AZ P&C Exam Flashcards

Q: How many questions are on the Arizona P&C exam?

Arizona Series 13-34 has 150 multiple-choice questions in 150 minutes with a 70% passing score and a $59 PSI exam fee. Five to ten items may be unscored experimental questions.

Q: Does Arizona require pre-licensing education for P&C?

No. Arizona statute does not mandate pre-licensing classroom hours for Property & Casualty producers. Candidates may schedule the PSI exam immediately, though comprehensive self-study is strongly recommended.

Q: What are Arizona's minimum auto liability limits?

Arizona requires 25/50/15: $25,000 bodily injury per person, $50,000 per accident, and $15,000 property damage. Limits increased from 15/30/10 on July 1, 2020 under Senate Bill 1087.

Q: What CE is required for Arizona P&C producers?

Arizona requires 48 continuing-education hours every four-year license period, including at least 6 ethics hours, completed before renewal through DIFI-approved providers.

Question 1

DIFI (Arizona Department of Insurance and Financial Institutions)

Accepted Answer

The Arizona cabinet agency regulating insurers, producers, and adjusters under A.R.S. Title 20. Formed in 2020 by merging the former Department of Insurance (ADOI) with financial-institutions regulation.

Question 2

Arizona Director of Insurance

Accepted Answer

Appointed by the Governor and serves at the Governor's pleasure with no fixed statutory term. Enforces Title 20, adopts A.A.C. rules, and has licensing, rate-review, market-conduct, and solvency authority.

Question 3

Arizona Competitive Rating (File-and-Use)

Accepted Answer

Most P&C lines use file-and-use: insurers file rates with DIFI and may use them immediately. DIFI reviews afterward and may disapprove rates that are excessive, inadequate, or unfairly discriminatory.

Question 4

Arizona Rate Standards (Three-Part Test)

Accepted Answer

Rates must be: (1) not excessive, (2) not inadequate, and (3) not unfairly discriminatory under A.R.S. § 20-356. An answer omitting unfair discrimination is incomplete.

Question 5

Certificate of Authority (Arizona)

Accepted Answer

DIFI license authorizing an admitted insurer to transact insurance in Arizona. Non-admitted (surplus lines) insurers lack a certificate and are not backed by the state guaranty fund.

Question 6

Arizona Insurance Exam Administrator (2026)

Accepted Answer

PSI Services LLC administers Arizona producer exams through the Arizona insurance portal (test-takers.psiexams.com/anzins). Prometric/Pearson VUE references for this exam are outdated.

Question 7

Arizona Series 13-34 Combined P&C Exam Format

Accepted Answer

150 multiple-choice questions, 150 minutes (2.5 hours), 70% passing score, $59 exam fee. PSI may include 5–10 unscored experimental items that do not affect the score.

Question 8

Arizona Pre-Licensing Education for P&C Producers

Accepted Answer

Arizona statute imposes zero mandatory pre-licensing classroom hours. Candidates may schedule the exam immediately, though self-study of national P&C plus Arizona law is essential.

Question 9

Arizona P&C Exam Retake Limit

Accepted Answer

Up to four attempts within a rolling 12-month period. After four failures in 12 months, the candidate must wait one year before another attempt.

Question 10

Arizona Producer License Term

Accepted Answer

Valid for four years, expiring on the last day of the licensee's birth month. This four-year cycle is a common exam trap versus the two-year renewal used in many states.

Question 11

Arizona Continuing Education (CE) for Producers

Accepted Answer

48 approved CE hours every four-year license period, including at least 6 hours of ethics. CE must be completed before filing renewal through DIFI-approved providers.

Question 12

License Application Deadline After Passing Arizona Exam

Accepted Answer

Apply through NIPR within 12 months of passing or exam results expire. Fingerprinting and background checks are required before DIFI issues the resident producer license.

Question 13

Arizona Producer Reporting Duties

Accepted Answer

Licensed producers must report address changes, legal name changes, administrative actions in other states, and criminal prosecutions or convictions to DIFI within 30 days.

