Personal Lines Practice Exam

Homeowners policies consider all of the following insured locations EXCEPT a. a strawberry patch owned by the insured b. land owned by the insured on which his new home is under construction c. an individual cemetery plot d. the hotel ballroom rented by the insured for a family reunion

a. a strawberry patch owned by the insured

What part of the insurance contract describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured? a. insuring agreement b. exclusions. c. declarations d. conditions

a. insuring agreement

a structure may be eligible for coverage under the national flood insurance program if it meets all of the following requirements EXCEPT a. its entirely over water b. is not located withing the coastal barrier resource system c. has 2 solid walls and a roof d. is principally above ground

a. its entirely over water

Which of the following losses meets the definition of flood and would be covered by a NFIP policy? a. mudflow and collaps b. windblown rain, snow, or sleet c. landslides d. backup of sewers unrelated to a flood

a. mudflow and collapse

What does HO personal property coverage NOT cover? a. personal property of roomers not related to the insured b. the spouses personal property c. the insureds personal property in another country d. the residents sons personal property

a. personal property of roomers not related to the insured

producer licensees are valid from the initial licensing or reinstatement period until a. the last day of the licensees birth month plus 1 year b. the last day of the licensees birth month plus 2 years c. the licensees birth date plus 1 year d. the licensees birth date plus 2 years

a. the last day of the licensees birth month plus 1 year

if an individual willfully violated provisions of the fair credit reporting act, what is the max civil penalty? a. $1,000 b. $2,500 c. $5,000 d. $10,000

b. $2,500

How many days from the cancellation of a policy must an insurer return any unearned premiums to the insured? a. 30 days b. 45 days c. 60 days d. 90 days

b. 45 days

A binder on a policy in this state may last for a max of a. 2 weeks b. 90 days c. 30 days d. 2 months

b. 90 days

an insured is injured while driving his own car. which of the following coverages will pay for the loss? a. Part A- liability b. Part B - medical payments c. Part C - uninsured motorist d. Part D- damage to your auto

b. Part B - medical payments

With regard to homeowners section II, which of the following does NOT meet the definition of insured location? a. a secondary residence acquired by the insured during the policy period b. a plot of farmland owned or rented by the insured c. a meeting hall rented to the insured to hold a reception for his daughters wedding d. a cabin rented to the insured for a use on a family vacation

b. a plot of farmland owned or rented by the insured

The transfer of a legal right or interest in an insurance policy is called a. liability b. assignment c. rescission d. subrogation

b. assignment

an insureds home catches fire. as a result, the insureds family must stay in a motel until the home is repaired. the cost of the motel stay would be considered a a. negligent loss b. consequential loss c. resulting loss d. direct loss

b. consequential loss

Fair rental value coverage in the dwelling policy is similar to which homeowners policy form? a. contents b. loss of use c. dwelling d. structure

b. loss of use

an individual skilled in the process of selecting risks that will not create adverse selection for an insurance company is called a. actuary b. underwriter c. adjuster d. general agent

b. underwriter

an insured has a personal umbrella with a $2,000 self-insured retention (SIR). Assuming no other policy is involved, how much would the umbrella pay after a $12,000 personal injury liability claim? a. $2,000 b. $1,000 c. $10,000 d. $12,000

c. $10,000

which of these would be covered by the medical payments coverage in a personal auto policy? a. a runaway shopping cart in a mall parking lot knocks an insured down, breaking his leg b. an insured trips over the curb while crossing the street on the way to her car and sprains a wrist c. an insured slams a hand in a car door while getting in, breaking the hand d. an insured falls down while water-skiing and is run over by a boat

c. an insured slams a hand in a car door while getting in, breaking the hand

Under which legal defense may a claimants recovery be defeated if the defendant can show that claimant contributed no matter how slightly to the injury or damage? a. pro rata liability b. presumed negligence c. contributory negligence d. comparative negligence

c. contributory negligence

A scheduled personal property endorsement will be used to insure a. personal vehicles used by travelers anywhere in the world b. person items at their actual cash value c. higher limits of coverage for fine arts items d. high value items only within the US

c. higher limits of coverage for fine arts items

The extended nonowned coverage provides protection to a. a person named and his or her spouse only b. anyone who has permission to drive the named insured c. only the person named on the policy d. the person named on the policy and all residence family members

c. only the person named on the policy

a stock insurer is defined as an insurer a. that invests at least 20% of the premium income in the stock market b. who pays dividends to its policyowners c. owned by its stockholders d. owned by its policyowners

c. owned by it stockholders

An automobile liability insurance policy is written with a(n) a. deductible limit b. per coverage period limit c. per accident limit d. aggregate limit

c. per accident limit

the declaration section in a homeowners policy provides all of the following information EXCEPT a. amount of deductible applied to a loss b. insured locations c. policy exclusions d. basic underwriting information

c. policy exclusions

what type of insurer uses a formal sharing agreement? a. mutual insurer b. fraternal benefit societies c. reciprocal insurers d. stock insurers

c. reciprocal insurers

What are the types of compensatory damages? a. unique and general b. special and punitive c. special and general d. punitive and reward

