PERSONAL LINES INSURANCE UPDATED EXAM SCRIPT
QUESTIONS AND ANSWERS SURE A+
✔✔The agent has many responsibilities to the applicant. One involves a trust
relationship between the agent and the insured regarding the insured's finances and
confidentiality. In this case, the agent acts in what capacity?
A) Fiduciary
B) Consultant
C) Attorney-in-fact
D) Special agent - ✔✔A) Fiduciary
Explanation: Agents have the duty to act in a fiduciary capacity that requires a high
degree of trust and confidence. This duty deals with the agent's dealings with both the
insured and the insurer. The agent is expected to be trustworthy, act in good faith, and
preserve confidential information.
Reference: 1.9.2 in the License Exam Manual
✔✔Thomas had a forklift injury at work that caused his death. How much money will his
surviving spouse receive for burial expenses?
A) Up to $10,000
B) Up to $1,000
C) Up to $2,500
D) Up to $5,000 - ✔✔D) Up to $5,000
Explanation: Burial expenses, not to exceed $5,000, are in addition to the
compensation.
Reference: See State Supplement
✔✔With a few exceptions, most personal insurance policies exclude losses arising out
of all of the following EXCEPT:
A) business activities
B) rendering of professional services
C) personal activities conducted away from the insured premises
D) work-related injuries - ✔✔C) personal activities conducted away from the insured
premises
Explanation: Although there are limited exceptions, such as certain permitted incidental
occupancies, personal lines policies typically exclude losses related to business
activities, professional services, and work-related injuries.
,Reference: 7.6.2 in the License Exam Manual
✔✔Which of the following items could be insured under Coverage C of a homeowners
policy?
A) Exotic birds
B) Motorized go-kart
C) Snowmobile
D) Personal property usually located in a secondary residence - ✔✔D) Personal
property usually located in a secondary residence
Explanation: Coverage C covers personal property under a homeowners policy.
Personal property usually located in a secondary residence may be insured under
Coverage C. In addition, the following personal property is covered: personal property
the insured owns or uses that is located anywhere in the world; personal property of
others while it is in the portion of the residence the insured occupies; and personal
property of a guest or employee while it is located in any resident the insured occupies.
Animals and motorized vehicles are excluded.
Reference: 7.5.1 in the License Exam Manual
✔✔The insured's home is insured under an HO-3 with a $100,000 Coverage A limit. A
tornado destroys the home and uproots a tree valued at $5,000. How much would the
insurance company pay for the loss to the insured's home and tree? Ignore any
deductible that would apply.
A) $105,000
B) 95,000
C) $100,500
D) $100,000 - ✔✔C) $100,500
Explanation: The trees, shrubs, and other plants additional coverage does not cover
damage caused by certain perils, such as wind. It covers damage caused by fire,
lightning, explosion, riot, aircraft, vehicles not owned or operated by a resident, theft,
and vandalism or malicious mischief. Coverage is limited to 5% of the Coverage A limit
and a maximum of $500 for any one tree, shrub, or plant.
Reference: 7.5.3 in the License Exam Manual
✔✔An insured has a $60,000 Special Form (DP-3). When a covered loss in the amount
of $10,000 damages the attached garage, how much of that amount is paid under the
Coverage B-Other Structures?
A) $0
B) $10,000
C) $1,000
,D) $6,000 - ✔✔A) $0
Explanation: The attached garage is considered part of the dwelling, so the $10,000 is
paid under Coverage A-Dwelling. Real property located on the described property and
separated from the dwelling by clear space is covered by Coverage B-Other Structures.
Reference: 6.4.3 in the License Exam Manual
✔✔Section II of the homeowners policy provides liability coverage for all of the following
EXCEPT
A) use of a 17-foot sailboat
B) renting the garage to a jewelry maker
C) actions of a domestic animal in the care of the insured
D) actions of a residence employee - ✔✔B) renting the garage to a jewelry maker
Explanation: The homeowners policy excludes liability arising out of the rental of any
part of the premises, except for the rental part of an insured location as a residence.
Reference: 7.6.4 in the License Exam Manual
✔✔Which of the following is NOT an eligibility requirement for a homeowners policy?
A) Named insured is the owner-occupant of dwelling
B) Dwelling is a seasonal residence
C) No more than 4 families occupy the home
D) Named insured lives on a farm - ✔✔D) Named insured lives on a farm
Explanation: Farms are not covered under homeowners policies. They have their own
specific farm policy. A homeowners policy requires that the named insured in the owner-
occupant and there are no more than 4 families in the home. A seasonal residence may
also be covered under a homeowners policy.
