IA Test 11 Flashcards
1
Q
An insured has an NFIP policy and suffers a direct loss due to flood. How many days does the insured have to submit a proof of loss?
Answer Choices: Select the Correct Answer 90 days. 45 days. 60 days. 30 days.
Question 1 of 100
A
Your answer: 90 days. is incorrect. The correct answer is: 60 days..
EXPLANATION:
An NFIP policy requires that the proof of loss be submitted within 60 days of the loss.
Question 1 of 100
2
Q
The principle of indemnity is illustrated by which of the following?
Answer Choices: Select the Correct Answer
Restores an insured to the same condition enjoyed before a loss
Allows an insured to profit from a loss
Limits recovery to actual cash value
Requires an insured to assign any rights of recovery against a third party
Question 2 of 100
A
Your answer: Restores an insured to the same condition enjoyed before a loss is correct.
EXPLANATION:
It is not intended for a claimant to profit from insurance. The purpose of insurance is to attempt to restore the person to the status enjoyed prior to the loss.
Question 2 of 100
3
Q
What type of coverage would a heating and cooling contractor need when work has been done on a newly renovated building but not yet accepted by the owner?
Answer Choices: Select the Correct Answer An Installation Floater A Builder’s Risk Policy A Bailee Form of Coverage A Transportation Floater
Question 3 of 100
A
Your answer: An Installation Floater is correct.
EXPLANATION:
The contractor would need an installation floater that provides property coverages for work performed until accepted by the owner.
Question 3 of 100
4
Q
The insured is a CPA and has the accounting tax records of several clients on the premises. If the records were suddenly destroyed by fire, what inland marine form would cover the cost to reproduce them?
Answer Choices: Select the Correct Answer Valuable papers and records Accounts Receivable Coverage EDP Coverage A Bailee Form
Question 4 of 100
A
Your answer: EDP Coverage is incorrect. The correct answer is: Valuable papers and records.
EXPLANATION:
The purpose of the valuable papers and records form is to pay for the cost of reproducing destroyed valuable papers and records.
Question 4 of 100
5
Q
A tornado blows over a wall of a barn which, in turn, knocks over a lamp and starts a fire. What is the proximate cause of loss?
A
Your answer: Tornado is correct.
EXPLANATION:
The proximate cause of loss would be the tornado (wind).
Question 5 of 100
6
Q
When Commercial General Liability “claims made” coverage is written, a “laser beam” endorsement may be used to:
Answer Choices: Select the Correct Answer
Exclude specific accidents, products, work, or locations.
Provide special coverage for certain high technology risks.
Provide coverage for certain types of nuclear hazards.
Add special conditions applicable to defense contractors.
Question 6 of 100
A
When Commercial General Liability “claims made” coverage is written, a “laser beam” endorsement may be used to:
Your answer: Exclude specific accidents, products, work, or locations. is correct.
EXPLANATION:
The “laser beam” endorsement is used to exclude risks or hazards that the insurer does not wish to insure. It is used exclusively on the “claims made” CGL form.
Question 6 of 100
7
Q
Which of the following scenarios would fall under the scope of the “Products Liability” section of a CGL policy?
Answer Choices: Select the Correct Answer
A visitor to a business steps on a nail.
A driver for Maid-Your-Day cleaning services causes an accident when she runs a stop sign.
An exercise machine snaps a belt, injuring a consumer in a sporting good store.
A team of contractor’s employees install a toilet in the wrong area of a bathroom.
Question 7 of 100
A
our answer: A team of contractor’s employees install a toilet in the wrong area of a bathroom. is incorrect. The correct answer is: An exercise machine snaps a belt, injuring a consumer in a sporting good store..
EXPLANATION:
Product liability covers injuries or damage caused by a faulty product. The exercise machine is faulty. The other three choices have nothing to do with a faulty product.
Question 7 of 100
8
Q
Which of the following are covered under the Homeowners “Additional Residence Rented to Others” endorsement?
I. Personal Liability (Injury)
II. Medical Payment to Others
III. Dwelling
IV. Personal Property
Answer Choices: Select the Correct Answer I and II only. I, II, III and IV. I and IV only. III and IV only.
Question 8 of 100
A
Your answer: III and IV only. is incorrect. The correct answer is: I and II only..
EXPLANATION:
The “Additional Residence Rented to Others” endorsement provides personal liability (injury) and medical payments to others coverage to cover the insured’s liability arising out of the ownership of a residence regularly rented to others.
Question 8 of 100
9
Q
An independent adjuster must complete ___ hours of continuing education during each license renewal cycle.
Answer Choices: Select the Correct Answer 12 20 24 36
Question 9 of 100
A
Your answer: 24 is correct.
EXPLANATION:
An individual who holds an insurance adjuster license and who is not exempt must satisfactorily complete a minimum of 24 hours, of which three hours are to be in ethics, of continuing education courses pertinent to the duties and responsibilities of an insurance adjuster license reported to the Insurance Commissioner on a biennial basis in conjunction with his or her license renewal cycle.
Question 9 of 100
10
Q
The Homeowners policy provides a special limit for Damage to Property of Others in the Section II (liability) Additional Coverages of:
Answer Choices: Select the Correct Answer $500. $250. $1,000. $2,000.
Question 10 of 100
A
Your answer: $2,000. is incorrect. The correct answer is: $1,000..
EXPLANATION:
This coverage has been increased to $1,000.
Question 10 of 100
11
Q
Which of the following is NOT a claim settlement option for liability claims?
Answer Choices: Select the Correct Answer Excessive amounts claimed. Lost wages claimed. Loss of Use. Disfigurement.
Question 11 of 100
A
Your answer: Excessive amounts claimed. is correct.
EXPLANATION:
Excessive amounts claimed are always contested by the insurer. Liability losses are categorized as “special damages”or “general damages.” Special damages include medical expenses and loss of wages or the costs of other known expenses. General damages would include pain and suffering, punitive damages, loss of consortium, disfigurement and disability claims.
Question 11 of 100
12
Q
Which of the following perils is not covered under the Commercial Property Basic Cause of Loss form:
Answer Choices: Select the Correct Answer
Collapse (other than sinkhole collapse).
Sprinkler leakage
Explosion
Sinkhole collapse
Question 12 of 100
A
Your answer: Sprinkler leakage is incorrect. The correct answer is: Collapse (other than sinkhole collapse)..
EXPLANATION:
The Basic Form does not cover collapse except sinkhole collapse.
Question 12 of 100
13
Q
An insured has a $2 million limit of insurance under a Personal Umbrella policy with a $2,000 self-insured retention limit. The insured is sued for $1 million in personal injury damages and $1.5 million in property damages arising from the same occurrence. The insured’s underlying liability policies exclude coverage in this case, but the claim is covered under the Umbrella policy. In this case, the umbrella policy will pay:
Answer Choices: Select the Correct Answer $1 million of the damages. $1,998,000 of the damages. $2 million of the damages. $2,500,000 of the damages.
Question 13 of 100
A
Your answer: $1 million of the damages. is incorrect. The correct answer is: $1,998,000 of the damages..
EXPLANATION:
Since the underlying coverage does not apply the insured must pay the $2,000 self-insured retention limit and the Umbrella insurer must pay the rest of the claim.
Question 13 of 100
14
Q
Contractor Joe has borrowed funds from a bank in order to finance a construction project. A surety bond which guarantees the lender that the contractor will use the borrowed funds to finish the contract free and clear of liens is known as a:
Answer Choices: Select the Correct Answer Bid bond. Performance bond. Labor and materials bond. Completion bond.
Question 14 of 100
A
Your answer: Completion bond. is correct.
EXPLANATION:
A completion bond guarantees the lending party of the funds that the borrowed funds will be used only for this work or project, and the work will be delivered free and clear of liens.
