IA Test 17

Question 1

The agent or insurer must obtain the applicant’s signature acknowledging receipt of the California Residential Property Insurance disclosure form within ____ of the date of the application.

Answer Choices:	Select the Correct Answer
10 days	
20 days	
60 days	
90 days	

Question 1 of 100

Answer 1

Your answer: 60 days is correct.

EXPLANATION:
No policy of residential property insurance may be issued in this state by any insurer unless the named insured is provided a copy of the California Residential Property Insurance disclosure statement. The agent or insurer must obtain the applicant’s signature acknowledging receipt of the disclosure form within 60 days of the date of the application.

Question 1 of 100

Question 2

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

Answer Choices: Select the Correct Answer
An insurer must conduct a full investigation before it pursues subrogation
An insurer does not have to conduct an investigation after it has paid a claim before it pursues subrogation against another party
An insurer is not required to determine as to whether subrogation is appropriate
Subrogation is a judgment call on the part of the insurer/adjuster without regard to regulations

Question 2 of 100

Answer 2

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 2 of 100

Question 3

With surety bonds, who is to be protected under a performance bond?

Answer Choices:	Select the Correct Answer
The Obligee	
The Surety	
The Sub-contractors	
The Contractor	

Question 3 of 100

Answer 3

Your answer: The Obligee is correct.

EXPLANATION:
The obligee is protected by the bond in case the contractor defaults under the contract for the work to be performed. The surety issuing the bond is the guarantor under the bond.

Question 3 of 100

Question 4

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 4 of 100

Answer 4

Your answer: $200,000 is incorrect. The correct answer is: $400,000.

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 4 of 100

Question 5

Of the following physical damage losses, which would be covered by a BAP providing comprehensive and collision coverage?

Answer Choices: Select the Correct Answer
The engine is damaged when water in the cooling system freezes. The insured failed to add antifreeze.
A front wheel bearing burns out after 70,000 miles of use.
Among other items of damage, the front tires are blown out in a high- speed head-on collision.
None of the losses would be covered.

Question 5 of 100

Answer 5

Your answer: The engine is damaged when water in the cooling system freezes. The insured failed to add antifreeze. is incorrect. The correct answer is: Among other items of damage, the front tires are blown out in a high- speed head-on collision..

EXPLANATION:
Damage to tires as a result of road damage is excluded. The tires were damaged in a collision and would therefore be covered.

Question 5 of 100

Question 6

Coverage for all reasonable expenses incurred by an insured in order to continue as nearly as practicable the normal operation of his/her business after a loss is:

Answer Choices:	Select the Correct Answer
Operations Expense Coverage	
Extra Expense Coverage	
Additional Expense Coverage	
Loss of Use Coverage	

Question 6 of 100

Answer 6

Your answer: Extra Expense Coverage is correct.

EXPLANATION:
Extra expenses include those incurred as a result of a covered loss that is required in order to continue the normal operation of the business. Example: Temporary re-location expenses, overtime expenses etc.

Question 6 of 100

Question 7

Which of the following is not considered an instrumentality of transportation or communication under the nationwide inland marine definition?

Answer Choices:	Select the Correct Answer
A toll bridge	
A truck-tractor	
Electric transmission lines	
A television transmitter	

Question 7 of 100

Answer 7

Your answer: A truck-tractor is correct.

EXPLANATION:
A truck-tractor is not considered an instrumentality of transportation or communication under the nationwide inland marine definition.

Question 7 of 100

Question 8

In the rating of Workers Compensation coverage, what is the purpose of the experience modification factor?

Answer Choices: Select the Correct Answer
To determine the base rates charged an employer.
To provide a method of either surcharging the rates or provide a credit in the rates.
To establish payroll classifications based on job description.
To factor in the years the business has been in existence.

Question 8 of 100

Answer 8

Your answer: To factor in the years the business has been in existence. is incorrect. The correct answer is: To provide a method of either surcharging the rates or provide a credit in the rates..

EXPLANATION:
In determining the experience mod, the individual employer is compared with other employers within the classification based upon the frequency of accidents and severity of injuries. The more accidents an employer has had in the past, the higher the modification rating. Therefore, it is an experience modification factor to either surcharge or credit the rates charged for the coverage.

Question 8 of 100

Question 9

The inception and expiration dates of an insured’s underlying commercial liability polices and commercial umbrella liability policy should be the same in order to:

Answer Choices: Select the Correct Answer
Assure non-concurrency
Relieve the paperwork load for the insurer.
Align the reporting periods.
Avoid gaps in coverage.

Question 9 of 100

Answer 9

Your answer: Avoid gaps in coverage. is correct.

EXPLANATION:
It is better to have the policies issued with the same inception and expiration dates to avoid gaps in coverage.

Question 9 of 100

Question 10

Which of the following NFIP forms provides replacement cost coverage if the building meets the other eligibility requirements for RCV?

Answer Choices: Select the Correct Answer
The Dwelling form only.
The Dwelling and RCBAP forms only.
The Dwelling, RCBAP, and General Property forms.
The General Property form only.

Question 10 of 100

Answer 10

Your answer: The Dwelling, RCBAP, and General Property forms. is incorrect. The correct answer is: The Dwelling and RCBAP forms only..

EXPLANATION:
The NFIP Dwelling and RCBAP forms provide loss settlement at replacement cost value only on single-family dwellings.

Question 10 of 100

Question 11

If an insured carries Coverage C (contents) under a dwelling (not homeowners) form, how much coverage applies on a worldwide basis?

Answer Choices:	Select the Correct Answer
10% of the coverage C limit	
25% of the coverage C limit	
40% of the coverage C limit	
50% of the coverage C limit	

Question 11 of 100

Answer 11

Your answer: 25% of the coverage C limit is incorrect. The correct answer is: 10% of the coverage C limit.

EXPLANATION:
The DP Forms have a 10% limitation of the Coverage C amount when personal property is OFF the premises. The homeowners forms provide the full limit of Coverage C anywhere in the world for personal property.

Question 11 of 100

Question 12

If an employee is killed as a result of a violation of the “serious and willful conduct” rule, there is an exception regarding a reduction in benefits when:

I. The injury is caused by the employer’s failure to comply with safety laws when the disability from the injury sustained is 70% or more
II. The injured employee is under 16 years of age at the time of injury.

Answer Choices:	Select the Correct Answer
I only	
II only	
Neither I nor II	
Both I and II	

Question 12 of 100

Answer 12

Your answer: Both I and II is correct.

