Casualty Insurance Terms and Related Concepts — practice questions

9.5% of the exam ≈15 real questions 15 free questions here

Negligence, damages, limits, triggers and Florida's tort statutes — about 15 of the 160 scored questions. The 2023 tort reform rewrote the answer to several of these, so an older study guide will actively cost you points here.

Where people lose points

• Reducing a 55%-at-fault plaintiff's award instead of barring it. Section 768.81(6), F.S., created by HB 837 in 2023, bars any party found more than 50% at fault for his or her own harm from recovering anything. Pure comparative fault applied only to causes of action accruing before March 24, 2023, and medical negligence actions under chapter 766 are carved out of the bar.
• Answering four years for negligence. Section 95.11(5)(a), F.S. now gives two years for an action founded on negligence, for causes of action accruing on or after March 24, 2023. Four years was the Florida rule for decades and is still printed in most national material.
• Stopping at the punitive multiplier. Section 768.73(1)(a), F.S. caps punitive damages at the GREATER of three times compensatory damages or $500,000 — so on a $120,000 compensatory award the ceiling is $500,000, not $360,000.
• Setting off every collateral source. Section 768.76(1), F.S. reduces the award by collateral sources, but expressly not by any source for which a subrogation or reimbursement right exists. A health plan that will be repaid out of the recovery therefore produces no setoff for the defendant.
• Confusing split limits with a combined single limit. On 100/300/50 the per-person cap is applied to each bodily injury claimant first and the per-accident cap second; a combined single limit is one amount for bodily injury and property damage together, with no per-person sublimit at all.

Questions and answers, explained

All 10 questions above, with the correct answer and why it is correct. Everything here is on casualty insurance terms and related concepts.

1. A guest slips on a wet tile floor in a homeowner's entryway. To recover in a negligence action the guest must establish all four elements. The guest proves the homeowner owed a duty of care, that the floor was left wet and unmarked, and that the wet floor caused the fall — but the guest got up uninjured, needed no treatment and incurred no expense. Which element of negligence is missing?

   • ADuty of care owed to the guest
   • BBreach of the duty of care
   • CProximate cause linking the condition to the fall
   • DDamagesCorrect

   Why: The four elements of negligence are duty, breach of that duty, proximate cause, and damages. Without an actual, measurable loss there is no cause of action, no matter how careless the conduct was. Here the guest establishes the first three but suffered nothing compensable. This is precisely why a liability policy responds to damages the insured becomes legally obligated to pay — not to careless behavior on its own.

   Reference General P&C concept — elements of negligence

2. A Florida business auto policy carries split limits of 100/300/50. The insured's driver causes a crash that injures three people, with bodily injury damages of $150,000, $80,000 and $40,000, and also causes $70,000 of damage to a commercial building. Assuming all damages are covered and the policy is otherwise unimpaired, how much does the policy pay in total?

   • A$220,000
   • B$270,000Correct
   • C$290,000
   • D$320,000

   Why: Split limits of 100/300/50 mean $100,000 bodily injury per person, $300,000 bodily injury per accident, and $50,000 property damage per accident. Apply the per-person cap first: the $150,000 claimant is limited to $100,000; the other two are paid in full at $80,000 and $40,000. Bodily injury totals $220,000, which is inside the $300,000 per-accident cap, so all $220,000 is paid. Property damage of $70,000 is capped at $50,000. Total paid is $270,000, and the insured is personally exposed for the uncovered $70,000 balance. The distractors each drop one step: $220,000 forgets property damage, $290,000 pays property damage in full, and $320,000 ignores the per-person cap.

   Reference ISO CA 00 01 (Business Auto Coverage Form) — split limits

3. A Florida jury awards a plaintiff $300,000. Her group health plan already paid $80,000 of her medical bills and, under the plan documents, retains a contractual right of reimbursement out of any recovery. How does s. 768.76, F.S., affect the judgment?

