17 Free Pennsylvania Property & Casualty Practice Questions: Commercial Property, Businessowners & Crime (2026)

Question 1 (Chapter 4)

A Pennsylvania contractor's tools and equipment are stolen from a job site. The contractor has a Commercial Inland Marine policy with a Contractor's Equipment floater. Which of the following statements is TRUE regarding coverage under this form?

• A) Coverage applies only when the equipment is stored at the contractor's primary business location.
• B) The policy covers the equipment while it is being transported over land, but not while it is at a temporary job site.
• C) Theft is automatically excluded unless the contractor purchases a separate Crime endorsement.
• D) Coverage follows the equipment wherever it goes, subject to the policy terms, including while at a job site or in transit.

Question 2 (Chapter 4)

A Pennsylvania farmer has a ISO Farm Property coverage forms (FP series) that includes coverage for the dwelling, barns, and farm personal property. Which of the following statements is TRUE regarding the coverage for farm personal property under this form?

• A) Farm personal property coverage includes livestock by default without needing a separate endorsement.
• B) Farm personal property covers only equipment used exclusively for farming operations, excluding personal use items.
• C) Livestock is covered under the Farm personal property section only if it is housed inside a covered building at the time of loss.
• D) Farm personal property includes machinery, equipment, supplies, and feed used in the farming operation, but does NOT include livestock unless specifically added.

Question 3 (Chapter 4)

A Pennsylvania business has a Commercial Property policy that includes the Value Reporting Form endorsement (CP 13 10). At the end of the reporting period, the insured discovers that the values reported were lower than the actual values of the insured property. What is the MOST likely consequence?

• A) The insurer will pay the full loss amount regardless of the under-reporting, as long as the loss is covered.
• B) The insurer will deny the claim entirely due to misrepresentation.
• C) The insurer will audit the insured's books and adjust the premium retroactively, but pay the claim in full.
• D) The insurer will reduce the claim payment proportionally based on the degree of under-reporting of values.

Question 4 (Chapter 4)

A Pennsylvania business purchases a Commercial Property policy that includes the Value Reporting Form endorsement (CP 13 10). The insured reports values monthly, and the premium is adjusted based on these reports. If the insured fails to submit a value report for a given month, what is the default value used for that month to determine the premium?

• A) The last reported value is used.
• B) The maximum limit of insurance is used.
• C) The average of the previous three months' reports is used.
• D) Zero is used, resulting in no premium for that month.

Question 5 (Chapter 4)

A Pennsylvania business has a Businessowners Policy (BP 00 03). The insured purchases the Hired and Non-Owned Auto Liability endorsement (BP 04 04). Which of the following scenarios would be covered under this endorsement?

• A) The business owner drives a company-owned vehicle to a personal appointment and causes an accident.
• B) A customer's vehicle is damaged while parked in the business's lot.
• C) An employee uses their personal vehicle to run a business errand and causes an accident.
• D) The business's leased delivery truck is involved in a collision.

Question 6 (Chapter 4)

A Pennsylvania business purchases a Commercial Package Policy that includes Commercial Property and Commercial General Liability coverage parts. The policy is cancelled by the insurer for nonpayment of premium. Which of the following statements is TRUE regarding the cancellation?

• A) The insurer may cancel the policy for nonpayment of premium without giving the insured any advance written notice.
• B) The insurer may cancel the policy for nonpayment of premium only with the consent of the Pennsylvania Insurance Department.
• C) The insurer must give the insured advance written notice of cancellation for nonpayment of premium, as required under Pennsylvania law.
• D) The insurer may cancel the policy for nonpayment of premium only at the end of the policy term.

Question 7 (Chapter 4)

A Pennsylvania contractor uses a Commercial Inland Marine policy with a Transportation floater to cover electronics while in transit. The shipment is damaged when the truck is involved in a collision. Which of the following is TRUE regarding coverage under this form?

