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Tennessee Personal Lines Practice Exam

20 exam-style questions drawn from the same bank as our full Tennessee Personal Lines course (Tennessee 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. Under FCRA, an insured who has been adversely affected by a consumer report is entitled to:
Free annual credit reports and the right to dispute inaccurate informationPunitive damages under the FCRA private cause of action for adverse actionA premium refund of the unearned portion of the most recent renewal collectedAutomatic policy issuance regardless of underwriting findings on the report
2. Which homeowners form is designed exclusively for owner-occupants of condominium units?
HO-6HO-5HO-4HO-2
3. On a personal-lines property application, an applicant fails to mention that the home has had three prior fire-loss claims in five years. This omission is best characterized as:
An immaterial misstatementAn honest mistake with no consequenceA material concealment that may void the policyA warranty breach only if the insurer asked
4. 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 she filed a written police report within twenty-four hours and obtained a signed witness affidavit at the accident sceneWhether the other driver was later identifiedWhether the insured carries collision coverageWhether the policy requires actual physical contact with the phantom vehicle (the 'miss-and-run' rule)
5. An insured has an HO-3 with a $2,500 special limit on silverware. A theft destroys $4,000 of sterling silverware. Without endorsement, how much of the loss is paid?
$4,000 less the deductibleFull Coverage C limit$0$2,500
6. The insured himself trips on his own stairs and breaks an ankle. He submits the $5,000 hospital bill to Coverage F. The insurer:
Pays subject to the policy's home-health-care sublimit for at-residence injuriesPays only actual cash value of the medical care after standard depreciationDenies the claim — Med Pay specifically excludes the insured and resident relativesPays the $5,000 hospital bill in full under the no-fault Coverage F provision
7. An insured's 22-year-old son moves home from college and begins driving the family car. He is best classified as:
Not covered under any provision because he has not been listed by name in the declarations or the underwriting fileA named excluded driver by default until he is specifically added to the policy as a listed-driver endorsementA resident relative — automatically an insured under the PAP and rated as a driver in the householdA non-resident relative — covered only as a permissive user under the omnibus clause, never as a full insured
8. 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:
$3,000 — full replacement cost of the spoiled food paid under the unsublimited refrigerated-property loss-settlement basisOnly $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 itUp to $500 (standard endorsement limit) for food spoilage from a covered power interruption — even one off-premises
9. 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$590 — the insurer reimburses the full repair plus the deductible amount as a goodwill credit toward the next term$0 — losses below the stated comprehensive deductible never trigger any insurer payment under standard claim-handling
10. An insured carries a $1M umbrella above 250/500/100 PAP and $300,000 HO liability. A covered auto accident results in a $2,000,000 BI award against the insured. How does coverage stack?
PAP pays $250,000; umbrella pays $1,750,000; insured pays nothing under the umbrella drop-downPAP pays $500,000 under the per-accident BI limit; umbrella pays $1.5M; insured pays nothing personallyUmbrella pays the full $2M under the broadened liability extension that ignores underlying limitsPAP pays $250,000 (per-person limit); umbrella pays $1,000,000; insured personally owes $750,000
11. Limitations and exclusions on a personal liability policy commonly remove coverage for:
Premises losses only that arise on the insured location during the policy termAll bodily injury claims regardless of cause or origin under the policy formIntentional acts, business pursuits, owned aircraft, and certain auto exposuresProperty of the insured covered by the underlying property coverage of the policy
12. An insured moves from one state to another mid-term and continues driving his PAP-insured vehicle. The most important agent action is to:
Notify the carrier promptly — rates, mandatory coverages (such as no-fault or UM minimums), and form availability differ by state, and the carrier may need to rewrite the policy in the new stateCancel the personal auto policy immediately and refund unused premium back to the insured, leaving the insured uninsured pending a new application with a state-licensed carrier in the destination stateChange only the mailing address of record with the carrier; the underlying rates, forms, mandatory coverages, and territory rating remain unchanged because the insured is the same regardless of garaging stateTake no further action with the carrier because the personal auto policy follows the insured into any new state of garaging automatically without any rate, form, or filing changes required
13. An insured loses $3,200 in cash during a covered burglary. Coverage C is $150,000 and no endorsements apply. How much does the policy pay?
$2,500 — the firearms-and-related-equipment theft sublimit applies to cash$1,000 — the securities, manuscripts, and stamps sublimit caps the loss$200 — the special sublimit on money, bank notes, and bullion$3,200 — Coverage C pays the full cash loss without applying any sublimit
14. 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:
Must 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 adjustedMay 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 formMay 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 PAP
15. On the PAP, when an insured's auto is total-loss, settlement is generally based on:
Actual cash value (ACV) at the time of loss, less the deductibleReplacement cost without depreciation under the new-vehicle replacement extensionLoan payoff amount under the optional GAP coverage rider attached to the policyOriginal purchase price as listed on the bill of sale at acquisition
16. An insured's laptop and luggage are stolen from a hotel room during a vacation. Coverage C is $100,000 and the loss is $4,000. How does the HO-3 respond?
Pays only actual cash value regardless of any replacement-cost endorsement on the policy, because the RCV provision suspends for off-residence-premises lossesPays up to 10% of Coverage C ($10,000) for property away from the residence premises — the $4,000 loss is covered in fullPays $1,000 — the standard flat-dollar off-premises sublimit applied regardless of the Coverage C personal-property limit selected at policy inceptionNo coverage — off-premises personal property is categorically excluded from Coverage C and routed to a scheduled-property floater for any reimbursement
17. Which underwriting practice most directly limits an insurer's exposure to adverse selection?
Classifying applicants into rating groups so each group's premium reflects the risk it bringsExtending the free-look period so applicants have longer to decide whether to keep the policyRaising the policy limit offered to every applicant who reports a prior loss on the applicationPaying producers a higher first-year commission on policies written for hard-to-place risks
18. 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:
Deny 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 provisionPay the judgment up to the Coverage F medical-payments-to-others limit because the underlying loss is a covered third-party premises injuryDeny the claim because the insured breached her duty to forward suit papers and cooperate, prejudicing the insurer's defense
19. The insuring agreement of a policy:
Identifies excluded perils through the standard exclusions schedule of the contractLists the rules the insured must follow under the conditions section of the contractSets out the basic promise of coverage by the insurerNames the agent of record and the producer's appointment number for commission purposes
20. The principle of indemnity holds that an insured should be:
Paid only the original policy premium back as a refund instead of receiving a true loss paymentRestored to the same financial position as before the loss, no better and no worsePaid market value regardless of policy limits, ignoring the per-occurrence cap on the declarationsAllowed to profit from a loss to compensate for inconvenience and time lost during the claim

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