17 Free Pennsylvania P&C Insurance Law Practice Questions (2026)

Question 1 (Chapter 7)

A Pennsylvania insurance producer's license expires on May 31, 2026. The producer submits a complete renewal application and fee on June 15, 2026. The Insurance Department processes the renewal on June 20, 2026. What is the status of the producer's authority to sell insurance between June 1 and June 20, 2026?

• A) The producer has continuous authority because the renewal application was filed within 30 days of expiration.
• B) The producer has authority under a grace period that extends coverage until July 31, 2026.
• C) The producer may sell insurance only if they obtained a temporary license before May 31, 2026.
• D) The producer's authority lapsed on June 1, 2026, and they may not sell insurance until the renewal is processed and issued on June 20, 2026.

Question 2 (Chapter 7)

A Pennsylvania resident insurance producer wishes to add a casualty line to their existing property license. The producer has not taken any pre-licensing education for the casualty line. Which of the following is true regarding the producer's ability to obtain the additional line?

• A) The producer must complete a pre-licensing course for the casualty line before taking the exam, as Act 142 only waived the requirement for the initial license.
• B) The producer must wait until their property license renews before applying for the casualty line.
• C) The producer may take the casualty line exam without pre-licensing education, as Act 142 of 2024 eliminated the pre-licensing requirement for all lines.
• D) The producer can only add the casualty line if they appoint a manager who holds that line.

Question 3 (Chapter 7)

An insurer wishes to terminate the appointment of a Pennsylvania insurance producer without cause. The producer has been appointed for 18 months. Which statement correctly describes the insurer's notice obligation under the Agency Termination Act?

• A) No advance notice is required because the appointment is less than two years old.
• B) The insurer need only notify the Pennsylvania Insurance Department, not the producer.
• C) The insurer must give the producer advance written notice before terminating without cause, regardless of the producer's tenure.
• D) The notice requirement applies only if the producer requests it in writing.

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 resident insurance producer is called to active military duty for a period of 18 months. The producer wishes to maintain their license during this period without fulfilling the continuing education requirement. Which of the following is true under Pennsylvania law?

• A) The producer's license is automatically suspended upon deployment and must be reinstated upon return.
• B) The producer may request an extension of the continuing education deadline due to military service under 40 P.S. § 310.8.
• C) The producer must complete the continuing education requirement during deployment to avoid license lapse.
• D) The producer's license will expire on schedule, and they must reapply as a new applicant upon return from duty.

Question 6 (Chapter 7)

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

• A) Permitted, as long as the producer does not collect premiums during the suspension.
• B) Allowed if the producer obtains written permission from the insurer they represent.
• C) A violation of 40 P.S. § 310.11, as the producer is engaging in insurance transactions while licensed status is suspended.
• D) Not a violation if the producer only services existing policies and does not write new business.

Question 7 (Chapter 7)

A Pennsylvania insurance producer is appointed by an insurer to sell its homeowners policies. Six months later, the insurer terminates the appointment without cause and gives the producer no advance notice before the termination takes effect. The producer claims this violates the Agency Termination Act. Which statement is correct regarding the producer's claim?

• A) The claim is invalid because the Agency Termination Act applies only to life insurance producers, not property and casualty producers.
• B) The claim is invalid because the Agency Termination Act does not require insurers to give any advance notice when terminating without cause.
• C) The claim is valid because the Act applies to all lines, including property and casualty, and requires the insurer to give the producer advance written notice before terminating an appointment without cause.
• D) The claim is valid only if the producer had been appointed for more than two years.

Question 8 (Chapter 7)

An insurance producer in Pennsylvania is found to have misrepresented the terms of a policy to a client during the sale. Which section of the Unfair Insurance Practices Act specifically prohibits this action?

