InsTX-PersPC55 Personal Lines Property
& Casualty (English) Exam Questions and
Answers with complete
1. A homeowner’s policy generally covers collapse of a building caused by hidden decay
only if the decay is not known to the insured before the loss.
Answer: True
Explanation: Standard HO policies cover sudden collapse from hidden decay, but if the
insured knew about the decay beforehand, the loss is excluded because it was not
sudden or unforeseen.
2. Which of the following would be covered under Coverage D – Loss of Use of a
homeowners policy?
A) Additional living expenses after a fire
B) Theft of a television
C) Damage to a neighbor’s fence
D) Medical payments for a guest who slips on ice
Answer: A
Explanation: Coverage D pays for additional living expenses (hotel, meals) when the
home is uninhabitable due to a covered peril. Theft is Coverage C, damage to neighbor’s
fence is Coverage E (personal liability), and guest’s injury is Coverage F (medical
payments).
3. In a personal auto policy, the “insured” includes all of the following EXCEPT:
A) The named insured
B) A family member living in the same household
C) A friend driving the named insured’s car with permission
D) A mechanic test-driving the car without the owner’s knowledge
,Answer: D
Explanation: Permission is required. If a mechanic takes the car without knowledge or
consent, they are not an insured under the policy.
4. Replacement cost coverage for personal property pays:
A) Actual cash value minus depreciation
B) The cost to buy a new identical item without depreciation deduction
C) The original purchase price regardless of current market value
D) Only 80% of the item’s current value
Answer: B
Explanation: Replacement cost pays to replace the item with a new one of like kind and
quality, without subtracting depreciation, whereas actual cash value deducts
depreciation.
5. Which peril is NOT covered under a basic HO-1 homeowners policy?
A) Fire
B) Lightning
C) Flood
D) Explosion
Answer: C
Explanation: Flood is excluded from all standard homeowners policies; it requires a
separate NFIP policy or private flood insurance. HO-1 covers only named perils including
fire, lightning, and explosion.
6. If a dog bites a mail carrier on the insured’s property, which part of the homeowners
policy would respond?
A) Coverage C – Personal property
B) Coverage D – Loss of use
C) Coverage E – Personal liability
D) Coverage F – Medical payments to others
Answer: C or D depending on injury
Explanation: The mail carrier could claim under Coverage F (medical payments, no-fault)
,for immediate medical bills, or under Coverage E if they sue for negligence. Both apply,
but Coverage E is for legal liability, Coverage F pays small medical expenses regardless
of fault.
7. Under a personal auto policy, Part A – Liability coverage pays for:
A) Damage to the insured’s own car
B) Medical bills for the insured driver
C) Bodily injury or property damage the insured causes to others
D) Theft of personal items from the car
Answer: C
Explanation: Part A (liability) covers damages the insured is legally obligated to pay for
bodily injury or property damage to a third party. Part D covers damage to the insured’s
car, Part B covers medical payments for insured, and theft of items is homeowners.
8. A “per occurrence” limit in a liability policy means:
A) The total paid per year regardless of number of accidents
B) The maximum paid for all claims arising from a single accident
C) The amount paid per injured person in an accident
D) The deductible per claim
Answer: B
Explanation: Per occurrence limit is the most the insurer will pay for all claims (bodily
injury + property damage) from one accident. It differs from per person limit (max per
injured individual).
9. Which of the following is considered a “named peril” in an HO-3 policy?
A) Theft
B) Earthquake
C) Flood
D) Nuclear accident
Answer: A
Explanation: HO-3 covers the dwelling on an open perils basis (all risks except
, exclusions), but personal property is named perils: fire, lightning, windstorm, hail, theft,
etc. Earthquake, flood, and nuclear accident are excluded.
10. An insured intentionally sets fire to his own home to collect insurance. The insurer
will:
A) Pay the claim but cancel the policy
B) Deny the claim because of intentional loss exclusion
C) Pay only 50% of the loss
D) Pay and then sue the insured
Answer: B
Explanation: All property-casualty policies exclude loss caused intentionally by the
insured. This is a public policy issue to prevent moral hazard and fraud.
11. In a PAP, Medical Payments coverage (Part B) applies to:
A) The insured driver no matter where they are injured
B) The insured driver only when struck as a pedestrian
C) Occupants of the insured car injured in an accident, regardless of fault
D) Only the named insured when driving their own car
Answer: C
Explanation: Part B covers medical expenses for the insured and passengers in the
insured car (or if the insured is struck by a car as pedestrian) without regard to fault. It
does not cover all injuries anywhere.
12. Which of the following property would typically have a special limit of insurance
under Coverage C (personal property) in a homeowners policy?
A) Furniture
B) Clothing
C) Jewelry (theft limit often $1,500)
D) Electronics
*Answer:* C
*Explanation:* Special limits apply to theft of jewelry, watches, furs, silverware, guns,
money, etc. Jewelry theft limit is commonly $1,000 to $1,500 unless endorsed.