Reference: 7.3.2 in the License Exam Manual
✔✔The provisions of the Terrorism Risk Insurance Act of 2002 apply to which of the
following lines of insurance?
A) Homeowners
B) Commercial property
C) Automobile
D) Dwelling - ✔✔B) Commercial property
Explanation: The Terrorism Risk Insurance Act of 2002 established a federal program to
provide compensation for insured losses resulting from terrorism acts. Most commercial
, property and casualty policies are required to offer coverage for certified acts of
terrorism. The program does not apply to personal lines coverage.
Reference: 3.8.2 in the License Exam Manual
✔✔Trees, shrubs, and other plants are covered as additional coverages for Coverages
A-The coverage is limited to certain perils, however. All of the following perils are
covered when causing damage to a tree or shrub EXCEPT
A) riot
B) explosion
C) theft
D) wind - ✔✔D) wind
Explanation: The insurer will cover trees, shrubs, plants or lawns at the residence
premises for loss caused by fire, lightning, explosion, riot, civil commotion, aircraft,
nonowned vehicles, vandalism and malicious mischief, and theft. Wind, a common peril
causing damages to trees, is not covered.
Reference: 7.5.3 in the License Exam Manual
✔✔Which one of the following is an example of a peril?
A) Gasoline stores on the premises
B) Earthquake
C) Indifference
D) Illness - ✔✔B) Earthquake
Explanation: A peril is the actual cause of a loss. Examples of perils are fire, wind, hail,
and collision. For example, if there is a house fire that destroys an entire house, the fire
is the peril.
Reference: 1.3 in the License Exam Manual
✔✔Which of the following individuals is NOT an insured under Section I of the
homeowners policies?
A) Resident relative of the insured
B) The spouse of the named insured
C) Person younger than 21 who is in the care of the named insured
D) Person hired by the insured to perform work on the insured premises - ✔✔D) Person
hired by the insured to perform work on the insured premises
Explanation: The definition of who is an insured under homeowners policies, while quite
broad, is not all-inclusive and would not be extended to include people hired by the
QUESTIONS AND ANSWERS SURE A+
✔✔The agent has many responsibilities to the applicant. One involves a trust
relationship between the agent and the insured regarding the insured's finances and
confidentiality. In this case, the agent acts in what capacity?
A) Fiduciary
B) Consultant
C) Attorney-in-fact
D) Special agent - ✔✔A) Fiduciary
Explanation: Agents have the duty to act in a fiduciary capacity that requires a high
degree of trust and confidence. This duty deals with the agent's dealings with both the
insured and the insurer. The agent is expected to be trustworthy, act in good faith, and
preserve confidential information.
Reference: 1.9.2 in the License Exam Manual
✔✔Thomas had a forklift injury at work that caused his death. How much money will his
surviving spouse receive for burial expenses?
A) Up to $10,000
B) Up to $1,000
C) Up to $2,500
D) Up to $5,000 - ✔✔D) Up to $5,000
Explanation: Burial expenses, not to exceed $5,000, are in addition to the
compensation.
Reference: See State Supplement
✔✔With a few exceptions, most personal insurance policies exclude losses arising out
of all of the following EXCEPT:
A) business activities
B) rendering of professional services
C) personal activities conducted away from the insured premises
D) work-related injuries - ✔✔C) personal activities conducted away from the insured
premises
Explanation: Although there are limited exceptions, such as certain permitted incidental
occupancies, personal lines policies typically exclude losses related to business
activities, professional services, and work-related injuries.
,Reference: 7.6.2 in the License Exam Manual
✔✔Which of the following items could be insured under Coverage C of a homeowners
policy?
A) Exotic birds
B) Motorized go-kart
C) Snowmobile
D) Personal property usually located in a secondary residence - ✔✔D) Personal
property usually located in a secondary residence
Explanation: Coverage C covers personal property under a homeowners policy.
Personal property usually located in a secondary residence may be insured under
Coverage C. In addition, the following personal property is covered: personal property
the insured owns or uses that is located anywhere in the world; personal property of
others while it is in the portion of the residence the insured occupies; and personal
property of a guest or employee while it is located in any resident the insured occupies.
Animals and motorized vehicles are excluded.
