PERSONAL LINES LATEST 2026 TEST PAPER QUESTIONS
AND SOLUTIONS GUARANTEE A+
✔✔HAZARD - ✔✔INCREASE THE CHANCE OF THE RISK OCCURRING
✔✔PHYSICAL HAZARDS - ✔✔MATERIAL AND STRUCTURAL THINGS YOU CAN
SEE AND TOUCH
✔✔GAS TANKS NEXT TO A PILE OF TOWELS IN THE GARAGE AND CAN LEAD TO
A FIRE IS AN EXAMPLE OF WHAT? - ✔✔PHYSICAL HAZARD
✔✔MORAL HAZARD - ✔✔LYING ON PURPOSE
(LYING ON INSURANCE APPLICATION)
✔✔MORALE HAZARDS - ✔✔A SENSE OF CARELESSNESS
✔✔HOW TO MEMORIZE MORAL(E) HAZARD - ✔✔ASSOCIATE THE E AT THE END
WITH "TEEN" MEANING TEENS DON'T CARE, THEY DO CARELESS THINGS
✔✔BOB DECIDED TO SMOKE AND DRINK BECAUSE HE KNEW HE WAS GOING
TO DIE ANYWAYS AND HE DIDNT CARE: WHAT HAZARD IS THIS? - ✔✔MORALE
HAZARD
**KEY WORD: HE DID NOT CARE SO HE WAS CARELESS EVEN THOUGH
SMOKING AND DRINKING MAKES YOU THINK OF PHYSICAL HAZARD**
✔✔PERIL - ✔✔THE CAUSE OF LOSS LIKE A FIRE OR HAIL
✔✔LOSS - ✔✔THE REDUCTION OR DISAPPERANCE OF VALUE
✔✔INDEMNITY - ✔✔TO RESTORE THE INSURED TO THEIR PREVIOUS
FINANCIAL CONDITION
✔✔EXAMPLE OF INDEMNITY - ✔✔A 3 BEDROOM HOME GOT BURNED AND
INSURANCE POLICY REPLACED THE COST TO FIX A 3 BEDROOM HOME --- YOU
WON'T GET A MANSION OR 4 BEDROOM -- YOU CAN'T GET MORE THAN WHAT
YOU HAD. THEIR JOB IS TO RESTOREE
✔✔CERTIFICATE OF AUTHORITY - ✔✔ALLOW INSURERS TO SELL IN THE STATE
MAKING THEM ADMITTED AND AUTHORIZED
✔✔STOCK COMPANIES - ✔✔-OWNED BY (S)HAREHOLDERS
-ISSUE (N)ON-PARTICIPATING POLICIES
- DIVIDENDS ARE (T)AXED
, ✔✔MUTUAL COMPANIES - ✔✔-OWNED BY (P)OLICYOWNERS
-ISSUES (P)ARTICIPATING POLICIES
- DIVIDENDS ARE (N)OT TAXED
✔✔STOCK VS MUTUAL COMPANIES: WHICH COMPANY IS OWNED BY
SHAREHOLDERS? - ✔✔STOCK COMPANIES
✔✔STOCK VS MUTUAL COMPANIES: WHICH COMPANY IS OWNED BY
POLICYOWNERS? - ✔✔MUTUAL COMPANIES
✔✔STOCK VS MUTUAL COMPANIES: WHICH COMPANY DOES NOT TAX ON
DIVIDENDS? - ✔✔MUTUAL COMPANIES
✔✔STOCK VS MUTUAL COMPANIES: WHICH COMPANY TAX ON DIVIDENDS? -
✔✔STOCK COMPANIES
✔✔SHORTER WAY TO MEMORIZE MUTUAL COMPANIES - ✔✔PPN
-(P)OLICYOWNERS
-(P)ARTICIPATING POLICIES
-(N)OT TAXED
✔✔SHORTER WAY TO MEMORIZE STOCK COMPANIES - ✔✔SNT
(S)HAREHOLDERS OR S FOR STOCK
(N)ON-PARTICIPATING POLICIES
(T)AXED
✔✔DOMESTIC - ✔✔THE INSURER IS INCORPORATED AND SELLING IN THIS
STATE
✔✔WHERE AN INSURANCE COMPANY IS INCORPORATED, HEADQUARTER AND
SELLING IS WHAT? - ✔✔DOMESTIC INSURER
✔✔AN INSURANCE AGENT IS SELLING IN ILLONOIS AND THE HEADQUARTER
COMPANY IS IN ILLONOIS: WHAT TYPE OF INSURER IS THIS? - ✔✔DOMESTIC
**THEY ONLY MENTIONED ONE STATE**
✔✔FOREIGN - ✔✔THE INSURER IS SELLING IN THIS STATE BUT THEY ARE
INCORPORATED IN A DIFFERENT STATE
✔✔EVERY INSURANCE COMPANY IS GOING TO BE CONSIDERED DOMESTIC IN
ONE STATE ONLY (WHEREEVER STATE THEY STARTED IN) BUT THEY WILL BE
FOREIGN WHEN SELLING IN ANY DIFFERENT STATE - ✔✔MEMORY HACK:
DOMESTIC MENTIONS ONE STATE AND FOREIGN WILL MENTION TWO STATES
