17 Free Pennsylvania Property & Casualty Practice Questions: Pennsylvania Property & Casualty Law (2026)
How to Use This Pennsylvania Law Set
Pennsylvania law is not a single block on the Property and Casualty outline. It is woven through sections 1, 3, 4 to 9, 11 and 12, and the two statutes that shape the most questions are the Motor Vehicle Financial Responsibility Law (Title 75) and the Workers' Compensation Act (Title 77). This set tests both, along with insurer solvency, rebating and nonrenewal.
Read each stem for the statute it is really about. Several questions describe an employer, an employee and a policy exclusion, and the point is almost always that the Act decides what the employee is owed, not the policy wording.
Practice Questions 1-6: Insurer Solvency, Auto Benefits, Workers' Compensation Coverage and Exclusive Remedy
What the Commissioner can do about an insurer short of surplus, first-party auto benefits, whether a heart attack is covered, claims regulations, late notice on an uninsured motorist claim and the exclusive remedy rule.
Question 1 (Chapter 8)
An insurer's surplus falls below the minimum required by 40 P.S. § 72. What action can the Commissioner take under 40 P.S. § 112?
- A) Immediately revoke the insurer's certificate of authority without a hearing.
- B) Require the insurer to cease writing new business only in the lines where surplus is deficient.
- C) Order the insurer to submit a remedial plan to restore surplus to the required level.
- D) Automatically place the insurer into liquidation under the Insurance Department Act of 1921.
Show answer & explanation
Answer: C
Under 40 P.S. § 112, when an insurer's surplus falls below the minimum required by § 72, the Commissioner has the authority to examine the insurer's financial condition and order a remedial plan to correct the deficiency. The Commissioner cannot revoke the certificate of authority without due process, cannot restrict only specific lines based on surplus deficiency, and liquidation is not automatic but may follow if the remedial plan fails or the insurer is insolvent.
Question 2 (Chapter 8)
A Pennsylvania-licensed insurer wants to introduce a new commercial property insurance form. Under 40 P.S. § 510, what must the insurer do before using the form in Pennsylvania?
- A) Submit the form to the NAIC for model law compliance review.
- B) Obtain a certificate of authority specifically for commercial property lines.
- C) File the form with the PID for approval at least 30 days prior to use.
- D) Provide 60 days' notice to all policyholders of the form change.
Show answer & explanation
Answer: C
Under 40 P.S. § 510, an insurer must file insurance policy forms with the Pennsylvania Insurance Department for approval before they can be used in the Commonwealth. There is no requirement to submit forms to the NAIC, obtain a separate certificate of authority for specific lines, or provide notice to policyholders for form approval. The PID reviews the form for compliance with state law and regulations.
Question 3 (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.
Show answer & explanation
Answer: D
Under the Pennsylvania Workers' Compensation Act, a heart attack (or similar condition) can be considered a covered injury if the employment contributed to, aggravated, or precipitated the condition. Coverage is not excluded for heart attacks per se, does not require a pre-existing condition, and is not limited to incidents on the premises during regular hours; the key is whether work was a contributing factor.
Question 4 (Chapter 8)
A Pennsylvania insurer uses a policy form that contains a provision deemed unfair or deceptive under the Unfair Insurance Practices Act. Which section of the Pennsylvania Insurance Department's regulations specifically addresses unfair claims settlement practices?
- A) 31 Pa. Code Ch. 146a (Privacy of Personal Information)
- B) 31 Pa. Code Ch. 59 (Cancellation and Nonrenewal)
- C) 40 P.S. § 1171.5(a)(10) (Unfair Claims Settlement Practices Act)
- D) 31 Pa. Code Ch. 146 (Unfair Claims Settlement Practices)
Show answer & explanation
Answer: D
While 40 P.S. § 1171.5(a)(10) is the statutory basis for the Unfair Claims Settlement Practices Act, the specific regulations that define and enforce unfair claims settlement practices are found in 31 Pa. Code Ch. 146. Chapter 146a deals with privacy, Chapter 59 with cancellation and nonrenewal, and although the statute is the enabling authority, the question asks for the regulatory section that specifically addresses the practices, which is 31 Pa. Code Ch. 146.
Question 5 (Chapter 8)
Under Pennsylvania's UM/UIM statute (40 P.S. § 2000 and 75 Pa.C.S. §§ 1731 et seq.), what is the consequence if an insured fails to provide timely notice of an accident to the insurer?
- A) The UM/UIM claim is automatically denied regardless of prejudice to the insurer.
- B) The insured loses the right to UM/UIM coverage for that accident permanently.
