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Free Personal Lines Practice Questions

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Sample Practice Questions

Try these 10 sample questions from the Personal Lines practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

  1. 1A Maryland resident applies for an individual Personal Lines producer license. What is the minimum age qualification?

    1. A. 18 years
    2. B. 19 years
    3. C. 21 years
    4. D. 25 years

    Answer: A

    Explanation: Insurance Article §10-104(d) states, "An applicant must be at least 18 years of age." The applicant therefore meets the age requirement at 18.

    Reference: Article - Insurance — Insurance Article §10-104(d)

  2. 2A fire investigation finds several conditions around a home. Which finding is the peril causing the property damage, rather than a hazard that increased its chance?

    1. A. Frayed electrical wiring present in the attic before ignition.
    2. B. The fire that burned the kitchen cabinets and ceiling.
    3. C. Overloaded electrical circuits present before the fire started.
    4. D. Combustible storage located close to the heating equipment.

    Answer: B

    Explanation: NAIC defines a peril as "the cause of property damage or personal injury" and a hazard as a "circumstance which tends to increase the probability or severity of a loss." The fire is the damaging event; frayed wiring, overloaded circuits, and combustible storage are risk-increasing conditions.

    Reference: NAIC Glossary of Insurance Terms — Glossary: Hazard

  3. 3A homeowner owes money on a mortgage secured by the house. Which party has an insurable interest in physical damage to that house because it could suffer a financial loss?

    1. A. The listing broker expecting a commission if the house sells.
    2. B. The home inspector engaged to assess the house for a buyer.
    3. C. The lender whose unpaid loan is secured by the house.
    4. D. The insurance agent expecting a commission at renewal.

    Answer: C

    Explanation: NAIC defines insurable interest as a relationship to insured property "such that the insured can suffer a financial loss from damage, loss or destruction to it." The mortgage lender's unpaid loan is secured by the house, so destruction threatens its collateral. A possible service fee or sales commission does not create the same property-backed interest in the house.

    Reference: NAIC Glossary of Insurance Terms — Glossary: Insurable Interest

  4. 4Under Maryland's dog-running-at-large rule, which situation subjects the owner to liability without one of that section's stated exceptions?

    1. A. The dog runs loose and injures an unprovoking passerby on a public sidewalk.
    2. B. The dog runs loose and injures someone who was tormenting the dog.
    3. C. The dog runs loose and injures someone trespassing on the owner's land.
    4. D. The dog remains confined and injures a visitor inside the owner's fenced yard.

    Answer: A

    Explanation: Maryland says "The owner of a dog is liable for any injury, death, or loss to person or property that is caused by the dog, while the dog is running at large". The section excepts a person "Teasing, tormenting, abusing, or provoking the dog." It also excepts trespass on the owner's property. A is the unprovoked injury while the dog runs loose; D lacks the running-at-large condition.

    Reference: Maryland Courts and Judicial Proceedings Article §3-1901 — Courts and Judicial Proceedings §3–1901(c)

  5. 5A property policy lists the causes of loss it covers. A distinct cause damages the insured property but is absent from that list. How does the named-perils grant treat this damage?

    1. A. It is covered whenever the damaged property is scheduled.
    2. B. It is covered whenever the cause is sudden and accidental.
    3. C. It is not covered under the named-perils grant.
    4. D. It is covered whenever the insured pays a deductible.

    Answer: C

    Explanation: Maryland explains: "If your property is damaged due to a peril not listed in the policy, your insurer will not pay for the damage." A scheduled object, sudden event, or deductible does not add a cause to the named-perils list.

    Reference: Maryland Insurance Administration Consumer Guide to Homeowners Insurance — Homeowners Insurance Guide, Named peril coverage, p. 3

  6. 6An owner wants to insure a rented dwelling building and its fair rental value but plans to arrange liability protection separately. Which policy addresses the building and rental interest?

    1. A. Dwelling Property policy (DP).
    2. B. Homeowners Special Form (HO-3).
    3. C. Renters Form (HO-4).
    4. D. Condominium Unit-Owners Form (HO-6).

    Answer: A

    Explanation: The Connecticut insurance glossary describes "DWELLING PROPERTY 1 - Property Insurance policy that insures the dwelling at actual cash value, other structures, personal property, fair rental value". This is a property form suited to the stated dwelling and rental interests; the other products serve different risks.

    Reference: Connecticut Insurance Department Glossary — Glossary: Dwelling Property 1

  7. 7A tenant rents an apartment, owns the furniture inside, and has no ownership interest in the building or condominium unit. Which homeowners form should the producer identify for the tenant's contents?

