Coverage protecting against claims of bodily injury or property damage caused by the insured
• B. Coverage paying the insured's own medical bills after an injury on the residence premises
• C. Coverage paying for the insured's personal property both on and away from the premises
• D. Coverage protecting the insured against liability claims arising from business conducted at the home

Correct answer: A. Coverage protecting against claims of bodily injury or property damage caused by the insured

Explanation: Personal liability coverage in a homeowners policy protects the insured against claims alleging they caused bodily injury or property damage to others, covering legal defense costs and damages up to policy limits.

• A. Primary liability coverage that replaces auto and homeowners policies
• B. Excess liability coverage above underlying primary policies
• C. A package policy that combines property and liability coverage
• D. Excess property coverage above the limits of a homeowners policy

Correct answer: B. Excess liability coverage above underlying primary policies

Explanation: An umbrella policy provides excess liability coverage above the limits of underlying primary policies (auto, homeowners). It also may cover claims excluded by underlying policies.

• A. Deliberate conduct intended to cause harm to another person
• B. Failure to disclose a known material fact on an insurance application
• C. Failure to exercise reasonable care, resulting in harm to others
• D. Failure to comply with the conditions of an insurance contract

Correct answer: C. Failure to exercise reasonable care, resulting in harm to others

Explanation: Negligence is the failure to exercise the degree of care that a reasonable person would exercise under similar circumstances, resulting in harm or damage to another person or property.

• A. Offer, acceptance, consideration, and legality
• B. Intent, motive, opportunity, and resulting injury
• C. Duty, breach of duty, foreseeability, and intent
• D. Duty, breach of duty, proximate cause, and damages

Correct answer: D. Duty, breach of duty, proximate cause, and damages

Explanation: To prove negligence, a plaintiff must establish four elements: (1) the defendant had a duty of care, (2) the defendant breached that duty, (3) the breach was the proximate cause of injury, and (4) actual damages resulted.

• A. Claims from others you injure or whose property you damage
• B. Damage to your own vehicle from a collision with another car
• C. Your own medical expenses after an accident regardless of fault
• D. Your injuries caused by a driver who carries no insurance

Correct answer: A. Claims from others you injure or whose property you damage

Explanation: Auto liability coverage protects you financially when you're legally responsible for injuring others or damaging their property in an accident. It pays their medical bills, property damage, and legal defense costs.

• A. Coverage for damage to another driver's vehicle when you are legally at fault
• B. Coverage for damage to your vehicle from colliding with another object
• C. Coverage for damage to your vehicle from theft, fire, or hail
• D. Coverage for injuries to occupants of your vehicle in a collision

Correct answer: B. Coverage for damage to your vehicle from colliding with another object

Explanation: Collision coverage pays for damage to your own vehicle when it collides with another vehicle or object (like a tree or guardrail), regardless of who is at fault.