Free Practice
Real questions in the style of the Alaska Casualty Insurance licensing exam, pulled straight from the TESTivity course, each with a plain-English explanation. Start with the Alaska-specific rules below, then work the rest, and unlock the full simulator when you're ready to drill.
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First-time pass rate: 60% · Source: NAIC, 2024 (most recent available statistics)
Question 1
In Alaska, how many hours of continuing education must a resident producer complete each 2-year renewal period (including 3 hours of ethics)?
Alaska follows the standard NAIC model: 24 hours of CE every 2 years, including 3 hours of ethics. The 20-hour figure is Alaska's Life pre-licensing requirement, not CE. Hook: AK CE is 24 every 2 years, 3 of them ethics.
Question 2
The Alaska Division of Insurance is headed by a Director of Insurance who is:
Alaska's Director of Insurance is appointed by the Governor and serves at the Governor's pleasure, enforcing Title 21 of the Alaska Statutes within the Division of Insurance (part of the Department of Commerce, Community, and Economic Development). Hook: in Alaska, the Governor appoints the Director of Insurance.
Question 3
In Alaska, how many days of advance notice must an insurer give before nonrenewing a personal automobile policy?
Alaska requires at least 20 days advance notice to nonrenew a personal auto policy (no reason required), versus 45 days for homeowners nonrenewal. Hook: AK auto nonrenewal is just 20 days - homeowners gets the longer 45.
Question 4
What are Alaska's minimum automobile liability limits - the highest of any state in this manual?
Alaska requires minimum auto liability of 50/100/25 - the highest BI minimums in the manual, double the 25/50 used by Arizona, Colorado, and Georgia, reflecting Alaska's high medical costs. Alaska is fault-based with no mandatory PIP, and UM is mandatory on every policy. Hook: AK minimum auto is a steep 50/100/25 - the highest in the manual.
Question 5
Alaska's insurance guaranty associations protect policyholders of insolvent insurers. Which insurers' policyholders are covered?
Guaranty association protection covers policyholders of admitted insurers only; surplus lines and non-admitted carriers are excluded, and the fund may never be used as a sales inducement. Hook: guaranty funds back admitted insurers only - never surplus lines.
Question 6
Under Alaska's prompt-payment law, within how many days must an insurer pay a clean ELECTRONIC claim?
Alaska requires clean electronic claims paid within 30 days and clean paper claims within 45 days, with interest on late payments. Hook: AK prompt pay is 30 days electronic, 45 days paper.
Question 7
Alaska's workers' compensation temporary total disability (TTD) benefit is distinctive because it replaces:
Alaska replaces 80% of spendable (after-tax) wages for TTD - notably higher than the 66 2/3%-of-gross standard used by most states - reflecting Alaska's high cost of living. All employers with one or more employees must carry coverage. Hook: AK workers' comp pays a rich 80% of after-tax wages - the most generous TTD in the manual.
Question 8
Knowingly allowing a prohibited person (one barred under Section 1033) to engage in the insurance business can result in:
Both the prohibited person and anyone who willfully permits them to participate can face federal criminal penalties, including fines and imprisonment. Hook: letting a barred person work in insurance is a federal crime for both of you.
Question 9
The federal Fair Credit Reporting Act (FCRA) regulates how insurers may:
The FCRA governs how consumer reports (including credit information) are obtained and used, which affects insurers that consider such reports in underwriting and rating. Hook: FCRA rules the use of consumer and credit reports in underwriting.
Question 10
Under the FCRA, when an insurer takes an adverse action (such as declining or rating up a policy) based on information in a consumer report, it must:
The FCRA requires an adverse-action notice telling the consumer that a report influenced the decision and identifying the reporting agency, so the consumer can review and dispute the data. Hook: adverse action based on a report triggers an adverse-action notice to the consumer.
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Question 1
Adverse selection refers to the tendency of:
Adverse selection is the insurer's headache: the people most likely to have a loss are also the most eager to buy and keep coverage. If underwriting didn't push back, the risk pool would fill up with bad risks and the math would collapse. It's exactly why underwriting and exclusions exist.
Question 2
The primary purpose of reinsurance is to:
Reinsurance is insurance for insurance companies. The original insurer (the ceding company) hands off part of its risk to a reinsurer so one giant loss doesn't sink it. Individuals never deal with reinsurers directly; it all happens behind the scenes between carriers.