    1. A. HO-3 Special Form.
    2. B. HO-4 Renter's Form.
    3. C. HO-5 Comprehensive Form.
    4. D. HO-6 Condo Owner's Form.

    Answer: B

    Explanation: NAIC states "HO-4 (Renter’s Form) – Covers unscheduled personal property on a broad named perils basis", while HO-6 covers a condominium owner's real property interest. This tenant has contents but no unit ownership, so HO-4 fits.

    Reference: NAIC Homeowners Policy Form Definitions — 2025 definitions, HO-4 and HO-6, p. 3

  8. 8A driver at fault collides with another person's parked car and also damages the driver's own car. Which coverage pays for the other person's car, rather than repairing the insured car?

    1. A. Collision coverage for the insured vehicle.
    2. B. Property damage liability coverage.
    3. C. Other-than-collision coverage for the insured vehicle.
    4. D. Medical payments coverage for injured occupants.

    Answer: B

    Explanation: Maryland says property damage liability pays for "vehicles or property that you do not own" damaged by the insured, while collision pays to repair "your vehicle". The parked car belongs to another person, so liability is the relevant coverage.

    Reference: Maryland Insurance Administration Consumer Guide to Auto Insurance — Auto Insurance Guide, Property Damage Liability, p. 10

  9. 9A covered liability claim exceeds the underlying auto liability limit. How is a personal umbrella designed to respond relative to that underlying policy?

    1. A. It supplies a liability layer above the specified underlying amount.
    2. B. It shares each liability dollar proportionally with the underlying policy.
    3. C. It pays the first liability dollars before the underlying policy responds.
    4. D. It reimburses the underlying insurer for its already-paid liability dollars.

    Answer: A

    Explanation: NAIC describes excess insurance as "liability coverage of an insured above a specific amount set forth in a basic policy". The umbrella sits above the stated underlying amount; pro rata sharing, first-dollar payment, and reinsuring the underlying insurer describe different relationships.

    Reference: NAIC Glossary of Insurance Terms — Glossary: Excess and Umbrella Liability

  10. 10An otherwise qualified Maryland applicant seeks an initial Personal Lines producer license. Which licensing condition applies?

    1. A. Complete a two-year apprenticeship
    2. B. Pass the examination given under the producer subtitle
    3. C. Hold a Property producer license for one year
    4. D. Receive an insurer appointment before taking the examination

    Answer: B

    Explanation: Insurance Article §10-104(g) provides, "Except as otherwise provided in this section, the applicant must pass an examination given by the Commissioner under this subtitle." Personal Lines is not one of the limited-line exceptions.

    Reference: Article - Insurance — Insurance Article §10-104(g)-(h)

Topics in this practice bank

These topics describe the available practice for Personal Lines. Review the examination outline and its sources for scope and allocation details.

