FLASHCARDS
Who is your commissioner’s name?
Ricardo Lara
Endorsement
A written provision that modifies the provisions of the original contract
The Insured
> the first party of an insurance contract
>the individual looking for coverage
When is a fire & casualty agent required to inform an insured of any conditions which may be precedent to coverage regarding a PAP?
at application
An applicant would like to buy a Personal Umbrella Policy:
Your insurer may require that they maintain an underlying liability coverage by carrying auto & personal liability.
AKA personal catastrophe policy
What endorsement can be used to insure a motorcycle under a PAP?
Miscellaneous type vehicle endorsement
Which of the following is NOT an uninsured motorist as by personal auto policies uninsured motorist coverage:
A vehicle owned by a state agency that SELF-INSURERS its autos.
An insured’s duties after a loss are
Make all necessary repairs to protect from further damage, the expense should be paid by the insurer.
Which type of exposure can best be defined as a condition or situation for any exposure or financial loss that is presented to an individual from death, disability, death or sickness?
personal loss exposure
>aka human loss exposure
Under a Personal Auto Policy, who qualifies as an insured while using a covered auto?
Any person using the vehicle with permission
Self-funding benefit plans cannot be used for..
death benefits
It is a violation of the CA insurance code to act as a producer for non-admitted carrier unless…
the producer is a surplus lines broker
To determine the actual cash value of a commercial building for coinsurance purpose, use:
fair market value
The following type of loss would result in a claim for monetary damages due to injury to another or damage to another’s property:
liability loss
A medical condition that exists on the policy effective date & during a specific time earlier, is the definition of…
pre-existing condition
If an endorsed claims-made general liability policy, how long does an insured have to report a claim which occurred during the policy period?
60 days
A pick-up or a van with a gross vehicle weight of 9,500lbs. May be eligible for a personal policy if it was used in the business of
farming or ranching
A car is insured using a PAP. The car is damaged by hail. The loss is covered under…
OTC- Other than Collision
What insurance professional would be employed to aid an insurance broker?
Insurance solicitor
If a building is damaged during an attempted burglary where money was stolen from a vault, what coverages would cover the loss of the money as well as the damage to the building?
Inside the Premises- theft of money and securities
What clause is commonly used to require insureds to purchase insurance close to the value of the property?
Co insurance clause
In the state of CA a rate will not remain in affect unless it is…
impartial
What does not have a standard coverage form?
an umbrella policy
the insurance definition of an “insurance broker” is…
Someone paid to transact insurance on behalf of another person, but not on behalf of the insurer.
The following vehicle is not eligible for coverage under a PAP:
a private passenger auto owned by a partnership
A common formula that is used to establish Actual Cash Value is…
ACV= (replacement cost - depreciation)
The amount to replace damaged property minus depreciation is known as
the actual cash value
If an insured discovers an occurrence 75days after the expiration of a commercial liability policy, what must the insured have in order for the loss to be covered?
supplemental extended reporting period endorsement
The amount paid for damaged property which is equal to the price for which it could have been sold is called the…
actual cash value
The personal auto policy towing & labor pays for…
The cost of labor if performed on site up to an hour
>$25
methods of managing risk:
S hare T ransfer A void R educe R etention
Under a PAP towing and labor pays for..
the cost of labor if performed on site up to an hour.
Under a personal umbrella policy, what underlying coverages must an insured typically maintain?
Auto and personal liability
yacht policies must provide coverage for..
hull, protection and indemnity (P&I)
insolvent
an insurer who is unable to provide for its liabilities & reinsurance capital risks
If a motor home is scheduled on a miscellaneous type vehicle endorsement..
luggage & other personal property within it would NOT be covered.
The PAP territory includes…
US, Guam, US Possessions, Puerto Rico & Canada
Which type of insurance was designed to cover domestic shipments, means of transportation, personal property, commercial floater risks?
inland marine
What is the main reason a person would purchase a dwelling policy instead of home owners policy
the owner does not reside in the dwelling
An open peril policy protects against the loss from..
ANY perils, other than those specifically excluded
waiver
the intentional relinquishment of a known right
What are the minimum liability coverages for CAARP policy?
15,000/30,000/5,000
What is the limit for sound reproducing equipment under the coverage endorsement under the coverage endorsements for excess sound-reproducing equipment, audio, visual and data electronics, tapes, records, disks, and other media endorsements in a PAP?
$200
Which type of loss is a business expose to from death retirement or disability of a key employee?
Personnel loss exposure
A newly acquired motorcycle is not automatically covered under a PAP because…
The unendorsed policy does not cover 2 wheeled vehicle (insured needs misc. type vehicle endo)
A possibility of financial loss resulting from the ownership of property known as what?
