OpenExamsFREE PRACTICE — ANY EXAM

Free Personal Lines Agent Practice Questions

201 free questions · Answer explanations · No signup required

View examination details, outline and sources

Loading selected examination banks…

Sample Practice Questions

Try these 10 sample questions from the Personal Lines Agent practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

  1. 1Under North Carolina's certificate-of-insurance law, may a certificate amend or extend the coverage afforded by the referenced policy?

    1. A. Yes, whenever requested by a certificate holder
    2. B. Yes, if signed by a producer
    3. C. Only for residential property
    4. D. No

    Answer: D

    Explanation: G.S. 58-3-149(b) states that a certificate "does not amend, extend, or alter the coverage afforded by the policy."

    Reference: Ncgs Chapter 58 — G.S. 58-3-149(b)

  2. 2What valuation starting point does North Carolina's standard fire policy use for covered property at the time of loss?

    1. A. Replacement cost without limitation
    2. B. Actual cash value
    3. C. Original purchase price
    4. D. Tax-assessed value

    Answer: B

    Explanation: G.S. 58-44-16(f)(1) insures "to the extent of the actual cash value of the property at the time of loss."

    Reference: Ncgs Chapter 58 — G.S. 58-44-16(f)(1)

  3. 3For the personal auto policy's physical-damage definition, which borrowed car is a non-owned automobile when driven by the named insured?

    1. A. A neighbor's car borrowed once and not available for regular family use
    2. B. A spouse's car owned within the insured's household and driven regularly
    3. C. The named insured's second car listed in the policy declarations
    4. D. An employer's car furnished to the insured for regular daily use

    Answer: A

    Explanation: NC DOI describes a non-owned auto as a private passenger automobile "not owned by or furnished or available for the regular use of you or any family member" while in the family member’s custody or operation. Occasional borrowing fits; ownership or regular availability defeats the definition in the other choices.

    Reference: North Carolina Department of Insurance, Basic and Miscellaneous Auto Coverages — Coverage for Damage to Your Auto, non-owned automobile definition

  4. 4Which losses must a real-property warranty described by G.S. 58-1-20(a)(2) exclude from coverage?

    1. A. Losses from defective parts and mechanical failure
    2. B. Losses from ordinary wear and tear
    3. C. Losses from recognizable perils such as fire, flood, and wind
    4. D. Losses requiring repair or replacement of covered items

    Answer: C

    Explanation: G.S. 58-1-20(a)(2) requires the warranty to exclude damage from "recognizable perils, such as fire, flood, and wind."

    Reference: Ncgs Chapter 58 — G.S. 58-1-20(a)(2)

  5. 5An insurer estimates the chance that a house will suffer a covered loss during the coming policy year. Which insurance concept is being estimated?

    1. A. The property's risk of loss
    2. B. The peril that causes a loss
    3. C. A hazard that increases loss
    4. D. The indemnity paid after loss

    Answer: A

    Explanation: The regulator glossary defines risk as "The chance that a loss will occur." The estimate concerns likelihood before any loss. A peril is a cause; a hazard changes likelihood; indemnity is the response to a loss.

    Reference: Washington Office of the Insurance Commissioner, A Consumer's Insurance Glossary — Risk

  6. 6For how many days may the standard fire policy cover property necessarily removed to a proper place for preservation from an insured peril?

    1. A. Three days
    2. B. Five days
    3. C. Ten days
    4. D. Thirty days

    Answer: B

    Explanation: G.S. 58-44-16(f)(1) provides coverage "pro rata for five days at each proper place" to which property is necessarily removed.

    Reference: Ncgs Chapter 58 — G.S. 58-44-16(f)(1)

  7. 7A named insured's covered auto is in a repair shop after a breakdown. Which use of another car fits the temporary-substitute condition in the personal auto policy's physical-damage wording?