  • 1.0 Insurance Regulation
    • 1.1 Licensing Purpose Process (Insurance Article Annotated Code- Sec. 10-115; Sec.10-116; Sec. 10-104) Initial Licensure Qualifications Examination License fee & application Exemptions to Licensure Types of licensees Producers Business entity producers Nonresident producers Temporary Advisers Public insurance adjusters Limited Lines Producer Portable Electronics Insurance Limited Lines license Maintenance and duration(Insurance Article Annotated Code- Sec. 10-116; Sec. 10-117(b)(1)) Reinstatement and renewal Address change Reporting of actions Assumed names Continuing education requirements, exemptions and penalties Disciplinary actions Cease and desist order Hearings Probation, suspension, revocation, refusal to issue or renew Penalties and fines
    • 1.2 State regulation Commissioner's general duties and powers (Insurance Article Annotated Code-Sec. 2-205 (a)(2)) State Specific Definitions (Insurance Article Annotated Code- Sec. 10-401; Sec. 27-209; Sec. 27-213; Sec. 10-201; Sec 10-126; Ref: COMAR Sec. 31.08.06.02) Company regulation (Insurance Article Annotated Code-Sec. 10-118; COMAR- Sec. 31.15.12.03(B)) Certificate of authority Solvency Rates Policy forms Examination of books and records Producer appointments Producer's Contract with Insurer versus Producer's Appointment with Insurer Producer's Individual Appointment versus Business Entity Appointment Maintaining Record of Appointment Notice Termination of producer appointment Producer regulation (Insurance Article Annotated Code-Sec. 27-212(d)) Examination of Books and Records Insurance Information and Privacy Protection Fiduciary Responsibilities (COMAR- Sec. 31.03.03) Bail Bond (COMAR- Sec. 31.03.05.02(B)(1); Sec. 31.03.05.05) Acting for Unlicensed Insurer Record Retention Activities of Unlicensed Individual Payment and sharing of Commissions Charging of fees Responsibility for Trust Accounts Complaint Record Binders Solvency Rates and Forms Impersonation Larceny Unlicensed persons compensation Unfair or deceptive insurance practices (Insurance Article Annotated Code-Sec. 19-107(a)(2); Sec. 27-501; Sec. 27-213, 212) Misrepresentation False advertising Defamation of insurer Boycott, coercion and intimidation False financial statements Failure to maintain complaint record Unfair discrimination (Insurance Article Annotated Code-Sec. 19-107(a)(2); Sec. 27-501; Sec. 27-213, 212) Unfair claims settlement practices Rebating Insurance fraud regulation Insurance Information and Privacy Protection Competitive Rating
    • 1.3 Federal regulation Fair Credit Reporting Act (15 USC 1681–1681d; Insurance Article Annotated Code- Sec. 27-501) Fraud and false statements including 1033 waiver (18 USC 1033, 1034)
    • 1.4 Maryland laws, regulations and required provisions Maryland Insurers Insolvency Fund Cancellation and nonrenewal (Insurance Article Annotated Code- Sec. 27-609) Concealment, misrepresentation or fraud Appraisal Federal Terrorism Insurance Program
    • 1.5 Maryland auto insurance policy State Auto Insurance Laws & Regulations State Required Limits of Liability (Insurance Article Annotated Code- Sec. 19-512; Sec. 19-504.1(3)(ii); Sec. 19-106; Sec. 17-103) Uninsured/Underinsured Motorist (Insurance Article Annotated Code- Sec. 19-509; COMAR- Sec. 31.15.10.03 Definitions Compulsory coverage Bodily injury to others Personal injury protection (Insurance Article Annotated Code- Sec. 19-505; Sec. 19-506; COMAR-Sec. 31.15.07.05) Benefits/waivers Exclusions Damage to someone else's property Uninsured/underinsured motorist (Insurance Article Annotated Code- Sec. 19-509; COMAR- Sec. 31.15.10.03) Coverage for damage to your auto Medical payments Collision Limited collision Comprehensive Deductibles Substitute transportation Towing and labor General provisions Duties after an accident or loss Selected endorsements Use of other autos — vehicles furnished or available for regular use Coverage for anyone renting an auto to you additional insured — lessor Named Driver Exclusion Maryland Automobile Insurance Fund (MAIF) (Insurance Article Annotated Code- Sec. 20-501(b); Sec. 20-502; Sec. 20-509(e-1)(ii); Sec. 20-201; Sec. 20-511)
  • 2.0 General Insurance
    • 2.1 Concepts Risk management key terms Risk Exposure Hazard Peril Loss Methods of handling risk Avoidance Retention Sharing Reduction Transfer Elements of insurable risks Adverse selection Law of large numbers Reinsurance
    • 2.2 Insurers Types of insurers Stock companies Mutual companies Reciprocals Self Insurers Risk retention groups Surplus lines carriers Purchasing groups Private versus government insurers Admitted versus nonadmitted insurers Domestic, foreign and alien insurers Financial status (independent rating services) and operating results Marketing (distribution) systems
    • 2.3 Producers and general rules of agency Types Captive Independent Insurer as principal Producer of insurer Authority and powers of producers Express Implied Apparent Responsibilities to the applicant/insured
    • 2.4 Contracts Elements of a legal contract Offer and acceptance Consideration Competent parties Legal purpose Distinct Characteristics of an Insurance Contract Contract of adhesion Aleatory contract Personal contract Unilateral contract Conditional contract Legal interpretations affecting contracts Ambiguities in a contract of adhesion Reasonable expectations Indemnity Utmost good faith Representations/misrepresentations Warranties Concealment Fraud Waiver and estoppel
