IA Test 18

Question 1

The standardized Homeowners policy forms provide additional coverage for loss of trees, shrubs and other plants. However, the coverage is limited to:

Answer Choices: Select the Correct Answer
$500 for any one tree, shrub, or plant.
$250 for any one tree, shrub, or plant.
$750 for any one tree, shrub, or plant.
$1,000 for any one tree, shrub, or plant.

Question 1 of 100

Answer 1

Your answer: $1,000 for any one tree, shrub, or plant. is incorrect. The correct answer is: $500 for any one tree, shrub, or plant..

EXPLANATION:
Most Homeowner policies provide a maximum limit of 5% of Coverage A and a maximum of $500 for any one tree, shrub or plant.

Question 1 of 100

Question 2

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 2 of 100

Answer 2

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 2 of 100

Question 3

In January 2011 ABC Company wrote a fidelity bond for Jim’s Cleaners. In March, Jim discovered an employee theft that took place two years ago. This claim should be handled by:

Answer Choices: Select the Correct Answer
The carrier who wrote their bond in 2009
ABC Company
Both carriers
Neither carrier

Question 3 of 100

Answer 3

Your answer: The carrier who wrote their bond in 2009 is incorrect. The correct answer is: ABC Company.

EXPLANATION:
Fidelity bonds normally contain a clause known as a superseded suretyship rider, which holds that the current bond is to pay all losses that would have been recoverable under prior bonds if the “discovery period” has expired on the previous bond.

Question 3 of 100

Question 4

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 4 of 100

Answer 4

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 4 of 100

Question 5

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 5 of 100

Answer 5

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 5 of 100

Question 6

For which of the following would an employee receive no workers compensation benefits in California?

Answer Choices: Select the Correct Answer
An employee whose injury was caused by his or her own intoxication
An employee who voluntarily participates in any off-duty recreational, social, or athletic activity not constituting part of the employee’s work-related duties.
An employee who was injured during a fight in which she was the initial aggressor
All responses listed are correct

Question 6 of 100

Answer 6

Your answer: All responses listed are correct is correct.

EXPLANATION:
While employees who are injured at work are normally provided with workers compensation benefits (without regard to fault), there are exceptions. Workers who are injured because of their own serious and willful conduct receive only 50% of normal benefits. However, there are no benefits payable if the employee is the initial aggressor in a fight that causes injury to him/herself, is injured while intoxicated, or voluntarily participates in any off-duty recreational, social, or athletic activity not constituting part of the employee’s work-related duties. This would mean that all of the answers listed are correct.

Question 6 of 100

Question 7

What does the Small Business Administration (SBA) surety bond program provide?

Answer Choices: Select the Correct Answer
Reimburses the sureties that provide the bonds a percentage of the losses sustained if the contractor defaults.
Bonding for small contractors.
Guarantees a bond will be issued.
Pays premiums for surety bonds.

Answer 7

Your answer: Guarantees a bond will be issued. is incorrect. The correct answer is: Reimburses the sureties that provide the bonds a percentage of the losses sustained if the contractor defaults. .

EXPLANATION:
SBA guarantees bid, performance, payment and ancillary bonds issued by surety companies for construction, service and supply contracts and reimburses the sureties a percentage of the losses sustained if the contractor defaults.

Question 7 of 100

Question 8

Workers compensation benefits provided in California include:

I. Medical benefits, including first aid
II. Disability income benefits providing payments for lost wages
III. Rehabilitation benefits, including physical rehabilitation expenses or vocational training
IV. Death benefits payable to the dependent spouse and children

Answer Choices:	Select the Correct Answer
I, II, III and IV	
II, III and IV only	
I, II and III only	
I, II and IV only	

Question 8 of 100

Answer 8

Your answer: I, II, III and IV is correct.

EXPLANATION:
All responses are examples of benefits provided by workers compensation.

Question 8 of 100

Question 9

In California, all the following are considered private passenger vehicles, EXCEPT:

Answer Choices: Select the Correct Answer
a six-wheel recreational vehicle.
a privately owned limousine used exclusively by the owner.
a personally owned four-wheel station wagon used for deliveries as a volunteer.
a four-wheel vehicle used as a taxi by an individual and not a company.

