PERSONAL LINES INSURANCE PRACTICE EXAM
QUESTIONS AND CORRECT RATIONALES
Bobby, cage c16, cborrows chis cparents' ccar cwithout ctheir cpermission cand cgets cinto can caccident. cWhich cof cthe cfollowing
cstatements cabout ccoverage cunder cthe cparents' cpersonal cauto cpolicy cis cCORRECT?
A) cBobby cis ccovered cby chis cparents' cpolicy cbecause che cis cincluded cin cthe cdefinition cof cnamed cinsured. c
B) cBobby cis cnot ccovered cfor cthis caccident cbecause che cused cthe ccar cwithout cpermission. c
C) cBobby cis cnot ccovered cbecause cit cwas cnot chis ccar. c
D) cBobby cis ccovered cby chis cparents' cpolicy cbecause che cis ca cfamily cmember. c- cCORRECT cANS✔✔D) cBobby cis ccovered cby
chis cparents' cpolicy cbecause che cis ca cfamily cmember.
Explanation: cBobby cis ca cfamily cmember cand cthus cautomatically cis ccovered cunder cthe cfamily's cPAP cpolicy. cEven cthough
cBobby cis cusing cthe ccar cwithout cpermission, cthe cexclusion cpertaining cto cnonpermissive cusers cdoes cnot capply cto cuse cof can
cowned cauto cpolicy cby cresident cfamily cmembers.
Reference: c8.7.2 cin cLicense cExam cManual
A cparking cvalet cat ca chotel cuses ca cguest's ccar cto cdo ca cpersonal cerrand cand cdamages cthe ccar cin ca ccollision. cThe cguest chas
ca cpersonal cauto cpolicy c(PAP). cThe cinsurance ccompany cwill cpay cthe cclaim cand c____.
A) crelieve cthe cparking cvalet cof clegal cliability cfor cthe closs
B) csubrogate cagainst cthe cnamed cinsured
C) csubrogate cagainst cthe cparking cvalet
D) crecover cany cadditional closs cfrom cthe clienholder c- cCORRECT cANS✔✔C) csubrogate cagainst cthe cparking cvalet
Explanation: cPart-D ccoverage cfor cDamage cto cYour cAuto cof cthe cPAP ccontains ca cno cbenefit cto cbailee cprovision. cThis
cprovision cstates cthat ca ccarrier cor cother cbailee cfor chire, csuch cas ca cparking cgar5age, cservice cstation, cor cmoving ccompany
cwill cnot cdirectly cor cindirectly cbenefit cfrom cthe cPAP's cinsurance. cA cbailee cis can cindividual cor centity cthat cassumes cpossession
cof cgoods cowned cby canother cfor cthe cpurpose cof ctransporting, cservicing, cor cstoring cthem. cWhen ctemporary ccustody cis
cassumed, cthe cbailee cbecomes clegally cliable cfor cthe cgoods.
Reference: c8.7.2 cin cthe cLicense cExam cManual
Who cof cthe cfollowing care crequired cto cbe cmembers cof cthe cArizona cProperty cand cCasualty cInsurance cGuaranty cFund?
A) cAll cinsurers cthat cwrite cthe ctypes cof cinsurance cthat care cprotected cby cthe cfund cin cArizona
B) cForeign cproperty cand ccasualty cinsurers conly
C) clien cproperty cand ccasualty cinsurers conly
D) cAll cinsurers cthat cwrite cinsurance cin cArizona, cincluding clife cand chealth cinsurers c- cCORRECT cANS✔✔A) cAll cinsurers cthat
cwrite cthe ctypes cof cinsurance cthat care cprotected cby cthe cfund cin cArizona
Explanation: cAll cinsurers cthat cwrite ctypes cof cinsurance cthat care cprotected cby cthe cfund care crequired cto cbe cmember cinsurers
cof cthe cfund. cReference: cState cSupplement cin cthe cLicense cExam cManual.
Reference: c4.4.16.3 cin cthe cLicense cExam cManual
Which cone cof cthe cfollowing cdwellings cwould ca cHO-3 cHomeowners cForm ccover?
A) cCondominium
,B) cOffice cbuilding
C) cSingle-family chome
D) cApartment cbuilding c- cCORRECT cANS✔✔C) cSingle-family chome
Explanation: cHO-3 cHomeowners cForm ccovers cowner-occupied csingle cfamily cdwellings. cCondominiums care ccovered cby cthe
cHO-6. cOffice cand capartment cbuildings cwould cbe ccovered cby ca ccommercial cpolicy.
Reference: c7.4.1 cin cthe cLicense cExam cManual
Which con cof cthe cfollowing cwould cbe cclassified cas ca cgeneral cdamage?
