Personal Lines Insurance Test
1. A situation in which some kind of loss is possible is referred to as:
A.
B.
C.
D.
Insurability
Risk
Transference
Intangibility
2. Insurance handles risk by
A.
B.
C.
D.
Reducing it
Avoiding it
Transferring it
Ignoring it
3. An insurance policy is a contract between an insured and an insurer in which
A.
B.
C.
D.
Specific future losses will be covered in exchange for payment
Risk of loss is reduced
Payments are sure to increase
None of the above
4. The payments an insured makes to an insurer are called
A.
B.
C.
D.
Product options
Benefits
Premiums
Deductibles
5. Which of the following is not an unfair claim settlement practice?
A.
B.
C.
D.
Misrepresentation of pertinent facts of policy
Failing to promptly acknowledge, settle, or deny a claim
Rebating
Attempting to settle a claim for less than entitled in insured policy
6. What type of hazard is a deliberate creation of loss by an insured in order to collect
insurance payment or benefits?
A.
B.
C.
D.
Morale hazard
Physical hazard
Moral hazard
Legal hazard
7. Which statement about state regulation of insurance is correct?
A. Rate structures may be excessive but not discriminatory
B. Different rates may be charged to groups of policyholders who pose different
degrees of risk
C. Companies may offer discount rates that cover costs but do not show a profit
D. States strictly regulate how much money is spent to advertise insurance products
8. What part of the policy structure answers the following, “Who, what, when, where, and
what limits?”
A.
B.
C.
D.
Injuring clause
Declaration
Definitions
Conditions
9. For a partial property loss to be paid at replacement cost, what percentage of the
market value of the home has to be insured?
A.
B.
C.
D.
100%
90%
80%
70%
10. Which of the following is a basic perils exclusion?
A.
B.
C.
D.
Fire
Lightning
Explosion
Falling object
11. In a homeowner’s policy, what is Coverage D?
A.
B.
C.
D.
Dwelling
Other structure
Loss of use
Personal property
12. What coverage pays for damage to your auto when it collides with something or
overturns?
A.
B.
C.
D.
Comprehensive
Collision
Liability
Uninsured motorist
13. Which of the following would be classified as personal property?
A.
B.
C.
D.
Woodsheds
Garage door openers
Snowmobiles
Hedges
14. Which names below are well-known insurance rating services?
A.
B.
C.
D.
Standard & Poor’s and A.M. Best
Procter & Gamble and Johnson & Johnson
Medicaid and Medicare
Crosse and Blackwell and Caswell-Massey
15. Auto insurance premiums may vary according to
A.
B.
C.
D.
The driver’s age, gender, and driving record
The vehicle’s safety features and theft rating
Geographic location and the use of the vehicle
All of the above
16. The basic parts of auto insurance coverage includes
A.
B.
C.
D.
Liability, medical expenses, property damage, uninsured/underinsured motorist
The insured, the insurer, the beneficiary
Personal injury, property damage, loss of use, and liability
Declarations, coverages, exclusions, conditions, and definitions
17. Both homeowner’s and renter’s insurance would cover
A.
B.
C.
D.
Damage to the insured’s dwelling
Damage to detached structures
Personal property stolen while the policyholder is on vacation
All of the above
18. Covered expenses for loss of use do NOT include
A.
B.
C.
D.
A rental home or hotel room
Meals
Entertainment
Parking
19. Personal liability coverage added to your homeowner’s policy protects against
A. Damage to someone else’s property caused by a member of your household or
your pet
B. Physical injury to someone that occurs on your property
C. Physical injury to someone caused by a member of your household or your pet
D. All of the above
20. Which set of factors will increase the price of homeowner’s insurance?
A.
B.
C.
D.
Newer home, brick construction
Wood frame construction, volunteer fire department
Two-adult household, whole-home security system
Contents insured for actual cash value, low claim frequency