Question 14 of 100
15
Q
All of the following would be excluded under Coverage D - Physical Damage of a Personal Automobile Policy, EXCEPT:
Answer Choices: Select the Correct Answer
Permanently-installed GPS systems.
Radar or laser detection equipment.
Camper bodies or trailers owned by the named insured but not listed on the declarations page.
Custom furnishings or equipment in a van.
Question 15 of 100
A
Your answer: Permanently-installed GPS systems. is correct.
EXPLANATION:
Permanently installed electronic equipment such as sound systems and GPS devices are covered, but no custom equipment is covered in a van unless an endorsement for this coverage is attached to the policy and an additional premium is paid. (Remember, radar detectors are excluded.)
Question 15 of 100
16
Q
QUESTION:
Which of the following zones is not expected to flood during the “base flood”?
A
Your answer: X zones. is correct.
EXPLANATION:
X zones are not expected to flood during the base flood.
Question 16 of 100
17
Q
For a first-party uninsured motorist claim in California, how many days notification must an insurer give if the statute of limitations on filing a claim is about to expire?
Answer Choices: Select the Correct Answer 60 days 30 days No notice is required. 45 days
Question 17 of 100
A
Your answer: 30 days is correct.
EXPLANATION:
For pending claims, the insurer must provide written notice to any first-party uninsured motorists claimant at least 30 days before the expiration date of the statute of limitations.
Question 17 of 100
18
Q
Under the farm forms, a “half a head” of livestock is an animal that is:
Answer Choices: Select the Correct Answer
Under three years of age and the most coverage that will be paid for that animal under the policy is $3,000.
Under two yeara of age and the most coverage that will be paid for that animal under the policy is $2,500.
Under one year of age and the most coverage that will be paid for that animal under the policy is $1,000.
Is under six months of age and the most coverage that will be paid for that animal under the policy is $500.
Question 18 of 100
A
Your answer: Under one year of age and the most coverage that will be paid for that animal under the policy is $1,000. is correct.
EXPLANATION:
An animal under one year of age, is known as a “half a head.” Coverage F covers farm personal property on a blanket basis both on and off the insured premises. A blanket limit for livestock can be added, however, the most that will be paid for “half a head” of livestock (an animal under one year of age) is $1,000.
Question 18 of 100
19
Q
An insured purchases two homeowner policies from two different insurance companies. If a covered loss occurs, on what basis will the loss be settled by each of the insurers?
Answer Choices: Select the Correct Answer First policy effective basis Excess basis Equal share basis Pro rata basis
Question 19 of 100
A
Your answer: Equal share basis is incorrect. The correct answer is: Pro rata basis.
EXPLANATION:
Each company will pay its pro-rata share of the loss. This means the percentage of coverage (the total amount of insurance carried) that each company provides on the risk.
Question 19 of 100
20
Q
Under a commercial inland marine form, which of the following is true regarding the appraisal clause?
Answer Choices: Select the Correct Answer
The insurer is bound by the decision of the appraisers or umpire
It is not binding to all parties
The insurer is not bound by the appraisal clause
The insurer must seek legal action under the appraisal clause to enforce the terms and conditions
Question 20 of 100
A
Your answer: The insurer is bound by the decision of the appraisers or umpire is correct.
EXPLANATION:
The insurer is bound by the outcome of a an appraisal on the damaged property as to it’s value. They still reserve the right to deny the claim if there is a coverage, rather than a valuation question.
Question 20 of 100
21
Q
Coverage G under the Farm forms covers which of the following?
Answer Choices: Select the Correct Answer
Covers barns, silos, fences
Covers unscheduled personal farm property
Covers scheduled personal property
Covers blanket buildings and contents
Question 21 of 100
A
Your answer: Covers blanket buildings and contents is incorrect. The correct answer is: Covers barns, silos, fences.
EXPLANATION:
Coverage G covers barns, outbuildings such as silos, fences, radio equipment and other farm structures that are not related to the dwelling.
Question 21 of 100
22
Q
Your answer: Covers blanket buildings and contents is incorrect. The correct answer is: Covers barns, silos, fences.
EXPLANATION:
Coverage G covers barns, outbuildings such as silos, fences, radio equipment and other farm structures that are not related to the dwelling.
Question 21 of 100
A
Your answer: Accounts Receivable for uncollectible accounts is incorrect. The correct answer is: Customer signs in their care custody and control.
EXPLANATION:
The Sign Coverage Form will cover the neon, electrical, and mechanical signs of others that in the care, custody and control of the insured.
Question 22 of 100
23
Q
Which of the following does not have to be included in the inspection report required to participate in the California Fair Access to Insurance Requirements (FAIR) Plan?
Answer Choices: Select the Correct Answer Structural inspection Condition of surrounding structures Occupancy features Photographs of the occupants
Question 23 of 100
A
Your answer: Photographs of the occupants is correct.
EXPLANATION:
According to the California Insurance Code (CIC 10093(b)), the inspection must include, but need not be limited to, pertinent structural and occupancy features as well as the general condition of the building and surrounding structures. A representative photograph of the property may be taken as part of the inspection.
Question 23 of 100
24
Q
Which of the following would be considered a consequential loss under a homeowner policy?
Answer Choices: Select the Correct Answer
Water damage to a house as a result of a fire
A tree falling on the roof and a branch breaks a window
Food spoilage in a freezer as a result of a fire in the house
Smoke damage to a detached garage as a result of a fire
Question 24 of 100
A
Your answer: Water damage to a house as a result of a fire is incorrect. The correct answer is: Food spoilage in a freezer as a result of a fire in the house.
EXPLANATION:
The food spoilage as a result of a covered peril cutting off the electricity would be an example of a consequential loss.
Question 24 of 100
25
Who is an insured under the liability section of a Farm insurance policy?
Answer Choices: Select the Correct Answer
A retail feed store employee.
A representative from a farm chemical company.
A roadside farm stand employee.
A custom farming employee hired to plow the insured’s fields under contract.
Question 25 of 100
Your answer: A custom farming employee hired to plow the insured’s fields under contract. is incorrect. The correct answer is: A roadside farm stand employee..
EXPLANATION:
A farm employee is covered while acting within the scope of their duties. Farming includes the incidental operation of roadside stands where farm products principally produced by the insured are sold.
Question 25 of 100
26
Herb has a duplex covered under an HO-8 form in California. The property is damaged by an insured peril that falls under the status of a declared state of emergency. Herb realizes that the standardized HO-8 policy only provides loss settlement at Actual Cash Value (ACV), but he also understands that the California mandatory special provisions form will allow him to make a claim to recoup his cost to repair or replace the damaged property if all of the following are TRUE regarding Herb's claim, EXCEPT:
Answer Choices: Select the Correct Answer
If he restores the duplex to the same occupancy level and does not increase that level.
He restores the duplex on the same site where it was located at the time of the loss.
He submits his claim for the cost to repair or replace the property within 12 months of the loss.
He submits his claim for the cost to repair or replace the property within 24 months of the loss.
Question 26 of 100
Your answer: He submits his claim for the cost to repair or replace the property within 24 months of the loss. is incorrect. The correct answer is: He submits his claim for the cost to repair or replace the property within 12 months of the loss..
EXPLANATION:
The question is asking you to choose the answer that is NOT TRUE. The only answer choice that is not true regarding Herb's claim is: "He submits his claim for the cost to repair or replace the property within 12 months of the loss." This answer choice is not true because the California mandatory special provisions form allows Herb 24 months to submit his claim.
Question 26 of 100
27
Three of the situations below describe circumstances in which an individual is usually not an insured by a commercial umbrella liability policy. Which situation describes circumstances in which an individual IS an insured?
Answer Choices: Select the Correct Answer
An employee of the insured injured another employee while driving the insured’s forklift.
A deceased insured’s brother has temporary legal custody of the insured’s business property.
Personal property belonging to a partner in the insured business is damaged.
