Personal Lines Insurance Practice Exam
Complete Questions and Guide Answers
100% Verified Graded A+
1. 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 defini-
tion 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 nonpermissive users does not apply to use of an
owned auto policy by resident family members.
Reference 8.7.2 in License Exam Manual
2. 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 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
3. 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 insur-
ers
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.
Reference 4.4.16.3 in the License Exam Manual
4. Which one of the following dwellings would a HO-3 Homeowners Form cov-
er?
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. Oflce and apartment buildings would be covered by a commercial policy.
Reference 7.4.1 in the License Exam Manual
5. Which on of the following would be classified as a general damage?
A) Pain and suffering
B) Lost wages
C) Medical bills
D) Damaged property
Answer: A) Pain and suttering
Complete Questions and Guide Answers
100% Verified Graded A+
1. 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 defini-
tion 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 nonpermissive users does not apply to use of an
owned auto policy by resident family members.
Reference 8.7.2 in License Exam Manual
2. 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 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
3. 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 insur-
ers
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.
Reference 4.4.16.3 in the License Exam Manual
4. Which one of the following dwellings would a HO-3 Homeowners Form cov-
er?
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. Oflce and apartment buildings would be covered by a commercial policy.
Reference 7.4.1 in the License Exam Manual
5. Which on of the following would be classified as a general damage?
A) Pain and suffering
B) Lost wages
C) Medical bills
D) Damaged property
Answer: A) Pain and suttering
