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Pennsylvania Personal Lines Practice Exam

20 exam-style questions drawn from the same bank as our full Pennsylvania Personal Lines course (Pennsylvania Personal Lines 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. An HO-3 includes an 80% coinsurance clause for replacement-cost loss settlement. The dwelling's RC at the time of loss is $400,000; the policy carries $240,000 of Coverage A. A partial covered fire loss of $50,000 occurs. Ignoring the deductible, the insurer will pay:
$37,500, coinsurance penalty: ($240,000 / $320,000) × $50,000$30,000, coinsurance penalty: ($240,000 / $400,000) × $50,000$50,000, RC is paid on partial losses regardless of coinsurance$240,000, the full Coverage A limit
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?
$1,500, only the jewelry-and-watches sublimit, with clothing folded into the same theft cap$80,000, payment up to the full Coverage C personal-property limit for the burglary$7,150, the full value of all stolen items paid under standard Coverage C with no sublimit application$2,350, $1,500 special-limit sublimit for jewelry/watches plus $850 of clothing at full value
3. What is the standard waiting period for new NFIP coverage to take effect?
24 hoursNo waiting period10 days30 days
4. Under the federal Fair Credit Reporting Act, when an insurer takes an adverse action based on a consumer report, the insurer must:
Cancel the policy without notice, since an adverse credit report is grounds for immediate cancellationWait 30 days before taking the action, so the consumer can dispute the report with the reporting agencyPay the consumer a fixed statutory penalty for having obtained the report without the consumer's consentNotify the consumer of the action and identify the consumer reporting agency that supplied the report
5. A liability policy with a $300,000 'each occurrence' limit has been used to settle a single accident for $250,000. What remains for additional claims arising from a SEPARATE later occurrence?
Depends on the aggregate$300,000 (a fresh per-occurrence limit)$0$50,000
6. The Commissioner extends the waiting period on a rate filing. What is the longest total review period?
45 days total60 days total90 days total30 days total
7. An insured's PAP has a named-driver-exclusion endorsement specifically excluding her brother (who has multiple DUIs). The brother takes the car without express permission and causes a crash. Most likely outcome:
The exclusion bars coverage for the brother as a driver, even though he is a household-adjacent risk; the carrier may still owe the state's minimum financial responsibility limit if statute requires itThe carrier voids the policy retroactively from inception for failure to maintain control of the keys to the vehicle, which is treated as a material breach of the standard reasonable-precautions condition in the PAPCoverage applies in full to the brother because his lack of express permission to take the vehicle means the named-driver exclusion endorsement does not apply to this unauthorized use of the family autoThe named-driver exclusion is void as against public policy because the omnibus permissive-use clause of the standard PAP always overrides any signed named-driver exclusion endorsement attached to the policy at issuance
8. After a UIPA hearing establishes a violation, what may the COMMISSIONER do directly?
Order restitution of premium to every affected policyholderIssue a cease and desist order, or suspend or revoke a licenseRefer the matter for prosecution as a third degree felonyAssess a civil penalty of up to $5,000 for each violation
9. An insured has an HO-3 on her primary residence. She accepts a two-year out-of-state work assignment and rents the house to her brother-in-law for a nominal sum. She keeps her HO-3 in force without notifying the carrier. During year one, a kitchen fire damages the dwelling. When she files the claim, the carrier discovers the rental arrangement. Which outcome is MOST likely?
Full payment under Coverage A because the HO-3 covers the dwelling regardless of any change in occupancy status during the policy term as writtenDenial or limited payment, converting to non-owner-occupied use voids or restricts HO eligibility, and a DP form should have been writtenFull payment of property coverage, but Section II personal liability is voided by the residence-premises eligibility change for non-owner-occupied conversionFull payment less a flat 25% co-insurance penalty applied under the residence-premises-occupancy provision of the unendorsed HO-3 dwelling form
10. Which is the best example of a peril?
A faulty wiring systemCarelessness with cigarettesA house fireAn old, dry roof
11. 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:
$1,200 because the daily limit applies but the aggregate $900 maximum is waived under the standard theft-loss extension to transportation expensesNothing, rental reimbursement applies only to collision claims under Part D and never to comprehensive theft losses on the covered auto policyUp to $900 in total rental reimbursement, limited by the $30/day cap and the $900 aggregate maximumThe full 40 days × $30/day = $1,200 because theft losses are excluded from the aggregate cap under the comprehensive-only rental expense rule
12. PIP (Personal Injury Protection) coverage is most associated with:
No-fault auto insurance statesProperty-only coverage statesStates that prohibit auto insuranceOpen-tort, fault-based states
13. An insured is struck by a hit-and-run driver in a parking lot. There are no witnesses and no physical contact between the vehicles, the other car swerved, the insured swerved to avoid it, and hit a pole. Which UM coverage issue most directly determines whether her claim is payable?
Whether the insured carries collision coverageWhether she filed a written police report within twenty-four hours and obtained a signed witness affidavit at the accident sceneWhether the policy requires actual physical contact with the phantom vehicle (the 'miss-and-run' rule)Whether the other driver was later identified
14. A lender holds a mortgage on an insured dwelling. What is the source of the lender's insurable interest in that property?
Its right to inspect the property each year under the loan agreement signed by the borrowerIts status as a party named on the declarations, which by itself creates the interest it needsIts secured financial stake in the property, which would suffer a measurable loss if it burnedThe borrower's written consent, which transfers part of the owner's insurable interest to it
15. A storm drops hail on an insured's home, breaking 14 windows, denting the roof, and damaging two cars in the driveway. For purposes of the homeowners policy deductible, this is generally treated as:
Three separate occurrencesOne occurrence per coverage (A, B, C separately)One occurrence, a single deductible appliesOne occurrence per damaged item
16. Salvage in a casualty/liability context refers to:
Premium calculation based on the exposure base and rating territory listed on the declarationsAn exclusion in the policy that removes coverage for certain categories of property lossThe amount of the deductible owed by the insured before insurer payment begins on a lossWhat the insurer can recover and sell from damaged property after paying a claim
17. An audit on a casualty policy compares:
The producer's commission to the carrier's loss reserves for the periodThe premium paid to the policy limit purchased for the periodEstimated exposure to actual exposure during the policy periodThe number of claims filed to the deductible selected for the period
18. Why are catastrophic risks (e.g., war, nuclear meltdowns) generally uninsurable, even though they are pure risks?
They occur too often to be predicted with statistical confidence over any reasonable underwriting period for the carrier or its reinsurersThey cannot be measured, because actuarial methods cannot capture the magnitude of a catastrophe and the data are too scarce for the law of large numbersThey violate the requirement that losses be relatively independent across the insured pool, a single event would simultaneously hit the entire poolThey lack insurable interest, because the affected insureds cannot establish a financial stake in the property before the catastrophic event occurs
19. Under a standard NFIP Dwelling Form, what is the maximum building coverage available for a single-family residence?
$100,000$500,000$250,000Unlimited
20. 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 defensePermits an inference of negligence from the circumstances of the loss when the defendant had exclusive control and the event ordinarily would not occur without negligenceImposes 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 pleadings

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