General Insurance Concepts & Property and Casualty Basics: PA-PC practice questions

General Insurance Concepts & Property and Casualty Basics PA-PC-01-050

A homeowners policy on the ISO HO-3 form names “John Smith and his spouse” as insureds. Smith wants to transfer the policy itself to the buyer of his home. How does the form’s Assignment condition treat this transfer?

Assignment is prohibited under Pennsylvania law. Assignment is permitted without the insurer’s consent. Assignment passes to the buyer automatically at closing. Assignment requires the insurer’s written consent.

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The answer is D: Assignment requires the insurer’s written consent.

The Assignment condition in the ISO homeowners form says an assignment of the policy is not valid unless the insurer gives its written consent, because the insurer underwrote a particular insured and risk. It does not ban assignment outright, and selling the house does not move the policy to the buyer automatically. This condition is about assigning the policy itself; courts treat an assignment of a claim for benefits after a loss differently.

Reviewed in our October 2026 Pennsylvania fact-check.

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General Insurance Concepts & Property and Casualty Basics PA-PC-01-051

An employee of a Pennsylvania manufacturing company negligently operates a forklift, causing injury to a third party. The injured party sues the company. Under which theory of liability is the company most likely held responsible?

No liability because the employee acted independently Vicarious liability Absolute liability Strict liability

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The answer is B: Vicarious liability

Vicarious liability holds an employer responsible for the negligent acts of an employee performed within the scope of employment. Strict or absolute liability do not apply to ordinary negligence, and the employee’s actions are not independent of the employer’s relationship.

Reviewed in our October 2026 Pennsylvania fact-check.

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General Insurance Concepts & Property and Casualty Basics PA-PC-01-052

A policyholder schedules a diamond necklace on an endorsement that fixes $5,000 in advance as the amount payable for its loss, without regard to depreciation or market price at the time of loss. The necklace is stolen, and the loss is covered under the endorsement. What loss valuation method is being used?

Agreed value Replacement cost Market value Actual cash value

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The answer is A: Agreed value

An agreed-value endorsement fixes in advance the amount the insurer will pay ($5,000 here), regardless of depreciation or later changes in the market. Actual cash value subtracts depreciation, replacement cost pays what it costs to replace the necklace now, and market value follows what buyers will pay.

Reviewed in our October 2026 Pennsylvania fact-check.

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General Insurance Concepts & Property and Casualty Basics PA-PC-01-053

A commercial auto policy carries an endorsement that applies a $500 per-accident deductible to bodily injury liability damages. The insured is legally liable for $3,200 in bodily injury damages from a single accident. How much of those damages will the insurer ultimately pay?

$3,000 $2,500 $3,200 $2,700

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The answer is D: $2,700

Standard business auto liability coverage has no deductible, but here an endorsement adds one to the damages the insured must pay. The insurer's share is the amount above the deductible: $3,200 − $500 = $2,700. Paying $3,200 ignores the deductible, and $2,500 and $3,000 subtract the wrong amounts.

Reviewed in our October 2026 Pennsylvania fact-check.

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