FLORIDA 4-40 TEST EXAM
QUESTIONS & ANSWERS |
LATEST ALREADY GRADED A+
UPDATE 2025|2026
Comprehensive Insurance & Property Policies MCQs
1. Transferring the risk to an insurance company is called:
A. Deductible
B. Risk retention
✅ C. Insurance
D. Co-insurance
Rationale:
Insurance transfers financial risk from the insured to the insurer in exchange for premium
payments.
2. When an insured requests a change to a condition or provision in an insurance policy,
what document is attached?
A. Rider
B. Endorsement
✅ C. Endorsement
D. Amendment
Rationale:
An endorsement is a written change added to the original policy to modify coverage, terms, or
conditions.
3. If George and Sandy co-own a home damaged by fire, who has an insurable interest?
A. George only
B. Sandy only
✅ C. Both George and Sandy
D. Neither
1
,Rationale:
All parties with a financial stake in the property have an insurable interest.
4. What is the most common loss settlement valuation in property insurance policies?
A. Replacement cost
✅ B. Actual cash value
C. Agreed value
D. Stated amount
Rationale:
Actual cash value (ACV) is replacement cost minus depreciation and is the most common
method for property claims.
5. When an insurance company pays the insured for damages and then seeks recovery from
the at-fault party, this concept is called:
A. Indemnification
B. Deductible
✅ C. Subrogation
D. Risk transfer
Rationale:
Subrogation allows the insurer to recover payments made from the responsible third party.
6. PIP in auto insurance stands for:
A. Property Insurance Protection
B. Personal Injury Policy
✅ C. Personal Injury Protection
D. Primary Insurance Plan
Rationale:
PIP provides medical coverage for injuries regardless of fault in auto accidents.
7. PIP coverage in Florida is considered:
✅ A. Primary
B. Secondary
C. Optional
D. Limited
2
, Rationale:
Florida requires PIP as primary coverage to pay medical expenses before any other coverage.
8. Tort immunity provides:
A. Full compensation for damages
✅ B. Relief for persons who have suffered harm from the wrongful acts of others
C. Punitive damages
D. Insurance discounts
Rationale:
Tort immunity protects individuals or entities from liability under certain circumstances.
9. Additional PIP coverage primarily serves to:
A. Reduce premiums
✅ B. Fill percentage gaps in coverage
C. Cover property damage
D. Extend liability limits
Rationale:
Additional PIP increases medical coverage limits beyond the standard percentage.
10. Under Florida law, benefits payable for medical expenses under PIP are:
A. 50%
✅ B. 80%
C. 60%
D. 100%
Rationale:
Florida statutes require PIP to cover 80% of reasonable and necessary medical expenses.
11. Benefits payable for lost wages under Florida PIP are:
A. 80%
B. 100%
✅ C. Up to 60%
D. 50%
Rationale:
Lost wages are partially compensated at 60% of the insured’s average weekly earnings.
3
QUESTIONS & ANSWERS |
LATEST ALREADY GRADED A+
UPDATE 2025|2026
Comprehensive Insurance & Property Policies MCQs
1. Transferring the risk to an insurance company is called:
A. Deductible
B. Risk retention
✅ C. Insurance
D. Co-insurance
Rationale:
Insurance transfers financial risk from the insured to the insurer in exchange for premium
payments.
2. When an insured requests a change to a condition or provision in an insurance policy,
what document is attached?
A. Rider
B. Endorsement
✅ C. Endorsement
D. Amendment
Rationale:
An endorsement is a written change added to the original policy to modify coverage, terms, or
conditions.
3. If George and Sandy co-own a home damaged by fire, who has an insurable interest?
A. George only
B. Sandy only
✅ C. Both George and Sandy
D. Neither
1
,Rationale:
All parties with a financial stake in the property have an insurable interest.
4. What is the most common loss settlement valuation in property insurance policies?
A. Replacement cost
✅ B. Actual cash value
C. Agreed value
D. Stated amount
Rationale:
Actual cash value (ACV) is replacement cost minus depreciation and is the most common
method for property claims.
5. When an insurance company pays the insured for damages and then seeks recovery from
the at-fault party, this concept is called:
A. Indemnification
B. Deductible
✅ C. Subrogation
D. Risk transfer
Rationale:
Subrogation allows the insurer to recover payments made from the responsible third party.
6. PIP in auto insurance stands for:
A. Property Insurance Protection
B. Personal Injury Policy
✅ C. Personal Injury Protection
D. Primary Insurance Plan
Rationale:
PIP provides medical coverage for injuries regardless of fault in auto accidents.
7. PIP coverage in Florida is considered:
✅ A. Primary
B. Secondary
C. Optional
D. Limited
2
, Rationale:
Florida requires PIP as primary coverage to pay medical expenses before any other coverage.
8. Tort immunity provides:
A. Full compensation for damages
✅ B. Relief for persons who have suffered harm from the wrongful acts of others
C. Punitive damages
D. Insurance discounts
Rationale:
Tort immunity protects individuals or entities from liability under certain circumstances.
9. Additional PIP coverage primarily serves to:
A. Reduce premiums
✅ B. Fill percentage gaps in coverage
C. Cover property damage
D. Extend liability limits
Rationale:
Additional PIP increases medical coverage limits beyond the standard percentage.
10. Under Florida law, benefits payable for medical expenses under PIP are:
A. 50%
✅ B. 80%
C. 60%
D. 100%
Rationale:
Florida statutes require PIP to cover 80% of reasonable and necessary medical expenses.
11. Benefits payable for lost wages under Florida PIP are:
A. 80%
B. 100%
✅ C. Up to 60%
D. 50%
Rationale:
Lost wages are partially compensated at 60% of the insured’s average weekly earnings.
3
