IA Test 15

Question 1

As a prerequisite to receive an adjuster license in California, the applicant must have at least two years of claims adjusting experience. The California Insurance Code defines one year of experience as:

Answer Choices: Select the Correct Answer
Not less than 1,000 hours of actual compensated work performed by an applicant, completed prior to submitting the license application.
Not less than 2,000 hours of actual compensated work performed by an applicant, completed prior to submitting the license application.
Not less than 2,000 hours of actual compensated work performed by an applicant, completed after submitting the license application.
Not less than 1,000 hours of actual compensated work performed by an applicant, completed after submitting the license application.

Question 1 of 100

Answer 1

Your answer: Not less than 2,000 hours of actual compensated work performed by an applicant, completed prior to submitting the license application. is correct.

EXPLANATION:
The CIC defines “one year of experience” as not less than 2,000 hours of actual compensated work performed by an applicant, completed prior to submitting the license application. Therefore, if an applicant must have the equivalent of two years of experience, they would need a total of 4,000 hours of compensated work.

Question 1 of 100

Question 2

The base deductible of 5% under the Earthquake Endorsement can be converted to a specific dollar amount by:

Answer Choices: Select the Correct Answer
Multiplying the greater of Coverage A or C, by the deductible percentage scheduled on the policy.
Scheduling a dollar amount on the endorsement form.
Multiplying the limit of liability for Coverage A by the deductible percentage.
Multiplying the limit of liability for Coverage C by the deductible percentage.

Question 2 of 100

Answer 2

Your answer: Multiplying the greater of Coverage A or C, by the deductible percentage scheduled on the policy. is correct.

EXPLANATION:
The deductible for an Earthquake Endorsement is converted to a specific dollar amount by multiplying the greater of Coverage A or C limit of liability, by the deductible percentage.

Question 2 of 100

Question 3

All of the following items would be covered under a Personal Property Replacement Cost Endorsement attached to a Homeowners policy, EXCEPT:

Answer Choices: Select the Correct Answer
A refrigerator in the covered home.
Jewelry that is described in the policy and subject to an agreed value loss settlement.
Carpeting that was damaged inside the covered dwelling.
An awning covering the front porch of the insured home.

Question 3 of 100

Answer 3

Your answer: Jewelry that is described in the policy and subject to an agreed value loss settlement. is correct.

EXPLANATION:
If the property is already subject to an “agreed value” loss settlement under the Homeowners policy, it will not be covered by the Personal Property Replacement Cost Endorsement.

Question 3 of 100

Question 4

Farm liability coverages include each of the following, EXCEPT:

Answer Choices:	Select the Correct Answer
Bodily injury and property damage.	
Personal injury and advertising injury.	
Medical payments to others.	
Professional liability.	

Question 4 of 100

Answer 4

Your answer: Personal injury and advertising injury. is incorrect. The correct answer is: Professional liability..

EXPLANATION:
Professional liability coverage is provided by other types of policies, but not under farm liability coverage.

Question 4 of 100

Question 5

What is the term used to describe the circumstance when a state requires its employers to buy coverage from a state-designated Workers Compensation program?

Answer Choices:	Select the Correct Answer
Compulsory	
Elective	
Competitive	
Monopolistic	

Question 5 of 100

Answer 5

Your answer: Compulsory is incorrect. The correct answer is: Monopolistic.

EXPLANATION:
In four states, Ohio, North Dakota, Wyoming, and Washington, private insurance companies are not allowed to sell Workers Compensation insurance. Employers in those states have to buy coverage from a state designated program or qualify to be self-insured. These states are known as “monopolistic” states.

Question 5 of 100

Question 6

Which of the following losses would be paid under the “Other than Collision” coverage of the Personal Auto policy?

Answer Choices: Select the Correct Answer
Gradual corrosion of the grillwork on the insured automobile due to continuous exposure to salty air.
The insured automobile was stolen and never recovered.
The insured automobile skidded on icy pavement and overturned.
The insured automobile was damaged when it was hit by another car that failed to stop at a red traffic light.

Question 6 of 100

Answer 6

Your answer: The insured automobile was stolen and never recovered. is correct.

EXPLANATION:
Comprehensive coverage provides theft coverage including damages that occur as a result of the theft. The corrosion is excluded as “wear and tear” and the other two choices are “collision” losses.

Question 6 of 100

Question 7

What limit of liability would be needed for a risk that transports radio active materials as required by the Motor Carrier Act under the MCS-90 endorsement?

Answer Choices:	Select the Correct Answer
$500,000	
$750,000	
$1,000,000	
$5,000,000	

Question 7 of 100

Answer 7

Your answer: $5,000,000 is correct.

EXPLANATION:
The MCS-90 endorsement requires the insured to carry a minimum of $5,000,000 in liability coverage. The endorsement provides for environmental restoration coverage as a result of pollution damages. The higher limit is required if transporting extra hazardous material.

Question 7 of 100

Question 8

Under the personal auto policy the “supplementary payments” coverage is:

Answer Choices: Select the Correct Answer
In addition to the limit of liability.
Added by endorsement.
Included in the limit of liability.
Not available under the personal auto policy.

Question 8 of 100

Answer 8

Your answer: In addition to the limit of liability. is correct.

EXPLANATION:
Supplementary payments are in addition to the limits of liability.

Question 8 of 100

Question 9

The form used to report the insured’s actual and estimated business income under an Equipment Breakdown policy is called:

Answer Choices:	Select the Correct Answer
Report of net income form	
Earnings reporting form	
Estimated income form	
Business income—Report of Values	

Question 9 of 100

Answer 9

Your answer: Business income—Report of Values is correct.

EXPLANATION:
This endorsement gives information to the insurer as to the actual values and estimated values of the insured’s business income. This enables the insurer to charge a proper premium for the business income exposures that are covered under the boiler and machinery program.

Question 9 of 100

Question 10

Under the ISO standard BOP form, how much would be paid for any one tree, shrub, or plant in case of a covered cause of loss?

Answer Choices:	Select the Correct Answer
$1,500	
$1,000	
$300	
$500	

Question 10 of 100

Answer 10

Your answer: $1,000 is correct.

EXPLANATION:
The policy provides a limit of no more than $1,000 on any one tree, shrub, or plant with a total limit of $2,500.

Question 10 of 10

Question 11

Which of the following is excluded under the Ordinance or Law Endorsement form?

Answer Choices: Select the Correct Answer
The cost to comply with any ordinance or law requiring a higher grade of pipe to be used in a home’s plumbing system.
The cost to comply with any ordinance or law regulating or enforcing the type of insulation that may be used in the attics of homes located in the jurisdiction.
The cost to comply with any ordinance or law requiring that handrails be installed on any porch that is greater than 2 feet in height, and is attached to the covered dwelling.
The cost to comply with any ordinance or law regulating or enforcing the clean up and removal of pollutants.

Question 11 of 100

Answer 11

Your answer: The cost to comply with any ordinance or law regulating or enforcing the clean up and removal of pollutants. is correct.

EXPLANATION:
The cost to comply with any ordinance or law regulating or enforcing the clean up and removal of pollutants is excluded under the Ordinance or Law endorsement.

Question 11 of 100

Question 12

Each of the following is a comprehensive loss under the physical damage coverage of a Commercial Auto policy, EXCEPT:

Answer Choices: Select the Correct Answer
Damage to a covered auto caused by hail during a thunderstorm.
Damage caused when the auto overturned on a sharp curve.
Damage to the auto caused by flood waters.
Damage caused when vandals spray-painted graffiti on the auto.

