FLORIDA GENERAL LINES AGENT EXAM QUESTIONS AND CORRECT ANSWERS 2025

What is the definition of a risk that is insurable? A.risk is defined as a chance or the possibility of financial loss; only pure risks are insurable as there is no possibility of a gain B.a chance of a loss or gain C.a risk where there is a possibility of a gain D.a chance for insurance coverage - correct ans-a What is an insurance policy? A.a binder that offers initial insurance coverage B.an oral agreement related to insurance C.a temporary agreement for insurance coverage D.a written agreement or contract for insurance coverage - correct ans-d. What is an insurance binder? A.an agreement with an insurer for coverage B.a temporary agreement for insurance coverage subject to the decision of the insurer C.a permanent agreement for insurance coverage D.an agreement with an agent - correct ans-b The term casualty is related to all the following insurance lines except? A.life and health insurance B.marine insurance C.insurance on property D.liability insurance - correct ans-a What is the mathematical concept where the actual results from an event being measured will equal the predicted or expected results as the number of units or trials increases? - correct ans-the concept of the law of large numbers. What insurance principle acts to place an insured in the same or similar financial position after a loss as was prior to the loss event? FLORIDA FLORIDA A.the indemnity principle B.the waiver principle C.the principle of utmost good faith D.the principle of subrogation - correct ans-a What type of contract prevents an insured from transferring the interest of an insurance policy to another? A.a personal contract B.an indemnity contract C.a subrogation contract D.a contract of good faith - correct ans-a What type of contract is one where the obligation of the insurer is to perform the terms of the contract and is based on the insured satisfying certain conditions? A.a binding contract B.a personal contract C.a conditional contract D.an adhesion contract - correct ans-c What type of contract is it that the insured cannot negotiate the terms of the contract and must accept the terms specified in the contract? A.an indemnity contract B.a conditional contract C.a contract of adhesion D.a personal contract - correct ans-c What type of interest (financial or legal) in property must an insured have to benefit from a loss that is insured? A.insurable interest B.an adhesion interest C.an indemnity interest D.a personal interest - correct ans-a What insurance doctrine states that a cause of a loss and all other directly related events flowing from the same cause of the loss would be considered as one event? A.the doctrine of insurable interest B.the doctrine of proximate cause C.the loss doctrine D.the doctrine of classification - correct ans-b FLORIDA FLORIDA FLORIDA John got in an accident that damaged his automobile, what would be considered as what type of loss? A.direct loss B.insured loss C.insurable loss D.indirect loss - correct ans-a John's home was totally destroyed by fire that resulted in him moving his family to a hotel. The cost of the hotel would be considered as what type of loss? A.a direct loss B.direct expenses C.an indirect loss D.insured loss - correct ans-c What insurance clause is related to a lender or creditor's interest in real property and the insurer would pay losses to all parties that have an interest in the same property? A.subrogation clause B.mortgage or mortgagee clause C.property loss clause D.loss payable or payee clause - correct ans-b What insurance clause is related to a creditor's interest in personal property such as an auto? A.the property interest clause B.the mortgage or mortgagee clause C.the creditor interest clause D.the loss payable or loss payee clause - correct ans-d Which of the following is not a legal requirement for a contract? A.all are legal requirements B.the contract must have a legal purpose and transfer of consideration (something of value such as payment of insurance premiums) C.there must be a valid offer and a voluntary acceptance D.the parties to the contract must have legal capacity to contract - correct ans-a What insurance loss settlement method is defined as the cost to replace the item less allowance for depreciation, and is the common method used for settlement of personal property losses? A.scheduled settlement method B.valued or stated settlement method FLORIDA FLORIDA C.actual cash value settlement method D.replacement cost (rc) settlement method - correct ans-c What insurance loss settlement method is defined as: the property loss is replaced with items that are similar and of like kind and quality, and is the common method used in settling real property losses? A.replacement cost settlement method B.actual cash value settlement method C.scheduled settlement method D.valued or stated settlement method - correct ans-a What insurance settlement method is defined as: the insurer agrees in advance to pay the value of the property insured up to the coverage limits regardless of the property acv or rc A.actual cash value acv settlement method B.valued or stated settlement method C.replacement cost (rc) settlement method D.structured settlement method - correct ans-b What settlement method is related to the price a willing buyer will pay for the property? - correct ans-the market value The remaining value of property after a total loss is referred to as? - correct ans-salvage value The florida law that states that an insured must pay the full coverage limits on property when there is a total loss is referred to as? - correct ans-florida valued policy law A property valued at $100,000 is insured for $56,000 on a property policy that has a coinsurance requirement of 80%. What amount of the loss is payable by the insurer if there is a loss of $20,000? The coinsurance formula is c / r x l where c is the amount of insurance carried by the insured on the property. R is the amount of insurance coverage required by the insurer based on the coinsurance requirement and l is the amount of the loss. The amount payable for the loss would be? - correct ans-loss would be $14,000 ($56,000 / $80,000 (80% of $100,000) x $20,000. Calculate the amount payable for a loss of $50,000 based on a property that is valued at $200,000 and the property is insured for $120,000 on a policy that requires a coinsurance amount of 80%? A.