Personal Lines Insurance Practice Exam |\ |\ |\ |\ |\
questions with answers |\ |\
Bobby, age 16, borrows his parents' car without their permission
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
and gets into an accident. Which of the following statements
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
about coverage under the parents' personal auto policy is
|\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT?
A) Bobby is covered by his parents' policy because he is included
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
in the definition of named insured.
|\ |\ |\ |\ |\ |\ |\
B) Bobby is not covered for this accident because he used the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
car without permission.
|\ |\ |\
C) Bobby is not covered because it was not his car.
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
D) Bobby is covered by his parents' policy because he is a family
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
member. - CORRECT ANSWERS ✔✔D) Bobby is covered by his
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
parents' policy because he is a family member.
|\ |\ |\ |\ |\ |\ |\
Explanation: Bobby is a family member and thus automatically is |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
covered under the family's PAP policy. Even though Bobby is
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
using the car without permission, the exclusion pertaining to
|\ |\ |\ |\ |\ |\ |\ |\ |\
nonpermissive users does not apply to use of an owned auto |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
policy by resident family members.
|\ |\ |\ |\
Reference: 8.7.2 in License Exam Manual |\ |\ |\ |\ |\
A parking valet at a hotel uses a guest's car to do a personal
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
errand and damages the car in a collision. The guest has a
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
,personal auto policy (PAP). The insurance company will pay the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
claim and ____. |\ |\
A) relieve the parking valet of legal liability for the loss
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
B) subrogate against the named insured
|\ |\ |\ |\ |\
C) subrogate against the parking valet
|\ |\ |\ |\ |\
D) recover any additional loss from the lienholder - CORRECT
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
ANSWERS ✔✔C) subrogate against the parking valet |\ |\ |\ |\ |\ |\
Explanation: Part-D coverage for Damage to Your Auto of the PAP |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
contains a no benefit to bailee provision. This provision states
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
that a carrier or other bailee for hire, such as a parking gar5age,
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
service station, or moving company will not directly or indirectly
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
benefit from the PAP's insurance. A bailee is an individual or
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
entity that assumes possession of goods owned by another for
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
the purpose of transporting, servicing, or storing them. When
|\ |\ |\ |\ |\ |\ |\ |\ |\
temporary custody is assumed, the bailee becomes legally liable
|\ |\ |\ |\ |\ |\ |\ |\ |\
for the goods.
|\ |\
Reference: 8.7.2 in the License Exam Manual |\ |\ |\ |\ |\ |\
Who of the following are required to be members of the Arizona
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
Property and Casualty Insurance Guaranty Fund?
|\ |\ |\ |\ |\
A) All insurers that write the types of insurance that are
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
protected by the fund in Arizona |\ |\ |\ |\ |\
B) Foreign property and casualty insurers only
|\ |\ |\ |\ |\ |\
C) lien property and casualty insurers only
|\ |\ |\ |\ |\ |\
,D) All insurers that write insurance in Arizona, including life and
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
health insurers - CORRECT ANSWERS ✔✔A) All insurers that write
|\ |\ |\ |\ |\ |\ |\ |\ |\
the types of insurance that are protected by the fund in Arizona
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
Explanation: All insurers that write types of insurance that are
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
protected by the fund are required to be member insurers of the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
fund. Reference: State Supplement in the License Exam Manual.
|\ |\ |\ |\ |\ |\ |\ |\
Reference: 4.4.16.3 in the License Exam Manual
|\ |\ |\ |\ |\ |\
Which one of the following dwellings would a HO-3 Homeowners
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
Form cover? |\
A) Condominium
|\
B) Office building
|\ |\
C) Single-family home
|\ |\
D) Apartment building - CORRECT ANSWERS ✔✔C) Single-family
|\ |\ |\ |\ |\ |\ |\ |\
home
Explanation: HO-3 Homeowners Form covers owner-occupied
|\ |\ |\ |\ |\ |\
single family dwellings. Condominiums are covered by the HO-6.
|\ |\ |\ |\ |\ |\ |\ |\ |\
Office and apartment buildings would be covered by a
|\ |\ |\ |\ |\ |\ |\ |\ |\
commercial policy. |\
Reference: 7.4.1 in the License Exam Manual
|\ |\ |\ |\ |\ |\
, Which on of the following would be classified as a general
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
damage?
A) Pain and suffering
|\ |\ |\
B) Lost wages
|\ |\
C) Medical bills
|\ |\
D) Damaged property - CORRECT ANSWERS ✔✔A) Pain and
|\ |\ |\ |\ |\ |\ |\ |\ |\
suffering
Explanation: Compensatory damages compensate an injured |\ |\ |\ |\ |\ |\
party for injuries sustained- nothing more. Their purpose is to
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
make a person whole again in the position that existed before
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
the loss or harm. Compensatory damages are further categorized
|\ |\ |\ |\ |\ |\ |\ |\
by: general damages (which necessarily result from the act or
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
omission, such as emotional distress, inconvenience, and pain
|\ |\ |\ |\ |\ |\ |\ |\
and suffering) and special damages (losses measured in exact
|\ |\ |\ |\ |\ |\ |\ |\ |\
sums of money including medical bills, travel expenses for
|\ |\ |\ |\ |\ |\ |\ |\ |\
medical care, prescription costs damaged property, and lost
|\ |\ |\ |\ |\ |\ |\ |\
wages).
Reference: 5.3.6 in the License Exam Manual |\ |\ |\ |\ |\ |\
Which of the following statements about flood insurance is NOT
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
correct?
