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Quizzes > Business & Finance > Business & Industry

Maryland Property & Casualty Quiz: Test Your P&C Knowledge

Ready for a practice test property and casualty challenge? Start free now!

Difficulty: Moderate
2-5mins
Learning OutcomesCheat Sheet
Paper art illustration featuring quiz cards Maryland map icons sky blue background property casualty practice test

Ready to ace your Maryland property and casualty license? Try our property and casualty practice test free to identify strengths and uncover gaps in your coverage knowledge. Whether you're a seasoned agent or stepping in for the first time, you'll benefit from clear explanations and instant feedback. This free p&c practice test tackles realistic scenarios and property casualty test questions, while the practice test property and casualty format keeps you focused on mastery. Access the full practice exam or explore our detailed test questions now and kick off your success!

Which term describes a condition that increases the likelihood of a loss?
Peril
Hazard
Risk
Retention
A hazard is any condition that increases the chance of loss, such as slippery floors or faulty wiring. Insurers assess hazards to determine policy terms and pricing. Understanding hazards helps in loss prevention. More info
Which section of an insurance policy outlines the rights and duties of both parties?
Definitions
Insuring Agreement
Conditions
Exclusions
The Conditions section specifies obligations of the insured and insurer, such as premium payment and proof of loss requirements. It governs how the policy operates. Failure to meet conditions can void coverage. More info
What best describes an insurance binder?
A permanent amendment to a policy
A temporary policy providing immediate coverage
A summary of claims history
A cancellation notice
A binder provides temporary evidence of insurance until a formal policy is issued. It can be written or oral and includes coverage terms. Binders are usually valid for a limited period. More info
What is the deductible in an insurance policy?
The total premium paid annually
The amount the insurer pays first
The portion of loss the insured must pay before coverage applies
The policy limit
A deductible is the amount an insured must pay out of pocket before the insurer covers the remaining loss. Deductibles help reduce small claims and lower premiums. Higher deductibles typically result in lower premiums. More info
Actual cash value (ACV) in property insurance is best defined as:
Replacement cost without depreciation
Market value of the property
Replacement cost minus depreciation
Original purchase price
Actual cash value is determined by taking the replacement cost and subtracting depreciation for age and wear. It reflects the tangible value of the property at the time of loss. ACV helps insurers limit overpayment on older items. More info
A 'named peril' policy provides coverage for:
All causes of loss unless specifically excluded
Specific perils listed in the policy
Preventive maintenance costs
Consequential losses only
Named peril policies cover only those causes of loss explicitly listed, such as fire or theft. Any peril not named is excluded. This contrasts with open-peril (all-risk) policies. More info
Which coverage is considered first-party?
Bodily Injury Liability
Medical Payments to Others
Property Damage Liability
Dwelling Coverage
First-party coverages provide benefits directly to the insured, such as dwelling coverage for their property. Liability and medical payments to others are third-party coverages. Understanding this distinction helps when selecting coverages. More info
The coinsurance clause in property insurance primarily encourages:
Underinsuring by policyholders
Full replacement benefits without depreciation
Maintaining adequate insurance to value
Unlimited coverage limits
Coinsurance requires the insured to carry insurance close to the property’s value, typically 80% or more, or face a penalty in claims. It helps distribute risk fairly and keeps premiums affordable. Underinsuring results in proportionate claim payments. More info
Which items are typically found on the declarations page of a policy?
All key policy information like limits, period, and named insured
Named insured, policy period, and premium
Coverages and deductibles only
Policy limits only
The declarations page summarizes key policy facts such as the named insured, policy period, coverages, limits, deductibles, and premium. It provides a quick reference and is the first page of most policies. Altering the declarations voids the policy. More info
What is an exclusion in an insurance policy?
A clause that increases coverage
A condition that reduces the premium
A provision that removes coverage for certain perils
A type of endorsement
Exclusions specify what is not covered, helping insurers limit exposure and define policy scope. Common exclusions include war, nuclear hazards, and intentional acts. Reviewing exclusions ensures insured’s expectations align with actual coverage. More info
How does an endorsement affect an insurance policy?
It cancels the policy
It modifies the terms and conditions
It extends the policy period automatically
It increases the deductible only
Endorsements are written amendments that add, delete, or alter coverage terms in a policy. They help tailor standard policies to specific needs. Both the insurer and insured must agree to endorsements. More info
