The Florida Personal Lines Exam, officially known as the 20-44 license, tests your knowledge across a wide range of topics, from basic insurance concepts to Florida-specific regulations. Understanding the types of questions you will face is essential for effective preparation. The questions are designed to assess not just memorization, but your ability to apply concepts to realistic scenarios .
A significant portion of the exam covers foundational insurance principles. You will need to know the difference between pure risk, which involves only the chance of loss or no loss and is the only type that is insurable, and speculative risk, which offers a chance for profit or loss and is not insurable . Questions often ask you to identify different types of hazards. For example, a person who does not lock their door due to an indifferent attitude represents a morale hazard, whereas an applicant with a history of fraudulent claims represents a moral hazard . You must also understand the concept of peril, the actual cause of loss, and distinguish between a direct loss, such as fire damage to a home, and an indirect loss, like the loss of rental income resulting from that fire .
Policy structure and valuation are heavily tested. You should be familiar with the declarations page, the insuring agreement, conditions, and exclusions . The method of calculating a loss payment, often using the formula (insurance carried divided by insurance required) multiplied by the loss amount, is a common calculation question . You will need to know that actual cash value is determined by taking the current replacement cost and subtracting depreciation . Other valuation methods like replacement cost, market value, and stated value are also key topics .
A major focus of the exam is on specific policy forms. For homeowners insurance, you must understand the differences between the various HO forms. HO-3 provides open-perils coverage on the dwelling, meaning all perils are covered except those specifically excluded . You need to know what each coverage section includes: Coverage A for the dwelling, Coverage B for other structures, Coverage C for personal property, and Coverage D for loss of use . Questions may also test the specific coverage limits, such as the sub-limit for trees, shrubs, and plants, which is typically $500 per item. Dwelling policy forms DP-1, DP-2, and DP-3 are also covered, with DP-3 offering the broadest, open-perils coverage on the dwelling .
For auto insurance, the Personal Auto Policy (PAP) is central. You should be familiar with its parts: Part A for liability, Part B for medical payments, Part C for uninsured/underinsured motorist coverage, and Part D for coverage of damage to your auto . Questions often explore who is covered and which policy is primary. For instance, if someone borrows another person's car, the owner's auto policy is typically primary. You must also understand Florida's no-fault laws, including Personal Injury Protection (PIP) coverage, which covers medical expenses and lost wages regardless of fault up to certain limits .
Legal doctrines and ethical practices are another critical area. Subrogation is the insurer's right to seek damages from a third party after paying a claim . You will be tested on unfair trade practices like twisting, which involves misrepresenting facts to get someone to switch policies, and sliding, which is adding coverage without the insured's knowledge or consent . Rebating, which is offering an inducement to purchase insurance, is also strictly prohibited .
Finally, Florida-specific knowledge is indispensable. You need to know the roles of the Office of Insurance Regulation (OIR), which has absolute authority to examine insurers for compliance, and the Department of Financial Services . Citizens Property Insurance Corporation is Florida's insurer of last resort for property owners who cannot find coverage in the private market . Cancellation and nonrenewal rules are also tested, such as the requirement for an insurer to provide 20 days' written notice when canceling a commercial property policy in the first 90 days for reasons other than non-payment . Florida's Valued Policy Law states that in case of a total loss by a covered peril, the insurer must pay the full policy limits .
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