Question 9 of 100

Answer 9

Your answer: a four-wheel vehicle used as a taxi by an individual and not a company. is correct.

EXPLANATION:
A four-wheel vehicle used as a taxi by an individual and not a company is not considered a private passenger vehicle.

Question 9 of 100

Question 10

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.

Answer 10

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 10 of 100

Question 11

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

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

Question 11 of 100

Answer 11

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

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

Question 11 of 100

Question 12

The giving up of a known right is called:

Answer Choices:	Select the Correct Answer
Waiver.	
Estoppel.	
Violation of policy conditions.	
Rebating.	

Question 12 of 100

Answer 12

Your answer: Waiver. is correct.

EXPLANATION:
A waiver can be intentional (expressed) or unintentional (implied).

Question 12 of 100

Question 13

Miranda’s home is covered under a Homeowners policy with an Earthquake Endorsement attached. She has selected the base deductible of 5% and her limit of liability under Coverage C is greater than Coverage A. Her Coverage C limit of liability is $1,000. What is the deductible that Miranda will have to pay?

Answer Choices:	Select the Correct Answer
$50	
$5	
$5,000	
$500	

Question 13 of 100

Answer 13

Your answer: $500 is correct.

EXPLANATION:
Although 5% multiplied by $1,000 is $50, the endorsement states that the deductible will never be less than $500.

Question 13 of 100

Question 14

Which of the following would not be “other structures” in the HO forms?

Answer Choices: Select the Correct Answer
A separate building on the insured premises used for business.
A building connected to the main dwelling only by a fence.
A private garage rented to a non-tenant.
An in-ground swimming pool.

Question 14 of 100

Answer 14

Your answer: A building connected to the main dwelling only by a fence. is incorrect. The correct answer is: A separate building on the insured premises used for business. .

EXPLANATION:
A building used for business purposes is not covered as an “other structure”. However, there is an exception for buildings that are rented out as private garages. Buildings connected to the dwelling only by a fence are considered detached, and therefore are “other structures”. An in-ground swimming pool would also be considered a structure.

Question 14 of 100

Question 15

Which of the following is not considered a “breakdown” under Equipment Breakdown coverage?

Answer Choices: Select the Correct Answer
Mechanical failure
Rupture or bursting caused by centrifugal force
Electrical failure
Lack of power, light, heat, steam or refrigeration

Question 15 of 100

Answer 15

Your answer: Lack of power, light, heat, steam or refrigeration is correct.

EXPLANATION:
Breakdown is direct physical loss that causes damage to covered equipment requiring it to be repaired or replaced. It must be caused by a failure of pressure or vacuum equipment, a mechanical failure, including rupture or bursting caused by centrifugal force, or an electrical failure, including arcing, provided the loss or damage is not excluded elsewhere in the coverage form. The lack of power, light, heat, steam or refrigeration is specifically excluded.

Question 15 of 100

Question 16

The Businessowners Policy provides coverage on the buildings and contents. How is the coverage provided?

Answer Choices: Select the Correct Answer
Actual Cash Value Basis
Replacement Cost Basis
Either on an actual cash value basis or replacement cost basis
Only on an agreed amount basis

Question 16 of 100

Answer 16

Your answer: Actual Cash Value Basis is incorrect. The correct answer is: Either on an actual cash value basis or replacement cost basis.

EXPLANATION:
The BOP offers the option of covering the property on a “replacement cost” basis or “actual cash value” basis.

Question 16 of 100

Question 17

What is the difference between arbitration and mediation in the adjusting of claims?

Answer Choices: Select the Correct Answer
Mediation is not binding whereas with arbitration, the decision is final and binding on the parties
Both involve a signed waiver
Arbitration usually involves a person in the legal profession
Only one involves the law of estoppel

Question 17 of 100

Answer 17

Your answer: Mediation is not binding whereas with arbitration, the decision is final and binding on the parties is correct.

EXPLANATION:
Arbitration is when the parties in a dispute submit their differences to a private body and the private body’s decision is usually final and binding to both parties. Mediation involves an impartial person, usually in the law profession, who helps the parties analyze their dispute and devise a compromise.