Question 14

HO-3 Homeowners Policy (Arizona)

Accepted Answer

Special form: open perils on the dwelling, named perils on personal property. The most common homeowners policy sold in Arizona's admitted market.

Question 15

HO-4 (Renters) vs. HO-6 (Condo)

Accepted Answer

HO-4 covers a tenant's personal property and liability only. HO-6 covers unit-owner improvements (walls-in), personal property, and loss assessment—typical for Arizona condos.

Question 16

Arizona Homeowners Insurance Mandate

Accepted Answer

Arizona law does not require homeowners insurance. Coverage is contract-driven—mortgage lenders require it as a loan condition, but an owner with no mortgage may legally carry none.

Question 17

Arizona FAIR Plan Status

Accepted Answer

Arizona has no state FAIR Plan or residual property pool. Hard-to-place residential risk (e.g., wildfire exposure) goes to surplus lines (E&S) carriers through licensed surplus lines brokers.

Question 18

Arizona Homeowners Cancellation Notice (A.R.S. 20-1632)

Accepted Answer

Insurer must give at least 10 days' written notice before cancellation. During the first 60 days, cancellation is limited to fraud, material misrepresentation, or nonpayment of premium.

Question 19

Arizona Homeowners Non-Renewal Notice

Accepted Answer

At least 45 days' written notice before the policy expiration date, with a stated reason. Non-renewal is not the same as mid-term cancellation.

Question 20

DP-3 Dwelling Fire Policy

Accepted Answer

Covers a non-owner-occupied dwelling (rental property) on an open-peril basis for the structure. Personal property and liability are typically added by endorsement.

Question 21

Replacement Cost vs. Actual Cash Value (Property)

Accepted Answer

Replacement cost pays to rebuild/replace without depreciation deduction (subject to policy limits). ACV subtracts depreciation—lower payout but often lower premium.

Question 22

Coinsurance Penalty (Commercial Property)

Accepted Answer

If insured property is underinsured below the policy's coinsurance percentage at loss, the claim payment is reduced proportionally. Encourages insuring to full value.

Question 23

Business Income (Time Element) Coverage

Accepted Answer

Covers lost net income and continuing operating expenses when a covered property loss suspends business operations. Requires a defined restoration period.

Question 24

BOP (Businessowners Policy)

Accepted Answer

Package policy combining property and liability coverages for small businesses. Simplifies coverage versus buying separate commercial property and CGL policies.

Question 25

Arizona Surplus Lines Insurance

Accepted Answer

Coverage placed with non-admitted insurers when admitted market declines the risk. Must be procured through a licensed surplus lines broker; not protected by APCIGF.

Question 26

Arizona Mandatory Auto Liability Limits (25/50/15)

Accepted Answer

$25,000 BI per person, $50,000 BI per accident, $15,000 property damage. Raised from 15/30/10 effective July 1, 2020 under Senate Bill 1087.

Question 27

Arizona Auto Insurance System Type

Accepted Answer

Tort (at-fault) state—not a no-fault PIP state. The negligent driver's liability coverage pays others' bodily injury and property damage losses.

Question 28

Pure Comparative Negligence (A.R.S. 12-2505)

Accepted Answer

Each party's recovery is reduced by their own fault percentage, with no bar—even a claimant 99% at fault may recover 1% of damages. Arizona does not use modified comparative thresholds.

Question 29

Several-Only Liability (A.R.S. 12-2506)

Accepted Answer

Each defendant pays only their own percentage of fault—joint and several liability is abolished in most personal-injury and property-damage actions. Plaintiffs cannot collect 100% from one deep-pocket defendant.

Question 30

Arizona UM/UIM Offer Requirement (A.R.S. 20-259.01)

Accepted Answer

Insurers must offer uninsured and underinsured motorist coverage in writing. The insured may reject UM/UIM in writing; without a signed rejection, coverage is presumed at liability limits.

Question 31

Arizona Financial Responsibility Verification

Accepted Answer

Arizona MVD uses an electronic insurance verification system. Lapses in required liability coverage can trigger registration suspension and reinstatement fees.

