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FLORIDA 2-20 AGENTS LICENSE EXAM
QUESTIONS WITH DETAILED VERIFIED
ANSWERS
The Florida Surplus Service Lines Office (FSLSO) was created to Ans:
oversee the surplus lines industry in the state
Which of the following is NOT a required qualification for a General Lines
Agent: Ans: Seeking the license only to write controlled business
The Department of Financial Services performs the following, EXCEPT:
Ans: Pays insurance claims
Once license, you have how long to obtain an appointment? Ans: 48
months
Which of the following is NOT a duty of the Office of Insurance
Regulation? Ans: Submit rate filings and underwriting rules for approval
Which one of the following statements is correct? Ans: Contractors must
usually provide evidence of liability insurance before a construction
contract is granted.
From a risk management viewpoint, insurance is used to Ans: Transfer
the cost of losses.
Liability coverage for loss exposures arising from a business
organization's premises and operations, its products, or its completed
work is typically provided by Ans: Commercial general liability
insurance.
Which one of the following statements is correct regarding the benefits
provided by insurance? Ans: Insurance helps reduce the financial burden
to society by compensating accident victims.
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Insurance is not the only risk management transfer technique. When
circumstances are appropriate, transfer can be accomplished through
Ans: Noninsurance transfer techniques.
Oscar's custom-built vehicle looks like a sausage sandwich on wheels. He
plans to drive it to special events at schools around the country where it
will serve as a mobile billboard to promote his product. Oscar is surprised
to learn that insurers are reluctant to insure his vehicle because it fails to
meet one of the ideal characteristics of an insurable risk. Which
characteristic is Oscar's vehicle least likely to meet? Ans: Large number
of similar exposure units
Liability coverage to individuals and families for bodily injury and
property damage arising from the insured's personal premises or
activities is typically provided by Ans: Personal liability insurance.
Sally is a recent college graduate who lives in the suburbs and drives to
work daily in the city. She recognizes that owning a car creates both
property damage and liability exposures for her and at the same time she
has the burden of student loans. For someone in Sally's circumstances
the most practical risk management technique for dealing with her auto-
related loss exposures is Ans: Risk transfer.
One of the costs of insurance is said to be opportunity costs. This means
that if capital and labor were not being used in the insurance business,
they could be used elsewhere and making other productive contributions
to Ans: Society
Retention is often used in combination with insurance as a way of
treating loss exposures. One of the major downsides of individuals using
retention alone is Ans: The potential for financial ruin.
The process of restoring an individual or organization to a pre-loss
financial condition is the process of Ans: Indemnification
Sometimes the existence of insurance encourages losses. The result of
this phenomenon is that it Ans: Increases the total cost of insurance
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A small business owner concerned about something happening and not
being able to work or earn a living for an extended period of time due to
an accident should purchase Ans: Disability insurance.
Which of the following is/are not a "your covered auto" under a Personal
Auto Policy for Liability? Ans: The 1990 Chevy 22 days after you
purchase it as an additional vehicle for your son who just got his license.
Joe has a Personal Auto Policy with one car with liability of 10/20/10,
basic PIP, 10/20 UM and no Med Pay. His Florida neighbor has an
identical policy on her care. Joe is driving her car, loses control; and hits
a tree. Joe is hurt with $15,000 in medical bills. What is the maximum
Joe can collect from UM from all sources from this accident? Ans: $0
Keith commutes into the city in his car, and he provides a ride to two co-
workers who live near him. Every other week, the co-workers take turns
buying the gasoline for Keith's car. Does this activity create a public or
livery conveyance situation that would preclude liability coverage under
Keith's Personal Auto Policy (PAP)? Ans: No, because Keith is involved in
a share-the-expense car pool.
An insured covers his owned auto with more than one Personal Auto
Policy (PAP), each from a different insurer. In the event of a claim for
medical payments coverage, Ans: Each insurer pays its pro rata share
based on the proportion that its limit of liability bears to the total of
applicable limits.
