IA Test 16

Question 1

A change in the Qualified Manager of a California independent adjusting business must be reported to the Department of Insurance within ____ days of such change.

Answer Choices:	Select the Correct Answer
30	
20	
15	
10	

Question 1 of 100

Answer 1

Your answer: 30 is correct.

EXPLANATION:
The change must be reported within 30 days.

Question 1 of 100

Question 2

Which of the following statements about Equipment Breakdown protection coverage is FALSE?

Answer Choices: Select the Correct Answer
It would cover the mechanical failure of a bottle-making machine in a glass factory.
It would cover hail damage to industrial air conditioning units on the roof of an insured business.
It would cover the clean-up costs after a refrigeration unit experienced a sudden pressure failure of the vacuum system and sprayed hazardous refrigerant everywhere.
It would cover the damage to a company’s computer server after an electrical failure shorted out many of its internal components.

Question 2 of 100

Answer 2

Your answer: It would cover hail damage to industrial air conditioning units on the roof of an insured business. is correct.

EXPLANATION:
Equipment Breakdown protection does not cover damage caused by the peril of hail. Damage to the industrial air conditioning units caused by hail would be covered by the Commercial Property policy.

Question 2 of 100

Question 3

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 3 of 100

Answer 3

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 3 of 100

Question 4

A Personal Umbrella liability policy:

Answer Choices: Select the Correct Answer
Only covers what the base policy covers.
Is not designed to act as a primary policy.
Will not cover professional liability.
May cover risks not covered in an underlying policy.

Question 4 of 100

Answer 4

Your answer: Is not designed to act as a primary policy. is incorrect. The correct answer is: May cover risks not covered in an underlying policy..

EXPLANATION:
Umbrella liability policies are excess coverage over the primary policy in force. There are some situations where an umbrella may cover a risk that’s not covered in an underlying policy.

Question 4 of 100

Question 5

The Common Policy Conditions apply to which coverage parts of a Commercial Package Policy?

Answer Choices:	Select the Correct Answer
All parts of the policy.	
The property insurance coverages.	
The optional insurance coverages.	
The liability insurance coverages.	

Question 5 of 100

Answer 5

Your answer: All parts of the policy. is correct.

EXPLANATION:
With a Commercial Package Policy, the Common Policy Conditions apply to all of the coverage parts.

Question 5 of 100

Question 6

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 6 of 100

Answer 6

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 6 of 100

Question 7

Coverage F under the farm forms covers which of the following?

Answer Choices:	Select the Correct Answer
Unscheduled personal property	
Scheduled personal property	
Scheduled real property coverage	
Blanket real property coverage	

Question 7 of 100

Answer 7

Your answer: Blanket real property coverage is incorrect. The correct answer is: Unscheduled personal property.

EXPLANATION:
Coverage F covers unscheduled personal property on a blanket basis. One limit for all business personal property is stated. The items are not scheduled as they are under Coverage E.

Question 7 of 100

Question 8

What is the procedure for an insured to refuse uninsured motorist coverage in California?

Answer Choices: Select the Correct Answer
The insured must advise the insurer in writing that he or she does not want the coverage.
The insured may advise the Insurance Department that he or she does not want the coverage.
The insured may phone the insurance agent and decline the coverage.
The insured may phone the insurance company and decline the coverage.

Question 8 of 100

Answer 8

Your answer: The insured may phone the insurance agent and decline the coverage. is incorrect. The correct answer is: The insured must advise the insurer in writing that he or she does not want the coverage..

EXPLANATION:
According to the California Insurance Code (CIC 11580.2), prior to issuance or renewal of the policy the insured must state in writing that he or she does not want the coverage.

Question 8 of 100

Question 9

What commercial auto policy form would be used to cover a company that transports their own property and property of others?

Answer Choices:	Select the Correct Answer
The Motor Carrier form.	
The Business Auto form.	
The Truckers form.	
The Garage Liability form.	

Question 9 of 100

Answer 9

Your answer: The Truckers form. is incorrect. The correct answer is: The Motor Carrier form..

EXPLANATION:
A motor carrier is anyone who transports property by auto in a commercial enterprise, regardless of whether he or she was hired for that purpose. The BAP can be used to cover an insured when transporting his or her own property. However, if an insured is transporting property of others and his or her own property, the Motor Carrier form should be used. Damage to the cargo itself would be covered under a Commercial Inland Marine form.

Question 9 of 100

Question 10

Which of the following best defines an “insured”?

Answer Choices: Select the Correct Answer
Transfer of the risk of financial loss from one party to another.
A legally binding contract in which the insurance company agrees to pay for specified losses in exchange for premiums.
A company, group, or government agency offering financial protection.
An individual or entity that pays premiums in exchange for financial protection.

Question 10 of 100

Answer 10

Your answer: A legally binding contract in which the insurance company agrees to pay for specified losses in exchange for premiums. is incorrect. The correct answer is: An individual or entity that pays premiums in exchange for financial protection..

EXPLANATION:
The “insured” is a person or entity that pays premiums in exchange for financial protection.

Question 10 of 100

Question 11

QUESTION:
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 11 of 100

Answer 11

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 11 of 100

Question 12

Which of the following best describes the reason for using various work classifications in the calculation of Workers Compensation premiums?

Answer Choices: Select the Correct Answer
To prevent discrimination by employers.
To assure a proper profit margin for insurers.
To accurately reflect the risks of each employer.
To encourage safety in the workplace.

Question 12 of 100

Answer 12

Your answer: To accurately reflect the risks of each employer. is correct.

EXPLANATION:
There are hundreds of different work classifications which are used in the calculation of Workers Compensation premiums, with a different rate for each one. By classifying an employer’s payroll according to work classification, the premiums charged more accurately reflect the actual risk of loss for each employer.

Question 12 of 100

Question 13

An insured is covered under a BOP policy. He insures a piece of equipment separately under a floater policy. In case of a loss what coverage will apply under the BOP policy?

Answer Choices: Select the Correct Answer
The loss is completely covered under the BOP.
The policy will pay its fair percentage of the loss.
The BOP will be excess over the floater policy.
The loss is not covered under the BOP because it is separately insured.

