PERSONAL LINES EXAMPREP MATERIAL
SOLVED QUESTIONS AND VERIFIED
SOLUTIONS PREMIUM COLLECTION
◉ 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. Answer: 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 Answer: 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 Answer: 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 Answer: 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 Answer: 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
SOLVED QUESTIONS AND VERIFIED
SOLUTIONS PREMIUM COLLECTION
◉ 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. Answer: 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 Answer: 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 Answer: 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 Answer: 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 Answer: 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