A) cPain cand csuffering
B) cLost cwages
C) cMedical cbills
D) cDamaged cproperty c- cCORRECT cANS✔✔A) cPain cand csuffering
Explanation: cCompensatory cdamages ccompensate can cinjured cparty cfor cinjuries csustained- cnothing cmore. cTheir cpurpose cis cto
cmake ca cperson cwhole cagain cin cthe cposition cthat cexisted cbefore cthe closs cor charm. cCompensatory cdamages care cfurther
ccategorized cby: cgeneral cdamages c(which cnecessarily cresult cfrom cthe cact cor comission, csuch cas cemotional cdistress,
cinconvenience, cand cpain cand csuffering) cand cspecial cdamages c(losses cmeasured cin cexact csums cof cmoney cincluding cmedical
cbills, ctravel cexpenses cfor cmedical ccare, cprescription ccosts cdamaged cproperty, cand clost cwages).
Reference: c5.3.6 cin cthe cLicense cExam cManual
Which cof cthe cfollowing cstatements cabout cflood cinsurance cis cNOT ccorrect?
A) cThere care ctwo ctypes cof cflood cinsurance cprograms cavailable: cemergency cand cregular
B) cA cflood cincludes can coverflow cof cinland cor ctidal cwaters
C) cSewer cbackup cinto ca cdwelling cis cnot cconsidered cflood cand cis cnot ccovered
D) cPersonal cproperty cin ca cbasement cor coutside cin cthe cyard cis ccovered c- cCORRECT cANS✔✔D) cPersonal cproperty cin ca
cbasement cor coutside cin cthe cyard cis ccovered
Explanation: cPersonal cproperty cin ca cbasement cor coutside cin cthe cyard cis cNOT ccovered cunder cflood cinsurance.
Reference: c9.4 cin cthe cLicense cExam cManual
Which cof cthe cfollowing ccoverages cis cNOT cincluded cin ca cboatowners/watercraft cpackage cpolicy?
A) cMedical cpayments
B) cLiability
C) cLongshore cand charbor cworkers' ccompensation cinsurance
D) cProperty c- cCORRECT cANS✔✔C) cLongshore cand charbor cworkers' ccompensation cinsurance
Explanation: cBoatowners/watercraft cpackage cpolicies cwere cdeveloped cby cindividual cinsurance ccompanies cand cthey ccombine
cproperty, cliability, cand cmedical cpayments cinsurance con can copen cperil cbasis. cLongshore cand charbor cworkers' ccompensation
cinsurance cis cfound cin cpersonal cyacht cpolicies, cwhich care cused cto cinsure clarger cvessels cthan cthose ccovered cunder
cboatowners cpolicies.
Reference: c9.8.1 cin cthe cLicense cExam cManual
An cinsured cowns ca cpet clion cthat cis ccaged con cthe chomeowner's cproperty. cThe cowner ctakes cgreat ccare cto cwarn cneighbors cof
cthe cpossible cdanger cby cposting csigns, cfencing cthe cyard, cand clocking cthe ccage cat call ctimes. cWhen ca cneighbor's cchild
cmanages cto copen cthe ccage cand cis cbitten, cwhat ctype cof cliability cwould capply cto cthe clion cowner?
A) cAbsolute cliability
B) cContractual cliability
C) cPremises cliability
D) cVicarious cliability c- cCORRECT cANS✔✔A) cAbsolute cliability
Explanation: cThe claw cimposes cstrict cor cabsolute cliability cfor cspecific csituations cor cactivities cthat cpose cthreats cto cthe csafety
cof cothers. cPeople cwho cown cdangerous canimals care cheld cto ca chigher cstandard cof ccare. cAbsolute cliability capplies cwhen ca
cperson cis cliable cfor ca cdangerous ccondition, cregardless cof cthe camount cof ccare ctaken.
Reference: c5.3.4 cin cthe cLicense cExam cManual
Which cof cthe cfollowing cterms cis cused cto cdescribe can cempty cbuilding cthat cis cnot cbeing cused?
A) cVacated
B) cAbsent
C) cUnoccupied
D) cVacant c- cCORRECT cANS✔✔D) cVacant
Explanation: cA cbuilding cthat cis cnot ccurrently cin cuse cand cdoes cnot chave cenough cfurnishings cto cfunction cin cits cnormal
ccapacity cis cconsidered cvacant. cA cbuilding cis cunoccupied cif cno cone cis ccurrently cin cit, cbut cfurnishings care cpresent cand cthe
coccupants cintended cto creturn, cas cis cthe ccase cwhen cthe cresidents care cout cof ctown con cvacation.
,Reference: c4.4.15 cin cthe cLicense cExam cManual
Which cof cthe cfollowing cstatements cabout cumbrella cpolicies cis cNOT ccorrect?
A) cThey cprovide ccoverage cabove cthe climits cof cunderlying cpolicies.
B) cThey care cwritten conly cfor ccommercial crisks.