Question 12 of 100

Answer 12

Your answer: Damage caused when the auto overturned on a sharp curve. is correct.

EXPLANATION:
Damage caused by overturn is considered to be a “collision” claim. The other three answer choices are all “comprehensive” or “other than collision” losses.

Question 12 of 100

Question 13

Which of the following losses would be covered under a crime policy’s “Inside the Premises - Robbery or Safe Burglary of Other Property?”

Answer Choices: Select the Correct Answer
Broken windows and damage to a door
Theft of money and securities
Fire damage to the insured building caused by a burglar
Vandalism to a trailer on the insured premises caused by a burglar

Question 13 of 100

Answer 13

Your answer: Theft of money and securities is incorrect. The correct answer is: Broken windows and damage to a door.

EXPLANATION:
This question deals with robbery or safe burglary of “other property” which means, in crime insurance “other than money and securities”. There is another crime form to cover money and securities. Property insurance on the building/contents, would cover the fire loss if caused by burglars to conceal evidence of fingerprints, etc. Vandalism is another property peril. Burglary covers the damage when there are “signs” of forceful entry or exit. Damage to the doors and windows is a prime example of the damage covered by burglary insurance but not fire. Assume a burglar is upset that he cannot break into the building. He damages the doors and windows trying to break in. He sprays red paint all over the building. The damage caused by his attempt to break in is covered under burglary. The spray painting is vandalism and covered under property insurance.

Question 13 of 100

Question 14

Which section of the Commercial Package Policy varies based on the lines of coverage included?

Answer Choices: Select the Correct Answer
Coverage Part.
Common Policy Conditions.
Common Policy Declarations.
None of the responses listed are correct.

Question 14 of 100

Answer 14

Your answer: Coverage Part. is correct.

EXPLANATION:
Each line of insurance that is eligible for the Commercial Package Policy has its own coverage part consisting of a variety of mandatory and optional forms that are used to provide the coverage desired.

Question 14 of 100

Question 15

Which of the following perils is NOT covered by the commercial property causes of loss basic form?

Answer Choices:	Select the Correct Answer
Falling objects	
Vandalism	
Sinkhole collapse	
Sprinkler leakage	

Question 15 of 100

Answer 15

Your answer: Sprinkler leakage is incorrect. The correct answer is: Falling objects.

EXPLANATION:
Only the broad and special forms provide falling object coverage.

Question 15 of 100

Question 16

The Building and Personal Property Coverage Form includes which of the following Coverage Extensions?

Answer Choices:	Select the Correct Answer
Newly Acquired Property	
Outdoor Signs	
Replacement Cost	
Rental Value	

Question 16 of 100

Answer 16

Your answer: Replacement Cost is incorrect. The correct answer is: Newly Acquired Property.

EXPLANATION:
There are five Coverage Extensions under this form. They are: Newly acquired or constructed property; personal effects and property of others; valuable papers and records; property off-premises, and outdoor property. Note that these are very limited in scope of coverage.

Question 16 of 100

Question 17

What does the phrase “free on board destination” mean?

Answer Choices: Select the Correct Answer
Makes the seller responsible to the buyer until the goods have been delivered as agreed.
An ocean term referring to jettison.
The title to the goods to be shipped is transferred to the buyer at the shipping point.
The term is in reference to a cruise ship agreement for passengers.

Question 17 of 100

Answer 17

Your answer: Makes the seller responsible to the buyer until the goods have been delivered as agreed. is correct.

EXPLANATION:
The term is used in two common phrases, “FOB shipping point” and “FOB destination,” to distinguish when the title of goods passes from the seller to the buyer. Under the terms of “FOB shipping point,” the title of the goods passes to the buyer at the shipping point. Similarly, under the terms of “FOB destination,” the title of the goods passes to the buyer when the goods arrive at their destination. The distinction is important because it determines who pays for the shipping costs of the merchandise - whoever holds the title to the merchandise at the time of its shipping pays for its transportation costs unless otherwise noted (e.g., freight prepaid or freight collect). Also, it is important that if the shipment is damaged while traveling the owner must file the freight claim.

Question 17 of 100

Question 18

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 18 of 100

Answer 18

Your answer: A direct loss. is incorrect. The correct answer is: A consequential loss..

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 18 of 100

Question 19

All of the following are considered to be family members on the PAP, EXCEPT:

Answer Choices: Select the Correct Answer
Insured’s son who lives in the household.
Insured’s foster child who lives in the household.
Insured’s mother who doesn’t live in the household.
Insured’s step-son residing in the home.

Question 19 of 100

Answer 19

Your answer: Insured’s mother who doesn’t live in the household. is correct.

EXPLANATION:
The insured’s mother although a relative by blood is not living in the household so therefore is not considered to be a family member. A family member is related to the insured by blood, marriage or adoption and resides in the household.

Question 19 of 100

Question 20

Claims adjusters have a close relationship to the legal profession, but must be careful not to become involved in the unauthorized practice of law. Which of the following would be an example of an adjuster who is engaged in the unauthorized practice of law?

Answer Choices: Select the Correct Answer
The adjuster has transmitted settlement offers on behalf of the principal.
The adjuster has managed claims in compliance with their state’s adopted Unfair Claim Settlement laws.
The adjuster has expressed an opinion, formed from a factual analysis, regarding the extent of damage or injury.
The adjuster has drafted the legally binding settlement papers on a claim.

Question 20 of 100

Answer 20

Your answer: The adjuster has drafted the legally binding settlement papers on a claim. is correct.

EXPLANATION:
Adjuster are not permitted to draft any document that is intended to have a legally binding effect.

Question 20 of 100

Question 21

Which of the following is considered robbery?

Answer Choices: Select the Correct Answer
Taking someone else’s property by use of violence
Taking someone else’s property by use of fear of violence
Taking the property of another by any overt, felonious act committed in the victim’s presence
All of the responses are correct

Question 21 of 100

Answer 21

Your answer: All of the responses are correct is correct.

EXPLANATION:
All of the responses are correct because they fit the definition of a threat of violence or injury in the taking of property.

Question 21 of 100

Question 22

Tea is applying for a new adjuster license in California. What is the fee she will need to submit with her license application?

Answer Choices:	Select the Correct Answer
$47	
$56	
$72	
$29	

Question 22 of 100

Answer 22

Your answer: $72 is correct.

EXPLANATION:
The application fee for an original license is: $72. (CIC 14097)

Question 22 of 100

Question 23

The amount it would cost to repair or replace property minus depreciation is the definition of:

Answer Choices:	Select the Correct Answer
Actual cash value.	
Replacement cost.	
Market value.	
Functional replacement cost.	

Question 23 of 100

Answer 23

our 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 23 of 100

Question 24

If a bond is called upon for payment, which party pays out the face amount of the bond?

Answer Choices:	Select the Correct Answer
Principal	
Surety	
Obligee	
Insured	

Question 24 of 100

Answer 24

Your answer: Surety is correct.

EXPLANATION:
The surety (the insurer) pays out the face amount of the bond to the obligee in the event that the bond is called. In that event, the surety will have “right of recourse” against its own principal.

