PERSONAL LINES INSURANCE EXAMS SCRIPT
2026/2027 QUESTIONS AND SOLUTIONS RATED A+
✔✔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
C) Sewer backup into a dwelling is not considered flood and is not covered
D) Personal property in a basement or outside in the yard is covered - ✔✔D) Personal
property in a basement or outside in the yard is covered
Explanation: Personal property in a basement or outside in the yard is NOT covered
under flood insurance.
Reference: 9.4 in the License Exam Manual
✔✔Which of the following coverages is NOT included in a boatowners/watercraft
package policy?
A) Medical payments
B) Liability
C) Longshore and harbor workers' compensation insurance
D) Property - ✔✔C) Longshore and harbor workers' compensation insurance
Explanation: Boatowners/watercraft package policies were developed by individual
insurance companies and they combine property, liability, and medical payments
insurance on an open peril basis. Longshore and harbor workers' compensation
insurance is found in personal yacht policies, which are used to insure larger vessels
than those covered under boatowners policies.
Reference: 9.8.1 in the License Exam Manual
✔✔An insured owns a pet lion that is caged on the homeowner's property. The owner
takes great care to warn neighbors of the possible danger by posting signs, fencing the
yard, and locking the cage at all times. When a neighbor's child manages to open the
cage and is bitten, what type of liability would apply to the lion owner?
A) Absolute liability
B) Contractual liability
C) Premises liability
D) Vicarious liability - ✔✔A) Absolute liability
Explanation: The law imposes strict or absolute liability for specific situations or
activities that pose threats to the safety of others. People who own dangerous animals
,are held to a higher standard of care. Absolute liability applies when a person is liable
for a dangerous condition, regardless of the amount of care taken.
Reference: 5.3.4 in the License Exam Manual
✔✔Which of the following terms is used to describe an empty building that is not being
used?
A) Vacated
B) Absent
C) Unoccupied
D) Vacant - ✔✔D) Vacant
Explanation: A building that is not currently in use and does not have enough
furnishings to function in its normal capacity is considered vacant. A building is
unoccupied if no one is currently in it, but furnishings are present and the occupants
intended to return, as is the case when the residents are out of town on vacation.
Reference: 4.4.15 in the License Exam Manual
✔✔Which of the following statements about umbrella policies is NOT correct?
A) They provide coverage above the limits of underlying policies.
B) They are written only for commercial risks.
C) Losses that are excluded by the underlying policy but covered by the umbrella are
subject to the umbrella's retention limit.
D) If the insured fails to keep the underlying coverage in force, the umbrella policy will
not cover the amount of loss that would have been paid by the underlying policy. -
✔✔B) They are written only for commercial risks.
Explanation: Umbrella liability policies may be written for both personal and commercial
risks.
Reference: 9.9.1 in the License Exam Manual
✔✔The agent has many responsibilities to the applicant. One involves a trust
relationship between the agent and the insured regarding the insured's finances and
confidentiality. In this case, the agent acts in what capacity?
A) Fiduciary
B) Consultant
C) Attorney-in-fact
D) Special agent - ✔✔A) Fiduciary
Explanation: Agents have the duty to act in a fiduciary capacity that requires a high
degree of trust and confidence. This duty deals with the agent's dealings with both the
,insured and the insurer. The agent is expected to be trustworthy, act in good faith, and
preserve confidential information.
Reference: 1.9.2 in the License Exam Manual
✔✔Thomas had a forklift injury at work that caused his death. How much money will his
surviving spouse receive for burial expenses?
A) Up to $10,000
B) Up to $1,000
C) Up to $2,500
D) Up to $5,000 - ✔✔D) Up to $5,000
Explanation: Burial expenses, not to exceed $5,000, are in addition to the
compensation.
Reference: See State Supplement
✔✔With a few exceptions, most personal insurance policies exclude losses arising out
of all of the following EXCEPT:
A) business activities
B) rendering of professional services
C) personal activities conducted away from the insured premises
D) work-related injuries - ✔✔C) personal activities conducted away from the insured
premises
Explanation: Although there are limited exceptions, such as certain permitted incidental
occupancies, personal lines policies typically exclude losses related to business
activities, professional services, and work-related injuries.
Reference: 7.6.2 in the License Exam Manual
✔✔Which of the following items could be insured under Coverage C of a homeowners
policy?