EXPLANATION:
Both of these situations are exceptions regarding a reduction of benefits when an employee violates the serious and willful conduct rule.

Question 12 of 100

Question 13

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 13 of 100

Answer 13

Your answer: It does not exclude any perils from coverage. is incorrect. The correct answer is: It provides coverage for all perils, unless that peril is specifically excluded. .

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 13 of 100

Question 14

Rita’s house has an 80% replacement cost value of $200,000. She has it insured for $100,000 under an HO-3 form and suffers a fire loss of $50,000. How much will Rita receive for the loss?

Answer Choices:	Select the Correct Answer
$100,000	
$50,000	
$25,000	
$10,000	

Question 14 of 100

Answer 14

Your answer: $50,000 is incorrect. The correct answer is: $25,000.

EXPLANATION:
Rita is 50% insured per the terms of the policy so she will receive only 50% of the loss or $25,000. The company could also offer to pay the claim on an “actual cash value” basis.

Question 14 of 100

Question 15

Adverse selection occurs when:

Answer Choices: Select the Correct Answer
Applicants are accepted by the insurer with little or no attention given to underwriting.
The insurer experiences negative financial results due to unforeseen catastrophes.
The insurer accepts some applicants who are opposed to rate increases.
Only low risk applicants are accepted by the insurer.

Question 15 of 100

Answer 15

Your answer: The insurer experiences negative financial results due to unforeseen catastrophes. is incorrect. The correct answer is: Applicants are accepted by the insurer with little or no attention given to underwriting. .

EXPLANATION:
Insurers must carefully underwrite all risks to avoid being the victim of adverse selection. With adverse selection, the insurer is confronted with the probability of loss due to risks not factored in at the time of sale.

Question 15 of 100

Question 16

Under the HO-3 policy, if an insured’s car is stolen from the driveway of his home and recovered in another city with his clothing and business property stolen from the trunk, what property will be covered?

Answer Choices: Select the Correct Answer
The clothing will be covered by the auto policy up to $2,000.
The business property will be covered up to a limit of $1,500.
The vehicle will be covered
Only a special floater will cover these personal property losses.

Question 16 of 100

Answer 16

Your answer: Only a special floater will cover these personal property losses. is incorrect. The correct answer is: The business property will be covered up to a limit of $1,500..

EXPLANATION:
The homeowner policy provides coverage for business personal property with a limit of $1,500 off the insured’s premises. The auto policy does not cover the theft of personal property such as clothing. The homeowner policy would cover these items.

Question 16 of 100

Question 17

All of the following are considered a “community” under the NFIP, EXCEPT:

Answer Choices:	Select the Correct Answer
An incorporated city.	
A town.	
A county.	
A village.	

Question 17 of 100

Answer 17

Your answer: A county. is correct.

EXPLANATION:
A county is not considered a “community” by the NFIP.

Question 17 of 100

Question 18

A commercial building is insured for $150,000 and is worth $250,000. A $100,000 loss occurs. The policy contains an 80% coinsurance clause. How much will the insurer pay?

Answer Choices:	Select the Correct Answer
$75,000	
$100,000	
$150,000	
$250,000	

Question 18 of 100

Answer 18

Your answer: $75,000 is correct.

EXPLANATION:
To comply with the 80% coinsurance clause the insured should have carried $200,000 of coverage on the building. The insured is covered for 75% of what should have been carried and therefore, the insurer would pay $75,000.

Question 19

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

Question 19 of 100

Answer 19

Your answer: The owners of condominiums and townhouses is correct.

EXPLANATION:
The HO-6 is for owners of condominiums and townhouses.

Question 19 of 100

Question 20

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 20 of 100

Answer 20

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 20 of 100

Question 21

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 21 of 100

Answer 21

Your answer: Bailee’s customers policy. is incorrect. The correct answer is: Dealers form.

EXPLANATION:
An equipment dealers form is an example.

Question 21 of 100

Question 22

Which of the following would be covered under Part II - Employer’s Liability of a Workers Compensation policy?

Answer Choices: Select the Correct Answer
Contractual liability.
The employee sues the employer from emotional stress due to termination.
The spouse of the injured employee sues the employer for loss of consortium.
Injury to an employee working after working too much overtime.

Question 22 of 100

Answer 22

Your answer: The spouse of the injured employee sues the employer for loss of consortium. is correct.

EXPLANATION:
Part II - Employer’s Liability under a Workers Compensation policy excludes coverage for injuries outside the coverage territory, employment practices and contractual liability. Coverage would apply, however, to a claim against the employer brought by a related third party, alleging loss-of-services due to a work-related injury to an employee.

Question 22 of 100

Question 23

Which of the following does not have to be included in the inspection report required to participate in the California Fair Access to Insurance Requirements (FAIR) Plan?

Answer Choices:	Select the Correct Answer
Structural inspection	
Condition of surrounding structures	
Occupancy features	
Photographs of the occupants	

Question 23 of 100

Answer 23

Your answer: Photographs of the occupants is correct.

EXPLANATION:
According to the California Insurance Code (CIC 10093(b)), the inspection must include, but need not be limited to, pertinent structural and occupancy features as well as the general condition of the building and surrounding structures. A representative photograph of the property may be taken as part of the inspection.

Question 23 of 100

Question 24

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 24 of 100

Answer 24

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 24 of 100

Question 25

The claimant relinquishes his or her right to sue by settling the claim under which of the following? ``` Answer Choices: Select the Correct Answer Scheduled Payment Release Advance Payment Full Release Settlement Structured Settlement ``` Question 25 of 100

Answer 25

Your answer: Full Release Settlement is correct. EXPLANATION: After a claimant signs a Full Release Settlement, he or she waives the right to sue. Question 25 of 100

Question 26

A department store has a large inventory of costume jewelry and watches. No single item is valued for more than $100.00. A customer steals most of the items and flees the scene. What theft coverage would be provided by an unendorsed ISO standardized BOP policy? Answer Choices: Select the Correct Answer $500 Full contents limit $2,500 No coverage for the theft of jewelry and watches Question 26 of 100

Answer 26

Your answer: $2,500 is incorrect. The correct answer is: Full contents limit. EXPLANATION: An unendorsed BOP provides theft of jewelry and watches up to the full contents limit if the value per item does not exceed $100.00. For high-end jewelry and watches, the policy provides a maximum theft limit of $2,500 for the entire theft loss. Please keep in mind that these limitations would not apply to losses from the other insured perils. Question 26 of 100

