Virginia Property & Casualty Insurance License Exam — All Questions

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

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.

A hazard that arises from a person's carelessness or indifference to a loss because insurance exists is called a:

• a.Physical hazard
• b.Moral hazard
• c.Morale hazard✓
• d.Legal hazard

A morale hazard is an attitude of carelessness or indifference to loss because the person knows insurance will pay (for example, leaving a car unlocked). A physical hazard is a tangible condition that increases the chance of loss, such as an oily rag pile. A moral hazard involves dishonesty, such as intentionally causing a loss to collect. Distinguishing morale from moral hazard is a common exam point: morale is carelessness, moral is dishonesty.

The principle of indemnity is best described as:

• a.Restoring the insured to the same financial position held before the loss, without gain✓
• b.Paying the full policy limit for every covered loss
• c.Guaranteeing a profit to the insured after a loss
• d.Replacing property with brand-new items regardless of age

Indemnity means restoring the insured to the approximate financial condition they were in just before the loss, so they are made whole but do not profit. Paying the full limit regardless of the actual loss would violate indemnity by allowing gain. Property insurance is built on indemnity, which is why concepts like actual cash value, deductibles, and other-insurance clauses exist to prevent overpayment.

For a property insurance claim to be valid, the insured must have an insurable interest in the property:

• a.Only when the policy is first purchased
• b.Only when the policy is renewed
• c.At no particular time; ownership is enough
• d.At the time of the loss✓

In property and casualty insurance, insurable interest must exist at the time of the loss, because the purpose is to indemnify an actual financial loss. This differs from life insurance, where insurable interest must exist only when the policy begins. A person who has sold the covered property before a loss no longer has an insurable interest and cannot collect.

An insurance contract is described as a contract of adhesion. This means:

• a.Both parties draft the wording together
• b.One party writes the contract and the other must accept or reject it as written✓
• c.The contract can be changed by either party at any time
• d.Only the insured makes an enforceable promise

A contract of adhesion is prepared by one party (the insurer) and offered to the applicant on a take-it-or-leave-it basis, with no negotiation of terms. Because the insured did not write the wording, any ambiguity is generally interpreted in favor of the insured. This is separate from the contract being unilateral (only the insurer makes a legally enforceable promise) and aleatory (an unequal exchange of value dependent on chance).

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

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.

A commercial building is insured under a policy with an 80% coinsurance clause. The building's replacement cost is $500,000, but it is insured for only $300,000. After a $100,000 covered loss, how much will the insurer pay before any deductible?

• a.$75,000✓
• b.$100,000
• c.$60,000
• d.$80,000

The coinsurance formula is: (amount carried / amount required) x loss = payment. The amount required is 80% of $500,000 = $400,000. The amount carried is $300,000. So $300,000 / $400,000 = 0.75, and 0.75 x $100,000 = $75,000. Because the insured carried only 75% of the required amount, the insurer pays 75% of the loss and the insured absorbs the rest as a penalty for underinsurance.

Under a named-perils property policy, the burden of proving that a loss was caused by a covered peril rests with:

• a.The insurer
• b.The insured✓
• c.The state regulator
• d.An independent adjuster only

Under a named-perils (specified perils) form, only perils listed in the policy are covered, so the insured must prove the loss was caused by one of those named perils. Under an open-perils (all-risk) form, coverage applies to any cause of loss not excluded, so the burden shifts to the insurer to prove an exclusion applies. This distinction is a core property concept and does not vary by state.

The purpose of a deductible in a property policy is to:

• a.Increase the insurer's exposure to small claims
• b.Guarantee the insured a profit on each loss
• c.Eliminate the need for coinsurance
• d.Reduce premiums and discourage small or frivolous claims✓

A deductible is the portion of a loss the insured pays before the insurer pays. It reduces premiums by eliminating small claims that are costly to process, and it gives the insured a stake in preventing losses. Deductibles do not guarantee profit and are a separate concept from coinsurance, which addresses the adequacy of the amount of insurance carried.

The clause that determines how a loss is shared when two or more policies cover the same property is the:

• a.Other insurance (pro rata) clause✓
• b.Coinsurance clause
• c.Subrogation clause
• d.Salvage clause

An other-insurance clause, commonly using a pro rata method, coordinates payment when more than one policy covers the same loss so the insured is indemnified but not overpaid. Each insurer pays its share based on the proportion of total coverage it provides. Coinsurance addresses whether enough insurance was purchased, and subrogation lets an insurer recover from a responsible third party after paying a claim.

