PERSONAL LINES FINAL EXAM WITH VERIFIED
ANSWERS
Statements made in the application are considered:
A. Warranties
B. Representations
C. Possible Concealments
D. None of the Above - ANSWER -B. Representations
The definition of Risk is:
A. Uncertainty regarding loss
B. A chance of gain
C. Uncertainty regarding gain or profit
D. Intended unforseen damage to property for gain or profit -
ANSWER -A. Uncertainty regarding loss
,A financial device for transferring or shifting risk from an
individual or entity to a large group with the same risk is the
definition of:
A. Avoidance
B. Retention
C. Transfer
D. Insurance - ANSWER -D. Insurance
Hazards include which of the following:
1. Unintended oily rags stacked in a corner
2. A homeowner's carelessness because he has insurance
A. 1 only
B. 2 only
C. Both 1 & 2
D. Neither 1 or 2 - ANSWER -C. Both 1 & 2
The mortgage condition in a property policy:
1. Guarantees that the lending institutions may act for itself in
paying a premium
,2. Guarantees claim payments will be divided as the interests of
the insurance and mortgagee appear
A. 1 only
B. 2 only
C. Both 1 & 2
D. Neither 1 nor 2 - ANSWER -C. Both 1 & 2
Which of the following situations does NOT create an insurable
interest?
A. Being named in someone's will as an heir
B. Holding a mortgage or lien on property
C. Having custody or control of someone else's property
D. Owning property - ANSWER -A. Being named in someone's
will as an heir
The plumbing in Mrs. Ward's home suddenly burst and the
ceilings were damaged by water. Which of the following
homeowner forms would cover the loss?
, A. HO1
B. HO2
C. HO4
D. HO7` - ANSWER -B. HO2
Nicole has a Personal Auto policy with limits of 10/20/10 for
liability coverage. She causes an accident that results in $12,000
bodily injury damages to the other driver and $5,000 in
property damage to the other driver's car. How much would
Nicole's policy pay for the the BI and PD losses?
A. $15,000
B. $17,000
C. $10,000
D. $12,000 - ANSWER -A. $15,000
Sally Smith calls her agent, Hubert Dufus, to purchase flood
insurance. Agent Dufus explains to Ms. Smith that flood
coverage can be purchased directly through the NFIP or through
him. Should Ms. Smith choose to purchase coverage through
Agent Dufus it is called the:
ANSWERS
Statements made in the application are considered:
A. Warranties
B. Representations
C. Possible Concealments
D. None of the Above - ANSWER -B. Representations
The definition of Risk is:
A. Uncertainty regarding loss
B. A chance of gain
C. Uncertainty regarding gain or profit
D. Intended unforseen damage to property for gain or profit -
ANSWER -A. Uncertainty regarding loss
,A financial device for transferring or shifting risk from an
individual or entity to a large group with the same risk is the
definition of:
A. Avoidance
B. Retention
C. Transfer
D. Insurance - ANSWER -D. Insurance
Hazards include which of the following:
1. Unintended oily rags stacked in a corner
2. A homeowner's carelessness because he has insurance
A. 1 only
B. 2 only
C. Both 1 & 2
D. Neither 1 or 2 - ANSWER -C. Both 1 & 2
The mortgage condition in a property policy:
1. Guarantees that the lending institutions may act for itself in
paying a premium
,2. Guarantees claim payments will be divided as the interests of
the insurance and mortgagee appear
A. 1 only
B. 2 only
C. Both 1 & 2
D. Neither 1 nor 2 - ANSWER -C. Both 1 & 2
Which of the following situations does NOT create an insurable
interest?
A. Being named in someone's will as an heir
B. Holding a mortgage or lien on property
C. Having custody or control of someone else's property
D. Owning property - ANSWER -A. Being named in someone's
will as an heir
The plumbing in Mrs. Ward's home suddenly burst and the
ceilings were damaged by water. Which of the following
homeowner forms would cover the loss?
, A. HO1
B. HO2
C. HO4
D. HO7` - ANSWER -B. HO2
Nicole has a Personal Auto policy with limits of 10/20/10 for
liability coverage. She causes an accident that results in $12,000
bodily injury damages to the other driver and $5,000 in
property damage to the other driver's car. How much would
Nicole's policy pay for the the BI and PD losses?
A. $15,000
B. $17,000
C. $10,000
D. $12,000 - ANSWER -A. $15,000
Sally Smith calls her agent, Hubert Dufus, to purchase flood
insurance. Agent Dufus explains to Ms. Smith that flood
coverage can be purchased directly through the NFIP or through
him. Should Ms. Smith choose to purchase coverage through
Agent Dufus it is called the:
