FLORIDA 2-20 STATE EXAM PRACTICE
EXAM SCRIPT 2026 UPDATED 145
QUESTIONS WITH ANSWERS GRADED A+
⩥ Which one of the following statements is correct. Answer: Contractors
must usually provide evidence of liability insurance before a
construction contract is granted.
⩥ From a risk management viewpoint, insurance is used to. Answer:
Transfer the cost of losses.
⩥ Liability coverage for loss exposures arising from a business
organization's premises and operations, its products, or its completed
work is typically provided by. Answer: Commercial general liability
insurance.
⩥ Which one of the following statements is correct regarding the
benefits provided by insurance. Answer: Insurance helps reduce the
financial burden to society by compensating accident victims.
⩥ Insurance is not the only risk management transfer technique. When
circumstances are appropriate, transfer can be accomplished through.
Answer: Noninsurance transfer techniques.
,⩥ Oscar's custom-built vehicle looks like a sausage sandwich on wheels.
He plans to drive it to special events at schools around the country where
it will serve as a mobile billboard to promote his product. Oscar is
surprised to learn that insurers are reluctant to insure his vehicle because
it fails to meet one of the ideal characteristics of an insurable risk. Which
characteristic is Oscar's vehicle least likely to meet?. Answer: Large
number of similar exposure units
⩥ Liability coverage to individuals and families for bodily injury and
property damage arising from the insured's personal premises or
activities is typically provided by. Answer: Personal liability insurance.
⩥ Sally is a recent college graduate who lives in the suburbs and drives
to work daily in the city. She recognizes that owning a car creates both
property damage and liability exposures for her and at the same time she
has the burden of student loans. For someone in Sally's circumstances
the most practical risk management technique for dealing with her auto-
related loss exposures is. Answer: Risk transfer.
⩥ One of the costs of insurance is said to be opportunity costs. This
means that if capital and labor were not being used in the insurance
business, they could be used elsewhere and making other productive
contributions to. Answer: Society
⩥ Retention is often used in combination with insurance as a way of
treating loss exposures. One of the major downsides of individuals using
retention alone is. Answer: The potential for financial ruin.
,⩥ The process of restoring an individual or organization to a pre-loss
financial condition is the process of. Answer: Indemnification
⩥ Sometimes the existence of insurance encourages losses. The result of
this phenomenon is that it. Answer: Increases the total cost of insurance
⩥ A small business owner concerned about something happening and
not being able to work or earn a living for an extended period of time
due to an accident should purchase. Answer: Disability insurance.
⩥ Which of the following is/are not a "your covered auto" under a
Personal Auto Policy for Liability?. Answer: The 1990 Chevy 22 days
after you purchase it as an additional vehicle for your son who just got
his license.
⩥ Joe has a Personal Auto Policy with one car with liability of 10/20/10,
basic PIP, 10/20 UM and no Med Pay. His Florida neighbor has an
identical policy on her care. Joe is driving her car, loses control; and hits
a tree. Joe is hurt with $15,000 in medical bills. What is the maximum
Joe can collect from UM from all sources from this accident?. Answer:
$0
⩥ Keith commutes into the city in his car, and he provides a ride to two
co-workers who live near him. Every other week, the co-workers take
turns buying the gasoline for Keith's car. Does this activity create a
, public or livery conveyance situation that would preclude liability
coverage under Keith's Personal Auto Policy (PAP)?. Answer: No,
because Keith is involved in a share-the-expense car pool.
⩥ An insured covers his owned auto with more than one Personal Auto
Policy (PAP), each from a different insurer. In the event of a claim for
medical payments coverage,. Answer: Each insurer pays its pro rata
share based on the proportion that its limit of liability bears to the total
of applicable limits.
⩥ The Insuring Agreement in Part A - Liability Coverage of the Personal
Auto Policy contains descriptions of all of the following EXCEPT:.
Answer: Limit of Liability
⩥ Tom and Martha insure their house with an unendorsed HO-3—
Special Form (HO-3) with a Coverage A—Dwelling limit of $300,000,
which is the replacement cost of the house. A thief breaks into the house
while Tom and Martha are on vacation and steals the following items:
•$500 cash•$50,000 stock certificates. Ignoring any deductible that may
apply, how much, if any, will Tom and Martha's insurer pay for the loss
of the items?. Answer: $1,700
⩥ Under the HO-3—Special Form (HO-3) Section I—Conditions, the
Loss Settlement condition. Answer: Establishes the process for
determining the amount to be paid for a property loss.
