Personal Lines Insurance Practice Exam questions with answers

Personal Lines Insurance Practice Exam |\ |\ |\ |\ |\




questions with answers |\ |\




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. - CORRECT ANSWERS ✔✔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 - CORRECT
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\


ANSWERS ✔✔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 - CORRECT ANSWERS ✔✔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 - CORRECT ANSWERS ✔✔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 - CORRECT ANSWERS ✔✔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
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\