A) There are two types of flood insurance programs available:
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
emergency and regular |\ |\
B) A flood includes an overflow of inland or tidal waters
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
questions with answers |\ |\
Bobby, age 16, borrows his parents' car without their permission
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
and gets into an accident. Which of the following statements
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
about coverage under the parents' personal auto policy is
|\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT?
A) Bobby is covered by his parents' policy because he is included
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
in the definition of named insured.
|\ |\ |\ |\ |\ |\ |\
B) Bobby is not covered for this accident because he used the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
car without permission.
|\ |\ |\
C) Bobby is not covered because it was not his car.
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
D) Bobby is covered by his parents' policy because he is a family
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
member. - CORRECT ANSWERS ✔✔D) Bobby is covered by his
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
parents' policy because he is a family member.
|\ |\ |\ |\ |\ |\ |\
Explanation: Bobby is a family member and thus automatically is |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
covered under the family's PAP policy. Even though Bobby is
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
using the car without permission, the exclusion pertaining to
|\ |\ |\ |\ |\ |\ |\ |\ |\
nonpermissive users does not apply to use of an owned auto |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
policy by resident family members.
|\ |\ |\ |\
Reference: 8.7.2 in License Exam Manual |\ |\ |\ |\ |\
A parking valet at a hotel uses a guest's car to do a personal
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
errand and damages the car in a collision. The guest has a
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
,personal auto policy (PAP). The insurance company will pay the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
claim and ____. |\ |\
A) relieve the parking valet of legal liability for the loss
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
B) subrogate against the named insured
|\ |\ |\ |\ |\
C) subrogate against the parking valet
|\ |\ |\ |\ |\
D) recover any additional loss from the lienholder - CORRECT
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
ANSWERS ✔✔C) subrogate against the parking valet |\ |\ |\ |\ |\ |\
Explanation: Part-D coverage for Damage to Your Auto of the PAP |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
contains a no benefit to bailee provision. This provision states
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
that a carrier or other bailee for hire, such as a parking gar5age,
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
service station, or moving company will not directly or indirectly
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
benefit from the PAP's insurance. A bailee is an individual or
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
entity that assumes possession of goods owned by another for
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
the purpose of transporting, servicing, or storing them. When
|\ |\ |\ |\ |\ |\ |\ |\ |\
temporary custody is assumed, the bailee becomes legally liable
|\ |\ |\ |\ |\ |\ |\ |\ |\
for the goods.
|\ |\
Reference: 8.7.2 in the License Exam Manual |\ |\ |\ |\ |\ |\
Who of the following are required to be members of the Arizona
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
Property and Casualty Insurance Guaranty Fund?
|\ |\ |\ |\ |\
A) All insurers that write the types of insurance that are
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
protected by the fund in Arizona |\ |\ |\ |\ |\
B) Foreign property and casualty insurers only
|\ |\ |\ |\ |\ |\
C) lien property and casualty insurers only
|\ |\ |\ |\ |\ |\
,D) All insurers that write insurance in Arizona, including life and
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
health insurers - CORRECT ANSWERS ✔✔A) All insurers that write
|\ |\ |\ |\ |\ |\ |\ |\ |\
the types of insurance that are protected by the fund in Arizona
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
Explanation: All insurers that write types of insurance that are
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
protected by the fund are required to be member insurers of the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
fund. Reference: State Supplement in the License Exam Manual.
|\ |\ |\ |\ |\ |\ |\ |\
Reference: 4.4.16.3 in the License Exam Manual
|\ |\ |\ |\ |\ |\
Which one of the following dwellings would a HO-3 Homeowners
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
Form cover? |\
A) Condominium
|\
B) Office building
|\ |\
C) Single-family home
|\ |\
D) Apartment building - CORRECT ANSWERS ✔✔C) Single-family
|\ |\ |\ |\ |\ |\ |\ |\
home
Explanation: HO-3 Homeowners Form covers owner-occupied
|\ |\ |\ |\ |\ |\
single family dwellings. Condominiums are covered by the HO-6.
|\ |\ |\ |\ |\ |\ |\ |\ |\
Office and apartment buildings would be covered by a
|\ |\ |\ |\ |\ |\ |\ |\ |\
commercial policy. |\
Reference: 7.4.1 in the License Exam Manual
|\ |\ |\ |\ |\ |\
, Which on of the following would be classified as a general
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
damage?
A) Pain and suffering
|\ |\ |\
B) Lost wages
|\ |\
C) Medical bills
|\ |\
D) Damaged property - CORRECT ANSWERS ✔✔A) Pain and
|\ |\ |\ |\ |\ |\ |\ |\ |\
suffering
Explanation: Compensatory damages compensate an injured |\ |\ |\ |\ |\ |\
party for injuries sustained- nothing more. Their purpose is to
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
make a person whole again in the position that existed before
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
the loss or harm. Compensatory damages are further categorized
|\ |\ |\ |\ |\ |\ |\ |\
by: general damages (which necessarily result from the act or
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
omission, such as emotional distress, inconvenience, and pain
|\ |\ |\ |\ |\ |\ |\ |\
and suffering) and special damages (losses measured in exact
|\ |\ |\ |\ |\ |\ |\ |\ |\
sums of money including medical bills, travel expenses for
|\ |\ |\ |\ |\ |\ |\ |\ |\
medical care, prescription costs damaged property, and lost
|\ |\ |\ |\ |\ |\ |\ |\
wages).
Reference: 5.3.6 in the License Exam Manual |\ |\ |\ |\ |\ |\
Which of the following statements about flood insurance is NOT
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
correct?
A) There are two types of flood insurance programs available:
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
emergency and regular |\ |\
B) A flood includes an overflow of inland or tidal waters
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
