PERSONAL LINES INSURANCE EXAM QUESTIONS WITH COMPLETE ANSWERS /DETAILED REVIEW {2025/2026 EDITION} GRADED A+

1. An insurance solicitor may be employed by only one agent / broker at any one time. True or False? - ANSWER True 2. Surplus line brokers transact business with ___________ insurers. - ANSWER Non admitted 3. __________ is the termination of a contract from the beginning. as if it never existed. - ANSWER Rescission 4. A standard market insurer is an insurer that offers rates for insurance coverage to insureds who have an average, or better than average loss experience. True or False? - ANSWER True 5. Materiality of representation is determined by the same rule as materiality of a concealment. True or False? - ANSWER True 6. The making of claim payments by an insurer that are not accompanied by statements containing the coverage, under by which payments are being made is an unfair claim settlement practice. True or False? - ANSWER True 7. An auto insurer may require that an automobile be repaired at a specific repair shop. True or False? - ANSWER False 8. Agents are required to keep records of any compensation they accept for their services involving premium financing. True or False? - ANSWER True 9. It is permissible for a person engaged in the business of financing the purchase of real or personal property to require the purchaser to obtain insurance for such property through a particular agent or broker. True or False? - ANSWER False 10. Applicants for a fire and casualty broker / agent license must obtain ___ hours of classroom instruction on fire and casualty topics, and ___ hours of instruction on ethics and code. - ANSWER 40 12 11. A personal lines licensee may write umbrella or excess liability coverage over one or more underlying auto or residential property insurance policies. True or False? - ANSWER True 12. The insurance department may deny any agents license application without a hearing if the applicant has had a previous license application denied for cause within ___ years. - ANSWER 5 13. A licensee's appointment becomes effective on the date it is signed by the _______. - ANSWER Insurer 14. An agents license is considered ________ when he / she has paid renewal fees but no insurer appointment is in force. - ANSWER Inactive 15. An individual licensed as both a fire and casualty agent / broker and life and / or accident and health agent can satisfy the continuing education requirement by completing courses approved for either license. True or False? - ANSWER True 16. The commissioner may not disapprove of the use of any name that a licensee may use if that name is their true name. True or False? - ANSWER False 17. Every licensee must __________ notify the commissioner, in writing, of any change of address. - ANSWER Immediately 18. A person advertising on the internet and providing an insurance premium quote to a California resident is deemed to be transacting the business of insurance in California. True or False? - ANSWER True 19. The California insurance code states that any person may be insured, except a ______ _____. - ANSWER Public Enemy 20. Market conduct regulations are state laws that regulate insurer practices regarding, underwriting, sales, rate making, and claims handling. True or False? - ANSWER True 21. Those risks that are located in a designated hazardous brush area are eligible for the FAIR plan. True or False? - ANSWER True 22. The california FAIR plan may be sold by all licensed fire and casualty brokers-agents. True or False? - ANSWER True 23. The determination of acceptable risks is the primary function of the ___________. - ANSWER Underwriter 24. in insurance, wet leaves allowed to remain on a homeowner's sidewalk could be considered a ________ hazard. - ANSWER Physical 25. ____ is defined as the uncertainty concerning a loss. - ANSWER Risk 26. when the number of similar units increases, the predictability of the loss improves according to the _______ of __________ _____. - ANSWER Law Of Large Numbers 27. _______ reinsurance is accepted or rejected on a case by-case basis. - ANSWER Facultative 28. The insuring of risks that are more prone to losses than average risks is know as ______ ______. - ANSWER Adverse Selection 29. Risk _________ is one takes action to prevent or reduce potential loss. - ANSWER Reduction 30. If a property owner does not desire any deduction for depreciation following a covered loss, he/she should purchase a ___________ ____ policy. - ANSWER Replacement Cost 31. For replacement cost coverage to apply in dwelling policies, the insured must carry insurance at least equal to ____% of the cost of replacement of the building. - ANSWER 80 32. Would a stated amount method of valuation likely be used when insuring gold bullion? - ANSWER No 33. An ____ policy is one that the value of the subject matter is not agreed upon, but is left to be ascertained in case of loss. - ANSWER Open 34. A valued policy is one that expresses on it's face an agreement that the thing insured is valued at a specific sum. True or False? - ANSWER True 35. Insuring more than one property on one policy for a single amount of insurance that applies to all properties covered under the policy is known as _______ coverage. - ANSWER Blanket 36. The name of the insured is found on the declarations page of the policy. True or False? - ANSWER True 37. What part or portion of a property policy contains the effective or expiration dates of the policy? - ANSWER Declarations 38. Are the insurer's limits of insurance amount stated in the conditions part or portion part of the policy? - ANSWER No 39. The __________ part or portion of a property policy sets forth the rights, rules, duties, and obligations of the insurer and insured to be followed throughout the policy period. - ANSWER Conditions 40. The ______________ Clause allows insurers to automatically broaden coverage without endorsement on existing policies with no increase in premium. - ANSWER Liberalization 41. When a property policy has been in effect less than 60 days and the insurer cancels for the nonpayment of premium, the insurer must give the insured ____ days written notice. - ANSWER 10 42. Could an order to vacate the property possibly cause an insurer to cancel a commercial property policy? - ANSWER Yes 43. An insurer may non renew a homeowners policy with oral notice to the insured. True or False? - ANSWER False 44. The insured's transfer of right of ownership or interest in an insurance policy to another party with the insurer's written consent is known as an __________. - ANSWER Assignment 45. ___________ transfers an insured's legal right of recovery to the insurer that paid the claim. - ANSWER Subrogation 46. When an insured suffers a loss, they are required to prepare an inventory of the damaged property at the ________ request. - ANSWER Insurers 47. In the event of a loss under a homeowners policy, a proof of loss must be signed and sworn by the _______. - ANSWER Insured 48. Company A has issued a policy in the amount of $200,000, and company B has issued a policy in the amount of $300,000. under the other insurance or pro rata liability condition or provision, how much will company A pay of a $100,000 loss? - ANSWER $40,000 49. The _________ portion of the policy specifies the causes of loss perils not covered, or property not covered. - ANSWER Exclusions 50. An amendment that is attached to a property insurance policy to broaden or restrict coverage, or further define certain policy provisions is known as a(n) ___________. - ANSWER Endorsement 51. Under a commercial lines property policy, who is responsible for making the premium payments in a timely manner? - ANSWER First Named Insured 52. Under a commercial lines property policy, who has the right to request changes to the policy, and the right to receive any return of premium? - ANSWER First Named Insured 53. Essentially, the higher the deductible that the insured chooses, the higher the premium will be. True or False? - ANSWER False 54. Whenever a personal property policy is cancelled or surrendered the unearned premium is to be tendered to the insured, or insurance agent of record for the transmittal to the insured, within ____ days of the cancellation or surrender. - ANSWER 25 55. A dwelling containing 5 apartment units would be eligible for coverage under a dwelling policy. True or False? - ANSWER False 56. Losses to the dwelling, other structures, and contents are paid on an actual cash value basis under a DP-1. - ANSWER True Smoke damaged caused from nearby industrial operations is or is not covered under a DP-2 broad form. - ANSWER Is Not In the event of a loss, the DP-2 broad form pays for damage to the dwelling on a ___________ ____ basis. - ANSWER Replacement Cost Under a DP-3 special form, fixtures that are apart of a dwelling which is not under construction or that has not been vacant for more than 30 days are covered for theft. True or False? - ANSWER True The covered causes of loss constitute the major differences between the dwelling forms. True or False? - ANSWER True