The Insuring Agreement in Part A - Liability Coverage of the Personal
Auto Policy contains descriptions of all of the following EXCEPT: Ans:
Limit of Liability
Tom and Martha insure their house with an unendorsed HO-3—Special
Form (HO-3) with a Coverage A—Dwelling limit of $300,000, which is the
replacement cost of the house. A thief breaks into the house while Tom
and Martha are on vacation and steals the following items: •$500
cash•$50,000 stock certificates. Ignoring any deductible that may apply,
how much, if any, will Tom and Martha's insurer pay for the loss of the
items? Ans: $1,700
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Under the HO-3—Special Form (HO-3) Section I—Conditions, the Loss
Settlement condition Ans: Establishes the process for determining the
amount to be paid for a property loss.
Property described in Coverages A, B, and C of an HO-3—Special Form
(HO-3) that is destroyed, confiscated, or seized by order of any
governmental or public authority is Ans: Excluded.
Adam and his insurer disagree on the amount of a loss covered by his
homeowners policy. Adam wants the insurer to pay $10,000 toward the
loss. The insurer's representative feels that the loss should be valued at
$5,000. How could the appraisal process resolve this situation? Ans:
Adam and the insurer will each select an appraiser, and the two
appraisers will submit their differences to an impartial umpire who will
reach a resolution.
Which one of the following has special limits of liability within Coverage C
of the HO-3—Special Form (HO-3)? Ans: Theft of firearms
A storm causes power lines to break ten miles from the insured's
premises. The loss of electrical power causes food in the insured's freezer
to thaw and spoil. Coverage for this loss is Ans: Excluded because the
power failure occurred off the residence premises.
If law enforcement officials seize an insured's personal computer to
search for files that might be related to a crime, the insured under an
HO-3—Special Form (HO-3) may be unsuccessful in claiming a theft loss
on the computer due to the Ans: Governmental Action exclusion.
Sam and Sophia insure their house with an unendorsed HO-3—Special
Form (HO-3) policy. Sam stores a small fishing boat and trailer behind
the house. While they are out for the evening, a fire destroys most of
their kitchen and completely destroys the boat and trailer. Assuming
Sam's boat and trailer are valued at $4,000 and ignoring any deductible
that may apply, what amount will their HO-3 insurer pay for the loss of
the boat and trailer? Ans: $1,500
The Florida Valued Policy Law applies to: Ans: mobile homes
FLORIDA 2-20 AGENTS LICENSE EXAM
QUESTIONS WITH DETAILED VERIFIED
ANSWERS
The Florida Surplus Service Lines Office (FSLSO) was created to Ans:
oversee the surplus lines industry in the state
Which of the following is NOT a required qualification for a General Lines
Agent: Ans: Seeking the license only to write controlled business
The Department of Financial Services performs the following, EXCEPT:
Ans: Pays insurance claims
Once license, you have how long to obtain an appointment? Ans: 48
months
Which of the following is NOT a duty of the Office of Insurance
Regulation? Ans: Submit rate filings and underwriting rules for approval
Which one of the following statements is correct? Ans: Contractors must
usually provide evidence of liability insurance before a construction
contract is granted.
From a risk management viewpoint, insurance is used to Ans: Transfer
the cost of losses.
Liability coverage for loss exposures arising from a business
organization's premises and operations, its products, or its completed
work is typically provided by Ans: Commercial general liability
insurance.
Which one of the following statements is correct regarding the benefits
provided by insurance? Ans: Insurance helps reduce the financial burden
to society by compensating accident victims.
, Page | 2
Insurance is not the only risk management transfer technique. When
circumstances are appropriate, transfer can be accomplished through
Ans: Noninsurance transfer techniques.
Oscar's custom-built vehicle looks like a sausage sandwich on wheels. He
plans to drive it to special events at schools around the country where it
will serve as a mobile billboard to promote his product. Oscar is surprised
to learn that insurers are reluctant to insure his vehicle because it fails to
meet one of the ideal characteristics of an insurable risk. Which
characteristic is Oscar's vehicle least likely to meet? Ans: Large number
of similar exposure units
Liability coverage to individuals and families for bodily injury and
property damage arising from the insured's personal premises or
activities is typically provided by Ans: Personal liability insurance.
Sally is a recent college graduate who lives in the suburbs and drives to
work daily in the city. She recognizes that owning a car creates both
property damage and liability exposures for her and at the same time she
has the burden of student loans. For someone in Sally's circumstances
the most practical risk management technique for dealing with her auto-
related loss exposures is Ans: Risk transfer.