A stockholder in the insured corporation was driving her own auto and was involved in an accident on the way to a stockholder’s meeting.
Question 27 of 100
Your answer: An employee of the insured injured another employee while driving the insured’s forklift. is incorrect. The correct answer is: A deceased insured’s brother has temporary legal custody of the insured’s business property. .
EXPLANATION:
In the case of the death of an insured, the person that has legal custody of the insured’s business is also considered to be an insured while acting in that capacity.
Question 27 of 100
28
Which of the following is not an "additional coverage" under Homeowners Liability -- Section II coverage?
Answer Choices: Select the Correct Answer
Payments made by the insurer to settle a claim.
Interest accruing after a legal judgment is entered.
The insurer’s costs to investigate a claim.
Damage to Property of Others.
Question 28 of 100
Your answer: The insurer’s costs to investigate a claim. is incorrect. The correct answer is: Payments made by the insurer to settle a claim..
EXPLANATION:
Settlements paid by the insurer come from the limits of liability shown on the Declarations page and are not an "additional coverage."
Question 28 of 100
29
Which of the following best describes the purpose of an "insuring agreement"?
Answer Choices: Select the Correct Answer
To describe the promises of the insurer and the insured and the coverages provided
To identify the named insured
To explain the duties of the named insured
To set forth the conditions and exclusions
Question 29 of 100
Your answer: To set forth the conditions and exclusions is incorrect. The correct answer is: To describe the promises of the insurer and the insured and the coverages provided.
EXPLANATION:
Insuring agreements are the promises or obligations of the insurer and the insured. In property insurance, it also contains the coverage the insured has purchased.
Question 29 of 100
30
The HO-3 form covers which of the following that the HO-4 form does not?
```
Answer Choices: Select the Correct Answer
Automobiles
Motorcycles
Dwellings
Work related injuries
```
Question 30 of 100
Your answer: Work related injuries is incorrect. The correct answer is: Dwellings.
EXPLANATION:
The HO-3 covers a dwelling structure; the HO-4 covers the insured's contents. The other choices are excluded on both forms
Question 30 of 100
31
According to the commercial auto policy definitions, an "accident:"
Answer Choices: Select the Correct Answer
Includes continuous or repeated exposure to the same conditions.
Must be sudden and unexpected.
Must be unexpected and unpreventable.
Is any event that causes injury or damage.
Question 31 of 100
Your answer: Is any event that causes injury or damage. is incorrect. The correct answer is: Includes continuous or repeated exposure to the same conditions. .
EXPLANATION:
The auto forms of the past used to simply cover the term "accident." It did not include continuous or repeated exposure to the same conditions. Many claims were denied because of this restriction. The current forms now include the broader definition and provide better coverage.
Question 31 of 100
32
Which of the following is true about "open peril" coverage?
Answer Choices: Select the Correct Answer
It provides coverage for all perils, unless that peril is specifically excluded.
It provides coverage for scheduled risks.
It provides coverage for the named perils.
It does not exclude any perils from coverage.
Question 32 of 100
Your answer: It provides coverage for all perils, unless that peril is specifically excluded. is correct.
EXPLANATION:
On a "named peril" cause of loss form, the covered perils are named or specified. If the peril is not listed, then coverage does not apply. Conversely, on an "open peril" cause of loss form, ALL perils are covered unless the peril(s) is/are specifically excluded. "Open peril" cause of loss forms contain more exclusions than named peril forms for obvious reasons.
Question 32 of 100
33
As an independent adjuster in California, your investigation of a two-car traffic accident indicates that both drivers are equally at fault. After speaking with the claimant's adjuster the two of you agree that both drivers are equally to blame. Your subrogation demand would be for:
Answer Choices: Select the Correct Answer
100% of your insured's damages as your analysis does not affect what is owed by the other party.
75% of your insured's damages as each side's 25% totals 50%.
50% of your insured's damage, because the insured and the other driver were both 50% at fault.
Nothing. Because both drivers were 50% at fault, each insurance company will pay 100% of the claim on their own insured's damages.
Question 33 of 100
Your answer: 50% of your insured's damage, because the insured and the other driver were both 50% at fault. is correct.
EXPLANATION:
California is a "comparative negligence" state. In California the person most at fault is deemed to be the primary cause of the accident. If investigation either by law enforcement or the insurance adjuster determines that there was "comparative negligence" on the part of the other driver(s), all damages owed are subject to apportionment.
Question 33 of 100
34
An insured who had a $500,000 primary liability policy purchased a $1 million Umbrella liability policy with a $2,000 self-insured retention limit. Later, the insured allowed the required underlying primary policy with a limit of $100,000 to expire. A week after that, the insured became liable for a $100,000 loss that is not excluded by the provisions of either the primary policy or the Umbrella policy. How will this loss likely be settled?
Answer Choices: Select the Correct Answer
The insured will pay the full $100,000 loss.
The umbrella policy will pay the full $100,000 loss.
The underlying policy will pay the full $100,000 loss.
The insured will pay $2,000, and the umbrella policy will pay the remainder of the loss.
Question 34 of 100
Your answer: The umbrella policy will pay the full $100,000 loss. is incorrect. The correct answer is: The insured will pay the full $100,000 loss..
EXPLANATION:
Because the insured allowed the required underlying policy to expire, he is responsible for the $100,000 loss. The Umbrella policy does not recognize a reduction in the underlying limits nor the non-renewal of underlying coverage.
Question 34 of 100
35
The definition of "occupying" in the personal auto definitions means all of the following, EXCEPT:
```
Answer Choices: Select the Correct Answer
In the vehicle
Upon the vehicle
Out or off the vehicle
Under the vehicle
```
Question 35 of 100
Your answer: Out or off the vehicle is incorrect. The correct answer is: Under the vehicle.
EXPLANATION:
"Occupying" means in, upon, getting in, on, out or off. "Under the vehicle" is not included in the definition of occupying.
Question 35 of 100
36
In the newest edition of the Commercial Property form, which of the following is now considered part of the building?
```
Answer Choices: Select the Correct Answer
Signs permanently attached
Vegetated Roofs
Outdoor Property
Detached signs
```
Question 36 of 100
Your answer: Detached signs is incorrect. The correct answer is: Vegetated Roofs.
EXPLANATION:
Vegetated roofs are now part of the building and not subject to the tree, shrubs and plants exclusion under covered property nor the tree, shrubs and plants extension of coverage.
Question 36 of 100
37
All the following statements are true regarding earthquake insurance under residential property coverage in California, EXCEPT:
Your answer: The offer of earthquake insurance may be made by mail or electronically. is incorrect. The correct answer is: A separate earthquake policy must be issued; an endorsement is not permitted..
EXPLANATION:
According to the California Insurance Code (CIC 10081), earthquake coverage may be provided in the policy of residential property insurance itself, either by specific policy provision or endorsement, or in a separate policy or certificate of insurance which specifically provides coverage for loss or damage caused by the peril of earthquake alone or in combination with other perils.
Question 37 of 100
38
Vandalism is not covered after a commercial building has been vacant for:
```
Answer Choices: Select the Correct Answer
15-days
30-days
45-days
60-days
```
Question 38 of 100
Your answer: 60-days is correct.
EXPLANATION:
Vandalism is not covered after the building has been vacant beyond 60 consecutive days.
Question 38 of 100
39
The most common method of settling liability insurance claims is through:
```
Answer Choices: Select the Correct Answer
ADRs.
Arbitration.
Mediation.
Negotiated settlement.
```
Question 39 of 100
Your answer: Arbitration. is incorrect. The correct answer is: Negotiated settlement..
EXPLANATION:
The most common method of settling liability insurance claims is through negotiated settlement.
Question 39 of 100
40
The crew of a ship is guilty of fraud with the intention of reaping gains at the expense of the owner. In ocean marine coverage, what is this called?
