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Delaware Personal Lines Practice Exam

20 exam-style questions drawn from the same bank as our full Delaware Personal Lines course (Delaware 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 runs a side business as a personal trainer; a client is injured during a session at the insured's home. The lawsuit alleges negligence in the training program. The unendorsed HO-3 Coverage E response is:
Covered only when the insured maintains a Business Personal Property coverage extension under the HO-3 in-home-business endorsement filingExcluded — bodily injury arising out of the insured's business pursuits is excluded; the insured needs a CGL or professional liability policyCovered up to the Coverage E personal-liability limit because the client was a guest on the residence premises at the time of the alleged negligenceCovered under Coverage E as a premises-liability claim because the bodily injury occurred at the insured's residence premises during a visit
2. An applicant owns a single-family home worth $380,000. She wants the broadest coverage available on both the dwelling AND her personal property — she does not want to argue with the adjuster about whether a particular peril is named in the form. Her producer recommends an HO-5. What is the key difference between an HO-5 and an HO-3 that justifies the recommendation?
HO-5 automatically includes flood and earthquake coverage as built-in additional perils that HO-3 expressly excludes under the standard earth-movement and water-damage exclusionsHO-5 covers BOTH the dwelling and personal property on an open-peril basis; HO-3 covers the dwelling open-peril but personal property named-perilHO-5 carries higher Section II personal liability and medical-payments limits than HO-3 as filed and approved minimums under the comprehensive-form filing scheduleHO-5 covers the dwelling on an open-peril basis; HO-3 covers only personal property on an open-peril basis with the dwelling on named-peril basis under the inverted-form rule
3. An HO-3 dwelling burns to the ground. The insured had $200,000 of Coverage A, no extended replacement cost endorsement, and actual reconstruction cost is $235,000. How much does the dwelling coverage pay?
$117,500 — half due to underinsurance$235,000 — full replacement cost regardless of limit$200,000 plus 25% extended buffer automatically$200,000 — the policy limit
4. Which homeowners form provides open-peril coverage on BOTH the dwelling and personal property?
HO-2HO-5HO-8HO-3
5. To qualify for a personal umbrella, an insured must typically:
Maintain prescribed minimum underlying limits on auto, home, and other listed exposuresEarn at least a stated minimum income shown on a verified tax return filed with the umbrella application formHave a perfect driving record with no moving violations or accidents during the preceding three-year periodCarry no other insurance besides the umbrella so that no coordination-of-benefits dispute can arise on the claim
6. What is the standard waiting period for new NFIP coverage to take effect?
30 days24 hoursNo waiting period10 days
7. An aggressive dog kept on the premises is a classic example of:
A morale hazard arising from the insured's careless attitude toward training and confining the animalA peril triggering coverage under the standard ISO HO liability section regardless of underwriting factsA physical hazard that may also lead to underwriting decline or specific dog-bite exclusionsAn exclusion only that removes the entire animal-liability section of the HO policy at issuance
8. Which of the following is a typical duty of the insured under a casualty policy when a covered injury occurs on the premises?
Refuse to discuss the incident with anyone including emergency responders, third parties, or claim investigators on fileTake steps to protect the injured person and provide reasonable first aid; cooperate with insurer's investigationPay the third party's medical bills personally before notifying the carrier or filing a claim under the casualty policyProvide first aid only if a medical professional is present at the scene of the incident on the residence premises
9. An insured carries liability and PIP but NO collision or comprehensive on his PAP. He rents a car and damages it. The rental agency's collision damage waiver:
Would have been important to purchase — without his own physical damage coverage, the PAP will not pay to repair the rentalVoids any PAP liability coverage that would otherwise apply to the operation of the rental as a non-owned auto under the standard liability provisionIs irrelevant — the rental company always absorbs any rental-vehicle damage as a built-in cost included in the daily rental fee paidPays only the underlying collision deductible amount and nothing more under the supplementary-payments extension to non-owned-auto operation
10. A burst pipe floods a kitchen on Saturday. The insured turns off the main water valve, mops what he can, and calls his agent Monday morning. He moves into his sister's spare bedroom Wednesday. He files a written sworn statement of loss two months later. The claims adjuster denies the ALE portion of the claim because the insured failed to:
Mitigate further damage by extracting subfloor moisture before any visible mold formed in the affected roomsSubmit a sworn proof of loss within 60 days as a strict condition precedent under the standard mortgage-clause provisionNotify the insurer promptly and protect the property from further damage in a timely mannerChoose temporary lodging within the geographic territory defined by the policy's coverage-extension provision
11. Supplementary payments under a personal liability policy typically include all of the following EXCEPT:
Punitive damages awarded against the insuredFirst-aid expenses to others incurred at the time of an accidentDefense costs (attorney's fees) for covered claimsPremiums on bonds required to release attachments (within stated limits)
12. A washing-machine supply hose suddenly bursts at 2 a.m. while the family is asleep, releasing roughly 400 gallons of water into the laundry room and adjacent finished basement before being discovered. There is no flood, no sewer backup, and no gradual leak — the failure was abrupt. The insured has an HO-3. How does the policy respond?
