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Florida 2-20 Agents
License Exam
- What is the primary purpose of insurance? A. To increase wealth B. To manage risk C. To guarantee profit D. To avoid losses Answer: B. To manage risk
- Which of the following is NOT considered an element of an insurance contract? A. Offer and acceptance
B. Consideration C. Competent parties D. Advertising Answer: D. Advertising
- What is the Florida law regarding the cancellation of a personal auto policy during the first 60 days of coverage? A. It can be canceled only for nonpayment of premium. B. It can be canceled for any reason. C. It cannot be canceled under any circumstances. D. It requires 90 days' notice. Answer: B. It can be canceled for any reason.
- What type of insurance policy provides coverage for legal liability arising from bodily injury or property damage caused by the insured’s negligence? A. Life insurance B. Auto liability insurance C. Homeowners insurance D. Workers' compensation insurance Answer: B. Auto liability insurance
- Which of the following is considered an unfair trade practice in the insurance industry? A. Disclosing claim details to the insured B. Misrepresenting policy provisions C. Charging premiums based on age D. Offering discounts for multi-policy coverage Answer: B. Misrepresenting policy provisions
D. $50,
Answer: B. $10,
- Which of the following is true about surplus lines insurance? A. It is written by admitted carriers. B. It provides coverage for high-risk or unique risks. C. It is backed by the Florida Insurance Guaranty Association (FIGA). D. It is prohibited in Florida. Answer: B. It provides coverage for high-risk or unique risks.11. What type of insurance policy protects businesses from financial loss due to dishonest acts committed by employees? A. Errors and omissions insurance B. Workers’ compensation insurance C. Fidelity bond D. Commercial auto policy Answer: C. Fidelity bond
- What is the coinsurance clause in a property insurance policy designed to do? A. Encourage insureds to carry insurance to value B. Limit coverage for specific perils C. Guarantee full payment of claims D. Eliminate the need for deductibles Answer: A. Encourage insureds to carry insurance to value
- Which of the following is an example of a speculative risk? A. A fire destroying a home B. A car accident C. Investing in the stock market
D. A storm damaging a roof Answer: C. Investing in the stock market
- In a Commercial General Liability (CGL) policy, which of the following is covered under Coverage A? A. Medical payments B. Bodily injury and property damage liability C. Advertising injury liability D. Personal injury liability Answer: B. Bodily injury and property damage liability
- What type of business entity can legally hold a 2-20 General Lines Agent License in Florida? A. Sole proprietorship B. Corporation C. Partnership D. All of the above Answer: D. All of the above
- What does the term "binder" refer to in insurance? A. A written policy endorsement B. A temporary agreement providing immediate coverage C. A policy amendment for additional coverage D. A declaration page Answer: B. A temporary agreement providing immediate coverage
- Under Florida law, what is the minimum notice period required for nonrenewal of a homeowners policy?
- Which of the following is considered a named peril in a standard property insurance policy? A. Flood B. Earthquake C. Fire D. War Answer: C. Fire
- What is the primary purpose of reinsurance? A. To reduce an insured's premium costs B. To share risk among multiple insurers C. To provide additional coverage to insureds D. To settle disputes between insurers and policyholders Answer: B. To share risk among multiple insurers
- What is subrogation in an insurance policy? A. An agreement to share losses between the insurer and insured B. The insurer's right to recover costs from a third party responsible for a loss C. A clause allowing the insurer to deny coverage D. A method for calculating policy premiums Answer: B. The insurer's right to recover costs from a third party responsible for a loss
- What is a "claims-made" liability policy? A. A policy that covers claims made only after it expires B. A policy that covers claims made during the policy period C. A policy that excludes pre-existing claims D. A policy that requires additional proof of claim validity
Answer: B. A policy that covers claims made during the policy period
- What is the deductible in an insurance policy? A. The amount paid by the insurer for a claim B. The portion of a loss that the insured must pay before the insurer covers the rest C. The total premium paid for coverage D. The maximum amount an insurer will pay for a loss Answer: B. The portion of a loss that the insured must pay before the insurer covers the rest26. What does the term “exclusions” refer to in an insurance policy? A. Specific conditions that are covered by the policy B. Types of coverage that are available for an additional premium C. Situations or risks not covered by the policy D. The policyholder’s responsibilities Answer: C. Situations or risks not covered by the policy
