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Personal Lines Insurance Practice Exam Questions with
100% Verified Answers 2025 | 2026
Bobby, age 16, borrows his parents' car without their
permission and gets into an accident. Which of the following
statements about coverage under the parents' personal auto
policy is CORRECT?
A) Bobby is covered by his parents' policy because he is
included in the definition of named insured.
B) Bobby is not covered for this accident because he used the
car without permission.
C) Bobby is not covered because it was not his car.
D) Bobby is covered by his parents' policy because he is a family
member. - ANSWER D) Bobby is covered by his parents' policy
because he is a family member.
Explanation: Bobby is a family member and thus automatically
is covered under the family's PAP policy. Even though Bobby is
using the car without permission, the exclusion pertaining to
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nonpermissive users does not apply to use of an owned auto
policy by resident family members.
Reference: 8.7.2 in License Exam Manual
A parking valet at a hotel uses a guest's car to do a personal
errand and damages the car in a collision. The guest has a
personal auto policy (PAP). The insurance company will pay the
claim and ____.
A) relieve the parking valet of legal liability for the loss
B) subrogate against the named insured
C) subrogate against the parking valet
D) recover any additional loss from the lienholder - ANSWER C)
subrogate against the parking valet
Explanation: Part-D coverage for Damage to Your Auto of the
PAP contains a no benefit to bailee provision. This provision
states that a carrier or other bailee for hire, such as a parking
gar5age, service station, or moving company will not directly or
indirectly benefit from the PAP's insurance. A bailee is an
individual or entity that assumes possession of goods owned by
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another for the purpose of transporting, servicing, or storing
them. When temporary custody is assumed, the bailee
becomes legally liable for the goods.
Reference: 8.7.2 in the License Exam Manual
Who of the following are required to be members of the
Arizona Property and Casualty Insurance Guaranty Fund?
A) All insurers that write the types of insurance that are
protected by the fund in Arizona
B) Foreign property and casualty insurers only
C) lien property and casualty insurers only
D) All insurers that write insurance in Arizona, including life and
health insurers - ANSWER A) All insurers that write the types of
insurance that are protected by the fund in Arizona
Explanation: All insurers that write types of insurance that are
protected by the fund are required to be member insurers of
the fund. Reference: State Supplement in the License Exam
Manual.
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Reference: 4.4.16.3 in the License Exam Manual
Which one of the following dwellings would a HO-3
Homeowners Form cover?
A) Condominium
B) Office building
C) Single-family home
D) Apartment building - ANSWER C) Single-family home
Explanation: HO-3 Homeowners Form covers owner-occupied
single family dwellings. Condominiums are covered by the HO-
6. Office and apartment buildings would be covered by a
commercial policy.
Reference: 7.4.1 in the License Exam Manual
Which on of the following would be classified as a general
damage?
Personal Lines Insurance Practice Exam Questions with
100% Verified Answers 2025 | 2026
Bobby, age 16, borrows his parents' car without their
permission and gets into an accident. Which of the following
statements about coverage under the parents' personal auto
policy is CORRECT?
A) Bobby is covered by his parents' policy because he is
included in the definition of named insured.
B) Bobby is not covered for this accident because he used the
car without permission.
C) Bobby is not covered because it was not his car.
D) Bobby is covered by his parents' policy because he is a family
member. - ANSWER D) Bobby is covered by his parents' policy
because he is a family member.
Explanation: Bobby is a family member and thus automatically
is covered under the family's PAP policy. Even though Bobby is
using the car without permission, the exclusion pertaining to
,2|Page
nonpermissive users does not apply to use of an owned auto
policy by resident family members.
Reference: 8.7.2 in License Exam Manual
A parking valet at a hotel uses a guest's car to do a personal
errand and damages the car in a collision. The guest has a
personal auto policy (PAP). The insurance company will pay the
claim and ____.
A) relieve the parking valet of legal liability for the loss
B) subrogate against the named insured
C) subrogate against the parking valet
D) recover any additional loss from the lienholder - ANSWER C)
subrogate against the parking valet
Explanation: Part-D coverage for Damage to Your Auto of the
PAP contains a no benefit to bailee provision. This provision
states that a carrier or other bailee for hire, such as a parking
gar5age, service station, or moving company will not directly or
indirectly benefit from the PAP's insurance. A bailee is an
individual or entity that assumes possession of goods owned by
,3|Page
another for the purpose of transporting, servicing, or storing
them. When temporary custody is assumed, the bailee
becomes legally liable for the goods.
Reference: 8.7.2 in the License Exam Manual
Who of the following are required to be members of the
Arizona Property and Casualty Insurance Guaranty Fund?
A) All insurers that write the types of insurance that are
protected by the fund in Arizona
B) Foreign property and casualty insurers only
C) lien property and casualty insurers only
D) All insurers that write insurance in Arizona, including life and
health insurers - ANSWER A) All insurers that write the types of
insurance that are protected by the fund in Arizona
Explanation: All insurers that write types of insurance that are
protected by the fund are required to be member insurers of
the fund. Reference: State Supplement in the License Exam
Manual.
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Reference: 4.4.16.3 in the License Exam Manual
Which one of the following dwellings would a HO-3
Homeowners Form cover?
A) Condominium
B) Office building
C) Single-family home
D) Apartment building - ANSWER C) Single-family home
Explanation: HO-3 Homeowners Form covers owner-occupied
single family dwellings. Condominiums are covered by the HO-
6. Office and apartment buildings would be covered by a
commercial policy.
Reference: 7.4.1 in the License Exam Manual
Which on of the following would be classified as a general
damage?