Question 17 of 100

Question 18

The traditional definition of actual cash value (ACV) is:

Answer Choices: Select the Correct Answer
Replacement cost minus depreciation.
The original purchase price minus depreciation.
Another term for replacement value.
The maximum amount any policy will pay for any property loss.

Question 18 of 100

Answer 18

Your answer: Another term for replacement value. is incorrect. The correct answer is: Replacement cost minus depreciation..

EXPLANATION:
The traditional definition of ACV is replacement cost minus depreciation.

Question 18 of 100

Question 19

All of the following are reasons for cancellation of a property insurance policy, EXCEPT:

Answer Choices: Select the Correct Answer
Several large claims.
Nonpayment of premium.
Conviction of the named insured of a crime arising out of an act increasing the hazard insured against.
Substantial change in the risk assumed by the insurer since the policy was issued.

Question 19 of 100

Answer 19

Your answer: Conviction of the named insured of a crime arising out of an act increasing the hazard insured against. is incorrect. The correct answer is: Several large claims..

EXPLANATION:
Several large claims is not a reason for canceling a policy.

Question 19 of 100

Question 20

With a claims made CGL policy, if a loss occurred after the retroactive date but was not reported during the policy period, what else needs to be in place in order for the insurer to respond to the notice of claim?

Answer Choices:	Select the Correct Answer
Extended policy term of 60 days.	
Extended supplemental retroactive date.	
Extended Coverage endorsement.	
Extended Reporting Period.	

Question 20 of 100

Answer 20

Your answer: Extended Reporting Period. is correct.

EXPLANATION:
An extended reporting period would need to be in place for claims that were not reported during the expiring policy term. There is a 60 day extended reporting period automatically built into the expiring policy, but if the insured needs more time, then a supplemental extended reporting period needs to be added by endorsement and an additional premium paid.

Question 20 of 100

Question 21

What type of liability is imposed by law without regard to fault on those participating in certain activities or owning certain things that are considered especially hazardous?

Answer Choices:	Select the Correct Answer
Vicarious	
Absolute	
Comparative	
Res ipsa loquitor	

Question 21 of 100

Answer 21

Your answer: Res ipsa loquitor is incorrect. The correct answer is: Absolute.

EXPLANATION:
Absolute or strict liability is liability without fault. It is occasionally imposed by statute on those participating in specified activities that are considered especially hazardous. For example, in some states, ownership of certain dog breeds places strict liability upon the owners in case of any damage or injury to others.

Question 21 of 100

Question 22

In casualty insurance, the “other insurance” clause would be applicable:

Answer Choices: Select the Correct Answer
When three policies are in force but no claim filed.
When two policies are in force and both cover the claim filed.
When the insurer requests it.
When there is a coverage limit issue.

Question 22 of 100

Answer 22

Your answer: When there is a coverage limit issue. is incorrect. The correct answer is: When two policies are in force and both cover the claim filed..

EXPLANATION:
When two or more policies are in force covering the same claim, the “other insurance” clause would apply.

Question 22 of 100

Question 23

What type of injury is usually not covered by commercial umbrella liability policies if the insured’s business is advertising, publishing, broadcasting or telecasting?

Answer Choices:	Select the Correct Answer
Slander or libel only	
Advertising injury only	
Personal injury only	
Violation of right of privacy only	

Question 23 of 100

Answer 23

Your answer: Personal injury only is incorrect. The correct answer is: Advertising injury only.

EXPLANATION:
Coverage for advertising injury is not covered if the insured is in the business of advertising, publishing or telecasting.

Question 23 of 100

Question 24

Under the California Insurance Frauds Prevention Act (IFPA), facts, circumstances or events which singly, or in combination, support(s) an inference that insurance fraud may be been committed is called:

Answer Choices:	Select the Correct Answer
A suspected fraud occurrence.	
A red flag event.	
A reasonable belief occurrence.	
A willful event.	

Question 24 of 100

Answer 24

Your answer: A red flag event. is correct.