- What is the main purpose of the National Association of Insurance Commissioners (NAIC)? A. To regulate the rates of insurance policies B. To provide guidelines for insurers on policy wordings C. To ensure solvency of insurers and protect consumers D. To establish mandatory state licensing requirements Answer: C. To ensure solvency of insurers and protect consumers
- In Florida, the maximum coverage limit for a personal auto policy under the Florida Motor Vehicle No-Fault Law for PIP (Personal Injury Protection) is: A. $5, B. $10, C. $25,
B. 20 hours C. 40 hours D. 60 hours Answer: B. 20 hours
- What is the maximum amount of time that a temporary license is valid for under Florida insurance law? A. 30 days B. 90 days C. 180 days D. 1 year Answer: B. 90 days
- What type of insurance is required under the Florida Workers' Compensation Law? A. Auto liability insurance B. Health insurance for employees C. Insurance to cover work-related injuries or illnesses D. Life insurance for employees Answer: C. Insurance to cover work-related injuries or illnesses
- A personal auto policy typically covers: A. Bodily injury to the insured B. Loss of use of the insured vehicle C. Damage to a vehicle while parked in a garage D. Injuries caused to a passenger in another car Answer: B. Loss of use of the insured vehicle
- What is the primary purpose of the insurance underwriting process? A. To adjust claims B. To set insurance premiums C. To determine if a policy should be issued and under what terms D. To handle customer complaints Answer: C. To determine if a policy should be issued and under what terms
- Under the Florida "Valued Policy Law," how much does an insurer owe for a total loss to a structure insured under a homeowners policy? A. The actual cash value of the property B. The replacement cost of the property C. The insured amount specified in the policy D. The market value of the property at the time of loss Answer: C. The insured amount specified in the policy
- In an insurance policy, what does the term “deductible” refer to? A. The total amount an insurer will pay for a claim B. The amount the insured must pay out of pocket before the insurer covers the rest C. The percentage of the loss the insurer will pay D. The maximum limit of liability under the policy Answer: B. The amount the insured must pay out of pocket before the insurer covers the rest
- Which of the following would be considered a peril under a standard homeowners insurance policy? A. Fire B. Flood C. Wear and tear D. Negligence
B. The cost to repair or replace damaged property with materials of like kind and quality C. The cost minus depreciation D. The amount paid to the mortgage company after a claim Answer: B. The cost to repair or replace damaged property with materials of like kind and quality
- What is the purpose of the Florida “Sunshine Law” regarding insurance? A. To make insurance rates more affordable B. To ensure that insurance policies are clear and easy to understand C. To allow consumers to request and obtain information about insurance companies and their rates D. To regulate the claims process in Florida Answer: C. To allow consumers to request and obtain information about insurance companies and their rates
- Which of the following is a characteristic of a "professional liability" insurance policy? A. It covers damages to property caused by negligence B. It provides coverage for legal liability arising from mistakes made in providing professional services C. It is required by law for most business owners D. It covers bodily injury and property damage Answer: B. It provides coverage for legal liability arising from mistakes made in providing professional services
- Which of the following is an example of an "occurrence" under a general liability insurance policy? A. A fire that occurs at the insured’s business after the policy expires
B. A lawsuit filed during the policy period for an injury that occurred prior to the policy’s inception C. A damage claim resulting from a product defect discovered after the policy ends D. An injury caused by a defect in the insured’s product during the policy period Answer: D. An injury caused by a defect in the insured’s product during the policy period
- Which of the following is an example of "third-party" coverage in an insurance policy? A. Coverage for damage to the insured's own vehicle B. Coverage for the insured's medical expenses C. Coverage for bodily injury liability to someone else D. Coverage for the insured’s personal belongings Answer: C. Coverage for bodily injury liability to someone else
- Which type of insurance is most likely to cover an injury sustained by an employee while performing their job duties? A. General liability insurance B. Workers’ compensation insurance C. Commercial auto insurance D. Businessowners policy Answer: B. Workers’ compensation insurance
