Objective FPQP® Assessment Guide Exam Questions and
Graded Financial Solutions with Satisfaction Guarantee
2025/2026
Broker - represents the buyer & has allegiance to the client; accountable for any legal
misrepresentation
Types of Homeowners Insurance -correct answer - single family houses (includes
townhomes)
- condominiums
- renters (tenant)
Types of Homeowner's Insurance Policies - correct answer - basic form (HO-1): covers
11 named perils
- broad form (HO-2): covers 18 named perils
- special form (HO-3): most common form
- renter's contents broad form (HO-4)
- condominium form (HO-6)
- older home form (HO-8)
Homeowners Insurance Section I Coverage - correct answer A: Dwelling (home &
other structures attached to the home, as well as limited coverage on landscaping
around the dwelling)
B: Other Structures (shed or barn in the backyard, unattached garages, etc.)
C: Personal Property (furniture, etc.)
D: Loss-of-Use (expenses incurred while the dwelling is uninhabitable due to damage
caused by a covered peril)
Homeowners Insurance Section II Coverage - correct answer E: Personal Liability
(someone slips & falls on ice on your property & tries to sue you, Coverage E would
cover the expenses as long as there is no negligence or moral hazards involved)
,F: Medical Payments to others (doesn't involve negligence; ex. neighbor comes over to
have dinner & accidentally cuts their hand while helping prepare)
What is an Inland Marine Policy? - correct answer used to provide coverage under
Coverage C for personal property that is frequently moved from one location to another,
or for which there is not enough coverage under the homeowners policy (jewelry, furs,
electronics, golf & ski equipment, musical instruments, etc.)
Homeowners coverage should cover at least ___% of the replacement cost of the
home. What is the formula? - correct answer - 80%
[ (amount of ins. carried / amount of ins. required) x loss ] - deductible = settlement
Homeowners Insurance Example p.1
Prisha bought a house for $100,000 15 years ago. She insured the home for $100,000
with a $500 deductible.
Now the home is worth $200,000. Hail damaged the roof at a cost of $20,000. What is
the settlement? - correct answer 200,000 x 80% = 160,000
[ (100,,000) x 20,000 ] - 500 = 12,000
insurance company will pay $12,000 out of the $20,000 needed to repair the roof
Homeowners Insurance Example p.2
If Prisha insured her home for the correct 80% of her homes value at $160,000, what
would the settlement be for the damage to her roof ($20,000)? - correct answer
[ (160,,000) x 20,000 ] - 500 = $19,500
,insurance company will pay $19,500 out of the $20,000 needed to repair the roof
4 Areas of Auto Insurance Coverage - correct answer - liability (protects against legal
liability when you cause the accident)
- medical payments ( pays for medical expenses regardless of personal liability)
- physical damage ( provided for direct & accidental loss to your automobile or any non-
owned automobile you may use)
- uninsured motorists ( protect against those who don't have the required coverage)
Factors that influence the premiums of Personal Auto Policies (PAPs) - correct answer
- age & sex of driver (teenage boys have the "worst" driving records)
- use of vehicle (personal vs work, long vs short commute)
- type of vehicle
- driving record
- credit score
- multiple vehicles
3 Categories of Automobile Loss covered by a PAP - correct answer A: legal liability
B: injury
C: damage to or loss of the automobile
6 Parts of an Automobile Policy - correct answer A: liability coverage
B: medical payments
C: uninsured/underinsured motorist coverage
D: coverage for damage to your automobile (collision insurance)
E: duties after an accident or loss (protocol insurance company would like you to follow
after an accident)
F: general provisions (fraud, etc.)
, What is Umbrella Insurance? - correct answer - designed to provide personal
catastrophe liability protection
- has higher premiums due to higher limit
- protects the insured against both automobile & general liability up to policy limits (e.g.
$2 mil.)
- usually written in increments of $1 mil.
Contributory Negligence vs Comparative Negligence - correct answer Contributory:
failure of the injured party to exercise reasonable care for their safety resulting in an
accident or injury
Comparative: when an accident occurs, the fault and/or negligence of each party
involved is based upon their respective contributions to the accident
What is the purpose of an insurance underwriter? - correct answer to determine
whether an insurance company will cover given risks
What is biggest difference between an insurance agent & a broker? - correct answer
an agent makes the insurance company accountable to info given by the client to the
agent, & the broker does not
What is an annuity? - correct answer A sum of money paid annually or at some other
regular interval, primarily used as an income stream for retirees
How do life insurance companies pay claims and make money? - correct answer
Policy owners pay premiums to receive insurance. The money made from premiums is
put in a Reserves account and some is used to pay claims in the future. Money in the
reserves is also used to pay overhead fees.
When someone dies, the claim is paid from the insurance company to the beneficiary of
policy holder, & then the relationship between the insurance company & policy holder
ceases to exist.
