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Nevada Personal Lines Practice Exam

20 exam-style questions drawn from the same bank as our full Nevada Personal Lines course (Nevada 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. Stated value (or stated amount) on a policy generally means:
Agreed 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 floaterReplacement 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 formA 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
2. A producer is comparing HO-2 and HO-3 for a young family that just purchased a 1990s ranch home. The premium difference is roughly $90/year. Which statement BEST describes the coverage difference that justifies the HO-3 premium?
HO-2 covers Coverage A on a named-peril basis; HO-3 covers Coverage A on an open-peril basis. Coverage C is named-peril under both.HO-2 excludes theft entirely as a base-form peril and requires a theft-coverage endorsement, while HO-3 includes theft as one of the listed Coverage C named perils with no endorsement requiredHO-3 doubles the Section II personal liability and medical-payments limits offered on HO-2 under the standard filed limits schedule that differentiates broad-form and special-form residential coverageHO-2 settles personal property losses on an actual-cash-value basis with no available replacement-cost endorsement option, while HO-3 settles personal property losses at full replacement cost without any required endorsement
3. An oral binder for liability coverage:
Is invalid in all states under the statute-of-frauds writing requirement for insurance contractsIs generally enforceable as evidence of temporary coverageIs not allowed without the agent's signature under the producer-licensing solicitation provisions of state lawMust be ratified by the state regulator before it takes effect under the form-filing rules of the state
4. On the ISO Personal Auto Policy (PAP), Part A provides:
Coverage for uninsured motorists, consistent with the model regulation but inapplicable to this scenarioMedical payments to the insured and passengers, under the broader consumer-protection construction sometimes applied herePhysical damage to the insured's auto — applicable to commercial scenarios only, not the personal-lines contextLiability coverage for bodily injury and property damage
5. An applicant for an HO-3 is quoted $1,420 annually. The carrier runs a credit-based insurance score and a CLUE loss-history report. Based on both reports, the underwriter increases the premium to $1,980 and uses a 'tier 4' rating instead of 'tier 2.' Under the Fair Credit Reporting Act, the carrier must:
Use only the CLUE report, not the credit score, in personal-lines underwritingIssue an adverse action notice to the applicant identifying the consumer reporting agencySubmit the rating decision to the state DOI for prior approvalRefund the difference if the applicant disputes the score within 14 days
6. The insured's basement sump pump fails during a heavy rain; water backs up through the floor drain, damaging $12,000 of contents. Without endorsement, the HO-3 excludes this. The correct fix is:
Earthquake endorsement covering plumbing failuresOrdinance or Law endorsement covering drain upgradesWater Backup and Sump Discharge or Overflow endorsementFlood endorsement attached to the HO-3 sewer rider
7. A misrepresentation on a casualty insurance application that is intentional and material may:
Always require court approval to act on under the regulatory rescission-approval procedureBe ignored by the carrier as immaterial to the underwriting decision on the casualty riskProvide grounds for the insurer to rescind the policy from inceptionAffect only future policies through nonrenewal under the renewal-only-effect prospective rule
8. Burglary is generally distinguished from robbery by:
Burglary involves a victim while robbery does not, since burglary requires an occupant on the premises but robbery can be committed against unattended property in a public area or commercial locationRobbery only occurs at night under the common-law nighttime requirement, while burglary can occur during daylight hours within commercial or residential premises that have been left unattendedBurglary involves only commercial property under the commercial crime form, while robbery applies to personal property taken from individuals on residential premises or in any public locationBurglary requires forcible entry into closed premises with visible signs of forced entry; robbery is the taking of property from a person by force or threat
9. An insured's home is burglarized. Stolen items include $4,500 of gold jewelry, $1,800 of watches, and $850 of clothing. The HO-3 carries Coverage C $80,000 with no scheduled property endorsement. The standard HO special-limit for theft of jewelry, watches, furs, and precious/semi-precious stones is $1,500. How much does Coverage C pay before the deductible?
$2,350 — $1,500 special-limit sublimit for jewelry/watches plus $850 of clothing at full value$7,150 — the full value of all stolen items paid under standard Coverage C with no sublimit application$80,000 — payment up to the full Coverage C personal-property limit for the burglary$1,500 — only the jewelry-and-watches sublimit, with clothing folded into the same theft cap
10. An insured schedules a $28,000 engagement ring on a scheduled personal articles (personal articles floater) endorsement. The ring slips off her finger and is lost while she is gardening. There is no theft, no fire, no named peril — just an accidental loss. Her base HO-3 would NOT cover this because 'lost' is not a Coverage C named peril. How does the scheduled endorsement respond?