EXAM SCRIPT 2026 UPDATED 145
QUESTIONS WITH ANSWERS GRADED A+
⩥ Which one of the following statements is correct. Answer: Contractors
must usually provide evidence of liability insurance before a
construction contract is granted.
⩥ From a risk management viewpoint, insurance is used to. Answer:
Transfer the cost of losses.
⩥ Liability coverage for loss exposures arising from a business
organization's premises and operations, its products, or its completed
work is typically provided by. Answer: Commercial general liability
insurance.
⩥ Which one of the following statements is correct regarding the
benefits provided by insurance. Answer: Insurance helps reduce the
financial burden to society by compensating accident victims.
⩥ Insurance is not the only risk management transfer technique. When
circumstances are appropriate, transfer can be accomplished through.
Answer: Noninsurance transfer techniques.
,⩥ Oscar's custom-built vehicle looks like a sausage sandwich on wheels.
He plans to drive it to special events at schools around the country where
it will serve as a mobile billboard to promote his product. Oscar is
surprised to learn that insurers are reluctant to insure his vehicle because
it fails to meet one of the ideal characteristics of an insurable risk. Which
characteristic is Oscar's vehicle least likely to meet?. Answer: Large
number of similar exposure units
⩥ Liability coverage to individuals and families for bodily injury and
property damage arising from the insured's personal premises or
activities is typically provided by. Answer: Personal liability insurance.
⩥ Sally is a recent college graduate who lives in the suburbs and drives
to work daily in the city. She recognizes that owning a car creates both
property damage and liability exposures for her and at the same time she
has the burden of student loans. For someone in Sally's circumstances
the most practical risk management technique for dealing with her auto-
related loss exposures is. Answer: Risk transfer.
⩥ One of the costs of insurance is said to be opportunity costs. This
means that if capital and labor were not being used in the insurance
business, they could be used elsewhere and making other productive
contributions to. Answer: Society
⩥ Retention is often used in combination with insurance as a way of
treating loss exposures. One of the major downsides of individuals using
retention alone is. Answer: The potential for financial ruin.
,⩥ The process of restoring an individual or organization to a pre-loss
financial condition is the process of. Answer: Indemnification
⩥ Sometimes the existence of insurance encourages losses. The result of
this phenomenon is that it. Answer: Increases the total cost of insurance
⩥ A small business owner concerned about something happening and
not being able to work or earn a living for an extended period of time
due to an accident should purchase. Answer: Disability insurance.
⩥ Which of the following is/are not a "your covered auto" under a
Personal Auto Policy for Liability?. Answer: The 1990 Chevy 22 days
after you purchase it as an additional vehicle for your son who just got
his license.
⩥ Joe has a Personal Auto Policy with one car with liability of 10/20/10,
basic PIP, 10/20 UM and no Med Pay. His Florida neighbor has an
identical policy on her care. Joe is driving her car, loses control; and hits
a tree. Joe is hurt with $15,000 in medical bills. What is the maximum
Joe can collect from UM from all sources from this accident?. Answer:
$0
⩥ Keith commutes into the city in his car, and he provides a ride to two
co-workers who live near him. Every other week, the co-workers take
turns buying the gasoline for Keith's car. Does this activity create a
, public or livery conveyance situation that would preclude liability
coverage under Keith's Personal Auto Policy (PAP)?. Answer: No,
because Keith is involved in a share-the-expense car pool.
⩥ An insured covers his owned auto with more than one Personal Auto
Policy (PAP), each from a different insurer. In the event of a claim for
medical payments coverage,. Answer: Each insurer pays its pro rata
share based on the proportion that its limit of liability bears to the total
of applicable limits.
⩥ The Insuring Agreement in Part A - Liability Coverage of the Personal
Auto Policy contains descriptions of all of the following EXCEPT:.
Answer: Limit of Liability
⩥ Tom and Martha insure their house with an unendorsed HO-3—
Special Form (HO-3) with a Coverage A—Dwelling limit of $300,000,
which is the replacement cost of the house. A thief breaks into the house
while Tom and Martha are on vacation and steals the following items:
•$500 cash•$50,000 stock certificates. Ignoring any deductible that may
apply, how much, if any, will Tom and Martha's insurer pay for the loss
of the items?. Answer: $1,700
⩥ Under the HO-3—Special Form (HO-3) Section I—Conditions, the
Loss Settlement condition. Answer: Establishes the process for
determining the amount to be paid for a property loss.
