Personal Lines Insurance Practice Exam
Questions With Correct Answers
Bobby, age 16, borrows his parents' car without their permission and
| | | | | | | | | | |
gets into an accident. Which of the following statements about coverage
| | | | | | | | | |
under the parents' personal auto policy is CORRECT?
| | | | | | | |
A) Bobby is covered by his parents' policy because he is included in the
| | | | | | | | | | | | | |
definition of named insured. | | | |
B) Bobby is not covered for this accident because he used the car
| | | | | | | | | | | | |
without permission. | |
C) Bobby is not covered because it was not his car.
| | | | | | | | | | |
D) Bobby is covered by his parents' policy because he is a family
| | | | | | | | | | | | |
member. - CORRECT ANSWER✔✔-D) Bobby is covered by his parents'
| | | | | | | | | |
policy because he is a family member.
| | | | | |
Explanation: Bobby is a family member and thus automatically is
| | | | | | | | | |
covered under the family's PAP policy. Even though Bobby is using the
| | | | | | | | | | | |
car without permission, the exclusion pertaining to nonpermissive users
| | | | | | | |
does not apply to use of an owned auto policy by resident family
| | | | | | | | | | | | | |
members.
,Reference: 8.7.2 in License Exam Manual | | | | |
A parking valet at a hotel uses a guest's car to do a personal errand and
| | | | | | | | | | | | | | | |
damages the car in a collision. The guest has a personal auto policy
| | | | | | | | | | | | |
(PAP). The insurance company will pay the claim and ____.
| | | | | | | | |
A) relieve the parking valet of legal liability for the loss
| | | | | | | | | |
B) subrogate against the named insured
| | | | |
C) subrogate against the parking valet
| | | | |
D) recover any additional loss from the lienholder - CORRECT
| | | | | | | | | |
ANSWER✔✔-C) subrogate against the parking valet | | | | |
Explanation: Part-D coverage for Damage to Your Auto of the PAP
| | | | | | | | | | |
contains a no benefit to bailee provision. This provision states that a
| | | | | | | | | | | |
carrier or other bailee for hire, such as a parking gar5age, service
| | | | | | | | | | | |
station, or moving company will not directly or indirectly benefit from
| | | | | | | | | | |
the PAP's insurance. A bailee is an individual or entity that assumes
| | | | | | | | | | | |
possession of goods owned by another for the purpose of transporting,
| | | | | | | | | | |
servicing, or storing them. When temporary custody is assumed, the
| | | | | | | | | |
bailee becomes legally liable for the goods.
| | | | | |
Reference: 8.7.2 in the License Exam Manual
| | | | | |
,Who of the following are required to be members of the Arizona
| | | | | | | | | | | |
Property and Casualty Insurance Guaranty Fund?
| | | | |
A) All insurers that write the types of insurance that are protected by
| | | | | | | | | | | | |
the fund in Arizona
| | |
B) Foreign property and casualty insurers only
| | | | | |
C) lien property and casualty insurers only
| | | | | |
D) All insurers that write insurance in Arizona, including life and health
| | | | | | | | | | | |
insurers - CORRECT ANSWER✔✔-A) All insurers that write the types of
| | | | | | | | | | |
insurance that are protected by the fund in Arizona
| | | | | | | |
Explanation: All insurers that write types of insurance that are protected
| | | | | | | | | |
by the fund are required to be member insurers of the fund. Reference:
| | | | | | | | | | | | | |
State Supplement in the License Exam Manual.
| | | | | |
Reference: 4.4.16.3 in the License Exam Manual | | | | | |
Which one of the following dwellings would a HO-3 Homeowners Form
| | | | | | | | | | |
cover?
A) Condominium
|
B) Office building
| |
C) Single-family home
| |
, D) Apartment building - CORRECT ANSWER✔✔-C) Single-family home
| | | | | | |
Explanation: HO-3 Homeowners Form covers owner-occupied single
| | | | | | |
family dwellings. Condominiums are covered by the HO-6. Office and
| | | | | | | | | |
apartment buildings would be covered by a commercial policy.
| | | | | | | |
Reference: 7.4.1 in the License Exam Manual
| | | | | |
Which on of the following would be classified as a general damage?
| | | | | | | | | | |
A) Pain and suffering
| | |
B) Lost wages
| |
C) Medical bills
| |
D) Damaged property - CORRECT ANSWER✔✔-A) Pain and suffering
| | | | | | | |
Explanation: Compensatory damages compensate an injured party for
| | | | | | | |
injuries sustained- nothing more. Their purpose is to make a person
| | | | | | | | | | |
whole again in the position that existed before the loss or harm.
| | | | | | | | | | | |
Compensatory damages are further categorized by: general damages
| | | | | | | |
(which necessarily result from the act or omission, such as emotional
| | | | | | | | | | |
distress, inconvenience, and pain and suffering) and special damages
| | | | | | | | |
(losses measured in exact sums of money including medical bills, travel
| | | | | | | | | | |
expenses for medical care, prescription costs damaged property, and
| | | | | | | | |
lost wages).
