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North Dakota Personal Lines Practice Exam

20 exam-style questions drawn from the same bank as our full North Dakota Personal Lines course (North Dakota 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 owns a $20,000 diamond engagement ring. She wants worldwide, all-risk (open peril) coverage including mysterious disappearance. The best solution is:
Schedule the ring on a Personal Articles Floater (scheduled personal property endorsement) with an appraisalAdd a Water Backup of Sewers and Drains endorsement so that mysterious-disappearance and theft losses are fully picked up at scheduled valueIncrease Coverage C by $20,000 since the HO-3 already provides built-in worldwide mysterious-disappearance coverage on jewelry itemsRely on the $1,500 unscheduled jewelry sublimit and self-insure the residual exposure, treating it as a budget-priced acceptable retention
2. A homeowners policy can also broaden coverage on small but valuable property classes by adding a:
Standard fire formScheduled Personal Property EndorsementLoss assessment endorsementMortgage clause
3. Compulsory auto insurance laws require:
Drivers to carry comp and collision under the mandatory physical-damage statutesAll drivers to be self-insured through filing a financial-responsibility bond with the state DMVDrivers to carry PIP only under the no-fault first-party benefit mandate adopted by statesDrivers to carry liability insurance at minimum statutory limits
4. Towing and Labor coverage on the PAP:
Is part of liability coverage extended to roadside disablement under the Part A insuring agreement for assistanceIs automatically included on all policies at no charge under the standard ISO Part D physical-damage filingPays for engine repairs and other mechanical work performed at a repair facility after the vehicle has been towedIs an optional endorsement covering reasonable towing and roadside-labor expenses up to a stated limit
5. An insured runs an unincorporated photography business as a side gig. A client visits the insured's home studio to view sample prints, slips on a wet floor, and breaks a hip. The client sues for $250,000. The insured carries an HO-3 with Coverage E $300,000 and a standard business-pursuits exclusion. How does the policy respond?
Covered under Coverage F med-pay regardless of the business exclusion because medical-payments-to-others is no-fault and runs outside Section II indemnity barsCovered, the loss occurred at the insured's residence premises, which automatically satisfies the Section II 'insured location' trigger regardless of activityCovered for defense costs only with no indemnity payment, under the standard duty-to-defend extension for business-pursuits-related premises injuriesExcluded, Section II excludes bodily injury arising out of business pursuits or activities the insured conducts for profit
6. 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 minus any salvage value of the materials$325,000, the Coverage A limit$245,000, actual cash value, because the insured elected not to rebuild$310,000, full replacement cost, because the dwelling was a total loss
7. An insured wants open-peril coverage on BOTH dwelling and personal property. The appropriate form is:
HO-3 (Special Form)HO-2 (Broad Form)HO-5 (Comprehensive Form)HO-8 (Modified Coverage Form)
8. A homeowner's collection of firearms is stolen in a burglary; the loss is $6,500. The unendorsed HO-3 has a special-limit sublimit on firearms theft. How does Coverage C respond?
Pays $500, the money, securities, and bank-notes special sublimit applies to firearms theft claimsPays nothing, theft of firearms is categorically excluded from Coverage C under standard HO-3 form provisionsPays $2,500, the special theft sublimit on firearms and related equipmentPays $6,500 in full because firearms are categorized as unsublimited Coverage C personal property under the form
9. Under a standard NFIP Dwelling Form, what is the maximum building coverage available for a single-family residence?
Unlimited$100,000$500,000$250,000
10. A PAP insured is stopped at a light when an uninsured driver rear-ends her. She suffers $35,000 in BI. The state's minimum financial-responsibility BI limits are 25/50. The insured carries UM limits of $50,000 per person / $100,000 per accident, and the at-fault driver carried zero coverage. Her UM coverage will pay:
$35,000, her actual damages, up to her $50,000 UM per-person limit$25,000, capped at the state's minimum BI limit$50,000, the UM limit, regardless of actual damagesZero, UM requires the at-fault driver to have a policy with insufficient limits
11. An auto is damaged with $9,000 in repair costs and an ACV of $7,500. The insurer most likely:
Refuses the claim because the repair cost exceeds the ACV threshold for covered comprehensive lossesDeclares a total loss and pays $7,500 less deductible, taking the salvagePays the difference between repair cost and ACV, leaving the insured to absorb the shortfall amountRepairs the vehicle for $9,000 even though that figure exceeds the actual cash value of the auto
12. A homeowner carries 100/300/100 BI/PD on her PAP and $500,000 of Coverage F on her HO-3. She wants a $2,000,000 personal umbrella. The umbrella insurer requires minimum underlying limits of 250/500/100 on auto and $300,000 on HO liability. The insured's current limits:
Meet HO but not auto, she must raise PAP BI before the umbrella will be issuedMeet auto but not HO, she must lower HO liability to align with the umbrella's underlying capMeet the umbrella's underlying-limits requirement on both the auto and HO schedules under the carrier's filed minimumsAre irrelevant to the umbrella, true umbrellas drop down to ground zero and absorb the missing primary layer
13. 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 disappearanceCovered, but only at actual cash value with depreciation applied because scheduled jewelry settlement reverts to ACV when no covered named peril is identifiableExcluded, 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 only when the insured can prove a theft occurred and provides a police report; mysterious-disappearance claims without theft evidence are categorically denied
14. An insured's HO-3 has Coverage A of $400,000 and Coverage C set at the standard 50% of Coverage A. A burglary results in the theft of $42,000 of personal property from the residence. There are no special sublimits triggered (no jewelry, no firearms, no cash). The insured has a $1,000 deductible. The policy provides replacement cost on Coverage C by endorsement. Items have actual cash value of $28,000. How much does Coverage C pay?
$200,000, Coverage C limit paid in full; theft losses bypass the deductible$199,000, the full Coverage C limit less the $1,000 deductible$27,000, actual cash value paid less the $1,000 deductible$41,000, replacement cost less deductible, up to the $200,000 Coverage C limit
15. The standard increment for personal umbrella limits is:
$100,000$1,000,000$10,000,000$10,000
16. Which dwelling form does NOT include personal liability coverage as a built-in part of the policy?
Only DP-3 includes built-in liability through the dwelling Section II package amendmentOnly DP-2 includes built-in liability under the Broad Form Section II ISO amendmentNone of the dwelling forms includes built-in liability; it must be added by endorsementDP-1, DP-2, and DP-3 all include built-in liability under the unified personal-lines liability provision
17. The Terrorism Risk Insurance Act (TRIA) primarily provides:
An exclusion of all terrorism risk from the policy regardless of whether the loss arises from a certified act or an ordinary criminal actA federal backstop that reimburses commercial-property insurers for a portion of certified terrorism lossesFederal flood coverage written through the same risk-pool program that administers the NFIP for property in mapped SFHA zonesMandatory personal-lines terrorism coverage that must be included on every HO and PAP policy without an opt-out election by the insured
18. Which of the following is NOT a category eligible to be scheduled on a standard Personal Articles Floater?
Stamp and coin collectionsMusical instrumentsFine artCommercial fleet vehicles
19. For a written binder to be enforceable, it must identify at minimum which set of terms?
The named insured, the mortgagee, and the loss history reported on the completed applicationThe producer's license number, the underwriter's name, and the filed form number of the policyThe insurer, the named insured, the coverage bound, the limits, and the effective date of coverageThe insurer, the producer's commission rate, and the full premium payment schedule for the term
20. 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 less a 'flood' deductible because backup is treated as floodZero, the exclusion is absolute$32,000, the endorsement removes the water exclusion entirely

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