Personal Lines Insurance Practice Exam Questions and Answers Graded A+

Personal Lines Insurance Practice Exam Questions and Answers Graded A+ 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. 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 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 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 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 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).