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Free SD Personal Lines Producer Practice Questions

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Sample Practice Questions

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

  1. 1A tenant is renting a house and wants insurance for the tenant's furniture and clothing, without insuring the landlord's dwelling. Which homeowners form fits this interest?

    1. A. HO-2 Broad Form
    2. B. HO-4 Renter's Form
    3. C. HO-6 Condo Owner's Form
    4. D. HO-8 Modified Coverage Form

    Answer: B

    Explanation: "HO-4 (Renter’s Form) – Covers unscheduled personal property on a broad named perils basis" HO-4 addresses a renter's personal property; HO-2 and HO-8 are owner dwelling forms, while HO-6 addresses an owned condominium unit.

    Reference: NAIC Homeowners Policy Forms (2025 Data Call Definitions) — Homeowners Policy Forms, HO-4

  2. 2A driver negligently injures a pedestrian in an auto accident. Which part of the driver's personal auto policy addresses the driver's liability for the pedestrian's injury?

    1. A. Bodily injury liability coverage
    2. B. Property damage liability coverage
    3. C. Medical payments coverage
    4. D. Collision damage coverage

    Answer: A

    Explanation: "Bodily Injury Liability: This coverage applies to injuries that you cause to someone else." The injured pedestrian is a third party, so bodily-injury liability applies. Property-damage liability concerns property, medical payments covers occupants, and collision concerns damage to the insured auto.

    Reference: NAIC, A Consumer's Guide to Auto Insurance — p. 1, Coverages in an Auto Policy, Bodily Injury Liability

  3. 3Many households face uncertain fire losses. An insurer collects premiums from them and promises to pay covered losses. Which principle explains this arrangement?

    1. A. Risk retention by each household without an insurer
    2. B. Risk transfer to an insurer through pooled exposures
    3. C. Risk avoidance by eliminating a household exposure
    4. D. Risk reduction through improved property safeguards

    Answer: B

    Explanation: "Insurance - an economic device transferring risk from an individual to a company and reducing the uncertainty of risk via pooling." Insurance transfers individual risk to an insurer and pools many exposures. Retention, avoidance, and reduction are different risk-management methods and do not describe the insurer's pooled promise in the stem.

    Reference: NAIC, Glossary of Insurance Terms — Glossary, Insurance

  4. 4A client asks where to verify the policy period, premium, and coverage limits on a newly delivered homeowners policy. Which policy part should the producer show?

    1. A. The declarations or information page
    2. B. The insuring agreement and its grants
    3. C. The exclusions section and its limits
    4. D. The general conditions and definitions

    Answer: A

    Explanation: "the coverages, coverage limits, the premium and any discounts." The declarations page lists the policy period, limits, and premium. The other policy parts explain grants, exclusions, or conditions rather than serving as the primary information schedule.

    Reference: NAIC, Understanding Your Homeowners or Renter's Policy — Understanding Your Policy, declaration/information page

  5. 5A South Dakota insurance investigation remains open after the producer voluntarily surrenders the license. What authority does the director retain?

    1. A. Authority to impose any penalty or remedy authorized by insurance law
    2. B. Authority only to issue a private reprimand
    3. C. Authority only to recover unpaid renewal fees
    4. D. No authority after the surrender becomes effective

    Answer: A

    Explanation: SDCL 58-30-170 says the director retains authority to impose an authorized penalty or remedy "even if the person's license or registration has been surrendered or has lapsed by operation of law." The surrender therefore does not end enforcement authority.

    Reference: Codified Law 58-30 | South Dakota Legislature — SDCL 58-30-170

  6. 6How may a binder for temporary property insurance be made in South Dakota?

    1. A. Only in writing
    2. B. Only electronically
    3. C. Orally or in writing
    4. D. Only by court order

    Answer: C

    Explanation: SDCL 58-11-29 provides that binders or temporary insurance contracts "may be made orally or in writing."

    Reference: Codified Law 58-11 | South Dakota Legislature — SDCL 58-11-29

  7. 7A client owns and occupies a condominium unit. The association insures the main building, but the client needs insurance for the unit owner's real-property interest and belongings. Which form applies?

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

    Answer: C

    Explanation: "HO-6 (Condo Owner’s Form) – Covers the real property interest" HO-6 addresses an owned condominium unit, including the owner's property interest. HO-4 is for tenants; HO-2 and HO-8 are dwelling forms for other owner situations.

