• Florida 2-20 General Lines (Property & Casualty)
Agent License Exam | 2026 Updated Study Guide
| Verified Practice Questions with Answers &
Detailed Rationales | Comprehensive Insurance
Licensing Preparation
1. What is the primary function of an insurance agent?
o A) To manage insurance company finances
o B) To sell and service insurance policies for clients.
o C) To set insurance premiums
o D) To investigate insurance fraud
Correct Answer: B
Rationale: Insurance agents primarily sell and service insurance
products, helping clients understand coverage options and manage their
policies.
2. Which type of insurance policy provides coverage for both property damage
and liability?
o A) Life Insurance
o B) Homeowners Insurance
o C) Workers' Compensation
o D) Health Insurance
Correct Answer: B
Rationale: Homeowners insurance typically covers both property
damage and liability, protecting the homeowner from various risks.
3. What is a "deductible" in an insurance policy?
o A) The amount the insured must pay out-of-pocket before the insurer
pays a claim.
o B) The total premium for the policy
o C) The maximum amount the insurer will pay for a claim
o D) The cost of additional coverage options
Correct Answer: A
Rationale: A deductible is the out-of-pocket expense that the insured is
responsible for before insurance coverage kicks in.
,4. In Florida, what is required to maintain a 2-20 Agent License?
o A) No continuing education is required
o B) Passing a state exam only
o C) Completing 24 hours of continuing education every two years.
o D) Attending a yearly conference
Correct Answer: C
Rationale: Florida requires 2-20 agents to complete continuing education
courses to ensure they stay updated on industry standards and
regulations.
5. What is the purpose of the Florida Insurance Guaranty Association (FIGA)?
o A) To regulate insurance rates
o B) To provide protection for policyholders in the event of an insurer's
insolvency.
o C) To investigate insurance fraud
o D) To manage health insurance claims
Correct Answer: B
Rationale: FIGA protects policyholders by providing coverage in case
their insurance company becomes insolvent.
6. Which of the following is an example of a peril?
o A) A policyholder
o B) A fire that damages property.
o C) A deductible
o D) An insurance premium
Correct Answer: B
Rationale: A peril is an event that can cause loss or damage, such as a
fire, theft, or flood.
7. What is the primary purpose of liability insurance?
o A) To cover property damage
o B) To protect against claims for bodily injury or property damage
caused by the insured.
, o C) To provide life coverage
o D) To cover health expenses
Correct Answer: B
Rationale: Liability insurance protects individuals and businesses from
legal claims arising from injuries or damages they may cause to others.
8. What does "underwriting" refer to in insurance?
o A) The process of selling policies
o B) The collection of premiums
o C) The assessment of risk and determining appropriate coverage and
premiums.
o D) The payment of claims
Correct Answer: C
Rationale: Underwriting involves evaluating the risk associated with an
applicant to determine whether to offer coverage and at what rate.
9. What is the maximum penalty for selling insurance without a license in
Florida?
o A) $1,000
o B) $2,500
o C) $5,000 and/or imprisonment.
o D) No penalty
Correct Answer: C
Rationale: Selling insurance without a license can result in substantial
fines and potential jail time under Florida law.
10. What type of insurance is designed to cover lost wages due to disability?
o A) Health Insurance
o B) Auto Insurance
o C) Disability Insurance
o D) Life Insurance
Correct Answer: C
Rationale: Disability insurance provides income replacement for
individuals who are unable to work due to a disability.
, 11. What is "exclusion" in an insurance policy?
o A) A type of coverage
o B) A specific condition or circumstance that is not covered by the
policy.
o C) The total amount of coverage provided
o D) The process of determining risk
Correct Answer: B
Rationale: Exclusions specify what is not covered under an insurance
policy, helping to clarify the limits of coverage.
12. What is the difference between "actual cash value" and "replacement
cost"?
o A) There is no difference.
o B) Actual cash value deducts depreciation, while replacement cost
does not.
o C) Replacement cost is always lower.
o D) Actual cash value is only used for health insurance.
Correct Answer: B
Rationale: Actual cash value considers depreciation, while replacement
cost covers the full cost of replacing an item without accounting for
depreciation.
13. Which type of insurance covers medical expenses resulting from an auto
accident?
o A) Liability Insurance
o B) Personal Injury Protection (PIP) Insurance
o C) Uninsured Motorist Insurance
o D) Property Damage Insurance
Correct Answer: B
Rationale: PIP insurance covers medical expenses and lost wages due to
injuries sustained in an auto accident.