Question 3
In a reinsurance transaction, the insurer that transfers risk to the reinsurer is known as the:
The company giving away (ceding) the risk is the ceding company; the company taking it on is the reinsurer. Easy hook: to 'cede' is to give up, so the one giving up the risk is the ceding company.
Question 4
A stock insurance company is owned by its:
A stock insurer is owned by its stockholders (shareholders), who receive taxable dividends when the company profits. Policyholders are just customers. Contrast that with a mutual insurer, which is owned by its policyholders. Stock equals stockholders; mutual equals members/policyholders.
Question 5
The authority that the public reasonably believes an agent has, based on the insurer's actions, is called:
Apparent authority is about appearances: what a reasonable customer believes the agent can do based on how the insurer let the agent act (business cards, signage, company applications). Express authority is spelled out in the contract; implied is what's needed to carry out the express. Apparent is the 'looks legit' bucket.
Question 6
An agent who collects premiums on behalf of an insurer holds those funds in a:
Premiums an agent collects belong to the insurer, not the agent, so the agent holds them in a fiduciary capacity, a position of financial trust. Mixing that money with personal funds (commingling) is a big no-no and a fast way to lose a license.
Question 7
An insurance broker legally represents the:
A broker works for the insured, shopping the market on the client's behalf, while an agent works for the insurer. Same exam, different masters: keep them straight. Broker equals the buyer's side; agent equals the company's side.
Question 8
An insurance contract is described as 'aleatory' because:
Aleatory means the exchange of value can be lopsided and depends on chance. You might pay $600 in premium and collect $200,000 on a claim, or pay for years and never file one. That built-in inequality, hinging on whether a loss happens, is what makes the contract aleatory.
Question 9
Insurance contracts are considered 'unilateral' because:
Unilateral means only one side makes a legally enforceable promise, and it's the insurer, who promises to pay covered claims. The insured doesn't actually promise to keep paying premiums; they just won't get coverage if they stop. One enforceable promise equals unilateral.
Question 10
Which of the following is NOT one of the four essential elements of a valid contract?
The four elements are agreement (offer and acceptance), consideration, competent parties, and legal purpose. A notarized signature isn't on the list, so it's the odd one out. Consideration, by the way, is what each side brings to the table: the insured's premium and the insurer's promise to pay.
Question 1
Market value of a building differs from replacement cost in that market value includes what replacement cost does not?
Market value reflects what the property would sell for, including the land and location-driven demand, while replacement cost is purely the cost to rebuild the structure. The two can differ widely. Hook: market value includes the land and the neighborhood; replacement cost is just bricks and labor.
Question 2
A key difference between a named perils policy and an open perils (special form) policy involves the burden of proof. Under an open perils policy, who carries the burden regarding coverage?
Under named perils, the insured must show the loss was caused by a listed peril. Under open perils (all-risk or special form), coverage is presumed unless the insurer proves an exclusion applies, so the burden shifts to the insurer. Open perils is the broader coverage. Hook: named perils, the insured proves it's covered; open perils, the insurer proves it's excluded.
Question 3
An open perils (all-risk or special form) policy covers what?
Open perils coverage protects against all direct physical losses unless a peril is specifically excluded, making it broader than named perils. The exclusions list defines what's left out. Hook: open perils covers everything except what's specifically excluded.
Question 4
An indirect (consequential) loss is best illustrated by which of the following?
An indirect, or consequential, loss is the financial fallout that follows a direct loss, like the income a business loses while closed for repairs. Business income (interruption) coverage addresses it. Hook: indirect loss is the ripple effect, the income lost after the physical damage.
Question 5
The coinsurance clause in a property policy is designed to do what?
The coinsurance clause pushes insureds to insure their property to an agreed percentage of value (commonly 80%). Carry less, and a penalty reduces partial-loss payments. It keeps premiums fair across policyholders. Hook: coinsurance nudges you to insure to value, or share the loss.
Question 6
The policy limit (limit of insurance) represents what?
The limit of insurance is the most the insurer will pay for a covered loss; amounts above it are the insured's responsibility. Hook: the limit is the ceiling on what the insurer pays.