When must insurable interest exist in a property insurance contract?
At the time the policy is written
At the time of loss
When the premium is paid
When the claim is settled
In property insurance, insurable interest must exist at the time of loss to ensure the insured has a legitimate financial stake in the property. This prevents wagering contracts. The insured’s interest can expire before a loss, invalidating the claim. More info
Risk transfer in insurance refers to:
Assuming risk oneself
Eliminating all risk
Shifting potential financial loss to an insurer
Sharing risk among consumers
Risk transfer involves shifting the financial consequences of a loss to an insurer through a contract. The insured pays a premium for this protection. It is a fundamental principle of insurance. More info
The principle of indemnity in insurance aims to:
Provide a profit to the insured after loss
Restore the insured to the same financial position before loss
Increase the insured’s wealth
Allow overinsurance
Indemnity ensures the insured does not profit from a loss and is returned to the pre-loss financial state. It prevents moral hazard and overpayment. Actual cash value and replacement cost methods support indemnity. More info
What is the primary purpose of a mortgagee clause in a property insurance policy?
To waive the insurer’s right of subrogation
To protect the lender’s financial interest in the property
To reduce the deductible amount
To extend coverage for debris removal
A mortgagee clause ensures that the lender (mortgagee) receives payment up to their interest in the event of a covered loss, even if the insured’s policy lapses. It protects the lender’s security in the property. This clause prevents disputes between the insurer and mortgagee. More info
Uninsured Motorist coverage in an auto policy provides protection when:
The insured causes the accident
The at-fault driver has insufficient or no liability insurance
The uninsured motorist is considered the insured
Claims are filed out of state
Uninsured Motorist (UM) coverage reimburses the insured for bodily injury or property damage caused by a driver with no or inadequate liability insurance. It ensures the insured is not left uncompensated. Maryland law requires insurers to offer UM coverage. More info
The 'other insurance' clause is designed to:
Prevent stacking of benefits when multiple policies apply
Allocate liability when two policies cover the same risk
Guarantee full recovery regardless of limits
Reduce premium costs
The other insurance clause determines how loss payments are divided when more than one policy covers the same loss. It prevents overpayment and conflicting coverage. Common methods include pro rata, excess, and escape clauses. More info
In a Commercial General Liability (CGL) policy, Coverage C refers to:
Bodily Injury and Property Damage Liability
Medical Payments
Products and Completed Operations
Personal and Advertising Injury
Coverage C in a CGL policy covers Medical Payments to others for small medical expenses regardless of fault. It is separate from liability limits and is a first-party coverage. It encourages prompt treatment and claim closure. More info
Business Income coverage (also known as business interruption) provides:
Funds for repairing damaged equipment
Income lost due to suspension of operations after a covered loss
Liability for third-party bodily injury
Coverage for employee theft
Business Income coverage reimburses an insured for net income lost when a covered peril causes necessary suspension of operations. It can also cover continuing expenses like rent and payroll. Limits and waiting periods apply. More info
An auto policy with split limits of 100/300/50 means:
$100,000 total limit, $300,000 per person
$100,000 bodily injury per person, $300,000 bodily injury per accident, $50,000 property damage
$100,000 property damage, $300,000 per person bodily injury
$100,000 total, $300,000 uninsured motorist, $50,000 medical payments
Split limits denote maximum payouts: $100,000 for bodily injury per person, $300,000 total per accident, and $50,000 for property damage. This structure limits insurer exposure and clarifies coverage. Agents must explain these distinctions to insureds. More info
Under an HO-3 (Special Form) homeowners policy, personal property is covered on which basis?
Named peril basis
Open peril basis
No coverage provided
Broad form basis
HO-3 policies provide open-peril coverage for the dwelling but personal property is covered on a named peril basis. Only perils listed in the policy, such as fire or theft, are covered for personal property. Additional endorsements can expand coverage. More info
Who is allowed to place surplus lines insurance in Maryland?
Any licensed agent
Only a licensed surplus lines broker
The insured directly
The state insurance commissioner
Surplus lines insurance must be placed through a licensed surplus lines broker who ensures the risk is uninsurable in the standard market. This maintains regulatory oversight and solvency checks. Unauthorized placement can lead to penalties. More info
A deposit premium in commercial insurance is:
A flat fee for policy issuance
An initial estimate that may be adjusted after audit
A penalty for late payment
The minimum amount of deductible