Question 27

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 27 of 100

Answer 27

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 27 of 100

Question 28

Which of the following would be covered under Coverage C of form HO-3? I. Property normally kept at the insured residence but in transit to a new principal residence II. Personal Property in Switzerland while the insured is on vacation ``` Answer Choices: Select the Correct Answer II only Both I and II I only Neither I nor II ``` Question 28 of 100

Answer 28

Your answer: Both I and II is correct. EXPLANATION: Coverage C provides protection for personal property owned or used by the insured anywhere in the world - with some exceptions. One is personal property normally stored off the premises - although this can be added by endorsement. (Property of away-from-home students is not "stored".) Question 28 of 100

Question 29

In crime insurance, which of the following individuals is NOT considered to be a custodian? ``` Answer Choices: Select the Correct Answer Janitor Employee Partner Insured ``` Question 29 of 100

Answer 29

Your answer: Janitor is correct. EXPLANATION: A janitor would not fit the definition of a custodian and would not have custody of the insured property. Only the insured, employee or partner fits into this position. A night watch person also would not be a custodian. Question 29 of 100

Question 30

The verdict in a personal injury liability suit was higher than the insured’s underlying liability policy’s limit of insurance. In this situation: Answer Choices: Select the Correct Answer The insured, the insurance company providing the insured’s underlying policy and the company providing the insured’s umbrella policy must agree on an appeal and share the expenses of that appeal. Neither the insured’s underlying insurer nor the umbrella insurer may appeal without the insured’s agreement. The insurance company providing the insured’s umbrella liability policy can appeal the case at its own expense even if the insured and the company providing the underlying policy do not appeal. The case cannot be appealed by any of the parties. Question 30 of 100

Answer 30

Your answer: The case cannot be appealed by any of the parties. is incorrect. The correct answer is: The insurance company providing the insured’s umbrella liability policy can appeal the case at its own expense even if the insured and the company providing the underlying policy do not appeal.. EXPLANATION: The umbrella insurer has the option to appeal even though the underlying insurer and the insured chooses not to appeal. Question 30 of 100

Question 31

Which of the following dwelling forms provides coverage for loss of rental income? ``` Answer Choices: Select the Correct Answer The Basic, Broad and Special Form The Basic and Broad Forms only The Broad and Special Forms only The Special Form only ``` Question 31 of 100

Answer 31

Your answer: The Basic and Broad Forms only is incorrect. The correct answer is: The Basic, Broad and Special Form. EXPLANATION: All of the forms provide for rental value coverage. In the DP-2 and DP-3, it is 20% of the Coverage A limit and is additional coverage. With the DP-1, the 20% coverage reduces the available Coverage A amount on the dwelling. (Note: in North Carolina the percentage is 10%.) Question 31 of 100

Question 32

Which of the garage policy coverages will pay for physical damage to a garage customer's auto regardless of legal liability? Answer Choices: Select the Correct Answer Section II - Garage Liability coverage. Section IV - Garage physical damage coverage. Garagekeepers legal liability coverage. Garagekeepers direct primary coverage. Question 32 of 100

Answer 32

Your answer: Garagekeepers direct primary coverage. is correct. EXPLANATION: The Garagekeepers direct primary coverage pays for damages to a customer's vehicle regardless of fault. The Garagekeepers legal liability form would require that the claimant prove negligence on the part of the garage. Question 32 of 100

Question 33

Mr. Thompson carries the minimum auto limits in his state. He drives his car to New York which requires bodily injury limits of $25/50 and a wrongful death limit of $50/100 and no fault coverage. If he has an accident in New York what coverage would he have? Answer Choices: Select the Correct Answer The coverage will automatically be modified to comply with the New York requirements. The insurance company will not raise the limits to those required in New York. The insured must pay an additional premium to have their limits increased before entering the state. Mr. Thompson will have to ask his company for higher limits before the trip. Question 33 of 100

Answer 33

Your answer: The coverage will automatically be modified to comply with the New York requirements. is correct. EXPLANATION: Most insurance companies would automatically modify the coverage to comply with the requirements of the other state. No additional premium is required, nor does permission have to be obtained. Question 33 of 100

Question 34

Under the farm forms, a "half a head" of livestock is an animal that is: Answer Choices: Select the Correct Answer Under three years of age and the most coverage that will be paid for that animal under the policy is $3,000. Under two yeara of age and the most coverage that will be paid for that animal under the policy is $2,500. Under one year of age and the most coverage that will be paid for that animal under the policy is $1,000. Is under six months of age and the most coverage that will be paid for that animal under the policy is $500. Question 34 of 100

Answer 34

Your answer: Under one year of age and the most coverage that will be paid for that animal under the policy is $1,000. is correct. EXPLANATION: An animal under one year of age, is known as a "half a head." Coverage F covers farm personal property on a blanket basis both on and off the insured premises. A blanket limit for livestock can be added, however, the most that will be paid for "half a head" of livestock (an animal under one year of age) is $1,000. Question 34 of 100

Question 35

The manager of an independent adjusting company in California leaves the business. The Department of Insurance requires notification of the manager's departure within: ``` Answer Choices: Select the Correct Answer 10 days 30 days 60 days At license renewal ``` Question 35 of 100

Answer 35

Your answer: 60 days is incorrect. The correct answer is: 30 days. EXPLANATION: The Insurance Department must be advised within 30 days. Question 35 of 100

Question 36

Which of the following would be covered under the DP-1 dwelling form? ``` Answer Choices: Select the Correct Answer Fire and resultant water damage Freezing Falling objects Earthquake ``` Question 36 of 100

Answer 36

Your answer: Falling objects is incorrect. The correct answer is: Fire and resultant water damage. EXPLANATION: A fire loss and resultant water damage to extinguish the fire would be covered under the DP-1 form. Question 36 of 100

Question 37

Under HO medical expense coverage, necessary medical expenses will be paid by Medical Payments to Others for bodily injury medically certified within: Answer Choices: Select the Correct Answer 30 days from the date of an accident. Six months from the date of an accident. One year from the date of an accident. Three years from the date of an accident. Question 37 of 100

Answer 37

Your answer: Three years from the date of an accident. is correct. EXPLANATION: Medical expenses are paid up to three years of the accident. Question 37 of 100