c. special and general

Due to appreciation, the amount of insurance on a business is less than 80% of its actual value on the date of loss. Which of the following is true? a. the full amount of the loss less any deductible paid b. the policy holder is responsible for twice the amount of the deductible c. the coinsurance penalty applies d. the policy pays nothing

c. the coinsurance penalty applies

If the premiums collected by an insurer participating in the WYO flood program are insufficient to cover losses, which of the following would be true? a. the insurer must apply for disaster relief funds b. federal insurance administration will remove the insurer from the NFIP c. the insurer will be reimbursed for the excess costs by the NFIP d. the insurer must cover the loss out of its surplus

c. the insurer will be reimbursed for the excess costs by the NFIP

The owner of a rental dwelling, insured under a DP-2, turns off the heat in the insured dwelling during the winter months because the dwelling is not occupied. The building's water pipes freeze and break, causing damage. How will the policy react to this loss? a. the DP policy will pay for the pipes but not the labor b. the DP policy will pay for the labor, but not the pipes c. this loss is excluded from coverage d. this loss is covered

c. this loss is excluded from coverage

two individuals of the same age, health status and life expectancy apply for individual insurance coverages. when policies are issued by the same insurer, the premium rates are different based on the insureds race. what practice does this describe? a. negligent underwriting b. misrepresentation c. unfair discrimination d. defamation

c. unfair discrimination

Which of the following would be a proper choice of policy for a company that transports goods that are irreplaceable in nature? a. replacement cost rider b. lloyd's policy c. valued policy d. excess liabilities floater

c. valued policy

An insured rents out a bedroom in his residence for $50 per week. The residence is badly damaged by fire. During the three weeks required to repair the fire damage, the insured pays $900 in rent for a short-term apartment, and the renter is forced to find other accommodations. Disregarding any extra expense for meals, how much would an HO-3 will pay under Coverage D? a. $150 b. $300 c. $900 d. $1,050

d. $1,050

the commissioner will send the insurer an appointment renewal notification for any licensees whose appointments are about to expire at least how many days before the renewal date? a. 10 days b. 15 days c. 30 days d. 60 days

d. 60 days

A homeowner has misplaced some of her insured personal property and has no idea what may have happened to it. Which HO policy form would cover such a loss? a. HO-2 b. HO-3 c. HO-4 d. HO-5

d. HO-5

What is a prerequisite for receiving a commission from an insurance transaction? a. an appointment with a company b. a policy summary delivery c. a signed contract d. an appropriate license

d. an appropriate license

each of the following may be insured under an HO-3 homeowners policy EXCEPT a. an occupant of a dwelling under a life estate arrangement when dwelling coverage is at least 80% of the current replacement cost b. one co-owner when each distinct portion of a two-family dwelling is occupied by co-owners c. the intended owner occupant of a dwelling under construction d. the owner-occupant of a condo unit

d. an owner-occupant of a condo unit

A personal umbrella policy may act over any of the following insurance coverage policies EXCEPT a. homeowners section II coverage b. auto liability coverage c. comprehensive personal liability d. auto collision coverage

d. auto collision coverage

In order for an insurer to legally transact insurance, it must obtain which of the following? a. directors decree b. power of authority c. authorization of power d. certification of authority

d. certification of authority

the statutory law defenses that reduces injury and awards for damage proportionately when the plaintiff and defendant are both responsible is called a. assumption of risk b. intervening cause c. contributory negligence d. comparative negligence

d. comparative negligence

Other-than-collision would cover financial losses due to a. damage to an insureds neighbors mailbox that was caused by the insureds pickup b. damage to an insureds car in an accident to which the insured was found at fault c. legal action brought against an insured for an accident d. damage to an insureds car caused by wind or hail

d. damage to an insureds car caused by wind or hail

The property damage coverage required under state auto laws means physical damage to the insured vehicle, unless the policy specifically provides coverage for the vehicle's contents or other forms of property damage. Property damage coverage a. is offered only at the option of the insurer b. must be requested in writing c. is mandatory on all policies issued in Washington d. may be rejected by the insured

d. may be rejected by the insured.

An insurance agent visits a potential client and explains various types of policies. The customer displays a lack of interest, so the agent guarantees higher dividends than he knows would be possible. Which term describes what the agent has done? a. rebating b. twisting c. defamation d. misrepresentation

d. misrepresentation

A person has a history of DUIs. To his insurer, this presents what type of hazard? a. legal b. physical c. moral d. morale

d. morale

an insurer may cancel or nonrenew personal insurance based upon which of the following? a. the insureds insurance score b. the insureds attained age c. nonpayment of premium d. the insureds consumer credit history

d. nonpayment of premium

Which of the following terms means termination of an insurance policy at its expiration date by not offering a policy continuation or replacement? a. suspension b. cessation c. cancellatino d. nonrenewal

d. nonrenewal

Wagering on a sporting event is known as what type of risk? a. calculated b. single c. pure d. speculative

d. speculative

Which would NOT be covered by an insured's uninsured motorist coverage? a. the insured's neighbor borrowed the insured's car and was hit by an uninsured motorist b. the insured's car is hit by someone whose auto insurer is insolvent. c. the insured's son is struck by a hit and run driver. d. the insured causes a head on collision with the car of an uninsured motorist.

d. the insured causes a head on collision with the car of an uninsured motorist