Question 24 of 100

Question 25

The California Code states that standard fire policies must be written on the standard form with very limited omissions. Which of the following modifications are permitted to be made under a Standard Fire policy in California? Answer Choices: Select the Correct Answer The coverage can be substantially equivalent to or more favorable to the insured. The insured can sign a waiver and accept lesser coverage. The Commissioner can approve any variance in coverage. The insurer can offer lesser coverage at a lower premium. Question 25 of 100

Answer 25

Your answer: The Commissioner can approve any variance in coverage. is incorrect. The correct answer is: The coverage can be substantially equivalent to or more favorable to the insured. . EXPLANATION: According to the California Insurance Code (CIC 2070), the coverage can be substantially equivalent to or more favorable to the insured than that contained in the Standard Fire insurance policy. Question 25 of 100

Question 26

In commercial property what is the effect of exercising the "agreed value" option? Answer Choices: Select the Correct Answer Negates coinsurance Pays replacement cost The insurer and insured must agree on the value of all insured property after a loss The insured reports values at an agreed upon date Question 26 of 100

Answer 26

Your answer: The insurer and insured must agree on the value of all insured property after a loss is incorrect. The correct answer is: Negates coinsurance. EXPLANATION: Agreed value is an option on the Building and Personal Property Coverage form. If selected and indicated on the Declaration page, the coinsurance condition does not apply. Question 26 of 100

Question 27

Under the California Insurance Frauds Prevention Act (IFPA), facts, circumstances or events which singly, or in combination, support(s) an inference that insurance fraud may be been committed is called: ``` Answer Choices: Select the Correct Answer A suspected fraud occurrence. A red flag event. A reasonable belief occurrence. A willful event. ``` Question 27 of 100

Answer 27

Your answer: A reasonable belief occurrence. is incorrect. The correct answer is: A red flag event.. EXPLANATION: Facts, circumstances or events which singly, or in combination, support(s) an inference that insurance fraud may be been committed is called a "red flag" or a "red flag event" in California. Question 27 of 100

Question 28

Your insurance company pays for the damages to your auto and for your bodily injury after your car is struck by a hit and run driver. The accident is witnessed by several individuals who can describe the car and its driver but who failed to get a license number. A year after the accident, the owner of the hit and run vehicle turns himself in. It is determined that he was fully insured at the time of the accident but fled because he had been drinking. Pursuant to the California Insurance Regulations, your insurance company can: Answer Choices: Select the Correct Answer Do nothing as a full year has passed since the accident occurred Subrogate against the other insurance company to recover only for the damages to your vehicle Subrogate against the other driver to recover all sums paid for your vehicle repair and your bodily injury File a lawsuit to waive the statute of limitations then proceed with subrogation Question 28 of 100

Answer 28

Your answer: Subrogate against the other driver to recover all sums paid for your vehicle repair and your bodily injury is correct. EXPLANATION: Payments made under both your Uninsured Motorist Bodily Injury and Uninsured Motorist Property Damage coverages can be recovered from the responsible party by subrogation if his/her identity is later confirmed. Question 28 of 100

Question 29

When is it appropriate for an adjuster to secure a non-waiver agreement with an insured?

Answer 29

Your answer: If the adjuster senses the claim may be fraudulent in nature. is incorrect. The correct answer is: If there is a question of coverage. . EXPLANATION: A properly executed non-waiver agreement allows the insurance company to complete a thorough investigation without implying that coverage is available for the loss. Question 29 of 100

Question 30

An insured has a HO-5 Homeowner Policy; they have insured the wife's diamond ring and the husband's guns on a personal articles floater. All of the items are stolen. What policy and deductibles would apply? Answer Choices: Select the Correct Answer The homeowner policy would not pay and the personal articles floater would pay without a deductible. The homeowner policy would be primary insurance with a deductible. The homeowner would pay excess over the personal articles floater with a deductible. Each policy would pay its pro-rata proportion of the loss. Question 30 of 100

Answer 30

Your answer: The homeowner policy would not pay and the personal articles floater would pay without a deductible. is correct. EXPLANATION: Once coverage is purchased on a more specific basis, the coverage no longer applies under the homeowner policy. The floater would pay the claim. Floaters seldom contain deductibles. Question 30 of 100

Question 31

A worker who suffers an injury during recreational activities is most likely to be compensable when which of the following circumstances exists? Answer Choices: Select the Correct Answer The recreational activities are one-time or first-time activity without the knowledge of the employer. The recreational activities occur on the employer's premises during a lunch-break, work-break, or other recreational time period. The recreational activities are off-premises and participation is not required. The recreational activities are voluntary and sponsored by the employer off-premises. Question 31 of 10

Answer 31

Your answer: The recreational activities occur on the employer's premises during a lunch-break, work-break, or other recreational time period. is correct. EXPLANATION: An injury that occurs during work hours and on the work premises are more likely to be covered. Question 31 of 100

Question 32

QUESTION: Under what circumstances does an insurer allow the transfer of an insured's rights and duties under a Commercial Package Policy without the permission of the insurer? Answer Choices: Select the Correct Answer When the named insured dies. When the named insured is in the hospital. When the named insured is out of the United States. When the named insured is informed of a terminal illness. Question 32 of 100

Answer 32

Your answer: When the named insured dies. is correct. EXPLANATION: If the named insured dies his or her rights and duties are transferred to the deceased's legal representative. This occurs automatically, the insurer's permission is not required. Question 32 of 100

Question 33

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 33 of 100

Answer 33

Your answer: Theft. is correct. EXPLANATION: The coverage is for very basic perils similar to the DP-1 perils. Theft is not covered. Question 33 of 100

Question 34

If the insured carries a DP-2 dwelling form and insures the dwelling for 80% of its replacement cost value, what will he be paid if his 30 year old roof sustains $10,000 in damages (disregarding any deductible)? ``` Answer Choices: Select the Correct Answer $333 $5,000 $10,000 $8,000 ``` Question 34 of 100

Answer 34

Your answer: $10,000 is correct. EXPLANATION: If the insured carries 80% to value he would be entitled to full replacement cost coverage for his damaged roof. Question 34 of 100

Question 35

The HO-3 provides _____ coverage on the dwelling and ____ coverage on personal property. ``` Answer Choices: Select the Correct Answer broad peril / open peril basic peril / basic peril open peril / broad peril named peril / open peril ``` Question 35 of 100

Answer 35

Your answer: broad peril / open peril is incorrect. The correct answer is: open peril / broad peril. EXPLANATION: The HO-3 (Special form) provides open peril coverage for loss to the dwelling and other structures. It provides broad peril coverage for personal property. Question 35 of 100

Question 36

A building insured under a Commercial Property policy suffers a fire and it is obvious that the building is underinsured. The policyholder demands payment for the entire loss on a replacement cost basis. The insurance company can:

Answer 36

Your answer: Pay only the actual cash value of the lost or damaged property or apply the coinsurance clause is correct. EXPLANATION: The insurer can pay the actual cash value of the loss or apply the coinsurance clause because the insured is underinsured. Question 36 of 100

Question 37

An inland marine coverage which covers the insured's merchandise held for sale, such property that is sold but not delivered, customers property in the care and custody of the insured, and property being transported to or from the insured, is a: ``` Answer Choices: Select the Correct Answer Dealers form Commercial articles floater. Floor plan merchandise coverage form. Bailee's customers policy. ``` Question 37 of 100