EXPLANATION:
Facts, circumstances or events which singly, or in combination, support(s) an inference that insurance fraud may be been committed is called a “red flag” or a “red flag event” in California.

Question 24 of 100

Submit

Question 25

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 25 of 100

Answer 25

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 25 of 100

Question 26

Which of the following businesses would be eligible for a Businessowners policy? I. Donut shop. II. Wholesale florist. III. Barber shop. IV. Taxidermist. ``` Answer Choices: Select the Correct Answer I, II, III, and IV I and III only II and III only I, II, and III only ``` Question 26 of 100

Answer 26

Your answer: I, II, III, and IV is correct. EXPLANATION: Generally, Businessowners policies are written to cover light businesses with limited locations and size. Most insurers would cover all of the ones in this question. The Donut shop will probably be required to install the proper fire extinguishing equipment if the donuts are made on the premises. Question 26 of 100

Question 27

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 27 of 100

Answer 27

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 27 of 100

Question 28

A contractor’s bid bond is used: Answer Choices: Select the Correct Answer To indemnity bonds posted at auction. To indemnity sealed bids. As a promise from the surety that if the principal is the low bidder and is awarded the contract, the principal will enter into the contract for the bid amount and provide required performance bonds. To guarantee that the work will be performed according to the terms and conditions of the contract with the obligee. Question 28 of 100

Answer 28

Your answer: To guarantee that the work will be performed according to the terms and conditions of the contract with the obligee. is incorrect. The correct answer is: As a promise from the surety that if the principal is the low bidder and is awarded the contract, the principal will enter into the contract for the bid amount and provide required performance bonds.. EXPLANATION: A bid bond is used as a promise from the surety that if the principal is the low bidder and is awarded the contract for the bid price, the principal will indeed enter into the contract. Question 28 of 100

Question 29

Which of the following is the principal in a bond? ``` Answer Choices: Select the Correct Answer Contractor doing the work Owner of the job The insurance company The surety ``` Question 29 of 100

Answer 29

Your answer: The insurance company is incorrect. The correct answer is: Contractor doing the work. EXPLANATION: There are three parties to a surety or fidelity bond: the principal, whose performance is being guaranteed by the surety; the obligee, to whom the principal makes a promise to perform or to be honest and the surety, which guarantees the principal’s performance. If the principal fails, the surety will indemnify the obligee up to the face amount. Question 29 of 100

Question 30

QUESTION: Homeowner policies provide additional coverage for loss of lawns, plants, trees, and shrubs -- but the coverage is limited to: Answer Choices: Select the Correct Answer $250 for any one tree, shrub, or plant. $1,000 for any one tree, shrub, or plant. $500 for any one tree, shrub, or plant. $750 for any one tree, shrub, or plant. Question 30 of 100

Answer 30

Your answer: $500 for any one tree, shrub, or plant. is correct. EXPLANATION: Most homeowner policies provide a maximum limit of 5% of coverage A and a maximum of $500 for any one tree, shrub or plant. Question 30 of 100

Question 31

Under the livestock coverage form, within how many days must newly acquired livestock be added to the policy? ``` Answer Choices: Select the Correct Answer Within 30 days of purchase Immediately Within 10 days of purchase With 5 days of purchase ``` Question 31 of 100

Answer 31

Your answer: Within 30 days of purchase is correct. EXPLANATION: Newly acquired livestock must be reported to the insurance company within 30 days of acquisition, at which time an additional premium will be charged the insured. Question 31 of 100

Question 32

Driver 1 and Driver 2 are in an accident. Driver 2 has the following damages: ``` Property Damage - $1,000 Rental Car Expense - $500 Emergency Room Expense - $400 Lost Wages - $300 The extent of the bodily injury will not be known for six months. How should the adjuster on this claim pay damages for Driver 2? ``` Answer Choices: Select the Correct Answer Pay all damage to date, provide a full and final release has been signed by Driver 2. Pay nothing until total of all damages has been determined. Pay the property damage and rental car expense and settle the bodily injury at a later time. None of the responses listed are correct. Question 32 of 100