Graded Financial Solutions with Satisfaction Guarantee
2025/2026
Broker - represents the buyer & has allegiance to the client; accountable for any legal
misrepresentation
Types of Homeowners Insurance -correct answer - single family houses (includes
townhomes)
- condominiums
- renters (tenant)
Types of Homeowner's Insurance Policies - correct answer - basic form (HO-1): covers
11 named perils
- broad form (HO-2): covers 18 named perils
- special form (HO-3): most common form
- renter's contents broad form (HO-4)
- condominium form (HO-6)
- older home form (HO-8)
Homeowners Insurance Section I Coverage - correct answer A: Dwelling (home &
other structures attached to the home, as well as limited coverage on landscaping
around the dwelling)
B: Other Structures (shed or barn in the backyard, unattached garages, etc.)
C: Personal Property (furniture, etc.)
D: Loss-of-Use (expenses incurred while the dwelling is uninhabitable due to damage
caused by a covered peril)
Homeowners Insurance Section II Coverage - correct answer E: Personal Liability
(someone slips & falls on ice on your property & tries to sue you, Coverage E would
cover the expenses as long as there is no negligence or moral hazards involved)
,F: Medical Payments to others (doesn't involve negligence; ex. neighbor comes over to
have dinner & accidentally cuts their hand while helping prepare)
What is an Inland Marine Policy? - correct answer used to provide coverage under
Coverage C for personal property that is frequently moved from one location to another,
or for which there is not enough coverage under the homeowners policy (jewelry, furs,
electronics, golf & ski equipment, musical instruments, etc.)
Homeowners coverage should cover at least ___% of the replacement cost of the
home. What is the formula? - correct answer - 80%
[ (amount of ins. carried / amount of ins. required) x loss ] - deductible = settlement
Homeowners Insurance Example p.1
Prisha bought a house for $100,000 15 years ago. She insured the home for $100,000
with a $500 deductible.
Now the home is worth $200,000. Hail damaged the roof at a cost of $20,000. What is
the settlement? - correct answer 200,000 x 80% = 160,000
[ (100,,000) x 20,000 ] - 500 = 12,000
insurance company will pay $12,000 out of the $20,000 needed to repair the roof
Homeowners Insurance Example p.2
If Prisha insured her home for the correct 80% of her homes value at $160,000, what
would the settlement be for the damage to her roof ($20,000)? - correct answer
[ (160,,000) x 20,000 ] - 500 = $19,500
,insurance company will pay $19,500 out of the $20,000 needed to repair the roof
4 Areas of Auto Insurance Coverage - correct answer - liability (protects against legal
liability when you cause the accident)
- medical payments ( pays for medical expenses regardless of personal liability)
- physical damage ( provided for direct & accidental loss to your automobile or any non-
owned automobile you may use)
- uninsured motorists ( protect against those who don't have the required coverage)
Factors that influence the premiums of Personal Auto Policies (PAPs) - correct answer
- age & sex of driver (teenage boys have the "worst" driving records)
- use of vehicle (personal vs work, long vs short commute)
- type of vehicle
- driving record
- credit score
- multiple vehicles
3 Categories of Automobile Loss covered by a PAP - correct answer A: legal liability
B: injury
C: damage to or loss of the automobile
6 Parts of an Automobile Policy - correct answer A: liability coverage
B: medical payments
C: uninsured/underinsured motorist coverage
D: coverage for damage to your automobile (collision insurance)
E: duties after an accident or loss (protocol insurance company would like you to follow
after an accident)
F: general provisions (fraud, etc.)
, What is Umbrella Insurance? - correct answer - designed to provide personal
catastrophe liability protection
- has higher premiums due to higher limit
- protects the insured against both automobile & general liability up to policy limits (e.g.
$2 mil.)
- usually written in increments of $1 mil.
Contributory Negligence vs Comparative Negligence - correct answer Contributory:
failure of the injured party to exercise reasonable care for their safety resulting in an
accident or injury
Comparative: when an accident occurs, the fault and/or negligence of each party
involved is based upon their respective contributions to the accident
What is the purpose of an insurance underwriter? - correct answer to determine
whether an insurance company will cover given risks
What is biggest difference between an insurance agent & a broker? - correct answer
an agent makes the insurance company accountable to info given by the client to the
agent, & the broker does not
What is an annuity? - correct answer A sum of money paid annually or at some other
regular interval, primarily used as an income stream for retirees
How do life insurance companies pay claims and make money? - correct answer
Policy owners pay premiums to receive insurance. The money made from premiums is
put in a Reserves account and some is used to pay claims in the future. Money in the
reserves is also used to pay overhead fees.
When someone dies, the claim is paid from the insurance company to the beneficiary of
policy holder, & then the relationship between the insurance company & policy holder
ceases to exist.