Answer 37

Your answer: Bailee's customers policy. is incorrect. The correct answer is: Dealers form. EXPLANATION: An equipment dealers form is an example. Question 37 of 100

Question 38

All of the following are reasons an independent adjuster may be hired, EXCEPT: Answer Choices: Select the Correct Answer The insured may retain an independent adjuster if negotiations with their insurer are not progressing forward. An insurer may contract with an independent adjuster in a location where the insurer does not have claims offices set up. Due to a catastrophe, an insurer may not have enough adjusters on staff to process all of the claims, and would contract with additional independent adjusters temporarily. An insurer may contract with an independent adjuster who has special knowledge or expertise to adjust specialized claims. Question 38 of 100

Answer 38

Your answer: The insured may retain an independent adjuster if negotiations with their insurer are not progressing forward. is correct. EXPLANATION: Retaining an adjuster to assist in negotiating a claim with the insurer would be a reason to hire a PUBLIC adjuster, not an INDEPENDENT adjuster. Question 38 of 100

Question 39

Which of the following is correct regarding the differences in coverage between an HO-3 and an HO-5? Answer Choices: Select the Correct Answer HO-3 covers personal property on a named peril basis, while personal property under an HO-5 is covered on an open peril basis. HO-3 pays market value for dwelling losses while the HO-5 pays replacement cost. HO-3 only covers personal property owned by the insured, while HO-5 can cover personal property owned or used by the insured. HO-3 has more exclusions pertaining to the insured dwelling than the HO-5. Question 39 of 100

Answer 39

Your answer: HO-3 covers personal property on a named peril basis, while personal property under an HO-5 is covered on an open peril basis. is correct. EXPLANATION: The HO-3 and the HO-5 are the same in terms of dwelling exclusions, valuation on dwelling losses, and the type of personal property insured. They are different in terms of perils insured against for personal property losses. Question 39 of 100

Question 40

If the insured suffers the loss of an article that is part of a pair or set, how will the insurance company typically settle the loss? Answer Choices: Select the Correct Answer Pay only for the value of the single item that was damaged or destroyed. Pay for the current value of the total set. Pay for the replacement cost of the entire pair or set. Pay a fair proportion of the total value of the pair or set. Question 40 of 100

Answer 40

If the insured suffers the loss of an article that is part of a pair or set, how will the insurance company typically settle the loss? Your answer: Pay for the replacement cost of the entire pair or set. is incorrect. The correct answer is: Pay a fair proportion of the total value of the pair or set.. EXPLANATION: The policy will not pay the value of the entire set. Instead, the policy will pay a reasonable and fair proportion of the total value of the pair or set. Question 40 of 100

Question 41

Ocean marine coverage for losses to the insured vessel caused by bursting boilers, latent defects in the vessel and negligence of the master or crew members are addressed by which of the following? ``` Answer Choices: Select the Correct Answer The Inchmaree clause. Protection and indemnity coverage. Hull coverage Barratry ``` Question 41 of 100

Answer 41

Your answer: The Inchmaree clause. is correct. EXPLANATION: Inchmaree was a steam ship that suffered a machinery loss that was not covered. A lawsuit followed, and future policies offered this coverage under what is commonly referred to as the Inchmaree clause. Question 41 of 100

Question 42

Jonathan, a licensed California independent adjuster, has received a notice of claim from an insured. How soon must is he transmit this notice to the insurer? ``` Answer Choices: Select the Correct Answer Within 5 calendar days Within 10 calendar days Within 21 calendar days Immediately ``` Question 42 of 100

Answer 42

Your answer: Immediately is correct. EXPLANATION: Upon receiving notice of claim, every licensee or claims agent must immediately transmit notice of claim to the insurer. Failure of the licensee or claims agent to immediately transmit notice of claim to the insurer will constitute a separate and distinct violation of California Insurance Code Question 42 of 100

Question 43

Flood coverage can be purchased under the Commercial Property policy using endorsement CP 10 65, if the property is eligible. If this Commercial Property endorsement is purchased and the property is already covered under a flood policy from the National Flood Insurance Program, then the coverage under this endorsement is considered to be: ``` Answer Choices: Select the Correct Answer Primary Excess over the NFIP maximum limits Pro-rata with the NFIP policy Not applicable ``` Question 43 of 100

Answer 43

Your answer: Excess over the NFIP maximum limits is correct. EXPLANATION: If a NFIP policy is in force or was eligible for purchase at the time the commercial property policy was endorsed for flood coverage, then the endorsement becomes excess coverage over the NFIP policy maximum limits. Question 43 of 100

Question 44

QUESTION: What is the primary purpose of the California Automobile Assigned Risk Plan (CAARP)? Answer Choices: Select the Correct Answer To guarantee coverage for low-income applicants. To monitor automobile rates of insurers in this state. To provide availability of coverage for applicants who are unable to obtain it through ordinary methods. To train agents to place coverage through the Plan. Question 44 of 100

Answer 44

Your answer: To provide availability of coverage for applicants who are unable to obtain it through ordinary methods. is correct. EXPLANATION: According to the California Insurance Code (CIC 11620), the purpose of the California Automobile Assigned Risk Plan is to provide availability of coverage to applicants for automobile bodily injury and property damage liability insurance who are in good faith entitled to coverge but are unable to procure that insurance through ordinary methods.

Question 45

Which of the following is considered to be a guarantee of truth throughout the duration of the policy? ``` Answer Choices: Select the Correct Answer Representation Warranty Endorsement Arbitration ``` Question 45 of 100

Answer 45

Your answer: Warranty is correct. EXPLANATION: A warranty is something that becomes part of the contract and is a statement that is considered to be a guarantee of truth for the entire term of the policy. Question 45 of 100

Question 46

An unendorsed claims made form CGL policy wil respond to claims reported during the policy period and up to _____days after the policy expires. ``` Answer Choices: Select the Correct Answer 90 120 365 60 ``` Question 46 of 100

Answer 46

Your answer: 60 is correct. EXPLANATION: The claims made form CGL has an automatic extended reporting period of 60 days after the policy expires. Question 46 of 100

Question 47

Which of the following is not an HO policy form? ``` Answer Choices: Select the Correct Answer DP-1 HO-4 HO-6 HO-8 ``` Question 47 of 100

Answer 47

Your answer: DP-1 is correct. EXPLANATION: The DP-1 form is a dwelling form. Question 47 of 100

Question 48

Money and securities are best covered under which of the following Commercial Crime policy coverages? Answer Choices: Select the Correct Answer Inside the Premises Theft of Money and Securities Robbery and safe burglary. Premises burglary. Theft coverage only. Question 48 of 100

Answer 48

Your answer: Robbery and safe burglary. is incorrect. The correct answer is: Inside the Premises Theft of Money and Securities. EXPLANATION: This coverage provides theft, disappearance and destruction and is the best method to insure the theft of money and securities inside the premises. The other responses are more restrictive in coverage. Question 48 of 100

Question 49

The insured is liable for $500,000 in damages for a personal injury claim that is covered under the insured's primary liability policy. The primary liability policy has a $300,000 limit per occurrence. The insured also has a $1 million Umbrella policy with a $3,000 self-insured retention limit. How would this claim likely be settled? Answer Choices: Select the Correct Answer The primary policy would pay $300,000 and the insured would pay $200,000. The primary policy would pay $300,000, the insured would pay $3,000, and the Umbrella policy would pay $197,000. The primary policy would pay nothing; the Umbrella policy would pay the full $500,000. The primary policy would pay $300,000 and the Umbrella policy would pay $200,000. Question 49 of 100