Question 13 of 100

Answer 13

Your answer: The loss is not covered under the BOP because it is separately insured. is incorrect. The correct answer is: The BOP will be excess over the floater policy. .

EXPLANATION:
The BOP would be excess subject to the policy limits if the floater does not cover the entire loss.

Question 13 of 100

Question 14

Extended reporting periods under the Commercial General Liability policy apply only to:

Answer Choices:	Select the Correct Answer
Bodily injury claims	
Property damage claims	
Claims-made policies	
Occurrence policies	

Question 14 of 100

Answer 14

Your answer: Bodily injury claims is incorrect. The correct answer is: Claims-made policies.

EXPLANATION:
The extended reporting period applies only to the “claims-made” CGL coverage form.

Question 14 of 100

Question 15

Part I of a standard workers compensation policy requires the insurer to pay injured workers the benefits that are required by state statutes. This section of the policy also specifies the:

Answer Choices: Select the Correct Answer
The schedule showing the dollar limit of the policy coverage.
Amount of coverage that federal programs will pay.
Statutory provisions of the policy.
The schedule showing the dollar amount paid for exemplary damages.

Question 15 of 100

Answer 15

Your answer: Statutory provisions of the policy. is correct.

EXPLANATION:
Part I of the standard workers compensation policy specifies the statutory (state-specific) provisions of the policy.

Question 15 of 100

Question 16

When an insured cancels a Homeowners policy before the renewal date, the unearned premium (UEP) is returned to the insured on a short-rate basis. Which of the following is true when a short-rate cancellation occurs?

Answer Choices: Select the Correct Answer
The insurer is permitted to retain a higher percentage of the UEP than when the insurer cancels the policy.
The insurer must return only 50% of the premium the insured has paid.
The insurer must return 100% of the premium the insured has paid.
The insurer is permitted to retain a smaller amount of the UEP with a short-rate cancellation than with a mid-term cancellation.

Question 16 of 100

Answer 16

Your answer: The insurer is permitted to retain a smaller amount of the UEP with a short-rate cancellation than with a mid-term cancellation. is incorrect. The correct answer is: The insurer is permitted to retain a higher percentage of the UEP than when the insurer cancels the policy..

EXPLANATION:
When an insured cancels a Homeowners policy before the renewal date, the insurer is permitted to retain a higher percentage of the UEP than when the insurer cancels the policy. The amount of the short-rate premium return is usually determined by a table within the policy itself.

Question 16 of 100

Question 17

Which of the following bests describes the process of mediation?

Answer Choices: Select the Correct Answer
A summons to give testimony
Estoppel because of certain acts of others
Both parties present their dispute to a person usually in the legal profession; nothing is binding on either party
All parties submit their differences to a disinterested third party; the result is binding on both parties

Question 17 of 100

Answer 17

Your answer: Both parties present their dispute to a person usually in the legal profession; nothing is binding on either party is correct.

EXPLANATION:
In mediation, both opposing parties present their dispute to an impartial third party, usually a trial lawyer or retired judge, who helps the parties analyze their dispute and devise a compromise. Nothing is binding on either party until an agreement is formulated and agreed to by the opposing parties.

Question 17 of 100

Question 18

Some policies will pay full current cost for new property when there is a loss that is insured on:

Answer Choices:	Select the Correct Answer
A replacement cost basis.	
A valued policy basis.	
A market value basis.	
An actual cash value (ACV) basis.	

Question 18 of 100

Answer 18

Your answer: A replacement cost basis. is correct.

EXPLANATION:
Replacement cost coverage pays to replace the property at today’s cost without regard to depreciation. The insured would have to carry coverage based on replacement cost instead of actual cash value (ACV).

Question 18 of 100

Question 19

Which of the following dwelling forms may provide replacement cost coverage for buildings?

Answer Choices:	Select the Correct Answer
The broad and special forms only	
The basic, broad, and special forms	
The basic and broad forms only	
The special form only	

Question 19 of 100

Answer 19

Broad and Basic forms only

Question 20

The “when more than one coverage applies” condition in Commercial Crime insurance is designed to:

Answer Choices: Select the Correct Answer
Specify how a claim would be allocated among the different insurers.
Allow the insured to choose the company that will pay the claim.
Provide for subrogation of a claim.
Avoid overpayment of a claim.

Question 20 of 100

Answer 20

Your answer: Avoid overpayment of a claim. is incorrect. The correct answer is: Specify how a claim would be allocated among the different insurers. .

EXPLANATION:
The purpose of the clause is to specify how a claim would be allocated among the different insurers.

Question 20 of 100

Question 21

Under which of the following claims settlements are the claim invoices presented and paid with no attempt to obtain a separate release?

Answer Choices:	Select the Correct Answer
A partial release.	
A walk-away release.	
An open-end release.	
Structured settlement.	

Question 21 of 100

Answer 21

Your answer: An open-end release. is incorrect. The correct answer is: A walk-away release..

EXPLANATION:
Under a “walk-away” release, the bills presented are paid with no attempt to obtain a separate release, although the wording on the draft or check may also serve as a form of release. After a certain amount of time has passed with no further contact with the claimant, the file is considered closed.

Question 21 of 100

Question 22

What is the limit that is paid for water damage under an Equipment Breakdown policy?

Answer Choices:	Select the Correct Answer
$10,000	
$15,000	
$25,000	
Nothing	

Question 22 of 100

Answer 22

Your answer: Nothing is incorrect. The correct answer is: $25,000.

EXPLANATION:
The limit is $25,000.

Question 22 of 100

Question 23

Each of the following qualifies under the business auto policy definition of “auto”, EXCEPT:

Answer Choices: Select the Correct Answer
A truck sometimes used to pull a mobile generator.
A trailer.
A bulldozer.
A motorcycle.

Question 23 of 100

Answer 23

Your answer: A trailer. is incorrect. The correct answer is: A bulldozer..

EXPLANATION:
The bulldozer is considered to be mobile equipment covered under the CGL policy for liability coverages unless it is registered and licensed. If registered and licensed as required by certain states, Symbol 19 would be used under the Business Auto policy. If the bulldozer does not require registration BUT is used on the public roads as a method of transportation, the Mobile Equipment endorsement will be required to make it a covered vehicle under the Business Auto policy.