Question 38

Under a standard Equipment Breakdown policy, the loss settlement is: Answer Choices: Select the Correct Answer ACV for all covered losses if the the claim is reported within 24 months. Replacement cost for all covered losses. Replacement cost coverage, if the repair or replacement, is made within 18 months of the loss. Replacement cost coverage, if the repair or replacement, is made within 24 months of the loss. Question 38 of 100

Answer 38

Your answer: Replacement cost for all covered losses. is incorrect. The correct answer is: Replacement cost coverage, if the repair or replacement, is made within 24 months of the loss.. EXPLANATION: The insured must repair or replace the damaged property within 24 months after the date of the breakdown (unless the time period is extended by the insurer in writing), or recovery of the loss is limited to the lesser of the cost it would have taken to repair the damaged property or the actual cash value of the property at the time of the breakdown. Usually coverage is on a replacement cost basis unless the insured or company endorses the policy to cover losses on an Actual Cash value bases. If replacement cost coverage applies, then the 24-month period is a factor if the insured is to receive replacement cost coverage for the loss. Question 38 of 100

Question 39

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 39 of 100

Answer 39

Your answer: 20 days. is correct. 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 39 of 100

Question 40

Which of the following NFIP policies is required to include the Increased Cost of Compliance (ICC) coverage? Answer Choices: Select the Correct Answer An NFIP contents-only policy. An NFIP Dwelling policy under the Emergency Program. An NFIP Dwelling policy under the Regular Program. An NFIP General Property policy under the Regular Program. Question 40 of 100

Answer 40

Your answer: An NFIP General Property policy under the Regular Program. is incorrect. The correct answer is: An NFIP Dwelling policy under the Regular Program.. EXPLANATION: ICC coverage is mandatory coverage that must be included on all NFIP policies, except those in the Emergency Program, or those policies insuring contents only. Therefore, an NFIP Dwelling policy under the Regular Program would be the only policy listed that be required to include ICC coverage. 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

What is the purpose of an adjuster's interim report? Answer Choices: Select the Correct Answer To report on the ongoing status of the claim. To render a final opinion on the claim. To provide the status on all releases. To provide final estimates of the damages claimed. Question 42 of 100

Answer 42

Your answer: To report on the ongoing status of the claim. is correct. EXPLANATION: This report merely provides the status of a claim prior to finalization. Question 42 of 100

Question 43

A non-waiver agreement issued by an insurance company is: ``` Answer Choices: Select the Correct Answer A loss or damage issue. A coverage issue. A cause of loss issue. An exclusion issue. ``` Question 43 of 100

Answer 43

A non-waiver agreement issued by an insurance company is: Your answer: A cause of loss issue. is incorrect. The correct answer is: A coverage issue.. EXPLANATION: Non-waiver agreements and reservation of rights letters both serve the following general purposes: 1. To advise the insured that any action taken by the insurance company in investigating the cause of loss or in ascertaining the amount of loss is not intended to waive or invalidate any policy condition, and 2. To clarify that the intent of the agreement is to permit an investigation of the claim and that neither the insured nor the insurer will thereby waive any respective rights or obligations. Question 43 of 100

Question 44

A commercial property policy specifies which of the following responsibilities as a duty of the insured? Answer Choices: Select the Correct Answer To provide a proof of loss statement following a loss if requested by the company. To return the policy if it is canceled by the insurance company. To pay the bank in full in the event of a total loss. To pay premiums within thirty days after receiving an invoice. Question 44 of 100

Answer 44

Your answer: To provide a proof of loss statement following a loss if requested by the company. is correct. EXPLANATION: If the insured reports a covered loss, the insurer may request the insured to complete a proof of loss statement. If this request is made, the insured must complete the proof of loss relatively quickly. Some policies give the insured only 60 days to complete the proof of loss after the insurer makes its request. Question 44 of 100

Question 45

In claims settlement, an open-ended release: Answer Choices: Select the Correct Answer Refers to all releases. Is a release involving an attorney. Is a conditional, or partial release. Refers to a release where all claims expenses are paid. Question 45 of 100

Answer 45

Your answer: Is a conditional, or partial release. is correct. EXPLANATION: An example would be where the insurance company agrees to pay some additional bills when they become available. These additional bills are viewed as part of the settlement agreement. Open-ended releases are generally subject to specific time and monetary limits. Question 45 of 100

Question 46

The fee that must be submitted to the Department with an original adjuster license application in California is: ``` Answer Choices: Select the Correct Answer $62 $56 $47 $72 ``` Question 46 of 100

Answer 46

Your answer: $72 is correct. EXPLANATION: The fee that must be submitted to the Department with an original adjuster license application in California is $72. Question 46 of 100

Question 47

Mr. Jamison owns a summer home in the woods that he rents to others. During his absence, bears enter the home and cause considerable damage. The insured reports the claim to his insurance company. The adjuster advises Mr. Jamison to report the claim as vandalism damage. The claim report is investigated by the state insurance department. How should the Department treat this action on the part of the adjuster? Answer Choices: Select the Correct Answer Require the company to pay the claim. Charge the adjuster with an unfair claims practice. Require the company to deny the claim because animal damage is excluded. Charge the adjuster with an unfair trade practice. Question 47 of 100

Answer 47

Your answer: Require the company to pay the claim. is incorrect. The correct answer is: Charge the adjuster with an unfair claims practice.. EXPLANATION: Advising the insured to misrepresent the facts of the claim would be an unfair claims practice. Question 47 of 100

Question 48

When can an adjuster in California use a fictitious name while conducting business? Answer Choices: Select the Correct Answer Never When authorized by the Commissioner to do so When it does not conflict with another’s name in the same business Anytime Question 48 of 100

Answer 48

Your answer: When authorized by the Commissioner to do so is correct. EXPLANATION: No licensee may conduct a business under a fictitious or other business name unless and until he or she has obtained the written authorization of the Commissioner to do so. Question 48 of 100

Question 49

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 49 of 100

Answer 49

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 49 of 100

Question 50

Joe enters into a contract with Martha to set fire to her house so she can collect on her insurance policy. Martha will pay Joe a portion of the insurance proceeds for his trouble. Which of the following parts of a valid contract is missing in this situation? ``` Answer Choices: Select the Correct Answer Competent parties. Consideration. Legal purpose. Offer and acceptance. ``` Question 50 of 100

Answer 50

Your answer: Legal purpose. is correct. EXPLANATION: For a contract to be valid, it must be for a legal purpose. Burning down Martha's house for a portion of the insurance money is not a legal purpose. Question 50 of 100