Insurable interest
the following is NOT a principle rating factor under Prop 103 for personal auto policies: years of driving experience annual miles number of drivers listed driving record
number of drivers listed
Mitchell’s (unendorsed) PAP liability coverage would pay for..
The cost of repairing the neighbor’s fence that Mitchell damaged due to the negligent operation of his car
It is a violation of the CA insurance code to act as a producer for a non-admitted carrier unless..
the producer is a surplus lines broker
In CA, excess and surplus lines coverage needs to be placed through
a surplus lines broker
what is the self-insured retention under an umbrella policy?
A deductible applicable to losses excluded by underlying coverage and covered by the umbrella
What would not be listed on a commercial liability declarations page?
pollution liability limit
If a property owner is insured under a building and personal property insurance form, when is the property considered vacant?
When less than 31% of the building space is rented to others or in use by the insured
The state laws that regulate insurer practices regarding underwriting, sales, rate-marketing, and claims handling are called..
market conduct regulation
The following is NOT a type of property commonly insured by using a commercial package policy inland marine coverage part:
automobiles while kept for the owner in a commercial parking garage (this falls under the garage-keepers policy)
What endorsement can be used to insure a motorcycle under a PAP?
Miscellaneous-Type Vehicle Endorsement
An insured’s duties after a loss are described in the homeowner’s section 1 conditions. The following is NOT a correct statement about these duties: The insured must…
make all necessary repairs to protect the property from further damage. The expense is paid by the insured. (This is false because the insurer will pay not the insured)
What does a supplemental extend reporting period endorsement provide?
Extends the filing reporting period indefinitely.
A home is damaged minutes after an earthquake. FIRST by fire, and then by fuel pipes bursting and causing an explosion. Under a homeowner’s HO3 form will be there be coverage?
There is coverage, but only for the damaged caused by the ensuing fire & explosion. In order for damage due to the earthquake to be covered. the insured must have bought an earthquake endorsement.
Under the financial responsibility law requirements in CA, what is the minimum limit for several people injured in one accident?
$30,000
Devon has a PAP with $250 deductible collision coverage and $100 deductible other than collision coverage. He runs a stop sign and hits another car. There is $1,300 worth of damage to his car (the insured’s car). How much would the insurer pay for the damage to Devon’s car?
because it is a collision claim not an OTC claim so he is subject to the $250 deductible and the policy will pay the balance after the deductible is met.
>he will pay $1050
What insurance professional would be employed to aid an insurance broker?
insurance solicitor
What is NOT a characteristic of an ideally insurance loss exposure?
losses that are catastrophic (that would not be ideal)
What is a self insured retention
a deductible
What is a self insured retention under an Umbrella Policy?
A deductible applicable to losses excluded by underlying coverage and covered by the umbrella
CA has lower financial responsibility than most other states. If Mandy, A California PAP insured, carrying minimum limits on coverage, has an accident in a state that requires higher limits, then..
the policy will automatically provide the higher limits at no extra charge.
Exclusive agents generally represent only one insurer are also known as…
Captive agents
Depreciation is..
the loss in value over time
Actual cash value is defined as…
Amount to replace damaged property less depreciation
Someone shoot’s Mike’s car rear window while the car is parked on the street overnight…
OTC- Other Than Collision will pay for this loss
What type of crime form covers losses that occur during the policy period regardless of when the loss is discovered?
loss sustained form
(loss sustained also covers losses which occurred during the policy period & are found for up to one year after the policy termination)
What is known as the process whereby an insurer determines appropriate charges for its policies?
Rate-Marketing
The following will not be considered a benefit of having insurance?
Retention of loss by the insured
this means the insured decides to pay for the loss instead of allowing the insurer to pay for the loss
The PAP towing & labor endorsement pays for the cost of labor only if..
performed at the place of disablement for up to one hour
What would the commissioner likely do if an agent induces a client to co-sign a loan?
suspend the agent’s license
What is NOT one of the three main types of loss?
financial loss
What factors support the principle of indemnity?
insurable interests
What does section 770 of the insurance code refer to?
An entity cannot demand that insurance be placed at a particular agency
Kim gives her neighbor a ride in the insured car. She has medical coverage of $2000. She has an accident in which they each incur over $2000 in medical expenses. The maximum amount that Kim’s policy will pay is…
$2000 to her & $2000 to her neighbor
A PAP insured’s car was a total loss when the car was stolen and then wrecked the loss is…
other than collision loss (OTC happened first)
What peril is included in the basic form but not in the broad form?
falling objects
Collision will cover…
The insured driving into a tree that had fallen during a recent storm.
What else must an applicant for an insurance license complete on addition to pre-license class room study?
A 12hr code & ethic course.
The amount to replace property with the same like kind & quality is known as..
replacement cost
Collision will cover…
the insured driving into a tree that had fallen during a recent storm
What else must an applicant for an insurance license complete in addition to pre-license classroom study?