  • 3.0 Property and Casualty Insurance Basics
    • 3.1 Principles and concepts Insurable interest Underwriting Function Loss ratio Rates Types Loss costs Components Hazards Physical Moral Morale Negligence Elements of a negligent act Defenses against negligence Proximate cause Torts Damages Compensatory — special versus general Punitive Absolute liability Strict liability Vicarious liability Causes of loss (perils) Named perils versus special (open) perils Direct loss Consequential or indirect loss Blanket versus specific insurance Basic types of construction Loss valuation Actual cash value Replacement cost Functional replacement cost Guaranteed replacement cost Market value Agreed value Stated amount Valued policy
    • 3.2 Policy structure Declarations Definitions Insuring agreement or clause Additional/supplementary coverage Conditions Exclusions Endorsements
    • 3.3 Common policy provisions Insureds — named, first named and additional Policy period Policy territory Cancellation and nonrenewal Deductibles Other insurance Nonconcurrent Primary and excess Pro rata Contribution by equal shares Limits of liability Per occurrence (accident) Per person Split Combined single Restoration/nonreduction of limits Coinsurance Third Party Provisions Vacancy or unoccupancy Named insured provisions Duties after loss Assignment Abandonment Insurer provisions Liberalization Subrogation Salvage Claim settlement options Duty to defend Lien holder provisions Standard mortgage clause Loss payable clause No benefit to the bailee
  • 4.0 Casualty Specific
    • 4.1 Strict Liability
    • 4.2 Vicarious Liability
    • 4.3 Limits of Liability Per occurrence (accident) Per person Aggregate (general versus products) completed operations Split Combined single
    • 4.4 Restoration - Non-Reduction of Limits
    • 4.5 Named lnsured Provisions Duties after loss Assignment Abandonment
    • 4.6 Insurer Provisions Liberalization Subrogation Salvage Claim settlement options Duty to defend
  • 5.0 Property Specific
    • 5.1 Causes of Loss (Basic, Broad and Special Forms)
    • 5.2 Direct Loss
    • 5.3 Consequential vs Indirect Loss
    • 5.4 Basic Types of Construction
    • 5.6 Coinsurance
    • 5.7 Loss Valuation Actual cash value Replacement cost Functional replacement cost Guaranteed Replacement Cost Market value Agreed value
  • 6.0 Dwelling Policy
    • 6.1 Characteristics and purpose
    • 6.2 Coverage forms — Perils insured against DP-1 Basic DP-2 Broad DP-3 Special
    • 6.3 Property coverages Coverage A — Dwelling Coverage B — Other structures Coverage C — Personal property Coverage D — Fair rental value Coverage E — Additional living expense Other coverages
    • 6.4 General exclusions
    • 6.5 Conditions
    • 6.6 Personal liability supplement
    • 6.7 Selected Endorsements Automatic Increase in Insurance Dwelling Under Construction Broad Theft Coverage Limited Theft Coverage Special Provisions
  • 7.0 Homeowners Policy
    • 7.1 Characteristics and Purpose
    • 7.2 Coverage forms HO-3 Special HO-4 Tenants HO-5 Comprehensive HO-6 Condominium Unit-Owners
    • 7.3 Definitions
    • 7.4 Section I — Property coverages Coverage A — Dwelling Coverage B — Other structures Coverage C — Personal property Coverage D — Additional Living Expense and Fair Rental Value Loss of Use
    • 7.5 Section II — Liability coverages Coverage E — Personal liability Coverage F — Medical payments to others
    • 7.6 Perils insured against
    • 7.7 Additional coverages Debris removal Reasonable repairs Trees, shrubs and other plants Fire department service charge Property removed Credit card, fund transfer card, forgery and counterfeit money Loss assessment Glass or safety glazing material Landlord's furnishings Building Additions and Alterations Claim expenses First aid expenses Damage to property of others
    • 7.8 Exclusions
    • 7.9 Conditions
    • 7.10 Other Policies Mobile Homes
    • 7.11 Selected Endorsements Business Pursuits Earthquake Home Day Care Permitted Incidental Occupancies Personal Injury Personal Property Replacement Cost Scheduled Personal Property Valuable papers Computers Watercraft Special Provisions
  • 8.0 Auto Insurance
    • 8.1 Personal auto policy Definitions Liability coverage Bodily injury and property damage Supplementary payments Exclusions Coverage for damage to your auto Collision Other than collision Deductibles Transportation expenses Exclusions Medical Payments Protection Against Uninsured/Underinsured Motorists General Provisions Conditions Duties after an accident or loss General provisions Selected endorsements Towing and labor costs Miscellaneous type vehicle Amendment of policy provisions — Maryland Medical expense and income loss benefits coverage — Maryland Transportation expenses coverage — Maryland Joint ownership coverage — Maryland Towing and labor costs — Maryland Extended non-owned coverage for named individual — Maryland Miscellaneous type vehicle — Maryland Uninsured motorists coverage — Maryland Loss Payable Clause
  • 9.0 Other Coverages and Options
    • 9.1 Personal umbrella Coverages Underlying Coverages Self-Insured Retention
    • 9.2 National Flood Insurance Program "Write your own" versus government Eligibility Coverage Limits Deductibles
    • 9.3 Boatowners including uninsured private pleasure watercraft coverage
    • 9.4 Basic Property Residual Market Maryland Property Insurance Association (FAIR plan)
    • 9.5 Inland marine Personal Articles floaters

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