Latest South Carolina Personal Lines
Exam Questions with Complete
Solutions (2025-2026) Updated.
The reduction, decrease, or disappearance of value of a person or property insured in a policy? -
Answer Loss
What is negligence? - Answer failure to use ordinary or reasonable care
Does a party need to prove negligence under absolute liability? - Answer No, absolute liability
exists when condition is inherently dangerous.
What does indemnify mean in insurance? - Answer To restore insured to same financial status
before a loss.
How is ACV calculated? - Answer Current Replacement Cost - Depreciation
What determines insurance companies responsibility for payment, as it's stated in the policy? -
Answer Limits of liability
If a manufactured product is unsafe, what type of liability applies to manufacturer? - Answer
Strict liability
What are the two types of compensatory damages? - Answer Special and general
A tornado that destroys a property would be an example of what? - Answer Peril
What is the term for the causes of loss insured against in an insurance policy? - Answer Peril
What sub-limit in a liability policy puts a ceiling on the payment for all claims that arise from a
single accident? - Answer Per occurrence
What sub-limit in a liability policy puts a ceiling on the payment for bodily injury for a single
,In property insurance, when must insurable interest exist? - Answer At the time of the loss
A policy that covers all causes of loss except for those specifically excluded is known as what
type of policy? - Answer Open/special peril form
What type of policy insures all property at multiple locations for a single amount? - Answer
Blanket policy
What is burglary? - Answer Forced entry into premises with felonious intent.
What type of limits of liability has the limits separately stated for different coverages? - Answer
Split limits
In property insurance, what is ACV? - Answer Current replacement cost, minus depreciation
How are direct and indirect losses related? - Answer Direct losses can cause indirect losses.
If insured peril was the proximate cause of loss, what type of loss is it? - Answer Direct
An insured's business is damaged because of a fire, and he is forced to close the business
temporarily for repairs. As a result, the insured lost income. What type of loss is this? - Answer
Indirect or consequential loss
What is a deductible in an insurance policy? - Answer A specified dollar amount that the
insured must pay before the insurer will pay the policy benefits
Both robbery and burglary can be considered what? - Answer theft
Formula for coinsurance less than 80% required - Answer (carried/required) * loss amount =
loss payment
In property insurance, what is the purpose of a coinsurance clause? - Answer To encourage
insureds to insure property close to its value
,another; unoccupancy is when no one is living/working but property is stored - like when you go
on vacation.
What term describes a loss caused by continuous exposure to a condition? - Answer
Occurrence
What provision prevents insured from collecting twice for the same loss: from insurer and third
party? - Answer subrogation
Subrogation - Answer when insurance company pursues third party for funds given to insured
for loss
A person who does not lock their doors shows an indifferent attitude. What type of hazard does
this represent? - Answer morale
What law protects consumers from the circulation of inaccurate or obsolete information? -
Answer Fair Credit Reporting Act
What term defines an exact, direct, and uninterrupted cause of loss? - Answer Proximate
cause
what is a risk? - Answer Uncertainty of loss
A situation in which a person can experience only a loss and no gain presents what type of risk?
- Answer Pure risk
Wagering on a sporting event is known as what type of risk? - Answer speculative risk
which is insurable pure or speculative risk? - Answer pure only
A insurer discovers that an applicant for a policy submitted a fraudulent claim in the past. What
type of hazard does this represent? - Answer Moral
What do individuals use to transfer risk of loss to a larger group? - Answer insurance
, Insurance is a contract that protects the insured from what? - Answer Loss
What term includes damage where the insured peril was the proximate cause of loss? - Answer
Direct loss
An insured is driving her car through a residential area when she loses control and crashes into
a neighbor's front porch. The neighbor, who was sitting on the porch, is injured. The insured's
liability policy has a limit of $500,000. This amount applies to the total of damages for any
bodily injury and property damage resulting from one accident. Which type of limit of liability
does the insured have? - Answer Combined Single
What is a combined single limit? - Answer single dollar limit of liability applying to total
damages for BI/PD from an accident/occurrence
Does replacement cost consider depreciation - Answer no
How much insurance must be carried for policies to carry replacement cost coverage - Answer
80% of replacement cost
What liability is commonly applied in product liability cases? - Answer strict liability
what is a second financial loss caused by a covered direct loss? - Answer
indirect/consequential loss
What is a peril - Answer cause/reason of loss
five elements of insurable risk - Answer due to chance,
definite/measurable,
statistically predictable,
not catastrophic,
and randomly selected/large loss exposure
law of large numbers - Answer larger group of people with similar exposures, the more
Exam Questions with Complete
Solutions (2025-2026) Updated.