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

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.

Which Dwelling policy form provides the broadest coverage by insuring the dwelling on an open-perils basis?

• a.The Basic form (DP-1)
• b.The Broad form (DP-2)
• c.The Special form (DP-3)✓
• d.A liability-only endorsement

The Dwelling Special form (DP-3) is the broadest, insuring the dwelling and other structures on an open-perils (all-risk) basis while covering personal property on a named-perils basis. The Basic form (DP-1) is the narrowest, covering a short list of named perils, and the Broad form (DP-2) adds more named perils but is still not open-perils. Broader coverage generally means higher premium.

Under a Dwelling policy, coverage for the physical house structure is provided under:

• a.Coverage A – Dwelling✓
• b.Coverage C – Personal Property
• c.Coverage D – Fair Rental Value
• d.Coverage E – Additional Living Expense

In the Dwelling program, Coverage A insures the dwelling structure itself. Coverage B insures other structures, Coverage C insures personal property, Coverage D provides fair rental value if a rented dwelling becomes uninhabitable, and Coverage E provides additional living expense for an owner-occupant. Knowing the standardized coverage letters is essential and is consistent across the country.

A landlord who rents out a house wants to insure the loss of rent if the home becomes uninhabitable after a covered fire. This need is met by:

• a.Coverage C – Personal Property
• b.Coverage E – Additional Living Expense
• c.Coverage B – Other Structures
• d.Coverage D – Fair Rental Value✓

Fair Rental Value (Coverage D) reimburses a landlord for lost rental income when a covered peril makes the rented dwelling unfit to live in, limited to the time reasonably required to repair. Additional Living Expense (Coverage E) instead pays the extra costs an owner-occupant incurs to maintain a normal standard of living elsewhere. The two coverages address different insureds: a landlord versus a resident owner.

Which Homeowners form covers both the dwelling and personal property on an open-perils basis?

• a.HO-2 (Broad form)
• b.HO-5 (Comprehensive form)✓
• c.HO-3 (Special form)
• d.HO-8 (Modified form)

The HO-5 comprehensive form insures both the dwelling and personal property on an open-perils basis, the broadest coverage among standard forms. The HO-3 special form covers the dwelling on an open-perils basis but personal property only on a named-perils basis. HO-2 covers both on named-perils, and HO-8 is a modified form for older homes that pays on a repair-cost or actual cash value basis rather than full replacement.

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

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.

Under a standard Homeowners policy, which coverage pays for injuries to a guest for which the insured is legally liable?

• a.Coverage C – Personal Property
• b.Coverage D – Loss of Use
• c.Coverage E – Personal Liability✓
• d.Coverage A – Dwelling

Coverage E (Personal Liability) responds when the insured is legally liable for bodily injury or property damage to others, providing a defense and paying damages up to the limit. Coverage F (Medical Payments to Others) is a related coverage that pays smaller medical bills regardless of fault. Coverages A through D address the insured's own property and loss of use, not liability to third parties.

A renter who wants to insure personal belongings and obtain personal liability coverage, but not the building, should buy:

• a.HO-3
• b.HO-6
• c.HO-8
• d.HO-4✓

The HO-4 form is the renters (tenants) policy. It covers the tenant's personal property and provides personal liability and loss-of-use coverage, but not the building structure, which is the landlord's responsibility. HO-6 is for condo owners, who own the interior and some structural elements; HO-3 and HO-8 are owner-occupied dwelling forms that include Coverage A on the structure.

Coverage F (Medical Payments to Others) on a Homeowners policy pays for medical expenses of a guest:

• a.Only if the insured is proven legally at fault
• b.Regardless of whether the insured was at fault✓
• c.Only for members of the insured's household
• d.Only after a lawsuit is filed

Medical Payments to Others (Coverage F) is a goodwill, no-fault coverage that pays reasonable medical expenses for a person injured on the insured premises or by the insured's activities, without regard to legal liability. It does not cover the insured or regular household residents. By paying small claims quickly and without a fault determination, it can help prevent larger liability lawsuits.

Under most Homeowners forms, certain categories of personal property such as jewelry, cash, and firearms are subject to:

• a.Special sublimits that cap the amount payable✓
• b.Unlimited coverage up to the Coverage C limit
• c.Automatic replacement cost with no cap
• d.No coverage of any kind

Homeowners policies apply special limits (sublimits) to certain high-theft or high-value property categories such as cash, jewelry, watches, furs, firearms, and silverware. These items are covered, but only up to a stated dollar cap that is lower than the overall Coverage C limit. Insureds who need more can schedule the items on a Personal Articles/Scheduled Property endorsement for broader, itemized coverage.

