PERSONAL LINES INSURANCE PRACTICE EXAM 2026/2027 02/09/2026
Personal Lines Insurance Practice Exam
2026/2027|Questions and Correct Answers with
rationales latest exam (full verified)
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 definition 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.
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
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
C) subrogate against the parking valet
PERSONAL LINES INSURANCE PRACTICE EXAM 2026/2027 PC
, PERSONAL LINES INSURANCE PRACTICE EXAM 2026/2027 02/09/2026
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
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 insurers
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
Which one of the following dwellings would a HO-3 Homeowners Form cover?
A) Condominium
B) Office building
C) Single-family home
PERSONAL LINES INSURANCE PRACTICE EXAM 2026/2027 PC
, PERSONAL LINES INSURANCE PRACTICE EXAM 2026/2027 02/09/2026
D) Apartment building
C) Single-family home
Explanation: HO-3 Homeowners Form covers owner-occupied single family dwellings. Condominiums
are covered by the HO-6. Office and apartment buildings would be covered by a commercial policy.
Reference: 7.4.1 in the License Exam Manual
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
A) Pain and suffering
Explanation: Compensatory damages compensate an injured party for injuries sustained- nothing
more. Their purpose is to make a person whole again in the position that existed before the loss or
harm. Compensatory damages are further categorized by: general damages (which necessarily result
from the act or omission, such as emotional distress, inconvenience, and pain and suffering) and
special damages (losses measured in exact sums of money including medical bills, travel expenses for
medical care, prescription costs damaged property, and lost wages).
Reference: 5.3.6 in the License Exam Manual
Which of the following statements about flood insurance is NOT correct?
A) There are two types of flood insurance programs available: emergency and regular
PERSONAL LINES INSURANCE PRACTICE EXAM 2026/2027 PC
, PERSONAL LINES INSURANCE PRACTICE EXAM 2026/2027 02/09/2026
B) A flood includes an overflow of inland or tidal waters
C) Sewer backup into a dwelling is not considered flood and is not covered
D) Personal property in a basement or outside in the yard is covered
D) Personal property in a basement or outside in the yard is covered
Explanation: Personal property in a basement or outside in the yard is NOT covered under flood
insurance.
Reference: 9.4 in the License Exam Manual
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
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?
PERSONAL LINES INSURANCE PRACTICE EXAM 2026/2027 PC
Personal Lines Insurance Practice Exam
2026/2027|Questions and Correct Answers with
rationales latest exam (full verified)
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 definition 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.
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
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
C) subrogate against the parking valet
PERSONAL LINES INSURANCE PRACTICE EXAM 2026/2027 PC
, PERSONAL LINES INSURANCE PRACTICE EXAM 2026/2027 02/09/2026
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
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 insurers
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
Which one of the following dwellings would a HO-3 Homeowners Form cover?
A) Condominium
B) Office building
C) Single-family home
PERSONAL LINES INSURANCE PRACTICE EXAM 2026/2027 PC
, PERSONAL LINES INSURANCE PRACTICE EXAM 2026/2027 02/09/2026
D) Apartment building
C) Single-family home
Explanation: HO-3 Homeowners Form covers owner-occupied single family dwellings. Condominiums
are covered by the HO-6. Office and apartment buildings would be covered by a commercial policy.
Reference: 7.4.1 in the License Exam Manual
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
A) Pain and suffering
Explanation: Compensatory damages compensate an injured party for injuries sustained- nothing
more. Their purpose is to make a person whole again in the position that existed before the loss or
harm. Compensatory damages are further categorized by: general damages (which necessarily result
from the act or omission, such as emotional distress, inconvenience, and pain and suffering) and
special damages (losses measured in exact sums of money including medical bills, travel expenses for
medical care, prescription costs damaged property, and lost wages).
Reference: 5.3.6 in the License Exam Manual
Which of the following statements about flood insurance is NOT correct?
A) There are two types of flood insurance programs available: emergency and regular
PERSONAL LINES INSURANCE PRACTICE EXAM 2026/2027 PC
, PERSONAL LINES INSURANCE PRACTICE EXAM 2026/2027 02/09/2026
B) A flood includes an overflow of inland or tidal waters
C) Sewer backup into a dwelling is not considered flood and is not covered
D) Personal property in a basement or outside in the yard is covered
D) Personal property in a basement or outside in the yard is covered
Explanation: Personal property in a basement or outside in the yard is NOT covered under flood
insurance.
Reference: 9.4 in the License Exam Manual
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
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?
PERSONAL LINES INSURANCE PRACTICE EXAM 2026/2027 PC