Question 23 of 100

Question 24

Which of the following is the type of report indicating the initial results of the investigation of a claim?

Answer Choices:	Select the Correct Answer
Field Report	
Interim Report	
Full Report	
Claims Report	

Question 24 of 100

Answer 24

Your answer: Claims Report is incorrect. The correct answer is: Field Report.

EXPLANATION:
This report can also be called the initial report and is the result of the initial investigation.

Question 24 of 100

Question 25

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 25 of 100

Answer 25

Your answer: The mortgagee is paid $150,000. is correct. 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 25 of 100

Question 26

All the following are covered under Section II of the homeowner policy EXCEPT: Answer Choices: Select the Correct Answer Injury to a newspaper carrier who slips on the insured's steps Premiums on bonds required for lawsuits defended by the insurer Intentional bodily injury to others by the insured Reasonable expenses incurred by the insured to assist with a lawsuit Question 26 of 100

Answer 26

Your answer: Intentional bodily injury to others by the insured is correct. EXPLANATION: Intentional acts are not covered under the homeowner policy. Question 26 of 100

Question 27

Medical payments coverage under the Farmowners policy covers which of the following? Answer Choices: Select the Correct Answer Injuries sustained by an invitee. Injuries sustained by a farm employee. Injuries sustained by the insured. Injuries sustained by a tenant living in the insured's dwelling. Question 27 of 100

Answer 27

Your answer: Injuries sustained by a farm employee. is incorrect. The correct answer is: Injuries sustained by an invitee.. EXPLANATION: Medical payments would pay for the injuries sustained by an invitee or guest. Coverage does not apply to members of the insured's family, roomers or boarders or tenants of the dwelling, or to farm employees. Question 27 of 100

Question 28

Losses caused by all of the following are covered under the National Flood Insurance Program, EXCEPT:

Answer 28

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 28 of 100

Question 29

The current version of the nationwide definition recognizes six broad classes of property as eligible for marine coverage. These eligible classes include all of the following, EXCEPT: Answer Choices: Select the Correct Answer Domestic shipments. Imports and exports. Instrumentalities of Transportation and Communication Business personal property. Question 29 of 100

Answer 29

Your answer: Business personal property. is correct. EXPLANATION: Business personal property is not a “class” or category of business mentioned in the definition specifically. Obviously this type of property can be covered under the commercial property forms or the BOP. Question 29 of 100

Question 30

In a liability policy the insurance company will pay damages on behalf of an insured when: Answer Choices: Select the Correct Answer The insurer determines the insured is legally liable and coverage applies under the policy. A relative is injured on the premises. The local police department issues a safety citation. Any time a third party is injured on the insured's premises. Question 30 of 100

Answer 30

Your answer: The insurer determines the insured is legally liable and coverage applies under the policy. is correct. EXPLANATION: Most insurers will pay a claim once it is determined the insured is legally liable. This determination can be made by a court or when the insurer feels that the insured is liable. Question 30 of 100

Question 31

A threat of violence or injury in the act of stealing is called: ``` Answer Choices: Select the Correct Answer Robbery. Burglary. Theft. Violent theft. ``` Question 31 of 100

Answer 31

Your answer: Robbery. is correct. EXPLANATION: Robbery requires stealing by means of a threat of violence or injury. The uses of some forms of weapon or violence in the taking of property from a custodian or messenger are examples. Question 31 of 100

Question 32

When a liability policy is contested, which of the following entities ultimately determines legal liability? I. The insurance company. II. A court of law. III. The claimant. ``` Answer Choices: Select the Correct Answer I or II I only II only III only ``` Question 32 of 100

Answer 32

Your answer: II only is correct. EXPLANATION: In cases of litigation it is the court/jury/judge that determines legal liability. Question 32 of 100

Question 33

Which of the following vehicles is considered a temporary substitute auto under a personal auto policy? Answer Choices: Select the Correct Answer An auto loaned by the garage while the vehicle of the insured is being repaired. A pickup truck owned by a neighbor and borrowed by an insured to run an errand. An auto purchased by an insured to replace a previously owned vehicle. An auto rented by an insured when the insured is on vacation. Question 33 of 100

Answer 33

Your answer: A pickup truck owned by a neighbor and borrowed by an insured to run an errand. is incorrect. The correct answer is: An auto loaned by the garage while the vehicle of the insured is being repaired. . EXPLANATION: This is as per the policy provision as respects to the definition of a substitute vehicle. The temporary substitute vehicle is considered a covered auto only IF the insured's vehicle is not usable due to service, repair, breakdown or destruction. The rental vehicle on vacation does not mention that the insured's car is inoperable.

Question 34

An insurance company in California has cancelled a Homeowners policy for a reason acceptable by law. How long does the insurer have to return the unearned premium to the insured? Answer Choices: Select the Correct Answer The unearned premium must be returned along with the notice provided to the insured that the policy is being cancelled. Within 30 days of the date of cancellation. Within 25 days of the date of cancellation. The unearned premium must be returned within 10 days of mailing the notice of cancellation to the insured. Question 34 of 100

Answer 34

Your answer: Within 30 days of the date of cancellation. is incorrect. The correct answer is: Within 25 days of the date of cancellation.. EXPLANATION: When a Homeowners policy is cancelled in California, any unearned premium must be returned to the insured within 25 days of the cancellation date of the policy. Question 34 of 100

Question 35

The insured is a trucking company that carries cargo. One of the insured trucks is involved in an accident and the goods it is transporting are damaged. Which of the following coverages would respond to cover this loss? Answer Choices: Select the Correct Answer The Commercial Auto policy would respond and pay under “property damage”. A General Liability policy. An Inland Marine Motor Truck Cargo policy. A Commercial Umbrella policy. Question 35 of 100

Answer 35

our answer: An Inland Marine Motor Truck Cargo policy. is correct. EXPLANATION: Property in the insured's care, custody and control is excluded. The insured would need to carry a motor truck cargo inland marine type of policy. Question 35 of 100

Question 36

An insured leases his building to a tenant. The tenant subsequently suffers a loss when the insured's building burns. What should the tenant do? Answer Choices: Select the Correct Answer Submit the claim to the insured’s (landlord’s) insurance company The tenant must prove liability on the part of the insured landlord Tenant must submit a claim to his/her own carrier None of the responses are correct Question 36 of 100