Question 51

A contractor in need of a bid bond to obtain a contract is an example of a(n): ``` Answer Choices: Select the Correct Answer Principal. Obligee. Surety. Fiduciary. ``` Question 51 of 100

Answer 51

Your answer: Surety. is incorrect. The correct answer is: Principal. . EXPLANATION: A contractor needing a bid bond would be the principal. The bond company is the guarantor and the owner (who receives the benefit of the bond) would be the obligee. Question 51 of 100

Question 52

A customer has eaten seafood in a restaurant and became very ill while still in the restaurant. What type of CGL claim is this? Answer Choices: Select the Correct Answer Premises Liability Products Liability Food born illnesses are not covered by a CGL policy Personal Injury Question 52 of 100

Answer 52

Your answer: Personal Injury is incorrect. The correct answer is: Products Liability. EXPLANATION: The moment the food was served to the customer for consumption, any injury caused by the food would be considered a "products" claim. The fact that the customer was still in the restaurant does not change the fact that the "product" had been put to its intended use. Question 52 of 100

Question 53

In a liability policy, the limits of coverage can be expressed as all of the following, EXCEPT: ``` Answer Choices: Select the Correct Answer Restricted Single Split Aggregate ``` Question 53 of 100

Answer 53

Your answer: Aggregate is incorrect. The correct answer is: Restricted. EXPLANATION: There is no such limit a restricted limit. Liability limits can be expressed as a split limit for bodily injury and property damage, or a single limit for both bodily injury and property damage per occurrence. The policy may also contain an aggregate limit which is the most the policy will pay for all claims (bodily injury and property damage) submitted for the entire policy period. Question 53 of 100

Question 54

QUESTION: When it is known that an employee is guilty of theft or other dishonest act, how is coverage affected? Answer Choices: Select the Correct Answer Coverage will continue if the employee agrees to make complete restitution. Coverage continues until the expiration date of the coverage. Coverage is cancelled immediately. Coverage will continue if an additional premium is charged for the increased exposure. Question 54 of 100

Answer 54

Your answer: Coverage is cancelled immediately. is correct. EXPLANATION: When it is known that an employee has committed a crime, the coverage for that employee terminates immediately for future losses. Question 54 of 100

Question 55

A Homeowners Form has a $50,000 personal property limit. Disregarding any deductibles, what is the most the insured can collect if a boat valued at $1,500 is stolen from the premises? ``` Answer Choices: Select the Correct Answer $1,000 $1,500 $1,400 $2,000 ``` Question 55 of 100

Answer 55

Your answer: $1,500 is correct. EXPLANATION: The insured can collect up to $1,500 because of the "special limits" that apply to watercraft. An insured could collect this full amount even when the deductible is factored in. For example, if a policyholder had a deductible of $500 and a covered loss to watercraft valued at more than $2000, they could collect a maximum of $1500. Theft of watercraft off the insured's premises is covered only under the HO-5 form. Question 55 of 100

Question 56

Which of the following would be an "uninsured motor vehicle"? Answer Choices: Select the Correct Answer Auto 1, which has no liability insurance under any policy. It is operated by a self-insurer. Auto 2, a hit-and-run vehicle. Neither the owner nor the driver can be identified. Auto 3, with a liability limit of insurance of $100,000. The insured’s state requires a liability limit of $25,000 and the insured has Uninsured Motorists coverage in the amount of $50,000. None of the above is an “uninsured motor vehicle”. Question 56 of 100

Answer 56

Your answer: Auto 1, which has no liability insurance under any policy. It is operated by a self-insurer. is incorrect. The correct answer is: Auto 2, a hit-and-run vehicle. Neither the owner nor the driver can be identified.. EXPLANATION: Uninsured motorist coverage does not apply to vehicles owned or operated by a self-insurer under any applicable motor vehicle law, except a self-insurer which becomes insolvent. Question 56 of 100

Question 57

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 57 of 100

Answer 57

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 57 of 100

Question 58

Which is false regarding the California Good Driver Discount? Answer Choices: Select the Correct Answer A person must have maintained at least a “B” average in high school. It shall be at least 20% below the rate the insured would otherwise be charged. A driver does not have to prior coverage in force to receive the discount. An insurer may refuse the discount for motorcycles in some cases. Question 58 of 100

Answer 58

Your answer: A driver does not have to prior coverage in force to receive the discount. is incorrect. The correct answer is: A person must have maintained at least a “B” average in high school. . EXPLANATION: To qualify for the discount, a driver does not have to be a student. Question 58 of 100

Question 59

Your answer: A driver does not have to prior coverage in force to receive the discount. is incorrect. The correct answer is: A person must have maintained at least a “B” average in high school. . EXPLANATION: To qualify for the discount, a driver does not have to be a student. Question 58 of 100

Answer 59

Your answer: 60 days is incorrect. The correct answer is: The insurer must be notified promptly. The number of days is not specified. EXPLANATION: The policy language states that all claims will be promptly reported to the insurer. Question 59 of 100

Question 60

On an unendorsed special form BOP, how much coverage is there for theft of money & securities? Answer Choices: Select the Correct Answer $5000 on the premises only $5000 on the premises but only $2500 off $1000 on and off the premises Nothing Question 60 of 100

Answer 60

Your answer: $5000 on the premises but only $2500 off is incorrect. The correct answer is: Nothing. EXPLANATION: Even though the special BOP is "open peril" coverage which includes theft, the loss of money and securities are still not a covered form of property. The endorsement for Money & Securities is necessary to cover this exposure. Question 60 of 100

Question 61

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 61 of 100

Answer 61

Your answer: Within 6 business days after receiving the notice of claim. is correct. 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 61 of 100

Question 62

Which of the following types of property may not be insured under the valuable papers and records coverage form? ``` Answer Choices: Select the Correct Answer Money and securities Books, maps, and film Property of others Mortgages and manuscripts ``` Question 62 of 100

Answer 62

Your answer: Property of others is incorrect. The correct answer is: Money and securities. EXPLANATION: Money and securities is crime coverage and these items are not covered by the valuable papers and records coverage form. Question 62 of 100

Question 63

Claims that are paid under a CGL policy coverage, are charged against the aggregate policy limits, and reduce the amount of insurance remaining to pay future claims under the current policy. When will the limits be reinstated? Answer Choices: Select the Correct Answer Six months after the payment of the last claim that caused the aggregate limits to become exhausted. On the effective date of the next policy renewal. As soon as the aggregate is actually exhausted. If the insured pays an extra premium for reinstatement. Question 63 of 100

