Pennsylvania Property & Casualty Insurance Practice Exam Free - 2026

• A. Registration and operating privilege suspended for three months
• B. Registration suspended for six months
• C. Operating privilege suspended for one year
• D. No suspension; only a $300 fine

Correct answer: A. Registration and operating privilege suspended for three months

Explanation: The department must suspend the vehicle registration for three months and the owner's or registrant's operating privilege for three months, and neither is restored until the restoration fee is paid and financial responsibility is proven. As an alternative to the registration suspension the owner may pay a $500 civil penalty plus the restoration fee, once in any 12-month period. Operating a vehicle without the required financial responsibility is also a summary offense with a $300 fine. See 75 Pa.C.S. 1786(d) and (f).

• A. 60 percent, after the third day
• B. 66 2/3 percent, after the seventh day
• C. 75 percent, after the seventh day
• D. 80 percent, after the fourteenth day

Correct answer: B. 66 2/3 percent, after the seventh day

Explanation: Total disability compensation is 66 2/3 percent of the injured employee's wages, subject to the statewide maximum, payable after the seventh day of total disability for the duration of the disability. If the computed benefit is very low, the minimum is the lower of 50 percent of the statewide average weekly wage or 90 percent of the worker's average weekly wage. The employer's liability under the Act is exclusive, though the worker may sue a negligent third party. See 77 P.S. 511; 77 P.S. 481.

• A. 30 days
• B. 60 days
• C. 180 days
• D. 90 days

Correct answer: D. 90 days

Explanation: An insurer may not terminate its contract with an agent without first giving the agent and the Commissioner written notice at least 90 days before the termination date, stating the reasons; the agent may request review within 30 days. Where the termination is for poor performance or business mix, the insurer must first attempt a rehabilitation program of at least one year. After termination the insurer must offer to continue the agent's policies through the agent for 12 months, with commissions at the contract rate. See 40 P.S. 242; 40 P.S. 243.

• A. 10 working days
• B. 30 working days
• C. 45 working days
• D. 15 working days

Correct answer: D. 15 working days

Explanation: Within 15 working days after receipt of properly executed proofs of loss, the first-party claimant must be advised of the acceptance or denial of the claim; if more time is needed the insurer must say so within the same 15 working days and send status letters at 30 days and every 45 days thereafter. Other deadlines in the chapter: acknowledge a claim within 10 working days, respond to Department inquiries within 15 working days, and complete the investigation within 30 days of notice. See 31 Pa. Code 146.7; 146.5; 146.6.

• 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.