    1. A. Borrowing a neighbor's car while the covered auto is being repaired
    2. B. Borrowing a neighbor's car while the covered auto is available at home
    3. C. Buying another car to replace the covered auto permanently
    4. D. Using an employer's regularly furnished car for a normal commute

    Answer: A

    Explanation: DOI includes an auto not owned by the insured when used as a "temporary substitute for your covered auto because of its breakdown, repair, servicing, loss or destruction." A is tied to repair and temporary replacement. The other cars lack that condition or are permanently owned or regularly furnished.

    Reference: North Carolina Department of Insurance, Basic and Miscellaneous Auto Coverages — Coverage for Damage to Your Auto, temporary substitute definition

  8. 8For the North Carolina warranty statute, when must an item be movable to qualify as goods?

    1. A. Only when the warranty expires
    2. B. At the time of sale or when the buyer takes possession
    3. C. Only after it becomes part of real property
    4. D. When the Commissioner approves the warranty

    Answer: B

    Explanation: G.S. 58-1-15(a)(1) defines goods as things that are "moveable at the time of sale or at the time the buyer takes possession."

    Reference: Ncgs Chapter 58 — G.S. 58-1-15(a)(1)

  9. 9A homeowner leaves faulty electrical wiring unrepaired and becomes less careful because the home is insured. What insurance concept best describes the changed behavior?

    1. A. An insured peril causing physical damage
    2. B. A morale hazard increasing loss likelihood
    3. C. An indemnity restoring a prior position
    4. D. A deductible retained after a loss

    Answer: B

    Explanation: The NAIC describes morale hazard as diminished prevention incentives, including "failing to repair faulty electrical wiring." The homeowner’s behavior increases the likelihood of loss; it is not the fire peril, a payment principle, or a claim deductible.

    Reference: NAIC, A Regulator's Introduction to the Insurance Industry — Chapter 2, Moral Hazard, p. 11

  10. 10Does the standard fire policy's loss measure include increased repair cost caused by an ordinance or law?

    1. A. Yes, automatically and without limit
    2. B. No, the standard text excludes that increased cost
    3. C. Only when the producer approves it
    4. D. Only for inland marine property

    Answer: B

    Explanation: G.S. 58-44-16(f)(1) applies the loss measure "without allowance for any increased cost of repair or reconstruction by reason of any ordinance or law."

    Reference: Ncgs Chapter 58 — G.S. 58-44-16(f)(1)

Topics in this practice bank

These topics describe the available practice for Personal Lines Agent. Review the examination outline and its sources for scope and allocation details.