Answer 36

Your answer: Tenant must submit a claim to his/her own carrier is correct. EXPLANATION: The commercial property building and personal property form includes under “your business property”, coverage for the tenants improvements and betterments to the landlords property. This coverage applies if the tenant purchases business personal property coverage. However, proper limits of coverage must be in place. Question 36 of 100

Question 37

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 37 of 100

Answer 37

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 37 of 100

Question 38

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 38 of 100

Answer 38

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 38 of 100

Question 39

n the event of an emergency situation, a non-licensed independent adjuster must register with the Commissioner within: ``` Answer Choices: Select the Correct Answer 48 hours. 30 days. 7 working days. 15 working days. ``` Question 39 of 100

Answer 39

Your answer: 7 working days. is incorrect. The correct answer is: 15 working days.. EXPLANATION: In the event of an emergency situation as declared by the Commissioner, claims arising out of the emergency, catastrophe, disaster, or other similar occurrence may be adjusted by a non-licensed adjuster upon registration with the Commissioner. Registration must occur within 15 working days. Question 39 of 100

Question 40

Before an application for an independent adjuster license is granted, the applicant must meet all of the following requirements, EXCEPT: Answer Choices: Select the Correct Answer The applicant must be at least 21 years of age. The applicant must have at least two years of experience in insurance claims adjusting. The applicant must not have committed acts constituting grounds for denial of a license. Payment of the application fee. Question 40 of 100

Answer 40

Your answer: The applicant must be at least 21 years of age. is correct. EXPLANATION: The applicant must be at least 18 years of age. Question 40 of 100

Question 41

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 41 of 100

Answer 41

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 41 of 100

Question 42

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 42 of 100

Answer 42

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 42 of 100

Question 43

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 43 of 100

Answer 43

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 43 of 100

Question 44

All the following are cause for cancellation of an automobile policy in California, EXCEPT: Answer Choices: Select the Correct Answer A subtantial increase in the hazard insured against. Discovery of a criminal record for a felony. Nonpayment of premium. The suspension of the primary insured's driver's license. Question 44 of 100

Answer 44

Your answer: Discovery of a criminal record for a felony. is correct. EXPLANATION: According to the California Insurance Code (CIC 661), discovery of a criminal record for a felony is NOT a reason for cancellation of an auto policy. Question 44 of 100

Question 45

If your insurance company cancels your commercial insurance, whom must they notify? Answer Choices: Select the Correct Answer They must notify all Insureds listed on the policy. They must notify whoever is listed first on the policy. They must notify the first named insured listed on the policy. They must notify whoever is responsible for premium payments. Question 45 of 100

Answer 45

Your answer: They must notify the first named insured listed on the policy. is correct. EXPLANATION: Only the first named insured listed on the policy is to receive any notices. Question 45 of 100

Question 46

All of the following describe one of the four elements of a negligent act, EXCEPT: Answer Choices: Select the Correct Answer The defendant had a legal duty to perform in a given manner. The loss or injury to the plaintiff was a direct result of the breach of duty by the defendant. The defendant entered into a legal contract with the plaintiff. The plaintiff suffered actual loss of injury due to the defendant's action or inaction. Question 46 of 100

Answer 46

Your answer: The defendant entered into a legal contract with the plaintiff. is correct. EXPLANATION: There would be nothing negligent about the defendant and claimant entering into a legal contract. Question 46 of 100

Question 47

Which of the following best describes an "occurrence?" Answer Choices: Select the Correct Answer A sudden and unforeseen event. Two or more sudden and unforeseen events. An accident including a continuous or repeated exposure to the same general harmful conditions. All of the events that have resulted in a claim from a single insured. Question 47 of 100

Answer 47

Your answer: An accident including a continuous or repeated exposure to the same general harmful conditions. is correct. EXPLANATION: An "occurrence" can be considered a sudden and unforeseen event or a repeated or continuous exposure to the same event. Question 47 of 100

Question 48

The aggregate limit on a liability policy can be expressed as: Answer Choices: Select the Correct Answer Per occurrence Premises/operations Products and Completed Operations Both Premises/operations and products/completed operations Question 48 of 100

Answer 48

Your answer: Both Premises/operations and products/completed operations is correct. EXPLANATION: The aggregate is the most the policy will pay for all claims submitted during the policy period. The policy will establish a general aggregate for all claims submitted in the policy period and a separate aggregate for products and completed operations type of claims for the entire year. Question 48 of 100

Question 49

An interline endorsement used in a Commercial Package Policy (CPP): I. May be mandatory or optional. II. Is an endorsement that applies to more than one line of insurance. ``` Answer Choices: Select the Correct Answer Both I and II I only II only Neither I nor II ``` Question 49 of 100

Answer 49

An interline endorsement used in a Commercial Package Policy (CPP): I. May be mandatory or optional. II. Is an endorsement that applies to more than one line of insurance. Your answer: Both I and II is correct. EXPLANATION: Interline endorsements are used in the CPP to simplify coverages and conditions among many different forms. Many of the same policy conditions apply to the various coverage parts. Question 49 of 100

Question 50

The "coverage territory" of umbrella liability policies is usually: Answer Choices: Select the Correct Answer The United States of America, its territories and possessions, Puerto Rico and Canada only. Anywhere in the world but sometimes with a requirement that suits be brought in the United States or Canada. The continental United States of America only. The state in which the insurance company is domiciled. Question 50 of 100

Answer 50

Your answer: The United States of America, its territories and possessions, Puerto Rico and Canada only. is incorrect. The correct answer is: Anywhere in the world but sometimes with a requirement that suits be brought in the United States or Canada.. EXPLANATION: The umbrella policy expands the coverage territory of the underlying coverages. The coverage is on a "worldwide" basis. Question 50 of 100

Question 51

Adjusters have a relationship to the legal profession, and must exercise care to avoid the unauthorized practice of law. In California, the insurance code states that nothing in the code will be construed as entitling any person to practice law in the state, UNLESS: Answer Choices: Select the Correct Answer He/she is a licensed independent adjuster. He/she has graduated from an accredited law school. He/she is an active member of the State Bar of California. He/she is a licensed public adjuster. Question 51 of 100