C) cLosses cthat care cexcluded cby cthe cunderlying cpolicy cbut ccovered cby cthe cumbrella care csubject cto cthe cumbrella's cretention
climit.
D) cIf cthe cinsured cfails cto ckeep cthe cunderlying ccoverage cin cforce, cthe cumbrella cpolicy cwill cnot ccover cthe camount cof closs cthat
cwould chave cbeen cpaid cby cthe cunderlying cpolicy. c- cCORRECT cANS✔✔B) cThey care cwritten conly cfor ccommercial crisks.
Explanation: cUmbrella cliability cpolicies cmay cbe cwritten cfor cboth cpersonal cand ccommercial crisks.
Reference: c9.9.1 cin cthe cLicense cExam cManual
The cagent chas cmany cresponsibilities cto cthe capplicant. cOne cinvolves ca ctrust crelationship cbetween cthe cagent cand cthe cinsured
cregarding cthe cinsured's cfinances cand cconfidentiality. cIn cthis ccase, cthe cagent cacts cin cwhat ccapacity?
A) cFiduciary
B) cConsultant
C) cAttorney-in-fact
D) cSpecial cagent c- cCORRECT cANS✔✔A) cFiduciary
Explanation: cAgents chave cthe cduty cto cact cin ca cfiduciary ccapacity cthat crequires ca chigh cdegree cof ctrust cand cconfidence. cThis
cduty cdeals cwith cthe cagent's cdealings cwith cboth cthe cinsured cand cthe cinsurer. cThe cagent cis cexpected cto cbe ctrustworthy, cact
cin cgood cfaith, cand cpreserve cconfidential cinformation. c
Reference: c1.9.2 cin cthe cLicense cExam cManual
Thomas chad ca cforklift cinjury cat cwork cthat ccaused chis cdeath. cHow cmuch cmoney cwill chis csurviving cspouse creceive cfor cburial
cexpenses?
A) cUp cto c$10,000
B) cUp cto c$1,000
C) cUp cto c$2,500
D) cUp cto c$5,000 c- cCORRECT cANS✔✔D) cUp cto c$5,000
Explanation: cBurial cexpenses, cnot cto cexceed c$5,000, care cin caddition cto cthe ccompensation.
Reference: cSee cState cSupplement
With ca cfew cexceptions, cmost cpersonal cinsurance cpolicies cexclude closses carising cout cof call cof cthe cfollowing cEXCEPT:
A) cbusiness cactivities
B) crendering cof cprofessional cservices
C) cpersonal cactivities cconducted caway cfrom cthe cinsured cpremises
D) cwork-related cinjuries c- cCORRECT cANS✔✔C) cpersonal cactivities cconducted caway cfrom cthe cinsured cpremises
Explanation: cAlthough cthere care climited cexceptions, csuch cas ccertain cpermitted cincidental coccupancies, cpersonal clines cpolicies
ctypically cexclude closses crelated cto cbusiness cactivities, cprofessional cservices, cand cwork-related cinjuries.
Reference: c7.6.2 cin cthe cLicense cExam cManual
Which cof cthe cfollowing citems ccould cbe cinsured cunder cCoverage cC cof ca chomeowners cpolicy?
A) cExotic cbirds
B) cMotorized cgo-kart
C) cSnowmobile
D) cPersonal cproperty cusually clocated cin ca csecondary cresidence c- cCORRECT cANS✔✔D) cPersonal cproperty cusually clocated
cin ca csecondary cresidence
Explanation: cCoverage cC ccovers cpersonal cproperty cunder ca chomeowners cpolicy. cPersonal cproperty cusually clocated cin ca
csecondary cresidence cmay cbe cinsured cunder cCoverage cC. cIn caddition, cthe cfollowing cpersonal cproperty cis ccovered: cpersonal
cproperty cthe cinsured cowns cor cuses cthat cis clocated canywhere cin cthe cworld; cpersonal cproperty cof cothers cwhile cit cis cin cthe
cportion cof cthe cresidence cthe cinsured coccupies; cand cpersonal cproperty cof ca cguest cor cemployee cwhile cit cis clocated cin cany
cresident cthe cinsured coccupies. cAnimals cand cmotorized cvehicles care cexcluded.
Reference: c7.5.1 cin cthe cLicense cExam cManual
The cinsured's chome cis cinsured cunder can cHO-3 cwith ca c$100,000 cCoverage cA climit. cA ctornado cdestroys cthe chome cand
cuproots ca ctree cvalued cat c$5,000. cHow cmuch cwould cthe cinsurance ccompany cpay cfor cthe closs cto cthe cinsured's chome cand
ctree? cIgnore cany cdeductible cthat cwould capply.