Answer 32

The extent of the bodily injury will not be known for six months. How should the adjuster on this claim pay damages for Driver 2? Your answer: Pay the property damage and rental car expense and settle the bodily injury at a later time. is correct. EXPLANATION: In this case the adjuster should pay for the parts of the claim where he can easily determine its value. He sould seek a partial release for these items. He can then settle the bodily injury claim and get a release at a later time. Question 32 of 100

Question 33

A building valued at $500,000 is insured at $300,000 on a policy containing an 80% coinsurance clause. How much would be paid on a covered $200,000 loss? ``` Answer Choices: Select the Correct Answer -0- $150,000 $160,000 $200,000 ``` Question 33 of 100

Answer 33

Your answer: $160,000 is incorrect. The correct answer is: $150,000. EXPLANATION: The answer is $150,000. Per the coinsurance clause, the required amount of insurance is 80% of $500,000, which equals $400,000. However, the insured’s limit of $300,000 is only ¾ of the insurance required. That same fraction, ¾, is applied to the loss amount. ¾ of $200,000 is $150,000. Thus there is a “coinsurance penalty” of ¼ of the loss, or $50,000. Question 33 of 100

Question 34

Convenience stores selling gasoline must have a minimum of ______ square feet in total floor area in order to qualify for the BOP? ``` Answer Choices: Select the Correct Answer 2,500 3,500 4,000 3,000 ``` Question 34 of 100

Answer 34

Your answer: 3,500 is incorrect. The correct answer is: 3,000. EXPLANATION: In the newer edition of the BOP, restaurants or convenience stores selling gasoline must have a minimum of 3,000 square feet of total floor space in order to qualify as an acceptable risk. Question 34 of 100

Question 35

In case of a loss, how many days notice does the insured have after notification of a claim to submit the claim to the underwriters of the ocean marine coverage? ``` Answer Choices: Select the Correct Answer 180 days. 90 days. 60 days. 120 days. ``` Question 35 of 100

Answer 35

Your answer: 90 days. is incorrect. The correct answer is: 180 days.. EXPLANATION: In case of a loss, the insured must notify the lead insurance company before it takes any action. There is no coverage for the loss unless the notification is made within 180 days after the loss occurs, unless the insurance company has agreed to a different notification period. Question 35 of 100

Question 36

If the named insured's employees use their own vehicles to run errands, and the named insured does not have commercial auto coverage, what coverage should be added to the insured's Businessowners policy? Answer Choices: Select the Correct Answer The Business Auto endorsement. The Hired and Non-owned Auto Liability endorsement. The Non-owned and Borrowed Auto Liability endorsement. Coverage for this exposure cannot be added to the Businessowners policy, a separate auto policy must be purchased to protect the insured. Question 36 of 100

Answer 36

Your answer: The Non-owned and Borrowed Auto Liability endorsement. is incorrect. The correct answer is: The Hired and Non-owned Auto Liability endorsement.. EXPLANATION: The "Hired Auto and Non-Owned Auto Liability" endorsement would be attached to the BOP policy to protect the insured from liability exposures resulting from an auto accident that occurs when an automobile that is not owned by the business, is used for business purposes. Question 36 of 100

Question 37

Sam's home located in a rural area is insured under a DP-2 dwelling form with a $500 deductible. He experiences a fire at his home and has to call the local volunteer fire department to extinguish the fire. He receives a bill from the fire department in the amount of $800. How much of the bill from the fire department will his policy pay? ``` Answer Choices: Select the Correct Answer Nothing $300 $500 $800 ``` Question 37 of 100

Answer 37

Your answer: $300 is incorrect. The correct answer is: $500. EXPLANATION: The policy will provide $500 to pay for fire department charges incurred when the fire department is called to save or protect covered property from a peril insured against. This coverage is additional insurance and no deductible applies. Question 37 of 100

Question 38

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 38 of 100

Answer 38

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 38 of 100

Question 39

In which of the following situations should a non-waiver agreement be used? Answer Choices: Select the Correct Answer An insured’s picture window was broken by a neighbor throwing a baseball An insured’s house burned to the ground An insured’s house shows rot damage, and it appears there is a long-term plumbing leak An insured’s roof blew off in a tornado Question 39 of 100