|
Questions With Correct Answers
Bobby, age 16, borrows his parents' car without their permission and
| | | | | | | | | | |
gets into an accident. Which of the following statements about coverage
| | | | | | | | | |
under the parents' personal auto policy is CORRECT?
| | | | | | | |
A) Bobby is covered by his parents' policy because he is included in the
| | | | | | | | | | | | | |
definition of named insured. | | | |
B) Bobby is not covered for this accident because he used the car
| | | | | | | | | | | | |
without permission. | |
C) Bobby is not covered because it was not his car.
| | | | | | | | | | |
D) Bobby is covered by his parents' policy because he is a family
| | | | | | | | | | | | |
member. - CORRECT ANSWER✔✔-D) Bobby is covered by his parents'
| | | | | | | | | |
policy because he is a family member.
| | | | | |
Explanation: Bobby is a family member and thus automatically is
| | | | | | | | | |
covered under the family's PAP policy. Even though Bobby is using the
| | | | | | | | | | | |
car without permission, the exclusion pertaining to nonpermissive users
| | | | | | | |
does not apply to use of an owned auto policy by resident family
| | | | | | | | | | | | | |
members.
,Reference: 8.7.2 in License Exam Manual | | | | |
A parking valet at a hotel uses a guest's car to do a personal errand and
| | | | | | | | | | | | | | | |
damages the car in a collision. The guest has a personal auto policy
| | | | | | | | | | | | |
(PAP). The insurance company will pay the claim and ____.
| | | | | | | | |
A) relieve the parking valet of legal liability for the loss
| | | | | | | | | |
B) subrogate against the named insured
| | | | |
C) subrogate against the parking valet
| | | | |
D) recover any additional loss from the lienholder - CORRECT
| | | | | | | | | |
ANSWER✔✔-C) subrogate against the parking valet | | | | |
Explanation: Part-D coverage for Damage to Your Auto of the PAP
| | | | | | | | | | |
contains a no benefit to bailee provision. This provision states that a
| | | | | | | | | | | |
carrier or other bailee for hire, such as a parking gar5age, service
| | | | | | | | | | | |
station, or moving company will not directly or indirectly benefit from
| | | | | | | | | | |
the PAP's insurance. A bailee is an individual or entity that assumes
| | | | | | | | | | | |
possession of goods owned by another for the purpose of transporting,
| | | | | | | | | | |
servicing, or storing them. When temporary custody is assumed, the
| | | | | | | | | |
bailee becomes legally liable for the goods.
| | | | | |
Reference: 8.7.2 in the License Exam Manual
| | | | | |
,Who of the following are required to be members of the Arizona
| | | | | | | | | | | |
Property and Casualty Insurance Guaranty Fund?
| | | | |
A) All insurers that write the types of insurance that are protected by
| | | | | | | | | | | | |
the fund in Arizona
| | |
B) Foreign property and casualty insurers only
| | | | | |
C) lien property and casualty insurers only
| | | | | |
D) All insurers that write insurance in Arizona, including life and health
| | | | | | | | | | | |
insurers - CORRECT ANSWER✔✔-A) All insurers that write the types of
| | | | | | | | | | |
insurance that are protected by the fund in Arizona
| | | | | | | |
Explanation: All insurers that write types of insurance that are protected
| | | | | | | | | |
by the fund are required to be member insurers of the fund. Reference:
| | | | | | | | | | | | | |
State Supplement in the License Exam Manual.
| | | | | |
Reference: 4.4.16.3 in the License Exam Manual | | | | | |
Which one of the following dwellings would a HO-3 Homeowners Form
| | | | | | | | | | |
cover?
A) Condominium
|
B) Office building
| |
C) Single-family home
| |
, D) Apartment building - CORRECT ANSWER✔✔-C) Single-family home
| | | | | | |
Explanation: HO-3 Homeowners Form covers owner-occupied single
| | | | | | |
family dwellings. Condominiums are covered by the HO-6. Office and
| | | | | | | | | |
apartment buildings would be covered by a commercial policy.
| | | | | | | |
Reference: 7.4.1 in the License Exam Manual
| | | | | |
Which on of the following would be classified as a general damage?
| | | | | | | | | | |
A) Pain and suffering
| | |
B) Lost wages
| |
C) Medical bills
| |
D) Damaged property - CORRECT ANSWER✔✔-A) Pain and suffering
| | | | | | | |
Explanation: Compensatory damages compensate an injured party for
| | | | | | | |
injuries sustained- nothing more. Their purpose is to make a person
| | | | | | | | | | |
whole again in the position that existed before the loss or harm.
| | | | | | | | | | | |
Compensatory damages are further categorized by: general damages
| | | | | | | |
(which necessarily result from the act or omission, such as emotional
| | | | | | | | | | |
distress, inconvenience, and pain and suffering) and special damages
| | | | | | | | |
(losses measured in exact sums of money including medical bills, travel
| | | | | | | | | | |
expenses for medical care, prescription costs damaged property, and
| | | | | | | | |
lost wages).
|