```
Answer Choices: Select the Correct Answer
Perils of the sea
Jettison
General average
Barratry
```
Question 40 of 100
Your answer: Barratry is correct.
EXPLANATION:
Barratry means fraud by the master or the crew with the intention of reaping gains at the expense of the owner. Examples include setting the ship on fire, diverting the ship from its course, or embezzlement of the cargo.
Question 40 of 100
41
Which of the following best exemplifies the fundamental tradeoff in Workers Compensation laws?
Answer Choices: Select the Correct Answer
Employees are provided no-fault benefits for most work-related injuries in exchange for the loss of the right to sue the employer for damages.
As long as employers provide workers compensation insurance, they are exempt from OSHA regulations.
Employees who waive their rights under workers compensation laws also lose their rights to bring civil lawsuits against their employers.
In exchange for providing workers compensation and health benefits insurance for all employees, employers become immune from any civil liability.
Question 41 of 100
Your answer: Employees are provided no-fault benefits for most work-related injuries in exchange for the loss of the right to sue the employer for damages. is correct.
EXPLANATION:
Workers compensation laws represent a tradeoff: covered employees who are injured in an accident at work lose their rights to sue their employers, in exchange for being provided certain medical, loss-of-income, rehabilitation, and death benefits, regardless of who is at fault.
Question 41 of 100
42
On the HO-2 policy, damage caused by wind to personal property would be covered if:
Answer Choices: Select the Correct Answer
Caused by a concurrent causation
Wind blew a hole in the structure allowing the wind to damage the contents
Always
Never
Question 42 of 100
Your answer: Wind blew a hole in the structure allowing the wind to damage the contents is correct.
EXPLANATION:
The HO-2 provides broad form perils coverage on contents. The wind would first have to damage the structure and then the contents. If Mother Nature lets herself in, the loss is covered. If you let Mother Nature in, the damage will be excluded.
Question 42 of 100
43
In a situation where liability is obviously clear and an insurer refuses to settle, which of the following is correct according to the California Insurance Code?
Answer Choices: Select the Correct Answer
The insurer has the right to delay payment for a period of up to six months even when liability is clear.
The insurer is permitted to exercise the right of appeal.
The insurer has the right to delay payment for a period of up to 90 days months even when liability is clear.
The insurer is committing an unfair claims settlement practice in California.
Question 43 of 100
Your answer: The insurer is committing an unfair claims settlement practice in California. is correct.
EXPLANATION:
Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear is an unfair claims settlement practice in California.
Question 43 of 100
44
If an employee in California suffers an "at work" injury or illness, they are entitled to ______ % of their lost wages.
```
Answer Choices: Select the Correct Answer
66 2/3.
70
75.
65.
```
Question 44 of 100
Your answer: 66 2/3. is correct.
EXPLANATION:
The employee is entitled to 66 2/3% of their lost wages as a result of a job related injury or illness. Current law limits benefits to a 2 year maximum and increases the maximum to 4 years for certain specified injuries.
Question 44 of 100
45
Loss of rental income on an apartment building caused by an insured peril is best described as:
Answer Choices: Select the Correct Answer
A direct loss.
A loss that can never be covered under a Commercial Property policy.
A consequential loss.
A loss that would be covered only if the fire was friendly.
Question 45 of 100
Your answer: A consequential loss. is correct.
EXPLANATION:
Consequential losses include time element losses. This coverage provides loss of income incurred by a business that is caused by a direct loss from an insured peril.
Question 45 of 100
46
Which of the following is the definition of "person" according to the California Adjuster Act?
Answer Choices: Select the Correct Answer
Any individual, firm, company, association, organization, partnership, limited liability company, and corporation.
The individual under whose direction, control, charge, or management of the business of a licensee is operated.
A person licensed under the insurance laws of the state of California.
An attorney who is an active member of the State Bar of California.
Question 46 of 100
Your answer: A person licensed under the insurance laws of the state of California. is incorrect. The correct answer is: Any individual, firm, company, association, organization, partnership, limited liability company, and corporation..
EXPLANATION:
According to the California Insurance Code, a "person" is defined as: "Any individual, firm, company, association, organization, partnership, limited liability company, and corporation."
Question 46 of 100
47
Which of the following is NOT a part of a Commercial Package Policy?
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Answer Choices: Select the Correct Answer
Declaration page
Condition section
One or more policy parts
Earthquake coverage
```
Question 47 of 100
Your answer: Earthquake coverage is correct.
EXPLANATION:
Earthquake coverage must be added by endorsement for coverage to apply.
Question 47 of 100
48
Under an Equipment Breakdown Protection policy with $500,000 in coverage, a covered "accident" resulted in the following:
I. $500,000 worth of damage to the property.
II. $10,000 damage to the property of another in the insured's care.
III. $5,000 in legal fees to defend the insured in this case.
The policy will pay a total of:
```
Answer Choices: Select the Correct Answer
$505,000.
$500,000.
$510,000.
$515,000.
```
Question 48 of 100
Under an Equipment Breakdown Protection policy with $500,000 in coverage, a covered "accident" resulted in the following:
I. $500,000 worth of damage to the property.
II. $10,000 damage to the property of another in the insured's care.
III. $5,000 in legal fees to defend the insured in this case.
The policy will pay a total of:
Your answer: $515,000. is incorrect. The correct answer is: $505,000..
EXPLANATION:
The maximum that can be paid is $500,000 because that is the limit of the policy. Legal expenses are in addition to the limit of coverage, adding $5,000 to the amount the insurer will pay, making the correct answer $505,000.
Question 48 of 100
49
Byron has submitted his application for a California Adjuster license, and then begins studying a course that will allow him to take the state licensing exam. Byron is working 40 hours a week, so he feels satisfied that he finished the course and passed the state licensing exam only 14 months after submitting his application. Which of the following is the response Byron will receive from the California Department of Insurance?
Answer Choices: Select the Correct Answer
He will receive notice that his license application is denied because he was required to fulfill all licensing requirements within 12 months of submitting his application.
He will receive his license from the Department because he fulfilled all the requirements for licensing.
He will receive notice that his license application is denied because he was required to fulfill all licensing requirements within 6 months of submitting his application.
He will receive notice that his license application has been approved and he will receive it within 60 days.
Question 49 of 100
Your answer: He will receive notice that his license application is denied because he was required to fulfill all licensing requirements within 12 months of submitting his application. is correct.
EXPLANATION:
He will receive notice that his license application is denied because he was required to fulfill all licensing requirements within 12 months of submitting his application. (CCR 2691.9)
Question 49 of 100
50
Which of the following is NOT considered a covered auto under the personal auto policy?
Answer Choices: Select the Correct Answer
A large truck used in a business on a full time basis.
A temporary substitute vehicle when the insured’s vehicle needs to be repaired.
A vehicle leased for six months or more.
A newly acquired vehicle.
Question 50 of 100
Your answer: A large truck used in a business on a full time basis. is correct.
EXPLANATION:
A large truck used exclusively in business should be covered under a business auto policy. The other answer choices are all covered under the business auto policy by definition.
Question 50 of 100
51
How long will the Businessowners Policy pay for “extra expense coverage” used to reduce the loss of income when the insured has suffered a loss from a covered peril?
Answer Choices: Select the Correct Answer
Six consecutive months
Twelve consecutive months
Until the repairs are complete and the business re-opens, subject to a 12 consecutive month limitation
Only until the policy expiration date
Question 51 of 100
Your answer: Until the repairs are complete and the business re-opens, subject to a 12 consecutive month limitation is correct.
EXPLANATION:
The coverage for extra expense is limited to twelve consecutive months after the date of direct physical loss or damage, even if the policy was to expire in the meantime. Coverage also ceases when repairs are complete and the business re-opens.
Question 51 of 10
52
Under the CGL policy, each of the following statements are true about the general aggregate limit, EXCEPT:
Answer Choices: Select the Correct Answer
It only applies to all losses included within the products and completed operations hazard.
