Louisiana Personal Lines exam
questions and answers
The insurer's duty to defend the insured, as provided by Section II of a Homeowners
policy, ends:
A) When the insured admits they were negligent
B) When the damages awarded against the insured exhaust the personal liability limit
C) If the insured becomes bankrupt or insolvent
D) If the claim is groundless - Answer-When the damages awarded against the insured
exhaust the personal liability limit
Reasoning: Once the Coverage E limit is exhausted by the payment of damages for
bodily injury or property damage awarded against the insured, the insurer's duty to
defend ends. Under the Bankruptcy condition, bankruptcy or insolvency of the insured
does not relieve the insurer of its obligations under the policy.
J has a Homeowners policy written on the HO-3 form. Which of the following people
would not be considered an insured on J's policy?
A) A friend who is renting a bedroom in J's house since it is only three blocks away from
work
B) J's resident uncle
C) J's daughter away at college in another state
D) A friend's 16-year-old daughter who is staying with J's family while going to school -
Answer-A friend who is renting a bedroom in J's house since it is only three blocks away
from work
Reasoning: The definition of insured included in the policy does not include tenants, so
the friend would not be covered under J's policy. The friend would need their own
insurance for personal property and liability. Unrelated people in the insured's care are
considered insureds up to age 21
Water damage caused by which of the following could be a covered loss under a
Dwelling policy?
A) Overflow of water from a sump pump
B) Discharge of water caused by a plumbing failure
C) Leaks through a driveway
D) Water below the surface of the ground seeping through the dwelling - Answer-
Discharge of water caused by a plumbing failure
Reasoning: Accidental overflow or discharge of water from a plumbing system, other
similar household system, or a household appliance is a covered peril under the Broad
and Special forms. The Water exclusion includes losses resulting from flood or tidal
,water, water that backs up or overflows from a sump pump or drain, and water
underground that seeps through a building or driveway.
The following are all Additional Coverages provided by Homeowners policies, except:
A) Collapse
B) Governmental Action
C) Credit Cards, Electronic Fund Transfer Card or Access Device, Forgery, and
Counterfeit Money
D) Loss Assessment - Answer-Governmental Action
Reasoning: Governmental action is an exclusion, not an Additional Coverage.
In liability insurance, the most the policy will pay for a loss arising out of any one
occurrence, regardless of overall policy limits, is known as the:
A) Per occurrence limit
B) Per person limit
C) Aggregate limit
D) Split limit - Answer-Per occurrence limit
Reasoning: The per occurrence limit specifies the most the policy will pay for a specified
type of loss arising out of any one occurrence. If the policy also has an aggregate limit,
which is the most the policy will pay for all losses resulting from all occurrences during
the policy period, the amount paid under a per occurrence limit will reduce the amount
of the aggregate limit available for other losses.
Which of the following is true regarding coverage provided by a flood policy written by
the National Flood Insurance Program?
A) Coverage is available for crops and livestock for eligible farm properties
B) Losses to buildings and losses to personal property are subject to separate
deductibles
C) Coverage is available only for personal residential buildings
D) Policies automatically include loss of use coverages - Answer-Losses to buildings
and losses to personal property are subject to separate deductibles
Reasoning: Separate deductibles apply to flood losses to property, one for building
losses and one for personal property losses. If a flood causes losses to both types of
property, the insured is liable for two deductibles. Loss of use is an indirect loss, so
coverage is not provided.
Coverage C on the HO-3 would cover which of the following losses?
A) Fire loss to the personal property of a boarder who is not related to the insured
B) Vandalism loss to property the insured borrows from a neighbor
C) Damage to furniture caused by wild animals
,D) Lightning damage to a structure held for rental to tenants as a private garage -
Answer-Vandalism loss to property the insured borrows from a neighbor
Reasoning: Coverage C covers personal property (contents) owned or used by the
insured. Coverage C can apply to the personal property of others while it is on the
residence premises, as long as coverage is requested by the insured after a loss by a
covered peril. Property of a boarder, roomer, or tenant who is not related to an insured
is not covered, as they would need their own insurance. Coverage C on the HO-3
protects against the Broad Form named perils, which does not include wild animals.
Damage to a structure rented or held for rental to tenants as a private garage is covered
under Coverage B.
When a claimant can prove that a product caused an injury, the fact that the
manufacturer will be held liable regardless of whether the product was defective or not
is an example of:
A) Contingent liability
B) Direct liability
C) Strict liability
D) Vicarious liability - Answer-Strict liability
Reasoning: The doctrine of strict liability applies to products and their manufacturers. It
holds that the manufacturer can be held responsible for an injury caused by a product,
even if the product is not defective.
In which of the following circumstances would the insured be required to pay the self-
insured retention of a Personal Umbrella Liability policy?
A) The limits of the underlying policy have been exhausted
B) The insurance carrier is declared insolvent
C) There is a substantial change in the risk
D) The Umbrella drops down to act as the primary policy - Answer-The Umbrella drops
down to act as the primary policy
Reasoning: The insured is only required to pay a self-insured retention when the
Umbrella drops down to serve as the primary policy, which happens when the
underlying policy does not cover a loss. If the Umbrella policy is activated after the limits
of the underlying policy have been exhausted, the Umbrella policy provides excess
liability coverage, and the retention would not apply.
