FLORIDA INSURANCE 20-44 PERSONAL
LINES AGENT FINAL EXAM PREP
QUESTIONS AND ANSWERS
1. Under the Florida No-Fault Law, if an insured is injured in a motor vehicle accident and has
sustained a ‘permanent injury’, which of the following is true?
A. The insured is barred from suing the at-fault party for non-economic damages.
B. The insured’s PIP benefits are doubled to $20,000.
C. The insured may sue the at-fault party for pain, suffering, mental anguish, and
inconvenience.
D. The at-fault party is exempt from all tort liability regardless of the injury severity.
Answer: C
Conceptual Explanation: In Florida, the ‘tort threshold’ must be met to sue for non-
economic damages (pain and suffering). A permanent injury is one of the criteria that
pierces the tort immunity provided by the No-Fault Law.
,2. A Florida homeowner has an HO-3 policy. A catastrophic ground cover collapse occurs,
causing the home to be condemned. How does the policy respond?
A. The policy must provide coverage for catastrophic ground cover collapse as a mandatory
coverage.
B. Coverage is excluded unless a Sinkhole Endorsement was purchased.
C. Coverage is only provided if the collapse was caused by an earthquake.
D. The policy pays only for the contents, not the structure.
Answer: A
Conceptual Explanation: Florida law requires all authorized insurers to provide coverage
for ‘catastrophic ground cover collapse.’ This is distinct from ‘sinkhole’ coverage, which is
often optional.
3. The Florida Insurance Guaranty Association (FIGA) is responsible for which of the
following?
A. Regulating the rates of surplus lines insurers.
B. Handling the claims of insolvent property and casualty insurers.
C. Providing low-cost auto insurance to high-risk drivers.
D. Insuring state-owned buildings against fire.
Answer: B
, Conceptual Explanation: FIGA is a non-profit corporation created by the Florida
Legislature to pay certain claims of P&C insurance companies that become insolvent.
4. An agent tells a client that a specific coverage is required by law when it is actually an
optional add-on with an additional premium. This prohibited practice is known as:
A. Twisting
B. Sliding
C. Churning
D. Rebating
Answer: B
Conceptual Explanation: Sliding is the act of representing to the applicant that a specific
ancillary coverage is required by law or is included in the policy without an additional
charge when such charge is actually required.
5. Under the Valued Policy Law in Florida, if a total loss occurs to a building by a covered peril,
what amount must the insurer pay?
A. The Actual Cash Value of the property.
B. The Replacement Cost of the property.
C. The amount determined by a neutral appraiser after the loss.
D. The full amount of insurance stated in the policy for which a premium was paid.
Answer: D
LINES AGENT FINAL EXAM PREP
QUESTIONS AND ANSWERS
1. Under the Florida No-Fault Law, if an insured is injured in a motor vehicle accident and has
sustained a ‘permanent injury’, which of the following is true?
A. The insured is barred from suing the at-fault party for non-economic damages.
B. The insured’s PIP benefits are doubled to $20,000.
C. The insured may sue the at-fault party for pain, suffering, mental anguish, and
inconvenience.
D. The at-fault party is exempt from all tort liability regardless of the injury severity.
Answer: C
Conceptual Explanation: In Florida, the ‘tort threshold’ must be met to sue for non-
economic damages (pain and suffering). A permanent injury is one of the criteria that
pierces the tort immunity provided by the No-Fault Law.
,2. A Florida homeowner has an HO-3 policy. A catastrophic ground cover collapse occurs,
causing the home to be condemned. How does the policy respond?
A. The policy must provide coverage for catastrophic ground cover collapse as a mandatory
coverage.
B. Coverage is excluded unless a Sinkhole Endorsement was purchased.
C. Coverage is only provided if the collapse was caused by an earthquake.
D. The policy pays only for the contents, not the structure.
Answer: A
Conceptual Explanation: Florida law requires all authorized insurers to provide coverage
for ‘catastrophic ground cover collapse.’ This is distinct from ‘sinkhole’ coverage, which is
often optional.
3. The Florida Insurance Guaranty Association (FIGA) is responsible for which of the
following?
A. Regulating the rates of surplus lines insurers.
B. Handling the claims of insolvent property and casualty insurers.
C. Providing low-cost auto insurance to high-risk drivers.
D. Insuring state-owned buildings against fire.
Answer: B
, Conceptual Explanation: FIGA is a non-profit corporation created by the Florida
Legislature to pay certain claims of P&C insurance companies that become insolvent.
4. An agent tells a client that a specific coverage is required by law when it is actually an
optional add-on with an additional premium. This prohibited practice is known as:
A. Twisting
B. Sliding
C. Churning
D. Rebating
Answer: B
Conceptual Explanation: Sliding is the act of representing to the applicant that a specific
ancillary coverage is required by law or is included in the policy without an additional
charge when such charge is actually required.
5. Under the Valued Policy Law in Florida, if a total loss occurs to a building by a covered peril,
what amount must the insurer pay?
A. The Actual Cash Value of the property.
B. The Replacement Cost of the property.
C. The amount determined by a neutral appraiser after the loss.
D. The full amount of insurance stated in the policy for which a premium was paid.
Answer: D