    Reference: NAIC Homeowners Policy Forms (2025 Data Call Definitions) — Homeowners Policy Forms, HO-6

  8. 8A driver backs into a neighbor's fence and is legally responsible for repairing it. Which personal auto coverage addresses the neighbor's damaged fence?

    1. A. Bodily injury liability coverage
    2. B. Property damage liability coverage
    3. C. Comprehensive auto coverage
    4. D. Uninsured motorist coverage

    Answer: B

    Explanation: "Property Damage Liability: This coverage pays for damages you cause to someone else’s car or to objects" The neighbor's fence is another person's damaged property. Bodily injury concerns people, comprehensive concerns the insured auto, and UM concerns an uninsured driver.

    Reference: NAIC, A Consumer's Guide to Auto Insurance — p. 1, Coverages in an Auto Policy, Property Damage Liability

  9. 9A bank wants to insure its interest in a borrower's house against fire. Which relationship gives the bank an insurable interest in that particular house?

    1. A. An unpaid mortgage loan secured by that particular house
    2. B. An unsecured personal loan made to the same homeowner
    3. C. A deposit account held by the same homeowner at the bank
    4. D. A mortgage loan secured by a different house the borrower owns

    Answer: A

    Explanation: "Insurable Interest - A right or relationship in regard to the subject matter of the insured contract such that the insured can suffer a financial loss from damage, loss or destruction to it." The unpaid loan secured by this house creates exposure to this house's damage. Other banking relationships do not give the bank that property-specific loss exposure.

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

  10. 10A homeowner needs to determine the initial types of losses the policy promises to cover before applying later limitations. Which policy part provides that grant?

    1. A. The declarations page listing policy data
    2. B. The insuring agreement stating coverages
    3. C. The exclusions section removing coverages
    4. D. The endorsement schedule changing coverages

    Answer: B

    Explanation: "The insuring agreement summarizes the policy coverages." The insuring agreement supplies the coverage grant and peril basis. The declarations page lists data; exclusions remove coverage; endorsements alter the base agreement.

    Reference: NAIC, Understanding Your Homeowners or Renter's Policy — Understanding Your Policy, insuring agreement

