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Louisiana Personal Lines Practice Exam

20 exam-style questions drawn from the same bank as our full Louisiana Personal Lines course (Louisiana 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. Collision coverage applies to:
Damage to the insured's auto from impact with another object or upsetBodily injury to the insured caused by an at-fault driver in a collisionDamage to other people's property arising from a covered auto accidentTheft of the auto from the insured's residence or any other parking location
2. An insured's home is rendered uninhabitable by a covered fire. Pre-loss, her monthly housing cost was $2,200 (mortgage P&I + utilities). She rents a similar home at $3,500/month plus $250/month additional utilities while repairs run for 5 months. The HO-3 Coverage D loss-of-use limit is $30,000. The insurer's Coverage D ALE payment is:
$30,000, the full Coverage D limit paid as a one-time settlement$18,750, gross rent plus extra utilities ($3,750) × 5 months at full cost$7,750, only the INCREASE above her pre-loss housing cost ($1,550/month), × 5 months$17,500, gross monthly rent ($3,500) × 5 months under the 'full-substitute' rule
3. Defenses to a negligence claim include:
Strict liability for ultrahazardous activities raised by the defendantContributory/comparative negligence, assumption of risk, and statute of limitationsIntent under the willful-misconduct tort theory pleaded by the plaintiffVicarious liability raised under the respondeat-superior doctrine here
4. Heavy rain overwhelms the city's sewer system, backing raw sewage up through the insured's basement floor drain and destroying the finished basement (drywall, carpet, appliances), total loss $32,000. The HO-3 contains the standard water-damage exclusion and the insured purchased the Water Backup and Sump-Pump Overflow endorsement with a $25,000 sublimit. The insurer pays:
$25,000, the sublimit caps the otherwise-excluded backup claim$32,000, the endorsement removes the water exclusion entirelyZero, the exclusion is absolute$32,000 less a 'flood' deductible because backup is treated as flood
5. A liberalization clause in a casualty policy provides that:
The insured may demand any new endorsement the carrier issues during the policy period at no charge, including coverage broadenings the carrier has filed for separately rated optional endorsements under the standard ISO menu of coverage optionsCoverage is liberalized only if the state regulator approves the broadening through a separate post-filing administrative order issued under the formal state-approval procedure that applies to all mid-term policy form amendments in the stateThe insurer may unilaterally narrow the policy at any time without notice or premium adjustment, under the unilateral mid-term restriction provision applicable to all standard personal-lines casualty policies under state regulatory lawIf the insurer broadens its standard policy form during the policy period without additional premium, the insured automatically benefits from the broader coverage
6. An insured carries dwelling coverage at exactly 80% of replacement cost ($200,000 limit / $250,000 RCV). A windstorm causes a $50,000 partial loss to the roof. How is the loss settled under standard HO-3 loss-settlement language?
$50,000 minus depreciation on labor onlyFull replacement cost, $50,000 because the 80% threshold is met$40,000, the insurer always pays the lesser of RCV or 80%Actual cash value only, coinsurance does not apply to partial losses
7. The 'protect the property' duty after a loss requires the insured to:
Tear down all damaged structures immediately to clear the parcel for rebuilding under the contractor's bidReplace the damaged property immediately at their own expense before any adjuster has inspected the siteSell the salvage to recoup the loss before notifying the insurer or filing a formal proof-of-loss statementTake reasonable steps to prevent further damage; reasonable expenses are typically reimbursed