- C) The insurer may deny the claim only if it can show that the late notice prejudiced its ability to investigate or defend the claim.
- D) The claim is subject to a 50% reduction in benefits due to late notice.
Show answer & explanation
Answer: C
Pennsylvania law requires that late notice to an insurer for a UM/UIM claim does not automatically bar recovery; the insurer must demonstrate that the late notice prejudiced its ability to investigate or defend the claim (40 P.S. § 2000; 75 Pa.C.S. §§ 1731 et seq.). Options A, B, and D incorrectly state automatic denial, permanent loss of coverage, or a fixed benefit reduction, which are not supported by statute.
Question 6 (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.
Show answer & explanation
Answer: C
Under 40 P.S. §§ 3401-3407 and 31 Pa. Code Ch. 113.81-.88, an insurer that nonrenews a commercial policy must give the insured written notice before the expiration date. There is no at-will exception, notice runs to the insured (not merely the producer), and the obligation is not limited to claims-based nonrenewals.
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Practice Questions 7-12: Policy Exclusions, Occupational Disease, Auto Benefits, Rebating and Nonrenewal
Whether a policy can exclude lunch-break injuries, occupational disease, which auto benefit every policy must carry, a rebate offer and nonrenewal notice for a private passenger auto policy.
Question 7 (Chapter 8)
A Pennsylvania employer's workers' compensation insurance policy excludes coverage for injuries sustained during the employee's lunch break when they leave the premises to eat at a nearby restaurant. Under the Pennsylvania Workers' Compensation Act (77 P.S. §§ 1, 21-22, 461-463, 676), is this exclusion enforceable?
- A) No, because the exclusion attempts to waive statutory workers' compensation benefits.
- B) Yes, because injuries during lunch breaks are never covered.
- C) Yes, if the employee was not performing work duties at the time of injury.
- D) No, but only if the injury occurred on the employer's premises.
Show answer & explanation
Answer: A
Under the Pennsylvania Workers' Compensation Act, employers cannot exclude or waive statutory coverage through policy provisions (77 P.S. §§ 1, 21-22, 461-463, 676). The Act provides coverage for injuries arising out of and in the course of employment, and while lunch breaks off-premises may sometimes be excluded based on specific circumstances, a blanket exclusion in the policy is unenforceable as it conflicts with the statutory scheme. Options B, C, and D are incorrect: lunch break injuries are not categorically barred, coverage is not solely based on performing work duties at the exact moment, and premises location is not the sole determinant.
Question 8 (Chapter 8)
A Pennsylvania employer's workers' compensation policy excludes coverage for an injury that occurs when an employee, during their paid lunch break, slips and falls in the employer-owned cafeteria. Under the Pennsylvania Workers' Compensation Act (77 P.S. §§ 1, 21-22, 461-463, 676), is this exclusion enforceable?
- A) Yes, because lunch breaks are never considered within the course of employment
- B) Yes, because the employer can exclude cafeteria accidents by policy endorsement
- C) No, because the Workers' Compensation Act prohibits all exclusions in policies
- D) No, because injuries occurring on employer premises during a paid break are generally covered
Show answer & explanation
Answer: D
Under the Pennsylvania Workers' Compensation Act, injuries occurring on employer premises during a paid break, such as in an employer-owned cafeteria, are generally considered to arise out of and in the course of employment and are therefore covered. Exclusions for such injuries are not enforceable. Option A is incorrect because paid lunch breaks on premises can be within the course of employment. Option B is incorrect because employers cannot unilaterally exclude coverage for injuries that are compensable under the Act. Option C is incorrect because while the Act limits exclusions, it does not prohibit all exclusions (e.g., for intentional self-harm or intoxication may be excluded in some contexts, though not via standard policy provisions).
Question 9 (Chapter 8)
A Pennsylvania employer's workers' compensation insurance policy denies a claim for an employee who developed tuberculosis after working in a homeless shelter operated by the employer. Under the Pennsylvania Workers' Compensation Act (77 P.S. §§ 1, 21-22, 461-463, 676), is this occupational disease covered?
- A) Yes, if the employee's exposure to the disease is attributable to their employment
- B) No, because tuberculosis is not listed as an occupational disease in the Act
- C) No, because infectious diseases are always excluded from coverage
- D) Yes, but only if the employee worked in a healthcare facility
Show answer & explanation
Answer: A
Under the Pennsylvania Workers' Compensation Act, occupational diseases are covered if the disease arises out of and in the course of employment and is causally related to the employment. Tuberculosis can be an occupational disease if the employee's exposure is due to their work conditions (e.g., working in a homeless shelter with high exposure risk). The Act does not require a specific list of diseases; coverage depends on the causal link. Option B is incorrect because the Act does not maintain an exclusive list. Option C is incorrect because infectious diseases are not automatically excluded. Option D is incorrect because coverage is not limited to healthcare facilities; any employment with sufficient exposure risk can qualify.
