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New Hampshire Personal Lines Practice Exam

20 exam-style questions drawn from the same bank as our full New Hampshire Personal Lines course (New Hampshire 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. Windstorm coverage in coastal regions is sometimes excluded from standard homeowners policies and offered through:
A state-sponsored windpool or beach plan that operates as a residual marketA standard inland marine form, on a scheduled per-structure basis for coastal-tier dwellingsAn auto liability policy, on an extended-peril basis for hurricane and named-storm wind exposuresThe federal NFIP, which extends its inundation peril coverage to include named-storm wind exposures
2. 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$1,500 — only the jewelry-and-watches sublimit, with clothing folded into the same theft cap$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
3. 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:
Submit the rating decision to the state DOI for prior approvalIssue an adverse action notice to the applicant identifying the consumer reporting agencyRefund the difference if the applicant disputes the score within 14 daysUse only the CLUE report, not the credit score, in personal-lines underwriting
4. When rating a PAP, the carrier assigns a classification based on usage. An insured who initially classified his car as 'pleasure use' begins commuting 30 miles each way to work daily. He fails to update the carrier. After a commute-time accident, the carrier:
May void the policy retroactively from inception, recover all prior claim payments made on prior losses, and rescind for material misrepresentation under the standard concealment-and-misrepresentation provision of the PAPMay reform the policy to the higher-rated commute class, collect additional premium, and pay the claim — or, depending on state law, may deny if the misclassification was material and intentionalMust pay the claim in full with no recourse against the insured because vehicle-use changes after policy issuance are never material rating facts under any state's standard PAP filed formMust pay the claim at the original pleasure-use premium ratio prorated against the commute-use premium that would have been charged rather than at the full claim value as adjusted
5. A civil authority closes a neighborhood for 10 days following a wildfire that damaged a nearby home but not the insured's. The insured has to stay in a hotel. Under the HO-3 civil-authority provision, Coverage D pays:
Loss of rental income only, with no ALE for the insured's own displacementFull Coverage A dwelling reconstruction cost as if direct loss occurredAdditional Living Expense for up to 2 weeks while civil authority prohibits useNothing — the insured's own property must sustain direct physical loss first
6. An insured carries a 'Transportation Expenses' / rental reimbursement coverage of $30/day, $900 max, on his PAP. His car is stolen and is in the body shop for 40 days. The carrier will pay:
Nothing — rental reimbursement applies only to collision claims under Part D and never to comprehensive theft losses on the covered auto policyThe full 40 days × $30/day = $1,200 because theft losses are excluded from the aggregate cap under the comprehensive-only rental expense rule$1,200 because the daily limit applies but the aggregate $900 maximum is waived under the standard theft-loss extension to transportation expensesUp to $900 in total rental reimbursement — limited by the $30/day cap and the $900 aggregate maximum
7. A covered kitchen fire forces a family to live in a hotel for three months. Their usual food/lodging expense is $2,500/month; hotel + restaurant meals run $4,200/month. Coverage D pays:
The $1,700/month INCREASE in living expenses — i.e., the additional cost above normalNothing — Coverage D applies only to commercial property losses, not residentialThe full $4,200/month hotel-plus-meal bill paid in gross under the standard ALE provisionThe $2,500/month normal household living expense paid as the baseline ALE benefit
8. 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?
Yes — but the endorsement covers only the on-site labor performed at the disablement point and never the tow charge itselfYes — towing and labor coverage applies to mechanical breakdown disablement; covered labor must be performed at the place of disablementNo — the towing and labor endorsement only responds after a covered Part D collision loss event has been adjusted and paidNo — mechanical breakdown is universally excluded from all auto coverages including towing and labor regardless of any endorsement
9. A representation on an insurance application must be:
Substantially true and material to the underwriting decisionNotarized by a commissioned officer of the carrier on fileAbsolutely true in every detail with no exceptions allowedMade under oath before a notary or other authorized officer
10. Under an unendorsed HO-3, money and bank notes are limited to what amount in any one loss?
$2,500$1,000$500$200
11. Special damages refer to:
Pain and suffering as a general non-economic component of compensatory damagesSpecific, measurable economic losses such as medical bills, lost wages, and repair costsPunitive awards intended to punish the defendant and deter future tortious conductEmotional distress arising independently from any physical injury sustained at all
12. Which of the following is a typical duty of the insured under a casualty policy when a covered injury occurs on the premises?
Pay the third party's medical bills personally before notifying the carrier or filing a claim under the casualty policyTake steps to protect the injured person and provide reasonable first aid; cooperate with insurer's investigationRefuse to discuss the incident with anyone including emergency responders, third parties, or claim investigators on fileProvide first aid only if a medical professional is present at the scene of the incident on the residence premises
13. Stated amount on a liability policy generally:
Has no significanceGuarantees that the stated amount will always be paidSets the maximum the insurer will pay per occurrenceIncreases the deductible
14. Why are catastrophic risks (e.g., war, nuclear meltdowns) generally uninsurable, even though they are pure risks?
They 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 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 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 violate the requirement that losses be relatively independent across the insured pool — a single event would simultaneously hit the entire pool
15. Two homes on the same street suffer water damage from frozen pipes during a cold snap. Home A is insured under an HO-2 (broad form named peril) and Home B is insured under an HO-3 (special form). Both insureds maintained heat and met all policy conditions. A theft has NOT occurred. Which statement BEST describes coverage for the dwelling itself?
Neither covers it — freezing is categorically excluded under all HO forms regardless of heat-maintenance compliance by the insured familyHO-2 covers it; HO-3 does not, because HO-3 lists freezing in its dwelling exclusions even when the heat-maintenance condition is metHO-3 covers it; HO-2 does not, because HO-2 limits named perils strictly to Coverage C personal property and provides no dwelling perils for freezing-lossBoth cover it — HO-2 because freezing is a listed named peril for Coverages A/B/C; HO-3 because freezing is not excluded under open-peril A/B
16. Defense costs in a personal-lines liability policy are typically:
Capped at $1,000 per claimOutside the limits — they do NOT erode the per-occurrence limitPaid by the insuredInside the limits of liability — they erode the limit
17. A pro-rata cancellation refund is calculated by:
Returning premium proportional to the unexpired policy period, with no penaltyReturning nothing because cancellation forfeits the entire unearned portion under the no-refund minimum-premium clauseReturning a flat percentage of the original premium under the minimum-earned premium provision for substandard risksSubtracting a penalty from the unearned premium under the short-rate retention schedule for insured-initiated cancellation
18. An insured stores fireworks in his attached garage, lights one, and it ignites the garage AND severely burns a friend who was helping. The HO-3 excludes 'expected or intended' bodily injury and property damage. The insured argues he 'didn't expect' anyone to get hurt. The insurer's coverage analysis turns on:
Whether the act of lighting fireworks was a covered 'occurrence' — meaning an ACCIDENT — given that the burn injury was the direct expected outcome of an intentional actWhether the homeowner had completed a state-approved fire-safety certification course within the 12 months immediately preceding the date of lossWhether the state DOI has approved an indoor-fireworks endorsement on the HO-3 form for use within attached-garage spaces at residential premisesWhether the injured friend signed an enforceable assumption-of-risk waiver before participating in the pyrotechnics demonstration under premises-liability case law
19. 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 liability payment to the spouse for wrongful deathA med pay benefit only available if the spouse was in the vehicleA PIP survivor benefit, paid in addition to medical and funeral expenseA workers compensation benefit triggered by an off-duty accident
20. 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

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