• A) Coverage applies only if the collision occurs within 100 miles of the insured's premises.
• B) Coverage is excluded if the goods are left unattended in the vehicle overnight.
• C) The Transportation floater covers goods against all risks of physical loss while in transit, subject to policy exclusions.
• D) The floater only covers damage caused by the inherent vice of the goods.

Question 8 (Chapter 4)

A Pennsylvania business has a Commercial Property policy that includes the Value Reporting Form endorsement (CP 13 10). The insured reports values quarterly. If the insured fails to submit a value report for a quarter, what is the default value used for that quarter to determine the premium?

• A) The value reported in the previous quarter.
• B) The last value reported.
• C) The limit of insurance shown in the declarations.
• D) Zero, resulting in no premium for that quarter.

Question 9 (Chapter 4)

A Pennsylvania business has a Commercial Property policy that includes Business Income coverage. After a covered loss, the business resumes operations in 30 days, but due to ongoing customer loss, continues to experience reduced income for another 45 days. The policy includes the Extended Business Income endorsement (CP 15 37) with a 60-day period. What is the maximum number of days for which the Extended Business Income coverage can provide payments after the property is repaired and operations resume?

• A) 15 days
• B) 60 days
• C) 30 days
• D) 45 days

Question 10 (Chapter 4)

A Pennsylvania manufacturer has a Commercial Package Policy that includes Commercial Property and Commercial Crime coverage parts. An employee steals money from the company safe. Which Crime coverage form would most likely provide coverage for this loss?

• A) Forgery or Alteration Insuring Agreement
• B) Inside the Premises - Theft of Money and Securities Insuring Agreement
• C) Employee Theft Insuring Agreement of the base Commercial Crime Coverage Form (CR 00 01)
• D) Outside the Premises Insuring Agreement

Question 11 (Chapter 4)

A Pennsylvania business owns a Commercial Property policy with a Business Income coverage form. After a covered fire, the business is unable to operate for 60 days while repairs are made. However, the business continues to incur fixed expenses (e.g., rent, salaries) during this period. Which of the following coverages would provide reimbursement for these continuing expenses under the Business Income form?

• A) Extra Expense coverage, which reimburses expenses incurred to avoid or minimize suspension of operations.
• B) Business Income coverage, which reimburses the loss of net profit and continuing expenses during the period of restoration.
• C) Contingent Business Income coverage, which covers loss of income from dependent businesses.
• D) Leasehold Interest coverage, which covers loss of rent payments due to the insured's inability to occupy the premises.

Question 12 (Chapter 4)

A Pennsylvania manufacturer purchases a Commercial Property policy with a 'Peak Season Limit of Insurance' endorsement (CP 12 30). The policy has a base limit of $500,000 for business personal property, and the endorsement increases the limit by 50% during the peak season (November 1 to January 31). If a covered loss occurs on December 15 and the actual value of the business personal property is $750,000, how much will the insurer pay, assuming no deductible and no coinsurance?

• A) $750,000, because the peak season limit is $750,000 (a 50% increase on the $500,000 base limit).
• B) $500,000, because the base limit applies during the peak season.
• C) $625,000, because the endorsement applies only a partial, pro-rated increase based on the date of loss.
• D) $500,000, because the endorsement does not apply to losses exceeding the base limit.

Question 13 (Chapter 4)

A Pennsylvania business purchases a Businessowners Policy (BP 00 03) with the 'Hired and Non-Owned Auto Liability' endorsement (BP 04 04). The business hires a delivery driver to transport goods using the driver's personal vehicle. While making a delivery, the driver causes an accident that injures a pedestrian. Which of the following is TRUE regarding coverage under this endorsement?

• A) The endorsement does not cover the accident because the driver was using a non-owned vehicle.
• B) The endorsement covers the accident only if the driver has their own auto liability policy.
• C) The endorsement covers the bodily injury liability for the accident because the driver was hired by the insured.
• D) The endorsement excludes coverage for accidents involving hired drivers.