Reference: 7.5.1 in the License Exam Manual
✔✔The insured's home is insured under an HO-3 with a $100,000 Coverage A limit. A
tornado destroys the home and uproots a tree valued at $5,000. How much would the
insurance company pay for the loss to the insured's home and tree? Ignore any
deductible that would apply.
A) $105,000
B) 95,000
C) $100,500
D) $100,000 - ✔✔C) $100,500
Explanation: The trees, shrubs, and other plants additional coverage does not cover
damage caused by certain perils, such as wind. It covers damage caused by fire,
lightning, explosion, riot, aircraft, vehicles not owned or operated by a resident, theft,
and vandalism or malicious mischief. Coverage is limited to 5% of the Coverage A limit
and a maximum of $500 for any one tree, shrub, or plant.
Reference: 7.5.3 in the License Exam Manual
✔✔An insured has a $60,000 Special Form (DP-3). When a covered loss in the amount
of $10,000 damages the attached garage, how much of that amount is paid under the
Coverage B-Other Structures?
A) $0
B) $10,000
C) $1,000
,D) $6,000 - ✔✔A) $0
Explanation: The attached garage is considered part of the dwelling, so the $10,000 is
paid under Coverage A-Dwelling. Real property located on the described property and
separated from the dwelling by clear space is covered by Coverage B-Other Structures.
Reference: 6.4.3 in the License Exam Manual
✔✔Section II of the homeowners policy provides liability coverage for all of the following
EXCEPT
A) use of a 17-foot sailboat
B) renting the garage to a jewelry maker
C) actions of a domestic animal in the care of the insured
D) actions of a residence employee - ✔✔B) renting the garage to a jewelry maker
Explanation: The homeowners policy excludes liability arising out of the rental of any
part of the premises, except for the rental part of an insured location as a residence.
Reference: 7.6.4 in the License Exam Manual
✔✔Which of the following is NOT an eligibility requirement for a homeowners policy?
A) Named insured is the owner-occupant of dwelling
B) Dwelling is a seasonal residence
C) No more than 4 families occupy the home
D) Named insured lives on a farm - ✔✔D) Named insured lives on a farm
Explanation: Farms are not covered under homeowners policies. They have their own
specific farm policy. A homeowners policy requires that the named insured in the owner-
occupant and there are no more than 4 families in the home. A seasonal residence may
also be covered under a homeowners policy.
Reference: 7.3.2 in the License Exam Manual
✔✔The provisions of the Terrorism Risk Insurance Act of 2002 apply to which of the
following lines of insurance?
A) Homeowners
B) Commercial property
C) Automobile
D) Dwelling - ✔✔B) Commercial property
Explanation: The Terrorism Risk Insurance Act of 2002 established a federal program to
provide compensation for insured losses resulting from terrorism acts. Most commercial
, property and casualty policies are required to offer coverage for certified acts of
terrorism. The program does not apply to personal lines coverage.
Reference: 3.8.2 in the License Exam Manual
✔✔Trees, shrubs, and other plants are covered as additional coverages for Coverages
A-The coverage is limited to certain perils, however. All of the following perils are
covered when causing damage to a tree or shrub EXCEPT
A) riot
B) explosion
C) theft
D) wind - ✔✔D) wind
Explanation: The insurer will cover trees, shrubs, plants or lawns at the residence
premises for loss caused by fire, lightning, explosion, riot, civil commotion, aircraft,
nonowned vehicles, vandalism and malicious mischief, and theft. Wind, a common peril
causing damages to trees, is not covered.
Reference: 7.5.3 in the License Exam Manual
✔✔Which one of the following is an example of a peril?
A) Gasoline stores on the premises
B) Earthquake
C) Indifference
D) Illness - ✔✔B) Earthquake
Explanation: A peril is the actual cause of a loss. Examples of perils are fire, wind, hail,
and collision. For example, if there is a house fire that destroys an entire house, the fire
is the peril.
Reference: 1.3 in the License Exam Manual
✔✔Which of the following individuals is NOT an insured under Section I of the
homeowners policies?
A) Resident relative of the insured
B) The spouse of the named insured
C) Person younger than 21 who is in the care of the named insured
D) Person hired by the insured to perform work on the insured premises - ✔✔D) Person
hired by the insured to perform work on the insured premises
Explanation: The definition of who is an insured under homeowners policies, while quite
broad, is not all-inclusive and would not be extended to include people hired by the
