We will discuss the basics of Casualty and Property exam, highlighting 10 highly tested topics and providing examples to help you understand. It is important for you to know that there are state-specific regulations and rules that you need to be aware of. In order to pass the exam and become a licensed insurance producer in the state, you will need to demonstrate minimal knowledge relating to general insurance concepts and terminology, as well as the specific characteristics of certain insurance products. You will also need to understand endorsements, additional coverages, exclusions, policy limits, covered perils, and the structure of insurance policies. This exam is required for individuals who wish to transact both commercial and personal lines of insurance.
The ECO Outline Content Exam provides a breakdown of the exam by topic, including the total number of questions on the exam and the time limit for testing. The structure of the P&C exam varies depending on the testing provider and state.
We recommend taking the exam combination wherever it is available. Generally, there are fewer questions on the exam combination and many areas are common to both exams, so there is overlap. Most states also offer the exam combination for P&C, but individual exams for Casualty and Property are offered in all states.
As this information is broad in scope, we suggest that you refer to the examination requirements specific to your state.
What topics should I focus on when studying for the Property and Casualty exam?
When it comes to studying for the P&C exam, you may be tested on any of the topics listed in the outline. It is important to be clear that regardless of the state you are in, there are specific topics that are highly testable. Students should focus on these topics in order to pass the exam. We have identified 10 general topics, but they are not listed in any particular order.
A legal agreement typically includes various components such as binders, warranties, and representations. Additionally, it is common to encounter inquiries about the property and casualty insurance sector. Familiarity with concepts such as the law of large numbers, adverse selection, and insurable interest, as well as different types of risks, perils, and hazards, will establish a basis for understanding insurance terminology and related principles. This knowledge will constitute around 10-15% of your P&C exam.
The video below describes the four components of a legal agreement.
The exam emphasizes the importance of knowing and comprehending the P&C policy structure and common provisions, or terms, included in most policies. It is crucial to be aware of not only the 4 sections of a policy – Declarations, Insuring Agreement, Conditions, and Exclusions – but also the specific locations within the policy where certain information can be found.
Let’s examine a sample inquiry.Output: Let’s explore an instance of a question.
Where can the Duties of the Insured in the Event of a Loss be found in an insurance policy?
A. Coverage AgreementB. StatementsC. TermsD. Additions.
Choice D, as endorsements are not one of the four components of a policy, can be automatically eliminated by examining the four answer choices. Choice A is incorrect since the correct answer is the Insuring Agreement, which is the insurer’s assurance of protection and encompasses the risks covered. The correct answer is not Choice B, as the Declarations page provides details that are specific to the policy, the insured party, and the property. Therefore, the correct answer is Choice C, as the Conditions section outlines the responsibilities of both the insurer and the insured for coverage to be applicable, which includes the Duties of the Insured in the Event of a Loss.
If there is a loss, the responsibilities of the policyholder consist of the Named Insured Provisions, like the liberalization clause, and the Insurer Provisions, which are standard conditions.
3. Property Insurance Basics
The focus of the property portion of the exam is on the fundamentals and property-specific terminology. Test takers will be expected to know and understand the differences between vacancy vs. Unoccupancy, bailee vs. Bailor, and named peril vs. Open peril. A concept that test takers often struggle with is loss valuation, which is the method by which the insurer determines the value of a loss. It is important to know the difference between replacement cost and actual cash value and for which type of loss each valuation method is used.
Other important provisions and terms to know for the exam include, but are not limited to, the Mortgage clause, abandonment, salvage, appraisal, coinsurance, and deductible.
The subsequent video examines the methods used to assess loss.
4. Casualty Insurance Basics
Test takers will require a comprehensive comprehension of negligence, including the components and counterarguments associated with it. Third-party insurance, also known as casualty coverage, is referred to as liability coverage. The foundational principles and terminology specific to casualty insurance concentrate on the casualty segment of the examination, akin to property insurance.
Let’s examine an instance of carelessness.Output: Let’s consider an example of negligence.
Bill was driving at 45 mph in a 35 mph speed limit zone. While Bill did not intentionally run the red light, he failed to obey Bill’s traffic laws due to negligence and was speeding carelessly. As a result, Bill hit another car that was lawfully proceeding through the green light, as he took his eyes off the road to change the radio station.
You can also anticipate encountering multiple inquiries regarding the four categories of liability risks.
The subsequent video provides information about the various forms of liability risks.