A) c$105,000
, B) c95,000
C) c$100,500
D) c$100,000 c- cCORRECT cANS✔✔C) c$100,500
Explanation: cThe ctrees, cshrubs, cand cother cplants cadditional ccoverage cdoes cnot ccover cdamage ccaused cby ccertain cperils,
csuch cas cwind. cIt ccovers cdamage ccaused cby cfire, clightning, cexplosion, criot, caircraft, cvehicles cnot cowned cor coperated cby ca
cresident, ctheft, cand cvandalism cor cmalicious cmischief. cCoverage cis climited cto c5% cof cthe cCoverage cA climit cand ca cmaximum
cof c$500 cfor cany cone ctree, cshrub, cor cplant.
Reference: c7.5.3 cin cthe cLicense cExam cManual
An cinsured chas ca c$60,000 cSpecial cForm c(DP-3). cWhen ca ccovered closs cin cthe camount cof c$10,000 cdamages cthe cattached
cgarage, chow cmuch cof cthat camount cis cpaid cunder cthe cCoverage cB-Other cStructures?
A) c$0
B) c$10,000
C) c$1,000
D) c$6,000 c- cCORRECT cANS✔✔A) c$0
Explanation: cThe cattached cgarage cis cconsidered cpart cof cthe cdwelling, cso cthe c$10,000 cis cpaid cunder cCoverage cA-Dwelling.
cReal cproperty clocated con cthe cdescribed cproperty cand cseparated cfrom cthe cdwelling cby cclear cspace cis ccovered cby cCoverage
cB-Other cStructures.
Reference: c6.4.3 cin cthe cLicense cExam cManual
Section cII cof cthe chomeowners cpolicy cprovides cliability ccoverage cfor call cof cthe cfollowing cEXCEPT
A) cuse cof ca c17-foot csailboat
B) crenting cthe cgarage cto ca cjewelry cmaker
C) cactions cof ca cdomestic canimal cin cthe ccare cof cthe cinsured
D) cactions cof ca cresidence cemployee c- cCORRECT cANS✔✔B) crenting cthe cgarage cto ca cjewelry cmaker
Explanation: cThe chomeowners cpolicy cexcludes cliability carising cout cof cthe crental cof cany cpart cof cthe cpremises, cexcept cfor cthe
crental cpart cof can cinsured clocation cas ca cresidence.
Reference: c7.6.4 cin cthe cLicense cExam cManual
Which cof cthe cfollowing cis cNOT can celigibility crequirement cfor ca chomeowners cpolicy?
A) cNamed cinsured cis cthe cowner-occupant cof cdwelling
B) cDwelling cis ca cseasonal cresidence
C) cNo cmore cthan c4 cfamilies coccupy cthe chome
D) cNamed cinsured clives con ca cfarm c- cCORRECT cANS✔✔D) cNamed cinsured clives con ca cfarm
Explanation: cFarms care cnot ccovered cunder chomeowners cpolicies. cThey chave ctheir cown cspecific cfarm cpolicy. cA chomeowners
cpolicy crequires cthat cthe cnamed cinsured cin cthe cowner-occupant cand cthere care cno cmore cthan c4 cfamilies cin cthe chome. cA
cseasonal cresidence cmay calso cbe ccovered cunder ca chomeowners cpolicy.
Reference: c7.3.2 cin cthe cLicense cExam cManual
The cprovisions cof cthe cTerrorism cRisk cInsurance cAct cof c2002 capply cto cwhich cof cthe cfollowing clines cof cinsurance?
A) cHomeowners
B) cCommercial cproperty
C) cAutomobile
D) cDwelling c- cCORRECT cANS✔✔B) cCommercial cproperty
Explanation: cThe cTerrorism cRisk cInsurance cAct cof c2002 cestablished ca cfederal cprogram cto cprovide ccompensation cfor cinsured
closses cresulting cfrom cterrorism cacts. cMost ccommercial cproperty cand ccasualty cpolicies care crequired cto coffer ccoverage cfor
ccertified cacts cof cterrorism. cThe cprogram cdoes cnot capply cto cpersonal clines ccoverage.
Reference: c3.8.2 cin cthe cLicense cExam cManual
Trees, cshrubs, cand cother cplants care ccovered cas cadditional ccoverages cfor cCoverages cA-The ccoverage cis climited cto ccertain
cperils, chowever. cAll cof cthe cfollowing cperils care ccovered cwhen ccausing cdamage cto ca ctree cor cshrub cEXCEPT
A) criot
B) cexplosion
C) ctheft
D) cwind c- cCORRECT cANS✔✔D) cwind
Explanation: cThe cinsurer cwill ccover ctrees, cshrubs, cplants cor clawns cat cthe cresidence cpremises cfor closs ccaused cby cfire,
clightning, cexplosion, criot, ccivil ccommotion, caircraft, cnonowned cvehicles, cvandalism cand cmalicious cmischief, cand ctheft. cWind,
ca ccommon cperil ccausing cdamages cto ctrees, cis cnot ccovered.