Answer 63

Your answer: On the effective date of the next policy renewal. is correct. EXPLANATION: The effective date of the next policy renewal would be correct. The policy aggregate limit applies during the current policy period. Once a new policy period begins or the policy is renewed, a new aggregate limit is activated. Question 63 of 100

Question 64

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 64 of 100

Answer 64

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 64 of 100

Question 65

QUESTION: Zach's factory was damaged by a fire and shuts down for 90 days for repairs. In order to keep his business going, Zach spends $150,000 renting another building, along with some machinery and other supplies. Had he not taken these measures, Zach's total loss of business income would have been $300,000; but by renting a building and equipment, he manages to reduce that loss by $80,000. Zach's Commercial Property policy includes Business Income coverage with Extra Expense. How much will his insurer indemnify him? ``` Answer Choices: Select the Correct Answer $370,000 $300,000 $120,000 $210,000 ``` Question 65 of 100

Answer 65

Your answer: $210,000 is incorrect. The correct answer is: $370,000. EXPLANATION: The form pays the 150,000 for the extra expenses he incurred to keep going after the loss and the $220,000 actual loss of business income for a total of $370,000. Question 65 of 100

Question 66

Al has an umbrella liability policy which does not pay damages until such time as Al is legally obligated to pay them. This type of policy is known as: ``` Answer Choices: Select the Correct Answer A reimbursement policy. A pay-on-behalf-of policy. An indemnification policy. An obligation policy. ``` Question 66 of 100

Answer 66

Your answer: An obligation policy. is incorrect. The correct answer is: An indemnification policy.. EXPLANATION: Most insurance contracts are indemnification policies. Question 66 of 100 Submit

Question 67

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 67 of 100

Answer 67

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 67 of 100

Question 68

Registration of a non-licensed independent adjuster in California during an emergency situation is valid for: ``` Answer Choices: Select the Correct Answer 90 working days. 180 days. One year. 120 days. ``` Question 68 of 100

Answer 68

our answer: 180 days. is correct. EXPLANATION: Registration of a non-licensed adjuster in an emergency situation is valid for a period of 180 days from the date of a registration letter is sent to the Commissioner from the supervising licensed adjuster or admitted insurer. Before the lapse of that period, the Commissioner may grant a further 180-day extension as deemed appropriate upon written request from the supervising licensed adjuster or the admitted insurer. Question 68 of 100

Question 69

Willie's Widgets has been earning a large portion of their market share for 10 years. During Willie's 11th year in business, Wynonna's Widgets opens and her superior marketing practices leaves Willie unable to continue in business. Which of the following types of risk caused Willie's loss? ``` Answer Choices: Select the Correct Answer Particular risk. Fundamental risk. Static risk. Dynamic risk. ``` Question 69 of 100

Answer 69

Your answer: Particular risk. is incorrect. The correct answer is: Dynamic risk.. EXPLANATION: A dynamic risk, caused Willie's loss as dynamic risks are associated with change. Having Wynonna as a competitor was a change that caused Willie to go out of business. Question 69 of 100

Question 70

The "special limits of liability" section of the HO forms provides watercraft coverage up to $1,500 aggregate for which of the following? ``` Answer Choices: Select the Correct Answer Sailboats Sailboards Boat trailers All of the responses are correct ``` Question 70 of 100

Answer 70

Your answer: All of the responses are correct is correct. EXPLANATION: All of the responses are correct. The $1,500 applies in the aggregate to all personal watercraft including their trailers, furnishings, equipment and outboard motors. Question 70 of 100

Question 71

An insured carries a Personal Property Replacement Cost endorsement attached to his Homeowners policy. He has suffered a loss to his personal property. He submits a claim for actual cash value (ACV) at the time of the loss, but notifies the insurer that he intends to make a claim for replacement cost later. The insurer will honor the insured's request, but only if the cost to repair or replace the property is: ``` Answer Choices: Select the Correct Answer More than $500. Less than $500. More than $1,000. Less than $5,000. ``` Question 71 of 100

Answer 71

Your answer: More than $500. is correct. EXPLANATION: If the cost to repair or replace the property is more than $500, the insurer will pay the actual cash value for the loss, until the actual repair or replacement is made. Question 71 of 100

Question 72

Which of the following are covered under the Homeowners "Additional Residence Rented to Others" endorsement? I. Personal Liability (Injury) II. Medical Payment to Others III. Dwelling IV. Personal Property ``` Answer Choices: Select the Correct Answer I and II only. I, II, III and IV. I and IV only. III and IV only. ``` Question 72 of 100

Answer 72

Your answer: I and II only. is correct. EXPLANATION: The "Additional Residence Rented to Others" endorsement provides personal liability (injury) and medical payments to others coverage to cover the insured's liability arising out of the ownership of a residence regularly rented to others. Question 72 of 100

Question 73

Personal injury in a CGL policy includes which of the following: I. Invasion of privacy. II. Wrongful eviction. III. Defamation of character. ``` Answer Choices: Select the Correct Answer I, II, and III I and III only I only II only ``` Question 73 of 100

Answer 73

Your answer: I, II, and III is correct. EXPLANATION: Personal injury would include all three of the given choices. Question 73 of 100

Question 74

Which of the following time periods is ordinary payroll coverage limited to in case of a business income loss under the BOP? ``` Answer Choices: Select the Correct Answer 30 days 60 days 90 days 180 days ``` Question 74 of 100

Answer 74

Your answer: 60 days is correct. EXPLANATION: The insurance company pays for only the loss of business income sustained during the restoration period that takes place within 12 consecutive months after the date of the covered loss or damage. However, it pays for ordinary payroll expenses for only 60 days after the date of loss unless a higher number of days is on the declarations. Question 74 of 100

Question 75

What specific type of liability policy gives an owner protection against liability claims arising out of the acts of its independent contractors? Answer Choices: Select the Correct Answer Owners and Contractors Protective Liability Policy Excess Liability Policy Bailee's Policy Legal Liability Policy Question 75 of 100

Answer 75

Your answer: Owners and Contractors Protective Liability Policy is correct. EXPLANATION: In some cases, in order to provide higher or additional limits, a separate owners and contractors protective liability policy is issued. This covers the vicarious acts of others for which the insured can be held legally liable. Question 75 of 100