  • I. TERMS AND CONCEPTS .............................................. 11
    • A. Risk
    • B. Hazard
    • C. Peril
    • D. Economic Loss
    • E. Indemnity
    • F. Insurable Interest
    • G. Deductible
    • H. Direct loss vs. Indirect loss (loss of use)
    • I. Named peril vs. Open peril
    • J. Specific vs. blanket coverage
    • K. Property loss valuation
    • K.1. Actual Cash Value
    • K.2. Replacement cost
    • K.3. Functional replacement cost
    • K.4. Salvage value
    • L. Mortgagee/loss payee
    • M. Misrepresentation, breach of warranty, concealment
    • N. Negligence, liability, and supplementary payments
    • O. Bodily injury, property damage, personal injury
    • P. Accident/Occurrence
    • Q. Liability Limits: single and split
    • R. Certificate of Insurance
    • S. Binder
    • T. Endorsement
    • U. Liberalization clause
    • V. Major classes of policy provisions
    • V.1. Declarations
    • V.2. Definitions
    • V.3. Insuring agreements
    • V.4. Exclusions/Waiver
    • V.5. Conditions
    • W. Insurance
    • X. Application
    • Y. Subrogation
    • Z. Adhesion
    • AA. Consent to Rate
  • II. PERSONAL INSURANCE COVERAGES...................... 30
    • A. Standard Fire Policy ............................................... 5
    • A.1. Perils and losses covered and excluded
    • A.2. Inception/expiration
    • A.3. Limitations on amount payable
    • A.3.a. Policy limit
    • A.3.b. Actual Cash Value
    • A.3.c. Cost to repair or replace
    • A.3.d. Pro rata liability
    • A.3.e. Interest of the insured
    • A.4. Insurer’s options in the loss settlement
    • A.5. Concealment, misrepresentations, fraud
    • A.6. Requirements in the event of loss
    • A.7. Appraisal
    • A.8. Subrogation
    • A.9. Suit against the company
    • A.10. Abandonment
    • A.11. Waiver
    • B. Basic (DP-1), Broad (DP-2), and Special (DP-3) dwelling property forms ......................................... 4 (The candidate should be able to compare the major features of these forms.)
    • B.1. General nature and eligibility
    • B.2. Coverage items and other coverages
    • B.3. Property excluded
    • B.4. Perils covered and excluded
    • B.5. Other conditions and provisions (e.g., loss settlement subrogation)
    • B.6. Personal Liability and Theft Coverages
    • C. Homeowner’s policies (including amendatory endorsements) ........................................................ 15 Ref: This section is based on the North Carolina Rate Bureau Forms as adapted from the HO-2011 program of the Insurance Services Offices.
    • C.1. Eligibility and forms available
    • C.2. Definitions
    • C.3. Section I (The candidate should be able to analyze and compare the several Homeowners policies with respect to the following items.)
    • C.3.a. Coverage items and additional coverages
    • C.3.b. Property limited or excluded
    • C.3.c. Perils covered and excluded
    • C.3.d. Relationship among amounts of insurance
    • C.3.e. Loss settlement
    • C.3.f. Other conditions
    • C.4. Section II
    • C.4.a. Liability insuring agreement and exclusions
    • C.4.b. Medical payments insuring agreement and exclusions
    • C.4.c. Additional coverages
    • C.4.d. Section II conditions
    • C.5. Conditions applicable to Sections I and II
    • C.6. Frequently Used Homeowner endorsements
    • C.6.a. Scheduled personal property (personal articles floater) Ref: HO-04-61
    • C.6.b. Personal injury Ref: HO-32-82
    • C.6.c. Personal property replacement cost Ref: HO-04-90
    • C.6.d. Permitted incidental occupancies Ref: HO-04-42
    • C.6.e. Watercraft Ref: HO-24-75
    • C.6.f. Water Back Up and Sump Discharge or Overflow Ref: HO-04-84
    • C.6.g. Refrigerated property coverage Ref: HO-04-98
    • C.7. North Carolina amendatory endorsements (mandatory)
    • C.7.a. Special provisions HO-32-32
    • C.7.b. Home day care business liability exclusions and limited property coverage HO-32-96
    • D. Other personal policies .......................................... 1
    • D.1. Mobile Homeowners Policy
    • E. Flood Insurance ...................................................... 3 (The candidate is not responsible for differences in the Flood Program’s treatment of personal exposures and commercial exposures.)