QUESTIONS AND CORRECT RATIONALES
Bobby, cage c16, cborrows chis cparents' ccar cwithout ctheir cpermission cand cgets cinto can caccident. cWhich cof cthe cfollowing
cstatements cabout ccoverage cunder cthe cparents' cpersonal cauto cpolicy cis cCORRECT?
A) cBobby cis ccovered cby chis cparents' cpolicy cbecause che cis cincluded cin cthe cdefinition cof cnamed cinsured. c
B) cBobby cis cnot ccovered cfor cthis caccident cbecause che cused cthe ccar cwithout cpermission. c
C) cBobby cis cnot ccovered cbecause cit cwas cnot chis ccar. c
D) cBobby cis ccovered cby chis cparents' cpolicy cbecause che cis ca cfamily cmember. c- cCORRECT cANS✔✔D) cBobby cis ccovered cby
chis cparents' cpolicy cbecause che cis ca cfamily cmember.
Explanation: cBobby cis ca cfamily cmember cand cthus cautomatically cis ccovered cunder cthe cfamily's cPAP cpolicy. cEven cthough
cBobby cis cusing cthe ccar cwithout cpermission, cthe cexclusion cpertaining cto cnonpermissive cusers cdoes cnot capply cto cuse cof can
cowned cauto cpolicy cby cresident cfamily cmembers.
Reference: c8.7.2 cin cLicense cExam cManual
A cparking cvalet cat ca chotel cuses ca cguest's ccar cto cdo ca cpersonal cerrand cand cdamages cthe ccar cin ca ccollision. cThe cguest chas
ca cpersonal cauto cpolicy c(PAP). cThe cinsurance ccompany cwill cpay cthe cclaim cand c____.
A) crelieve cthe cparking cvalet cof clegal cliability cfor cthe closs
B) csubrogate cagainst cthe cnamed cinsured
C) csubrogate cagainst cthe cparking cvalet
D) crecover cany cadditional closs cfrom cthe clienholder c- cCORRECT cANS✔✔C) csubrogate cagainst cthe cparking cvalet
Explanation: cPart-D ccoverage cfor cDamage cto cYour cAuto cof cthe cPAP ccontains ca cno cbenefit cto cbailee cprovision. cThis
cprovision cstates cthat ca ccarrier cor cother cbailee cfor chire, csuch cas ca cparking cgar5age, cservice cstation, cor cmoving ccompany
cwill cnot cdirectly cor cindirectly cbenefit cfrom cthe cPAP's cinsurance. cA cbailee cis can cindividual cor centity cthat cassumes cpossession
cof cgoods cowned cby canother cfor cthe cpurpose cof ctransporting, cservicing, cor cstoring cthem. cWhen ctemporary ccustody cis
cassumed, cthe cbailee cbecomes clegally cliable cfor cthe cgoods.
Reference: c8.7.2 cin cthe cLicense cExam cManual
Who cof cthe cfollowing care crequired cto cbe cmembers cof cthe cArizona cProperty cand cCasualty cInsurance cGuaranty cFund?
A) cAll cinsurers cthat cwrite cthe ctypes cof cinsurance cthat care cprotected cby cthe cfund cin cArizona
B) cForeign cproperty cand ccasualty cinsurers conly
C) clien cproperty cand ccasualty cinsurers conly
D) cAll cinsurers cthat cwrite cinsurance cin cArizona, cincluding clife cand chealth cinsurers c- cCORRECT cANS✔✔A) cAll cinsurers cthat
cwrite cthe ctypes cof cinsurance cthat care cprotected cby cthe cfund cin cArizona
Explanation: cAll cinsurers cthat cwrite ctypes cof cinsurance cthat care cprotected cby cthe cfund care crequired cto cbe cmember cinsurers
cof cthe cfund. cReference: cState cSupplement cin cthe cLicense cExam cManual.
Reference: c4.4.16.3 cin cthe cLicense cExam cManual
Which cone cof cthe cfollowing cdwellings cwould ca cHO-3 cHomeowners cForm ccover?
A) cCondominium
,B) cOffice cbuilding
C) cSingle-family chome
D) cApartment cbuilding c- cCORRECT cANS✔✔C) cSingle-family chome
Explanation: cHO-3 cHomeowners cForm ccovers cowner-occupied csingle cfamily cdwellings. cCondominiums care ccovered cby cthe
cHO-6. cOffice cand capartment cbuildings cwould cbe ccovered cby ca ccommercial cpolicy.
Reference: c7.4.1 cin cthe cLicense cExam cManual
Which con cof cthe cfollowing cwould cbe cclassified cas ca cgeneral cdamage?