Answer 39

Your answer: An insured’s house shows rot damage, and it appears there is a long-term plumbing leak is correct. EXPLANATION: Non-waivers should be executed when there are unresolved questions regarding coverage, limits or both. The adjuster would be wise to present such of waiver to the claimant/insured during the initial site visit. Question 39 of 100

Question 40

An independent adjuster must complete ___ hours of continuing education during each license renewal cycle. ``` Answer Choices: Select the Correct Answer 12 20 24 36 ``` Question 40 of 100

Answer 40

Your answer: 24 is correct. EXPLANATION: An individual who holds an insurance adjuster license and who is not exempt must satisfactorily complete a minimum of 24 hours, of which three hours are to be in ethics, of continuing education courses pertinent to the duties and responsibilities of an insurance adjuster license reported to the Insurance Commissioner on a biennial basis in conjunction with his or her license renewal cycle. Question 40 of 100

Question 41

The insured has liability coverage with a limit of $300,000 per occurrence. She purchases a $1 million Personal Umbrella to extend and broaden her coverage. The Umbrella policy includes a $10,000 retained limit. The insured becomes liable for $800,000 in damages that are excluded by the underlying liability policy, but is covered by the Umbrella policy. How would this case likely be settled? Answer Choices: Select the Correct Answer The underlying policy would pay nothing, the insured would pay $10,000, and the Umbrella policy would pay $200,000. The insured would pay $10,000 and the Umbrella policy would pay $790,000. The underlying liability policy would pay $300,000 and the insured would pay $500,000. The underlying liability policy would pay $300,000 and the Umbrella policy would pay $500,000. Question 41 of 100

Answer 41

Your answer: The insured would pay $10,000 and the Umbrella policy would pay $790,000. is correct. EXPLANATION: Because the underlying liability policy excludes coverage and assuming claim was covered under the broadened coverage purchased under the Personal Umbrella policy, the Umbrella policy would pay the claim less the $10,000 retained limit. Question 41 of 100

Question 42

Which of the following would not be improvements or betterments? ``` Answer Choices: Select the Correct Answer Carpet Furniture Interior walls Electrical wiring ``` Question 42 of 100

Answer 42

Your answer: Furniture is correct. EXPLANATION: Improvements and betterments are items added to a tenant’s rented structure that are permanent in nature. The tenant has insurable interest in them during occupancy of the building, and therefore can insure them. Furniture is not an improvement or betterment; it is personal property. Question 42 of 100

Question 43

Homeowners policies will provide which of the following for personal property located in a self-storage facility? ``` Answer Choices: Select the Correct Answer Full Coverage C limit $2,500 10% of the Coverage C limit $5,000 ``` Question 43 of 100

Answer 43

Your answer: Full Coverage C limit is incorrect. The correct answer is: 10% of the Coverage C limit. EXPLANATION: The Homeowners forms will limit coverage for personal property at self-storage facilities up to 10% of the Coverage C limit, or $1,000 whichever is higher. Question 43 of 100

Question 44

The Commercial Building and Personal Property form suspends coverage for losses caused by vandalism or theft if, at the time of loss, the building has been vacant for more than: ``` Answer Choices: Select the Correct Answer 60 consecutive days. 90 consecutive days. 30 consecutive days. 20 consecutive days. ``` Question 44 of 100

Answer 44

Your answer: 60 consecutive days. is correct. EXPLANATION: Vacancy means the building is unoccupied and does not contain contents. After 60 days of vacancy certain perils and coverages are affected. Question 44 of 100

Question 45

What is required in order for seasonal increase coverage to apply under the BOP? Answer Choices: Select the Correct Answer The insured must purchase the coverage by endorsement. The limit of insurance must be at least equal 100% of the average personal property values for the previous 12 months. Submit average inventory values for the previous three years. The BOP does not provide automatic seasonal increase in coverage. Question 45 of 100

Answer 45

Your answer: Submit average inventory values for the previous three years. is incorrect. The correct answer is: The limit of insurance must be at least equal 100% of the average personal property values for the previous 12 months.. EXPLANATION: The limit of insurance for business personal property must at least equal 100% of the average business personal property values for the previous 12 months in order for the seasonal increase to apply. Question 45 of 100