Answer 49

Your answer: The primary policy would pay $300,000, the insured would pay $3,000, and the Umbrella policy would pay $197,000. is incorrect. The correct answer is: The primary policy would pay $300,000 and the Umbrella policy would pay $200,000. . EXPLANATION: Because the claim is covered with the underlying liability coverage policy, the Umbrella policy picks up and pays the remaining portion of the claim, without the application of the self-insured retention. If the Umbrella policy was required to pay first, the self-insured retention would apply. Question 49 of 100

Question 50

When an insured is fulfilling the duty of proving a loss by taking an inventory of the damaged property, who pays the expenses incurred by the insured? Answer Choices: Select the Correct Answer The insured. The insurer. The adjuster will provide funds to pay for these expenses. Who pays these expenses will be negotiated at the settlement of the claim. Question 50 of 100

Answer 50

Your answer: The insurer. is incorrect. The correct answer is: The insured.. EXPLANATION: The insured is instructed to “keep a record of your expenses for emergency and temporary repairs, for consideration in the settlement of the claim.” Reasonable expenses paid by the insured to protect the property from further loss are the obligation of the insurer. Thus any other expenses incurred by the insured are NOT paid by the insurer and the insurer will only pay the "reasonable expenses" to protect the property if the insured maintains an inventory of expenses paid. Until that time, the insured is responsible for all expenses. Question 50 of 100

Question 51

The Now Company carries a special BOP policy with a liability limit of $500,000. The company is involved in an accident causing $200,000 bodily injury damage and $200,000 property damage. The total amount collectible under the policy is: ``` Answer Choices: Select the Correct Answer $500,000 $400,000 $200,000 $100,000 ``` Question 51 of 100

Answer 51

Your answer: $400,000 is correct. EXPLANATION: BOP policies provide a single limit of liability. Both bodily injury and property damage coverage is provided. Since the amounts for bodily injury and property damage combined do not exceed the 500,000 occurrence limit, the total amount of the claim would be covered. Question 51 of 100

Question 52

The Homeowners "Additional Residence Rented to Others" endorsement will provide coverage for an additional structure, used as a residence, that is rented by the insured as a: ``` Answer Choices: Select the Correct Answer A one-family dwelling. A two-family dwelling. A one to four-family dwelling. A one to two-family dwelling. ``` Question 52 of 100

Answer 52

Your answer: A one to four-family dwelling. is correct. EXPLANATION: The Homeowners "Additional Residence Rented to Others" endorsement provides coverage for an additional structure, used as a residence, for one to four families. Question 52 of 100

Question 53

The most common method of settling liability insurance claims is through: ``` Answer Choices: Select the Correct Answer ADRs. Arbitration. Mediation. Negotiated settlement. ``` Question 53 of 100

Answer 53

Your answer: Negotiated settlement. is correct. EXPLANATION: The most common method of settling liability insurance claims is through negotiated settlement. Question 53 of 100

Question 54

Sally Roe's vehicle is rear-ended by John Doe. Sally and John are good friends. Sally tells John not to worry about the damage. She says she has insurance and will tell her insurance company to pay for the damage. She will waive her subrogation right so that John won't have to pay anything. Her insurer will: Answer Choices: Select the Correct Answer Honor the waiver. Not honor the waiver. Proceed with subrogation against John Doe and will not honor the waiver. Refuse to pay the claim because of the waiver of subrogation. Question 54 of 100

Answer 54

Your answer: Proceed with subrogation against John Doe and will not honor the waiver. is correct. EXPLANATION: Sally does not have to file a claim. She can pay for the damage herself if she chooses. However, she cannot ask her insurance company to pay for her damage without allowing it the right to subrogate. With insurance, subrogation is the substitution of one party (insurer) for another party (insured) to pursue any rights the insured may have against a third party liable for the loss paid by the insurer. Once the insurer has paid for the insured's (Sally's) damage, it has the contractual right to recover not only Sally's deductible, but also the money it paid for Sally's repairs from the at-fault party (John). Sally cannot "waive" this contractual right. Question 54 of 100

Question 55

The National Flood Insurance Program provides coverage for losses caused by all of the following occurrences, EXCEPT: ``` Answer Choices: Select the Correct Answer Water-main breakage. Mudflow. Runoff from heavy rain. Overflow of tidal waters. ``` Question 55 of 100

Answer 55

Your answer: Mudflow. is incorrect. The correct answer is: Water-main breakage. . EXPLANATION: It is not the intent of flood insurance to cover losses such as water-main breakage. Question 55 of 100

Question 56

Which of the following terms means "through another person?" ``` Answer Choices: Select the Correct Answer Strict Vicarious Indemnity Subrogation ``` Question 56 of 100

Answer 56

Your answer: Vicarious is correct. EXPLANATION: Vicarious means "through or in place of another person." There are times when a person may be held responsible for the negligent acts of another person. This is known as vicarious liability. Question 56 of 100

Question 57

The insured's deliberate failure to reveal material facts that would affect the insurer's decision to issue an insurance policy is called: ``` Answer Choices: Select the Correct Answer Rebating Material concealment Over indemnity Fraud ``` Question 57 of 100

Answer 57

Your answer: Material concealment is correct. EXPLANATION: Concealment would be a material misrepresentation and the insurer could cancel the policy. Question 57 of 100

Question 58

In California, a Homeowners policy may be cancelled during the 60-day underwriting period, and for the reasons acceptable by law, if a notice of _____ is provided to the insured. ``` Answer Choices: Select the Correct Answer 20 days. 30 days. 45 days. 10 days. ``` Question 58 of 100

Answer 58

our answer: 30 days. is incorrect. The correct answer is: 20 days.. EXPLANATION: In California, when a Homeowners policy is still within the 60-day underwriting period, the insurance company can cancel the policy if a 20-day notice is provided to the insured. Question 58 of 100

Question 59

What is the definition of custom farming? Answer Choices: Select the Correct Answer Farming for others. Sharecropping. Raising specialty crops. Crops grown using genetically modified seeds. Question 59 of 100

Answer 59

Your answer: Farming for others. is correct. EXPLANATION: Custom farming is farming for others for a fee under a contract or agreement. A special endorsement is required if the receipts are in excess of $5,000 per year. Question 59 of 100

Question 60

Which of the following is the class of insurance, defined by the California Insurance Code (CIC) that includes insurance against financial loss by reason of the nonpayment of principal, interest or other sums agreed to be paid under the terms of any note or bond, or other evidence of indebtedness secured by a mortgage, deed of trust, or other instrument constituting a lien or charge on real estate? ``` Answer Choices: Select the Correct Answer Insolvency insurance. Credit insurance. Mortgage Guaranty insurance. Legal insurance. ``` Question 60 of 100

Answer 60

Your answer: Mortgage Guaranty insurance. is correct. EXPLANATION: Insurance against financial loss by reason of the nonpayment of principal, interest or other sums agreed to be paid under the terms of any note or bond, or other evidence of indebtedness secured by a mortgage, deed of trust, or other instrument constituting a lien or charge on real estate, is known as Mortgage Guaranty insurance in California. Question 60 of 100