Question 14 (Chapter 4)

A Pennsylvania business purchases a Commercial Crime policy with the 'Securities Deposited with Others' coverage form (CR 04 10). The business deposits $200,000 in securities with a financial institution for safekeeping. The securities are stolen when the institution is robbed. The policy has a $500,000 limit for this coverage form and a $5,000 deductible. How much will the insurer pay for this loss?

• A) $195,000, after applying the $5,000 deductible.
• B) $200,000, because the loss is fully covered under the coverage form.
• C) $190,000, because the insurer applies a 5% penalty for losses involving financial institutions.
• D) $0, because the policy excludes theft from financial institutions.

Question 15 (Chapter 4)

A Pennsylvania restaurant owner purchases a Businessowners Policy (BP 00 03) with the Utility Services – Time Element endorsement (BP 04 57). During a winter storm, a tree falls on a power line, causing a 3-day power outage. The restaurant’s walk-in freezers fail, spoiling $15,000 worth of inventory. The insured submits a claim under the Utility Services endorsement, but the insurer denies it, stating that the Spoilage endorsement (CP 04 40) is required for coverage of spoiled goods. Which of the following is TRUE under Pennsylvania policy terms?

• A) The insurer must pay for the spoiled inventory because the Utility Services – Time Element endorsement includes direct physical loss coverage for perishable goods when caused by a covered utility interruption.
• B) The insurer is correct—the Utility Services – Time Element endorsement only covers lost income and extra expenses, not direct physical damage like spoiled inventory.
• C) The insured must purchase both the Utility Services – Time Element endorsement AND the Spoilage endorsement to recover for spoiled inventory in this scenario.
• D) The insured can recover for the spoiled inventory under the Businessowners Policy’s Business Income coverage, as it includes indirect losses from utility interruptions.

Question 16 (Chapter 4)

A Pennsylvania warehouse purchases a Commercial Property policy with a Causes of Loss – Broad Form and adds the Spoilage endorsement (CP 04 40). During a covered power outage caused by a lightning strike, the warehouse’s refrigerated goods spoil, resulting in a $200,000 loss. The insurer denies the claim, stating that the power outage was caused by ‘electrical breakdown’, which is excluded. The insured argues that the Spoilage endorsement covers the loss because the underlying peril (lightning) was covered. Under Pennsylvania Spoilage endorsement terms, which of the following is TRUE?

• A) The insurer is correct—the Spoilage endorsement excludes losses caused by electrical breakdown, even if the underlying peril (lightning) was covered.
• B) The insurer may reduce the claim by 25% if the spoilage was partially due to negligence (e.g., improper storage).
• C) The insurer must pay the claim because the Spoilage endorsement covers losses when the underlying cause of the power outage is a covered peril (e.g., lightning).
• D) The insured can recover only if the power outage lasted more than 48 hours, as the Spoilage endorsement has a ‘duration requirement’.

Question 17 (Chapter 4)

A Pennsylvania retail store purchases a Businessowners Policy (BP 00 03) with the Protective Safeguards endorsement (BP 04 30). The policy requires the store to maintain a sprinkler system, but the insured fails to test it annually. A fire occurs, and the sprinkler system does not activate, exacerbating the damage. The insurer denies the claim, citing the endorsement violation. The insured argues that the fire was caused by an unrelated electrical fault. Under Pennsylvania Protective Safeguards endorsement terms, which of the following is TRUE?

• A) The insurer is correct—the endorsement requires compliance, and failure to maintain safeguards voids coverage, regardless of the fire’s cause.
• B) The insurer must pay the claim because the electrical fault was a covered peril, and the sprinkler failure was incidental.
• C) The insurer may reduce the claim by 20% if the sprinkler system was partially functional (e.g., some sprinkler heads worked).
• D) The insured can recover full coverage if the fire department confirms the sprinklers were not the sole reason for the loss.