All losses under the premises and operations subline are subject to the limit.
It is an annual limit that is reinstated at the beginning of each new policy year.
Once the aggregate has been exhausted, the insurer has no further obligation for additional claims.
Question 52 of 100
Your answer: All losses under the premises and operations subline are subject to the limit. is incorrect. The correct answer is: It only applies to all losses included within the products and completed operations hazard..
EXPLANATION:
The general aggregate in the CGL policy applies to premises and operations, personal injury/advertising injury, medical payments and damage to Premises Rented to You (previously referred to as "fire damage legal liability"). Products and Completed Operations coverage has its own separate aggregate limit.
Question 52 of 100
53
The FAIR Plan is designed to serve hazardous and inner city areas and property being insured must be in a designated plan area (brush area). Both commercial and personal risks may be placed through the plan but farm risks and automobiles are not eligible. All of the perils can be purchased, EXCEPT:
```
Answer Choices: Select the Correct Answer
Theft.
Fire and lightning.
Riot and civil commotion.
Windstorm.
```
Question 53 of 100
Your answer: Windstorm. is incorrect. The correct answer is: Theft. .
EXPLANATION:
The coverage is for very basic perils similar to the DP-1 perils. Theft is not covered.
Question 53 of 100
54
Which of the following is the correct description of the medical expenses limit in the liability section of the Businessowners policy?
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Answer Choices: Select the Correct Answer
Per accident
Per person, per occurrence
Per incident
Per location, per occurrence
```
Question 54 of 100
Your answer: Per person, per occurrence is correct.
EXPLANATION:
Medical payments under the BOP are based on "per person, per occurrence." The time limit to submit a "medical payments" claim under a BOP policy is one year from the date of the injury.
Question 54 of 100
55
Susan buys a product in Texas and gives it to her mother in Hawaii. Her mother brings suit against the manufacturer when the product malfunctions and causes her bodily injury. The suit is brought in Hawaii. The CGL policy:
Answer Choices: Select the Correct Answer
Will not provide coverage for this claim because the suit was brought in Hawaii.
Will provide coverage for this claim because Hawaii is within the coverage territory.
Will only provide coverage if the suit is brought in Texas.
Will only partially cover this claim because Hawaii is not within the coverage territory.
Question 55 of 100
Your answer: Will only provide coverage if the suit is brought in Texas. is incorrect. The correct answer is: Will provide coverage for this claim because Hawaii is within the coverage territory..
EXPLANATION:
The claim would be honored since Hawaii is within the coverage territory.
Question 55 of 100
56
What type of bond is required when a person dies without leaving a will?
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Answer Choices: Select the Correct Answer
Surety bond
Fidelity bond
Administrator’s bond
Estate bond
```
Question 56 of 100
Your answer: Administrator’s bond is correct.
EXPLANATION:
The court will appoint an administrator for the estate and that person is required to obtain an administrator's bond.
Question 56 of 100
57
The Earthquake Endorsement will provide coverage to the dwelling and/or personal property with the deductible stated as:
Answer Choices: Select the Correct Answer
$1,000
5% of the limit that applies to all Section I coverages.
$500
$2,500
Question 57 of 100
Your answer: 5% of the limit that applies to all Section I coverages. is correct.
EXPLANATION:
The Earthquake Endorsement has a base deductible is 5% of the limit that applies to all Section I coverages, but never less than $500.
Question 57 of 100
58
Robert is retired and lives in an older home in Maine. He has an old floor furnace to heat his home that is in need of repair and he forgets to have it checked. In the winter he stays in Florida for a month with his daughter. While Robert is away, the furnace malfunctions and all his water pipes freeze and burst causing massive water damage. The furnace is also destroyed. His house is covered under a Homeowners broad cause of loss form, that includes water damage from a heating or plumbing system. How will the adjuster handle this claim?
Answer Choices: Select the Correct Answer
Pay for all damage except the furnace.
Deny the entire claim because of neglect of the insured.
Pay for the furnace and the resulting water damage only.
Pay for the water damage and depreciate the payment for the replacement of the furnace.
Question 58 of 100
Your answer: Pay for the furnace and the resulting water damage only. is incorrect. The correct answer is: Pay for all damage except the furnace..
EXPLANATION:
In this case, most insurers would pay for all damage except the destroyed furnace. The policy does not pay for the wear and tear of a heating or air conditioning system. Even though the insured was neglectful, the ensuing damage resulting from the frozen pipes would be covered. If the insured had been advised by a contractor that the furnace needed immediate repairs and the insured failed to make them, most adjusters would deny the entire claim. This would then be considered an increased hazard not known to the insurer and intentional neglect on the part of the insured.
Question 58 of 100
59
A bank robber locks the employees and several customers in a vault and demands money for their release. If the bank is forced to pay the demands, what crime coverage if any will cover this loss?
```
Answer Choices: Select the Correct Answer
Securities stolen by others
Guests Property
Employee Theft
Extortion-Commercial Entities
```
Question 59 of 100
Your answer: Extortion-Commercial Entities is correct.
EXPLANATION:
If the entity gives in and pays the demands, the "Extortion-Commercial Entities" crime form will respond.
Question 59 of 100
60
Al has an umbrella liability policy which does not pay damages until such time as Al is legally obligated to pay them. This type of policy is known as:
```
Answer Choices: Select the Correct Answer
A reimbursement policy.
A pay-on-behalf-of policy.
An indemnification policy.
An obligation policy.
```
Question 60 of 100
Your answer: An obligation policy. is incorrect. The correct answer is: An indemnification policy..
EXPLANATION:
Most insurance contracts are indemnification policies.
Question 60 of 100
61
On a homeowner policy, Coverage A would include all of the following, EXCEPT:
Answer Choices: Select the Correct Answer
The residence being insured.
A storage shed connected to the dwelling by a utility line.
Structures attached to the dwelling.
Material and supplies intended for repair or alteration of the dwelling.
Question 61 of 100
Your answer: Material and supplies intended for repair or alteration of the dwelling. is incorrect. The correct answer is: A storage shed connected to the dwelling by a utility line..
EXPLANATION:
Structures connected by a fence or utility line are considered to be "other structures" (Coverage B) under homeowner forms. Coverage A is dwelling coverage.
Question 61 of 100
62
Which of the following is NOT a claim settlement option in a property loss?
Answer Choices: Select the Correct Answer
Replace the property with like kind and quality.
Replace the property with new.
Repair the property.
Pay market value only.
Question 62 of 100
Your answer: Pay market value only. is correct.
EXPLANATION:
Offering market value only is not a claim settlement option. If the insured carries replacement cost coverage then the adjuster needs to address the payment of the claim accordingly.
Question 62 of 100
63
Under workers compensation rules, an employee who is injured on the job due to his or her intoxication will receive:
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Answer Choices: Select the Correct Answer
compensation limited to 50%.
compensation limited to 30%.
no compensation.
full compensation.
```
Question 63 of 100
Your answer: compensation limited to 50%. is incorrect. The correct answer is: no compensation..
EXPLANATION:
The employee, if injured on the job while intoxicated, will receive no compensation benefits.
Question 63 of 100
64
The HO-6 policy provides full replacement cost coverage if it is rendered a total loss by fire, EXCEPT:
Answer Choices: Select the Correct Answer
The structure portion occupied by the insured as a residence
Improvements and betterments made to the structure by the insured
Structures owned by the insured other than the residence
Replacement cost coverage does not apply under the HO-6 form
Question 64 of 100
Your answer: Replacement cost coverage does not apply under the HO-6 form is incorrect. The correct answer is: The structure portion occupied by the insured as a residence.