Question 46

Coverage L in a Personal Liability Supplement provides: Answer Choices: Select the Correct Answer Coverage for both bodily injury and property damage to a third party for which the insured is legally liable. No-fault coverage for necessary, reasonable medical expenses for a third party injured on the insured's premises. At least $1,000 in loss assessment coverage. Coverage similar to Coverage E of a Homeowners policy, but it doesn't cover the insured's legal defense. Question 46 of 100

Answer 46

Your answer: Coverage for both bodily injury and property damage to a third party for which the insured is legally liable. is correct. EXPLANATION: The Personal Liability Supplement covers the same exposures as the underlying primary policy for both bodily injury and property damage to a third party for which the insured is legally liable. Question 46 of 100

Question 47

Which of the following types of losses will NOT be excluded by Thomas Drug Company's CGL policy? Answer Choices: Select the Correct Answer Bodily injury to a customer arising out of a forklift being used by the insured Damage to a forklift owned by others which was in the custody of the insured Property damage caused to the insured's water system when a forklift dropped a drum of caustic chemicals owned by the insured Bodily injury to an employee driving a forklift Question 47 of 100

Answer 47

Your answer: Damage to a forklift owned by others which was in the custody of the insured is incorrect. The correct answer is: Bodily injury to a customer arising out of a forklift being used by the insured. EXPLANATION: The use of "mobile equipment" like a forklift on or off the insured's premises is covered under the CGL policy. Property in the insured's care, custody or control is excluded. Pollution is also excluded as well as injuries to employees. Question 47 of 100

Question 48

A California Independent Adjuster license expires every: ``` Answer Choices: Select the Correct Answer Year Three years Two years Four years ``` Question 48 of 100

Answer 48

Your answer: Two years is correct. EXPLANATION: The license expires every two years on the last calendar day of the month in which the initial license was initially issued. Question 48 of 10

Question 49

Under a Flood insurance RCBAP (residential condominium building association policy) will settle claims on what basis? ``` Answer Choices: Select the Correct Answer Functional Replacement Cost Replacement Cost Actual Cash Value Market Value ``` Question 49 of 100

Answer 49

Your answer: Functional Replacement Cost is incorrect. The correct answer is: Replacement Cost. EXPLANATION: The RCBAP settles losses on a replacement cost basis. Question 49 of 100

Question 50

Angie has suffered an automobile physical damage loss. All of the following are the insured's duties after a loss under Angie's personal automobile policy, EXCEPT: Answer Choices: Select the Correct Answer Take reasonable steps after the loss to protect the property from further damage. Promptly notify the police if the vehicle is stolen. Allow the insurer to inspect and appraise the damaged property. Facilitate the repairs to the vehicle and submit the invoice to the insurer. Question 50 of 100

Answer 50

Your answer: Facilitate the repairs to the vehicle and submit the invoice to the insurer. is correct. EXPLANATION: The insured is not permitted to make repairs on the vehicle until after the vehicle has been inspected and/or appraised and an agreement as to the damages has been reached with the insurer. Question 50 of 100

Question 51

Which of the following coverages would apply to a rental car used by an insured executive while on vacation? ``` Answer Choices: Select the Correct Answer Coverage for nonowned autos. Drive other car coverage. Garagekeepers legal liability. Truckers coverage. ``` Question 51 of 100

Answer 51

Your answer: Coverage for nonowned autos. is correct. EXPLANATION: The personal auto policy covers the use of a non-owned auto whether it be a rental car or a vehicle belonging to a friend. Question 51 of 100

Question 52

When an applicant for auto insurance has been rejected by several admitted insurers in California due to a poor driving record, the applicant may obtain coverage through: Answer Choices: Select the Correct Answer The California Assigned Risk Automobile Insurance Plan Through a non-admitted auto insurer California's Low Cost Auto Insurance Program Through the Federal Assigned Risk Plan Question 52 of 100

