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Arizona Personal Lines Practice Exam

20 exam-style questions drawn from the same bank as our full Arizona Personal Lines course (Arizona Insurance Producer — Personal Lines — Exam Prep). Answer all 20, then grade yourself — most state exams require 70% to pass. Explanations for every question are part of the full course.

1. An insured with PIP and med pay is injured in a no-fault state. Coordination of these first-party coverages typically works as follows:
Both PIP and med pay pay pro-rata from the first dollar of incurred medical expense under the standard same-policy first-party benefit-coordination rulePIP pays first as the statutory no-fault benefit; med pay pays excess of PIP up to its own limitOnly one of the two coverages may be elected at policy issuance, the insured cannot carry both PIP and med pay together under filed-policy form restrictionsMed pay pays first because it is contractual coverage purchased by the insured; PIP coverage is treated as residual statutory benefit excess to med pay
2. The rule that an insured may not collect more than the actual loss, even when the same loss is covered by more than one policy, is a direct consequence of:
The anti-concurrent-causation clause in the formThe reasonable expectations doctrine of coverageThe aleatory nature of the insurance contractThe principle of indemnity (no double recovery)
3. An insured carries med pay with a $5,000 limit and group health insurance through his employer. He is injured in his own vehicle and incurs $8,000 in medical bills. Under most med pay 'other insurance' provisions, the insurer will:
Pay nothing, because group health insurance is always primary to PAP med pay under the standard cross-coverage coordination-of-benefits rule applied by carriersPay $3,000, which is only the amount that the insured's group health insurance leaves unpaid after its deductible and coinsurance have been appliedPay up to the $5,000 med pay limit regardless of what health insurance pays; coordination of benefits between med pay and health is determined by the health policy's termsPay only after the insured exhausts every other source of recovery, including group health insurance, workers compensation, and any third-party tort claim
4. An insured dies in an auto accident covered by PIP. The insurer pays a lump sum to her surviving spouse and minor children. This benefit is best described as:
A PIP survivor benefit, paid in addition to medical and funeral expenseA workers compensation benefit triggered by an off-duty accidentA liability payment to the spouse for wrongful deathA med pay benefit only available if the spouse was in the vehicle
5. Why does correctly calling a brick veneered house FRAME rather than masonry change how the repair is scoped?
Because the veneer and the wood structure behind it are priced as separate systemsBecause a frame building cannot be repaired without an engineer's letterBecause masonry buildings are always settled on an actual cash value basisBecause the veneer is excluded from coverage once it is called a skin
6. Increased Cost of Compliance (ICC) coverage under the SFIP provides:
Unlimited code-upgrade and mitigation coverage that applies fully and automatically after any covered flood loss occursPayment of the community's floodplain-management permit and inspection fees after a flood, but nothing further beyond thatUp to $10,000 dedicated specifically to elevating the building's utilities and mechanical systems above the base flood elevationUp to $30,000 toward floodplain-management compliance measures when the community declares the building substantially damaged
7. A mutual insurer is owned by:
Its shareholdersIndividual underwriters who each accept a share of riskIts policyholdersIts subscribers through an attorney-in-fact
8. A carrier settles a loss to plaster walls by paying to replace them with drywall — a less costly but functionally equivalent material. Which valuation method is this?
Market valueFunctional replacement costActual cash valueAgreed value
9. Under the PAP definitions, a family member is a person who:
Is named on the declarations page with the insuredShares ownership of the covered autoHolds a license listed with the insurer, wherever they liveIs related by blood, marriage, or adoption and resides in the household
10. Coverage F (Medical Payments to Others) on an HO form:
Is part of the Section I property coverage on the form rather than the Section II liability coveragePays the medical bills of the insured's own resident family members who are hurt on the premisesRequires a formal liability judgment against the insured before any medical benefit is ever paid outPays a small no-fault medical benefit to non-insureds injured on the premises or by the insured's activities
11. An insured with state-minimum split limits drives into a state with higher minimum financial responsibility limits and causes an accident there. The PAP:
Applies the home-state limits, leaving the insured exposedAutomatically provides the higher limits the other state requiresRequires an out-of-state endorsement purchased in advanceSuspends coverage outside the home state
12. A coinsurance condition, requiring the insured to carry limits equal to a stated percentage of value, is most characteristically found on which form?
A standard personal auto liability policy covering bodily injury claimsA statutory workers' compensation policy covering on-the-job injuriesThe ISO Building and Personal Property Coverage Form (commercial property)A federal National Flood Insurance Program single-family policy
13. A collision shatters the insured's windshield along with body damage. Why may the glass breakage be treated as part of the collision loss rather than as OTC?
Glass breakage is never covered under OTC in any edition and pays only as a collision lossWindshield glass is excluded from Part D entirely as non-permanently-installed auto equipmentGlass losses must always be settled under a stand-alone glass endorsement with its own deductibleTreating collision-caused glass as collision avoids applying two deductibles to a single event
14. Among the three "other insurance" clause types, which one purports to provide NO coverage at all if other insurance exists — and is widely disfavored by courts?
Pro rataEscapeExcessContribution by equal shares
15. An older home's replacement cost far exceeds its market value. Which HO form is designed for this risk, and how does it settle dwelling losses?
HO-8, with functional replacement cost or ACV settlementHO-2, with replacement cost settlementHO-3, with extended replacement cost settlementHO-5, with agreed value settlement
16. After paying a collision claim, an auto insurer pursues the at-fault driver who caused the damage. This recovery right is called what?
Subrogation of the claimCoinsurance of the claimAbandonment of salvageReinstatement of cover
17. After a covered kitchen fire, the city requires the homeowner to upgrade wiring throughout the house. The carrier pays fire repairs but refuses the wiring upgrade entirely. The best analysis is:
Claim the built-in ordinance-or-law percentage, check for an increased ordinance-or-law endorsement, and separate code costs from direct-damage repair in the estimateThe code-upgrade costs must instead be claimed under Coverage B as an additional structures expense rather than under the dwelling coverage, where they plainly do not belongThe carrier is entirely correct here, because code-upgrade costs required after a loss are simply never covered under any standard homeowners form or ordinance endorsementThe carrier is entirely wrong here, because any code upgrade a government requires after a covered loss is fully and automatically covered under the dwelling coverage without limit
18. Which is one of the three SFIP forms?
Broad FormBusinessowners FormPersonal Articles FormDwelling Form
19. The HO-2 Broad Form covers the dwelling and personal property on what basis?
Named perils (the 16 broad-form perils) on bothNamed peril on the dwelling, open peril on contentsOpen peril on bothOpen peril on the dwelling, named peril on contents
20. In a 'choice no-fault' state, an insured may elect either a no-fault (limited tort) option or a full tort option. The most accurate description of the trade-off is:
Limited tort raises premium and lets the insured sue without any restriction for any economic or non-economic damages arising from any covered auto lossLimited tort and full tort carry the same premium under the filed rates and differ only in the per-person PIP medical-benefit limit selected by the policyholderFull tort means the insured waives all rights to sue any third-party tortfeasor and accepts only first-party PIP benefits as the exclusive recovery sourceLimited tort lowers premium but restricts the insured's right to sue for non-economic damages (pain and suffering) unless a serious-injury threshold is met

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