Topics in this practice bank

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

  • I. TYPES OF PROPERTY POLICIES
    • A. Homeowners
    • A. Homeowners / 1. HO-2
    • A. Homeowners / 2. HO-3
    • A. Homeowners / 3. HO-4
    • A. Homeowners / 4. HO-5
    • A. Homeowners / 5. HO-6
    • A. Homeowners / 6. HO-8
    • B. Dwelling policies
    • B. Dwelling policies / 1. DP-1
    • B. Dwelling policies / 2. DP-2
    • B. Dwelling policies / 3. DP-3
    • C. Inland marine
    • C. Inland marine / 1. Personal Articles floaters
    • D. National Flood Insurance Program
    • E. Others
    • E. Others / 1. Earthquake
    • E. Others / 2. Mobile Homes
    • E. Others / 3. Watercraft
    • E. Others / 4. Windstorm
  • II. TYPES OF CASUALTY POLICIES
    • A. Automobile: personal auto
    • A. Automobile: personal auto / 1. Liability
    • A. Automobile: personal auto / 1. Liability / a. Bodily Injury
    • A. Automobile: personal auto / 1. Liability / b. Property Damage
    • A. Automobile: personal auto / 1. Liability / c. Split Limits
    • A. Automobile: personal auto / 1. Liability / d. Combined Single Limit
    • A. Automobile: personal auto / 2. Medical Payments
    • A. Automobile: personal auto / 3. Physical Damage (collision; other than collision; specified perils)
    • A. Automobile: personal auto / 4. Uninsured motorists
    • A. Automobile: personal auto / 5. Underinsured motorists
    • A. Automobile: personal auto / 6. Who is an insured
    • A. Automobile: personal auto / 7. Types of Auto
    • A. Automobile: personal auto / 7. Types of Auto / a. Owned
    • A. Automobile: personal auto / 7. Types of Auto / b. Non-owned
    • A. Automobile: personal auto / 7. Types of Auto / c. Hired
    • A. Automobile: personal auto / 7. Types of Auto / d. Temporary Substitute
    • A. Automobile: personal auto / 7. Types of Auto / e. Newly Acquired Autos
    • A. Automobile: personal auto / 7. Types of Auto / f. Transportation Expense and Rental Reimbursement Expense
    • A. Automobile: personal auto / 8. Exclusions
    • B. Umbrella/Excess liability
  • III. PROPERTY AND CASUALTY INSURANCE TERMS AND RELATED CONCEPTS
    • A. Insurance
    • A. Insurance / 1. Law of Large Numbers
    • B. Insurable interest
    • C. Risk
    • C. Risk / 1. Pure vs. Speculative Risk
    • D. Hazard
    • D. Hazard / 1. Moral
    • D. Hazard / 2. Morale
    • D. Hazard / 3. Physical
    • E. Peril
    • F. Loss
    • F. Loss / 1. Direct
    • F. Loss / 2. Indirect
    • G. Loss Valuation
    • G. Loss Valuation / 1. Actual cash value
    • G. Loss Valuation / 2. Replacement cost
    • G. Loss Valuation / 3. Market value
    • G. Loss Valuation / 4. Stated value
    • G. Loss Valuation / 5. Salvage value
    • H. Proximate cause
    • I. Deductible
    • J. Indemnity
    • K. Limits of liability
    • L. Coinsurance/Insurance to value
    • M. Occurrence
    • N. Cancellation
    • O. Nonrenewal
    • P. Vacancy and unoccupancy
    • Q. Liability
    • Q. Liability / 1. Absolute
    • Q. Liability / 2. Strict
    • Q. Liability / 3. Vicarious
    • R. Negligence
    • S. Binder
    • T. Endorsements
    • U. Blanket vs. Specific
    • V. Burglary, Robbery, Theft, and Mysterious Disappearance
    • W. Warranties
    • X. Representations
    • Y. Concealment
    • Z. Deposit Premium/Audit
    • AA. Certificate of Insurance
    • BB. Damages
    • BB. Damages / 1. Compensatory
    • BB. Damages / 1. Compensatory / a. General
    • BB. Damages / 1. Compensatory / b. Special
    • BB. Damages / 2. Punitive
    • CC. Compliance with Provisions of Fair Credit Reporting Act
  • IV. PROPERTY AND CASUALTY POLICY PROVISIONS AND CONTRACT LAW
    • A. Declarations
    • B. Insuring agreement
    • C. Conditions
    • D. Exclusions
    • E. Definition of the insured
    • F. Duties of the insured after a loss
    • G. Obligations of the insurance company
    • H. Mortgagee rights
    • I. Proof of loss
    • J. Notice of claim
    • K. Appraisal
    • L. Other Insurance Provision
    • M. Subrogation
    • N. Elements of a contract
    • O. Sources of underwriting information
    • P. Fair Credit Reporting Act
    • Q. Privacy Protection (Gramm Leach Bliley)
    • R. Policy Application
    • S. Terrorism Risk Insurance Act (TRIA)
    • T. Cancellation and nonrenewal provisions
    • U. Supplementary payments
    • V. Loss settlement provisions including consent to settle a loss
    • W. Territory
  • I. SD STATUTES, RULES, AND REGULATIONS COMMON TO LIFE, ACCIDENT AND HEALTH, PROPERTY, AND CASUALTY INSURANCE
    • A. Director of Insurance
    • A. Director of Insurance / 1. Duties and powers
    • A. Director of Insurance / 2. Examination of records
    • A. Director of Insurance / 3. Hearings/notice of hearings