AND SOLUTIONS GUARANTEE A+
✔✔HAZARD - ✔✔INCREASE THE CHANCE OF THE RISK OCCURRING
✔✔PHYSICAL HAZARDS - ✔✔MATERIAL AND STRUCTURAL THINGS YOU CAN
SEE AND TOUCH
✔✔GAS TANKS NEXT TO A PILE OF TOWELS IN THE GARAGE AND CAN LEAD TO
A FIRE IS AN EXAMPLE OF WHAT? - ✔✔PHYSICAL HAZARD
✔✔MORAL HAZARD - ✔✔LYING ON PURPOSE
(LYING ON INSURANCE APPLICATION)
✔✔MORALE HAZARDS - ✔✔A SENSE OF CARELESSNESS
✔✔HOW TO MEMORIZE MORAL(E) HAZARD - ✔✔ASSOCIATE THE E AT THE END
WITH "TEEN" MEANING TEENS DON'T CARE, THEY DO CARELESS THINGS
✔✔BOB DECIDED TO SMOKE AND DRINK BECAUSE HE KNEW HE WAS GOING
TO DIE ANYWAYS AND HE DIDNT CARE: WHAT HAZARD IS THIS? - ✔✔MORALE
HAZARD
**KEY WORD: HE DID NOT CARE SO HE WAS CARELESS EVEN THOUGH
SMOKING AND DRINKING MAKES YOU THINK OF PHYSICAL HAZARD**
✔✔PERIL - ✔✔THE CAUSE OF LOSS LIKE A FIRE OR HAIL
✔✔LOSS - ✔✔THE REDUCTION OR DISAPPERANCE OF VALUE
✔✔INDEMNITY - ✔✔TO RESTORE THE INSURED TO THEIR PREVIOUS
FINANCIAL CONDITION
✔✔EXAMPLE OF INDEMNITY - ✔✔A 3 BEDROOM HOME GOT BURNED AND
INSURANCE POLICY REPLACED THE COST TO FIX A 3 BEDROOM HOME --- YOU
WON'T GET A MANSION OR 4 BEDROOM -- YOU CAN'T GET MORE THAN WHAT
YOU HAD. THEIR JOB IS TO RESTOREE
✔✔CERTIFICATE OF AUTHORITY - ✔✔ALLOW INSURERS TO SELL IN THE STATE
MAKING THEM ADMITTED AND AUTHORIZED
✔✔STOCK COMPANIES - ✔✔-OWNED BY (S)HAREHOLDERS
-ISSUE (N)ON-PARTICIPATING POLICIES
- DIVIDENDS ARE (T)AXED
, ✔✔MUTUAL COMPANIES - ✔✔-OWNED BY (P)OLICYOWNERS
-ISSUES (P)ARTICIPATING POLICIES
- DIVIDENDS ARE (N)OT TAXED
✔✔STOCK VS MUTUAL COMPANIES: WHICH COMPANY IS OWNED BY
SHAREHOLDERS? - ✔✔STOCK COMPANIES
✔✔STOCK VS MUTUAL COMPANIES: WHICH COMPANY IS OWNED BY
POLICYOWNERS? - ✔✔MUTUAL COMPANIES
✔✔STOCK VS MUTUAL COMPANIES: WHICH COMPANY DOES NOT TAX ON
DIVIDENDS? - ✔✔MUTUAL COMPANIES
✔✔STOCK VS MUTUAL COMPANIES: WHICH COMPANY TAX ON DIVIDENDS? -
✔✔STOCK COMPANIES
✔✔SHORTER WAY TO MEMORIZE MUTUAL COMPANIES - ✔✔PPN
-(P)OLICYOWNERS
-(P)ARTICIPATING POLICIES
-(N)OT TAXED
✔✔SHORTER WAY TO MEMORIZE STOCK COMPANIES - ✔✔SNT
(S)HAREHOLDERS OR S FOR STOCK
(N)ON-PARTICIPATING POLICIES
(T)AXED
✔✔DOMESTIC - ✔✔THE INSURER IS INCORPORATED AND SELLING IN THIS
STATE
✔✔WHERE AN INSURANCE COMPANY IS INCORPORATED, HEADQUARTER AND
SELLING IS WHAT? - ✔✔DOMESTIC INSURER
✔✔AN INSURANCE AGENT IS SELLING IN ILLONOIS AND THE HEADQUARTER
COMPANY IS IN ILLONOIS: WHAT TYPE OF INSURER IS THIS? - ✔✔DOMESTIC
**THEY ONLY MENTIONED ONE STATE**
✔✔FOREIGN - ✔✔THE INSURER IS SELLING IN THIS STATE BUT THEY ARE
INCORPORATED IN A DIFFERENT STATE
✔✔EVERY INSURANCE COMPANY IS GOING TO BE CONSIDERED DOMESTIC IN
ONE STATE ONLY (WHEREEVER STATE THEY STARTED IN) BUT THEY WILL BE
FOREIGN WHEN SELLING IN ANY DIFFERENT STATE - ✔✔MEMORY HACK:
DOMESTIC MENTIONS ONE STATE AND FOREIGN WILL MENTION TWO STATES
