Practice Exam

Question 1

The AZ Dept of Insurance does all of the following EXCEPT:

Answer 1

recommend insurance products to the public.

Question 2

To reduce insurance cost, Brittany wants to replace her HO3 policy with a standard dwelling policy. Although the premium will be lower, the dwelling policy will NOT include:

Answer 2

Liability and theft coverage

Question 3

Lupe must replace your car’s tires. Why will her personal auto policy’s physical damage coverage (collision and other than collision coverage) cover this expense?

Answer 3

Vandals cut them.

Question 4

Which is NOT a reason for a homeowner to buy a dwelling policy instead of a homeowner’s policy?

Answer 4

The dwelling policy provides more comprehensive coverage for less premium period

Question 5

Which of the following types of agent authority arises from the impression that the public has about the agent and his or her duty to the principal?

Answer 5

Apparent

Question 6

In a standard insurance sales transaction involving an applicant, a producer, and an insurance company, which party is the offer?

Answer 6

Applicant

Question 7

The Terrorism Risk Insurance Act (TRIA) does not compel insurance companies to offer coverage for certified acts of terrorism and which of the following lines of insurance?

Answer 7

Homeowners

Question 8

It would cost $500,000 to replace angels home today with an identical home at the same location. According to her HO3 policy, no depreciation will be deducted when settling a loss if she buys coverage of at least:

Answer 8

$400,000

Question 9

Maurice’s personal auto policy on the family car lists him as the name insured. His wife, Sondra, is involved in an accident while using the car as a Charity Organization volunteer. The injured parties sues Maurice, Sondra, and Charity Organization. Which is insured under the policies liability coverage?

Answer 9

Maurice, Sondra, and Charity Organization

Question 10

What kind of insurer involves mutual agreements to indemnify the insurance from loss?

Answer 10

Reciprocal Insurer

Question 11

Quentin has a standard HO3 policy with no endorsements. Assuming appropriate insurance to value, loss to which of the following items would be settled on the basis of its replacement cost?

Answer 11

Brick workshop building in the backyard

Question 12

A house is struck by lightning during a thunderstorm, which starts a fire. The house stands in a floodplain and the basement fills with water from the storm. The homeowner files a claim on her homeowners insurance policy, which excludes losses from floods. What is true about her coverage?

Answer 12

It will cover the loss.

Question 13

How many motor vehicle identification cards must an insurer issue for auto liability policies?

Answer 13

At least two

Question 14

When applying for a business owners insurance policy, Brandy did not mention the hazardous and illegal activity that goes on in the back room of her shop because she realized no insurer that knew about it wouldn’t share her business. What is Brandy’s failure to disclose the activity considered?

Answer 14

Concealment

Question 15

And insurer that fails to pay a claim in a timely manner will owe interest on the amount due from the date on which the:

Answer 15

Insurer received a claim.

Question 16

Floyd is in an auto accident. Which is NOT among the duties that his personal auto policy (PAP) imposes upon him?

Answer 16

Negotiate a settlement with the other driver

Question 17

A notice of policy cancellation will not be effective if:

Answer 17

Notices made only verbally to the insured.

Question 18

Because the wording of a typical insurance policy is drafted by an insurance company and offer to insurance buyers on a take-it-or-leave-it basis, insurance policies are considered:

Answer 18

Contracts of adhesion

Question 19

A tree limb puts a hole in Leslie’s roof, so she buys a tarp and hires a handyman to place it over the hole. She then notifies her insurance company that provides her HO3 policy. What will the insurer do?

Answer 19

It will pay for the tarp and it’s installation under the reasonable repairs additional coverage.

Question 20

Which incident that resulted in a liability claim against Ada did NOT involve “bodily injury” as defined in her homeowner’s insurance policy?

Answer 20

A neighbor’s reputation was harmed by rumors Ada spread.

Question 21

Phoebe rents her home. She loses control of her car on the icy driveway and crashes into the garage door. It will cost $1,000 to repair or replace the door. The property damage liability coverage of Phoebe’s personal auto policy will:

Answer 21

Pay for the damage

Question 22

A miscellaneous type vehicle endorsement such as PP 13 69 might be included when the miscellaneous type vehicle is which of the following?

Answer 22

Golf cart

Question 23

Colby mows lawns and shovels snow after high school to save money for college. He is insured under his parents homeowners insurance policy. The liability coverage of this policy contains a business exclusion. What effect, if any, will this exclusion have on bodily injury or property damage claims against Colby as a result of his business activities?

Answer 23

The exclusion has no effect in Colby is covered.

Question 24

Making sure a recommended insurance product matches a customer’s needs and circumstances means determining the products:

Answer 24

Suitability

Question 25

Carolyn is a resident of Phoenix Arizona. Although she moves to Albuquerque New Mexico on October 1st she keeps an office in Phoenix and wants to maintain her Arizona producer’s license as a non-resident of the state. What is the first thing she should do after she moved?

Answer 25

Notify the Arizona directive Insurance of her move by October 31st

Question 26

Esther, an underwriter for QRS insurance company, is not able to provide the coverage requested in Benny’s insurance application. Esther can reject the application or she can:

Answer 26

Make a counter offer

Question 27

Lorraine was parking her car when her brakes failed and she struck the car next to her which was owned by Marty. In this case all the following statements are correct EXCEPT:

Answer 27

The rolling of Lorraine’s car into Marty’s car was the proximate cause of the damage.

Question 28

How much advance notice must an insurance company give its policy holder before it cancels a personal auto policy?

Answer 28

At least 10 days

Question 29

Greg’s business is covered by an open perils property insurance policy but he is concerned that the policy excludes coverage for flood and earthquake losses. What might Greg purchase to obtain flood and earthquake coverage?

Answer 29

A difference-in-conditions policy

Question 30

Riley’s coupe is insured with a personal auto policy that includes liability, uninsured motorists, and other than collision coverages. He buys a new sedan and wants collision coverage on it. Which statement is true about his coverage?

Answer 30

He must notify the insurer about the newly acquired sedan within 4 days.

Question 31

Arizona special provisions may also modify a homeowner’s insurance policy. For instance which of the following statements is NOT true about the changes provided under a policy HO 01 02 form?

Answer 31

And insurer may not refuse to renew the insurance policy

Question 32

Because he doesn’t own an airplane Larry thinks it is silly that his homeowner’s policy insurance contains several exclusions that apply to an aircraft. What is the purpose of these exclusions?

Answer 32

To remove coverage not needed by a typical insured

Question 33

Which of the following pieces of federal legislation controls the manner in which businesses treat consumer information when it is used for insurance purposes?

Answer 33

Fair Credit Reporting Act

Question 34

4 years after he was injured in an auto accident due to another driver’s negligence Archie must undergo treatment for a spinal deformity caused by the accident. He submits a claim under the medical payments provision of his personal auto policy. Why does the insurer deny the claim?

Answer 34

Archie’s medical expenses were incurred more than 3 years after the date of the accident.

Question 35

Pierce homeowner’s policy often refers to “we”. He correctly determines that “we” means:

Answer 35

The insurance company