A) cPain cand csuffering
B) cLost cwages
C) cMedical cbills
D) cDamaged cproperty c- cCORRECT cANS✔✔A) cPain cand csuffering
Explanation: cCompensatory cdamages ccompensate can cinjured cparty cfor cinjuries csustained- cnothing cmore. cTheir cpurpose cis cto
cmake ca cperson cwhole cagain cin cthe cposition cthat cexisted cbefore cthe closs cor charm. cCompensatory cdamages care cfurther
ccategorized cby: cgeneral cdamages c(which cnecessarily cresult cfrom cthe cact cor comission, csuch cas cemotional cdistress,
cinconvenience, cand cpain cand csuffering) cand cspecial cdamages c(losses cmeasured cin cexact csums cof cmoney cincluding cmedical
cbills, ctravel cexpenses cfor cmedical ccare, cprescription ccosts cdamaged cproperty, cand clost cwages).
Reference: c5.3.6 cin cthe cLicense cExam cManual
Which cof cthe cfollowing cstatements cabout cflood cinsurance cis cNOT ccorrect?
A) cThere care ctwo ctypes cof cflood cinsurance cprograms cavailable: cemergency cand cregular
B) cA cflood cincludes can coverflow cof cinland cor ctidal cwaters
C) cSewer cbackup cinto ca cdwelling cis cnot cconsidered cflood cand cis cnot ccovered
D) cPersonal cproperty cin ca cbasement cor coutside cin cthe cyard cis ccovered c- cCORRECT cANS✔✔D) cPersonal cproperty cin ca
cbasement cor coutside cin cthe cyard cis ccovered
Explanation: cPersonal cproperty cin ca cbasement cor coutside cin cthe cyard cis cNOT ccovered cunder cflood cinsurance.
Reference: c9.4 cin cthe cLicense cExam cManual
Which cof cthe cfollowing ccoverages cis cNOT cincluded cin ca cboatowners/watercraft cpackage cpolicy?
A) cMedical cpayments
B) cLiability
C) cLongshore cand charbor cworkers' ccompensation cinsurance
D) cProperty c- cCORRECT cANS✔✔C) cLongshore cand charbor cworkers' ccompensation cinsurance
Explanation: cBoatowners/watercraft cpackage cpolicies cwere cdeveloped cby cindividual cinsurance ccompanies cand cthey ccombine
cproperty, cliability, cand cmedical cpayments cinsurance con can copen cperil cbasis. cLongshore cand charbor cworkers' ccompensation
cinsurance cis cfound cin cpersonal cyacht cpolicies, cwhich care cused cto cinsure clarger cvessels cthan cthose ccovered cunder
cboatowners cpolicies.
Reference: c9.8.1 cin cthe cLicense cExam cManual
An cinsured cowns ca cpet clion cthat cis ccaged con cthe chomeowner's cproperty. cThe cowner ctakes cgreat ccare cto cwarn cneighbors cof
cthe cpossible cdanger cby cposting csigns, cfencing cthe cyard, cand clocking cthe ccage cat call ctimes. cWhen ca cneighbor's cchild
cmanages cto copen cthe ccage cand cis cbitten, cwhat ctype cof cliability cwould capply cto cthe clion cowner?
A) cAbsolute cliability
B) cContractual cliability
C) cPremises cliability
D) cVicarious cliability c- cCORRECT cANS✔✔A) cAbsolute cliability
Explanation: cThe claw cimposes cstrict cor cabsolute cliability cfor cspecific csituations cor cactivities cthat cpose cthreats cto cthe csafety
cof cothers. cPeople cwho cown cdangerous canimals care cheld cto ca chigher cstandard cof ccare. cAbsolute cliability capplies cwhen ca
cperson cis cliable cfor ca cdangerous ccondition, cregardless cof cthe camount cof ccare ctaken.
Reference: c5.3.4 cin cthe cLicense cExam cManual
Which cof cthe cfollowing cterms cis cused cto cdescribe can cempty cbuilding cthat cis cnot cbeing cused?
A) cVacated
B) cAbsent
C) cUnoccupied
D) cVacant c- cCORRECT cANS✔✔D) cVacant
Explanation: cA cbuilding cthat cis cnot ccurrently cin cuse cand cdoes cnot chave cenough cfurnishings cto cfunction cin cits cnormal
ccapacity cis cconsidered cvacant. cA cbuilding cis cunoccupied cif cno cone cis ccurrently cin cit, cbut cfurnishings care cpresent cand cthe
coccupants cintended cto creturn, cas cis cthe ccase cwhen cthe cresidents care cout cof ctown con cvacation.
,Reference: c4.4.15 cin cthe cLicense cExam cManual
Which cof cthe cfollowing cstatements cabout cumbrella cpolicies cis cNOT ccorrect?
A) cThey cprovide ccoverage cabove cthe climits cof cunderlying cpolicies.
B) cThey care cwritten conly cfor ccommercial crisks.