The reduction, decrease, or disappearance of value of a person or property insured in a policy? -
Answer Loss
What is negligence? - Answer failure to use ordinary or reasonable care
Does a party need to prove negligence under absolute liability? - Answer No, absolute liability
exists when condition is inherently dangerous.
What does indemnify mean in insurance? - Answer To restore insured to same financial status
before a loss.
How is ACV calculated? - Answer Current Replacement Cost - Depreciation
What determines insurance companies responsibility for payment, as it's stated in the policy? -
Answer Limits of liability
If a manufactured product is unsafe, what type of liability applies to manufacturer? - Answer
Strict liability
What are the two types of compensatory damages? - Answer Special and general
A tornado that destroys a property would be an example of what? - Answer Peril
What is the term for the causes of loss insured against in an insurance policy? - Answer Peril
What sub-limit in a liability policy puts a ceiling on the payment for all claims that arise from a
single accident? - Answer Per occurrence
What sub-limit in a liability policy puts a ceiling on the payment for bodily injury for a single
,In property insurance, when must insurable interest exist? - Answer At the time of the loss
A policy that covers all causes of loss except for those specifically excluded is known as what
type of policy? - Answer Open/special peril form
What type of policy insures all property at multiple locations for a single amount? - Answer
Blanket policy
What is burglary? - Answer Forced entry into premises with felonious intent.
What type of limits of liability has the limits separately stated for different coverages? - Answer
Split limits
In property insurance, what is ACV? - Answer Current replacement cost, minus depreciation
How are direct and indirect losses related? - Answer Direct losses can cause indirect losses.
If insured peril was the proximate cause of loss, what type of loss is it? - Answer Direct
An insured's business is damaged because of a fire, and he is forced to close the business
temporarily for repairs. As a result, the insured lost income. What type of loss is this? - Answer
Indirect or consequential loss
What is a deductible in an insurance policy? - Answer A specified dollar amount that the
insured must pay before the insurer will pay the policy benefits
Both robbery and burglary can be considered what? - Answer theft
Formula for coinsurance less than 80% required - Answer (carried/required) * loss amount =
loss payment
In property insurance, what is the purpose of a coinsurance clause? - Answer To encourage
insureds to insure property close to its value
,another; unoccupancy is when no one is living/working but property is stored - like when you go
on vacation.
What term describes a loss caused by continuous exposure to a condition? - Answer
Occurrence
What provision prevents insured from collecting twice for the same loss: from insurer and third
party? - Answer subrogation
Subrogation - Answer when insurance company pursues third party for funds given to insured
for loss
A person who does not lock their doors shows an indifferent attitude. What type of hazard does
this represent? - Answer morale
What law protects consumers from the circulation of inaccurate or obsolete information? -
Answer Fair Credit Reporting Act
What term defines an exact, direct, and uninterrupted cause of loss? - Answer Proximate
cause
what is a risk? - Answer Uncertainty of loss
A situation in which a person can experience only a loss and no gain presents what type of risk?
- Answer Pure risk
Wagering on a sporting event is known as what type of risk? - Answer speculative risk
which is insurable pure or speculative risk? - Answer pure only
A insurer discovers that an applicant for a policy submitted a fraudulent claim in the past. What
type of hazard does this represent? - Answer Moral
What do individuals use to transfer risk of loss to a larger group? - Answer insurance
, Insurance is a contract that protects the insured from what? - Answer Loss
What term includes damage where the insured peril was the proximate cause of loss? - Answer
Direct loss
An insured is driving her car through a residential area when she loses control and crashes into
a neighbor's front porch. The neighbor, who was sitting on the porch, is injured. The insured's
liability policy has a limit of $500,000. This amount applies to the total of damages for any
bodily injury and property damage resulting from one accident. Which type of limit of liability
does the insured have? - Answer Combined Single
What is a combined single limit? - Answer single dollar limit of liability applying to total
damages for BI/PD from an accident/occurrence
Does replacement cost consider depreciation - Answer no
How much insurance must be carried for policies to carry replacement cost coverage - Answer
80% of replacement cost
What liability is commonly applied in product liability cases? - Answer strict liability
what is a second financial loss caused by a covered direct loss? - Answer
indirect/consequential loss
What is a peril - Answer cause/reason of loss
five elements of insurable risk - Answer due to chance,
definite/measurable,
statistically predictable,
not catastrophic,
and randomly selected/large loss exposure
law of large numbers - Answer larger group of people with similar exposures, the more
