PERSONAL LINES INSURANCE PRACTICE EXA1

PERSONAL LINES INSURANCE
PRACTICE EXAM




Bobby,00age0016,00borrows00his00parents'00car00without00their00permission00and00gets00i
nto00an00accident.00Which00of00the00following00statements00about00coverage00under00th
e00parents'00personal00auto00policy00is00CORRECT?

A)00Bobby00is00covered00by00his00parents'00policy00because00he00is00included00in00the00d
efinition00of00named00insured.00
B)00Bobby00is00not00covered00for00this00accident00because00he00used00the00car00without0
0permission.00
C)00Bobby00is00not00covered00because00it00was00not00his00car.00
D)00Bobby00is00covered00by00his00parents'00policy00because00he00is00a00family00member.
00-00ans--
✔✔D)00Bobby00is00covered00by00his00parents'00policy00because00he00is00a00family00mem
ber.

Explanation:00Bobby00is00a00family00member00and00thus00automatically00is00covered00un
der00the00family's00PAP00policy.00Even00though00Bobby00is00using00the00car00without00pe
rmission,00the00exclusion00pertaining00to00nonpermissive00users00does00not00apply00to00
use00of00an00owned00auto00policy00by00resident00family00members.

Reference:008.7.200in00License00Exam00Manual

A00parking00valet00at00a00hotel00uses00a00guest's00car00to00do00a00personal00errand00and
00damages00the00car00in00a00collision.00The00guest00has00a00personal00auto00policy00(PA
P).00The00insurance00company00will00pay00the00claim00and00____.

A)00relieve00the00parking00valet00of00legal00liability00for00the00loss
B)00subrogate00against00the00named00insured
C)00subrogate00against00the00parking00valet
D)00recover00any00additional00loss00from00the00lienholder00-00ans--
✔✔C)00subrogate00against00the00parking00valet

Explanation:00Part-
D00coverage00for00Damage00to00Your00Auto00of00the00PAP00contains00a00no00benefit00to0

,0bailee00provision.00This00provision00states00that00a00carrier00or00other00bailee00for00hire,
00such00as00a00parking00gar5age,00service00station,00or00moving00company00will00not00di
rectly00or00indirectly00benefit00from00the00PAP's00insurance.00A00bailee00is00an00individua
l00or00entity00that00assumes00possession00of00goods00owned00by00another00for00the00pur
pose00of00transporting,00servicing,00or00storing00them.00When00temporary00custody00is00
assumed,00the00bailee00becomes00legally00liable00for00the00goods.

Reference:008.7.200in00the00License00Exam00Manual

Who00of00the00following00are00required00to00be00members00of00the00Arizona00Property00
and00Casualty00Insurance00Guaranty00Fund?

A)00All00insurers00that00write00the00types00of00insurance00that00are00protected00by00the00f
und00in00Arizona
B)00Foreign00property00and00casualty00insurers00only
C)00lien00property00and00casualty00insurers00only
D)00All00insurers00that00write00insurance00in00Arizona,00including00life00and00health00insur
ers00-00ans--
✔✔A)00All00insurers00that00write00the00types00of00insurance00that00are00protected00by00th
e00fund00in00Arizona

Explanation:00All00insurers00that00write00types00of00insurance00that00are00protected00by00
the00fund00are00required00to00be00member00insurers00of00the00fund.00Reference:00State00
Supplement00in00the00License00Exam00Manual.

Reference:004.4.16.300in00the00License00Exam00Manual

Which00one00of00the00following00dwellings00would00a00HO-
300Homeowners00Form00cover?

A)00Condominium
B)00Office00building
C)00Single-family00home
D)00Apartment00building00-00ans--✔✔C)00Single-family00home

Explanation:00HO-300Homeowners00Form00covers00owner-
occupied00single00family00dwellings.00Condominiums00are00covered00by00the00HO-
6.00Office00and00apartment00buildings00would00be00covered00by00a00commercial00policy.

Reference:007.4.100in00the00License00Exam00Manual

Which00on00of00the00following00would00be00classified00as00a00general00damage?