   • AIt is reduced by $80,000, because health insurance is a collateral source
   • BIt is not reduced, because a reimbursement right exists on that paymentCorrect
   • CIt is reduced by $40,000, with the parties sharing that benefit
   • DIt is not reduced, because Florida abolished the setoff in 2023

   Why: Section 768.76(1), F.S., requires the court to reduce an award by the total of all amounts paid for the claimant's benefit or otherwise available to her from collateral sources, but it expressly provides that there shall be no reduction for collateral sources for which a subrogation or reimbursement right exists. Because the health plan keeps its reimbursement right, the plan is repaid out of the recovery and the defendant gets no windfall setoff. Option A is the near-miss: health, sickness and disability insurance is squarely a collateral source under s. 768.76(2)(a), so candidates stop one step early and take the deduction. Note too that Medicare, Medicaid and workers' compensation benefits are carved out of the definition of collateral sources altogether.

   Reference s. 768.76(1) and (2), F.S.

4. A Florida applicant buys an auto policy with $100,000/$300,000 bodily injury liability limits and tells the agent by telephone that she does not want uninsured motorist coverage. The policy is issued without UM and no rejection form is ever signed. She is later injured by an uninsured driver. What UM coverage applies?

   • ANone, because her oral instruction was a valid rejection of UM
   • BUM at $100,000/$300,000, since rejection requires the approved formCorrect
   • CUM at the 10/20 financial responsibility minimum limits
   • DNone, because the agent's contemporaneous file note suffices

   Why: Under s. 627.727(1), F.S., no motor vehicle liability policy may be delivered or issued for delivery in Florida unless uninsured motorist coverage is provided at limits not less than the bodily injury liability limits, unless the named insured rejects the coverage or selects lower limits in writing on a form approved by the Office of Insurance Regulation. A signed approved form creates a conclusive presumption of an informed, knowing rejection; an oral instruction, an agent's file note, or the insured's silence at renewal does not. With no signed form, UM attaches by operation of law at the bodily injury liability limits, here $100,000/$300,000. Option C is the tempting miss: the default is the policy's own bodily injury liability limits, not the 10/20 financial responsibility minimums.

   Reference s. 627.727(1), F.S.

5. A hotel guest is struck by a light fixture that falls from the lobby ceiling. She cannot show what the hotel did wrong, but the fixture was under the hotel's exclusive control and such fixtures do not ordinarily fall unless someone has been negligent. Which doctrine lets her claim reach the jury?

   • AStrict liability, which excuses her from proving fault at all
   • BRes ipsa loquitur, allowing an inference of negligence hereCorrect
   • CVicarious liability, charging the hotel with its staff's acts
   • DNegligence per se, resting on a violated safety ordinance

   Why: Res ipsa loquitur, 'the thing speaks for itself,' permits the trier of fact to infer negligence from the accident itself where the instrumentality causing the harm was in the defendant's exclusive control and the event is one that does not ordinarily occur in the absence of negligence. In Goodyear Tire & Rubber Co. v. Hughes Supply, Inc., 358 So. 2d 1339 (Fla. 1978), the Florida Supreme Court treated the doctrine as a rule of evidence yielding a permissible inference; it does not shift the burden of proof and it does not make the defendant an insurer. Option A is the tempting miss because it also spares the plaintiff from identifying a specific negligent act, but strict liability dispenses with fault altogether and in Florida is reserved for abnormally dangerous activities and defective products, not an ordinary premises accident where negligence is merely being inferred.

   Reference Goodyear Tire & Rubber Co. v. Hughes Supply, Inc., 358 So. 2d 1339 (Fla. 1978)

6. A roofing contractor's commercial general liability policy shows a $1,000,000 each occurrence limit, a $2,000,000 general aggregate and a $2,000,000 products-completed operations aggregate. A roof the contractor finished a year ago begins leaking and ruins the building owner's inventory. Which limit caps the contractor's total recoveries for losses of this kind during the policy year?