A) Exotic birds
B) Motorized go-kart
C) Snowmobile
D) Personal property usually located in a secondary residence - ✔✔D) Personal
property usually located in a secondary residence
Explanation: Coverage C covers personal property under a homeowners policy.
Personal property usually located in a secondary residence may be insured under
Coverage C. In addition, the following personal property is covered: personal property
the insured owns or uses that is located anywhere in the world; personal property of
, others while it is in the portion of the residence the insured occupies; and personal
property of a guest or employee while it is located in any resident the insured occupies.
Animals and motorized vehicles are excluded.
Reference: 7.5.1 in the License Exam Manual
✔✔The insured's home is insured under an HO-3 with a $100,000 Coverage A limit. A
tornado destroys the home and uproots a tree valued at $5,000. How much would the
insurance company pay for the loss to the insured's home and tree? Ignore any
deductible that would apply.
A) $105,000
B) 95,000
C) $100,500
D) $100,000 - ✔✔C) $100,500
Explanation: The trees, shrubs, and other plants additional coverage does not cover
damage caused by certain perils, such as wind. It covers damage caused by fire,
lightning, explosion, riot, aircraft, vehicles not owned or operated by a resident, theft,
and vandalism or malicious mischief. Coverage is limited to 5% of the Coverage A limit
and a maximum of $500 for any one tree, shrub, or plant.
Reference: 7.5.3 in the License Exam Manual
✔✔An insured has a $60,000 Special Form (DP-3). When a covered loss in the amount
of $10,000 damages the attached garage, how much of that amount is paid under the
Coverage B-Other Structures?
A) $0
B) $10,000
C) $1,000
D) $6,000 - ✔✔A) $0
Explanation: The attached garage is considered part of the dwelling, so the $10,000 is
paid under Coverage A-Dwelling. Real property located on the described property and
separated from the dwelling by clear space is covered by Coverage B-Other Structures.
Reference: 6.4.3 in the License Exam Manual
✔✔Section II of the homeowners policy provides liability coverage for all of the following
EXCEPT
A) use of a 17-foot sailboat
B) renting the garage to a jewelry maker
C) actions of a domestic animal in the care of the insured
D) actions of a residence employee - ✔✔B) renting the garage to a jewelry maker
2026/2027 QUESTIONS AND SOLUTIONS RATED A+
✔✔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
C) Sewer backup into a dwelling is not considered flood and is not covered
D) Personal property in a basement or outside in the yard is covered - ✔✔D) Personal
property in a basement or outside in the yard is covered
Explanation: Personal property in a basement or outside in the yard is NOT covered
under flood insurance.
Reference: 9.4 in the License Exam Manual
✔✔Which of the following coverages is NOT included in a boatowners/watercraft
package policy?
A) Medical payments
B) Liability
C) Longshore and harbor workers' compensation insurance
D) Property - ✔✔C) Longshore and harbor workers' compensation insurance
Explanation: Boatowners/watercraft package policies were developed by individual
insurance companies and they combine property, liability, and medical payments
insurance on an open peril basis. Longshore and harbor workers' compensation
insurance is found in personal yacht policies, which are used to insure larger vessels
than those covered under boatowners policies.
Reference: 9.8.1 in the License Exam Manual
✔✔An insured owns a pet lion that is caged on the homeowner's property. The owner
takes great care to warn neighbors of the possible danger by posting signs, fencing the
yard, and locking the cage at all times. When a neighbor's child manages to open the
cage and is bitten, what type of liability would apply to the lion owner?
A) Absolute liability
B) Contractual liability
C) Premises liability
D) Vicarious liability - ✔✔A) Absolute liability
Explanation: The law imposes strict or absolute liability for specific situations or
activities that pose threats to the safety of others. People who own dangerous animals
,are held to a higher standard of care. Absolute liability applies when a person is liable
for a dangerous condition, regardless of the amount of care taken.
Reference: 5.3.4 in the License Exam Manual
✔✔Which of the following terms is used to describe an empty building that is not being
used?
A) Vacated
B) Absent
C) Unoccupied
D) Vacant - ✔✔D) Vacant
Explanation: A building that is not currently in use and does not have enough
furnishings to function in its normal capacity is considered vacant. A building is
unoccupied if no one is currently in it, but furnishings are present and the occupants
intended to return, as is the case when the residents are out of town on vacation.