Question 7
Absolute (strict) liability holds a party liable for harm regardless of what?
Strict (absolute) liability holds a party responsible for harm without proof of negligence or fault, typically for inherently dangerous activities (like blasting) or, in some contexts, defective products. Hook: strict liability means liable even without fault.
Question 8
Under a pro rata other insurance provision, when two policies cover the same loss, each insurer pays what?
A pro rata provision splits a loss among insurers in proportion to each policy's limit, so a policy carrying half the total coverage pays half the loss. It keeps the insured from collecting more than the actual loss. Hook: pro rata splits the loss by each policy's share of the total limits.
Question 9
Under most property policies, the insured generally may NOT do what after a loss?
Property policies typically prohibit abandonment: the insured can't simply dump damaged property on the insurer and demand the full amount. The insurer decides whether to repair, replace, or pay. Hook: you can't abandon the wreck to the insurer and demand a full check.
Question 10
A physical hazard is best illustrated by which of the following?
A physical hazard is a tangible condition of property or environment that increases risk, like icy steps, faulty wiring, or stored chemicals. It exists in the physical world, unlike moral or morale hazards. Hook: a physical hazard is a real-world condition you could point to.
Question 1
A combined single limit (CSL) auto liability policy differs from a split-limit policy in that it:
A combined single limit gives one pool of money per accident that can be used for bodily injury and property damage in any combination, instead of separate per-person and per-accident caps. It offers more flexibility on large losses. Hook: combined single limit is one bucket for everything per accident.
Question 2
Under a 25/50/25 split limit, three people are injured in one at-fault accident with bodily injury claims of $30,000, $20,000, and $15,000. How much will the bodily injury portion pay?
The first claim is capped at the 25,000 per-person limit, the other two ($20,000 and $15,000) are under that cap and paid in full, summing to 60,000. But the 50,000 per-accident bodily injury limit caps the total payout at 50,000. Hook: apply the per-person cap first, then the per-accident cap can still trim the total.
Question 3
Under the PAP, Medical Payments coverage for the named insured and family members applies:
For the named insured and resident family members, Med Pay follows the person: it applies when they are struck by a vehicle as pedestrians or while riding in other autos, not only in the insured's car. Other passengers are covered while occupying the insured auto. Hook: for you and your family, Med Pay follows the person, not just the car.
Question 4
Uninsured motorist (UM) coverage protects the insured when:
UM coverage steps in when an at-fault driver has no liability insurance (or cannot be identified, as in a hit-and-run), paying the insured for injuries the other driver should have covered. Hook: uninsured motorist covers you when the at-fault driver has zero insurance.
Question 5
Underinsured motorist (UIM) coverage applies when the at-fault driver:
UIM fills the gap when the at-fault driver does carry liability insurance but the limits run out before the insured's injuries are fully paid. It picks up where the other driver's insufficient coverage stops. Hook: underinsured means they had some coverage, just not enough, and UIM bridges the shortfall.
Question 6
Collision coverage under Part D pays for damage to the insured's auto caused by:
Collision covers damage from the insured's auto colliding with another vehicle or object, or from overturning (upset). Losses like theft, fire, and hail fall under other-than-collision instead. Hook: collision is crashing into something or flipping over.
Question 7
A deductible on physical damage (collision or comprehensive) coverage is:
A deductible is the insured's share of each physical damage loss, paid before the insurer pays the remainder. Choosing a higher deductible lowers the premium. Hook: the deductible is your slice of the loss you pay first.
Question 8
The newly acquired auto provision in the PAP:
The newly acquired auto rule automatically extends the policy to a car the insured buys during the term, for a limited window (commonly up to 14 days), so the insured is not driving uninsured before reporting it. Hook: buy a new car and you get an automatic grace period to add it.
Question 9
An insured wants coverage for the cost of a tow truck after a breakdown on the highway. They should add:
Towing and labor coverage, sometimes called roadside assistance, pays for towing and on-site labor costs after a disablement. It is a low-cost optional endorsement. Hook: towing and labor is the tow-truck and roadside endorsement.
Question 10
The Personal Auto Policy generally excludes coverage when the covered auto is used:
The PAP excludes vehicles used as a public or livery conveyance, meaning carrying people or property for a fee. Personal use, commuting, and vacations are fine; for-hire driving needs commercial or ride-share coverage. Hook: the PAP is personal use, driving for a fee needs a different policy.