Question 10 (Chapter 8)
Under the Pennsylvania Motor Vehicle Financial Responsibility Law (75 Pa.C.S. §§ 1711-1725), which first-party benefit must be included in every private passenger auto policy issued in Pennsylvania?
- A) Income continuation
- B) Medical benefits
- C) Essential services
- D) Funeral benefit
Show answer & explanation
Answer: B
Medical benefits of at least $5,000 are the only first-party benefit every Pennsylvania private passenger auto policy must contain. Income loss (A), funeral benefits (D) and accidental death benefits must be made available to the insured, who may accept or decline them; essential services (C) is not a Pennsylvania first-party benefit at all.
Question 11 (Chapter 8)
A producer tells a prospective client that if the client purchases a homeowners policy, the producer will give the client a 5% discount on the premium for also buying a life insurance policy from the same company. Which prohibited practice does this represent under Pennsylvania law?
- A) Rebate
- B) Twisting
- C) Misrepresentation
- D) Unfair discrimination
Show answer & explanation
Answer: A
40 P.S. § 1171.5(a)(8) bars any rebate, which is a discount or other inducement offered for purchasing insurance. Twisting (§ 473) involves misrepresenting coverage to induce replacement of a policy, misrepresentation (a)(1)-(2) involves false statements, and unfair discrimination involves differential treatment based on prohibited classifications.
Question 12 (Chapter 8)
A private passenger auto insurer intends not to renew a policy at the end of the term. Under 40 P.S. § 991.2001 et seq., which statement is correct about the insurer's nonrenewal notice obligation?
- A) The insurer must give the insured written notice of nonrenewal before the end of the policy term.
- B) No notice is required because auto policies renew automatically unless the insured objects.
- C) The insurer need only notify the lienholder, not the insured.
- D) Notice is required only if the nonrenewal is based on the insured's driving record.
Show answer & explanation
Answer: A
Nonrenewal of private passenger auto policies is governed by 40 P.S. § 991.2001 et seq., which requires the insurer to give the insured written notice before the end of the policy term. Options B, C, and D incorrectly describe the notice as unnecessary, owed only to a lienholder, or limited to driving-record-based nonrenewals.
Practice Questions 13-17: Insolvency, Mandatory Coverage and Course of Employment
The Commissioner's power over an insolvent insurer, who must carry workers' compensation, and injuries on the employer's premises during breaks and after hours.
Question 13 (Chapter 8)
An insurer’s surplus falls below the minimum required by 40 P.S. §72 and the Commissioner determines the insurer is insolvent. What action may the Commissioner take under Pennsylvania law?
- A) Require the insurer to lower its premiums
- B) Issue a new certificate of authority
- C) Order the liquidation of the insurer
- D) Impose a monetary fine only
Show answer & explanation
Answer: C
Under 40 P.S. §112, the Commissioner has the authority to order the liquidation of an insurer that is insolvent or otherwise fails to meet solvency standards. Adjusting premiums, issuing new certificates, or merely fining are not the primary remedial powers in an insolvency situation.
Question 14 (Chapter 8)
Under the Pennsylvania Standard Fire Policy (40 P.S. § 636), what happens to the coverage if the named insured dies and the policy is not otherwise assigned?
- A) Coverage terminates immediately upon the death of the named insured.
- B) Coverage continues for the benefit of the surviving spouse until policy expiration.
- C) Coverage passes to the legal representative of the deceased named insured.
- D) Coverage is suspended until the estate is probated.
Show answer & explanation
Answer: C
Under 40 P.S. § 636.1(a), if the named insured dies and the policy is not assigned, the insurance under the Standard Fire Policy passes to the legal representative of the deceased named insured. Coverage does not terminate, is not limited to the surviving spouse, and is not suspended during probate; it continues for the benefit of the estate through the legal representative.
Question 15 (Chapter 8)
A Pennsylvania employer’s workers’ compensation insurer denies a claim for an injury sustained by an employee who was driving a company vehicle during their lunch break but was still on the employer’s premises. Under 77 P.S. §§ 461-463, is this denial justified?
- A) Yes, the denial is justified because injuries occurring during unpaid lunch breaks are excluded from coverage under Pennsylvania law.
- B) Yes, the denial is justified because personal errands (e.g., driving to a restaurant) are not covered, even if the employee is on the premises.