5. Homeowners Policies
Since most Property & Casualty agents provide homeowners insurance, individuals who are taking the test can expect to come across 7 to 11 questions related to the following subjects:
To get an overview of the limits of Homeowners Section I Property Coverage, please watch the video below.
The following video offers an overview of the Liability Coverages in Section II for Homeowners.
6. Personal Auto Policies
Regarding the aforementioned, individuals taking the test can anticipate encountering inquiries. Personal Auto Policies (PAP) are significantly prone to being assessed and constitute 7 to 11 test queries, similar to Homeowners Policies.
7. Commercial Property Policies
Commercial Property Coverage is typically a part of a Commercial Package Policy, but it can also be a standalone policy. Test takers are expected to know the additional coverages and extensions for both broad and special causes of loss.
One can also anticipate encountering various inquiries on the subsequent forms of coverage for commercial properties.
8. Commercial General Liability Coverage
The Comprehensive General Liability Coverage provides insurance for businesses against the four legal liability risks.
There are two examples of legal liabilities for exposures. At a retail furniture company’s location, a customer hits their head on a coffee table on display and trips over a rug. The furniture company is responsible for bodily injury under the premises’ exposure.
In light of the operational risk, the furniture company bears responsibility for the property harm in this particular situation. During the delivery of furniture to a different customer’s residence, an employee accidentally drops a substantial dresser, resulting in damage to the customer’s hardwood flooring.
The examination will also prioritize the policy sections of the Comprehensive General Liability policy.
Section I – Insurances.
Section II – Who qualifies as an Insured.
Section III – Insurance Coverage Limits.
Section IV – Conditions for General Liability in Business.
Section V – Meanings.
9. Businessowners Policies (BOP)
The P&C examination will emphasize the significance of business hazards that are qualified and disqualified for coverage under a Businessowners policy.
The following video offers a summary of qualifying hazards.
The individuals who take the test are expected to know that the Form Coverage Businessowners provides commercial property and liability coverage, and the coverage will be tested in detail in the following sections.
Section I – Real Estate.
Section II – Responsibility.
Section III – General Policy Conditions.
Selected Endorsements.
10. State Insurance Laws
Familiarize yourself with the expectations to successfully clear the examination in your state, thus it is crucial to review the requirements specific to your state. It is important to note that in some states, candidates seeking a license are required to pass the state portion of the exam separately from the general portion. This section of the exam, which focuses on the state’s insurance laws, can account for approximately 20% – 30% of the total exam.
The main subjects examined in many states are consequences and corrective measures, unjust business practices, the upkeep of licenses (including ongoing education and renewal), qualifications and prerequisites for obtaining licenses, various license types, and the responsibilities of the Commissioner (Director, Superintendent, etc.). Furthermore, there will be specific regulations pertaining to products, such as benefits for workers’ compensation, state risk plans, financial accountability for automobile policies, and requirements for policy renewal and cancellation.
Here is an illustration of a question regarding state laws that you might encounter on the exam.
This is an example of Unfair Trade Practice. The company falsely claims that their insurance pays rival producers, which is not true.
A. DiscountingB. SlanderC. DistortionD. Unjust differentiation.
The defamatory statement that harms the financial condition of an insurance company is an intentional act of harm. The correct answer is Choice B. Unfair discrimination is when individuals with the same risk classification are unreasonably denied coverage or charged different rates. Misrepresentation involves making a false statement to induce a policyholder to surrender, cancel, or lapse their policy. Rebating is offering a credit or discount on the premium that is not specified in the policy.
How many math questions are on the P&C exam?
You will certainly encounter numerous figures on the exam, but that does not imply there are numerous computations. Generally, the P&C exam consists of 1-3 math queries. It is not primarily a math test, so dedicating a substantial amount of time to studying or fretting about math is unnecessary. Nonetheless, one area that will likely be assessed and involves a calculation is coinsurance.
The subsequent video demonstrates the process of determining coinsurance to determine value.
How can I start studying for the Property and Casualty exam?
The A.D. Banker’s P&C online course consists of videos, exercises, mock tests, and audio, and can be enhanced with flashcards, study guides, and a web seminar.
They should not be the exclusive way of learning material; tests should be used as assessment tools to gauge your understanding. This strategy leads to comprehension, as opposed to memorization. We recommend that you spend the most time reading the content. We recommend that you spend 40 hours studying for your exam.
Our first attempt at passing your licensing exam provides you with more information on how to best utilize our online course – check it out today!
Subjects: Prelicensing, Property & Casualty, Study Techniques, Insurance, States.