Deposit premium is an upfront estimate based on expected exposures (e.g., payroll or sales). After the policy term, an audit determines actual exposures and adjusts the premium accordingly. This ensures accuracy in premium calculation. More info
Maryland requires insurers to file rate changes under which rating law?
File-and-use
Use-and-file
Prior approval
Open competition
Maryland operates under a prior approval rating law, meaning insurers must submit rate filings to the Maryland Insurance Administration and receive approval before use. This process ensures rates are fair, adequate, and not unfairly discriminatory. More info
The Fair Credit Reporting Act requires insurers to:
Ignore consumer credit information
Notify applicants if an adverse underwriting decision is based on a credit report
Provide free coverage for consumers with poor credit
Use credit scores exclusively for premium calculations
The Fair Credit Reporting Act mandates that insurers notify applicants if a credit report adversely affects underwriting or rating decisions. Consumers have the right to know and dispute the information. This protects consumer privacy and accuracy. More info
In commercial property insurance, a vacancy clause typically applies after how many days of vacancy?
30 days
60 days
90 days
120 days
Most commercial property forms restrict coverage for certain perils if a building is vacant for more than 60 consecutive days. Vacancy increases risk of undetected damage or vandalism. The clause allows insurers to limit coverage accordingly. More info
An occurrence form CGL policy covers losses that:
Are reported during the policy period
Occur during the policy period regardless of when reported
Occur after the policy expires
Occur before the policy begins
Occurrence CGL forms cover bodily injury or property damage that occurs during the policy period, even if the claim is reported later. This provides broad protection. Claims-made forms differ by requiring the claim to be reported during the policy period. More info
A CLUE report primarily provides information about:
Credit scores
Professional liability claims
Personal claim history for property and auto
Policy premiums
A CLUE (Comprehensive Loss Underwriting Exchange) report details an individual’s prior property and auto insurance claims history, usually over the past seven years. Insurers use it for underwriting and rating. Consumers can review and dispute inaccuracies. More info
Which endorsement is used to add additional insured status to a liability policy?
Waiver of subrogation endorsement
Additional Insured endorsement
First Named Insured endorsement
Severability of Interest endorsement
An Additional Insured endorsement extends liability coverage to third parties, such as landlords or contractors, under the named insured’s policy. It protects those parties from liability for claims arising from the named insured’s operations. Insurers may require specific proof of a relationship. More info
If an insurer cancels a property policy, the unearned premium is returned on what basis?
Short-rate basis
Pro rata basis
Flat cancellation
First-in, first-out
When the insurer cancels a policy, the unearned premium must be returned pro rata, meaning based on the exact time remaining. This ensures fairness since the insurer initiated the cancellation. If the insured cancels, short-rate penalties may apply. More info
Which statutory condition in property insurance requires the insured to provide prompt notice of loss?
Insuring agreement
Statutory Condition 1
Bailment Condition
Other Insurance Condition
Statutory Condition 1 obligates the insured to give prompt notice of loss to the insurer, including details necessary for investigation. This is essential for claims handling. Maryland incorporates these conditions by regulation. More info
What is the primary difference between facultative and treaty reinsurance?
Facultative covers all risks; treaty covers select risks
Treaty reinsurance requires individual approval of each risk; facultative does not
Facultative requires separate underwriting per risk; treaty covers a portfolio automatically
There is no difference
Facultative reinsurance is negotiated separately for each individual risk, requiring insurer and reinsurer agreement per policy. Treaty reinsurance covers a class or portfolio of risks automatically under a pre-agreed contract. Treaties streamline coverage for standard risks. More info
What are Maryland’s minimum required auto liability limits?
25/50/10
30/60/15
50/100/25
20/40/10
Maryland requires minimum liability limits of $30,000 per person, $60,000 per accident for bodily injury, and $15,000 for property damage. These limits ensure basic financial responsibility for drivers. Higher limits are often recommended. More info
Under Maryland law, how long must insurers maintain consumer insurance records?
3 years
5 years
7 years
10 years
Maryland regulations require insurers to retain consumer records, including policy documents and claims files, for at least five years after policy expiration or claim settlement. This facilitates audits and consumer inquiries. Proper recordkeeping protects both policyholders and insurers. More info
Surplus lines insurers must submit premium taxes to the Maryland Insurance Administration within how many days after binding?
30 days
45 days
60 days
90 days