$37,500 ($120,000 / $160,000 (80% of $200,000) x $50,000) B.$10,000 (20% of $50,000) C.$50,000 (100% of $50,000) D.$40,000 (80% of $50,000) - correct ans-a FLORIDA FLORIDA There are 2 properties insured, property #1 has an insurance limit of $200,000 and property #2 has a coverage amount of $300,000. What would be the total coverage limit based on the properties being insured on a blanket basis? A.each property would be insured for their coverage limits B.$300,000 would be the blanket limit C.$500,000 ($200,000 + $300,00) D.$200,000 would be the blanket limit - correct ans-c A property policy is insured with a standard deductible of $500 and there is a loss of $5,000. What would the insurer pay for the loss? - correct ans-$4,500 ($5,000 - $500) A property is insured with a franchise deductible of $500 and there is a $5,000 loss. What amount of the loss would be payable by the insurer? - correct ans-$5,000 (the entire loss would be paid as the loss exceed the deductible). An agreement that pays on behalf of an insured as defined by the policy or coverage the amount that the insurer is legally liable for up to the limits of the policy is considered? - correct ans-legal liability An insured auto is insured for $30,000 liability coverage that applies to both bodily injury and property damage would be considered as? A.single limit of liability B.total liability C.aggregate limit of liability D.split limits of liability - correct ans-a John's auto is insured for 10/20/10 liability split limits. Explain how the limits would be applied if there is an accident? - correct ans-$10,000 would be the limit that would apply to any 1 person bodily injury. $20,000 would be the limit that would apply to 2 or more persons injury and $10,000 would be the limit that would apply to the property damage. A policy with one limit that would apply to all losses that occur during the policy period would be considered as what type of liability limit? - correct ans-aggregate limit of liability Liability insurance only pays for? - correct ans-monetary damages,remember liability insurance does not cover punitive damages which are damages a court may impose on someone due to gross negligence or willful regard for the welfare of others What type of legal liability is imposed on a person regardless of fault for liability such as liability for employee injury and manufacturing of chemicals or other dangerous substances? - correct ans-absolute or strict liability FLORIDA FLORIDA What type of liability may be imposed on someone for the negligent acts of others within the person's control or supervision or for employees acting within the scope of the authority granted? - correct ans-vicarious liability The following are legal requirements for bringing a suit involving negligence except? A.all are legal requirements B.the person must fail to perform the legal duty C.the person must be under a legal duty to perform some action D.the injury must be the proximate (related) cause of the failure to perform - correct ans a Which of the following legal damages are not covered by liability policies? A.general damages B.punitive damages C.compensatory damages D.special damages - correct ans-b What type of compensatory damage involves injuries that can easily be calculated in monetary terms often including injury that result in loss of wages and medical expenses? - correct ans-general damages What type of compensatory damage involves injuries that may not be easily calculated in monetary terms often including injury such as pain and suffering, death and other serious injury? - correct ans-special damage Which of the following is not one of the duties of an insured after the occurrence of a loss that is insured? A.cooperate with the insurer B.all are duties C.prompt notice of the loss to the insurer D.act in ways to preserve the insurer's rights under the contract - correct ans-b What insurance clause provides the insurer the right to recover claims paid to an insured from a negligent third party and the insured is prohibited from impeding the insurer's rights under the clause? A.subrogation clause B.assignment clause C.indemnity clause D.insurable interest clause - correct ans-a FLORIDA FLORIDA What insurance clause prohibits the insured from transferring the rights under the contract to another without written consent of the insurer? - correct ans-rights of assignment clause What will happen to insurance coverage when the property insured is taken outside the territory (geographic area) specified by the insurance contract? - correct ans-the coverage will be suspended until the property is return to the covered territory". There are 2 policies covering the same loss of $30,000. Policy a coverage limit is $100,000 and policy b coverage limit is $200,000. How would the loss be distributed under the pro-rata distribution method? - correct ans-policy a would pay $10,000 (1/3 of the loss $100,000 / $300,000) and policy b $20,000 (2/3 of the loss $200,000 / $300,000). There are 2 policies covering the same loss of $120,000. Policy a is the primary policy with a limit of $100,000 and policy b is the excess policy with a limit of $100,000. How would the loss be distributed under the primary and excess method? - correct ans-policy a would pay $100,000 and policy b would pay $20,000 Which insurance policy provision states that when the insurer broadens coverage without any additional premiums the benefit would apply to all