Covered, because scheduled personal property is written on an open-peril ('all-risk') basis with no deductible and broader perils than base Coverage C, including mysterious disappearanceExcluded — even scheduled losses must still match one of the Coverage C named perils, with 'lost' specifically barred under the no-mysterious-disappearance rule on jewelry endorsementsCovered, but only at actual cash value with depreciation applied because scheduled jewelry settlement reverts to ACV when no covered named peril is identifiableCovered only when the insured can prove a theft occurred and provides a police report; mysterious-disappearance claims without theft evidence are categorically denied
11. A named driver exclusion endorsement on a PAP:
Excludes only physical damage but keeps liability under the partial-coverage carve-out written into the operator scheduleLists drivers who are guaranteed coverage under the rated-operator schedule attached to the declarationsExcludes a specifically named driver from any coverage when operating any vehicle covered by the policyIncreases the deductible for one driver under the operator-specific deductible filing for high-risk household drivers
12. Res ipsa loquitur ('the thing speaks for itself') is a doctrine that:
Permits punitive damages automatically whenever the doctrine is successfully invoked, without any further showing of malice, fraud, gross negligence, or other heightened culpable mental state on the part of the defendant in the underlying tortBars all defenses to the negligence cause of action that the defendant might otherwise raise under contributory negligence, comparative fault, assumption of risk, statute of limitations, or any related affirmative defenseImposes strict liability on the defendant for any covered occurrence under the policy regardless of fault, control, or the inherent nature of the underlying activity at issue in the lawsuit pleadingsPermits an inference of negligence from the circumstances of the loss when the defendant had exclusive control and the event ordinarily would not occur without negligence
13. The standard increment for personal umbrella limits is:
$10,000$1,000,000$10,000,000$100,000
14. If a casualty insurer fails or refuses to settle a claim within policy limits when it could have, and a judgment exceeds the limits:
The insurer is automatically liable for double the limit under the punitive multiplier extension of bad-faith doctrineThe court automatically reduces the judgment to the policy limit under the cap-at-limit judgment reduction ruleThe insurer may face a 'bad faith' claim by the insured for the amount of the excess judgmentThe insured is solely responsible for any excess under the per-occurrence limit forfeiture rule of casualty policies
15. An insured's HVAC compressor stops working after 12 years of normal operation. A technician confirms the compressor failed from age and mechanical wear; there was no power surge, lightning, or external event. Replacement cost: $4,800. The insured files a claim under his HO-3. How does the policy respond?
Covered under Coverage C with a 10% sublimit for appliancesCovered, but only after the insured exhausts the manufacturer's warrantyExcluded — HO forms exclude mechanical breakdown, wear and tear, and inherent viceCovered — open-peril Coverage A covers all direct physical loss
16. An insured has $250/500/100 on his PAP and a $1,000,000 personal umbrella with a required underlying PAP limit of $250/500/100. He is at fault in a wreck causing $900,000 BI to a single claimant. The carriers respond:
The umbrella pays $900,000 directly because the PAP per-person limit is too lowPAP pays $500,000 (its per-occurrence limit); the umbrella pays the next $400,000PAP pays $250,000 (its per-person limit); the umbrella pays the next $650,000 on topPAP pays $250,000; the umbrella denies because per-person limits do not match its underlying schedule
17. An insured is injured while a passenger in a friend's car. The friend's PAP carries PIP; the insured's own PAP also carries PIP. Most policies coordinate PIP so that:
Both PIP coverages contribute pro rata from the first dollar of medical expense incurredThe PIP on the vehicle the insured was occupying pays first; the insured's own PIP is excessNeither policy pays, because PIP applies only to the named insured shown on each policyThe insured's own PIP always pays first, regardless of who owned the vehicle he occupied
18. Which loss-settlement basis applies to the principal residence under an NFIP Dwelling Form when the insured carries at least 80% of replacement cost?
Actual cash valueMarket valueReplacement costFunctional replacement cost
19. A PAP insured carries comprehensive (other-than-collision) with a $500 deductible. A windshield is cracked by a rock kicked up by a truck. The insurer's claim handling guide notes a 'glass deductible waiver' for windshield repair (not replacement). The insured chooses a $90 chip-repair. The insurer pays:
$0 net — the $90 loss is reduced by the full $500 deductible, leaving nothing payable to the insured$90 — the deductible is waived for windshield repair under the guide$0 — losses below the stated comprehensive deductible never trigger any insurer payment under standard claim-handling$590 — the insurer reimburses the full repair plus the deductible amount as a goodwill credit toward the next term
20. After a casualty insurer pays a claim and exercises subrogation, recovery from the responsible third party is generally:
Used to reimburse the insurer for payments made, with any excess going to the insured (subject to the made-whole doctrine in many states)Paid entirely to the insured under the post-recovery total-distribution rule of standard casualty policy provisions that grants the insured every dollar collected from the responsible third party regardless of the amount the carrier paid on the original claimKept entirely by the insurer under the unconditional-recoupment provision that applies to all third-party subrogation recoveries on casualty policies regardless of any state-law overlay of the made-whole rule for first-party claimantsPaid to the state under the statutory unclaimed-property escheat rule applicable to recovered amounts that exceed the insured's covered loss, processed through the state controller's office in the jurisdiction where the underlying tort occurred

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