• A) 40 P.S. § 1171.5(a)(8) - Rebates
• B) 40 P.S. § 1171.5(a)(3) - Defamation
• C) 40 P.S. § 473 - Twisting
• D) 40 P.S. § 1171.5(a)(1) - Misrepresentation

Question 9 (Chapter 7)

A Pennsylvania insurance producer receives a premium payment from a client and deposits it into the producer's business operating account, which is used to pay rent, utilities, and employee salaries. The producer maintains a detailed ledger showing the amount of client funds held. 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 the ledger matches the bank balance.
• B) This is allowed if the producer obtains written consent from the client to commingle funds.
• C) This is permissible only if the producer's business account is interest-bearing and the interest is paid to the client.
• D) This violates the producer's fiduciary responsibility under 40 P.S. § 310.96 because insurance funds must be kept in a separate, identifiable fiduciary capacity.

Question 10 (Chapter 7)

A Pennsylvania insurance producer is accused of boycotting by refusing to place business with a specific insurer unless the insurer agrees to exclude a competing producer from certain territories. Under the Unfair Insurance Practices Act, which section prohibits this conduct?

• A) 40 P.S. § 1171.5(a)(1) - Misrepresentation
• B) 40 P.S. § 1171.5(a)(8) - Rebates
• C) 40 P.S. § 473 - Twisting
• D) 40 P.S. § 1171.5(a)(4) - Boycott, coercion, or intimidation

Question 11 (Chapter 7)

An insurance producer in Pennsylvania is found to have knowingly made a false statement of material fact on an application for insurance. Which of the following best describes the legal consequence under Pennsylvania law?

• A) This is a violation of the producer's fiduciary duty but is not a criminal act.
• B) This is permissible if the false statement was made to benefit the client.
• C) This constitutes insurance fraud under 18 Pa.C.S. § 4117 and may result in felony charges.
• D) This violates the Unfair Insurance Practices Act but only results in a civil fine.

Question 12 (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 13 (Chapter 8)

An insurer nonrenews a commercial package policy in Pennsylvania. Under 40 P.S. §§ 3401-3407 and 31 Pa. Code Ch. 113.81-.88, which statement is correct about the insurer's nonrenewal notice obligation?

• A) No notice is required because commercial policies may be nonrenewed at will.
• B) The insurer need only notify the producer, not the insured.
• C) The insurer must give the insured written notice of nonrenewal before the policy's expiration date.
• D) Notice is required only if the nonrenewal is based on the insured's claims history.

Question 14 (Chapter 8)

An employee suffers a heart attack while lifting heavy equipment at work in Pennsylvania. Under the Pennsylvania Workers' Compensation Act (77 P.S. §§ 1, 21-22, 461-463, 676), is this injury covered?

• A) No, because heart attacks are not considered 'injuries' under the Act.
• B) Only if the employee had a pre-existing heart condition.
• C) No, unless the heart attack occurred on the employer's premises during regular hours.
• D) Yes, if the employment contributed to or aggravated the heart attack.

Question 15 (Chapter 8)

Which of the following statements about the exclusive remedy provision of the Pennsylvania Workers' Compensation Act (77 P.S. §§ 72, 481) is correct?

• A) Employees can sue their employer for pain and suffering in addition to receiving workers' compensation benefits.
• B) The exclusive remedy does not apply if the employer intentionally caused the injury.
• C) Employees may elect to reject workers' compensation and sue for full tort damages instead.
• D) Workers' compensation benefits are the employee's sole remedy against the employer for a work-related injury.

Question 16 (Chapter 8)

An employer in Pennsylvania has three part-time employees who each work 20 hours per week. Under the Pennsylvania Workers' Compensation Act (77 P.S. §§ 1, 21-22, 461-463, 676), are these employees covered?

• A) No, because part-time employees are excluded from coverage.
• B) Only if they work more than 30 hours per week on average.
• C) No, unless they are paid a salary rather than an hourly wage.
• D) Yes, because the Act covers all employees regardless of the number of hours worked.

Question 17 (Chapter 8)

Under Pennsylvania law governing cancellation and nonrenewal of homeowners policies (40 P.S. § 1171.5(a)(9) and 31 Pa. Code Ch. 59 and 59.6), which statement is correct about the insurer's nonrenewal notice obligation?

• A) No written notice is required for nonrenewal of a homeowners policy.
• B) The insurer need only notify the mortgagee, not the insured.
• C) The insurer must give the insured written notice before the policy's expiration date.
• D) Notice is required only when the nonrenewal is based on nonpayment of premium.