Question 32

Collision vs. Comprehensive (PAP)

Accepted Answer

Collision covers impact with another vehicle or object. Comprehensive covers non-collision events (theft, vandalism, fire, hail, animal strike). Both are optional unless lender-required.

Question 33

CGL Coverage A (Bodily Injury & Property Damage)

Accepted Answer

Pays third-party BI/PD liability from business operations or premises. Defense costs are usually outside limits with a duty to defend.

Question 34

Occurrence vs. Claims-Made (CGL Trigger)

Accepted Answer

Occurrence: injury/damage during policy period triggers coverage regardless of when claimed. Claims-made: claim must be first made and reported during the policy period (or extended reporting endorsement).

Question 35

CGL Aggregate Limit

Accepted Answer

The most the insurer will pay for all covered claims during the policy term, regardless of number of occurrences. Per-occurrence limits apply separately within the aggregate cap.

Question 36

Punitive Damages and Insurance (Arizona)

Accepted Answer

Punitive damages are generally uninsurable as a matter of public policy. Liability policies cover compensatory damages, not punishment awards.

Question 37

Arizona Workers' Compensation Mandate

Accepted Answer

Virtually all Arizona employers with one or more employees must carry workers' compensation—unlike Texas where private coverage is voluntary for most employers.

Question 38

Workers' Compensation Exclusive Remedy

Accepted Answer

Covered employees generally cannot sue the employer for negligence for on-the-job injuries. Benefits are the statutory trade-off; third-party suits against non-employers may still be allowed.

Question 39

NCCI Role in Arizona Workers' Comp

Accepted Answer

NCCI files prospective loss costs and experience-rating plans; individual insurers apply their own loss-cost multipliers. Explains why carriers can share class codes but charge different premiums.

Question 40

Arizona Property & Casualty Insurance Guaranty Fund (APCIGF)

Accepted Answer

Protects Arizona policyholders when a member insurer becomes insolvent, up to statutory limits. Producers must not use guaranty-fund protection as a sales inducement.

Question 41

Rebating (Prohibited Trade Practice)

Accepted Answer

Offering something of value not specified in the policy as an inducement to buy insurance—illegal in Arizona. Includes returning premium, gifts, or favors tied to the sale.

Question 42

Twisting (Prohibited Trade Practice)

Accepted Answer

Using misrepresentation or incomplete comparison to induce a policyholder to lapse, surrender, or replace existing coverage to the producer's financial benefit.

Question 43

Churning / Unnecessary Replacement

Accepted Answer

Replacing a policy primarily to generate new commission without a legitimate benefit to the insured. Violates Arizona unfair trade practice standards and producer fiduciary duties.

Question 44

Misrepresentation and Concealment

Accepted Answer

Material misstatements on an application can void coverage from inception (concealment) or support rescission. Producers must not aid false statements to obtain coverage or lower premiums.

Question 45

Producer Fiduciary Duty (Arizona)

Accepted Answer

Licensed producers must act in the insured's best interest when recommending coverage, disclose conflicts, and place business with financially sound insurers—especially surplus lines when admitted market is unavailable.

Question 46

Insurable Interest Requirement

Accepted Answer

The applicant must suffer a financial loss if the insured event occurs. Without insurable interest at policy inception, the contract is void—prevents wagering on others' lives or property.

Question 47

Principle of Indemnity

Accepted Answer

Insurance restores the insured to their pre-loss financial position—no profit from a covered loss. Replacement cost and agreed-value exceptions exist where permitted by policy form.

Question 48

Waiver vs. Estoppel

Accepted Answer

Waiver: intentional relinquishment of a known right (e.g., accepting late premium). Estoppel: insurer's conduct leads insured to reasonably rely, barring the insurer from denying coverage.

Question 49

Endorsement (Policy Rider)

Accepted Answer

Written amendment adding, deleting, or modifying coverage. Must be attached to the policy to be enforceable—verbal promises are not binding coverage changes.

Question 50

Binder vs. Certificate of Insurance

Accepted Answer

Binder: temporary proof of coverage until the formal policy is issued—creates immediate insurance contract. Certificate: evidence of existing coverage for a third party (e.g., landlord); does not amend the policy.

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