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

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.

Under Part D of the Personal Auto Policy, collision coverage pays for damage to the insured's vehicle caused by:

• a.Fire, theft, and falling objects
• b.Impact with another vehicle or object, or upset of the vehicle✓
• c.Injuries to pedestrians
• d.Damage the insured causes to another car

Collision coverage pays for damage to the insured's own auto from colliding with another vehicle or object or from overturning (upset), regardless of fault. Other-than-collision (comprehensive) coverage handles losses such as fire, theft, falling objects, glass breakage, and animal strikes. Damage the insured causes to someone else's car is a liability (Part A) matter, not Part D.

Other-than-collision coverage (comprehensive) under the Personal Auto Policy would pay for loss caused by:

• a.The insured rear-ending another car
• b.The insured striking a guardrail
• c.The insured's car rolling over in a ditch
• d.A tree falling on the parked insured vehicle✓

Other-than-collision (comprehensive) coverage handles losses not caused by collision or upset, such as fire, theft, vandalism, hail, flood, glass breakage, animal strikes, and falling objects like a tree limb. Rear-ending a car, hitting a guardrail, and rolling over are all collision or upset losses covered under collision coverage, not comprehensive.

Uninsured Motorists (UM) coverage under Part C is designed to protect the insured when:

• a.An at-fault driver who caused injury has no liability insurance✓
• b.The insured damages their own vehicle
• c.The insured injures a pedestrian
• d.The insured's car is stolen

Uninsured Motorists coverage steps in when the insured is injured by an at-fault driver who carries no liability insurance (and, with underinsured motorists coverage, when the at-fault driver's limits are too low). It essentially provides the liability protection the negligent driver failed to carry. Damage to the insured's own car is handled by Part D, and injuring others is a Part A liability matter.

An auto liability limit shown as split limits of 100/300/50 means the policy will pay up to:

• a.$100,000 total for all claims combined
• b.$100,000 per accident for property damage
• c.$100,000 per person and $300,000 per accident for bodily injury, and $50,000 for property damage✓
• d.$300,000 per person for bodily injury

Split limits are read as bodily injury per person / bodily injury per accident / property damage per accident. So 100/300/50 means up to $100,000 for one injured person, up to $300,000 total for all bodily injury in one accident, and up to $50,000 for property damage per accident. A single combined single limit, by contrast, provides one total amount for both bodily injury and property damage.

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

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.

The failure to exercise the degree of care that a reasonably prudent person would exercise under similar circumstances is the legal definition of:

• a.Indemnity
• b.Subrogation
• c.Absolute liability
• d.Negligence✓

Negligence is the failure to act with the level of care a reasonably prudent person would use in similar circumstances, and it is the basis of most liability claims. Proving negligence generally requires four elements: a duty owed, a breach of that duty, that the breach was the proximate cause of harm, and actual damages. Absolute (strict) liability applies without proof of negligence in inherently dangerous situations.

To win a negligence claim, an injured party generally must prove all of the following EXCEPT:

• a.A legal duty was owed
• b.The duty was breached
• c.The defendant intended to cause harm✓
• d.Actual damages resulted from the breach

Negligence requires proving duty, breach of that duty, proximate cause, and actual damages, but it does not require intent to cause harm; negligence is about carelessness, not intent. An intentional act that causes harm is a separate category (an intentional tort) and is generally excluded from liability insurance. This makes intent the element that does not belong in a negligence claim.

Liability that is imposed on a party regardless of fault or negligence, such as for abnormally dangerous activities, is called:

• a.Absolute (strict) liability✓
• b.Vicarious liability
• c.Contributory negligence
• d.Comparative liability

Absolute or strict liability is imposed without regard to fault when a party engages in inherently dangerous activities (such as blasting) or under certain statutes; the injured party need not prove negligence. Vicarious liability holds one party responsible for another's acts (such as an employer for an employee). Contributory and comparative concepts address how an injured party's own fault affects recovery.

In a liability policy, the coverage that responds to bodily injury or property damage the insured becomes legally obligated to pay is triggered by:

• a.Any loss the insured reports, whether or not legally liable
• b.Legal liability of the insured to a third party✓
• c.Damage to the insured's own property
• d.The insured's medical expenses

Liability (third-party) coverage responds when the insured is legally obligated to pay damages to another party for bodily injury or property damage, and it typically includes the cost of the insured's legal defense. It does not pay for the insured's own property or injuries, which are first-party coverages. The legal obligation, usually arising from negligence, is what triggers the coverage.