- C) No, the denial is unjustified because company vehicle use during any break is considered work-related if the employee remains on the employer’s premises.
- D) No, the denial is unjustified because all injuries occurring on the employer’s premises are covered, regardless of whether the employee is on a break.
Show answer & explanation
Answer: C
77 P.S. § 461 covers injuries that arise out of and in the course of employment. If the employee is using a company vehicle and remains on the employer’s premises (e.g., driving within the plant grounds or parking lot), the injury is presumed work-related, even if it occurs during a paid or unpaid break. Option A is incorrect because paid breaks are covered, and unpaid breaks may still be covered if work-related activities continue. Option B is wrong because personal errands are not the issue here; the key factor is company vehicle use on employer premises. Option D is too broad—not all injuries on premises are covered (e.g., injuries during personal detours off premises).
Question 16 (Chapter 8)
A Pennsylvania employer’s workers’ compensation insurer denies a claim for an injury sustained by an employee who slipped on ice while walking to their parked car in the employer’s parking lot after hours. The employer argues that the injury occurred outside of working hours. Under 77 P.S. § 461, is this denial justified?
- A) No, the denial is unjustified because parking lot injuries are covered if they occur on the employer’s premises, even after hours.
- B) Yes, the denial is justified because the injury occurred after hours and outside the scope of employment.
- C) Yes, the denial is justified because commuting injuries are excluded under Pennsylvania law.
- D) No, the denial is unjustified only if the employee was performing a work-related task (e.g., retrieving tools) at the time of the injury.
Show answer & explanation
Answer: A
77 P.S. § 461 covers injuries that arise out of and in the course of employment, which includes premises liability risks (e.g., slipping on ice in an employer-owned parking lot), even after hours, if the employee is acting in furtherance of employment. Option B is incorrect because premises injuries are covered if they are work-related. Option C is wrong because commuting injuries are covered only if they occur on the employer’s premises (e.g., parking lot) and are incidental to employment. Option D is too narrow—the injury does not need to involve a work task; the location and employer control are sufficient.
Question 17 (Chapter 8)
A Pennsylvania employer, TechSolutions Inc., has eight employees who work remotely from home but are full-time and paid by the company. The employer does not purchase workers’ compensation insurance, arguing that remote work excludes coverage under 77 P.S. § 461. Which of the following statements is correct under Pennsylvania law?
- A) The employer is not required to secure workers’ compensation insurance because remote employees are excluded from coverage under § 461 if they work outside the employer’s premises.
- B) The employer must secure workers’ compensation insurance because § 461 requires coverage for all ‘employees’, regardless of work location, if they are under the employer’s control and direction (e.g., paid by the company, subject to company policies).
- C) The employer must secure workers’ compensation insurance only if the remote employees spend more than 50% of their time on company-owned equipment.
- D) The employer is exempt from workers’ compensation requirements because remote work is considered ‘independent contracting’ under Pennsylvania law.
Show answer & explanation
Answer: B
Correct (B): Under 77 P.S. § 461, workers’ compensation coverage is required for all ‘employees’, defined as individuals under the employer’s control and direction (e.g., paid by the company, subject to company policies, and performing work for the employer’s benefit). Remote work does not exclude coverage—what matters is the employer-employee relationship. Since these workers are full-time, paid by TechSolutions, and subject to company policies, they are covered employees, and the employer must secure workers’ compensation insurance. Why not A? Remote work does not exclude coverage—§ 461 applies to all employees, regardless of location, if they meet the employer-employee relationship test. Why not C? There is no 50% threshold—coverage depends on employer control, not equipment use. Why not D? Remote work does not automatically classify workers as ‘independent contractors’—Pennsylvania uses control and direction as the test, not work location.
The Pennsylvania Law Mistakes That Cost Marks
Letting a policy override the Act. A workers' compensation policy cannot exclude a benefit the Act requires, so a policy exclusion for lunch-break injuries does not defeat a compensable claim.
Reading remote work as an exemption. Employees who work from home and are paid and directed by the employer are still employees, and the employer must secure workers' compensation coverage.
Narrowing the course of employment. An injury on the employer's premises during a break, or in the employer's parking lot, can still arise in the course of employment.
Treating late notice as automatic denial. On an uninsured or underinsured motorist claim, the insurer has to show that late notice prejudiced it.
Forgetting the exclusive remedy has an edge. The employee cannot sue the employer in negligence for a work injury but can still pursue a negligent third party.
Missing a rebate. A discount or other inducement offered to buy insurance is a rebate under 40 P.S. 1171.5(a)(8), even when it is attached to another product.
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