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South Carolina Personal Lines Practice Exam

20 exam-style questions drawn from the same bank as our full South Carolina Personal Lines course (South Carolina 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's home is rendered uninhabitable by a covered fire. Pre-loss, her monthly housing cost was $2,200 (mortgage P&I + utilities). She rents a similar home at $3,500/month plus $250/month additional utilities while repairs run for 5 months. The HO-3 Coverage D loss-of-use limit is $30,000. The insurer's Coverage D ALE payment is:
$17,500 — gross monthly rent ($3,500) × 5 months under the 'full-substitute' rule$18,750 — gross rent plus extra utilities ($3,750) × 5 months at full cost$7,750 — only the INCREASE above her pre-loss housing cost ($1,550/month), × 5 months$30,000 — the full Coverage D limit paid as a one-time settlement
2. A representation on an insurance application must be:
Substantially true and material to the underwriting decisionAbsolutely true in every detail with no exceptions allowedNotarized by a commissioned officer of the carrier on fileMade under oath before a notary or other authorized officer
3. An insured forgot to renew her HO-3 — it lapsed three weeks before her dog bit a delivery driver, causing $400,000 in BI damages. She still carried a current personal umbrella with $1M limits and a $250 SIR; the umbrella required $300K underlying HO liability. The umbrella will likely:
Pay $1,000,000 in full because the umbrella is current and the policy's drop-down provision absorbs any lapsed primary layer beneath itPay only the $250 SIR amount under the umbrella's residual-payment rule when the required scheduled underlying primary is missingDeny the claim entirely because failure to maintain underlying is a strict coverage condition under the umbrella's warranty-of-primary-coverage provisionPay the loss in excess of the would-be $300,000 underlying — i.e., $100,000 — because the insured is treated as self-insured for the missing primary layer
4. 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 insuredCovered only up to 50% of the med pay limit as a non-listed driverNot covered — med pay is restricted to the named insured and resident relatives who are specifically listed on the policy declarations page
5. An insured carries a CSL (combined single limit) of $300,000. He is at fault for one accident causing $250,000 BI to one claimant and $80,000 PD to two vehicles. The carrier will pay:
$300,000 BI and an additional $300,000 PD because the CSL applies separately to each loss category under the standard split-application ruleUp to $300,000 total across BI and PD combined — the carrier pays $300,000 and the insured is exposed for the remaining $30,000$250,000 BI plus $80,000 PD = $330,000 paid because a CSL doubles its limit when a single accident produces both BI and PD claims$100,000 paid because the standard per-person bodily-injury cap under a CSL is one-third of the per-accident combined limit elected
6. An insured's HO-3 covers his coin collection ($3,200), $400 in cash on hand, and a checkbook with several blank checks. A burglar steals all three. The HO special-limit for money, bank notes, bullion, gold, silver, and numismatic property is typically $200. The special-limit for securities, manuscripts, and stamps is typically $1,500. How is the loss settled?
$1,700 — $200 cap on cash and coins + $1,500 cap on securities/manuscripts$200 — cash and coins share one money/numismatic limit$200 cash + up to $200 numismatic = $400 total$3,800 — full value of all stolen items
7. Theft of personal property under a DP-3:
Is excluded but can be added by endorsementIs covered only when theft occurs at a secondary residenceIs covered up to a $500 special limitIs automatically covered up to the Coverage C limit
8. A homeowner is sued by a contractor who fell on her icy driveway. She does NOT notify her HO-3 carrier; instead she hires her cousin's attorney, defends herself, and loses a $90,000 judgment. She then submits the judgment to her HO-3 carrier under Coverage F (Personal Liability) and demands reimbursement. The carrier's BEST response is to:
Pay the judgment up to the Coverage F medical-payments-to-others limit because the underlying loss is a covered third-party premises injuryDeny payment because Coverage F categorically excludes any bodily injury claim made by a person classified as the insured's inviteePay only the legal-defense portion as a supplementary payment in addition to limits under the policy's supplementary-payments provisionDeny the claim because the insured breached her duty to forward suit papers and cooperate, prejudicing the insurer's defense
9. An insured wants to increase Ordinance or Law coverage from the 10% additional coverage to 50% of Coverage A so the home, built in 1958, can be fully brought to current code. The appropriate solution is:
Increased Ordinance or Law endorsement — raises the additional-coverage percentage from 10% to a higher selected limitInflation Guard endorsement — addresses code-upgrade obligations through the renewal-period dwelling-cost adjustment factorExtended Replacement Cost endorsement — automatically pays code-required upgrades as part of the expanded dwelling-reconstruction provisionWater Backup of Sewers and Drains endorsement — code-upgrade costs are paid from its sublimit on plumbing-related upgrades
10. Which loss-settlement basis applies to the principal residence under an NFIP Dwelling Form when the insured carries at least 80% of replacement cost?
