Download Personal Lines Insurance License Questions and Correct Answers With Rationales| Personal L and more Exams Credit and Risk Management in PDF only on Docsity!
Personal Lines Insurance License Questions and
Correct Answers With Rationales| Personal Lines
Exam Latest Questions With 100% Accurate Answers
(New!) 2025 - 2026
Risk _________ is when one takes action to prevent or reduce potential loss. Reduction When the number of similar units increases, the predictability of the loss improves according to the rule of _____ ________. Large Numbers The insuring of risks that are more prone to losses than average risks is known as? Adverse Selection A ___________ contract is an arrangement where one insurer transfers or shares risks with another insurer. Reinsurance _____________ Reinsurance is accepted or rejected by a case by case basis. Facultative
The fact that an insured would profit from a loss, would be a violation of the principle of ___________. Indemnity The determination of acceptable risks is the primary function of the ___________. Underwriter Underwriters like to select insureds who's actual losses will be similar to expected losses. True or False? True When rates cannot be used until they are improved by the department or division of insurance, they are called ____ ________ rates. Prior Approval The termination of a policy by either the insured or insurer before its expiration date is known as ___________. Cancellation When the insurer cancels a property policy, the unearned premium is returned ___ ____. Pro Rata
Policy A is written for $100,000, and an excess Policy B is written for $200,000 on the same property. In the event of a $20,000 loss, how much will each policy pay? A= $20,000 ; B= $ A building that has neither occupants nor personal property is ______. Vacant When property is damaged by fire, the loss is said to be a(n) ______ loss. Direct If a fire on a premises caused a power outage, which caused meat in the freezer to spoil, would the meat spoilage be considered a direct loss or indirect loss? Indirect Loss Open peril policies include losses caused by theft. True or False? True If a property owner does not desire any deduction for depreciation following a covered loss, he/she should purchase a ___________ ____ policy. Replacement Cost
For replacement cost coverage to apply in dwelling policies, the insured must carry insurance at least equal to ____% of the cost of replacement of the building. 80 Would a stated amount method of valuation likely be used when insuring gold bullion? No An ____ policy is one that the value of the subject matter is not agreed upon, but is left to be ascertained in case of loss. Open A valued policy is one that expresses on it's face an agreement that the thing insured is valued at a specific sum. True or False? True Insuring more than one property on one policy for a single amount of insurance that applies to all properties covered under the policy is known as _______ coverage. Blanket The name of the insured is found on the declarations page of the policy. True or False? True
An insurer may nonrenew a homeowners policy with oral notice to the insured. True or False? False The insured's transfer of right of ownership or interest in an insurance policy to another party with the insurer's written consent is known as an __________. Assignment ___________ transfers an insured's legal right of recovery to the insurer that paid the claim. Subrogation When an insured suffers a loss, they are required to prepare an inventory of the damaged property at the ________ request. Insurers In the event of a loss under a homeowners policy, a proof of loss must be signed and sworn by the _______. Insured Company A has issued a policy in the amount of $200,000, and company B has issued a policy in the amount of $300,000. under the other insurance or pro rata liability condition or provision, how much will company A pay of a $100,000 loss?