Maryland law mandates surplus lines premium taxes be remitted to the state within 60 days of binding the coverage. Timely filing ensures regulatory compliance and state revenue collection. Late submissions may incur penalties. More info
The Maryland FAIR Plan provides coverage for:
Residents unable to obtain homeowners insurance in the voluntary market
High-risk auto drivers
Flood insurance
Commercial property owners exclusively
The Maryland FAIR (Fair Access to Insurance Requirements) Plan offers basic property insurance to homeowners who cannot secure coverage through standard carriers. It addresses market shortcomings by providing last-resort insurance. Rates are regulated by the MIA. More info
Which part of a Commercial Package Policy (CPP) contains common policy conditions?
Common Conditions
Commercial General Liability
Commercial Property
Inland Marine
The Common Policy Conditions section of a CPP outlines provisions applicable to all included coverages, such as cancellation, changes, and premium audit. It standardizes policy administration. Each coverage part also has its own specific conditions. More info
Maryland’s auto insurance system is classified as a:
Pure no-fault system
Choice no-fault system
Tort liability system
Negligence-free system
Maryland follows a tort liability system, meaning the at-fault driver is financially responsible for damages. There is no mandatory personal injury protection as in no-fault states. Injured parties must sue to recover non-economic damages. More info
Which liability exposure is specifically excluded under a CGL policy?
Vicarious liability for employees acting within scope
Workers’ compensation
Premises liability
Product liability
CGL policies exclude workers’ compensation liability, which is covered under separate statutory plans. Employers must carry workers’ compensation insurance to cover employee workplace injuries. Other exposures like premises and products liability are covered under CGL. More info
Under a property policy, how is 'vacancy' distinguished from 'unoccupancy'?
Vacancy refers to lack of personal property; unoccupancy to lack of people
They are interchangeable terms
Unoccupancy means no commerce; vacancy means no utilities
Vacancy is seasonal; unoccupancy is permanent
Vacancy means both people and property are absent, whereas unoccupancy means the building is empty of people but still contains personal property. Insurers often treat vacancy as higher risk. Correct classification affects claim payment. More info
Which inland marine form would cover a photographer’s portable equipment?
Bailees Customers Form
Builders Risk Form
Personal Articles Floater
Equipment Breakdown Form
A Personal Articles Floater insures movable personal property like cameras and equipment on an all-risk basis. It provides broader worldwide coverage and higher limits than standard property forms. Photographers often need this coverage. More info
An umbrella policy typically provides:
Primary coverage for auto liability
Excess limits over underlying policies and broader coverage
First-party property damage
Workers’ compensation coverage
Umbrella liability policies provide excess limits over underlying primary policies (e.g., auto and homeowners) and may drop down to cover gaps in coverage. They enhance total liability protection. Insureds must maintain certain underlying limits. More info
If the insured initiates cancellation of a property policy, how is the unearned premium returned in Maryland?
Pro rata basis
Short-rate basis
Flat-rate basis
Daily pro rata
When the insured cancels a policy, Maryland regulations allow insurers to retain a penalty (short-rate) portion of the unearned premium. This compensates the insurer for acquisition expenses. The retained amount is greater than a pro rata refund. More info
Which liability limit format allows the insured to allocate a single combined limit among bodily injury and property damage as needed?
Split limit
Combined Single Limit
Per person limit
Aggregate limit only
A Combined Single Limit (CSL) provides one overall limit that can be applied to any combination of bodily injury and property damage in a single occurrence. This offers flexibility compared to split limits which specify separate amounts. CSL is often preferred for broader protection. More info
In insurance ratemaking, an exposure unit is:
A measurement of time a policy is in effect
A unit used to assess risk and calculate premium, such as a car or $100 of payroll
The number of claims filed per year
The insurer’s total capital
Exposure units quantify the insured risk for premium calculations—for example, one vehicle or $100 of payroll in workers’ compensation. They standardize rate making and ensure premiums are proportional to the risk. Misidentifying exposure units can lead to incorrect pricing. More info
What does the ceding commission represent in a reinsurance contract?
Fee paid by the ceding insurer to the reinsurer
Commission paid by the reinsurer to the ceding insurer to cover acquisition and administration costs
Profit-sharing arrangement between insurers
Premium withheld by the reinsurer
The ceding commission is an amount the reinsurer pays to the ceding insurer to cover part of the acquisition and administrative expenses incurred when writing the original policy. It is negotiated as part of the reinsurance agreement. This makes the cession of risk financially viable for primary insurers. More info
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Study Outcomes

