Page | 1
AD Banker Exam Personal Lines Questions
with Detailed Verified Answers
Falling objects
⼀Answer:⼀ Damage to the exterior of the building must take place
for coverage to apply to contents inside the building.
Contract Law
⼀Answer:⼀ Law that pertains to the formation and enforcement of
contracts.
Acceptance
⼀Answer:⼀ The acceptance of an insurance contract takes place
when the insurance company agrees to issue insurance.
Mutual Insurance Company
⼀Answer:⼀ Owned by policyholders. Policyholders receive non-
taxable dividends as a return of unused premium when delcared
Insurable Interest
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⼀Answer:⼀ Possibility of economic loss.
Life and Health — Interest must exist at time of application/purchase.
Property — Interest must exist at time of loss/claim (ownership is
evidence).
Casualty — Interest results from property rights, contract rights and
potential legal liability.
Principle of Indemnity
⼀Answer:⼀ The principle of restoring the insured to the same
financial condition as before the loss, with no intent of loss or gain.
Law of Agency
⼀Answer:⼀ A relationship between two parties where one (the
producer/agent) may act on the behalf of the other (the
insurer/principal) and bind the actions or words of the principal.
Consideration
⼀Answer:⼀ Insured pays premium, insurer promises to pay claims
Misrepresentation
⼀Answer:⼀ Making misleading representations or fraudulent policy
comparisons, description of benefits or untrue statements about the
financial conditions of any insurer
Contents Broad Form (HO-4)
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⼀Answer:⼀ Designed to insure those who are tenants.
HO-4 insures personal property under Coverage C against loss from
the 16 named broad form perils found in the HO-2 and HO-3 forms.
Replacement Value
⼀Answer:⼀ The cost to replace property with property of like kind
and quality, at current pricing, without a deduction for depreciation.
Attained Age
⼀Answer:⼀ Insured's age at the point in time at issuance, renewal, or
conversion
Excess Coverage
⼀Answer:⼀ Property coverage above the primary amount of
insurance. Excess does not pay until primary is exhausted.
Additional Coverage(s)
⼀Answer:⼀ Additional coverages are automatically included in
property policies without an additional premium. The type of
additional coverages depends upon the type of policy. Additional
coverages are paid in addition to those stated in the insuring
agreement and include debris removal, collapse, and fire department
service charges.
Four Elements of a Legal Contract
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⼀Answer:⼀ 1. Competent Parties - Minors, Mentally Incompetent,
Persons under the influence of drugs and alcohol do not have legal
capacity
2. Legal Purpose - Illegal activity voids contract
3. Agreement - Offer is application, acceptance is issuance of policy
4. Consideration - Insured pays premium, insurer promises to pay
claims
Bankruptcy Clause
⼀Answer:⼀ Specifies that bankruptcy or insolvency of the insured
does not relieve the insurer of any of its duties or obligations under the
policy.
Difference in Conditions (DIC) Insurance
⼀Answer:⼀ DIC is a special form used to fill in the gaps of a
property policy. There is no standard policy form, no coinsurance, no
pro rata clause.
Facultative Agreements
⼀Answer:⼀ A reinsurance agreement allowing the ceding company
and the reinsurance company an opportunity to exchange advice
about the underwriting of each case.
Non-Admitted
⼀Answer:⼀ An insurer that has not sought approval (or) has not
been able to obtain approval to transact business from the insurance
regulator in this state.
Collision
AD Banker Exam Personal Lines Questions
with Detailed Verified Answers
Falling objects
⼀Answer:⼀ Damage to the exterior of the building must take place
for coverage to apply to contents inside the building.
Contract Law
⼀Answer:⼀ Law that pertains to the formation and enforcement of
contracts.
Acceptance
⼀Answer:⼀ The acceptance of an insurance contract takes place
when the insurance company agrees to issue insurance.
Mutual Insurance Company
⼀Answer:⼀ Owned by policyholders. Policyholders receive non-
taxable dividends as a return of unused premium when delcared
Insurable Interest
, Page | 2
⼀Answer:⼀ Possibility of economic loss.
Life and Health — Interest must exist at time of application/purchase.
Property — Interest must exist at time of loss/claim (ownership is
evidence).
Casualty — Interest results from property rights, contract rights and
potential legal liability.
Principle of Indemnity
⼀Answer:⼀ The principle of restoring the insured to the same
financial condition as before the loss, with no intent of loss or gain.
Law of Agency
⼀Answer:⼀ A relationship between two parties where one (the
producer/agent) may act on the behalf of the other (the
insurer/principal) and bind the actions or words of the principal.
Consideration
⼀Answer:⼀ Insured pays premium, insurer promises to pay claims
Misrepresentation
⼀Answer:⼀ Making misleading representations or fraudulent policy
comparisons, description of benefits or untrue statements about the
financial conditions of any insurer
Contents Broad Form (HO-4)
, Page | 3
⼀Answer:⼀ Designed to insure those who are tenants.
HO-4 insures personal property under Coverage C against loss from
the 16 named broad form perils found in the HO-2 and HO-3 forms.
Replacement Value
⼀Answer:⼀ The cost to replace property with property of like kind
and quality, at current pricing, without a deduction for depreciation.
Attained Age
⼀Answer:⼀ Insured's age at the point in time at issuance, renewal, or
conversion
Excess Coverage
⼀Answer:⼀ Property coverage above the primary amount of
insurance. Excess does not pay until primary is exhausted.
Additional Coverage(s)
⼀Answer:⼀ Additional coverages are automatically included in
property policies without an additional premium. The type of
additional coverages depends upon the type of policy. Additional
coverages are paid in addition to those stated in the insuring
agreement and include debris removal, collapse, and fire department
service charges.
Four Elements of a Legal Contract
, Page | 4
⼀Answer:⼀ 1. Competent Parties - Minors, Mentally Incompetent,
Persons under the influence of drugs and alcohol do not have legal
capacity
2. Legal Purpose - Illegal activity voids contract
3. Agreement - Offer is application, acceptance is issuance of policy
4. Consideration - Insured pays premium, insurer promises to pay
claims
Bankruptcy Clause
⼀Answer:⼀ Specifies that bankruptcy or insolvency of the insured
does not relieve the insurer of any of its duties or obligations under the
policy.
Difference in Conditions (DIC) Insurance
⼀Answer:⼀ DIC is a special form used to fill in the gaps of a
property policy. There is no standard policy form, no coinsurance, no
pro rata clause.
Facultative Agreements
⼀Answer:⼀ A reinsurance agreement allowing the ceding company
and the reinsurance company an opportunity to exchange advice
about the underwriting of each case.
Non-Admitted
⼀Answer:⼀ An insurer that has not sought approval (or) has not
been able to obtain approval to transact business from the insurance
regulator in this state.
Collision