EXPLANATION:
The HO-6 condominium policy does not provide coverage for the structure. It insures the interior furnishings and contents and provides liability protection to the condominium owner. Separate structures such as a private garage would be covered for replacement cost coverage if added to the policy. Replacement cost coverage would have to be added separately to cover the contents.
Question 64 of 100
65
Without a vacancy permit, vandalism is not covered under Commercial Property if the building has been vacant for how many consecutive days prior to a loss?
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Answer Choices: Select the Correct Answer
30
45
60
90
```
Question 65 of 100
Your answer: 60 is correct.
EXPLANATION:
In commercial property insurance, when a building is vacant for 60 days prior to a loss, there is no coverage for certain perils like vandalism and glass breakage, and there is a 15% reduction in payment for any other covered loss. For example a fire loss.
Question 65 of 100
66
How can the "property causes of loss" be changed under a BOP policy, from risks of "direct physical loss" to "named perils" coverage?
Answer Choices: Select the Correct Answer
State the named perils on the Declarations page of the policy.
Attach the "named perils" form endorsement to the BOP policy.
The property "causes of loss" cannot be changed under a BOP policy.
Change the policy to a different ISO Businessowners Coverage form.
Question 66 of 100
Your answer: Attach the "named perils" form endorsement to the BOP policy. is correct.
EXPLANATION:
To change the property coverage under the Businessowners policy from risks of "direct physical loss" to "named perils" coverage, the named perils endorsement must be attached to the policy.
Question 66 of 100
67
Your homeowners policy provides jewelry coverage for a set limit. If you insure a piece of jewelry separately, on a floater, and the jewelry is stolen can you claim it under both the HO coverage and the floater?
Answer Choices: Select the Correct Answer
Yes, as you have paid a separate premium for the floater.
Yes, because it is "named jewelry" on the floater.
Yes, because the floater merely serves to add all-risk coverage.
No, because you cannot collect twice for the item's value.
Question 67 of 100
Your answer: No, because you cannot collect twice for the item's value. is correct.
EXPLANATION:
Once coverage is specifically written separately, no coverage would apply under the homeowner policy for jewelry.
Question 67 of 100
68
Which company would be called the "third party" under XYZ Corporation's Commercial General Liability policy?
Answer Choices: Select the Correct Answer
XYZ Corporation (the insured).
Trustworthy Insurance (the insurer).
Jones Flooring Specialist (a claimant).
The Board of Directors of XYZ Corporation (the insured).
Question 68 of 100
Your answer: Jones Flooring Specialist (a claimant). is correct.
EXPLANATION:
Claimants under a CGL policy are called the "third party". The insured is the "first party" and the insurer is the "second party".
Question 68 of 100
69
Commercial Property Insurance usually imposes a penalty if, at the time of loss, the insured failed to maintain a minimum amount of coverage. This penalty may apply because of the:
```
Answer Choices: Select the Correct Answer
Coinsurance clause.
Valuation clause.
Deductible provision.
Value policy law.
```
Question 69 of 100
Your answer: Value policy law. is incorrect. The correct answer is: Coinsurance clause. .
EXPLANATION:
Commercial property forms contain an 80% coinsurance clause. This means the insured must insure the property for 80% of its value or risk a penalty in case of a partial loss.
Question 69 of 100
70
Driver 1 and Driver 2 are in an accident. Driver 2 has the following damages:
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Property Damage - $1,000
Rental Car Expense - $500
Emergency Room Expense - $400
Lost Wages - $300
The extent of the bodily injury will not be known for six months. How should the adjuster on this claim pay damages for Driver 2?
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Answer Choices: Select the Correct Answer
Pay all damage to date, provide a full and final release has been signed by Driver 2.
Pay nothing until total of all damages has been determined.
Pay the property damage and rental car expense and settle the bodily injury at a later time.
None of the responses listed are correct.
Question 70 of 100
The extent of the bodily injury will not be known for six months. How should the adjuster on this claim pay damages for Driver 2?
Your answer: None of the responses listed are correct. is incorrect. The correct answer is: Pay the property damage and rental car expense and settle the bodily injury at a later time..
EXPLANATION:
In this case the adjuster should pay for the parts of the claim where he can easily determine its value. He sould seek a partial release for these items. He can then settle the bodily injury claim and get a release at a later time.
Question 70 of 100
71
The Ordinance or Law Endorsement can be added to a Homeowners form to increase the amount of coverage in ______ increments, up to ______ coverage.
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Answer Choices: Select the Correct Answer
20% increments, up to 80% coverage.
25% increments, up to 100% coverage.
30% increments, up to 70% coverage.
15% increments, up to 95% coverage.
```
Question 71 of 100
Your answer: 25% increments, up to 100% coverage. is correct.
EXPLANATION:
Coverage for Ordinance or Law is already included on all Homeowners forms except the HO-8. The Ordinance or Law Endorsement can be attached to the form, increasing the coverage in 25% increments, up to 100% coverage.
Question 71 of 100
72
The purpose of the California Fair Access to Insurance Requirements (FAIR Plan) is to:
Answer Choices: Select the Correct Answer
Assure the availability of automobile liability insurance.
Assure the availability of basic property insurance.
Guarantee the issue of basic property insurance to any applicant.
Pay the obligations of insolvent insurers in California.
Question 72 of 100
Your answer: Assure the availability of basic property insurance. is correct.
EXPLANATION:
The FAIR Plan assures the availability of basic property insurance in California.
Question 72 of 100
73
When can an adjuster in California use a fictitious name while conducting business?
Answer Choices: Select the Correct Answer
Never
When authorized by the Commissioner to do so
When it does not conflict with another’s name in the same business
Anytime
Question 73 of 100
Your answer: When authorized by the Commissioner to do so is correct.
EXPLANATION:
No licensee may conduct a business under a fictitious or other business name unless and until he or she has obtained the written authorization of the Commissioner to do so.
Question 73 of 100
74
In California, which of the following is the definition of an "insurable event"?
Answer Choices: Select the Correct Answer
California law requires insurance companies to compensate a policyholder for a covered loss, but that holders should be neither penalized nor rewarded by a loss.
An expected or unexpected event, that is covered by an insurance policy, subject to California law.
Any contingent or unknown event, whether past or future, which may indemnify a person having an insurable interest, or create a liability against him, may be insured against, subject to California law.
Any event caused by a third-party, against an insured, that is covered by insurance and subject to California law.
Question 74 of 100
Your answer: An expected or unexpected event, that is covered by an insurance policy, subject to California law. is incorrect. The correct answer is: Any contingent or unknown event, whether past or future, which may indemnify a person having an insurable interest, or create a liability against him, may be insured against, subject to California law..
EXPLANATION:
The definition of an "insured event" as detailed by California law is: "Any contingent or unknown event, whether past or future, which may indemnify a person having an insurable interest, or create a liability against him, may be insured against, subject to California law."
Question 74 of 100
75
Which of the following statements is correct regarding the responsibilities of the insurance company when paying liability claims?
Answer Choices: Select the Correct Answer
The insurer may refuse to pay the cost to defend or settle a claim if the type of loss is not covered by the policy.
The insurer must defend or settle all claims brought against the insured during the policy period.
The insurer must defend or settle all claims brought against the insured for up to five years beyond the policy period.
The insurer may refuse to defend or settle a claim until the court establishes legal liability.
Question 75 of 100
Your answer: The insurer must defend or settle all claims brought against the insured during the policy period. is incorrect. The correct answer is: The insurer may refuse to pay the cost to defend or settle a claim if the type of loss is not covered by the policy..
EXPLANATION:
The insurer is not required to defend or cover claims made against the insured that are not covered by the policy.
Question 75 of 100
76
The amount it would cost to repair or replace property minus depreciation is the definition of:
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Answer Choices: Select the Correct Answer
Actual cash value.
Replacement cost.
Market value.
Functional replacement cost.
```
Question 76 of 100
Your answer: Replacement cost. is incorrect. The correct answer is: Actual cash value. .