Question 76

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 76 of 100

Answer 76

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 76 of 100

Question 77

The Earthquake Endorsement will provide coverage to the dwelling and/or personal property with the deductible stated as: Answer Choices: Select the Correct Answer $1,000 5% of the limit that applies to all Section I coverages. $500 $2,500 Question 77 of 100

Answer 77

Your answer: 5% of the limit that applies to all Section I coverages. is correct. EXPLANATION: The Earthquake Endorsement has a base deductible is 5% of the limit that applies to all Section I coverages, but never less than $500. Question 77 of 100

Question 78

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 78 of 100

Answer 78

Your answer: II only is correct. EXPLANATION: In cases of litigation it is the court/jury/judge that determines legal liability. Question 78 of 100

Question 79

Which part of the personal auto policy will contain a deductible? Answer Choices: Select the Correct Answer The "other than collision" coverage. The "collision". Neither "other than collision" nor the "collision". Both the "other than collision" coverage and the "collision" coverage. Question 79 of 100

Answer 79

Your answer: Both the "other than collision" coverage and the "collision" coverage. is correct. EXPLANATION: Both "collision" and "other than collision" coverage will be subject to a deductible. The deductible amount does not have to be the same for both coverages. Question 79 of 100

Question 80

What does an insurer do when the insured has possibly waived his or her rights in a liability claim? Answer Choices: Select the Correct Answer Send a "reservation of rights" letter. Deny the claim. Pay only a portion of the proven liability claim. Insist the insured obtain his or her own legal counsel. Question 80 of 100

Answer 80

Your answer: Send a "reservation of rights" letter. is correct. EXPLANATION: There are situations where the insured has waived the right to coverage under a liability policy. Failure to report a claim in a timely fashion could cause the insured to waive coverage. The insurer will normally issue a reservation of rights letter to the insured advising that it will investigate the claim but will not commit to pay the claim. Question 80 of 100

Question 81

All of the following are exclusions under Equipment Breakdown coverage, EXCEPT: ``` Answer Choices: Select the Correct Answer Sudden and accidental loss. Fire losses. Flood. Wear and tear. ``` Question 81 of 100

Answer 81

Your answer: Sudden and accidental loss. is correct. EXPLANATION: The Equipment Breakdown policy covers sudden and accidental loss. It can be modified to cover indirect loss (loss of income) as a result of a direct loss. The commercial property forms would cover a fire loss as a result of a boiler explosion since this would be an ensuing loss. Question 81 of 100

Question 82

The BOP has limitations on the square footage in regard to eligible retail and service risks. What is the maximum square footage a building can contain and still be eligible for the policy? ``` Answer Choices: Select the Correct Answer 15,000 square feet 20,000 square feet 35,000 square feet 30,000 square feet ``` Question 82 of 100

Answer 82

Your answer: 30,000 square feet is incorrect. The correct answer is: 35,000 square feet. EXPLANATION: Eligible retail and service risks cannot exceed 35,000 square feet in total floor area, or exceed $6,000,000 in annual gross sales at each location. Incidental storage buildings not exceeding 35,000 square feet and occupied by the insured may be included. Question 82 of 100

Question 83

Which of the following would meet the definition of "twenty-four hour" coverage? Answer Choices: Select the Correct Answer Joint issuance of a workers compensation policy and a disability insurance policy Joint issuance of a workers compensation policy and a life insurance policy Joint issuance of a life insurance policy and a disability insurance policy Issuance of a workers compensation policy Question 83 of 100

Answer 83

Your answer: Issuance of a workers compensation policy is incorrect. The correct answer is: Joint issuance of a workers compensation policy and a disability insurance policy. EXPLANATION: Twenty-four hour coverage is the joint issuance of a workers compensation policy with a disability insurance policy, health care service plan contract, or other medical insurance coverage for non-occupational injuries and illnesses. This product does not include a life insurance policy. Question 83 of 100

Question 84

Kelly, Vince, Ed, and Ginny are all staff adjusters. Which of these adjusters is acting appropriately as a fiduciary agent? Answer Choices: Select the Correct Answer Kelly tries to calm an angry claimant by telling him that she's sure his claim will be covered, even though she has not yet determined the cause of loss. Vince finds additional damage that seems to be related to the claim, but he leaves it off of his estimate because the claimant didn't notice it in the first place. Ed knows the claimant can't possibly afford to pay for their extensive damages, but he denies the claim anyway because the cause of loss was not covered by the policy. Ginny investigates the claim and determines the loss is not covered, but writes up her estimate in such a way that it would appear to be covered so she can pay the claimant anyway. Question 84 of 100

Answer 84

Your answer: Ed knows the claimant can't possibly afford to pay for their extensive damages, but he denies the claim anyway because the cause of loss was not covered by the policy. is correct. EXPLANATION: If a claim is not covered by the policy, the staff adjuster has a fiduciary responsibility to protect the financial interest of the insurer and deny the loss. The fact that the claimant can't afford to pay for the damages has nothing to do with the coverage issue. Question 84 of 100

Question 85

A ship owner that would like to be covered in the event that crew members bring liability suits for injuries sustained while working would purchase: ``` Answer Choices: Select the Correct Answer Workers Compensation Hull Coverage Freight Coverage Protection and Indemnity ``` Question 85 of 100

Answer 85

Your answer: Workers Compensation is incorrect. The correct answer is: Protection and Indemnity. EXPLANATION: Coverage would be obtained by purchasing protection and indemnity coverage. Question 85 of 100

Question 86

In California, the class of insurance that provides coverage against loss of property and liability for damage to persons or property from explosion of, or accident to, boilers, tanks, pipes, pressure vessels, engines, wheels, electrical machinery, or apparatus connected them, is known as: ``` Answer Choices: Select the Correct Answer Marine insurance. Fire insurance. Mechanical Breakdown insurance. Boiler & Machinery insurance. ``` Question 86 of 100

Answer 86

Your answer: Boiler & Machinery insurance. is correct. ``` EXPLANATION: In California, the class of insurance that provides coverage against loss of property and liability for damage to persons or property from explosion of, or accident to, boilers, tanks, pipes, pressure vessels, engines, wheels, electrical machinery, or apparatus connected them, is known as Boiler & Machinery insurance. In most states, this type of insurance is now referred to as Equipment Breakdown insurance. Mechanical Breakdown insurance covers automobile breakdowns. ``` Question 86 of 100

