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Missouri Personal Lines Practice Exam

20 exam-style questions drawn from the same bank as our full Missouri Personal Lines course (Missouri Personal Lines Insurance Producer — 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. A lender holds a mortgage on an insured dwelling. What is the source of the lender's insurable interest in that property?
Its status as a party named on the declarations, which by itself creates the interest it needsThe borrower's written consent, which transfers part of the owner's insurable interest to itIts right to inspect the property each year under the loan agreement signed by the borrowerIts secured financial stake in the property, which would suffer a measurable loss if it burned
2. Which homeowners form provides open-peril coverage on BOTH the dwelling and personal property?
HO-8HO-5HO-3HO-2
3. The Law of Large Numbers is fundamental to casualty rating because:
Larger pools allow actuaries to predict aggregate frequency and severity within statistically reliable boundsIt permits speculative gain through pooling of casualty exposures across a sufficient number of similar exposure units writing inIt predicts the timing of any individual loss through actuarial computation of frequency and severity factors for each insured riskIt eliminates risk from the underlying casualty pool by spreading the expected loss cost across all participating policyholders
4. The insured spends $1,200 on emergency tarping and board-up after a covered windstorm to prevent further damage. The HO-3 additional coverage for Reasonable Repairs:
Caps at a flat $250 per loss for any emergency-repair activity, regardless of the actual mitigation cost incurred by the insuredPays only after a written contractor estimate is reviewed and pre-approved by the insurer's claims department before the work is performedExcludes emergency tarping and board-up entirely; only permanent reconstruction work is reimbursable under the additional-coverage extensionPays the $1,200, reasonable measures to protect property from further damage are covered as part of the loss
5. Casualty insurance generally responds to which type of risk?
NeitherPureSpeculativeBoth
6. A 'family member' on the PAP is:
Anyone living in the same house, including roommates, unrelated boarders, domestic employees, and any other person who has been a regular occupant during the policy periodOnly the spouse of the named insured, even if other relatives reside in the household and are listed on the application form for coverage under the policy as drivers of the covered autoA person related by blood, marriage, or adoption who is a resident of the named insured's household, including a ward or foster childOnly a child under 18 who resides in the household and has been disclosed on the application form filed for coverage under the policy on the covered auto schedule
7. 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 claimZero, the exclusion is absolute$32,000, the endorsement removes the water exclusion entirely$32,000 less a 'flood' deductible because backup is treated as flood
8. The four elements that a plaintiff must prove for negligence are:
Negligence, recklessness, intent, gross negligenceOffer, acceptance, consideration, legal purposeIntent, action, harm, defenseDuty, breach, causation, damages
9. An HO-3 dwelling is destroyed by fire. Coverage A is $300,000, the mortgagee's balance is $185,000, and the insured did NOT pay her last quarterly premium, the insurer issued a notice of cancellation for nonpayment that took effect three days before the fire. The mortgagee was listed on the declarations and was sent the cancellation notice. The insurer's payment obligation is:
$185,000 to the insured for the mortgage payoff and $115,000 to the mortgagee under the open-mortgage 'pro-rata payee' rule$185,000 to the mortgagee under the standard mortgage clause, even though the insured has no claim$300,000 to the insured because the policy was bound at issuance and the standard-mortgage-clause notice cured the lapse retroactivelyZero, the nonpayment cancellation extinguished coverage to the insured AND simultaneously voided the mortgagee's independent contract
10. The appraisal clause is invoked when:
The insurer suspects fraud and refers the file for investigationThe insured and insurer cannot agree on the AMOUNT of the lossThe insurer has denied coverage for the loss entirelyThe insured and insurer disagree on which deductible applies
11. An insured's HO-3 is destroyed by a covered tornado. Coverage A limit is $325,000. Replacement cost is $310,000. ACV is $245,000. The policy carries the standard HO RC loss-settlement clause and the insured was carrying more than 80% of RC. After demolition the insured decides NOT to rebuild and instead takes a cash settlement. How is the loss settled?
$310,000, full replacement cost, because the dwelling was a total loss$310,000 minus any salvage value of the materials$245,000, actual cash value, because the insured elected not to rebuild$325,000, the Coverage A limit
12. Comparative negligence allows a plaintiff to recover damages reduced by:
The plaintiff's percentage of faultThe defendant's net worthThe age of the plaintiffThe amount of insurance available
13. A homeowner is on a weekend trip and walks his dog through a public park. The dog, normally docile, bites a jogger, requiring stitches and ER care totaling $9,200. The insured carries an HO-3 with Coverage E $300,000 and Coverage F $5,000. No dog-bite exclusion is in place. How does the policy respond to the jogger's claim?
Only Coverage C responds, because the dog is personal property of the insured and bodily-injury claims attaching to owned animals are limited to Coverage CIt does not respond because Section II incidents occurring away from the residence premises are excluded under the standard 'off-premises pet activity' barCoverage E pays only after a court rules and judgment is entered, no payment is made until a final adjudication of liability is reachedCoverage F pays up to $5,000 regardless of fault, and Coverage E pays any liability damages above that if the insured is legally responsible
14. Under an HO-3, theft of personal property kept in a secondary residence (not the residence premises) is generally:
Limited to $1,000Covered to the full Coverage C limitExcludedSubject to a $5,000 special limit
15. Under a typical PAP med pay coverage, which person is LEAST likely to be considered an 'insured' eligible for med pay benefits?
The named insured personally injured as a pedestrian struck by a car while crossing a public street near the residence premisesThe named insured's resident spouse injured while occupying a friend's non-owned auto on a weekend out-of-town shopping tripThe named insured's adult son who lives in his own apartment and is injured while driving his own car, which is insured under a separate PAPA guest passenger in the covered auto injured during a single-vehicle wreck while the named insured was operating the vehicle
16. A PAP insured is at fault in an accident causing $8,000 of PD to the other driver's car. The injured driver's car had been damaged in a prior unrelated accident and was not yet repaired; the insurer estimates $1,500 of the $8,000 represents pre-existing damage. The insured's PAP PD coverage will pay:
$6,500, only the incremental damage actually caused by this accident$8,000, the full amount of damage claimed in the accident report$8,000 less the deductible that applies to Part A property damageNothing, because the unrepaired prior damage taints the entire claim
17. Which of the following types of vehicles is NOT eligible for the standard ISO PAP?
A motor home used as a residenceA pickup truck under 10,000 lbs GVW used for personal pleasureA four-door sedan owned by the named insuredA commercial tractor-trailer used for hire
18. Which coverage on a homeowners policy responds when a covered loss makes the dwelling uninhabitable and the family must rent a hotel?
Coverage DCoverage ACoverage CCoverage B
19. The National Flood Insurance Program is administered by:
The Department of Housing and Urban DevelopmentThe Federal ReserveFEMA (Federal Emergency Management Agency)Each state's department of insurance
20. A homeowner's tree falls on a neighbor's parked car during a windstorm. The neighbor's auto comprehensive coverage pays for the car at $14,000 ACV. The neighbor's auto insurer then sends a subrogation demand to the homeowner's HO-3 carrier. The homeowner believes 'subrogation is unfair, I already pay homeowners.' The homeowner's HO-3 will:
Forward the file to the state property guaranty association as a residual-market apportionment under the state's involuntary-pool rulePay the demand automatically because subrogation between two licensed insurers is unconditional under the inter-insurer arbitration agreementRefuse the subrogation demand because acts of nature are absolutely barred from subrogation under standard HO 'occurrence' definitionsHonor the demand only if the homeowner had been negligent (e.g., knew the tree was dead and did nothing)

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