Question 61

In connection with the bonding business which of the following statements is NOT true? Answer Choices: Select the Correct Answer A surety bond protects the principal from sustaining a loss. Ideally, underwritten surety bonds should not produce any loss. Court bonds are prescribed by the individual courts and not by the insurance companies. A surety bond protects the obligee from sustaining a loss. Question 61 of 100

Answer 61

Your answer: A surety bond protects the obligee from sustaining a loss. is incorrect. The correct answer is: A surety bond protects the principal from sustaining a loss.. EXPLANATION: The purpose of a surety bond is to protect the obligee from sustaining a loss. A contractor provides the bond, which is issued by the surety for the benefit of the obligee who would be the party contracting with the contractor to perform under a contract. Question 61 of 100

Question 62

All of the following are additional property coverages under the homeowners program, EXCEPT: ``` Answer Choices: Select the Correct Answer Debris removal. Reasonable repairs. Special damages. Loss assessment. ``` Question 62 of 100

Answer 62

Your answer: Loss assessment. is incorrect. The correct answer is: Special damages.. EXPLANATION: Special damages are those addressed by the liability section of the policy. Medical expenses and loss of wages are a few examples. Question 62 of 100

Question 63

Convenience stores selling gasoline must have a minimum of ______ square feet in total floor area in order to qualify for the BOP? ``` Answer Choices: Select the Correct Answer 2,500 3,500 4,000 3,000 ``` Question 63 of 100

Answer 63

Your answer: 3,500 is incorrect. The correct answer is: 3,000. EXPLANATION: In the newer edition of the BOP, restaurants or convenience stores selling gasoline must have a minimum of 3,000 square feet of total floor space in order to qualify as an acceptable risk. Question 63 of 100

Question 64

The minimum liability amount per occurrence for bodily injury and property damage claims available under the BOP is: ``` Answer Choices: Select the Correct Answer $500,000 $1,000,000 $100,000 $300,000 ``` Question 64 of 100

Answer 64

Your answer: $300,000 is correct. EXPLANATION: $300,000 of liability per occurrence is automatically included on the BOP. Higher limits are available at the request of the insured and at the discretion of the company. Question 64 of 100

Question 65

Homeowner policies typically provide coverage for all of the following, EXCEPT: ``` Answer Choices: Select the Correct Answer Personal liability Personal injury Claim expenses Medical payments ``` Question 65 of 100

Answer 65

Your answer: Personal injury is correct. EXPLANATION: Personal injury covers libel, slander, wrongful eviction and several other coverages. The standard homeowner policy must be endorsed to provide personal injury coverage. Question 65 of 100

Question 66

In the case of a first-party automobile physical damage claim in California, the auto insurance company must exercise its right to inspect the damaged vehicle: Answer Choices: Select the Correct Answer Within 48 hours of receiving the claims notice. Anytime within 30 days of receiving the claims notice. Within 7 business days after receiving the notice of claim. Within 6 business days after receiving the notice of claim. Question 66 of 100

Answer 66

Your answer: Within 7 business days after receiving the notice of claim. is incorrect. The correct answer is: Within 6 business days after receiving the notice of claim.. EXPLANATION: The California Fair Claims Settlement Practices Regulations state that if an insurer chooses to exercise its right to inspect the damaged vehicle on a first-party claim, it must do so within 6 business days of receiving the claims notice. Question 66 of 100

Question 67

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 67 of 100

Answer 67

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 67 of 100

Question 68

Losses caused by all of the following are covered under the National Flood Insurance Program, EXCEPT: Answer Choices: Select the Correct Answer Mudslide. Overflow of tidal waters. Mudflow. Rapid accumulation or runoff of surface water. Question 68 of 100

Answer 68

Your answer: Mudslide. is correct. EXPLANATION: Flood insurance covers loss caused by an overflow of tidal or surface waters and mudflow. The NFIP does not cover mudslide. Question 68 of 100

Question 69

If an adjusting firm intends to add a new branch office, what action must be taken? Answer Choices: Select the Correct Answer Report the new location to the Commissioner immediately Report the new location within 30 days Must first obtain a branch office certificate No action needs to be taken Question 69 of 100

Answer 69

Your answer: Must first obtain a branch office certificate is correct. EXPLANATION: Adjusters cannot conduct business from any location other than that shown on the records of the Commissioner as his or her place of business unless he or she has received a branch location certificate for that location. A licensee must notify the Commissioner in writing within 10 days after the closing or changing the location of a branch office. Question 69 of 100

Question 70

Which of the following injury or damage falls within the products-completed operations hazard as defined in a commercial umbrella liability policy? Answer Choices: Select the Correct Answer A spot remover company hired sales representatives across the country to visit potential customers’ homes and demonstrate its product. The company received hundreds of claims from people who said the carpets in their homes were reunited because, during the demonstration, the spot remover ate large holes in the carpet. A home hair preparation was advertised to “curl hair” within two hours.” Many people used the product and their hair fell out. A building being constructed by a contractor falls and causes bodily injury. A contractor is blasting and a rock is thrown and a vehicle is damaged. Question 70 of 100

Answer 70

Your answer: A home hair preparation was advertised to “curl hair” within two hours.” Many people used the product and their hair fell out. is correct. EXPLANATION: Product liability occurs when the product is relinquished to others away from the insured’s premises. Question 70 of 100

Question 71

The insured sets a fire to his home and is found to be guilty of arson. There is a lien on the burned property by a mortgage company in the amount of $150,000. The property is insured for $300,000 and is a total loss. The personal property of the insured, covered separately by a Homeowners policy for $150,000, is also a total loss. How will this claim most likely be paid? Answer Choices: Select the Correct Answer The insured is paid a total of $300,000. The mortgagee is paid $150,000. The insured is paid $150,000 for the personal property loss. Since the loss is from an intentional act of the insured the entire loss is denied. Question 71 of 100

Answer 71

Your answer: Since the loss is from an intentional act of the insured the entire loss is denied. is incorrect. The correct answer is: The mortgagee is paid $150,000.. EXPLANATION: The provisions relative to the suspension of payment due to arson do not apply to a lender that holds a valid recorded mortgage on the property in question. Therefore, the lien holder is fully reimbursed for its insurable interest in the property. The insured is not paid due to the charge and conviction of arson. Question 71 of 100

Question 72

Secondary injury funds (also known as second or subsequent injury funds) are a part of most states’ workers compensation laws. Which of the following most closely identifies their purpose? Answer Choices: Select the Correct Answer Designed to save the employer premium Designed to cover all employers within the state All employers which have had two or more workers compensation claims in the past years have their premiums surcharged The Fund reimburses employers who employ employees with a pre-existing partial disability who suffer a secondary injury. Question 72 of 100

Answer 72

Your answer: Designed to cover all employers within the state is incorrect. The correct answer is: The Fund reimburses employers who employ employees with a pre-existing partial disability who suffer a secondary injury.. EXPLANATION: Insurers pay into these funds. In some states, all insurers writing workers compensation coverage must pay into the fund, in other states, the stipulations for contribution are spelled out in the law. The Fund is a state agency which reimburses employers or, if insured, their insurance carriers for part of the workers’ compensation costs in certain instances when an employee with a pre-existing permanent partial disability is injured on the job. Question 72 of 100

Question 73

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 73 of 100

Answer 73

Your answer: Pay for all damage except the furnace. is correct. 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 73 of 100