EXPLANATION:
This is the definition of actual cash value (ACV) - the cost new at the time of the loss, less depreciation equals actual cash value.
Question 76 of 100
77
Under the commercial auto forms, what is the limit for transportation expenses when the insured has suffered a theft loss of a private passenger type vehicle?
Answer Choices: Select the Correct Answer
$20 per day subject to a maximum payment of $600.
$15.
$15 per day subject to a maximum limit of $450.
$25.
Question 77 of 100
Your answer: $20 per day subject to a maximum payment of $600. is correct.
EXPLANATION:
The current limit is $20 per day up to a maximum limit of $600. This coverage includes loss of use coverage for the rented vehicle which is now out of service because of a theft. This coverage only applies to autos of the private passenger type.
Question 77 of 100
78
Which of the following would not be improvements or betterments?
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Answer Choices: Select the Correct Answer
Carpet
Furniture
Interior walls
Electrical wiring
```
Question 78 of 100
Your answer: Electrical wiring is incorrect. The correct answer is: Furniture .
EXPLANATION:
Improvements and betterments are items added to a tenant’s rented structure that are permanent in nature. The tenant has insurable interest in them during occupancy of the building, and therefore can insure them. Furniture is not an improvement or betterment; it is personal property.
Question 78 of 100
79
A brand new house costing $500,000 to build would need to be covered for what minimum limit according to the "insurance to value" clause, in order for the insured to receive full replacement cost coverage in the event of a $50,000 fire loss?
Your answer: $400,000 is correct.
EXPLANATION:
The "insurance to value" clause requires a home to be covered with a limit of at least 80% of the home's full replacement value.
Question 79 of 100
80
The BAP uses Symbol 7 to cover "specifically described autos" identified in the declarations. An auto acquired during the policy period will only be covered:
Answer Choices: Select the Correct Answer
If the insured insures all of their vehicles with the company or it replaces a covered auto.
Only if it is a private passenger auto
Only if it is other than a private passenger auto
If reported to the company within 14 days of acquisition
Question 80 of 100
Your answer: If reported to the company within 14 days of acquisition is incorrect. The correct answer is: If the insured insures all of their vehicles with the company or it replaces a covered auto. .
EXPLANATION:
First the insured must insure all of their vehicles they own, or the auto replaces a covered auto. In either case the insured must notify the insurance company of the change.
Question 80 of 100
81
Ellie's Engineering Inc. has several warehouses and it is necessary for employees to transport different items between the warehouses, depending on what products are being manufactured at any given time. One day Bill, Karen, and Josh were required to load several containers of an explosive chemical onto a truck to transport it across town to another warehouse. Karen knew that the chemical must be handled carefully to prevent it from exploding, but she did not refuse to move the containers nor did she indicate to Bill and Josh that the chemical was dangerous. After loading the containers, Josh is moving the truck out of the loading zone and negligently backs it into a brick wall, injuring all three workers. Bill died from the injuries several days after the accident. Which of the following statements most accurately describes the common-law defense(s) that Ellie's Engineering might use to defend themselves against a lawsuit filed by Karen?
Answer Choices: Select the Correct Answer
The contributory negligence doctrine only.
The assumption of risk, contributory negligence, and fellow worker doctrine.
The assumption of risk and the fellow worker doctrine only.
The assumption of risk only.
Question 81 of 100
Your answer: The assumption of risk and the fellow worker doctrine only. is correct.
EXPLANATION:
Ellie's Engineering may assert that Karen assumed the risk by knowing the danger and not refusing to load the chemicals. Ellie's might also assert the fellow worker doctrine due to Josh's negligence in causing the explosion. Ellie's would not assert the contributory negligence doctrine because she did not commit the negligent act of backing the truck into the brick wall, causing the explosion.
Question 81 of 100
82
Isaac owns a home with an older furnace in need of repair. He leaves his home for a month to avoid the cold weather. He returns to find that the furnace had stopped working. Water pipes have frozen and burst and his property has been damaged. Since the water ran for almost a month, his water bill is extremely high. What will the adjuster pay?
Answer Choices: Select the Correct Answer
The water damage.
The increased cost of the water bill.
The cost to replace the particular part in the plumbing system that busted and caused the damage.
The furnace repairs and/or replacement.
Question 82 of 100
Your answer: The water damage. is correct.
EXPLANATION:
One could argue that this was caused by neglect, but the damage cannot be tied to the neglect exclusion. This exclusion applies post-loss and not before a loss has occurred. The company would have to prove intent on the part of the insured to damage his own property. Even if the furnace caused a fire, the company would have to prove an intentional act such as arson. Water is not considered covered property so the value of its loss (the water bill) is not covered.
Question 82 of 100
83
Which of the following dwelling forms provides broad perils coverage for personal property?
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Answer Choices: Select the Correct Answer
DP-2 and DP-3 only
DP-1, DP-2, and DP-3
DP-3 only
DP-2 only
```
Question 83 of 100
Which of the following dwelling forms provides broad perils coverage for personal property?
Your answer: DP-3 only is incorrect. The correct answer is: DP-2 and DP-3 only.
EXPLANATION:
The DP-1 includes only the perils of fire, lightning, and internal explosion. A DP-1 policyholder can add the extended coverage and vandalism perils by indicating this choice on the declarations page, but the broad perils (damage by burglars, etc) is NOT available. Both the DP-2 and the DP-3 forms automatically provide fire, lightning, EC, vandalism, and the broad perils for personal property.
Question 83 of 100
84
Which of the following would qualify for the Transportation Expense coverage:
I. Car rental fees incurred by the insured due to physical damage to his covered auto.
II. Loss of use expenses for which the insured is liable because of physical damage to his covered auto.
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Answer Choices: Select the Correct Answer
Both I and II
Neither I nor II
I only
II only
```
Question 84 of 100
Your answer: I only is incorrect. The correct answer is: Both I and II.
EXPLANATION:
Under Coverage D -- Transportation Expenses are paid directly to the insured at a rate of $20 a day, up to a maximum of $600. If the vehicle is stolen there is a 48-hour waiting period. The insured can used these funds to offset his/her transportation expenses he is now incurring because he/she cannot use the car due to a covered loss.
Question 84 of 100
85
Kate is a claims representative who has been involved in adjusting a very complex claim. During a meeting with the claimant and the claimant's attorney, Kate asks the claimant to sign an authorization for access to his medical records. Which of the following is the term used to describe this stage of the claims process?
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Answer Choices: Select the Correct Answer
Evaluation.
Resolution.
Investigation.
Negotiation.
```
Question 85 of 100
Your answer: Investigation. is correct.
EXPLANATION:
If Kate is requesting authorization to review information, the term best used to describe this stage is "investigation".
Question 85 of 100
86
A sandblaster becomes very sick after working for his current employer for 6 months. The employer did not know that the employee was suffering from a respiratory disease caused by similar work done over the past 20 years. How much responsibility, if any, would the current employer have for workers compensation?
Answer Choices: Select the Correct Answer
None, since this is a pre-existing condition
A portion of the responsibility, to be shared will all employers within the past year.
Maximum 50% responsibility
Full responsibility
Question 86 of 100
Your answer: A portion of the responsibility, to be shared will all employers within the past year. is correct.
EXPLANATION:
Responsibility for workers compensation benefits for occupational diseases is apportioned to all of a worker's employers during the last year which exposed the worker to the hazards associated with the occupational disease. Employers beyond one year in the past are absolved of responsibility to pay workers compensation benefits.
Question 86 of 100
87
What is a Reporting Form policy?
Answer Choices: Select the Correct Answer
The form that must be filled out to report a loss of personal property to the insurer
A policy that requires the insured to report the value of the property insured at certain time intervals
The same as a personal articles floater in that it specifically lists each jewelry item
None of the responses are correct
Question 87 of 100
Your answer: A policy that requires the insured to report the value of the property insured at certain time intervals is correct.
