FLORIDA 2-20 AGENTS LICENSE ACTUAL EXAM 2026 |
Newest Version Real Exam 300 Questions & Correct Detailed
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Section 1: Insurance Terminology & Basic Concepts
Q1: Which of the following best describes the concept of indemnity in property
insurance?
A. Paying the insured the full replacement cost of a damaged roof without any
deductions
B. Restoring the insured to the same financial position they were in just before the loss,
no better or worse
C. Ensuring the insurance company makes a profit on every policy written
D. Reimbursing the insured for pain and suffering caused by a covered loss
Correct Answer: B
Rationale: On the Florida 2-20 exam, remember that the principle of indemnity means
the insured is restored to their pre-loss financial condition, preventing them from
profiting from a covered loss.
Q2: An insured leaves a can of gasoline sitting next to their water heater in the garage,
which eventually catches fire. The gasoline is considered what type of hazard?
A. Morale hazard
B. Moral hazard
C. Physical hazard
D. Pure hazard
Correct Answer: C
Rationale: That’s right because a physical hazard is a tangible condition or physical
feature of the property that increases the chance of loss, like storing flammable liquids
near an ignition source.
,Q3: What is the difference between a peril and a hazard?
A. A peril is the cause of a loss, while a hazard increases the likelihood or severity of a
peril occurring
B. A hazard is the cause of a loss, while a peril increases the likelihood of a hazard
occurring
C. Perils apply to property insurance, while hazards apply only to casualty insurance
D. There is no practical difference; the terms are used interchangeably in Florida
Correct Answer: A
Rationale: A common exam trap is confusing these two, but a peril is the actual cause
of the loss (like fire), while a hazard is something that makes the loss more likely or
severe (like frayed wiring).
Q4: Which type of risk involves only the chance of loss, with no possibility of gain?
A. Speculative risk
B. Pure risk
C. Fundamental risk
D. Dynamic risk
Correct Answer: B
Rationale: Pure risk, such as a house burning down, only offers the possibility of a loss
or no change, which is the only type of risk that is typically insurable.
Q5: An insured suffers a loss of $15,000 under a policy with a $500 straight deductible.
How much will the insurer pay?
A. $15,000
B. $14,500
C. $14,000
D. $500
Correct Answer: B
Rationale: For a straight deductible, you simply subtract the deductible amount from the
total loss, so $15,000 minus $500 equals $14,500.
Q6: A policy has a $1,000 franchise deductible. If the insured suffers a covered loss of
$900, what will the insurer pay?
A. $900
B. $0
C. $100
,D. $1,000
Correct Answer: B
Rationale: A franchise deductible means the insurer pays nothing if the loss falls below
the deductible amount, but pays the full loss amount if it meets or exceeds it.
Q7: Under a policy with a disappearing deductible, what happens as the size of the loss
increases?
A. The deductible stays the same but the coverage limit decreases
B. The deductible amount gradually reduces to zero as the loss amount increases
C. The premium increases to cover the larger loss
D. The deductible amount doubles for every $1,000 in loss
Correct Answer: B
Rationale: A disappearing deductible reduces the out-of-pocket cost to the insured as
the loss gets larger, eventually disappearing entirely if the loss reaches a specified
threshold.
Q8: What does "actual cash value" (ACV) mean in a property insurance policy?
A. The original purchase price of the property
B. The cost to replace the property with new property of like kind and quality
C. Replacement cost minus depreciation
D. The fair market value of the property in a retail store
Correct Answer: C
Rationale: On the Florida 2-20 exam, remember the simple formula: ACV equals
replacement cost minus depreciation for wear and tear and obsolescence.
Q9: An insurance company based in New York is writing a policy for a business located
in Tampa. In Florida, this New York insurer is considered what type of company?
A. Domestic
B. Foreign
C. Alien
D. Surplus lines
Correct Answer: B
Rationale: That’s right because an insurer formed under the laws of another state (like
New York) but operating in Florida is classified as a foreign insurer.
, Q10: If an insurance company is formed under the laws of Germany and is operating in
Florida, it is considered an:
A. Alien insurer
B. Foreign insurer
C. Domestic insurer
D. Non-admitted surplus lines insurer
Correct Answer: A
Rationale: An alien insurer is any company formed under the laws of a country other
than the United States, regardless of whether it is admitted in Florida.
Q11: Which part of an insurance policy contains the insured's name, address, policy
period, and premium?
A. Insuring agreement
B. Conditions
C. Declarations
D. Exclusions
Correct Answer: C
Rationale: The declarations page is the customized part of the contract that identifies
who is insured, what is covered, the policy limits, and the premium paid.
Q12: The insuring agreement is best described as:
A. The section detailing what the insured must do after a loss
B. The section outlining the insurer's promise to pay for covered losses and the
circumstances under which payments will be made
C. The section listing all the property and perils specifically excluded from coverage
D. The section defining all the technical terms used in the policy
Correct Answer: B
Rationale: The insuring agreement is the heart of the policy where the insurer makes its
broad promise to cover certain types of losses in exchange for the premium.
Q13: What is the purpose of an endorsement or rider in an insurance policy?