C) cLosses cthat care cexcluded cby cthe cunderlying cpolicy cbut ccovered cby cthe cumbrella care csubject cto cthe cumbrella's cretention
climit.
D) cIf cthe cinsured cfails cto ckeep cthe cunderlying ccoverage cin cforce, cthe cumbrella cpolicy cwill cnot ccover cthe camount cof closs cthat
cwould chave cbeen cpaid cby cthe cunderlying cpolicy. c- cCORRECT cANS✔✔B) cThey care cwritten conly cfor ccommercial crisks.
Explanation: cUmbrella cliability cpolicies cmay cbe cwritten cfor cboth cpersonal cand ccommercial crisks.
Reference: c9.9.1 cin cthe cLicense cExam cManual
The cagent chas cmany cresponsibilities cto cthe capplicant. cOne cinvolves ca ctrust crelationship cbetween cthe cagent cand cthe cinsured
cregarding cthe cinsured's cfinances cand cconfidentiality. cIn cthis ccase, cthe cagent cacts cin cwhat ccapacity?
A) cFiduciary
B) cConsultant
C) cAttorney-in-fact
D) cSpecial cagent c- cCORRECT cANS✔✔A) cFiduciary
Explanation: cAgents chave cthe cduty cto cact cin ca cfiduciary ccapacity cthat crequires ca chigh cdegree cof ctrust cand cconfidence. cThis
cduty cdeals cwith cthe cagent's cdealings cwith cboth cthe cinsured cand cthe cinsurer. cThe cagent cis cexpected cto cbe ctrustworthy, cact
cin cgood cfaith, cand cpreserve cconfidential cinformation. c
Reference: c1.9.2 cin cthe cLicense cExam cManual
Thomas chad ca cforklift cinjury cat cwork cthat ccaused chis cdeath. cHow cmuch cmoney cwill chis csurviving cspouse creceive cfor cburial
cexpenses?
A) cUp cto c$10,000
B) cUp cto c$1,000
C) cUp cto c$2,500
D) cUp cto c$5,000 c- cCORRECT cANS✔✔D) cUp cto c$5,000
Explanation: cBurial cexpenses, cnot cto cexceed c$5,000, care cin caddition cto cthe ccompensation.
Reference: cSee cState cSupplement
With ca cfew cexceptions, cmost cpersonal cinsurance cpolicies cexclude closses carising cout cof call cof cthe cfollowing cEXCEPT:
A) cbusiness cactivities
B) crendering cof cprofessional cservices
C) cpersonal cactivities cconducted caway cfrom cthe cinsured cpremises
D) cwork-related cinjuries c- cCORRECT cANS✔✔C) cpersonal cactivities cconducted caway cfrom cthe cinsured cpremises
Explanation: cAlthough cthere care climited cexceptions, csuch cas ccertain cpermitted cincidental coccupancies, cpersonal clines cpolicies
ctypically cexclude closses crelated cto cbusiness cactivities, cprofessional cservices, cand cwork-related cinjuries.
Reference: c7.6.2 cin cthe cLicense cExam cManual
Which cof cthe cfollowing citems ccould cbe cinsured cunder cCoverage cC cof ca chomeowners cpolicy?
A) cExotic cbirds
B) cMotorized cgo-kart
C) cSnowmobile
D) cPersonal cproperty cusually clocated cin ca csecondary cresidence c- cCORRECT cANS✔✔D) cPersonal cproperty cusually clocated
cin ca csecondary cresidence
Explanation: cCoverage cC ccovers cpersonal cproperty cunder ca chomeowners cpolicy. cPersonal cproperty cusually clocated cin ca
csecondary cresidence cmay cbe cinsured cunder cCoverage cC. cIn caddition, cthe cfollowing cpersonal cproperty cis ccovered: cpersonal
cproperty cthe cinsured cowns cor cuses cthat cis clocated canywhere cin cthe cworld; cpersonal cproperty cof cothers cwhile cit cis cin cthe
cportion cof cthe cresidence cthe cinsured coccupies; cand cpersonal cproperty cof ca cguest cor cemployee cwhile cit cis clocated cin cany
cresident cthe cinsured coccupies. cAnimals cand cmotorized cvehicles care cexcluded.
Reference: c7.5.1 cin cthe cLicense cExam cManual
The cinsured's chome cis cinsured cunder can cHO-3 cwith ca c$100,000 cCoverage cA climit. cA ctornado cdestroys cthe chome cand
cuproots ca ctree cvalued cat c$5,000. cHow cmuch cwould cthe cinsurance ccompany cpay cfor cthe closs cto cthe cinsured's chome cand
ctree? cIgnore cany cdeductible cthat cwould capply.