Question 1
A commercial insurance program that includes only one line of coverage is called a:
A monoline policy covers a single line of business, such as property alone. Add a second coverage part and it becomes a package. Hook: one line is monoline; two or more is a package.
Question 2
A complete CPP coverage part generally consists of:
Each coverage part is itself built from a declarations page, coverage form(s), a causes-of-loss form (for property), and applicable conditions, all sitting under the shared common declarations and common conditions. Hook: a coverage part stacks its own dec, coverage form, causes-of-loss, and conditions.
Question 3
The Common Policy Conditions apply to:
The common policy conditions, things like cancellation, changes, inspections, and transfer of rights, govern every coverage part in the package, while each part also has its own specific conditions. Hook: common conditions are common to all parts; specific conditions live in each part.
Question 4
The Building and Personal Property Coverage Form (BPP) is part of which CPP coverage part?
The BPP is the workhorse coverage form of the commercial property coverage part, insuring buildings and business personal property. Hook: the BPP is the heart of the commercial property part.
Question 5
Under the BPP, property of others left in the insured's care, custody, or control is:
The BPP has a separate Personal Property of Others category for property of others in the insured's care, custody, or control, such as customers' goods left for service. Hook: customers' property in your care goes under Personal Property of Others.
Question 6
Under the BPP, the building coverage would include:
Building coverage takes in the structure, completed additions, permanently installed fixtures and machinery, and equipment used to maintain or service the building (like heating and air conditioning). Movable contents and stock are business personal property instead. Hook: building is the structure plus what is bolted in to run it.
Question 7
The Special causes-of-loss form provides:
The Special form is open perils: it covers all causes of loss except those specifically excluded, making it the broadest causes-of-loss form. Basic and Broad are named-perils. Hook: Special form is open perils, the broadest of the three.
Question 8
Business income (business interruption) coverage is designed to pay:
Business income coverage replaces the net income (and continuing expenses like payroll) the business would have earned had a covered loss not suspended operations. It is time-element coverage. Hook: business income replaces the profit you lose while you are shut down.
Question 9
The period of restoration for business income coverage generally:
The period of restoration runs from the date of the direct physical loss (after any waiting period) until the property is or should be repaired or replaced with reasonable speed. That window defines how long business income is paid. Hook: restoration runs from the loss to when repairs should be done.
Question 10
A key difference between a CPP and a Businessowners Policy (BOP) is that the CPP:
A CPP is built piece by piece from chosen coverage parts and suits a wide range of businesses, while a BOP is a standardized bundle of property and liability designed for eligible small to mid-size businesses. Hook: CPP is build-your-own; BOP is the prepackaged small-business bundle.
Question 1
An employee is hurt while intoxicated and violating a clear safety rule. Under many state workers compensation laws, benefits may be:
Although comp is no-fault, most statutes still allow benefits to be reduced or denied where the injury results from the worker's intoxication or willful misconduct. No-fault does not mean no defenses. Hook: no-fault still has limits, intoxication and willful misconduct can cut benefits.
Question 2
Part Three (Other States Insurance) of the workers compensation policy:
Part Three provides coverage if the employer begins operations in a state listed there during the policy period, protecting against gaps when the business expands into new states. Hook: Part Three is the just-in-case coverage for states you might expand into.
Question 3
The states where the employer's operations are principally located and listed for full statutory coverage are shown in:
The states where the employer operates and wants full statutory coverage are the listed states under Part One. States of possible future operation go in Part Three. Hook: where you operate now is listed under Part One.
Question 4
An experience modification factor (experience mod) adjusts a workers compensation premium based on:
The experience mod compares an employer's actual losses with those expected for its class. A mod above 1.0 raises premium, below 1.0 lowers it, rewarding good safety records. Hook: the experience mod credits or debits you for your own loss history.
Question 5
Workers compensation rates are commonly expressed as a rate per:
Workers compensation rates are quoted as a dollar rate per $100 of payroll for each classification, so payroll drives the premium. Hook: comp rates are dollars per $100 of payroll.