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

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.

Commercial General Liability (CGL) coverage most typically protects a business against:

• a.Third-party bodily injury and property damage claims arising from its operations, products, or premises✓
• b.Damage to the business's own building
• c.Injuries to its own employees on the job
• d.Loss of the business's own inventory to fire

Commercial General Liability covers a business's legal liability to third parties for bodily injury and property damage arising from its premises, operations, products, and completed work, plus personal and advertising injury. Damage to the company's own building or inventory is covered by commercial property insurance, and on-the-job injuries to the company's employees are handled by workers compensation, not CGL.

A Businessowners Policy (BOP) is best described as:

• a.A standalone workers compensation policy
• b.A package policy combining property and liability coverage for eligible small to mid-sized businesses✓
• c.A policy that covers only commercial auto exposures
• d.A life insurance product for business owners

A Businessowners Policy is a packaged commercial policy that bundles commercial property and general liability coverage (and often business income) tailored for eligible small and mid-sized businesses. It is convenient and cost-effective but has eligibility restrictions. Workers compensation and commercial auto are generally written separately, not inside a BOP.

Business income (business interruption) coverage is designed to pay for:

• a.Physical repairs to the damaged building only
• b.Liability claims from customers
• c.The cost of replacing stolen inventory
• d.Lost net income and continuing expenses while operations are suspended by a covered loss✓

Business income coverage replaces the net income the business would have earned and pays continuing normal operating expenses (such as payroll and rent) during the period of restoration after a covered physical loss suspends operations. It addresses the indirect financial consequences of a loss, complementing the direct property coverage that pays to repair or replace the damaged property itself.

An inland marine policy is typically used to cover:

• a.Movable or transportable property and property in transit over land✓
• b.Ocean-going cargo on international voyages only
• c.A building's permanent foundation
• d.An employee's health expenses

Inland marine coverage evolved from ocean marine to insure property that moves over land or is otherwise mobile or in transit, as well as certain fixed property tied to transportation or communication (such as bridges) and hard-to-value items like fine art and contractors' equipment. Ocean marine covers vessels and cargo on the water; buildings and employee health are covered by other lines.

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

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.

Which of the following benefits is NOT typically provided by workers compensation insurance?

• a.Medical care for the work injury
• b.Compensation for the employee's pain and suffering✓
• c.Partial wage replacement during disability
• d.Death benefits to surviving dependents

Workers compensation provides defined benefits: medical treatment for the work injury, partial wage replacement during disability, rehabilitation, and death benefits to dependents. It generally does not pay for pain and suffering, which are non-economic damages available through lawsuits. Because workers comp is a no-fault statutory system, benefits are limited to these scheduled categories rather than open-ended tort damages.

Under a Workers Compensation and Employers Liability policy, Part Two (Employers Liability) is intended to:

• a.Pay statutory workers comp benefits directly
• b.Cover the employee's health insurance premiums
• c.Provide auto liability for company vehicles
• d.Cover the employer against certain work-injury lawsuits not covered by statutory benefits✓

Part One of the policy pays the statutory workers compensation benefits an employer owes by law. Part Two, Employers Liability, protects the employer against certain lawsuits related to workplace injuries that fall outside the exclusive-remedy workers comp system, such as third-party-over actions. Health premiums and auto liability are covered under entirely different policies.

The part of an insurance policy that identifies the insured, the property or risk, the policy period, and the coverage limits is the:

• a.Declarations✓
• b.Insuring agreement
• c.Conditions
• d.Exclusions

The declarations page (the 'dec page') states the specific facts of the policy: the named insured, description of the covered property or risk, policy period, limits of insurance, premium, and any forms attached. The insuring agreement states what the insurer promises to cover, the exclusions state what is not covered, and the conditions set the rules and duties both parties must follow.

Subrogation is best defined as the insurer's right to:

• a.Cancel a policy for any reason at any time
• b.Increase the premium after a claim
• c.Recover a paid claim from a negligent third party responsible for the loss✓
• d.Deny coverage after paying the claim

Subrogation is the insurer's right, after paying a covered claim, to step into the insured's shoes and pursue recovery from the third party who caused the loss. It prevents the insured from collecting twice and helps hold the responsible party accountable, which supports the principle of indemnity. The insured must not do anything after a loss that impairs the insurer's subrogation rights.

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

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.

Which body regulates insurance and licenses resident property and casualty producers in Virginia?