Reference: 4.4.15 in the License Exam Manual
✔✔Which of the following statements about umbrella policies is NOT correct?
A) They provide coverage above the limits of underlying policies.
B) They are written only for commercial risks.
C) Losses that are excluded by the underlying policy but covered by the umbrella are
subject to the umbrella's retention limit.
D) If the insured fails to keep the underlying coverage in force, the umbrella policy will
not cover the amount of loss that would have been paid by the underlying policy. -
✔✔B) They are written only for commercial risks.
Explanation: Umbrella liability policies may be written for both personal and commercial
risks.
Reference: 9.9.1 in the License Exam Manual
✔✔The agent has many responsibilities to the applicant. One involves a trust
relationship between the agent and the insured regarding the insured's finances and
confidentiality. In this case, the agent acts in what capacity?
A) Fiduciary
B) Consultant
C) Attorney-in-fact
D) Special agent - ✔✔A) Fiduciary
Explanation: Agents have the duty to act in a fiduciary capacity that requires a high
degree of trust and confidence. This duty deals with the agent's dealings with both the
,insured and the insurer. The agent is expected to be trustworthy, act in good faith, and
preserve confidential information.
Reference: 1.9.2 in the License Exam Manual
✔✔Thomas had a forklift injury at work that caused his death. How much money will his
surviving spouse receive for burial expenses?
A) Up to $10,000
B) Up to $1,000
C) Up to $2,500
D) Up to $5,000 - ✔✔D) Up to $5,000
Explanation: Burial expenses, not to exceed $5,000, are in addition to the
compensation.
Reference: See State Supplement
✔✔With a few exceptions, most personal insurance policies exclude losses arising out
of all of the following EXCEPT:
A) business activities
B) rendering of professional services
C) personal activities conducted away from the insured premises
D) work-related injuries - ✔✔C) personal activities conducted away from the insured
premises
Explanation: Although there are limited exceptions, such as certain permitted incidental
occupancies, personal lines policies typically exclude losses related to business
activities, professional services, and work-related injuries.
Reference: 7.6.2 in the License Exam Manual
✔✔Which of the following items could be insured under Coverage C of a homeowners
policy?
A) Exotic birds
B) Motorized go-kart
C) Snowmobile
D) Personal property usually located in a secondary residence - ✔✔D) Personal
property usually located in a secondary residence
Explanation: Coverage C covers personal property under a homeowners policy.
Personal property usually located in a secondary residence may be insured under
Coverage C. In addition, the following personal property is covered: personal property
the insured owns or uses that is located anywhere in the world; personal property of
, others while it is in the portion of the residence the insured occupies; and personal
property of a guest or employee while it is located in any resident the insured occupies.
Animals and motorized vehicles are excluded.
Reference: 7.5.1 in the License Exam Manual
✔✔The insured's home is insured under an HO-3 with a $100,000 Coverage A limit. A
tornado destroys the home and uproots a tree valued at $5,000. How much would the
insurance company pay for the loss to the insured's home and tree? Ignore any
deductible that would apply.
A) $105,000
B) 95,000
C) $100,500
D) $100,000 - ✔✔C) $100,500
Explanation: The trees, shrubs, and other plants additional coverage does not cover
damage caused by certain perils, such as wind. It covers damage caused by fire,
lightning, explosion, riot, aircraft, vehicles not owned or operated by a resident, theft,
and vandalism or malicious mischief. Coverage is limited to 5% of the Coverage A limit
and a maximum of $500 for any one tree, shrub, or plant.
Reference: 7.5.3 in the License Exam Manual
✔✔An insured has a $60,000 Special Form (DP-3). When a covered loss in the amount
of $10,000 damages the attached garage, how much of that amount is paid under the
Coverage B-Other Structures?
A) $0
B) $10,000
C) $1,000
D) $6,000 - ✔✔A) $0
Explanation: The attached garage is considered part of the dwelling, so the $10,000 is
paid under Coverage A-Dwelling. Real property located on the described property and
separated from the dwelling by clear space is covered by Coverage B-Other Structures.
Reference: 6.4.3 in the License Exam Manual
✔✔Section II of the homeowners policy provides liability coverage for all of the following
EXCEPT
A) use of a 17-foot sailboat
B) renting the garage to a jewelry maker
C) actions of a domestic animal in the care of the insured
D) actions of a residence employee - ✔✔B) renting the garage to a jewelry maker