Question 6
Sole proprietors, partners, and executive officers are often:
Many states let sole proprietors, partners, and corporate officers opt out of their own workers compensation coverage or elect to be included, since they are owners rather than ordinary employees. Hook: owners can often opt in or out of their own comp coverage.
Question 7
A genuine independent contractor, who is not an employee, is generally:
Because workers compensation covers employees, a true independent contractor is normally not covered by the hiring firm's policy and is expected to carry their own. Misclassifying employees as contractors is a common compliance problem. Hook: real independent contractors are not on the hiring firm's comp.
Question 8
In a monopolistic fund state, an employer must buy workers compensation insurance from:
In a monopolistic state, workers compensation must be purchased from the state fund, and private insurers do not write the coverage there. Hook: monopolistic means one seller, the state fund.
Question 9
The federal law that provides workers compensation-type benefits to longshore and harbor workers is the:
The Longshore and Harbor Workers Compensation Act (USL&H) covers maritime workers such as longshoremen and harbor workers who fall outside state workers comp. The Jones Act covers seamen and FELA covers railroad workers. Hook: dockworkers fall under USL&H, the Longshore act.
Question 10
The Jones Act provides a remedy for injured:
The Jones Act gives seamen (crew members of vessels) the right to seek damages from their employer for job injuries. Railroad workers use FELA instead. Hook: seamen sail under the Jones Act; railroaders ride FELA.
Question 1
A personal umbrella policy is designed to:
An umbrella sits on top of the home and auto policies, adding a high layer of liability limits and broadening coverage for some claims the underlying policies exclude. It is excess liability, not property coverage. Hook: the umbrella is extra liability stacked above your home and auto.
Question 2
An insured wants protection against earthquake damage to their home. The most accurate statement is:
Standard property forms exclude earth movement, but earthquake coverage can be added by endorsement or bought separately, commonly with a deductible expressed as a percentage of the dwelling limit rather than a flat dollar amount. The NFIP covers flood, not quake. Hook: earthquake is excluded but buy-back-able, usually with a percentage deductible.
Question 3
A personal articles floater (scheduled personal property endorsement) is a form of:
Scheduling valuables like jewelry, furs, or fine arts is done on a personal articles floater, which is a personal inland marine form. Hook: the personal articles floater is inland marine for your valuables.
Question 4
A key advantage of scheduling jewelry on a personal articles floater rather than relying on a homeowners policy is that the floater:
A floater insures scheduled items for an agreed or appraised value on a broad, open-perils basis, getting past the low special theft sublimits a homeowners policy places on jewelry. Hook: schedule the ring on a floater to beat the homeowners jewelry sublimit.
Question 5
Despite its name, inland marine insurance today mostly covers:
Inland marine grew out of ocean marine to cover property that moves over land or is hard to insure at a fixed site, plus transportation instrumentalities like bridges and tunnels. Hook: inland marine is property on the move over land, not on the sea.
Question 6
A small pleasure boat, such as a canoe or small outboard, is often covered within limits under:
Homeowners policies give limited coverage for small, low-powered watercraft, but larger or faster boats require a dedicated boatowners or yacht policy. Hook: little boats may ride on the homeowners; real boats need their own policy.
Question 7
A FAIR Plan (Fair Access to Insurance Requirements) exists to:
FAIR Plans are state residual-market programs that make basic property insurance available to applicants who cannot get it in the voluntary market, often because of location or risk. Hook: FAIR Plans are the property safety net for hard-to-insure risks.
Question 8
Title insurance protects a property owner or lender against:
Title insurance covers losses from title defects, such as liens, errors in records, or competing ownership claims, that already existed but surface after the property is bought. Hook: title insurance protects against ownership defects hiding in the property's past.
Question 9
Farm and ranch coverage is distinctive because it can combine, in one program:
A farm policy blends personal and business exposures, covering the farm dwelling and personal property along with barns, equipment, livestock, and farm liability, because a farm is both a home and a business. Hook: farm coverage mixes the home and the business under one roof.
Question 10
The residual or shared market (such as assigned risk plans and FAIR Plans) exists mainly to:
The residual or shared market is the insurer of last resort, providing coverage (auto through assigned risk plans, property through FAIR Plans) to applicants the voluntary market turns down. Hook: the residual market is the last resort for risks no one else will write.
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