Answer 51

Your answer: He/she is an active member of the State Bar of California. is correct. EXPLANATION: In California, the insurance code states that nothing in the code will be construed as entitling any person to practice law in the state, UNLESS he/she is an active member of the State Bar of California. Question 51 of 100

Question 52

Which of the following is the amount of coverage provided on an attached garage of a home insured under an HO-3 for $100,000? ``` Answer Choices: Select the Correct Answer $25,000 $20,000 No additional coverage $10,000 ``` Question 52 of 100

Answer 52

Your answer: $10,000 is incorrect. The correct answer is: No additional coverage. EXPLANATION: A garage attached to a dwelling is considered to be one structure therefore, no additional coverage over and above the $100,000 is provided. If the structure were a separate structure it would be covered for an additional $10,000. Question 52 of 100

Question 53

With a "full release settlement" of an insurance claim: Answer Choices: Select the Correct Answer The claimant does not have to sign a release. The insurer can make payments over 90 days. The insurer has 60 days to make payment. All damages are paid immediately in one lump sum. Question 53 of 100

Answer 53

Your answer: All damages are paid immediately in one lump sum. is correct. EXPLANATION: A "full release settlement" is also known as a "final release" and all sums due have been paid and the file is closed. Question 53 of 100

Question 54

Which of the following statements does NOT describe the major purpose of commercial umbrella liability insurance? Answer Choices: Select the Correct Answer To provide supplementary insurance. To provide excess insurance in addition to the underlying policy. To provide additional coverage to the underlying insurance policy. To protect the insured from catastrophic losses by providing additional insurance. Question 54 of 100

Answer 54

Your answer: To provide supplementary insurance. is incorrect. The correct answer is: To provide additional coverage to the underlying insurance policy.. EXPLANATION: In commercial umbrella insurance the insurer will require the insured to carry "underlying" insurance. Underlying policies pay first for claims covered by the underlying coverage and then the umbrella continues to pay according to its policy provisions. Question 54 of 100

Question 55

Which of the following is a true statement regarding subrogation in California?

Answer 55

Your answer: An insurer must conduct a full investigation before it pursues subrogation is correct. EXPLANATION: California law requires that an insurer notify a first-party claimant if it intends to pursue subrogation of a claim. Regulations also require every insurer that makes a subrogation demand to include the first-party claimant's deductible. Furthermore, no insurer may pursue a claim for subrogation unless it has first conducted a thorough, fair, and objective investigation as to whether subrogation is appropriate. Question 55 of 100

Question 56

Standard Homeowners policies have "special limits of liability" for losses to all of the following types of property, EXCEPT: ``` Answer Choices: Select the Correct Answer Fire damage to guns. Theft of coins. Theft of silverware. Theft of furs. ``` Question 56 of 100

Answer 56

Your answer: Theft of silverware. is incorrect. The correct answer is: Fire damage to guns.. EXPLANATION: The special limit of liability for guns applies only to the peril of theft. Guns are not limited to a certain amount of coverage by the peril of fire. Question 56 of 100

Question 57

The coverage extension "Business Personal Property Temporarily in Portable Storage Units" will provide $10,000 of coverage for up to: ``` Answer Choices: Select the Correct Answer 60 days 120 days 90 days 30 days ``` Question 57 of 100

Answer 57

Your answer: 120 days is incorrect. The correct answer is: 90 days. EXPLANATION: The extension of coverage is for 90 days, but if the portable unit has been used on a regular basis, the 90 days begins from the time when the unit was first put to use and not when certain property was placed there. Question 57 of 100

Question 58

Which of the following is covered under the broad form farmowners policy that is not covered under the basic form farmowners policy? ``` Answer Choices: Select the Correct Answer Accidental shooting of livestock Flood damage to structures Collision Earthquake ``` Question 58 of 100

Answer 58

Your answer: Earthquake is incorrect. The correct answer is: Accidental shooting of livestock. EXPLANATION: Accidental shooting of livestock, as well as electrocution of covered livestock, drowning of livestock and accidents involving livestock while loading and unloading are covered by the broad form and not covered by the basic form. Question 58 of 100

Question 59

Protection and indemnity coverage contained in an ocean marine policy covers: I. Liability against injuries to seamen. II. Injury to stevedores, longshoreman and harbor workers. III. Cargo, if lost or damaged through negligence. ``` Answer Choices: Select the Correct Answer I, II and III. I and II only. II and III only. I and III only. ``` Question 59 of 100

Answer 59

Your answer: I, II and III. is correct. EXPLANATION: Protection and indemnity coverage would apply to all of these types of losses. Question 59 of 100

Question 60

When can an adjuster in California operate under a fictitious name? Answer Choices: Select the Correct Answer Never. Only when he or she has obtained written permission from the Commissioner. For a 30 day period only. For a 60 day period only. Question 60 of 100

Answer 60

Your answer: Only when he or she has obtained written permission from the Commissioner. is correct. EXPLANATION: Only when he or she has obtained written permission from the Commissioner. Question 60 of 100

Question 61

If an insured carries Coverage C under a Dwelling form, what is the limit for "personal property off the premises"? ``` Answer Choices: Select the Correct Answer 10% of the Coverage C limit. 20% of the Coverage C limit. 40% of the Coverage C limit. 50% of the Coverage C limit. ``` Question 61 of 100

Answer 61

Your answer: 50% of the Coverage C limit. is incorrect. The correct answer is: 10% of the Coverage C limit.. EXPLANATION: Whereas Homeowners forms provide the FULL limit of personal property coverage anywhere in the world, Dwelling forms cover only 10% of the personal property limit on a worldwide basis. The remainder of the personal property is covered only while on the designated premises. Question 61 of 100

Question 62

Which of the following is NOT covered under a premise burglary claim? Answer Choices: Select the Correct Answer Product is stolen Damage to a door Fire to the building caused from the break in Damage to a show case Question 62 of 100

Answer 62

Your answer: Fire to the building caused from the break in is correct. EXPLANATION: Crime insurance coverage does not include the peril of fire to the premises however caused, except loss of or damage to “money” and “securities” and loss from damage to a safe or vault other than a safe or vault. Fire coverage is provided for most property under commercial property coverage. Question 62 of 100