A. To cancel the policy mid-term
B. To modify the original terms, coverages, or premiums of the policy
C. To transfer the policy to a new owner
D. To defend the insured in a liability lawsuit
Correct Answer: B
Newest Version Real Exam 300 Questions & Correct Detailed
Answers | A Grade | Brand New Version | Pass Guaranteed -
A+ Graded
Section 1: Insurance Terminology & Basic Concepts
Q1: Which of the following best describes the concept of indemnity in property
insurance?
A. Paying the insured the full replacement cost of a damaged roof without any
deductions
B. Restoring the insured to the same financial position they were in just before the loss,
no better or worse
C. Ensuring the insurance company makes a profit on every policy written
D. Reimbursing the insured for pain and suffering caused by a covered loss
Correct Answer: B
Rationale: On the Florida 2-20 exam, remember that the principle of indemnity means
the insured is restored to their pre-loss financial condition, preventing them from
profiting from a covered loss.
Q2: An insured leaves a can of gasoline sitting next to their water heater in the garage,
which eventually catches fire. The gasoline is considered what type of hazard?
A. Morale hazard
B. Moral hazard
C. Physical hazard
D. Pure hazard
Correct Answer: C
Rationale: That’s right because a physical hazard is a tangible condition or physical
feature of the property that increases the chance of loss, like storing flammable liquids
near an ignition source.
,Q3: What is the difference between a peril and a hazard?
A. A peril is the cause of a loss, while a hazard increases the likelihood or severity of a
peril occurring
B. A hazard is the cause of a loss, while a peril increases the likelihood of a hazard
occurring
C. Perils apply to property insurance, while hazards apply only to casualty insurance
D. There is no practical difference; the terms are used interchangeably in Florida
Correct Answer: A
Rationale: A common exam trap is confusing these two, but a peril is the actual cause
of the loss (like fire), while a hazard is something that makes the loss more likely or
severe (like frayed wiring).
Q4: Which type of risk involves only the chance of loss, with no possibility of gain?
A. Speculative risk
B. Pure risk
C. Fundamental risk
D. Dynamic risk
Correct Answer: B
Rationale: Pure risk, such as a house burning down, only offers the possibility of a loss
or no change, which is the only type of risk that is typically insurable.
Q5: An insured suffers a loss of $15,000 under a policy with a $500 straight deductible.
How much will the insurer pay?
A. $15,000
B. $14,500
C. $14,000
D. $500
Correct Answer: B
Rationale: For a straight deductible, you simply subtract the deductible amount from the
total loss, so $15,000 minus $500 equals $14,500.
Q6: A policy has a $1,000 franchise deductible. If the insured suffers a covered loss of
$900, what will the insurer pay?
A. $900
B. $0
C. $100
,D. $1,000
Correct Answer: B
Rationale: A franchise deductible means the insurer pays nothing if the loss falls below
the deductible amount, but pays the full loss amount if it meets or exceeds it.
Q7: Under a policy with a disappearing deductible, what happens as the size of the loss
increases?
A. The deductible stays the same but the coverage limit decreases
B. The deductible amount gradually reduces to zero as the loss amount increases
C. The premium increases to cover the larger loss
D. The deductible amount doubles for every $1,000 in loss
Correct Answer: B
Rationale: A disappearing deductible reduces the out-of-pocket cost to the insured as
the loss gets larger, eventually disappearing entirely if the loss reaches a specified
threshold.
Q8: What does "actual cash value" (ACV) mean in a property insurance policy?
A. The original purchase price of the property
B. The cost to replace the property with new property of like kind and quality
C. Replacement cost minus depreciation
D. The fair market value of the property in a retail store
Correct Answer: C
Rationale: On the Florida 2-20 exam, remember the simple formula: ACV equals
replacement cost minus depreciation for wear and tear and obsolescence.
Q9: An insurance company based in New York is writing a policy for a business located
in Tampa. In Florida, this New York insurer is considered what type of company?
A. Domestic
B. Foreign
C. Alien
D. Surplus lines
Correct Answer: B
Rationale: That’s right because an insurer formed under the laws of another state (like
New York) but operating in Florida is classified as a foreign insurer.
, Q10: If an insurance company is formed under the laws of Germany and is operating in
Florida, it is considered an:
A. Alien insurer
B. Foreign insurer
C. Domestic insurer
D. Non-admitted surplus lines insurer
Correct Answer: A
Rationale: An alien insurer is any company formed under the laws of a country other
than the United States, regardless of whether it is admitted in Florida.
Q11: Which part of an insurance policy contains the insured's name, address, policy
period, and premium?
A. Insuring agreement
B. Conditions
C. Declarations
D. Exclusions
Correct Answer: C
Rationale: The declarations page is the customized part of the contract that identifies
who is insured, what is covered, the policy limits, and the premium paid.
Q12: The insuring agreement is best described as:
A. The section detailing what the insured must do after a loss
B. The section outlining the insurer's promise to pay for covered losses and the
circumstances under which payments will be made
C. The section listing all the property and perils specifically excluded from coverage
D. The section defining all the technical terms used in the policy
Correct Answer: B
Rationale: The insuring agreement is the heart of the policy where the insurer makes its
broad promise to cover certain types of losses in exchange for the premium.
Q13: What is the purpose of an endorsement or rider in an insurance policy?
A. To cancel the policy mid-term
B. To modify the original terms, coverages, or premiums of the policy
C. To transfer the policy to a new owner
D. To defend the insured in a liability lawsuit
Correct Answer: B