Question 87

The medical payments coverage of a Farm policy can be claimed for up to: Answer Choices: Select the Correct Answer 1 year. 3 years. 2 years. 5 years by a resident employee injured picking up groceries for the insured. Question 87 of 100

Answer 87

Your answer: 3 years. is correct. EXPLANATION: Medical payment claims can be made up to three years from the date of the injury under the Farm liability coverage. Question 87 of 100

Question 88

Under the Commercial Building and Personal Property Coverage form, if no optional coverages are selected, loss valuation/settlement is based on: ``` Answer Choices: Select the Correct Answer Actual cash value. Market value. Original cost. Replacement cost. ``` Question 88 of 100

Answer 88

Your answer: Actual cash value. is correct. EXPLANATION: Losses are settled on an ACTUAL CASH VALUE basis. If the insured desires replacement cost coverage, then that option must be selected by indicating it on the property declarations. The insured limit should be increased to reflect the higher values involved with a replacement cost settlement. Question 88 of 100

Question 89

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 89 of 100

Answer 89

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 89 of 100

Question 90

An application for an independent adjuster license in California must include: I. The full name and business address of the applicant. II. A recent photograph of the applicant and one classifiable set of his or her fingerprints. III. A verified statement of his or her experience qualifications. IV. A statement as to the classification or classifications under which the applicant desires to be qualified. ``` Answer Choices: Select the Correct Answer I, II, III and IV I, II and III only I, III and IV only I and II only ``` Question 90 of 100

Answer 90

Your answer: I, II, III and IV is incorrect. The correct answer is: I, III and IV only. EXPLANATION: Two recent photographs of the applicant, of a type prescribed by the Commissioner, and two classifiable sets of his or her fingerprints is required. Question 90 of 100

Question 91

Requiring a claimant to travel a long distance to have his or her automobile repaired violates which of the following standards for prompt investigations and fair and equitable settlements? ``` Answer Choices: Select the Correct Answer Unreasonable Travel Avoidance of Payment Notice of Applicable Time Limitations Denial of Claims ``` Question 91 of 100

Answer 91

Your answer: Unreasonable Travel is correct. EXPLANATION: No person may require a claimant to travel unreasonably either to inspect replacement vehicles, to obtain a repair estimate or to have the motor vehicle repaired at a specific repair shop. Question 91 of 100

Question 92

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.

Answer 92

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 92 of 100

Question 93

Roger Reed, an employee of Moo Insurance Services, is driving his car while traveling to a client's office on company business. He strikes and injures a pedestrian. He will be liable as the operator and owner of the vehicle. Moo will potentially be ____ liable because Roger was acting on their behalf. ``` Answer Choices: Select the Correct Answer Vicariously. Absolutely. Strictly. Primarily. ``` Question 93 of 100

Answer 93

Your answer: Vicariously. is correct. EXPLANATION: Vicarious liability is being held liable for the actions of another person, such as an employee. Since Reed was working on behalf of Moo at the time of the accident, they would need symbol 1 or 9 to cover this liability exposure. Symbol #1 provides coverage for any vehicle used in the insured business and symbol #9 covers non-owned vehicles used for company business. Question 93 of 100

Question 94

In the newest edition of the Commercial Property form, which of the following is now considered part of the building? ``` Answer Choices: Select the Correct Answer Signs permanently attached Vegetated Roofs Outdoor Property Detached signs ``` Question 94 of 100

Answer 94

Your answer: Vegetated Roofs is correct. EXPLANATION: Vegetated roofs are now part of the building and not subject to the tree, shrubs and plants exclusion under covered property nor the tree, shrubs and plants extension of coverage. Question 94 of 100

Question 95

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 95 of 100

Answer 95

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 95 of 100

Question 96

The commercial auto policy form provides for "worldwide liability coverage" for private passenger autos that the insured: Answer Choices: Select the Correct Answer Hires, leases, rents or borrows without a driver. Purchases. Sells. Occupies. Question 96 of 100

Answer 96

Your answer: Hires, leases, rents or borrows without a driver. is correct. EXPLANATION: World-wide liability coverage is provided for a period of 30 days. The insured's liability is determined in a settlement agreed to by the insurer or in a suit filed in the United States or its territories, possessions, Puerto Rico or Canada. Question 96 of 100

Question 97

A building with an actual cash value of $240,000 is insured for $200,000. The policy has an 80% coinsurance requirement. If there are no deductibles, how much would be paid for a $60,000 loss? ``` Answer Choices: Select the Correct Answer $60,000 $48,000 $57,600 $62,500 ``` Question 97 of 100

Answer 97

Your answer: $48,000 is incorrect. The correct answer is: $60,000. EXPLANATION: The insured needs to be covered for at least 80% x $240,000 or $192,000 to avoid a penalty in case of a partial loss. In this case, the insured carries more than is required, and therefore, all the loss is covered. Question 97 of 100

Question 98

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 98 of 100

Answer 98

Your answer: The Fund reimburses employers who employ employees with a pre-existing partial disability who suffer a secondary injury. is correct. 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 98 of 100

Question 99

What coverage is used to cover damage to a customer's vehicle in the care and custody of a repair garage? ``` Answer Choices: Select the Correct Answer Garagekeeper's Legal Liability. Garage liability. "Drive Other Car" coverage. Commercial General liability. ``` Question 99 of 100

Answer 99

Your answer: Garagekeeper's Legal Liability. is correct. EXPLANATION: Garagekeeper’s Legal Liability covers damage to the customer’s vehicle as a result of the negligence of the repair facility. This coverage can also be provided on a direct and primary basis, meaning that any damage sustained to the customer’s vehicle while in the garage facility’s care custody and control would be covered without proving negligence. Question 99 of 100

Question 100

The Main Street Gazette is interested in protecting against the additional costs of continuing to print the newspaper, at a temporary location in the event its building was destroyed. Which of the following coverages should the Main Street Gazette purchase for this purpose? ``` Answer Choices: Select the Correct Answer Extra Expense Open Perils Loss of Rents Contingent Gross Earnings ``` Question 100 of 100

Answer 100

Your answer: Open Perils is incorrect. The correct answer is: Extra Expense. EXPLANATION: The purpose of Extra Expense coverage is to cover any increase in expenses incurred by the insured (after a direct property loss which interrupts the business) to decrease the amount of time the business is idle or interrupted, and keep it operating, even at another location. Question 100 of 100