PERSONAL LINES INSURANCE {LATEST
2026 -2027 update} QUESTIONS AND
ANSWERS 100% CORRECT
A ___________ contract is an arrangement where one insurer transfers or shares risks
with another insurer. - correct answer Reinsurance
_____________ Reinsurance is accepted or rejected by a case by case basis. - correct
answer Facultative
The fact that an insured would profit from a loss, would be a violation of the principle
of ___________. - correct answer Indemnity
The determination of acceptable risks is the primary function of the ___________ . -
correct answer Underwriter
Underwriters like to select insureds who's actual losses will be similar to expected
losses. True or False? - correct answer True
When rates cannot be used until they are improved by the department or division of
insurance, they are called ____ ________ rates. - correct answer Prior Approval
,The termination of a policy by either the insured or insurer before its expiration date is
known as ___________. - correct answer Cancellation
When the insurer cancels a property policy, the unearned premium is returned ___ ____.
- correct answer Pro Rata
When an insured requests cancellation of a policy, the unearned premium is refunded
to the insured on a _____ _____. - correct answer Short Rate
A fire is considered to be a _____ of a potential loss. - correct answer Cause
A document that provides temporary insurance coverage until a policy is issued is
known as a ______. - correct answer Binder
Coverage C under the dwelling forms extends to include personal property of a tenant
or boarder of the insured. True or False? - correct answer False
The DP-1 basic form applies coverage to property that is removed because it is
endangered by a covered peril. True or False? - correct answer True
,Under the DP-2, and DP-3, endangered property removed to another location is
covered for 30 days while at the removed location. True or False? - correct answer
True
Collapse of a structure due to hidden decay is covered under all dwelling forms. True
or False? - correct answer False
The earth movement exclusion does not exclude damage by an explosion that ensues
from the earth movement. True or False? - correct answer True
Water that backs up through sewers and drains causing damage is covered under a
DP-3. True or False? - correct answer False
Under the HO-2, would the explosion of a hot water heater that causes major damage
to the house be covered? - correct answer Yes
Under a homeowners policy, for a claim of more than $2,500 on the dwelling to be paid
on a replacement cost basis, the repairs must ____ __________. - correct answer Be
Completed
Does an HO-3 policy provide coverage against damage caused by falling objects? -
correct answer Yes
, The perils included in the HO-3 policy for coverages A and B are the special _____
perils. - correct answer Open
The HO-4 policy provides _____ ____ peril coverage on the personal property. - correct
answer Broad Form
Does the HO-4 provide coverage for real property? - correct answer No
A client desires open peril coverage on both their dwelling and personal property
under their homeowners policy. which homeowners form would give them this
coverage? - correct answer Form 5
The main difference between an HO-3 and an HO-5 is that the HO-3 insures personal
property for broad form perils and the HO-5 insures personal properties for open
perils. - correct answer True
The HO-6 provides _____ ____ _____ peril coverage on personal property. - correct
answer Broad Form Named
The HO-6 condominium unit-owners form provides coverage for common grounds
which are next to the insured's property. True or False? - correct answer False
2026 -2027 update} QUESTIONS AND
ANSWERS 100% CORRECT
A ___________ contract is an arrangement where one insurer transfers or shares risks
with another insurer. - correct answer Reinsurance
_____________ Reinsurance is accepted or rejected by a case by case basis. - correct
answer Facultative
The fact that an insured would profit from a loss, would be a violation of the principle
of ___________. - correct answer Indemnity
The determination of acceptable risks is the primary function of the ___________ . -
correct answer Underwriter
Underwriters like to select insureds who's actual losses will be similar to expected
losses. True or False? - correct answer True
When rates cannot be used until they are improved by the department or division of
insurance, they are called ____ ________ rates. - correct answer Prior Approval
,The termination of a policy by either the insured or insurer before its expiration date is
known as ___________. - correct answer Cancellation
When the insurer cancels a property policy, the unearned premium is returned ___ ____.
- correct answer Pro Rata
When an insured requests cancellation of a policy, the unearned premium is refunded
to the insured on a _____ _____. - correct answer Short Rate
A fire is considered to be a _____ of a potential loss. - correct answer Cause
A document that provides temporary insurance coverage until a policy is issued is
known as a ______. - correct answer Binder
Coverage C under the dwelling forms extends to include personal property of a tenant
or boarder of the insured. True or False? - correct answer False
The DP-1 basic form applies coverage to property that is removed because it is
endangered by a covered peril. True or False? - correct answer True
,Under the DP-2, and DP-3, endangered property removed to another location is
covered for 30 days while at the removed location. True or False? - correct answer
True
Collapse of a structure due to hidden decay is covered under all dwelling forms. True
or False? - correct answer False
The earth movement exclusion does not exclude damage by an explosion that ensues
from the earth movement. True or False? - correct answer True
Water that backs up through sewers and drains causing damage is covered under a
DP-3. True or False? - correct answer False
Under the HO-2, would the explosion of a hot water heater that causes major damage
to the house be covered? - correct answer Yes
Under a homeowners policy, for a claim of more than $2,500 on the dwelling to be paid
on a replacement cost basis, the repairs must ____ __________. - correct answer Be
Completed
Does an HO-3 policy provide coverage against damage caused by falling objects? -
correct answer Yes
, The perils included in the HO-3 policy for coverages A and B are the special _____
perils. - correct answer Open
The HO-4 policy provides _____ ____ peril coverage on the personal property. - correct
answer Broad Form
Does the HO-4 provide coverage for real property? - correct answer No
A client desires open peril coverage on both their dwelling and personal property
under their homeowners policy. which homeowners form would give them this
coverage? - correct answer Form 5
The main difference between an HO-3 and an HO-5 is that the HO-3 insures personal
property for broad form perils and the HO-5 insures personal properties for open
perils. - correct answer True
The HO-6 provides _____ ____ _____ peril coverage on personal property. - correct
answer Broad Form Named
The HO-6 condominium unit-owners form provides coverage for common grounds
which are next to the insured's property. True or False? - correct answer False
