AAI 81 B Final EXAM NEWEST 2025-
2026 ACTUAL EXAM QUESTIONS AND
CORRECT DETAILED ANSWERS
(VERIFIED ANSWERS)
Which one of the following statements correctly describes the general framework of homeowners policy
forms?
Select one:
A. They provide monoline coverage for property losses.
B. They provide a package of nonautomobile property and liability insurance coverage for an average
family.
C. They mostly provide coverage for liability losses with some property coverage provided as an
additional coverage.
D. Some cover property losses and others cover both property and liability losses. - CORRECT ANSWERS
B. They provide a package of nonautomobile property and liability insurance coverage for an average
family.
Which one of the following is true regarding the HO-3 policy, Section I, Coverage A—Dwelling?
Select one:
A. The coverage amount for Section A is a minimum amount set by the insurer.
B. Materials and supplies used for construction or repair located on or next to the residence premises
are not covered.
C. The residence premises and land shown in the Declarations are covered.
D. The dwelling includes attached property, such as plumbing, heating and cooling equipment, canopies,
patio coverings, and garages. - CORRECT ANSWERS D. The dwelling includes attached
property, such as plumbing, heating and cooling equipment, canopies, patio coverings, and garages.
Section I—Property Coverage on the HO-3 policy applies to which one of the following motor vehicles?
Select one:
A. Go-cart
B. Riding lawn mower
C. Trail bike
D. Snowmobile - CORRECT ANSWERS B. Riding lawn mower
Which one of the following is true regarding the HO-3 policy, Section I, Coverage D—Loss of Use?
Select one:
A. If the residence premises are not fit to live in, the policy pays any necessary increase in living
expenses incurred to maintain the insured's standard of living.
B. The limit of liability the insurer will pay for Coverage D—Loss of Use is typically 20% of the Coverage A
limit.
, C. Coverage is excluded for necessary living expenses if a civil authority prohibits the insured from using
the residence premises as a result of direct damage to a neighboring premises by a fire loss.
D. Fair rental value of that part of the "residence premises" rented to others is excluded from coverage.
- CORRECT ANSWERS A. If the residence premises are not fit to live in, the policy pays any
necessary increase in living expenses incurred to maintain the insured's standard of living.
Which one of the following grants open perils protection for Coverage A and named perils protection for
Coverage C?
Select one:
A. HO-2
B. HO-3
C. HO-4
D. HO-5 - CORRECT ANSWERS B. HO-3
Which one of the following statements is true of the earth movement exclusion under Section I of the
HO-3 policy?
Select one:
A. Loss ensuing from theft is covered.
B. Loss ensuing from fire and explosion are not covered.
C. Earth movement also means subsidence or sinkhole.
D. Earth movement is excluded only if caused by natural means. - CORRECT ANSWERS C. Earth
movement also means subsidence or sinkhole.
Which one of the following is true of Coverage E—Personal Liability under the HO-3 policy?
Select one:
A. The insurer's duty to settle or defend ends when defense costs for an occurrence exceed the limit of
liability.
B. The minimum limit for Coverage E is $200,000.
C. Coverage is provided for a full-time student who was a resident in the household before moving to
school and is a relative under age 24.
D. Prejudgment interest costs are excluded. - CORRECT ANSWERS C. Coverage is provided for a
full-time student who was a resident in the household before moving to school and is a relative under
age 24.
For insureds who operate an office, service, sales, or crafts business out of the home, comprehensive
business coverage can be provided by attaching which one of the following endorsements to a
homeowners form?
Select one:
A. Permitted Incidental Occupancies—Residence Premises Endorsement HO 04 42
B. Home Business Insurance Coverage Endorsement HO 07 01
C. Business Pursuits Endorsement HO 24 71
D. Home Day Care Coverage Endorsement HO 04 97 - CORRECT ANSWERS B. Home Business
Insurance Coverage Endorsement HO 07 01
2026 ACTUAL EXAM QUESTIONS AND
CORRECT DETAILED ANSWERS
(VERIFIED ANSWERS)
Which one of the following statements correctly describes the general framework of homeowners policy
forms?
Select one:
A. They provide monoline coverage for property losses.
B. They provide a package of nonautomobile property and liability insurance coverage for an average
family.
C. They mostly provide coverage for liability losses with some property coverage provided as an
additional coverage.
D. Some cover property losses and others cover both property and liability losses. - CORRECT ANSWERS
B. They provide a package of nonautomobile property and liability insurance coverage for an average
family.
Which one of the following is true regarding the HO-3 policy, Section I, Coverage A—Dwelling?
Select one:
A. The coverage amount for Section A is a minimum amount set by the insurer.
B. Materials and supplies used for construction or repair located on or next to the residence premises
are not covered.
C. The residence premises and land shown in the Declarations are covered.
D. The dwelling includes attached property, such as plumbing, heating and cooling equipment, canopies,
patio coverings, and garages. - CORRECT ANSWERS D. The dwelling includes attached
property, such as plumbing, heating and cooling equipment, canopies, patio coverings, and garages.
Section I—Property Coverage on the HO-3 policy applies to which one of the following motor vehicles?
Select one:
A. Go-cart
B. Riding lawn mower
C. Trail bike
D. Snowmobile - CORRECT ANSWERS B. Riding lawn mower
Which one of the following is true regarding the HO-3 policy, Section I, Coverage D—Loss of Use?
Select one:
A. If the residence premises are not fit to live in, the policy pays any necessary increase in living
expenses incurred to maintain the insured's standard of living.
B. The limit of liability the insurer will pay for Coverage D—Loss of Use is typically 20% of the Coverage A
limit.
, C. Coverage is excluded for necessary living expenses if a civil authority prohibits the insured from using
the residence premises as a result of direct damage to a neighboring premises by a fire loss.
D. Fair rental value of that part of the "residence premises" rented to others is excluded from coverage.
- CORRECT ANSWERS A. If the residence premises are not fit to live in, the policy pays any
necessary increase in living expenses incurred to maintain the insured's standard of living.
Which one of the following grants open perils protection for Coverage A and named perils protection for
Coverage C?
Select one:
A. HO-2
B. HO-3
C. HO-4
D. HO-5 - CORRECT ANSWERS B. HO-3
Which one of the following statements is true of the earth movement exclusion under Section I of the
HO-3 policy?
Select one:
A. Loss ensuing from theft is covered.
B. Loss ensuing from fire and explosion are not covered.
C. Earth movement also means subsidence or sinkhole.
D. Earth movement is excluded only if caused by natural means. - CORRECT ANSWERS C. Earth
movement also means subsidence or sinkhole.
Which one of the following is true of Coverage E—Personal Liability under the HO-3 policy?
Select one:
A. The insurer's duty to settle or defend ends when defense costs for an occurrence exceed the limit of
liability.
B. The minimum limit for Coverage E is $200,000.
C. Coverage is provided for a full-time student who was a resident in the household before moving to
school and is a relative under age 24.
D. Prejudgment interest costs are excluded. - CORRECT ANSWERS C. Coverage is provided for a
full-time student who was a resident in the household before moving to school and is a relative under
age 24.
For insureds who operate an office, service, sales, or crafts business out of the home, comprehensive
business coverage can be provided by attaching which one of the following endorsements to a
homeowners form?
Select one:
A. Permitted Incidental Occupancies—Residence Premises Endorsement HO 04 42
B. Home Business Insurance Coverage Endorsement HO 07 01
C. Business Pursuits Endorsement HO 24 71
D. Home Day Care Coverage Endorsement HO 04 97 - CORRECT ANSWERS B. Home Business
Insurance Coverage Endorsement HO 07 01