   • AThe general aggregate, which all liability claims erode together
   • BThe occurrence limit alone, as aggregates apply only on premises
   • CThe products-completed operations aggregate, a separate limitCorrect
   • DBoth aggregates together, because two coverage parts respond

   Why: The 'products-completed operations hazard' of the ISO commercial general liability form takes in bodily injury and property damage arising out of 'your product' or 'your work' and occurring away from premises you own or rent, once the work has been completed or abandoned. Losses falling in that hazard are subject to the separate products-completed operations aggregate limit and do not erode the general aggregate. Because the roof was finished and located away from the contractor's own premises, the leak sits squarely in that hazard. Option A is the near-miss: the general aggregate caps everything else under Coverage A and Coverage B, but the limits section of the form expressly excludes damages arising out of the products-completed operations hazard from it, which is exactly why the declarations carry two separate aggregate figures.

   Reference ISO CG 00 01 — 'products-completed operations hazard'; Section III, Limits of Insurance

7. A Florida jury awards $120,000 in compensatory damages and finds punitive damages warranted. It does not find the conduct was motivated solely by unreasonable financial gain, nor that the defendant specifically intended to harm the claimant. Under s. 768.73, F.S., what is the most punitive damages the court may allow?

   • A$360,000 — three times the compensatory damages awarded
   • B$500,000 — the greater of $500,000 or three times compensatoryCorrect
   • C$480,000 — four times the compensatory damages awarded
   • DNo cap applies once a jury finds punitive conduct

   Why: Section 768.73(1)(a), F.S., caps punitive damages at the greater of three times the amount of compensatory damages awarded to each claimant or $500,000. Three times $120,000 is $360,000, which is less than $500,000, so the flat figure controls and $500,000 is the ceiling. Option A is by far the most tempting because the multiplier is the part candidates memorize, but the statute is written as a choice of the greater of two numbers, not as a multiplier alone. The four-times or $2 million cap of s. 768.73(1)(b) applies only where the conduct was motivated solely by unreasonable financial gain and a managing agent knew of its unreasonably dangerous nature. Only a finding of specific intent to harm under s. 768.73(1)(c) removes the cap altogether, and the jury made no such finding here.

   Reference s. 768.73(1), F.S.

8. A contractor leaves an unsecured backhoe, key in the ignition, parked overnight on an open lot beside a Tampa elementary school. A nine-year-old climbs into the cab, starts the machine and is badly hurt. Which liability concept is most directly at issue?

   • AAttractive nuisance — a child trespasser drawn by a hazardCorrect
   • BAssumption of risk — the child chose to climb into the cab
   • CAbsolute liability — heavy equipment is ultrahazardous per se
   • DComparative negligence — a child is held to the adult standard

   Why: The attractive nuisance doctrine is the exception to the low duty ordinarily owed a trespasser. Where an artificial condition on land is likely to attract children too young to appreciate its danger, the occupier owes a duty of ordinary care to guard against harm to those children, and unsecured heavy machinery is the paradigm case — the doctrine grew out of nineteenth century railroad turntable claims. Florida applies the doctrine but limits it sharply where water is the hazard, and this is the point most study material gets wrong. Allen v. William P. McDonald Corp., 42 So. 2d 706 (Fla. 1949), holds that an artificial body of water is not an attractive nuisance unless it is constructed so as to constitute a trap or presents some unusual element of danger not found in ponds generally, and Adler v. Copeland, 105 So. 2d 594 (Fla. 3d DCA 1958), applied that rule to hold an ordinary residential swimming pool is not an attractive nuisance. Do not carry the textbook shorthand that a pool equals an attractive nuisance into a Florida answer: a pool owner's real exposure runs through ordinary negligence and through the Residential Swimming Pool Safety Act — s. 515.29, F.S. (barrier requirements) and s. 515.27, F.S. (safety feature options; penalties), whose options all turn on isolating the pool from the home and which are enforced at final inspection of newly built pools. Option C is the tempting one because a running backhoe feels inherently dangerous, but strict or absolute liability is reserved for abnormally dangerous activities such as blasting or keeping wild animals; the contractor is still judged on reasonable care. Options B and D fail because a child is judged by the standard of a reasonable child of like age, capacity and experience, never an adult standard, and because Florida replaced contributory negligence with comparative negligence in Hoffman v. Jones, 280 So. 2d 431 (Fla. 1973), now modified by s. 768.81(6), F.S., which bars recovery by a party more than 50 percent at fault for his or her own harm.