Question 63

Whose responsibility is it to see that a ship is seaworthy? ``` Answer Choices: Select the Correct Answer The Ship Owner The Shipper The Captain Both the Captain and the Crew ``` Question 63 of 100

Answer 63

Your answer: The Ship Owner is correct. EXPLANATION: The ship owner is ultimately responsible to see that the ship is sea worthy. This is an implied warranty in ocean marine insurance. Question 63 of 100

Question 64

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 64 of 100

Answer 64

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 64 of 100

Question 65

Which of the following coverages is not provided under a Commercial General Liability policy? ``` Answer Choices: Select the Correct Answer Contractual liability Products liability Personal injury liability Pollution liability ``` Question 65 of 100

Answer 65

Your answer: Contractual liability is incorrect. The correct answer is: Pollution liability. EXPLANATION: The pollution coverage under the CGL policy is very restrictive, if not entirely excluded. Pollution coverage must be added by endorsement, or a completely separate policy must be purchased, for adequate coverage to apply. Question 65 of 100

Question 66

Under the standardized ISO Businessowners form, how much is paid for pollution clean-up and removal in case of a covered loss? Answer Choices: Select the Correct Answer $10,000. Any amount that does not exceed the limit of the policy. 25% of the loss. $0. Question 66 of 100

Answer 66

Your answer: Any amount that does not exceed the limit of the policy. is incorrect. The correct answer is: $10,000.. EXPLANATION: The policy pays up to $10,000 for pollution clean-up and removal. Do not confuse this with debris removal where the limit is $25,000. Question 66 of 100

Question 67

The Section I - Property conditions of the California Homeowners Special Provisions form states that if loss or damage relates to a state of emergency under California law, the insured has an extended amount of time after the insurer's payment of actual cash value, to notify the insurer of the intent to make a replacement cost claim under the HO-2, HO-3, and HO-5 forms. How long is this extended period of time? ``` Answer Choices: Select the Correct Answer 12 months. 24 months. 36 months. 9 months. ``` Question 67 of 100

Answer 67

Your answer: 24 months. is correct. EXPLANATION: When the loss or damage related to a state of emergency under California law, the insured has 24 months following the insurer's payment of actual cash value, to make a claim for replacement cost settlement. If the loss or damage results from a cause other than a declared state of emergency, the California Special Provisions form requires that the insured make the replacement cost claim within 12 months. Question 67 of 100

Question 68

Who is responsible to pay the premiums on a Workers' Compensation policy? Answer Choices: Select the Correct Answer The employee. The employer. The employer pays the largest percentage, but the employee pays a portion. The state Workers' Compensation fund. Question 68 of 100

Answer 68

Your answer: The employer. is correct. EXPLANATION: The Workers' Compensation insurance policy is purchased by employers, therefore they are responsible to pay the premium. Question 68 of 100

Question 69

"Sinkhole collapse" is a peril covered under which of the following ISO Commercial Property Cause of Loss forms? ``` Answer Choices: Select the Correct Answer The Basic, Broad and Special forms. The Broad only. The Broad and Special only. The Special only. ``` Question 69 of 100

Answer 69

Your answer: The Special only. is incorrect. The correct answer is: The Basic, Broad and Special forms.. EXPLANATION: Even the Basic Form provides this coverage. Question 69 of 100

Question 70

A Businessowners policy has a $500,000 occurrence limit for liability, and a $1,000,000 aggregate limit. If claims for $600,000 and $400,000 have been filed in two separate incidents, how much coverage remains, if any, for future claims submitted during the policy term? ``` Answer Choices: Select the Correct Answer $500,000 $0 $100,000 $1,000,000 ``` Question 70 of 100

Answer 70

Your answer: $100,000 is correct. EXPLANATION: The most the policy will pay for any one single occurrence is $500,000, therefore that amount would be payable for the first loss. Once paid that amount must be subtracted from the Aggregate Limit (the most available for all claims in the policy year) leaving $500,000 remaining in the aggregate. The second claim is within the occurrence limit and because there is enough left in the aggregate, the entire $400,000 is payable. After subtracting the $400,000 loss from the remaining aggregate, $100,000 is left to pay any and all future claims for the remainder of the policy term.

Question 71

The California Insurance Commissioner, in lieu of suspending or revoking a license issued to an independent adjuster for a violation, may impose which of the following? Answer Choices: Select the Correct Answer Jail sentence for up to six months $500 monetary penalty Both a $500 penalty and a jail sentence of up to six months $1,000 monetary penalty Question 71 of 100

Answer 71

Your answer: $500 monetary penalty is correct. EXPLANATION: The monetary penalty is $500, but no jail time. Question 71 of 100

Question 72

Sarah is shopping at a grocery store and wants to purchase a bottle of juice. The aisle is marked off with a rope awaiting the clerk to clean up a previously broken bottle and spill on the floor. Sarah moves the rope to get the item and slips and falls on the floor, cutting her face on the scattered glass. Which of the following would be the defense that the insurance company would most likely use in this situation? Answer Choices: Select the Correct Answer Breach of duty on the part of the customer. Assumption of risk and contributory negligence on the part of the customer. Trespassing on non-entry areas by the customer. Comparative negligence. Question 72 of 100

Answer 72

Your answer: Assumption of risk and contributory negligence on the part of the customer. is correct. EXPLANATION: Business owners are only liable for negligence if a failure to carry out their duty caused the accident. For strict liability cases against manufacturers or sellers of defective products, the injury must result from a defect. In this case the grocery store attempted to keep the premises safe and was not negligent and no breach of duty occurred. The customer assumed the risk which contributed to the injuries. Question 72 of 100

Question 73

In which of the following situations should an adjuster consider obtaining a non-waiver agreement? Answer Choices: Select the Correct Answer When requested by an insurer In dealing with a potential coverage dispute When subrogation may be involved When directed by the court Question 73 of 100

Answer 73

Your answer: In dealing with a potential coverage dispute is correct. EXPLANATION: In coverage dispute situations, an adjuster may want to make clear that a known right is NOT being waived by any party. Question 73 of 100