Question 74

When completing an application for an independent claims adjuster license in California, one year of experience consists of not less than _____ hours of actual compensated work performed by the applicant. ``` Answer Choices: Select the Correct Answer 1,000 500 2,000 750 ``` Question 74 of 100

Answer 74

Your answer: 2,000 is correct. EXPLANATION: One year of experience consists of not less than 2,000 hours of actual compensated work performed by each applicant preceding the filing of the application. Applicants must substantiate claimed years and hours of qualifying experience and the exact details as to the character and nature by written certifications from employers, subject to independent verification by the Commissioner. Question 74 of 100

Question 75

Under workers compensation rules, if an employee suffers a 5% loss of use of his left arm, he will receive a disability rating of: ``` Answer Choices: Select the Correct Answer Temporary, partial. Temporary, total. Permanent, total. Permanent, partial. ``` Question 75 of 100

Answer 75

Your answer: Permanent, partial. is correct. EXPLANATION: Any rating between 1% and 99% indicates a permanent, partial disability. Question 75 of 100

Question 76

What is the personal umbrella policy/personal excess liability coverage designed to do? Answer Choices: Select the Correct Answer Provide coverage in excess, with higher limits, than the primary policy. Provide coverage to you under a workers compensation claim. Provide coverage for intentional acts. Provide coverage for all acts. Question 76 of 100

Answer 76

Your answer: Provide coverage in excess, with higher limits, than the primary policy. is correct. EXPLANATION: The personal umbrella policy is sometimes called personal excess liability coverage. The umbrella policy provides excess limits over the primary underlying coverage. It also provides broader coverage than the underlying coverage. Question 76 of 100

Question 77

Which of the following is TRUE of the Equipment Breakdown Protection Coverage Form? Answer Choices: Select the Correct Answer It includes a maximum of $25,000 of liability coverage. It has a standard deductible of $1,000 that applies to each occurrence or breakdown. If damage is also covered by another poicy, the Equipment Breakdown Protection Coverage form is primary and the other policy is secondary. It normally pays replacement cost, unless endorsed to pay actual cash value. Question 77 of 100

Answer 77

Your answer: It normally pays replacement cost, unless endorsed to pay actual cash value. is correct. EXPLANATION: The Equipment Breakdown policy provides replacement cost loss settlement unless endorsed to pay ACV. The other choices are all incorrect regarding this coverage form. Question 77 of 100

Question 78

Which of the following is correct concerning the appraisal process under a business automobile policy: I. Only the named insured can make a written demand that the appraisal method be used. II. The appraisal method cannot be used to determine whether the loss is covered, rather than the amount of damages. ``` Answer Choices: Select the Correct Answer II only. I only. Both I and II. Neither I nor II. ``` Question 78 of 100

Answer 78

Your answer: Both I and II. is incorrect. The correct answer is: II only. . EXPLANATION: Either party - the insured or the insurer - can demand the appraisal method but only when the amount of damages is in dispute. Appraisal cannot be used to resolve coverage disputes. Question 78 of 100

Question 79

An insured has reported a claim late that occurred over one year ago and now seeks defense representation and coverage under his automobile policy. What should the adjuster do? Answer Choices: Select the Correct Answer Deny the claim Investigate the claim Issue a reservation of rights letter to the insured Advise the insured to seek his own legal counsel Question 79 of 100

Answer 79

Your answer: Issue a reservation of rights letter to the insured is correct. EXPLANATION: In this case since the facts are not clear and probably no witnesses or police reports and a lack of physical evidence, the adjuster should issue a "reservation of rights" letter to the insured. Question 79 of 100

Question 80

What is the purpose of CAARP? Answer Choices: Select the Correct Answer To provide auto insurance for those unable to obtain it from admitted insurers. To provide watercraft coverage for sport fishermen. To provide coverage for retired persons in the state of California. To provide discounted automobile insurance to students with good grades. Question 80 of 100

Answer 80

Your answer: To provide auto insurance for those unable to obtain it from admitted insurers. is correct. EXPLANATION: CAARP is a residual market for vehicle owners who cannot obtain coverage voluntarily from admitted insurers. Question 80 of 100

Question 81

All of the following are within the score of a workers compensation adjuster's duties with regard to rehabilitation of workers, EXCEPT: Answer Choices: Select the Correct Answer Identifying claims that could benefit from rehabilitation. Deciding liability issues. Making benefit payments. Determining the outcome of rehabilitative services. Question 81 of 100

Answer 81

Your answer: Identifying claims that could benefit from rehabilitation. is incorrect. The correct answer is: Determining the outcome of rehabilitative services.. EXPLANATION: Adjusters do not actually evaluate the results of any medical or rehabilitation treatments, they make decisions based on outcome results provided to them by the service provider. Question 81 of 100

Question 82

All of the following perils are covered under a building and personal property coverage form with a basic cause of loss form, EXCEPT: ``` Answer Choices: Select the Correct Answer Earth movement. Smoke. Sprinkler leakage. Sinkhole collapse. ``` Question 82 of 100

Answer 82

Your answer: Earth movement. is correct. EXPLANATION: The earthquake endorsement would be required. Question 82 of 100

Question 83

Which of the following would be eligible for coverage under a Businessowners policy? ``` Answer Choices: Select the Correct Answer A family pub A funeral home An auto repair shop A credit union ``` Question 83 of 100

Answer 83

Your answer: An auto repair shop is incorrect. The correct answer is: A funeral home. EXPLANATION: There are many classes that are not eligible for coverage under a Businessowners policy. Businesses connected with automobiles, such as repair or service stations, dealerships, or parking lots or garages, are not eligible unless one of these is incidental to an eligible business. Bars and pubs are ineligible for coverage, as well as a credit union. A funeral home WOULD BE eligible. Question 83 of 100

Question 84

Which of the following should be insured by an HO-6? Answer Choices: Select the Correct Answer The owners of condominiums and townhouses A tenant who rents an apartment in a high-rise building The owner of a ranch-style house A person who wishes to schedule their valuable jewelry separately on a policy

Answer 84

Your answer: The owners of condominiums and townhouses is correct. EXPLANATION: The HO-6 is for owners of condominiums and townhouses. Question 84 of 100

Question 85

The California Standard Fire policy contains all the following, EXCEPT: ``` Answer Choices: Select the Correct Answer Name of the insurance company. The amount of coverage. The address of the insured. The premium being charged. ``` Question 85 of 100

Answer 85

The California Standard Fire policy contains all the following, EXCEPT: Your answer: The address of the insured. is correct. EXPLANATION: According to the California Insurance Code (CIC 2070-2084), the California Standard Fire policy does not include the address of the insured. Question 85 of 10

Question 86

An applicant for an independent adjuster license must file with the Commissioner a surety bond in the amount of: ``` Answer Choices: Select the Correct Answer $10,000. $5,000. $2,500. $2,000. ``` Question 86 of 100

Answer 86

our answer: $2,000. is correct. EXPLANATION: No license will be issued unless the applicant files with the Commissioner a surety bond executed by a surety company authorized to do business in the state in the sum of $2,000 conditioned for the faithful and honest conduct of business by the applicant. Such bond as to its form, execution, and sufficiency of the sureties must be approved by the Commissioner. Question 86 of 100

Question 87

If the insurer wishes to nonrenew the CGL policy, unless state law is different, how many days advance notice must be sent to the insured. ``` Answer Choices: Select the Correct Answer 30 45 60 90 ``` Question 87 of 100