   Reference General P&C concept — attractive nuisance doctrine; Allen v. William P. McDonald Corp., 42 So. 2d 706 (Fla. 1949); Adler v. Copeland, 105 So. 2d 594 (Fla. 3d DCA 1958); ss. 515.29 and 515.27, F.S.; Hoffman v. Jones, 280 So. 2d 431 (Fla. 1973)

9. An unendorsed CGL shows a $10,000 Medical Expense Limit. A visitor trips over her own untied shoelace inside the insured retail shop and incurs $1,200 in treatment two weeks later. The shop did nothing wrong and is clearly not legally liable. How does the policy respond?

   • AIt pays nothing, since liability was not established
   • BIt pays half, reflecting the visitor's own carelessness
   • CIt pays the medical expenses regardless of who was at faultCorrect
   • DIt pays only if the visitor signs a release of all claims

   Why: Coverage C, Medical Payments, is a small no-fault goodwill coverage sitting alongside the liability insuring agreements. It pays reasonable medical, surgical, dental, ambulance, hospital, professional nursing and funeral expenses for bodily injury caused by an accident on premises the insured owns or rents, on ways next to those premises, or because of the insured's operations, provided the accident occurs in the coverage territory during the policy period and the expenses are incurred and reported to the insurer within one year of the date of the accident. The insuring agreement says the insurer will pay these expenses regardless of fault. Option A states the rule for Coverage A, which does require the insured to be legally obligated to pay damages, and that is why so many candidates pick it. Signing a release is not a condition of payment either; the whole point is to settle small injuries early, before goodwill erodes into a liability claim. Know the exclusions as well: Coverage C does not apply to any insured other than a volunteer worker, to a person hired to do work for or on behalf of an insured or a tenant of an insured, to a person injured on that part of the premises he or she normally occupies, to injury covered by workers compensation, to athletics participants, or to the products-completed operations hazard. Payment is also always capped by the Medical Expense Limit under Section III — here $10,000, comfortably above the $1,200 bill.

   Reference ISO CG 00 01 (Commercial General Liability Coverage Form) — Coverage C, Medical Payments, Insuring Agreement and Exclusions 2.a.–2.g.; Section III, Limits Of Insurance

10. A pedestrian is seriously injured by a negligently driven Florida county vehicle. She is the only person hurt, and a jury awards her $700,000. Under s. 768.28, F.S., how much may the county be required to pay on that judgment?

    • A$200,000, unless the Legislature passes a claim bill for the restCorrect
    • B$700,000, since the county waived immunity by buying insurance
    • C$300,000, the per-claimant limit for a single injured person
    • DNothing, because sovereign immunity bars all tort recoveries

    Why: Section 768.28(5)(a), F.S., waives sovereign immunity for the state and its subdivisions in tort but caps what may actually be paid at $200,000 on any one claim or judgment and $300,000 for all claims arising out of the same incident or occurrence. The portion of a judgment above those figures may be reported to the Legislature and paid, in whole or in part, only by a further legislative act — the claim bill. Option C is the closest miss because it uses a real statutory number in the wrong place: $300,000 is the aggregate ceiling for the entire occurrence, not what one claimant may collect, and a single injured person is still held to $200,000. Option B fails too: an agency may buy liability insurance and settle within its coverage, but the statute expressly says the entity is not deemed to have waived any defense of sovereign immunity or to have increased its limits of liability by obtaining insurance above the $200,000 and $300,000 waiver. A 2026 bill to raise the caps to $350,000 and $500,000 cleared both chambers almost unanimously but was vetoed on 30 June 2026, so the long-standing figures still govern.

    Reference s. 768.28(5)(a), F.S.

Topics inside this domain

• Occurrence vs claims-made liability forms
• Florida comparative negligence after HB 837
• Bad faith and the civil remedy notice

Drill other domains

• Types of Property Policies (14%)
• Property Insurance Terms and Related Concepts (9.5%)
• Property Policy Provisions and Contract Law (8%)
• Types of Casualty Policies, Bonds, and Related Terms (15%)
• Casualty Policy Provisions (8%)
• Florida Statutes, Rules and Regulations Common to All Lines (15%)

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