17 Free Pennsylvania Property & Casualty Practice Questions: Insurance Regulation & Producer Law (2026)

Question 1 (Chapter 7)

A newly licensed Pennsylvania property and casualty producer receives their first commission check from an insurer for a policy sold. The producer deposits the check into their personal checking account and uses the funds to pay personal bills. Which statement best describes the producer's action under Pennsylvania law?

• A) This is permissible as long as the producer reconciles the account monthly and retains records of the insurance funds.
• B) This is allowed if the producer notifies the insurer in writing within 30 days of depositing the funds.
• C) This is permissible only if the producer has obtained written consent from the insurer to commingle funds.
• D) This violates the producer's fiduciary responsibility under 40 P.S. § 310.96 and may result in disciplinary action.

Question 2 (Chapter 7)

A Pennsylvania insurance producer is accused of twisting by a competitor. Which of the following producer actions, if proven, would constitute twisting under Pennsylvania law?

• A) Offering a client a $100 gift card to purchase a policy from the producer's insurer instead of a competitor's.
• B) Failing to disclose that a policy does not cover flood damage when the client lives in a flood-prone area.
• C) Inducing a policyholder to drop an existing life insurance policy and purchase a similar one from another insurer using misrepresentations about the new policy's benefits.
• D) Providing a client with a comparative quote from three different insurers for the same coverage.

Question 3 (Chapter 7)

A Pennsylvania insurance producer is convicted of a felony unrelated to insurance activities. Under Pennsylvania law, what is the producer's duty regarding this conviction?

• A) The producer has no duty to report non-insurance-related criminal convictions to the Insurance Department.
• B) The producer must report the conviction only if it involves dishonesty or breach of trust.
• C) The producer must promptly report the conviction to the Insurance Department, without waiting for the next license renewal.
• D) The producer must report the conviction to the Insurance Department only at the time of license renewal.

Question 4 (Chapter 7)

Pennsylvania's continuing education requirement for insurance producers (40 P.S. § 310.8(b); 31 Pa. Code Ch. 39a) is measured over a two-year license cycle. A producer completes most of the required CE hours in the first year of the cycle and only a small amount in the second year, but the total over the two years meets the requirement. What is the producer's CE status at the end of the cycle?

• A) The producer has not met the requirement because an equal number of hours must be completed in each year of the cycle.
• B) The producer has not met the requirement because the hours completed in the second year, standing alone, are insufficient.
• C) The producer has not met the requirement unless the hours completed in the first year are disregarded.
• D) The producer has met the requirement because the hours are measured over the full two-year cycle rather than year by year.

Question 5 (Chapter 7)

A Pennsylvania insurance producer is appointed by an insurer to sell commercial property policies. The producer discovers that the insurer is financially impaired and unable to meet its obligations. The producer continues to solicit and bind new policies for this insurer without disclosing the impairment to clients. Which action by the producer violates Pennsylvania law?

• A) Soliciting new business for an insurer known to be financially impaired.
• B) Binding coverage for an insurer without the producer's own errors and omissions insurance.
• C) Receiving commissions from an insurer that is under regulatory supervision.
• D) Failing to disclose the insurer's financial impairment to clients before binding coverage.

Question 6 (Chapter 7)

A Pennsylvania insurance producer is accused of defamation by a competing producer. Which of the following producer actions, if proven, would constitute defamation under the Unfair Insurance Practices Act?

• A) Offering a client a lower premium than a competitor for equivalent coverage.
• B) Refusing to place business with an insurer unless the insurer agrees to stop doing business with a competing producer.
• C) Using a competitor's trademark in advertising without permission.
• D) Making a false statement about a competitor's financial condition that is known to be false or made with reckless disregard for the truth.

Question 7 (Chapter 7)

A Pennsylvania insurance producer is appointed by Insurer X to sell commercial general liability policies. The producer's appointment is terminated by Insurer X after 12 months, without cause and without the insurer giving any advance notice. The producer claims this violates the Agency Termination Act (40 P.S. § 241). Which statement is correct regarding the producer's claim?

• A) The producer's claim is valid because the Act requires the insurer to give the producer advance written notice before terminating without cause.
• B) The producer's claim is invalid because the Agency Termination Act does not apply to commercial general liability appointments.
• C) The producer's claim is invalid because the insurer is not required to give any notice when terminating without cause.
• D) The producer's claim is valid only if the producer had been appointed for more than two years.

Question 8 (Chapter 7)

A Pennsylvania producer is convicted of theft by deception (a misdemeanor) unrelated to insurance activities. Under 40 P.S. § 310.78, what is the producer's mandatory duty regarding this conviction?

• A) The producer must report the conviction only if asked by the Department during a licensing renewal.
• B) The producer must report the conviction only if it results in a license suspension or revocation in another state.
• C) The producer must promptly report the conviction to the Pennsylvania Insurance Department, regardless of whether it is insurance-related.
• D) The producer has no duty to report misdemeanor convictions unless they are directly related to insurance activities.

Question 9 (Chapter 7)

A Pennsylvania producer is suspended by the Insurance Department for unfair claims settlement practices. During the suspension, the producer continues to solicit and bind new policies for clients. Which of the following best describes the legal consequence of the producer’s actions?

• A) The producer’s actions are permissible because the suspension only applies to claims handling, not sales.
• B) The producer’s actions are not prohibited because the suspension does not explicitly mention sales activities.
• C) The producer’s actions are grounds for immediate license revocation under 40 P.S. § 310.91.
• D) The producer’s actions are a violation of 40 P.S. § 310.11(2) for continuing to transact insurance while suspended.

Question 10 (Chapter 7)

A Pennsylvania producer is handling a claim for a client and advises the client to exaggerate injuries to increase the claim settlement. This action violates which specific provision of the Unfair Insurance Practices Act?