- What is the purpose of the "Other Insurance" clause in a property insurance policy? A. To prevent multiple insurers from covering the same loss B. To allow the insured to recover more than the value of the loss C. To adjust the deductible for additional insurance policies D. To prioritize the insurer's liability in the event of a claim
B. Personal injury protection C. Physical damage and liability for business-related incidents D. Workers' compensation Answer: C. Physical damage and liability for business-related incidents
- Which of the following is an example of a “moral hazard” in the context of insurance? A. An individual intentionally setting fire to their property to collect the insurance proceeds B. An individual failing to carry proper insurance coverage C. A property owner failing to maintain their property D. A company accidentally underreporting payroll to lower premiums Answer: A. An individual intentionally setting fire to their property to collect the insurance proceeds
- What is the difference between a "Bodily Injury" and "Property Damage" liability in an auto policy? A. Bodily injury covers medical expenses for the insured, while property damage covers the damage to other people's property B. Bodily injury covers damages to the insured’s property, while property damage covers injuries to others C. Bodily injury covers medical expenses for others, while property damage covers damage to the insured's property D. Bodily injury covers damages to the other party’s property, while property damage covers injuries to the insured Answer: C. Bodily injury covers medical expenses for others, while property damage covers damage to the insured's property
- What is the maximum amount of time an agent can receive commissions for a policy sold after the policy’s effective date? A. 30 days B. 60 days C. 90 days D. As long as the policy remains in force Answer: D. As long as the policy remains in force
- In Florida, what is the maximum fine an agent could face for engaging in unfair trade practices? A. $ B. $1, C. $10, D. $50, Answer: C. $10,
- What does the term “actual cash value” (ACV) mean in property insurance? A. The cost to replace property with new materials of like kind and quality B. The amount the insurer pays after subtracting depreciation C. The amount the property is sold for at auction D. The value determined by an appraiser Answer: B. The amount the insurer pays after subtracting depreciation
- Which of the following is NOT a standard exclusion in a homeowners insurance policy? A. Flood damage B. Theft of personal property C. Damage from falling trees D. Earthquake damage
A. Bodily injury to third parties B. Property damage caused by a third party C. Advertising injury, such as slander or libel D. Medical expenses to injured workers Answer: C. Advertising injury, such as slander or libel
- Which of the following types of insurance would typically provide coverage for damage caused by a flood? A. Homeowners insurance B. Earthquake insurance C. Flood insurance D. Commercial property insurance Answer: C. Flood insurance
- Which of the following is true regarding the Florida No-Fault Law (PIP)? A. It requires that all drivers carry bodily injury liability coverage B. It provides coverage for injuries sustained in a car accident, regardless of fault C. It provides coverage for damage to a vehicle D. It only covers damages to property Answer: B. It provides coverage for injuries sustained in a car accident, regardless of fault
- What is the purpose of an "endorsement" in an insurance policy? A. To update or add coverage to the existing policy B. To cancel the policy C. To increase the premium D. To change the deductible Answer: A. To update or add coverage to the existing policy
- What is the primary difference between a "named-peril" policy and an "all-risk" policy? A. Named-peril policies cover only the perils specifically listed, while all-risk policies cover all perils unless excluded B. Named-peril policies cover all perils unless excluded, while all-risk policies only cover listed perils C. Named-peril policies cover all perils, including those not listed, while all-risk policies only cover specific perils D. There is no difference between the two Answer: A. Named-peril policies cover only the perils specifically listed, while all-risk policies cover all perils unless excluded
- What type of policy provides coverage for injuries that occur while an employee is working at a temporary job site? A. Workers' compensation insurance B. Personal injury protection C. Businessowners policy D. General liability insurance Answer: A. Workers' compensation insurance
- What does the term "subrogation" refer to in the context of an insurance claim? A. The right of an insurer to recover costs from a third party responsible for the loss B. The amount an insurer must pay to settle a claim C. The process of verifying the policyholder’s information D. The method for calculating insurance premiums Answer: A. The right of an insurer to recover costs from a third party responsible for the loss