8. When a Personal Articles Floater uses 'agreed value,' what does that mean?
The insurer determines the value at the time of loss using the standard ISO actual cash value depreciation schedule applied to scheduled propertyCoverage is limited to the depreciated value using the same straight-line method that applies to unscheduled personal property under the homeowners Coverage C provisionThe insured and insurer pre-agree to the item's value, and that figure is paid in the event of total lossThe insured must prove ownership at the time of loss through receipts and serial numbers consistent with the proof-of-loss requirements that apply to all unscheduled property
9. Special damages refer to:
Punitive awards intended to punish the defendant and deter future tortious conductSpecific, measurable economic losses such as medical bills, lost wages, and repair costsPain and suffering as a general non-economic component of compensatory damagesEmotional distress arising independently from any physical injury sustained at all
10. Nonrenewal differs from cancellation in that:
Cancellation occurs at the end of a policy period; nonrenewal occurs mid-termBoth terms mean the same thingNonrenewal terminates a policy at the end of its term; cancellation terminates mid-termNonrenewal requires a refund of premium; cancellation does not
11. An insured who voluntarily admits fault and pays a third-party claimant before notifying the insurer:
May have breached the policy's cooperation/no-voluntary-payments condition, which can jeopardize coverage for that lossOwes the insurer the amount paid under the post-loss disgorgement provision that requires the insured to repay any unauthorized third-party settlement made before insurer noticeWill be reimbursed automatically by the carrier under the supplementary-payments extension that pays the insured back for any reasonable expenses incurred at the loss sceneHas fulfilled their duties properly under the prompt-mitigation provision of the casualty policy that requires the insured to take immediate steps to limit the loss
12. An insured's friend borrows the covered auto with permission and is injured in a single-car wreck. The friend incurs $4,000 in medical bills. Under typical PAP med pay, the friend is:
Covered only if her own health insurance denies the claim firstCovered as an occupant of the covered auto, regardless of whether she is a resident relative of the named insuredNot covered, med pay is restricted to the named insured and resident relatives who are specifically listed on the policy declarations pageCovered only up to 50% of the med pay limit as a non-listed driver
13. A standalone boatowners (or yacht) policy typically covers:
Auto liability for a trailer being towed on a public roadProperty stored inside the boat owner's homeHull damage and liability for the watercraftWorkers' compensation for a hired crew member
14. An applicant wants 'insurance' against losing money on a stock-market investment. The agent declines, explaining that insurance is not the right product. The underlying reason is that the investment loss represents:
An adverse-selection exposure that limits availability under the carrier's risk-classification planA morale hazard that disqualifies the risk under standard underwriting acceptance rulesA speculative risk, chance of loss OR gain, and only pure risks are insurableA pure risk that is technically insurable but commercially unprofitable for the carrier to write
15. A dwelling is insured for $250,000 with the Increased Dwelling Limit (extended replacement cost) endorsement at 25%. After a total loss the actual reconstruction cost is $310,000 because lumber prices spiked. How much will the policy pay for the dwelling?
$250,000, extended replacement cost does not raise the dwelling limit$312,500, the maximum the endorsement allows$275,000, the endorsement caps at 10% above stated limit$310,000, within the 25% buffer
16. Which applicant is the best candidate for a farmowners policy rather than a homeowners policy?
An investor who owns cropland but lives in a city apartment and leases the ground to a tenantA grain elevator operator who buys and resells crops from a commercial site with no residenceA suburban owner whose only agricultural activity is a fenced vegetable garden behind the houseAn owner who lives in a farmhouse on acreage and also raises livestock and stores equipment in barns
17. An insured's friend borrows the car with permission and then lets HIS girlfriend (whom the named insured has never met) drive it. The girlfriend causes an at-fault accident. Coverage typically depends on:
Whether the first permittee (the friend) was physically present and seated as a passenger in the covered auto at the exact time of the at-fault loss, with continuous-presence supervision being the dispositive conditionWhether the girlfriend has her own personal auto policy in force at the time of the wreck, if she carries any auto coverage of her own, the named insured's PAP excludes her absolutely as a second-permittee operator regardless of permissionWhether the named insured signed a notarized permission-to-loan form expressly authorizing delegation of operation to second-tier permittees, which is a contractual condition precedent to second-permittee coverage under every state's filed PAP formWhether the named insured's permission could reasonably be implied to extend to a second-tier permittee, many policies cover the second permittee if the first had implied authority to delegate
18. An insured owns a 110-year-old Victorian home in a historic district. Original hand-cut beams, plaster walls, leaded glass windows, and ornate moldings would cost roughly $620,000 to replicate today, but the home's actual market value is only $240,000. Standard HO-3 carriers have declined to write replacement-cost coverage because the cost to repair exceeds market value by a wide margin. Which form is designed for this gap?
HO-5 comprehensive form with stated valueHO-2 broad form with an inflation guard endorsementHO-3 special form with a guaranteed replacement cost endorsementHO-8 modified form, which settles losses on a functional/repair-cost basis
19. Strict liability (or absolute liability) is most often imposed for:
Ultrahazardous activities such as blasting or keeping wild animalsDriving a passenger car on a public roadway under ordinary traffic conditionsWalking on a public sidewalk where unforeseen hazards may injure third partiesOwning a small business that serves the general public on commercial premises
20. Stated value (or stated amount) on a policy generally means:
Replacement cost up to that amount without depreciation deduction, applied through the same coinsurance-test mechanism that controls loss settlement on the standard ISO HO-3 owner-occupied homeowners formAgreed value with no other limitations beyond the appraisal that was filed at policy issuance, used identically to the way agreed-value settlement operates on a scheduled fine-art class under an open-peril inland marine floaterA guarantee that the stated amount will always be paid in full on total loss without any deduction, depreciation, or coinsurance penalty, mirroring how agreed value functions on a scheduled inland marine PAF written on an open-peril basisAn amount declared by the insured at policy issuance that caps the recovery, but the loss settlement is the lesser of stated amount, ACV, or repair cost

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