• a.The Virginia Secretary of the Commonwealth
• b.The State Corporation Commission's Bureau of Insurance✓
• c.The Virginia Department of Motor Vehicles
• d.The Virginia Department of Professional and Occupational Regulation

Insurance in Virginia is regulated by the State Corporation Commission (SCC) through its Bureau of Insurance (scc.virginia.gov). The Bureau licenses producers, reviews forms and rates, and enforces the insurance laws. On the exam, remember it is the SCC's Bureau of Insurance, not the DMV or Secretary of the Commonwealth, that licenses property and casualty producers.

For a Virginia auto policy effective on or after January 1, 2025, what are the minimum bodily-injury liability limits?

• a.$25,000 per person / $50,000 per accident
• b.$30,000 per person / $60,000 per accident
• c.$40,000 per person / $80,000 per accident
• d.$50,000 per person / $100,000 per accident✓

Virginia Code 46.2-472 sets minimum bodily-injury limits of $50,000 per person and $100,000 per accident (50/100) for policies effective on or after January 1, 2025, reflecting a scheduled increase. Because minimums can change, confirm the current figures with the Virginia Bureau of Insurance.

For a Virginia auto policy effective on or after January 1, 2025, what is the minimum property-damage liability limit?

• a.$20,000 per accident
• b.$25,000 per accident✓
• c.$10,000 per accident
• d.Virginia has no property-damage minimum

Under Virginia Code 46.2-472, the property-damage liability minimum is $25,000 per accident for policies effective on or after January 1, 2025, alongside the 50/100 bodily-injury minimums. These statutory minimums can change; verify current figures with the Virginia Bureau of Insurance.

Virginia has historically been unusual in how it treats compulsory auto insurance. Which statement best reflects that history?

• a.Virginia has never required auto liability insurance
• b.Virginia formerly let a motorist pay an Uninsured Motor Vehicle (UMV) fee to the DMV instead of buying liability insurance; a producer should confirm the current requirement✓
• c.Virginia requires no-fault PIP on every policy
• d.Virginia bars uninsured motorist coverage

Virginia long allowed a motorist to pay an Uninsured Motor Vehicle (UMV) fee to the DMV as an alternative to carrying liability insurance, an unusual feature among the states. This option has been changing, so a producer should confirm the current requirement with the Virginia DMV and Bureau of Insurance rather than assume the fee is still available.

How is Virginia's auto system best characterized with respect to the right to sue?

• a.A no-fault state that restricts auto injury lawsuits
• b.An add-on state with mandatory first-party PIP benefits
• c.A tort ('at-fault') state in which the injured party keeps the right to sue the at-fault driver✓
• d.A state with no financial-responsibility requirement

Virginia is a tort, or at-fault, state: it does not mandate no-fault PIP, so an injured person keeps the right to sue the at-fault driver for damages. Virginia also follows a strict contributory-negligence rule, under which a claimant even slightly at fault may be barred from recovery. Confirm current requirements with the Virginia Bureau of Insurance.

A Virginia producer offers to rebate part of the commission to a client as an inducement to buy a policy. Under Virginia's unfair trade practices law this is generally:

• a.Permitted if the insurer approves
• b.Permitted for commercial clients only
• c.Prohibited rebating✓
• d.Required to be disclosed but otherwise lawful

Giving any part of the premium or commission, or other valuable consideration not stated in the policy, as an inducement to buy is prohibited rebating under Virginia's unfair trade practices law and can bring fines and license action by the State Corporation Commission's Bureau of Insurance.

Before a licensed Virginia producer may transact business for a specific insurer, what must occur?

• a.Nothing further once the license is issued
• b.The insurer must appoint the producer, with the appointment on file with the Bureau of Insurance✓
• c.The producer must post a surety bond with the state treasurer
• d.The producer must become a resident of the insurer's home state

A license lets a person act as a producer, but to represent a specific insurer that company must appoint the producer, with the appointment on file with the Virginia Bureau of Insurance. A producer may hold appointments from several insurers at once.

Which statement best describes continuing education (CE) for a Virginia resident P&C producer?

• a.CE is never required
• b.CE is required only before the first renewal
• c.State-approved continuing education, including an ethics component, is required each renewal cycle✓
• d.CE can be satisfied only by retaking the licensing exam

Following the NAIC model, Virginia requires resident producers to complete approved continuing education each renewal cycle, including ethics. The exact hour totals are set by the Virginia Bureau of Insurance and should be verified before renewal.