Market valueActual cash valueReplacement costFunctional replacement cost
11. Which of the following losses would be covered under a DP-3 but NOT under a DP-1 with extended coverage and V&MM?
A grease fire in the kitchen that ignites cabinetry and structural framingA wind-driven tree falling on the roof during a covered windstorm eventA hailstorm shattering windows that are listed under the EC perilAn accidental collapse of a load-bearing wall from a hidden defect
12. An insured loses $3,000 in food and medication when a covered power outage knocks out a chest freezer for 48 hours. The Refrigerated Property endorsement typically pays:
Only $50 — the standard delicatessen-perishables sublimit applied to all spoilage claims under the food-loss extensionNothing — food spoilage from any cause is categorically excluded from the unendorsed HO-3 and the refrigerated-property endorsement does not modify it$3,000 — full replacement cost of the spoiled food paid under the unsublimited refrigerated-property loss-settlement basisUp to $500 (standard endorsement limit) for food spoilage from a covered power interruption — even one off-premises
13. After a kitchen fire an insured submits a sworn proof of loss inventory listing a 75-inch television, a leather sectional, and a designer espresso machine. The adjuster suspects the inventory is inflated and requests an Examination Under Oath. The insured refuses, citing 'invasion of privacy.' Under standard HO conditions, the insurer may:
Deny the claim in full for failure to comply with a condition precedent to coverageCancel the policy mid-term but pay the current claim under the standard 'unilateral cancellation' provision found in HO formsRefer the matter to the state DOI's market-conduct division for binding arbitration under the unfair-claim-practices actPay the undisputed portion only and reserve the contested items for declaratory-judgment litigation against the insured
14. Coverage D under a dwelling form is:
Other structuresPersonal liabilityPersonal propertyLoss of use / fair rental value
15. Which is the best example of a peril?
An old, dry roofA faulty wiring systemCarelessness with cigarettesA house fire
16. When a liability policy reimburses a third party for property damage to their auto, the typical valuation basis is:
Original purchase priceReplacement cost without depreciationStated valueActual cash value (or repair cost up to ACV)
17. 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 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 formDenial or limited payment — converting to non-owner-occupied use voids or restricts HO eligibility, and a DP form should have been writtenFull payment under Coverage A because the HO-3 covers the dwelling regardless of any change in occupancy status during the policy term as written
18. In a no-fault state, a PAP insured is rear-ended; she suffers $4,200 in medical bills. She has PIP with a $10,000 limit and $5,000 of med-pay. Which coverage pays first, and how do the two interact?
Both pay in full and the insured may keep the totalNeither pays — no-fault eliminates first-party medical coverageMed-pay pays first; PIP is excessPIP pays first; med-pay coordinates as excess and prevents double-recovery
19. An HO-3 has $250,000 Coverage A. The insured builds a $50,000 detached workshop and is concerned the default Coverage B is too low. Which is the most appropriate solution?
Buy a separate dwelling policy on the home itself to free up Coverage BDo nothing — Coverage B always pays the full cost of any one structureEndorse the policy to schedule increased Coverage B specifically on the workshopRely on Coverage A — the workshop will be treated as part of the dwelling
20. A landlord owns a single-family rental dwelling. She wants minimum-premium coverage on the dwelling against fire, lightning, and a few other basic perils — she does not need open-peril coverage and is willing to accept named-peril limits. She wants the cheapest dwelling-fire form available. Which DP form fits?
HO-3 — DP forms cannot be written for rental properties under residence-premises eligibility restrictions in the dwelling-fire program filingsDP-2 broad form, which covers an expanded named-peril list including water discharge, weight of ice/snow, and falling objects at higher premium than DP-1DP-1 basic form, which covers a short list of basic perils (fire, lightning, internal explosion) plus optional ECE (extended coverage endorsement) perilsDP-3 special form, which provides open-peril dwelling coverage with replacement-cost settlement at the highest premium in the dwelling-fire program filing

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