• A) 40 P.S. § 1171.5(a)(1) – Misrepresentation in claims
• B) 40 P.S. § 1171.5(a)(2) – False advertising
• C) 40 P.S. § 1171.5(a)(5) – Boycott, coercion, or intimidation
• D) 40 P.S. § 1171.5(a)(6) – Unfair settlement practices

Question 11 (Chapter 7)

A Pennsylvania insurance producer is handling a workers' compensation claim for a client. The producer advises the client to falsely claim that an injury occurred at work when it actually happened off-duty, to secure benefits under the Workers' Compensation Act. Under Pennsylvania law, which of the following best describes the producer's action?

• A) This constitutes insurance fraud under 40 P.S. §§ 325.1-.62 and 18 Pa.C.S. § 4117.
• B) This is a permissible claim negotiation tactic under the Unfair Insurance Practices Act.
• C) This is allowed if the producer believes the client deserves benefits regardless of the injury location.
• D) This violates only the Workers' Compensation Act, not insurance fraud statutes.

Question 12 (Chapter 7)

A Pennsylvania insurance producer's license is suspended by the Insurance Department for violating fiduciary responsibilities. During the suspension, the producer continues to negotiate and sell insurance policies to Pennsylvania residents. Which of the following best describes the producer's action?

• A) This is permissible if the producer only services existing policies during the suspension.
• B) This constitutes practicing insurance without a valid license and is subject to disciplinary action.
• C) This is allowed because suspension only affects the producer's ability to renew, not to conduct business.
• D) This violates only the producer's appointment agreements, not state licensing law.

Question 13 (Chapter 7)

A Pennsylvania insurance producer is appointed by an insurer to sell commercial property policies. The producer discovers that the insurer is under an order of supervision by the Insurance Department due to impaired financial condition. The producer continues to solicit and bind new policies for this insurer without disclosing the supervision order to clients. Which action by the producer violates Pennsylvania law?

• A) The action constitutes twisting under 40 P.S. § 473 because the producer is replacing coverage with a financially impaired insurer.
• B) The action violates the producer's duty to disclose material facts under 40 P.S. § 310.71(b).
• C) The action is permissible if the producer believes the insurer will remain solvent.
• D) The action violates the producer's fiduciary duty to the insurer under 40 P.S. § 310.96.

Question 14 (Chapter 7)

A Pennsylvania insurance producer is appointed by Insurer X to sell personal auto policies. The producer knowingly binds coverage for a client using a binder that Insurer X never authorized, in order to secure the sale before a policy can be issued. The client later cancels the policy after learning the binder was not authorized by Insurer X. Which Pennsylvania statute does this violate?

• A) 40 P.S. § 636.1(a), which addresses what happens to coverage when the named insured dies.
• B) 40 P.S. § 310.48, which addresses misrepresentation in policy applications.
• C) 40 P.S. § 1171.5(a)(2), which addresses false advertising.
• D) 40 P.S. § 310.11, which prohibits a producer from transacting insurance business it is not authorized to transact.

Question 15 (Chapter 7)

A Pennsylvania insurance producer is investigating a claim for a client under a homeowners policy. The producer discovers that the client intentionally set a fire to collect insurance proceeds. The producer advises the client to lie to the insurer about the cause of the fire to secure a payout. Under 40 P.S. § 1171.5(a)(9) and 18 Pa.C.S. § 4117, which of the following best describes the producer’s legal exposure?

• A) The producer violated the Unfair Insurance Practices Act (40 P.S. § 1171.5(a)(9)) by encouraging fraudulent claims and could face disciplinary action under 40 P.S. § 310.91 and criminal penalties under 18 Pa.C.S. § 4117 (insurance fraud).
• B) The producer is not liable because advising a client on claim strategies is protected under attorney-client privilege.
• C) The producer’s actions are permissible if the client signs a waiver acknowledging the advice.
• D) The producer only violated the Agency Termination Act (40 P.S. § 241) by failing to disclose the client’s intent to the insurer.

Question 16 (Chapter 7)

A Pennsylvania insurance producer is appointed by Insurer F to sell workers' compensation policies. The producer fails to disclose that they own a competing public adjuster firm that could benefit financially from denied or delayed claims by Insurer F. This conflict of interest violates which specific Pennsylvania statute?

• A) 40 P.S. § 310.71(b) (Producer Disclosure Requirements), which requires disclosure of material facts, including financial conflicts, that could affect a client's decision.
• B) 40 P.S. § 1171.5(a)(4) (Boycott, Coercion, or Intimidation), as the producer is intimidating insurers into denying claims.
• C) 40 P.S. § 310.96 (Fiduciary Responsibility), which addresses a producer's general duty of loyalty rather than this specific disclosure obligation.
• D) 40 P.S. §§ 325.1-.62 (Insurance Fraud), as the producer is engaging in fraudulent claim practices.

Question 17 (Chapter 7)

A Pennsylvania insurance producer is handling a workers’ compensation claim for an injured employee. The producer advises the employee to falsely claim that the injury occurred at work (when it actually happened off-duty) to secure benefits under the Workers’ Compensation Act (Title 77). Under Pennsylvania law, which of the following best describes the producer’s legal exposure?

• A) The producer committed insurance fraud under 18 Pa.C.S. § 4117 by knowingly assisting in a false claim.
• B) The producer violated 40 P.S. § 1171.5(a)(9) (unfair claims settlement practices) by inducing fraudulent claims.
• C) The producer engaged in misrepresentation (40 P.S. § 1171.5(a)(1)) by advising the employee to lie.
• D) The producer violated fiduciary duty (40 P.S. § 310.96) by failing to act in the employer’s best interest.