Answer 87

Your answer: 30 is correct. EXPLANATION: The standard CGL policy requires a minimum of 30 days advance notice of the insurer's intention to non renew. Question 87 of 100

Question 88

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 88 of 100

Answer 88

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 88 of 100

Question 89

Samantha misses three days from work because of a lawsuit against her, which requires her appearance in court. She loses $80 in wages each day that she is at court. Her CGL insurance company will pay: ``` Answer Choices: Select the Correct Answer $240 $300 $160 $0 ``` Question 89 of 100

Answer 89

Your answer: $240 is correct. EXPLANATION: The supplementary coverage within a general liability policy provides for wage reimbursement of up to $250.00 per day. Question 89 of 100

Question 90

A landlord has wrongfully evicted a tenant. A lawsuit is brought by the tenant against the landlord. The landlord would need: ``` Answer Choices: Select the Correct Answer Premises liability coverage Bodily injury coverage Personal injury coverage Contractual coverage ``` Question 90 of 100

Answer 90

Your answer: Contractual coverage is incorrect. The correct answer is: Personal injury coverage. EXPLANATION: The landlord would need personal injury liability coverage which is included in the CGL policy. Question 90 of 100

Question 91

After a Homeowners policy in California has been in effect for more than one year, the insurer may cancel the policy for any reason at the anniversary date, so long as the insured is notified: Answer Choices: Select the Correct Answer At least 25 days in advance of the anniversary date. At least 30 days in advance of the anniversary date. At least 20 days in advance of the cancellation date. At least 45 days in advance of the cancellation date. Question 91 of 100

Answer 91

Your answer: At least 20 days in advance of the cancellation date. is incorrect. The correct answer is: At least 45 days in advance of the cancellation date.. EXPLANATION: The insurer may cancel the policy for any reason at the anniversary date, so long as the insured is notified at least 45 days in advance of the cancellation date of the policy. Question 91 of 100

Question 92

The Commercial Building and Personal Property form automatically provides which of the following extensions of coverage? ``` Answer Choices: Select the Correct Answer Newly acquired property Outdoor signs Replacement cost Rental Value ``` Question 92 of 100

Answer 92

Your answer: Newly acquired property is correct. EXPLANATION: There are 5 extensions of coverage under this form IF the provisions of the co-insurance clause were met. They are: Newly acquired or constructed property; personal effects and property of others; valuable papers and records; property off premises and outdoor property. Note that these are very limited in scope of coverage. Question 92 of 100

Question 93

On the way to Europe, heavy seas place a cargo ship in danger of sinking. The crew decides that if they dispose of the heavy equipment they are hauling the ship won’t sink. They toss overboard 10 tractors owned by John Deere. The cartons of cotton balls owned by Eli Cotton are safe as is the whipped marshmallow cream being shipped for Kraft Foods. When they get to Europe, Eli and Kraft are asked to share in the loss that John Deere sustained. This is an example of: ``` Answer Choices: Select the Correct Answer Demurrage Sue and Labor Clause Free of Particular Average Clause General Average Clause ``` Question 93 of 100

Answer 93

Your answer: General Average Clause is correct. EXPLANATION: This would be an example of the use of the general average clause where everyone shares in the loss to save and preserve the ship and its cargo. Question 93 of 100

Question 94

Under Coverage E - Scheduled Farm Property, how is the property covered? Answer Choices: Select the Correct Answer For the limit shown in the policy declarations Unlimited Blanket coverage Replacement cost basis Question 94 of 100

Answer 94

Your answer: Blanket coverage is incorrect. The correct answer is: For the limit shown in the policy declarations. EXPLANATION: The property is covered for the limit shown on the declarations page of the policy for the property specifically scheduled. Question 94 of 100

Question 95

Any misinformation provided by an applicant which is such that the insurance company would not have issued a policy if the true facts were known is: ``` Answer Choices: Select the Correct Answer Material misrepresentation. Malfeasance. Fraud. Concealment. ``` Question 95 of 100

Answer 95

Your answer: Concealment. is incorrect. The correct answer is: Material misrepresentation. . EXPLANATION: This statement defines material misrepresentation, which is deliberately withholding an important fact that would have a bearing on the acceptability and/or pricing of the risk. Question 95 of 100

Question 96

A vehicle is stolen and the insured submits a claim to his/her insurance company. When the vehicle is found, the insured is covered by a new insurance carrier. Which company covers the claim? Answer Choices: Select the Correct Answer Both carriers will cover the loss up to their individual limit of liability. The carrier covering the insured at the time of the loss. The carrier covering the insured at the time the loss was reported. The carrier covering the insured when the vehicle was found. Question 96 of 100

Answer 96

Your answer: The carrier covering the insured at the time of the loss. is correct. EXPLANATION: The personal auto policy covers accidents or losses that occur during the policy period. This would mean that the carrier that covered the insured at the time of the loss would be liable for the claim. Question 96 of 100

Question 97

What insurers must participate in accepting business under the California FAIR Plan? Answer Choices: Select the Correct Answer All insurers licensed to write basic property insurance or any component of property insurance in multi-peril policies. Companies who specialize in difficult or hard to place property insurance. Only those property insurers holding a certificate of authority for 5 years or less in California. Only those insurers wanting to enter California and have received approval from their board of directors. Question 97 of 100

Answer 97

Your answer: All insurers licensed to write basic property insurance or any component of property insurance in multi-peril policies. is correct. EXPLANATION: The purpose of the FAIR Plan is designed to provide a market for those property owners who are unable to obtain insurance through the normal market. Therefore, the California legislature enacted legislation requiring the participation of admitted insurers licensed to write property insurance to participate. Question 97 of 100

Question 98

The CGL policy contains limited world-wide product liability, but only in which of the following situations? Answer Choices: Select the Correct Answer The product had to be made in the coverage territory. The lawsuit is brought in the coverage territory. The product must be either manufactured or sold in a coverage territory and the suit brought within the coverage territory unless another venue is approved. None of the responses listed is correct. Question 98 of 100

Answer 98

Your answer: None of the responses listed is correct. is incorrect. The correct answer is: The product must be either manufactured or sold in a coverage territory and the suit brought within the coverage territory unless another venue is approved.. EXPLANATION: World-wide product liability is available on the CGL policy if the product causing the injury was made or sold in the coverage territory AND the lawsuit is brought within the coverage territory. Question 98 of 100

Question 99

What is the purpose of reinsurance?

Answer 99

Your answer: It is insurance for insurance companies, to reduce the risk of catastrophic losses. is correct. EXPLANATION: "Reinsurance" is insurance for insurers. Through reinsurance, one insurance company (the ceding insurer) reduces its exposure by transferring (ceding) some or all of its business to another insurer (the assuming insurer). The assuming insurer is also known as the reinsurer." Reinsurance allows one insurer to write a very large risk and then cede as much of the risk as needed to protect against catastrophic losses. Question 99 of 100

Question 100

Following a loss by earthquake in California, how many days does the insured have, unless extended in writing by the insurer, to present proof of loss for payment? ``` Answer Choices: Select the Correct Answer 60 days 30 days 20 days 45 days ``` Question 100 of 100

Answer 100

Your answer: 60 days is correct. EXPLANATION: The 60-day period is established because the insured is required to protect the property from further damage, and separate the damaged property from the undamaged. Question 100 of 100