PERSONAL LINES FINAL EXAM QUESTIONS WITH VERIFIED ANSWERS

PERSONAL LINES FINAL EXAM QUESTIONS WITH
VERIFIED ANSWERS



Statements made in the application are considered:
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A. Warranties
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B. Representations
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C. Possible Concealments
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D. None of the Above - ans-B. Representations
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The definition of Risk is:
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A. Uncertainty regarding loss
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B. A chance of gain
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C. Uncertainty regarding gain or profit
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D. Intended unforseen damage to property for gain or profit - ans-
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A. Uncertainty regarding loss
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A financial device for transferring or shifting risk from an individual or entity to a large group
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with the same risk is the definition of:
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A. Avoidance
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B. Retention
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C. Transfer
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D. Insurance - ans-D. Insurance
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Hazards include which of the following:
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1. Unintended oily rags stacked in a corner
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2. A homeowner's carelessness because he has insurance
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A. 1 only
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B. 2 only
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C. Both 1 & 2
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D. Neither 1 or 2 - ans-C. Both 1 & 2
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The mortgage condition in a property policy:
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1. Guarantees that the lending institutions may act for itself in paying a premium
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2. Guarantees claim payments will be divided as the interests of the insurance and mortgag
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ee appear
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A. 1 only
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B. 2 only
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C. Both 1 & 2
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D. Neither 1 nor 2 - ans-C. Both 1 & 2
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, Which of the following situations does NOT create an insurable interest?
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A. Being named in someone's will as an heir
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B. Holding a mortgage or lien on property
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C. Having custody or control of someone else's property
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D. Owning property - ans-A. Being named in someone's will as an heir
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The plumbing in Mrs. Ward's home suddenly burst and the ceilings were damaged by water
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. Which of the following homeowner forms would cover the loss?
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A. HO1 cv




B. HO2 cv




C. HO4 cv




D. HO7` - ans-B. HO2
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Nicole has a Personal Auto policy with limits of 10/20/10 for liability coverage. She causes a
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n accident that results in $12,000 bodily injury damages to the other driver and $5,000 in pr
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operty damage to the other driver's car. How much would Nicole's policy pay for the the BI a
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nd PD losses?cv cv




A. $15,000 cv




B. $17,000 cv




C. $10,000 cv




D. $12,000 - ans-A. $15,000
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Sally Smith calls her agent, Hubert Dufus, to purchase flood insurance. Agent Dufus explai
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ns to Ms. Smith that flood coverage can be purchased directly through the NFIP or through
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him. Should Ms. Smith choose to purchase coverage through Agent Dufus it is called the:
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A. Write your own program
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B. Create flood insurance program
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C. Flood insurance is not available through private insurers
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D. None of the Above - ans-A. Write your own program
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The law of large numbers state that the larger...
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A. The number of insured, the more likely they will have losses
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B. A company, the more profit it will make
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C. The chance of loss, the higher the premium
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D. The number of insureds, the easier it is to estimate their losses - ans-
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D. The number of insureds, the easier it is to estimate their losses
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A sudden, unintended, and unexpected event is known as:
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A. Negligence
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B. Warrantycv




C. Accidentcv