One of the costs of insurance is said to be opportunity costs. This means
that if capital and labor were not being used in the insurance business,
they could be used elsewhere and making other productive contributions
to Ans: Society
Retention is often used in combination with insurance as a way of
treating loss exposures. One of the major downsides of individuals using
retention alone is Ans: The potential for financial ruin.
The process of restoring an individual or organization to a pre-loss
financial condition is the process of Ans: Indemnification
Sometimes the existence of insurance encourages losses. The result of
this phenomenon is that it Ans: Increases the total cost of insurance
, Page | 3
A small business owner concerned about something happening and not
being able to work or earn a living for an extended period of time due to
an accident should purchase Ans: Disability insurance.
Which of the following is/are not a "your covered auto" under a Personal
Auto Policy for Liability? Ans: The 1990 Chevy 22 days after you
purchase it as an additional vehicle for your son who just got his license.
Joe has a Personal Auto Policy with one car with liability of 10/20/10,
basic PIP, 10/20 UM and no Med Pay. His Florida neighbor has an
identical policy on her care. Joe is driving her car, loses control; and hits
a tree. Joe is hurt with $15,000 in medical bills. What is the maximum
Joe can collect from UM from all sources from this accident? Ans: $0
Keith commutes into the city in his car, and he provides a ride to two co-
workers who live near him. Every other week, the co-workers take turns
buying the gasoline for Keith's car. Does this activity create a public or
livery conveyance situation that would preclude liability coverage under
Keith's Personal Auto Policy (PAP)? Ans: No, because Keith is involved in
a share-the-expense car pool.
An insured covers his owned auto with more than one Personal Auto
Policy (PAP), each from a different insurer. In the event of a claim for
medical payments coverage, Ans: Each insurer pays its pro rata share
based on the proportion that its limit of liability bears to the total of
applicable limits.
The Insuring Agreement in Part A - Liability Coverage of the Personal
Auto Policy contains descriptions of all of the following EXCEPT: Ans:
Limit of Liability
Tom and Martha insure their house with an unendorsed HO-3—Special
Form (HO-3) with a Coverage A—Dwelling limit of $300,000, which is the
replacement cost of the house. A thief breaks into the house while Tom
and Martha are on vacation and steals the following items: •$500
cash•$50,000 stock certificates. Ignoring any deductible that may apply,
how much, if any, will Tom and Martha's insurer pay for the loss of the
items? Ans: $1,700
, Page | 4
Under the HO-3—Special Form (HO-3) Section I—Conditions, the Loss
Settlement condition Ans: Establishes the process for determining the
amount to be paid for a property loss.
Property described in Coverages A, B, and C of an HO-3—Special Form
(HO-3) that is destroyed, confiscated, or seized by order of any
governmental or public authority is Ans: Excluded.
Adam and his insurer disagree on the amount of a loss covered by his
homeowners policy. Adam wants the insurer to pay $10,000 toward the
loss. The insurer's representative feels that the loss should be valued at
$5,000. How could the appraisal process resolve this situation? Ans:
Adam and the insurer will each select an appraiser, and the two
appraisers will submit their differences to an impartial umpire who will
reach a resolution.
Which one of the following has special limits of liability within Coverage C
of the HO-3—Special Form (HO-3)? Ans: Theft of firearms
A storm causes power lines to break ten miles from the insured's
premises. The loss of electrical power causes food in the insured's freezer
to thaw and spoil. Coverage for this loss is Ans: Excluded because the
power failure occurred off the residence premises.
If law enforcement officials seize an insured's personal computer to
search for files that might be related to a crime, the insured under an
HO-3—Special Form (HO-3) may be unsuccessful in claiming a theft loss
on the computer due to the Ans: Governmental Action exclusion.
Sam and Sophia insure their house with an unendorsed HO-3—Special
Form (HO-3) policy. Sam stores a small fishing boat and trailer behind
the house. While they are out for the evening, a fire destroys most of
their kitchen and completely destroys the boat and trailer. Assuming
Sam's boat and trailer are valued at $4,000 and ignoring any deductible
that may apply, what amount will their HO-3 insurer pay for the loss of
the boat and trailer? Ans: $1,500
The Florida Valued Policy Law applies to: Ans: mobile homes