EXPLANATION:
A "Reporting Form" policy is one in which the policyholder is required to report the values of insured property to the company at certain intervals. A provisional (deposit) premium is charged initially and the final premium is determined by applying the rate to the average of the values reported. The insured is required to insure the property 100% to value. The insured is also required to report 100% of the value of the insured property.
Question 87 of 100
88
Which of the following would not be addressed by a court in the determination of a declaratory judgment?
Answer Choices: Select the Correct Answer
Determine if a particular exclusion would apply
Determine if a particular insuring agreement would apply
Determine fault or monetary damages
Determine if other insurance policies apply
Question 88 of 100
Your answer: Determine if other insurance policies apply is incorrect. The correct answer is: Determine fault or monetary damages.
EXPLANATION:
The court would not determine the fault or monetary judgment in the determination of a declaratory judgment.
Question 88 of 100
89
oseph Jones purchased a new car stereo system from Dailey's Auto Enhancements. Daily's permanently installed the stereo system in Joseph's car in an area of the dashboard not typically used by the automobile manufacturer for such installations. One week after installation, Joseph's car was broken into and the stereo was stolen. Under Part D of the personal auto form, what would be the limit of coverage?
Answer Choices: Select the Correct Answer
$1,000
$1,200
$2,000
Because the stereo was not permanently installed in the location used by the auto manufacturer, the loss would not be covered.
Question 89 of 100
Your answer: $1,000 is correct.
EXPLANATION:
The auto form provides for a limit of $1,000 for electronic equipment that reproduces, receives or transmits audio, visual or data signals that is permanently installed in an auto, but not in the location used by the auto manufacturer.
Question 89 of 100
90
An insurance coverage which is designed to supplement other coverages and fill insurance gaps is:
```
Answer Choices: Select the Correct Answer
Difference in Conditions insurance.
Special Causes of Loss coverage.
Consequential loss coverage.
Blanket insurance coverage.
```
Question 90 of 100
Your answer: Blanket insurance coverage. is incorrect. The correct answer is: Difference in Conditions insurance..
EXPLANATION:
Difference in conditions insurance is used to cover perils that would ordinarily be excluded or the coverage is limited under standard property forms. Years ago, before flood insurance became available, limited coverage was often written under this form.
Question 90 of 100
91
Under "pollution cleanup and removal" coverage under the standard ISO BOP form, when must a loss be reported?
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Answer Choices: Select the Correct Answer
Within 180 days
Within 60 days
Immediately
Within 90 days
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Question 91 of 100
Your answer: Within 90 days is incorrect. The correct answer is: Within 180 days.
EXPLANATION:
The expenses will be paid only if they are reported to the insurer within 180 days of the date of the direct loss or by the end of the policy period, whichever is earlier.
Question 91 of 100
92
Which of the following is the principal in a bond?
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Answer Choices: Select the Correct Answer
Contractor doing the work
Owner of the job
The insurance company
The surety
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Question 92 of 100
Your answer: The insurance company is incorrect. The correct answer is: Contractor doing the work.
EXPLANATION:
There are three parties to a surety or fidelity bond: the principal, whose performance is being guaranteed by the surety; the obligee, to whom the principal makes a promise to perform or to be honest and the surety, which guarantees the principal’s performance. If the principal fails, the surety will indemnify the obligee up to the face amount.
Question 92 of 100
93
The Businessowners policy provides loss of income on an "actual loss" sustained basis for up to:
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Answer Choices: Select the Correct Answer
24 months
6 months
12 months
18 months
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Question 93 of 100
Your answer: 12 months is correct.
EXPLANATION:
The policy provides for loss of income for up to 12-months, even if the policy was set to expire in the meantime. There is a 72-hour period before coverage takes effect.
Question 93 of 100
94
If an independent adjuster owns more than ____ of a salvage, repair or another firm that is being used in connection with a loss being handled, he must divest themselves of the claim.
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Answer Choices: Select the Correct Answer
5%
4%
3%
2%
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Question 94 of 100
Your answer: 5% is incorrect. The correct answer is: 3%.
EXPLANATION:
If an adjuster owns 3% or more, he must divest himself of the firm because of a conflict of interest.
Question 94 of 100
95
The low-cost policy limits for automobile insurance for low-income drivers who are insured by the California Automobile Assigned Risk Plan are:
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Answer Choices: Select the Correct Answer
$20,000/$40,000/$10,000
$25,000/$50,000/$25,000
$10,000/$20,000/$3,000
$12,500/$25,000/$10,000
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Question 95 of 100
Your answer: $10,000/$20,000/$3,000 is correct.
EXPLANATION:
The policy must offer coverage in the amount of $10,000 for bodily injury to, or death of, each person as a result of any one accident and, subject to that limit as to one person, the amount of $20,000 for bodily injury to, or death of all persons as a result of any one accident,and the amount of $3,000 for damage to property of others as a result of any one accident.
Question 95 of 100
96
The manager of an independent adjusting company in California leaves the business. The Department of Insurance requires notification of the manager's departure within:
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Answer Choices: Select the Correct Answer
10 days
30 days
60 days
At license renewal
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Question 96 of 100
Your answer: 30 days is correct.
EXPLANATION:
The Insurance Department must be advised within 30 days.
Question 96 of 100
97
Which party has the right to request information about a claim at any time?
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Answer Choices: Select the Correct Answer
The California Department of Insurance
The plaintiff’s attorney
Law enforcement
The agent
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Question 97 of 100
Your answer: The California Department of Insurance is correct.
EXPLANATION:
Only the California Department of Insurance (CDI) has the absolute right to request and be provided any claim information at any time. A plaintiff’s attorney may subpoena such information, but it may be considered private information. Law enforcement would also need a subpoena for claim information.
Question 97 of 100
98
An "independent adjuster" may also be known as all of the following, EXCEPT:
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Answer Choices: Select the Correct Answer
A catastrophe adjuster.
A staff adjuster.
A public adjuster.
A field adjuster.
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Question 98 of 100
Your answer: A public adjuster. is correct.
EXPLANATION:
An independent adjuster will never be known as a "public" adjuster as these two licenses are the opposite of each other. Independent adjusters on behalf of insurance companies, and public adjusters work on behalf of the policyholders.
Question 98 of 100
99
Personal property that is covered under the Personal Property Replacement Cost Endorsement is damaged and a claim has been filed. The replacement cost of the property at the time of the loss is $2,500. The full cost to repair the property is $2,000. The Coverage C limit of the Homeowners policy is $8,000. No special limits apply to this property and there is no limit applied to the type of property being claimed. Which of the following is the amount that will be paid under the endorsement?
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Answer Choices: Select the Correct Answer
$2,500.
$2,000.
$8,000.
$500.
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Question 99 of 100
Your answer: $2,500. is incorrect. The correct answer is: $2,000..
EXPLANATION:
The endorsement will pay the smallest amount of the replacement cost at the time of the loss, the full repair cost, the Coverage C limit, any applicable special limits, or the limit that applies to the type of property being claimed.
Question 99 of 100
100
Under the discovery clause in a loss sustained bond, which of the following is covered?
Answer Choices: Select the Correct Answer
A loss discovered up to one year after the policy expired but that occurred during the policy period.
A loss that is discovered after the policy has expired.
A loss that occurred prior to the inception date of the policy.
A loss that occurred during the policy period but was not discovered until five years after the expiration date.
Question 100 of 100
Your answer: A loss discovered up to one year after the policy expired but that occurred during the policy period. is correct.
EXPLANATION:
The discovery clause in a loss sustained form states that losses that occur during the policy period, but are not discovered for up to one year after the bond has expired, can be covered under the expired bond. The discovery clause in the discovery form provides coverage during the policy period or within 60 days after the bond expires for coverage to apply.
Question 100 of 100