An insured has a Personal Auto policy with comprehensive coverage. After a tree falls
on the insured's vehicle during a windstorm, the auto is unusable and must be repaired.
If the insured incurs any transportation expenses, Part D of the policy will:
A) Cover transportation expenses incurred beginning 24 hours after the loss
B) Deny coverage for transportation expenses and physical damage
C) Cover transportation expenses incurred immediately following the loss
, D) Cover transportation expenses incurred beginning 48 hours after the loss - Answer-
Cover transportation expenses incurred beginning 24 hours after the loss
Reasoning: Windstorms and falling objects are covered perils under OTC coverage, so
coverage is provided. Coverage for transportation expenses begins 24 hours after the
loss, except when the loss is a total theft, in which case coverage begins 48 hours after
the loss.
The Dwelling Program would provide coverage for which of the following windstorm or
hail losses?
A) Windstorm damage to an awning
B) Rain damage to carpet after hail broke a window
C) Hail damage to an outdoor television antenna
D) Tornado damage to a rowboat sitting outside - Answer-Rain damage to carpet after
hail broke a window
Reasoning: Windstorm and hail coverage will cover losses to the building's interior if
wind or hail first caused an exterior loss that led to the interior loss, such as rain
damage to the carpet after hail broke a window. Wind and hail damage to awnings,
outdoor antennas, canoes and rowboats located outside, trees, and plants are not
covered.
Which of the following would not be covered under Coverage C of the Special Dwelling
Form?
A) Property of guests and domestic employees
B) Property of others that the insured is using
C) Household and personal property
D) The insured's golden retriever - Answer-The insured's golden retriever
Reasoning: Coverage C covers personal property that the insured owns or uses,
personal property the insured's resident family members own or use, and the personal
property of a guest or domestic employee. The policy does not cover animals or pets.
The definition of an uninsured motor vehicle under a standard Personal Auto policy
does not include:
A) A hit-and-run vehicle that cannot be identified
B) A vehicle newly acquired by the named insured that has not been reported to the
insurer
C) A vehicle that has no applicable liability insurance policy
D) A pickup insured by an insolvent company - Answer-A vehicle newly acquired by the
named insured that has not been reported to the insurer
Reasoning: A vehicle owned by the insured would not fit the definition of an uninsured
vehicle.
questions and answers
The insurer's duty to defend the insured, as provided by Section II of a Homeowners
policy, ends:
A) When the insured admits they were negligent
B) When the damages awarded against the insured exhaust the personal liability limit
C) If the insured becomes bankrupt or insolvent
D) If the claim is groundless - Answer-When the damages awarded against the insured
exhaust the personal liability limit
Reasoning: Once the Coverage E limit is exhausted by the payment of damages for
bodily injury or property damage awarded against the insured, the insurer's duty to
defend ends. Under the Bankruptcy condition, bankruptcy or insolvency of the insured
does not relieve the insurer of its obligations under the policy.
J has a Homeowners policy written on the HO-3 form. Which of the following people
would not be considered an insured on J's policy?
A) A friend who is renting a bedroom in J's house since it is only three blocks away from
work
B) J's resident uncle
C) J's daughter away at college in another state
D) A friend's 16-year-old daughter who is staying with J's family while going to school -
Answer-A friend who is renting a bedroom in J's house since it is only three blocks away
from work
Reasoning: The definition of insured included in the policy does not include tenants, so
the friend would not be covered under J's policy. The friend would need their own
insurance for personal property and liability. Unrelated people in the insured's care are
considered insureds up to age 21
Water damage caused by which of the following could be a covered loss under a
Dwelling policy?
A) Overflow of water from a sump pump
B) Discharge of water caused by a plumbing failure
C) Leaks through a driveway
D) Water below the surface of the ground seeping through the dwelling - Answer-
Discharge of water caused by a plumbing failure
Reasoning: Accidental overflow or discharge of water from a plumbing system, other
similar household system, or a household appliance is a covered peril under the Broad
and Special forms. The Water exclusion includes losses resulting from flood or tidal
,water, water that backs up or overflows from a sump pump or drain, and water
underground that seeps through a building or driveway.
The following are all Additional Coverages provided by Homeowners policies, except:
A) Collapse
B) Governmental Action
C) Credit Cards, Electronic Fund Transfer Card or Access Device, Forgery, and
Counterfeit Money
D) Loss Assessment - Answer-Governmental Action
Reasoning: Governmental action is an exclusion, not an Additional Coverage.
In liability insurance, the most the policy will pay for a loss arising out of any one
occurrence, regardless of overall policy limits, is known as the:
A) Per occurrence limit
B) Per person limit
C) Aggregate limit
D) Split limit - Answer-Per occurrence limit
Reasoning: The per occurrence limit specifies the most the policy will pay for a specified
type of loss arising out of any one occurrence. If the policy also has an aggregate limit,
which is the most the policy will pay for all losses resulting from all occurrences during
the policy period, the amount paid under a per occurrence limit will reduce the amount
of the aggregate limit available for other losses.