A) c$105,000
, B) c95,000
C) c$100,500
D) c$100,000 c- cCORRECT cANS✔✔C) c$100,500
Explanation: cThe ctrees, cshrubs, cand cother cplants cadditional ccoverage cdoes cnot ccover cdamage ccaused cby ccertain cperils,
csuch cas cwind. cIt ccovers cdamage ccaused cby cfire, clightning, cexplosion, criot, caircraft, cvehicles cnot cowned cor coperated cby ca
cresident, ctheft, cand cvandalism cor cmalicious cmischief. cCoverage cis climited cto c5% cof cthe cCoverage cA climit cand ca cmaximum
cof c$500 cfor cany cone ctree, cshrub, cor cplant.
Reference: c7.5.3 cin cthe cLicense cExam cManual
An cinsured chas ca c$60,000 cSpecial cForm c(DP-3). cWhen ca ccovered closs cin cthe camount cof c$10,000 cdamages cthe cattached
cgarage, chow cmuch cof cthat camount cis cpaid cunder cthe cCoverage cB-Other cStructures?
A) c$0
B) c$10,000
C) c$1,000
D) c$6,000 c- cCORRECT cANS✔✔A) c$0
Explanation: cThe cattached cgarage cis cconsidered cpart cof cthe cdwelling, cso cthe c$10,000 cis cpaid cunder cCoverage cA-Dwelling.
cReal cproperty clocated con cthe cdescribed cproperty cand cseparated cfrom cthe cdwelling cby cclear cspace cis ccovered cby cCoverage
cB-Other cStructures.
Reference: c6.4.3 cin cthe cLicense cExam cManual
Section cII cof cthe chomeowners cpolicy cprovides cliability ccoverage cfor call cof cthe cfollowing cEXCEPT
A) cuse cof ca c17-foot csailboat
B) crenting cthe cgarage cto ca cjewelry cmaker
C) cactions cof ca cdomestic canimal cin cthe ccare cof cthe cinsured
D) cactions cof ca cresidence cemployee c- cCORRECT cANS✔✔B) crenting cthe cgarage cto ca cjewelry cmaker
Explanation: cThe chomeowners cpolicy cexcludes cliability carising cout cof cthe crental cof cany cpart cof cthe cpremises, cexcept cfor cthe
crental cpart cof can cinsured clocation cas ca cresidence.
Reference: c7.6.4 cin cthe cLicense cExam cManual
Which cof cthe cfollowing cis cNOT can celigibility crequirement cfor ca chomeowners cpolicy?
A) cNamed cinsured cis cthe cowner-occupant cof cdwelling
B) cDwelling cis ca cseasonal cresidence
C) cNo cmore cthan c4 cfamilies coccupy cthe chome
D) cNamed cinsured clives con ca cfarm c- cCORRECT cANS✔✔D) cNamed cinsured clives con ca cfarm
Explanation: cFarms care cnot ccovered cunder chomeowners cpolicies. cThey chave ctheir cown cspecific cfarm cpolicy. cA chomeowners
cpolicy crequires cthat cthe cnamed cinsured cin cthe cowner-occupant cand cthere care cno cmore cthan c4 cfamilies cin cthe chome. cA
cseasonal cresidence cmay calso cbe ccovered cunder ca chomeowners cpolicy.
Reference: c7.3.2 cin cthe cLicense cExam cManual
The cprovisions cof cthe cTerrorism cRisk cInsurance cAct cof c2002 capply cto cwhich cof cthe cfollowing clines cof cinsurance?
A) cHomeowners
B) cCommercial cproperty
C) cAutomobile
D) cDwelling c- cCORRECT cANS✔✔B) cCommercial cproperty
Explanation: cThe cTerrorism cRisk cInsurance cAct cof c2002 cestablished ca cfederal cprogram cto cprovide ccompensation cfor cinsured
closses cresulting cfrom cterrorism cacts. cMost ccommercial cproperty cand ccasualty cpolicies care crequired cto coffer ccoverage cfor
ccertified cacts cof cterrorism. cThe cprogram cdoes cnot capply cto cpersonal clines ccoverage.
Reference: c3.8.2 cin cthe cLicense cExam cManual
Trees, cshrubs, cand cother cplants care ccovered cas cadditional ccoverages cfor cCoverages cA-The ccoverage cis climited cto ccertain
cperils, chowever. cAll cof cthe cfollowing cperils care ccovered cwhen ccausing cdamage cto ca ctree cor cshrub cEXCEPT
A) criot
B) cexplosion
C) ctheft
D) cwind c- cCORRECT cANS✔✔D) cwind
Explanation: cThe cinsurer cwill ccover ctrees, cshrubs, cplants cor clawns cat cthe cresidence cpremises cfor closs ccaused cby cfire,
clightning, cexplosion, criot, ccivil ccommotion, caircraft, cnonowned cvehicles, cvandalism cand cmalicious cmischief, cand ctheft. cWind,
ca ccommon cperil ccausing cdamages cto ctrees, cis cnot ccovered.