& Casualty (English) Exam Questions and
Answers with complete
1. A homeowner’s policy generally covers collapse of a building caused by hidden decay
only if the decay is not known to the insured before the loss.
Answer: True
Explanation: Standard HO policies cover sudden collapse from hidden decay, but if the
insured knew about the decay beforehand, the loss is excluded because it was not
sudden or unforeseen.
2. Which of the following would be covered under Coverage D – Loss of Use of a
homeowners policy?
A) Additional living expenses after a fire
B) Theft of a television
C) Damage to a neighbor’s fence
D) Medical payments for a guest who slips on ice
Answer: A
Explanation: Coverage D pays for additional living expenses (hotel, meals) when the
home is uninhabitable due to a covered peril. Theft is Coverage C, damage to neighbor’s
fence is Coverage E (personal liability), and guest’s injury is Coverage F (medical
payments).
3. In a personal auto policy, the “insured” includes all of the following EXCEPT:
A) The named insured
B) A family member living in the same household
C) A friend driving the named insured’s car with permission
D) A mechanic test-driving the car without the owner’s knowledge
,Answer: D
Explanation: Permission is required. If a mechanic takes the car without knowledge or
consent, they are not an insured under the policy.
4. Replacement cost coverage for personal property pays:
A) Actual cash value minus depreciation
B) The cost to buy a new identical item without depreciation deduction
C) The original purchase price regardless of current market value
D) Only 80% of the item’s current value
Answer: B
Explanation: Replacement cost pays to replace the item with a new one of like kind and
quality, without subtracting depreciation, whereas actual cash value deducts
depreciation.
5. Which peril is NOT covered under a basic HO-1 homeowners policy?
A) Fire
B) Lightning
C) Flood
D) Explosion
Answer: C
Explanation: Flood is excluded from all standard homeowners policies; it requires a
separate NFIP policy or private flood insurance. HO-1 covers only named perils including
fire, lightning, and explosion.
6. If a dog bites a mail carrier on the insured’s property, which part of the homeowners
policy would respond?
A) Coverage C – Personal property
B) Coverage D – Loss of use
C) Coverage E – Personal liability
D) Coverage F – Medical payments to others
Answer: C or D depending on injury
Explanation: The mail carrier could claim under Coverage F (medical payments, no-fault)
,for immediate medical bills, or under Coverage E if they sue for negligence. Both apply,
but Coverage E is for legal liability, Coverage F pays small medical expenses regardless
of fault.
7. Under a personal auto policy, Part A – Liability coverage pays for:
A) Damage to the insured’s own car
B) Medical bills for the insured driver
C) Bodily injury or property damage the insured causes to others
D) Theft of personal items from the car
Answer: C
Explanation: Part A (liability) covers damages the insured is legally obligated to pay for
bodily injury or property damage to a third party. Part D covers damage to the insured’s
car, Part B covers medical payments for insured, and theft of items is homeowners.
8. A “per occurrence” limit in a liability policy means:
A) The total paid per year regardless of number of accidents
B) The maximum paid for all claims arising from a single accident
C) The amount paid per injured person in an accident
D) The deductible per claim
Answer: B
Explanation: Per occurrence limit is the most the insurer will pay for all claims (bodily
injury + property damage) from one accident. It differs from per person limit (max per
injured individual).
9. Which of the following is considered a “named peril” in an HO-3 policy?
A) Theft
B) Earthquake
C) Flood
D) Nuclear accident
Answer: A
Explanation: HO-3 covers the dwelling on an open perils basis (all risks except
, exclusions), but personal property is named perils: fire, lightning, windstorm, hail, theft,
etc. Earthquake, flood, and nuclear accident are excluded.
10. An insured intentionally sets fire to his own home to collect insurance. The insurer
will:
A) Pay the claim but cancel the policy
B) Deny the claim because of intentional loss exclusion
C) Pay only 50% of the loss
D) Pay and then sue the insured
Answer: B
Explanation: All property-casualty policies exclude loss caused intentionally by the
insured. This is a public policy issue to prevent moral hazard and fraud.
11. In a PAP, Medical Payments coverage (Part B) applies to:
A) The insured driver no matter where they are injured
B) The insured driver only when struck as a pedestrian
C) Occupants of the insured car injured in an accident, regardless of fault
D) Only the named insured when driving their own car
Answer: C
Explanation: Part B covers medical expenses for the insured and passengers in the
insured car (or if the insured is struck by a car as pedestrian) without regard to fault. It
does not cover all injuries anywhere.
12. Which of the following property would typically have a special limit of insurance
under Coverage C (personal property) in a homeowners policy?
A) Furniture
B) Clothing
C) Jewelry (theft limit often $1,500)
D) Electronics
*Answer:* C
*Explanation:* Special limits apply to theft of jewelry, watches, furs, silverware, guns,
money, etc. Jewelry theft limit is commonly $1,000 to $1,500 unless endorsed.