    • E.1. National Flood Insurance Program
    • E.1.a. Background and purpose
    • E.1.k. Programs
    • E.1.k.4) Emergency
    • E.1.k.5) Regular
    • E.1.k.6) Who needs flood insurance
    • E.1.l. Flood maps and zone determinations
    • E.1.m. Policies available
    • E.1.n. Definitions
    • E.1.o. General rules
    • E.1.p. Rating
    • E.1.q. Claims handling process
    • E.1.r. Write your own company
    • E.3. Excess flood insurance
    • E.4. Private flood insurance
    • F. Watercraft/yacht ...................................................... 1
    • F.1. Hull coverage
    • F.2. Liability (protection and indemnity) coverage
    • G. Personal umbrella liability ..................................... 1
    • G.1. General nature
    • G.2. Underlying coverages
    • G.3. Self-Insured retention
  • III. PERSONAL AUTO POLICY (NORTH CAROLINA RATE BUREAU FORM) ................................................. 15
    • A. General nature and eligibility
    • B. Definitions
    • B.1. Named insured
    • B.2. An insured
    • B.3. Covered automobile
    • B.3.a. Non-owned
    • B.3.b. Temporary substitute
    • C. Standard coverages, parts A through D (The candidate should have knowledge of the insuring agreement, exclusions, and other items of the coverage listed below.)
    • C.1. Liability
    • C.2. Medical payments
    • C.3. Uninsured motorists/underinsured motorists
    • C.4. Damage to your auto (physical damage)
    • C.5. Insured’s duties
    • C.6. General provisions
    • D. Other coverages available
    • D.1. Towing and labor Ref: NC 03 03
    • D.2. Extended transportation expenses Ref: NC 03 02
    • D.3. Extended non-owned coverage Ref: NC 03 06
    • D.4. Coverage for Damage to Your Auto Ref: NC 03 15
  • IV. NORTH CAROLINA STATUTES AND REGULATIONS PERTINENT TO PERSONAL LINES ............................. 24
    • A. Contract of Insurance Ref: Article 1 (G.S. 58-1-10)
    • B. Commissioner of Insurance Ref: Article 2 (G.S. 58-2-5, 40, 50, 60, 65, 69, 70, 75, 155, 160, 161, 162, 163, 180, 185, 195, 200); 11 NCAC, Chapter 19, Section .0103
    • C. General Regulations for Insurance Ref: Article 3 (G.S. 58-3-10, 15, 25, 40, 115, 120, 130, 135, 140, 145)
    • D. Licensing of Agents, Limited Representatives, and Adjusters Ref: Article 33 (G.S. 58-33-1, 5, 10, 17, 20, 26, 31, 32, 40, 46, 50, 56, 60, 66, 70, 75, 76, 80, 82, 83, 85, 95, 100, 105, 110, 115, 120, 125, 130, 132, 135); 11 NCAC, Chapter 4, Section .0423
    • E. Insurance Information & Privacy Protection Act Ref: Article 39 (G.S. 58-39-5 through 58-39-120)
    • F. Regulation of Credit Insurance Ref: Article 57 (G.S. 58-57-65)
    • G. Unfair Trade Practices Ref: Article 63 (G.S. 58-63-15, 20, 50)
    • H. False Pretenses and Cheats Ref: Article 19 (G.S. 14-100)
    • I. Continuing Education Ref: 11NCAC, Chapter 6A, Section .0800; 11 NCAC, Chapter 4, Section .0423
    • J. North Carolina Rate Bureau Ref: Article 36 (G.S. 58-36-1, 15, 20, 25, 30, 45, 55, 65, 75, 80)
    • K. North Carolina Motor Vehicle Reinsurance Facility Ref: Article 37 (G.S. 58-37-1,5, 25, 30, 35, 50, 55, 60)
    • L. General Regulations of Business Ref: Article 43 (G.S. 58-43-5, 10)
    • M. Fire Insurance Policies Ref: Article 44 (G.S. 58-44-1, 5, 30)
    • N. Essential Property Insurance for Beach Area Property Ref: Article 45 (G.S. 58-45-1, 5, 10, 15, 35)
    • O. Fair Access to Insurance Requirements Ref: Article 46 (G.S. 58-46-1, 5, 10, 15)
    • P. Post Assessment Insurance Guaranty Association Ref: Article 48 (G.S. 58-48-5, 10, 25, 35)
    • Q. Motor Vehicle Liability Policy Defined Ref: (G.S. 20-279.21); 11 NCAC, Chap. 4, Section .0415
    • R. Cancellation or Nonrenewal of Motor Vehicle Policy Ref: (G.S. 20-310)
    • S. Consumer Division Ref: II NCAC, Chapter 4, Subsections .0120, .0121, .0122, .0415, .0423, .0429

How to use these free practice questions

Choose an answer, check the explanation, and review your progress by chapter. Practice questions and explanations are free to access without signing up.

These are independent study questions, not actual examination items. For examination requirements and official information, view Personal Lines Agent details.