Vermont Property and Casualty Insurance Practice Exam Free 2026

• A. Transferring the policy to another person
• B. Reducing the claim amount
• C. Substituting one policy for another
• D. The insurer's right to pursue recovery from the party responsible for the loss

Correct answer: D. The insurer's right to pursue recovery from the party responsible for the loss

Explanation: Subrogation is the insurer's right, after paying a claim, to pursue recovery of the payment from the third party who caused the loss. This prevents the insured from collecting twice.

• A. Disagreeing with a claim decision
• B. Filing a legitimate claim
• C. Changing insurers frequently
• D. Intentional deception to obtain insurance benefits illegally

Correct answer: D. Intentional deception to obtain insurance benefits illegally

Explanation: Insurance fraud is intentional deception committed by an applicant, policyholder, or claimant for the purpose of obtaining insurance benefits to which they are not entitled.

• A. Electrical fire damage
• B. The intentional and malicious burning of property
• C. Smoke damage without fire
• D. Accidental fire damage

Correct answer: B. The intentional and malicious burning of property

Explanation: Arson is the intentional and malicious burning of property. Insurance claims for fire losses caused by arson committed by the insured are denied and can result in criminal prosecution.

• A. Defending against premium increases
• B. The insurer's obligation to provide legal defense for covered claims
• C. A requirement to hire a defense attorney
• D. The insured's duty to defend the insurer

Correct answer: B. The insurer's obligation to provide legal defense for covered claims

Explanation: The duty to defend is the insurer's obligation to provide legal defense for the insured against covered claims, even if the claims are groundless. This is separate from the duty to pay damages.

• A. Switching insurance companies
• B. Disagreeing with policy terms
• C. An insurer's unreasonable denial or delay of legitimate claims
• D. Purchasing insurance you don't need

Correct answer: C. An insurer's unreasonable denial or delay of legitimate claims

Explanation: Bad faith occurs when an insurer unreasonably denies or delays payment of legitimate claims, fails to investigate properly, or otherwise acts unfairly toward the insured. It can result in significant penalties.

• A. Insurance for construction workers
• B. Coverage for construction defects
• C. Insurance for real estate developers
• D. Coverage for buildings under construction against damage or loss

Correct answer: D. Coverage for buildings under construction against damage or loss

Explanation: Builders risk insurance (course of construction insurance) covers buildings under construction against physical damage or loss from covered perils like fire, vandalism, or weather.

• A. Insurance for inland watercraft
• B. Insurance for lakes and rivers
• C. Marine life coverage
• D. Coverage for goods in transit and movable property on land

Correct answer: D. Coverage for goods in transit and movable property on land

Explanation: Inland marine insurance covers goods in transit over land, movable property, and items that may be at various locations. Despite its name, it has little to do with water transportation.

• A. Insurance for ocean-view properties
• B. Coverage for marine animals
• C. Coverage for ships, cargo, and related maritime exposures
• D. Flood insurance for coastal areas

Correct answer: C. Coverage for ships, cargo, and related maritime exposures

Explanation: Ocean marine insurance covers ships (hull coverage), cargo being transported by water, freight charges, and liability for damage to others' property or vessels.

• A. Insurance for movie directors
• B. Coverage for corporate headquarters
• C. Coverage protecting corporate directors and officers from personal liability for decisions
• D. Insurance for military officers

Correct answer: C. Coverage protecting corporate directors and officers from personal liability for decisions

Explanation: D&O liability insurance protects directors and officers of a company from personal liability when sued for alleged wrongful acts in managing the company, such as breach of fiduciary duty.

• A. Insurance for employment agencies
• B. Coverage for hiring practices
• C. Protection against claims of wrongful employment practices like harassment or discrimination
• D. Coverage for employee injuries

Correct answer: C. Protection against claims of wrongful employment practices like harassment or discrimination

Explanation: EPL insurance protects employers against claims by employees alleging wrongful employment practices such as discrimination, sexual harassment, wrongful termination, or retaliation.

• A. Insurance for online shopping
• B. Coverage for electronic equipment
• C. Coverage for data breaches, cyberattacks, and related exposures
• D. Insurance for internet companies only

Correct answer: C. Coverage for data breaches, cyberattacks, and related exposures

Explanation: Cyber liability insurance covers losses from data breaches, cyberattacks, network damage, and related liabilities including notification costs, credit monitoring, and legal expenses.

• A. Coverage for residential garages
• B. Insurance for garage door companies
• C. Liability coverage for businesses that service, sell, or store vehicles
• D. Coverage for parking garages only

Correct answer: C. Liability coverage for businesses that service, sell, or store vehicles

Explanation: Garage liability insurance provides liability coverage for auto dealerships, repair shops, service stations, and other businesses that work with vehicles, covering both premises and auto liability exposures.

No. This is an independent study resource. Use it with the official Vermont regulator and exam-vendor resources before scheduling or testing.

Vermont Department of Financial Regulation is the regulator/source authority referenced for this page. Always verify current licensing rules directly with official sources.

The current vendor/source note used on this page is: Prometric hosts Vermont insurance exam resources and lists Producer Property and Casualty among Vermont insurance exam series.

Review property insurance, casualty insurance, liability, auto, homeowners, commercial lines, policy provisions, claims basics, producer duties, state law, and unfair trade practices plus the Vermont-specific law and regulation sections in the official candidate handbook or content outline.

No. It can help you review concepts and identify weak areas, but it cannot guarantee exam results, licensing eligibility, or approval.