PERSONAL LINES FINAL EXAM
WITH CORRECT ANSWER S
Question : Statements made in the application are considered:
- Warranties
- Representations
- Possible Concealments
- None of the Above
CORRECT ANSWER : B. Representations
Question : The definition of Risk is:
- Uncertainty regarding loss
- A chance of gain
- Uncertainty regarding gain or profit
- Intended unforseen damage to property for gain or profit
CORRECT ANSWER : A. Uncertainty regarding loss
Question : A financial device for transferring or shifting risk
from an individual or entity to a large group with the same
risk is the definition of:
- Avoidance
- Retention
- Transfer
- Insurance
CORRECT ANSWER : D. Insurance
Question : Hazards include which of the following: 1.Unintended oily rags stacked in a corner 2. A homeowner's carelessness because he has insurance
- 1 only
- 2 only
- Both 1 & 2
- Neither 1 or 2
CORRECT ANSWER : C. Both 1 & 2
Question : The mortgage condition in a property policy: 1.Guarantees that the lending institutions may act for itself in paying a premium 2. Guarantees claim payments will be divided as the interests of the insurance and mortgagee appear
- 1 only
- 2 only
- Both 1 & 2
- Neither 1 nor 2
CORRECT ANSWER : C. Both 1 & 2
Question : Which of the following situations does NOT create
an insurable interest?
- Being named in someone's will as an heir
- Holding a mortgage or lien on property
- Having custody or control of someone else's property
- Owning property
CORRECT ANSWER : A. Being named in someone's will
as an heir
Question : The plumbing in Mrs. Ward's home suddenly burst
and the ceilings were damaged by water. Which of the following homeowner forms would cover the loss?
A. HO1
B. HO2
C. HO4
D. HO7`
CORRECT ANSWER : B. HO2
Question : Nicole has a Personal Auto policy with limits of
10/20/10 for liability coverage. She causes an accident that results in $12,000 bodily injury damages to the other driver and $5,000 in property damage to the other driver's car. How much would Nicole's policy pay for the the BI and PD losses?
A. $15,000
B. $17,000
C. $10,000
D. $12,000
CORRECT ANSWER : A. $15,000
Question : Sally Smith calls her agent, Hubert Dufus, to
purchase flood insurance. Agent Dufus explains to Ms. Smith that flood coverage can be purchased directly through the NFIP or through him. Should Ms. Smith choose to purchase