Question 74

The ISO Commercial Building and Personal Property coverage form covers all of the following, EXCEPT: ``` Answer Choices: Select the Correct Answer Dwellings. Buildings. Business personal property. Personal property of others. ``` Question 74 of 100

Answer 74

Your answer: Personal property of others. is incorrect. The correct answer is: Dwellings. . EXPLANATION: Dwelling forms are available to cover dwellings, but buildings, business personal property, and personal property of others are acceptable forms of property to be covered under the form. Question 74 of 100

Question 75

Under a CGL policy, personal and advertising injury liability coverage does NOT apply to damages resulting from: Answer Choices: Select the Correct Answer Slanderous statements made by an advertising firm. Copyright infringement by a department store. Harmful, truthful information published by a realtor. Invasion of an individual's privacy. Question 75 of 100

Answer 75

Your answer: Slanderous statements made by an advertising firm. is correct. EXPLANATION: An offense committed by an insured whose business is advertising, broadcasting, publishing or telecasting is specifically excluded by the policy. Question 75 of 100

Question 76

Steve has removed the rear seat in the company car and installed stereo equipment and two speakers. The maximum the physical damage coverage will pay for damage to the items in an accident is: Answer Choices: Select the Correct Answer The actual cash value of the equipment since it is permanently installed in the car. Nothing, because the equipment was not factory equipment. $1,000 because the equipment was permanently installed in a place where the auto maker would normally not have it put it minus deductible. $1,500 for the equipment but nothing for the labor to install it. Question 76 of 100

Answer 76

Your answer: The actual cash value of the equipment since it is permanently installed in the car. is incorrect. The correct answer is: $1,000 because the equipment was permanently installed in a place where the auto maker would normally not have it put it minus deductible.. EXPLANATION: For any electronic equipment that reproduces audio, video or data signals that are permanently installed in the auto in a place where the auto maker would not normally install is covered up to a total of $1,000 per loss. Question 76 of 100

Question 77

In order to avoid problems with underinsurance and overinsurance, a business which has fluctuating inventory values during the year should consider coverage written on: ``` Answer Choices: Select the Correct Answer The value reporting form. The business income form. A blanket basis. A replacement cost basis. ``` Question 77 of 100

Answer 77

Your answer: The value reporting form. is correct. EXPLANATION: The insured selects a limit that is at least adequate or more than adequate to cover the business personal property at any given time. The insured then submits monthly reports. The 12 reports are divided by 12 to arrive at the average value. The insured is charged on the basis of the average value. Question 77 of 100

Question 78

A blanket position bond: Answer Choices: Select the Correct Answer Names each employee separately. Covers all employees for prior acts of embezzlement. Grants blanket coverage for the employer for all employees during the term of the bond. Excludes certain named individuals. Question 78 of 100

Answer 78

Your answer: Grants blanket coverage for the employer for all employees during the term of the bond. is correct. EXPLANATION: A blanket position bond is a type of fidelity bond, covering an employer for dishonest acts by employees. The bond grants blanket coverage to all employees in the service of the employer during the term of the bond. Employee names do not need to be listed on the bond. Question 78 of 100

Question 79

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 79 of 100

Answer 79

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 79 of 100

Question 80

An employee who started a fight and was subsequently injured is entitled to what type of workers compensation benefits? ``` Answer Choices: Select the Correct Answer Disability benefits only None Medical benefits only A maximum of 50% of the normal benefits ``` Question 80 of 100

Answer 80

Your answer: A maximum of 50% of the normal benefits is incorrect. The correct answer is: None. EXPLANATION: An employee who is injured in a fight in which he or she was the initial aggressor is not entitled to workers compensation coverage. Question 80 of 100

Question 81

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 81 of 100

Answer 81

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 81 of 100

Question 82

Commercial Insurance coverage under the broad and special forms covers which of the following types of water damage? Answer Choices: Select the Correct Answer Flood Surface waters Water below the ground which surfaces and causes damage A water pipe that bursts Question 82 of 100

Answer 82

Your answer: A water pipe that bursts is correct. EXPLANATION: The broad and special cause of loss forms provide coverage for all types of water related damage except that caused by flood, from surface water or water below ground which surfaces. Question 82 of 100

Question 83

Under the Homeowners Policy, "theft" does not include: Answer Choices: Select the Correct Answer Theft of building materials from a dwelling under construction. Attempted theft. Theft of property from a known place. Theft of watercraft from the insured premises. Question 83 of 100

Answer 83

Your answer: Attempted theft. is incorrect. The correct answer is: Theft of building materials from a dwelling under construction.. EXPLANATION: Theft of building materials from a dwelling under construction is excluded. An inland marine form can be purchased to cover this exposure. Question 83 of 100

Question 84

Harry runs a stop sign and hits Sue's vehicle causing $5,000 in damage. It is determined that Sue was speeding and was 20% responsible for the accident. Harry was only 80% responsible. How much can Sue collect under the doctrine of comparative negligence? Answer Choices: Select the Correct Answer Sue will get $4,000. Since Sue was 20% negligent, she gets nothing. Sue will get $5,000 because Harry hit her and was mainly at fault. Since both were at fault their individual policies will pay the damage to each ones vehicle. Question 84 of 100

Answer 84

Your answer: Sue will get $4,000. is correct. EXPLANATION: Under the comparative negligence law in California, a plaintiff's damages are reduced in proportion to his/her own negligence. Therefore, Sue will have her damage amount reduced by 20%. Question 84 of 100

Question 85

he insured's diamond ring valued at $10,000 has been destroyed in a fire. She is insured by a HO-3 policy. What is the responsibility of the insurance company with respect to this loss? Answer Choices: Select the Correct Answer Pay the ACV of the ring Deny the claim because of the jewelry limitation Pay the loss and waive the deductible Pay only the replacement value of the ring and waive any deductible Question 85 of 100

Answer 85

Your answer: Pay the loss and waive the deductible is incorrect. The correct answer is: Pay the ACV of the ring. EXPLANATION: The policy contains a limitation for the theft of the jewelry. Since the ring was destroyed in the fire the insurer is responsible for the actual cash value of the ring unless the insured purchased replacement cost coverage. Question 85 of 100

Question 86

What is the limit of insurance that applies to property in transit in the BOP? ``` Answer Choices: Select the Correct Answer $1,000 $2,500 $5,000 $10,000 ``` Question 86 of 100

