PERSONAL LINES INSURANCE PRACTICE
EXAM {LATEST 2026 -2027 UPDATE}
QUESTIONS AND ANSWERS 100%
CORRECT
Which of the following coverages is NOT included in a boatowners/watercraft package
policy?
A) Medical payments
B) Liability
C) Longshore and harbor workers' compensation insurance
D) Property - correct answer C) Longshore and harbor workers' compensation
insurance
Explanation: Boatowners/watercraft package policies were developed by individual
insurance companies and they combine property, liability, and medical payments
insurance on an open peril basis. Longshore and harbor workers' compensation
insurance is found in personal yacht policies, which are used to insure larger vessels
than those covered under boatowners policies.
Reference: 9.8.1 in the License Exam Manual
,An insured owns a pet lion that is caged on the homeowner's property. The owner
takes great care to warn neighbors of the possible danger by posting signs, fencing the
yard, and locking the cage at all times. When a neighbor's child manages to open the
cage and is bitten, what type of liability would apply to the lion owner?
A) Absolute liability
B) Contractual liability
C) Premises liability
D) Vicarious liability - correct answer A) Absolute liability
Explanation: The law imposes strict or absolute liability for specific situations or
activities that pose threats to the safety of others. People who own dangerous animals
are held to a higher standard of care. Absolute liability applies when a person is liable
for a dangerous condition, regardless of the amount of care taken.
Reference: 5.3.4 in the License Exam Manual
Which of the following terms is used to describe an empty building that is not being
used?
A) Vacated
B) Absent
,C) Unoccupied
D) Vacant - correct answer D) Vacant
Explanation: A building that is not currently in use and does not have enough
furnishings to function in its normal capacity is considered vacant. A building is
unoccupied if no one is currently in it, but furnishings are present and the occupants
intended to return, as is the case when the residents are out of town on vacation.
Reference: 4.4.15 in the License Exam Manual
Which of the following statements about umbrella policies is NOT correct?
A) They provide coverage above the limits of underlying policies.
B) They are written only for commercial risks.
C) Losses that are excluded by the underlying policy but covered by the umbrella are
subject to the umbrella's retention limit.
D) If the insured fails to keep the underlying coverage in force, the umbrella policy will
not cover the amount of loss that would have been paid by the underlying policy. -
correct answer B) They are written only for commercial risks.
Explanation: Umbrella liability policies may be written for both personal and
commercial risks.
, Reference: 9.9.1 in the License Exam Manual
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 - correct answer 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?
EXAM {LATEST 2026 -2027 UPDATE}
QUESTIONS AND ANSWERS 100%
CORRECT
Which of the following coverages is NOT included in a boatowners/watercraft package
policy?
A) Medical payments
B) Liability
C) Longshore and harbor workers' compensation insurance
D) Property - correct answer C) Longshore and harbor workers' compensation
insurance
Explanation: Boatowners/watercraft package policies were developed by individual
insurance companies and they combine property, liability, and medical payments
insurance on an open peril basis. Longshore and harbor workers' compensation
insurance is found in personal yacht policies, which are used to insure larger vessels
than those covered under boatowners policies.
Reference: 9.8.1 in the License Exam Manual
,An insured owns a pet lion that is caged on the homeowner's property. The owner
takes great care to warn neighbors of the possible danger by posting signs, fencing the
yard, and locking the cage at all times. When a neighbor's child manages to open the
cage and is bitten, what type of liability would apply to the lion owner?
A) Absolute liability
B) Contractual liability
C) Premises liability
D) Vicarious liability - correct answer A) Absolute liability
Explanation: The law imposes strict or absolute liability for specific situations or
activities that pose threats to the safety of others. People who own dangerous animals
are held to a higher standard of care. Absolute liability applies when a person is liable
for a dangerous condition, regardless of the amount of care taken.
Reference: 5.3.4 in the License Exam Manual
Which of the following terms is used to describe an empty building that is not being
used?
A) Vacated
B) Absent
,C) Unoccupied
D) Vacant - correct answer D) Vacant
Explanation: A building that is not currently in use and does not have enough
furnishings to function in its normal capacity is considered vacant. A building is
unoccupied if no one is currently in it, but furnishings are present and the occupants
intended to return, as is the case when the residents are out of town on vacation.
Reference: 4.4.15 in the License Exam Manual
Which of the following statements about umbrella policies is NOT correct?
A) They provide coverage above the limits of underlying policies.
B) They are written only for commercial risks.
C) Losses that are excluded by the underlying policy but covered by the umbrella are
subject to the umbrella's retention limit.
D) If the insured fails to keep the underlying coverage in force, the umbrella policy will
not cover the amount of loss that would have been paid by the underlying policy. -
correct answer B) They are written only for commercial risks.
Explanation: Umbrella liability policies may be written for both personal and
commercial risks.
, Reference: 9.9.1 in the License Exam Manual
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 - correct answer 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?