A)00Pain00and00suffering
B)00Lost00wages
C)00Medical00bills

,D)00Damaged00property00-00ans--✔✔A)00Pain00and00suffering

Explanation:00Compensatory00damages00compensate00an00injured00party00for00injuries00
sustained-
00nothing00more.00Their00purpose00is00to00make00a00person00whole00again00in00the00posi
tion00that00existed00before00the00loss00or00harm.00Compensatory00damages00are00furthe
r00categorized00by:00general00damages00(which00necessarily00result00from00the00act00or0
0omission,00such00as00emotional00distress,00inconvenience,00and00pain00and00suffering)0
0and00special00damages00(losses00measured00in00exact00sums00of00money00including00
medical00bills,00travel00expenses00for00medical00care,00prescription00costs00damaged00pr
operty,00and00lost00wages).

Reference:005.3.600in00the00License00Exam00Manual

Which00of00the00following00statements00about00flood00insurance00is00NOT00correct?

A)00There00are00two00types00of00flood00insurance00programs00available:00emergency00a
nd00regular
B)00A00flood00includes00an00overflow00of00inland00or00tidal00waters
C)00Sewer00backup00into00a00dwelling00is00not00considered00flood00and00is00not00covere
d
D)00Personal00property00in00a00basement00or00outside00in00the00yard00is00covered00-
00ans--
✔✔D)00Personal00property00in00a00basement00or00outside00in00the00yard00is00covered

Explanation:00Personal00property00in00a00basement00or00outside00in00the00yard00is00NOT
00covered00under00flood00insurance.


Reference:009.400in00the00License00Exam00Manual

Which00of00the00following00coverages00is00NOT00included00in00a00boatowners/
watercraft00package00policy?

A)00Medical00payments
B)00Liability
C)00Longshore00and00harbor00workers'00compensation00insurance
D)00Property00-00ans--
✔✔C)00Longshore00and00harbor00workers'00compensation00insurance

Explanation:00Boatowners/
watercraft00package00policies00were00developed00by00individual00insurance00companies
00and00they00combine00property,00liability,00and00medical00payments00insurance00on00an
00open00peril00basis.00Longshore00and00harbor00workers'00compensation00insurance00is0
0found00in00personal00yacht00policies,00which00are00used00to00insure00larger00vessels00th
an00those00covered00under00boatowners00policies.

, Reference:009.8.100in00the00License00Exam00Manual

An00insured00owns00a00pet00lion00that00is00caged00on00the00homeowner's00property.00Th
e00owner00takes00great00care00to00warn00neighbors00of00the00possible00danger00by00post
ing00signs,00fencing00the00yard,00and00locking00the00cage00at00all00times.00When00a00nei
ghbor's00child00manages00to00open00the00cage00and00is00bitten,00what00type00of00liability
00would00apply00to00the00lion00owner?


A)00Absolute00liability
B)00Contractual00liability
C)00Premises00liability
D)00Vicarious00liability00-00ans--✔✔A)00Absolute00liability

Explanation:00The00law00imposes00strict00or00absolute00liability00for00specific00situations0
0or00activities00that00pose00threats00to00the00safety00of00others.00People00who00own00dan
gerous00animals00are00held00to00a00higher00standard00of00care.00Absolute00liability00appli
es00when00a00person00is00liable00for00a00dangerous00condition,00regardless00of00the00am
ount00of00care00taken.

Reference:005.3.400in00the00License00Exam00Manual

Which00of00the00following00terms00is00used00to00describe00an00empty00building00that00is00
not00being00used?

A)00Vacated
B)00Absent
C)00Unoccupied
D)00Vacant00-00ans--✔✔D)00Vacant

Explanation:00A00building00that00is00not00currently00in00use00and00does00not00have00enou
gh00furnishings00to00function00in00its00normal00capacity00is00considered00vacant.00A00buil
ding00is00unoccupied00if00no00one00is00currently00in00it,00but00furnishings00are00present00
and00the00occupants00intended00to00return,00as00is00the00case00when00the00residents00ar
e00out00of00town00on00vacation.

Reference:004.4.1500in00the00License00Exam00Manual

Which00of00the00following00statements00about00umbrella00policies00is00NOT00correct?

A)00They00provide00coverage00above00the00limits00of00underlying00policies.
B)00They00are00written00only00for00commercial00risks.
C)00Losses00that00are00excluded00by00the00underlying00policy00but00covered00by00the00u
mbrella00are00subject00to00the00umbrella's00retention00limit.
D)00If00the00insured00fails00to00keep00the00underlying00coverage00in00force,00the00umbrell
a00policy00will00not00cover00the00amount00of00loss00that00would00have00been00paid00by00t