The _________ portion of the policy specifies the causes of loss perils not covered, or property not covered. Exclusions An amendment that is attached to a property insurance policy to broaden or restrict coverage, or further define certain policy provisions is known as a(n) ___________. Endorsement Under a commercial lines property policy, who is responsible for making the premium payments in a timely manner? First Named Insured Under a commercial lines property policy, who has the right to request changes to the policy, and the right to recieve any return of premium? First Named Insured Essentially, the higher the deductible that the insured chooses, the higher the premium will be. True or False? False
True The covered causes of loss constitute the major differences between the dwelling forms. True or False? True The land under a dwelling is not covered as a part of coverage A (dwelling) under the dwelling forms. True or False? True Does a detached garage that is used to store commercial equipment qualify for coverage under coverage B other structures of the dwelling forms? No At the insured's request, coverage C ________ ________ will cover personal property of a guest or servant while on described premises. Personal Property Coverage C under the dwelling forms extends to include personal property of a tenant or boarder of the insured. True or False? False
The DP-1 basic form applies coverage to property that is removed because it is endangered by a covered peril. True or False? True Under the DP-2, and DP-3, endangered property removed to another location is covered for 30 days while at the removed location. True or False? True Collapse of a structure due to hidden decay is covered under all dwelling forms. True or False? False The earth movement exclusion does not exclude damage by an explosion that ensues from the earth movement. True or False? True Water that backs up through sewers and drains causing damage is covered under a DP-3. True or False? False Under the HO-2, would the explosion of a hot water heater that causes major damage to the house be covered? Yes
The main difference between an HO-3 and an HO-5 is that the HO-3 insures personal property for broad form perils and the HO-5 insures personal properties for open perils. True The HO-6 provides _____ ____ _____ peril coverage on personal property. Broad Form Named The HO-6 condominium unit-owners form provides coverage for common grounds which are next to the insured's property. True or False? False A homeowner has an insured loss of $10,000 damage to the home, $2,000 damage to personal property and $2,000 additional living expenses. the policy carries a $100 deductible. how much will the policy pay? $13, The HO-3 policy provides theft coverage for building supplies that are next to the house which are to be used in construction. True or False? False Under the homeowners policy, vandalism and malicious mischief coverage is excluded if the property is ______ for more than 60 days.
Vacant A homeowners policy that is written for $100,000, has the detached garage completely destroyed by fire. what is the most the policy will pay? $10, What percentage of coverage A is allowed for coverage B (other structures) under a homeowners policy? 10 The territorial limits for personal property under the homeowners policy is _________. Worldwide Under section 1 of a homeowners policy, there is a special limit under coverage C on watercraft of _____. $1, Under section 1 of a homeowners policy, there is a special limit for the theft of firearms. True or False? True
Under a HO-3 policy, the maximum amount for any one tree, shrub or plant is $___. 500 when an insured removes insured property from the premises because it is endangered by a covered peril, the homeowners policy provides coverage for ____ days at the location the property is removed to. 30 The HO-2 policy will cover the collapse of a patio that is caused by the weight of water that has collected on the roof. True Or False? False Under a homeowners policy, landslides would be covered. True or False? False Ensuing loss by fire, explosion or glass breakage resulting from earth movement is covered under a homeowners policy even though the earth movement itself is excluded. True or False? False Is the backing up of sewers covered under a homeowners policy?
No If an insured has maintained heat in an unoccupied dwelling, damaged caused by freezing of the plumbing system would be covered under the HO-3 policy. True or False? True Would a television set be covered on a replacement cost basis under the replacement cost endorsement? Yes Under the homeowners policy, the personal property replacement cost endorsement would provide replacement cost on an insured's pet. True or False? False Under the scheduled personal property endorsement, newly aquired fine arts need to be reported to the insurer within ____ days. 90 The california residential property insurance disclosure form is required by california law and becomes an actual part of an insured's homeowners policy. True or False? False
Most boat owners policies provide physical damage coverage on an open peril basis. True or False? True A yacht policy is an inland marine form and provides property hull coverage only. True or False? False Individuals who own property in participating communities are eligible to purchase flood insurance. True or False? True Mudslides caused by accumulation of water are considered a covered peril under the national flood insurance program. True or False True Are kitchen appliances covered under the national flood insurance program? Yes Wharves, piers and docks are, or are not covered under a national flood insurance program. Are Not
The national flood insurance policy covers water damage from a sewer. True or False? False The national flood insurance program is available for private dwellings only. True or False? False Would the flood policy cover a flood that is confined to the insured's premises? No Attached structures and utility tanks are insured as a part of coverage ____(mobile home) under a mobile home owners policy. A The transportation / permission to move endorsement provides coverage for the collision,upset, stranding or sinking of a mobile home that is being moved to a new location for up to ____ days. 30 A tort is a _____ or _______ wrong commited by one person against another. Civil Private
