North Dakota Property & Casualty Insurance License Exam Practice Test
Frequently asked questions
How many North Dakota Property & Casualty Insurance Exam practice questions are here?+
A full bank of original North Dakota Property & Casualty Insurance Exam practice questions across the official content areas, weighted like the real exam, with explanations. Free, no signup.
What is the North Dakota Property & Casualty Insurance Exam exam like?+
A multiple-choice exam. Practice by topic here, then take the full timed mock exam to gauge readiness.
Are these the real exam questions?+
No. Every question is 100% original, written from public primary sources with explanations. We never copy real exam questions or paid prep material.
Can I study in Chinese or Spanish?+
PrepPass practice is in English, 中文 and Español. The official exam is in English — switch the question language to English any time to rehearse the exact terminology you'll see on test day.
Sample practice questions
A few real questions from this free bank, with full explanations. Use the practice tool above for the whole set.
- 1. General Insurance Principles
Which type of risk is insurable by a property and casualty insurer?
- a.Speculative risk, because it offers a chance of gain
- b.Pure risk, because it involves only the chance of loss or no loss
- c.Market risk, because prices are predictable
- d.Dynamic risk, because it changes with the economy
Answer: b
Explanation: Insurers cover pure risk, which is a situation with only two possible outcomes: a loss or no loss, with no possibility of gain. Speculative risk (such as gambling or investing) includes a chance of gain and is not insurable, because insurance is meant to restore a loss, not create profit. Market and dynamic risks generally involve speculative elements and broad economic change that are not suited to insurance pooling.
- 2. Property Insurance Fundamentals
Actual cash value (ACV) is most accurately calculated as:
- a.Replacement cost plus the cost of upgrades
- b.The original purchase price of the property
- c.Replacement cost minus depreciation
- d.The amount the insured paid in premiums
Answer: c
Explanation: Actual cash value equals the current replacement cost of the property minus depreciation for age, wear, and obsolescence. It reflects what the property is actually worth at the time of loss, not what it would cost to buy new. Replacement cost coverage, by contrast, pays to repair or replace with new property of like kind and quality without deducting depreciation, subject to policy conditions.
- 3. Dwelling Policy (DP)
A key difference between a Dwelling policy and a Homeowners policy is that the Dwelling policy:
- a.Always includes broader theft and liability coverage
- b.Does not automatically include personal liability coverage
- c.Can only be written on owner-occupied homes
- d.Never covers the structure itself
Answer: b
Explanation: Dwelling (DP) policies are designed primarily for property coverage on residences, including rentals and non-owner-occupied homes, and they do not automatically include personal liability or medical payments coverage; liability must be added by endorsement. Homeowners policies package property and personal liability together. This makes the Dwelling form flexible for landlords and situations that do not fit a standard Homeowners eligibility.
- 4. Homeowners Policy (HO)
The HO-8 modified form is specifically designed for:
- a.Older homes whose replacement cost far exceeds market value
- b.Luxury homes needing the widest coverage
- c.Renters who do not own the structure
- d.Condominium unit owners
Answer: a
Explanation: The HO-8 modified form is intended for older or historic homes where the cost to replace with identical materials would greatly exceed the home's market value. It typically settles losses on a functional replacement or actual cash value basis rather than full replacement cost, keeping coverage affordable. HO-4 covers renters and HO-6 covers condominium unit owners, which are different needs.
- 5. Personal Auto Policy
In the Personal Auto Policy, which coverage part pays for bodily injury and property damage the insured causes to others?
- a.Part D – Coverage for Damage to Your Auto
- b.Part C – Uninsured Motorists
- c.Part A – Liability Coverage
- d.Part B – Medical Payments
Answer: c
Explanation: Part A (Liability Coverage) responds when the insured is legally responsible for bodily injury or property damage to others arising out of the use of a covered auto, paying damages and providing a defense. Part B pays medical expenses for the insured and passengers, Part C covers injuries caused by uninsured or underinsured drivers, and Part D covers physical damage to the insured's own vehicle.
- 6. Personal Auto Policy
The difference between underinsured motorists (UIM) and uninsured motorists (UM) coverage is that UIM applies when the at-fault driver:
- a.Has no insurance at all
- b.Has insurance, but with limits too low to cover the full injury
- c.Cannot be identified
- d.Is the insured's own family member
Answer: b
Explanation: Underinsured motorists coverage applies when the at-fault driver does carry liability insurance, but the limits are insufficient to fully pay the injured insured's damages; UIM makes up part of the shortfall. Uninsured motorists coverage applies when the at-fault driver has no liability insurance or cannot be identified (such as a hit-and-run). Both protect the innocent insured from another driver's inadequate coverage.
- 7. Casualty & Liability Insurance
An umbrella liability policy primarily provides:
- a.First-dollar coverage with no underlying insurance
- b.Coverage only for property owned by the insured
- c.Additional liability limits above underlying policies and broader coverage for some claims
- d.A replacement for the insured's auto physical damage coverage
Answer: c
Explanation: A personal umbrella policy provides an extra layer of liability limits that sits above the insured's underlying home and auto liability coverage, and it may cover some claims the underlying policies exclude (subject to a self-insured retention). It generally requires the insured to maintain specified underlying limits. It is excess liability protection, not a first-dollar or property coverage.
- 8. Workers Compensation
Workers compensation insurance operates on the principle that benefits for a covered work-related injury are paid:
- a.Only if the employer is proven negligent
- b.Only if the employee files a lawsuit
- c.On a no-fault basis, regardless of who was at fault
- d.Only for injuries occurring away from work
Answer: c
Explanation: Workers compensation is a no-fault system: an employee injured in the course and scope of employment receives statutory benefits regardless of who was at fault, and in exchange generally gives up the right to sue the employer. This trade-off provides prompt, predictable benefits to workers while limiting employers' liability. The concept is uniform nationwide, even though specific benefit amounts are set by each state.
- 9. Policy Structure & Provisions
A binder in property and casualty insurance is:
- a.A permanent replacement for the policy
- b.Temporary evidence of coverage until the formal policy is issued
- c.A document that cancels coverage
- d.A list of policy exclusions
Answer: b
Explanation: A binder is a temporary agreement, oral or written, that provides immediate evidence of insurance coverage until the insurer issues the formal policy or declines the risk. It contains the essential terms so the insured is protected in the interim. A binder is not permanent; it is superseded once the actual policy is delivered or the coverage is formally declined.
- 10. North Dakota Auto Coverage (No-Fault)
What is North Dakota's minimum property-damage liability limit for an auto policy?
- a.$10,000 per accident
- b.$25,000 per accident
- c.$50,000 per accident
- d.North Dakota has no property-damage minimum
Answer: b
Explanation: Per the North Dakota Insurance Department, the minimum property-damage liability limit is $25,000 per accident, alongside the 25/50 bodily-injury minimums. Verify current figures with the North Dakota Insurance Department.