Florida 2-20 General Lines Agent
License Exam 2025/2026 – Actual
Exam with 200 Questions and Detailed
Correct Answers | A Grade
Section 1: General Insurance Knowledge (Questions 1-55)
Question 1
Which is NOT a characteristic of an ideal insurable risk?
A. Loss is accidental.
B. Loss is measurable.
C. Loss is predictable.
D. Risk is catastrophic.
D. Risk is catastrophic.
Rationale: Ideal risks are non-catastrophic to avoid insurer insolvency. A, B, C are required
characteristics; catastrophic risks cause mass losses.
Question 2
The principle of indemnity ensures the insured:
A. Profits from a loss.
B. Is restored to pre-loss condition.
C. Shares losses with insurer.
D. Pays premiums indefinitely.
B. Is restored to pre-loss condition.
Rationale: Indemnity prevents profit from loss to avoid moral hazard. A encourages fraud; C, D
are unrelated to indemnity.
Question 3
Actual cash value (ACV) in property insurance is:
A. Replacement cost minus depreciation.
B. Replacement cost without depreciation.
C. Market value at loss.
D. Agreed policy value.
A. Replacement cost minus depreciation.
Rationale: ACV accounts for depreciation to reflect fair value. B is replacement cost; C is
similar but less precise; D is a contractual value.
,Question 4
Which is unique to insurance contracts?
A. Aleatory: Unequal value exchange.
B. Unilateral: Insurer only obligated.
C. Adhesion: Insurer drafts terms.
D. All of the above.
D. All of the above.
Rationale: Insurance contracts are aleatory (premium vs. payout), unilateral (insurer’s
obligation), and adhesion (insurer-drafted terms). All characteristics apply.
Question 5
Subrogation allows an insurer to:
A. Increase premiums.
B. Recover paid claims from liable parties.
C. Deny coverage.
D. Reduce deductibles.
B. Recover paid claims from liable parties.
Rationale: Subrogation prevents double recovery by pursuing liable parties. A, C, D are
unrelated to subrogation.
Question 6
A binder provides temporary coverage until:
A. The policy is issued.
B. The premium is paid.
C. A claim is filed.
D. The agent is licensed.
A. The policy is issued.
Rationale: Binders provide interim coverage until the policy is finalized. B, C, D do not trigger
binder termination.
Question 7
The law of large numbers in insurance:
A. Increases premiums.
B. Predicts losses statistically.
C. Reduces coverage limits.
D. Eliminates risks.
B. Predicts losses statistically.
Rationale: The law of large numbers uses data to predict losses accurately. A, C, D are unrelated
to this principle.
Question 8
A peril in insurance is:
, A. Cause of loss.
B. Policy exclusion.
C. Premium amount.
D. Deductible value.
A. Cause of loss.
Rationale: Perils (e.g., fire, theft) are events causing covered losses. B, C, D are unrelated to
perils.
Question 9
A direct loss is:
A. Loss of use after a fire.
B. Property damage from a fire.
C. Increased living expenses.
D. Business interruption costs.
B. Property damage from a fire.
Rationale: Direct losses involve physical damage from a peril. A, C, D are indirect losses.
Question 10
Insurer financial strength is rated by:
A. DFS.
B. AM Best.
C. FSLSO.
D. OIR.
B. AM Best.
Rationale: AM Best evaluates insurer financial stability. A, C, D are regulatory bodies, not
rating agencies.
Question 11
What is a deductible in an insurance policy?
A. Premium paid by insured.
B. Amount insured pays before coverage.
C. Total claim amount.
D. Insurer’s liability limit.
B. Amount insured pays before coverage.
Rationale: Deductibles are out-of-pocket amounts before insurer payment. A is the premium; C,
D are unrelated.
Question 12
Proximate cause in insurance refers to:
A. Policy exclusions.
B. Primary cause of loss.
License Exam 2025/2026 – Actual
Exam with 200 Questions and Detailed
Correct Answers | A Grade
Section 1: General Insurance Knowledge (Questions 1-55)
Question 1
Which is NOT a characteristic of an ideal insurable risk?
A. Loss is accidental.
B. Loss is measurable.
C. Loss is predictable.
D. Risk is catastrophic.
D. Risk is catastrophic.
Rationale: Ideal risks are non-catastrophic to avoid insurer insolvency. A, B, C are required
characteristics; catastrophic risks cause mass losses.
Question 2
The principle of indemnity ensures the insured:
A. Profits from a loss.
B. Is restored to pre-loss condition.
C. Shares losses with insurer.
D. Pays premiums indefinitely.
B. Is restored to pre-loss condition.
Rationale: Indemnity prevents profit from loss to avoid moral hazard. A encourages fraud; C, D
are unrelated to indemnity.
Question 3
Actual cash value (ACV) in property insurance is:
A. Replacement cost minus depreciation.
B. Replacement cost without depreciation.
C. Market value at loss.
D. Agreed policy value.
A. Replacement cost minus depreciation.
Rationale: ACV accounts for depreciation to reflect fair value. B is replacement cost; C is
similar but less precise; D is a contractual value.
,Question 4
Which is unique to insurance contracts?
A. Aleatory: Unequal value exchange.
B. Unilateral: Insurer only obligated.
C. Adhesion: Insurer drafts terms.
D. All of the above.
D. All of the above.
Rationale: Insurance contracts are aleatory (premium vs. payout), unilateral (insurer’s
obligation), and adhesion (insurer-drafted terms). All characteristics apply.
Question 5
Subrogation allows an insurer to:
A. Increase premiums.
B. Recover paid claims from liable parties.
C. Deny coverage.
D. Reduce deductibles.
B. Recover paid claims from liable parties.
Rationale: Subrogation prevents double recovery by pursuing liable parties. A, C, D are
unrelated to subrogation.
Question 6
A binder provides temporary coverage until:
A. The policy is issued.
B. The premium is paid.
C. A claim is filed.
D. The agent is licensed.
A. The policy is issued.
Rationale: Binders provide interim coverage until the policy is finalized. B, C, D do not trigger
binder termination.
Question 7
The law of large numbers in insurance:
A. Increases premiums.
B. Predicts losses statistically.
C. Reduces coverage limits.
D. Eliminates risks.
B. Predicts losses statistically.
Rationale: The law of large numbers uses data to predict losses accurately. A, C, D are unrelated
to this principle.
Question 8
A peril in insurance is:
, A. Cause of loss.
B. Policy exclusion.
C. Premium amount.
D. Deductible value.
A. Cause of loss.
Rationale: Perils (e.g., fire, theft) are events causing covered losses. B, C, D are unrelated to
perils.
Question 9
A direct loss is:
A. Loss of use after a fire.
B. Property damage from a fire.
C. Increased living expenses.
D. Business interruption costs.
B. Property damage from a fire.
Rationale: Direct losses involve physical damage from a peril. A, C, D are indirect losses.
Question 10
Insurer financial strength is rated by:
A. DFS.
B. AM Best.
C. FSLSO.
D. OIR.
B. AM Best.
Rationale: AM Best evaluates insurer financial stability. A, C, D are regulatory bodies, not
rating agencies.
Question 11
What is a deductible in an insurance policy?
A. Premium paid by insured.
B. Amount insured pays before coverage.
C. Total claim amount.
D. Insurer’s liability limit.
B. Amount insured pays before coverage.
Rationale: Deductibles are out-of-pocket amounts before insurer payment. A is the premium; C,
D are unrelated.
Question 12
Proximate cause in insurance refers to:
A. Policy exclusions.
B. Primary cause of loss.