Which of the following is true regarding coverage provided by a flood policy written by
the National Flood Insurance Program?
A) Coverage is available for crops and livestock for eligible farm properties
B) Losses to buildings and losses to personal property are subject to separate
deductibles
C) Coverage is available only for personal residential buildings
D) Policies automatically include loss of use coverages - Answer-Losses to buildings
and losses to personal property are subject to separate deductibles
Reasoning: Separate deductibles apply to flood losses to property, one for building
losses and one for personal property losses. If a flood causes losses to both types of
property, the insured is liable for two deductibles. Loss of use is an indirect loss, so
coverage is not provided.
Coverage C on the HO-3 would cover which of the following losses?
A) Fire loss to the personal property of a boarder who is not related to the insured
B) Vandalism loss to property the insured borrows from a neighbor
C) Damage to furniture caused by wild animals
,D) Lightning damage to a structure held for rental to tenants as a private garage -
Answer-Vandalism loss to property the insured borrows from a neighbor
Reasoning: Coverage C covers personal property (contents) owned or used by the
insured. Coverage C can apply to the personal property of others while it is on the
residence premises, as long as coverage is requested by the insured after a loss by a
covered peril. Property of a boarder, roomer, or tenant who is not related to an insured
is not covered, as they would need their own insurance. Coverage C on the HO-3
protects against the Broad Form named perils, which does not include wild animals.
Damage to a structure rented or held for rental to tenants as a private garage is covered
under Coverage B.
When a claimant can prove that a product caused an injury, the fact that the
manufacturer will be held liable regardless of whether the product was defective or not
is an example of:
A) Contingent liability
B) Direct liability
C) Strict liability
D) Vicarious liability - Answer-Strict liability
Reasoning: The doctrine of strict liability applies to products and their manufacturers. It
holds that the manufacturer can be held responsible for an injury caused by a product,
even if the product is not defective.
In which of the following circumstances would the insured be required to pay the self-
insured retention of a Personal Umbrella Liability policy?
A) The limits of the underlying policy have been exhausted
B) The insurance carrier is declared insolvent
C) There is a substantial change in the risk
D) The Umbrella drops down to act as the primary policy - Answer-The Umbrella drops
down to act as the primary policy
Reasoning: The insured is only required to pay a self-insured retention when the
Umbrella drops down to serve as the primary policy, which happens when the
underlying policy does not cover a loss. If the Umbrella policy is activated after the limits
of the underlying policy have been exhausted, the Umbrella policy provides excess
liability coverage, and the retention would not apply.
An insured has a Personal Auto policy with comprehensive coverage. After a tree falls
on the insured's vehicle during a windstorm, the auto is unusable and must be repaired.
If the insured incurs any transportation expenses, Part D of the policy will:
A) Cover transportation expenses incurred beginning 24 hours after the loss
B) Deny coverage for transportation expenses and physical damage
C) Cover transportation expenses incurred immediately following the loss
, D) Cover transportation expenses incurred beginning 48 hours after the loss - Answer-
Cover transportation expenses incurred beginning 24 hours after the loss
Reasoning: Windstorms and falling objects are covered perils under OTC coverage, so
coverage is provided. Coverage for transportation expenses begins 24 hours after the
loss, except when the loss is a total theft, in which case coverage begins 48 hours after
the loss.
The Dwelling Program would provide coverage for which of the following windstorm or
hail losses?
A) Windstorm damage to an awning
B) Rain damage to carpet after hail broke a window
C) Hail damage to an outdoor television antenna
D) Tornado damage to a rowboat sitting outside - Answer-Rain damage to carpet after
hail broke a window
Reasoning: Windstorm and hail coverage will cover losses to the building's interior if
wind or hail first caused an exterior loss that led to the interior loss, such as rain
damage to the carpet after hail broke a window. Wind and hail damage to awnings,
outdoor antennas, canoes and rowboats located outside, trees, and plants are not
covered.
Which of the following would not be covered under Coverage C of the Special Dwelling
Form?
A) Property of guests and domestic employees
B) Property of others that the insured is using
C) Household and personal property
D) The insured's golden retriever - Answer-The insured's golden retriever
Reasoning: Coverage C covers personal property that the insured owns or uses,
personal property the insured's resident family members own or use, and the personal
property of a guest or domestic employee. The policy does not cover animals or pets.
The definition of an uninsured motor vehicle under a standard Personal Auto policy
does not include:
A) A hit-and-run vehicle that cannot be identified
B) A vehicle newly acquired by the named insured that has not been reported to the
insurer
C) A vehicle that has no applicable liability insurance policy
D) A pickup insured by an insolvent company - Answer-A vehicle newly acquired by the
named insured that has not been reported to the insurer
Reasoning: A vehicle owned by the insured would not fit the definition of an uninsured
vehicle.