14. What is "subrogation" in insurance?
Agent License Exam | 2026 Updated Study Guide
| Verified Practice Questions with Answers &
Detailed Rationales | Comprehensive Insurance
Licensing Preparation
1. What is the primary function of an insurance agent?
o A) To manage insurance company finances
o B) To sell and service insurance policies for clients.
o C) To set insurance premiums
o D) To investigate insurance fraud
Correct Answer: B
Rationale: Insurance agents primarily sell and service insurance
products, helping clients understand coverage options and manage their
policies.
2. Which type of insurance policy provides coverage for both property damage
and liability?
o A) Life Insurance
o B) Homeowners Insurance
o C) Workers' Compensation
o D) Health Insurance
Correct Answer: B
Rationale: Homeowners insurance typically covers both property
damage and liability, protecting the homeowner from various risks.
3. What is a "deductible" in an insurance policy?
o A) The amount the insured must pay out-of-pocket before the insurer
pays a claim.
o B) The total premium for the policy
o C) The maximum amount the insurer will pay for a claim
o D) The cost of additional coverage options
Correct Answer: A
Rationale: A deductible is the out-of-pocket expense that the insured is
responsible for before insurance coverage kicks in.
,4. In Florida, what is required to maintain a 2-20 Agent License?
o A) No continuing education is required
o B) Passing a state exam only
o C) Completing 24 hours of continuing education every two years.
o D) Attending a yearly conference
Correct Answer: C
Rationale: Florida requires 2-20 agents to complete continuing education
courses to ensure they stay updated on industry standards and
regulations.
5. What is the purpose of the Florida Insurance Guaranty Association (FIGA)?
o A) To regulate insurance rates
o B) To provide protection for policyholders in the event of an insurer's
insolvency.
o C) To investigate insurance fraud
o D) To manage health insurance claims
Correct Answer: B
Rationale: FIGA protects policyholders by providing coverage in case
their insurance company becomes insolvent.
6. Which of the following is an example of a peril?
o A) A policyholder
o B) A fire that damages property.
o C) A deductible
o D) An insurance premium
Correct Answer: B
Rationale: A peril is an event that can cause loss or damage, such as a
fire, theft, or flood.
7. What is the primary purpose of liability insurance?
o A) To cover property damage
o B) To protect against claims for bodily injury or property damage
caused by the insured.
, o C) To provide life coverage
o D) To cover health expenses
Correct Answer: B
Rationale: Liability insurance protects individuals and businesses from
legal claims arising from injuries or damages they may cause to others.
8. What does "underwriting" refer to in insurance?
o A) The process of selling policies
o B) The collection of premiums
o C) The assessment of risk and determining appropriate coverage and
premiums.
o D) The payment of claims
Correct Answer: C
Rationale: Underwriting involves evaluating the risk associated with an
applicant to determine whether to offer coverage and at what rate.
9. What is the maximum penalty for selling insurance without a license in
Florida?
o A) $1,000
o B) $2,500
o C) $5,000 and/or imprisonment.
o D) No penalty
Correct Answer: C
Rationale: Selling insurance without a license can result in substantial
fines and potential jail time under Florida law.
10. What type of insurance is designed to cover lost wages due to disability?
o A) Health Insurance
o B) Auto Insurance
o C) Disability Insurance
o D) Life Insurance
Correct Answer: C
Rationale: Disability insurance provides income replacement for
individuals who are unable to work due to a disability.
, 11. What is "exclusion" in an insurance policy?
o A) A type of coverage
o B) A specific condition or circumstance that is not covered by the
policy.
o C) The total amount of coverage provided
o D) The process of determining risk
Correct Answer: B
Rationale: Exclusions specify what is not covered under an insurance
policy, helping to clarify the limits of coverage.
12. What is the difference between "actual cash value" and "replacement
cost"?
o A) There is no difference.
o B) Actual cash value deducts depreciation, while replacement cost
does not.
o C) Replacement cost is always lower.
o D) Actual cash value is only used for health insurance.
Correct Answer: B
Rationale: Actual cash value considers depreciation, while replacement
cost covers the full cost of replacing an item without accounting for
depreciation.
13. Which type of insurance covers medical expenses resulting from an auto
accident?
o A) Liability Insurance
o B) Personal Injury Protection (PIP) Insurance
o C) Uninsured Motorist Insurance
o D) Property Damage Insurance
Correct Answer: B
Rationale: PIP insurance covers medical expenses and lost wages due to
injuries sustained in an auto accident.
14. What is "subrogation" in insurance?
