PERSONAL LINES INSURANCE 80 QUESTIONS AND
ANSWERS 2026/2027 || INSURANCE FUNDAMENTALS ||
PROPERTY & CASUALTY COVERAGE, POLICIES &
REGULATIONS || VERIFIED QUESTIONS & ACCURATE
ANSWERS || HIGH-YIELD STUDY GUIDE || GRADED A+
Statements made in the application are considered:
A. Warranties
B. Representations
C. Possible Concealments
D. None of the Above - CORRECT ANSWER - B. Representations
The definition of Risk is:
A. Uncertainty regarding loss
B. A chance of gain
C. Uncertainty regarding gain or profit
D. Intended unforseen damage to property for gain or profit - CORRECT
ANSWER - A. Uncertainty regarding loss
A financial device for transferring or shifting risk from an individual or entity to a
large group with the same risk is the definition of:
A. Avoidance
B. Retention
C. Transfer
D. Insurance - CORRECT ANSWER - D. Insurance
,Hazards include which of the following:
1. Unintended oily rags stacked in a corner
2. A homeowner's carelessness because he has insurance
A. 1 only
B. 2 only
C. Both 1 & 2
D. Neither 1 or 2 - CORRECT ANSWER - C. Both 1 & 2
The mortgage condition in a property policy:
1. Guarantees that the lending institutions may act for itself in paying a premium
2. Guarantees claim payments will be divided as the interests of the insurance and
mortgagee appear
A. 1 only
B. 2 only
C. Both 1 & 2
D. Neither 1 nor 2 - CORRECT ANSWER - C. Both 1 & 2
Which of the following situations does NOT create an insurable interest?
A. Being named in someone's will as an heir
B. Holding a mortgage or lien on property
, C. Having custody or control of someone else's property
D. Owning property - CORRECT ANSWER - A. Being named in someone's
will as an heir
The plumbing in Mrs. Ward's home suddenly burst and the ceilings were damaged
by water. Which of the following homeowner forms would cover the loss?
A. HO1
B. HO2
C. HO4
D. HO7` - CORRECT ANSWER - B. HO2
Nicole has a Personal Auto policy with limits of 10/20/10 for liability coverage.
She causes an accident that results in $12,000 bodily injury damages to the other
driver and $5,000 in property damage to the other driver's car. How much would
Nicole's policy pay for the the BI and PD losses?
A. $15,000
B. $17,000
C. $10,000
D. $12,000 - CORRECT ANSWER - A. $15,000
Sally Smith calls her agent, Hubert Dufus, to purchase flood insurance. Agent
Dufus explains to Ms. Smith that flood coverage can be purchased directly through
ANSWERS 2026/2027 || INSURANCE FUNDAMENTALS ||
PROPERTY & CASUALTY COVERAGE, POLICIES &
REGULATIONS || VERIFIED QUESTIONS & ACCURATE
ANSWERS || HIGH-YIELD STUDY GUIDE || GRADED A+
Statements made in the application are considered:
A. Warranties
B. Representations
C. Possible Concealments
D. None of the Above - CORRECT ANSWER - B. Representations
The definition of Risk is:
A. Uncertainty regarding loss
B. A chance of gain
C. Uncertainty regarding gain or profit
D. Intended unforseen damage to property for gain or profit - CORRECT
ANSWER - A. Uncertainty regarding loss
A financial device for transferring or shifting risk from an individual or entity to a
large group with the same risk is the definition of:
A. Avoidance
B. Retention
C. Transfer
D. Insurance - CORRECT ANSWER - D. Insurance
,Hazards include which of the following:
1. Unintended oily rags stacked in a corner
2. A homeowner's carelessness because he has insurance
A. 1 only
B. 2 only
C. Both 1 & 2
D. Neither 1 or 2 - CORRECT ANSWER - C. Both 1 & 2
The mortgage condition in a property policy:
1. Guarantees that the lending institutions may act for itself in paying a premium
2. Guarantees claim payments will be divided as the interests of the insurance and
mortgagee appear
A. 1 only
B. 2 only
C. Both 1 & 2
D. Neither 1 nor 2 - CORRECT ANSWER - C. Both 1 & 2
Which of the following situations does NOT create an insurable interest?
A. Being named in someone's will as an heir
B. Holding a mortgage or lien on property
, C. Having custody or control of someone else's property
D. Owning property - CORRECT ANSWER - A. Being named in someone's
will as an heir
The plumbing in Mrs. Ward's home suddenly burst and the ceilings were damaged
by water. Which of the following homeowner forms would cover the loss?
A. HO1
B. HO2
C. HO4
D. HO7` - CORRECT ANSWER - B. HO2
Nicole has a Personal Auto policy with limits of 10/20/10 for liability coverage.
She causes an accident that results in $12,000 bodily injury damages to the other
driver and $5,000 in property damage to the other driver's car. How much would
Nicole's policy pay for the the BI and PD losses?
A. $15,000
B. $17,000
C. $10,000
D. $12,000 - CORRECT ANSWER - A. $15,000
Sally Smith calls her agent, Hubert Dufus, to purchase flood insurance. Agent
Dufus explains to Ms. Smith that flood coverage can be purchased directly through