  1. Understand Policy Cancellation and Nonrenewal Rules -

    Learn the specific conditions under Maryland law that allow insurers to cancel or nonrenew property and casualty policies, including required notices and timelines.

  2. Analyze Personal Injury Protection (PIP) Benefits -

    Break down the coverage limits, eligibility criteria, and claim procedures for PIP benefits in Maryland to ensure proper application during policy reviews.

  3. Apply Maryland Licensing Requirements -

    Identify the steps, fees, and continuing education mandates needed to obtain and maintain a Maryland property and casualty insurance license.

  4. Evaluate Practice Test Property and Casualty Questions -

    Use targeted practice test questions to assess your knowledge gaps and reinforce learning in high-yield topics relevant to the Maryland P&C exam.

  5. Improve Exam Readiness and Confidence -

    Utilize instant scoring and detailed feedback to track your progress, focus on weak areas, and build the confidence needed for successful exam performance.

Cheat Sheet

  1. Policy Cancellation & Nonrenewal Rules -

    In Maryland, insurers must give at least 20 days' notice for cancellation after the first 60 days of a policy's inception and 45 days' notice before nonrenewal, per the Maryland Insurance Administration. Use the "20-45" mnemonic to recall these required timeframes. Always verify with MDIA bulletins for any legislative updates.

  2. Personal Injury Protection (PIP) Benefits Structure -

    PIP covers medical expenses, wage loss, and funeral costs regardless of fault, often summarized by the mnemonic "MWF" (Medical, Wage, Funeral). Standard practice-test limits in Maryland scenarios are $2,500 per person, with defined priority of payment under the state's no-fault guidelines. Reviewing the NAIC Model Rule 17 alongside Maryland statutes helps clarify how PIP coordinates with health plans.

  3. Insurable Interest & Principle of Indemnity -

    Insurable interest requires the insured to face a financial loss at the time of the covered event, while indemnity restores policyholders to their pre-loss position without profit. Remember the ACV formula: ACV = Replacement Cost - Depreciation, an ISO standard for property claims. This principle keeps claims fair and aligns with AAIS guidelines.

  4. Key Coverages & Endorsements -

    HO-3 offers open perils on dwellings and named perils on personal property; adding endorsements like Replacement Cost (RCMP) upgrades property coverage from ACV to full replacement cost. Use the "RECS" mnemonic - Replacement, Earthquake, Contents, Seasons - to recall common add-ons. Always compare ISO form filings via SERFF for up-to-date rates and forms.

  5. Maryland P&C Licensing & CE Requirements -

    To earn a Maryland P&C license, candidates must complete a 40-hour prelicensing course and pass the state exam, as administered by the Maryland Insurance Administration. Licensees renew every two years, completing 24 hours of continuing education with a minimum of 3 ethics hours. Track CE credits through Sircon or other NAIC-approved platforms to stay compliant.

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