Covered — sudden and accidental discharge of water from a plumbing system is covered under HO-3 Coverage A (open-peril dwelling) and is a named peril under Coverage CExcluded — interior water-discharge damage requires a separately-purchased water-backup-of-sewers-and-drains endorsement to restore coverage from the base exclusionCovered, but only the failed appliance itself; resulting damage to the dwelling and contents is excluded as a consequential-loss bar under the formExcluded — all water damage of any kind is excluded under HO forms unless separately-purchased flood insurance is in force at the time of loss
13. An insured backs out of his garage and strikes his own homeowners-policy storage shed, damaging both. Which coverage applies to the damage to the vehicle, and which applies to the damage to the shed?
Vehicle damage under comprehensive; shed damage under PAP property damage liability, treated as a third-party recovery pursued against the at-fault driver of the striking auto through subrogationBoth the vehicle and the detached shed are paid under PAP collision because the impact occurred while the auto was being operatedVehicle damage under collision on the PAP; shed damage is excluded from the PAP property damage liability (owned-property exclusion) and must be claimed under his homeowners dwelling extensionBoth items are paid under the homeowners policy as a single property occurrence under the dwelling-and-other-structures additional-coverage extension
14. An attractive nuisance, such as an unfenced swimming pool that draws neighborhood children, is best classified as a:
Physical hazard increasing liability exposureSpeculative risk under the gain-or-loss testPure benefit arising under the policy bargainMoral hazard arising from intent to defraud
15. An insured's sterling silver flatware (worth $4,000) is stolen. The unendorsed HO-3 sublimit on theft of silverware, goldware, and pewterware is $2,500. What is paid (ignoring deductible)?
$0 — theft of silver is categorically excluded by form$4,000 — full replacement cost paid under Coverage C$1,000 — the money/bullion sublimit applies to silver$2,500 — special theft sublimit on silverware
16. When a liability policy pays a settlement directly to a third-party claimant, the principle of indemnity is supported because:
The insurer pays double the limit when the third-party claimant has been injured significantlyThe insured is protected from out-of-pocket loss but does not profitThe third party is paid twice through both the insurer and the at-fault tortfeasor directlyThe insured profits from the loss because the insurer issues a windfall settlement check
17. In a no-fault state, a PAP insured is rear-ended; she suffers $4,200 in medical bills. She has PIP with a $10,000 limit and $5,000 of med-pay. Which coverage pays first, and how do the two interact?
Both pay in full and the insured may keep the totalMed-pay pays first; PIP is excessNeither pays — no-fault eliminates first-party medical coveragePIP pays first; med-pay coordinates as excess and prevents double-recovery
18. Why are catastrophic risks (e.g., war, nuclear meltdowns) generally uninsurable, even though they are pure risks?
They cannot be measured because actuarial science cannot capture the magnitude of a catastrophic loss event across an insured pool of similar exposure units, since data on such events is too scarce to use the law of large numbers reliably in any rate-filing analysis under the standard methodsThey occur too often to be predictable with statistical certainty across any reasonable underwriting horizon for the carrier or its reinsurance treaty partners under typical industry-rate filings and pricing models for property and casualty business written across a range of territories within the affected poolThey lack insurable interest because the affected pool of insureds cannot reasonably establish a protectable financial stake before the catastrophic event occurs, given the broad geographic distribution of the affected risks and the difficulty of measuring exposure in advance of the manifestation of the underlying covered eventThey violate the requirement that losses be relatively independent across the insured pool — a single event would simultaneously hit the entire pool
19. Under an HO-3, what is the default Coverage C limit?
70% of Coverage A10% of Coverage A30% of Coverage A50% of Coverage A
20. An insured's transmission fails on the highway and his car must be towed to a repair shop. He carries the Towing and Labor endorsement on his PAP. Will it pay?
No — mechanical breakdown is universally excluded from all auto coverages including towing and labor regardless of any endorsementYes — towing and labor coverage applies to mechanical breakdown disablement; covered labor must be performed at the place of disablementYes — but the endorsement covers only the on-site labor performed at the disablement point and never the tow charge itselfNo — the towing and labor endorsement only responds after a covered Part D collision loss event has been adjusted and paid

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