A 12hr code & ethic course
The amount to replace property with the same like kind & quality is known as
replacement cost
Concealment can be…
intentional and unintentional and can be grounds for declination by insurer.
An open peril policy protects against the loss from..
ANY perils other than those specifically excluded
If an insured signs a claim that is fraudulent, the insured may be guilty of…
Perjury
If an insured rents an auto while on a 2week vacation, what coverage is available under the PAP?
The broadest (the most) coverage shown in the declarations page.
What is the difference between the per accident limit in the split limits and the single limit?
The per accident limit applies only to bodily injuries, and the single limit applies to all claims.
Which perils are included in the vacancy permit endorsement?
> building glass breakage
sprinkler leakage
vandalism
What are the liability limits for the CLCA?
California’s Low Cost Auto insurance program
10/20/3
The medical expense plan designed to cover a hospital visit for a hernia repair operation would fall under…
Basic Medical Coverage
Which code requires agents to keep records of any compensation they may have received for their services involved with premium financing?
The CA insurance code
The measure of loss potential which is used for pricing of insurance is known as..
an exposure unit
The following loss is NOT covered by either the PAP policy collision or OTC coverage:
Sean leaves his personal laptop computer in his car overnight. His car is parked in his driveway in front of his house. The computer is stolen from his car. (This is not covered by the PAP but rather his HO policy)
Under the liability portion of an unendorsed PAP, what coverage is available if the name insured is operating a company car on a regular basis?
The policy excludes this usage (meaning it is NOT covered)
Carmen is driving her own car on behalf of her employer. Carmen gets in an auto accident that injures members of the public. The employer may be held responsible because of what is called:
Vicarious liability
Liability would pay for a scenario such as:
the neighbors fence that an insured damaged due to negligent operation of the vehicle
the following is NOT a rating factor under Prop 103:
number of listed drivers
What must an insured do who accepts an application from an agent who is not specifically appointed by that insurer, and then issues a policy from that application?
Forward to the commissioner a notice of appointment within 14 days of the receipt of application.
co-insurance equals a percentage that…
the employee pays after the deductible is met
If an insured borrows a neighbors car to run an errand, in the event of an auto accident how would the policies respond?
the neighbor policy is primary (because he is the owner) and then the driver is excess
The equipment dealer’s coverage form would NOT cover:
Motor vehicle designed for highway use.
The limited mexico coverage endorsement applies to trips to Mexico for how many days?
10 days or less
What course of action does a party to a contract have if the other party is found to be in breach of that contract?
Damage for breach, reasonable attorney fees and court costs
What does it mean if an agents license is inactive?
The agent cannot transact insurance business.
A representation qualifies as an..
implied warranty
the state law that regulates insurer practices are called…
Market conduct regulations
the amount paid for damage to property which is equal to the price for which it could have been sold is
actual cash value
A well maintained dwelling located in a hazardous brush area
is most likely eligible for the CA fair plan
CAARP
the minimum liability limits for CAARP are 15/30/5
the liability coverage in a yacht policy is referred to as
Protection & indemnity
punishment for twisting or misrepresentation
up to $25,000
& up to 1 year of jail
punishment for twisting or misrepresentation
up to $25,000
& up to 1 year of jail
A partnership can continue when a new partner joins after the department is notified within 30 days & the changes are approved
new partner=30 days
Every applicant for a license to act as an agent must have filed with the Commissioner a notice of appointment to do business in the state.
applicants=notice of appointment
A passed bill will go into effect:
January 1st
good records must be kept and made available to DOI for a period of
5yrs
actuarial department is responsible for
> using claims history, stats, and computer data to predict losses
actuarial=actual data
informational records must be kept a minimum of
18 months
A commissioner may give an order that records be brought current within
60days
the penalty for violating the Insurance Info & Privacy Protection Act
$50,000 fine for violations committed with regularity showing they are a general business practice
Once insured, agreed payment must be made within
30 calendar days
how many days to accept/deny a claim
40 days
significance of the SEAU case of 1944
the court decided the federal government should regulate insurance
an insurance company uses the rate they determine appropriate first & then file that rate with the commission
use & file
penalties for fraud
> up to $150k (or double fraud amount)
>up to 5yrs in state prison
CIGA pertains to
the insurer’s insolvency
policy revision that provides broader coverage, no premium or endorsement
liberalization
loss sustained
is the type of coverage that would pay for losses which occurred during the policy period and are found for up to 1yr after policy termination
self-funding of employee benefits cannot be used for death benefits
death benefits
unendorsed claims, you have 60 days to report a claim
unendorsed=60days
physical damage, liability, & medical payments are typically provided in a boat owner’s policy
all coverage=boat owner