    • A. Director of Insurance / 4. Penalties (and fines)
    • A. Director of Insurance / 5. Cease and desist orders
    • B. Insurance Definitions
    • B. Insurance Definitions / 1. Acts constituting an insurance transaction
    • B. Insurance Definitions / 2. Domestic, foreign and alien company
    • B. Insurance Definitions / 3. Fraternals
    • B. Insurance Definitions / 4. Authorized and unauthorized companies insurer
    • B. Insurance Definitions / 5. Stock and mutual companies
    • B. Insurance Definitions / 6. Certificate of authority
    • C. Licensing
    • C. Licensing / 1. Types of licenses
    • C. Licensing / 1. Types of licenses / a. Producer
    • C. Licensing / 1. Types of licenses / b. Resident/Nonresident
    • C. Licensing / 1. Types of licenses / c. Temporary license
    • C. Licensing / 1. Types of licenses / d. Business entity
    • C. Licensing / 2. Qualifications for obtaining a license
    • C. Licensing / 2. Qualifications for obtaining a license / a. Exemptions/Exceptions
    • C. Licensing / 2. Qualifications for obtaining a license / b. License denial
    • C. Licensing / 3. Maintaining a license
    • C. Licensing / 3. Maintaining a license / a. Continuing education
    • C. Licensing / 3. Maintaining a license / b. Change of address
    • C. Licensing / 3. Maintaining a license / c. Renewal/Nonrenewal
    • C. Licensing / 3. Maintaining a license / d. Record maintenance
    • C. Licensing / 3. Maintaining a license / e. License suspension/ revocation/ refusal to issue or renew
    • C. Licensing / 3. Maintaining a license / f. Reporting actions
    • C. Licensing / 3. Maintaining a license / g. Assumed business name
    • C. Licensing / 3. Maintaining a license / h. Inactivity due to military service
    • C. Licensing / 3. Maintaining a license / i. Inactivity due to extenuating circumstances
    • C. Licensing / 3. Maintaining a license / j. Reinstatement, continuation, termination
    • C. Licensing / 4. Producer appointment
    • C. Licensing / 4. Producer appointment / a. Termination of contract
    • D. Producer responsibilities
    • D. Producer responsibilities / 1. Fiduciary responsibilities
    • D. Producer responsibilities / 2. Commissions, compensation, fees
    • D. Producer responsibilities / 3. Reporting of felonies and crimes of moral turpitude
    • D. Producer responsibilities / 4. Influence of witnesses
    • D. Producer responsibilities / 5. Response to Division inquiries
    • E. Insurance Guaranty Association
    • E. Insurance Guaranty Association / 1. Purpose and disclaimer
    • F. Marketing practices
    • F. Marketing practices / 1. Unfair practices
    • F. Marketing practices / 1. Unfair practices / a. Boycott, coercion, intimidation
    • F. Marketing practices / 1. Unfair practices / b. Commingling
    • F. Marketing practices / 1. Unfair practices / c. Controlled business
    • F. Marketing practices / 1. Unfair practices / d. Defamation
    • F. Marketing practices / 1. Unfair practices / e. False advertising
    • F. Marketing practices / 1. Unfair practices / f. Illegal inducement
    • F. Marketing practices / 1. Unfair practices / g. Misrepresentation
    • F. Marketing practices / 1. Unfair practices / h. Rebating
    • F. Marketing practices / 1. Unfair practices / i. Twisting
    • F. Marketing practices / 1. Unfair practices / j. Unfair discrimination
    • F. Marketing practices / 1. Unfair practices / k. Acting without a license
    • F. Marketing practices / 1. Unfair practices / l. Larceny
    • F. Marketing practices / 1. Unfair practices / m. Prohibited fees/ premiums/ extra charges
    • F. Marketing practices / 1. Unfair practices / n. Loans
    • F. Marketing practices / 1. Unfair practices / o. Notification of suspected fraud
    • F. Marketing practices / 2. Unfair claims settlement practices
    • G. Policy delivery and receipt
    • H. Insurance Fraud Regulation
  • II. SD STATUTES PERTINENT TO PERSONAL LINES INSURANCE
    • A. Binders
    • A. Binders / 1. Evidence of insurance
    • B. Suit against insurer
    • C. Rating
    • D. Certificate of Insurance
    • E. South Dakota Valued Policy Law
    • F. Flood Insurance
    • F. Flood Insurance / 1. Flood Insurance Rate Map (FIRM)
    • G. Marine and Transportation Insurance
    • H. Cancellation and Nonrenewal
    • I. Surplus lines
    • J. South Dakota Automobile Insurance Plan (Assigned Risk)
    • K. Private-passenger automobile insurance
    • K. Private-passenger automobile insurance / 1. Uninsured/Underinsured motorists coverage
    • K. Private-passenger automobile insurance / 2. Proof of financial responsibility
    • K. Private-passenger automobile insurance / 3. Cancellation and nonrenewal

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