Answer 86

Your answer: $5,000 is incorrect. The correct answer is: $10,000 . EXPLANATION: The BOP provides a $10,000 limit for property in transit. Question 86 of 100

Question 87

The insured has a one family dwelling with a detached garage. The dwelling is insured for $200,000. How much coverage applies to the garage? ``` Answer Choices: Select the Correct Answer $10,000 $15,000 $20,000 None ``` Question 87 of 100

Answer 87

Your answer: $20,000 is correct. EXPLANATION: The policy provides for 10% of the dwelling limit. Therefore, the garage is insured for $20,000 for the same perils that apply to the dwelling. Question 87 of 100

Question 88

Under the standard ISO Farm insurance Special Cause of Loss form, coverage for vandalism or breakage of glass is excluded if the premises has been vacant for _____ days or more. ``` Answer Choices: Select the Correct Answer 45 15 60 30 ``` Question 88 of 100

Answer 88

Your answer: 60 is correct. EXPLANATION: Under the standard ISO Farm insurance policy, if a property has been vacant for 60 or more days prior to the loss, certain perils become excluded. These exclusions include vandalism and glass breakage. Other perils such as fire and water damage could have limited coverage if the vacancy clause of the policy is violated. Question 88 of 100

Question 89

You are assigned the investigation of a head-on collision involving major injuries in both the insured and claimant vehicles. First contact should be made with the: ``` Answer Choices: Select the Correct Answer Driver of the insured vehicle. Any passengers in the insured vehicle. Driver of the claimant vehicle. Any passengers of the claimant vehicle. ``` Question 89 of 100

Answer 89

Your answer: Driver of the claimant vehicle. is correct. EXPLANATION: Since this will be a possible third party claim the adjuster should first contact the driver of the claimant vehicle. Question 89 of 100

Question 90

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 90 of 100

Answer 90

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 90 of 100

Question 91

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? ``` Answer Choices: Select the Correct Answer $2,500. $2,000. $8,000. $500. ``` Question 91 of 100

Answer 91

Your answer: $2,000. is correct. 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 91 of 100

Question 92

You own an independent adjusting company in California. In order to open a second office in a different location you must obtain: Answer Choices: Select the Correct Answer Written permission from the Department of Insurance. A branch manager's license. A fidelity bond. A branch office certificate. Question 92 of 100

Answer 92

Your answer: A branch office certificate. is correct. EXPLANATION: According to the California Insurance Code, "If the licensee intends to conduct business from any location in California other than the principal place of business, a Branch Office Certificate must be obtained by submitting an Application for Branch Office Certificate along with the appropriate fee." Question 92 of 100

Question 93

All of the following are common-low duties of an employer under a Workers' Compensation policy, EXCEPT: Answer Choices: Select the Correct Answer Warn workers of inherent dangers. Provide a safe working environment. Assumption of risk. Provide an adequate number of competent fellow workers. Question 93 of 100 Submit

Answer 93

Your answer: Provide an adequate number of competent fellow workers. is incorrect. The correct answer is: Assumption of risk.. EXPLANATION: Assumption of risk is a common-law defense if a claim is filed. All of the other three answer choices are common-law duties. Question 93 of 100

Question 94

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 94 of 100

Answer 94

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 94 of 100

Question 95

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 95 of 100

Answer 95

Your answer: Report the new location within 30 days is incorrect. The correct answer is: Must first obtain a branch office certificate. 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 95 of 100

Question 96

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 96 of 100

Answer 96

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 96 of 100

Question 97

Under the personal automobile policy, the definition of a "covered auto" for Coverage A - Liability includes: I. Private passenger autos the named insured acquires during the policy period. II. Trailers owned by the named insured. III. Autos or trailers not owned by the named insured that are being used as a temporary substitute. IV. Farm wagons or implements towed by a covered vehicle. ``` Answer Choices: Select the Correct Answer I, II, III, and IV I, II, and III only I and III only I and II only ``` Question 97 of 100

Answer 97

Your answer: I, II, III, and IV is correct. EXPLANATION: Coverage A - Liability includes coverage for those vehicles shown in the declaration page of the policy. It also includes coverage for non-owned vehicles. Trailers, whether owned or non-owned are covered provided they are designed to be pulled by a private passenger type vehicle, pickup truck or van. Usually the policy excludes "business use" but farming and ranching are two types of businesses that can be covered under the PAP policy. Newly acquired vehicles are covered for a period of 14 days after acquisition under most policies for liability coverage. Temporary substitute vehicles are insured when the insured vehicle is damaged, destroyed or disabled. Question 97 of 100

Question 98

Which property coverage form should be used for a building under construction? ``` Answer Choices: Select the Correct Answer Value Reporting Form Business Construction Form Builders Risk Form Owners and Contractors Protective ``` Question 98 of 100

Answer 98

Your answer: Business Construction Form is incorrect. The correct answer is: Builders Risk Form. EXPLANATION: Builders Risk Coverage form is used specifically to cover a building while it is under construction. Limit is based on Completed Value, and there is typically a 100% coinsurance clause. When a building is finished, the builders risk coverage can be replaced with permanent property coverage. Question 98 of 100

Question 99

Under an ocean marine policy, damage to the ship would be covered under what marine coverage? ``` Answer Choices: Select the Correct Answer Hull Insurance Protection and Indemnity Particular average General average ``` Question 99 of 100

Answer 99

Your answer: Hull Insurance is correct. EXPLANATION: Damage to the ship is covered under hull insurance with the "running down" clause. Question 99 of 100

Question 100

Which of the following businesses would be eligible for a Businessowners policy? Answer Choices: Select the Correct Answer A dental office. A contractors business that provides insulation services. A savings and loan. A small wig manufacturing business. Question 100 of 100

Answer 100

Your answer: A dental office. is correct. EXPLANATION: A dental office is the only business listed that would be eligible for coverage under a Businessowners policy. Manufacturing businesses are generally not accepted for BOP coverage due to the "Products" liability exposure. The contractor providing insulation services would not be eligible for a Businessowners policy due to the risk involved in performing the service. The savings and loan would not be covered due to the large crime risk. Question 100 of 100