Answer 52

Your answer: California's Low Cost Auto Insurance Program is incorrect. The correct answer is: The California Assigned Risk Automobile Insurance Plan . EXPLANATION: If a licensed driver is denied coverage in the standard markets he or she can apply for a High-Risk Auto Insurance policy under the California Assigned Risk Automobile Insurance Plan for coverage. Question 52 of 100

Question 53

While repairing a stairway for a customer, an employee of Mike's Construction Company accidentally drops a hammer and injures someone passing by. What coverage under Mike's CGL policy would respond to cover the claim? Answer Choices: Select the Correct Answer Premises and Operations Liability Products and Completed Operations Liability Contractual Liability Owners and Contractors Protective Liability Question 53 of 100 Submit

Answer 53

Your answer: Owners and Contractors Protective Liability is incorrect. The correct answer is: Premises and Operations Liability. EXPLANATION: This is clearly an operations claim. The claim occurred during the operations of the insured. Question 53 of 100

Question 54

The low-cost policy limits for automobile insurance for low-income drivers who are insured by the California Automobile Assigned Risk Plan are: ``` Answer Choices: Select the Correct Answer $20,000/$40,000/$10,000 $25,000/$50,000/$25,000 $10,000/$20,000/$3,000 $12,500/$25,000/$10,000 ``` Question 54 of 100

Answer 54

Your answer: $10,000/$20,000/$3,000 is correct. EXPLANATION: The policy must offer coverage in the amount of $10,000 for bodily injury to, or death of, each person as a result of any one accident and, subject to that limit as to one person, the amount of $20,000 for bodily injury to, or death of all persons as a result of any one accident,and the amount of $3,000 for damage to property of others as a result of any one accident. Question 54 of 100

Question 55

All of the following are "advertisements" as defined by the California Code of Regulations (CCR), EXCEPT: Answer Choices: Select the Correct Answer Any written or printed communication for the purpose of soliciting, describing, or promoting the licensed business of the licensee, including a brochure, letter, pamphlet, newspaper, periodical, publication, or other writing. A directory listing caused or permitted by the licensee that also indicates his licensed activity. Any printing or writing on buildings used as the licensee's place of business or branch office. A radio, television or similar airwaves transmission that solicits or promotes the licensed business of the licensee. Question 55 of 100

Answer 55

Your answer: A directory listing caused or permitted by the licensee that also indicates his licensed activity. is incorrect. The correct answer is: Any printing or writing on buildings used as the licensee's place of business or branch office.. EXPLANATION: "Any printing or writing on buildings used as the licensee's place of business or branch office" is actually listed as NOT being included in the definition of "advertisement". All the other answer choices ARE considered "advertisements" according to the CCR. (CCR 2691.17) Question 55 of 100

Question 56

Coinsurance does not apply when: Answer Choices: Select the Correct Answer All structures on the property are insured The insured suffers a total loss of the property The insured suffers a partial loss of the property All of the responses are correct Question 56 of 100

Answer 56

Your answer: All of the responses are correct is incorrect. The correct answer is: The insured suffers a total loss of the property. EXPLANATION: Coinsurance does not apply to total losses. The clause is activated when a partial loss occurs and the insured has not complied with the coinsurance clause. Question 56 of 100

Question 57

Insurance that guarantees or indemnifies owners of real or personal property, or the holders of liens or encumbrances on that property, is classified in California as which of the following types of insurance? ``` Answer Choices: Select the Correct Answer Title insurance. Surety insurance. Credit insurance. Mortgage Guaranty insurance. ``` Question 57 of 100

Answer 57

Your answer: Title insurance. is correct. EXPLANATION: Insurance that guarantees or indemnifies owners of real or personal property, or the holders of liens or encumbrances on that property, is classified in California as Title insurance. Question 57 of 100

Question 58

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 58 of 100

Answer 58

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 58 of 100

Question 59

Which of the following is TRUE regarding those who qualify for coverage under the California Fair Access to Insurance Requirements (FAIR) Plan? Answer Choices: Select the Correct Answer Any person who applies will receive more competitive premiums than that available through normal channels. An inspection of the property will be waived for any person who applies to the FAIR Plan. Any person who is unable to obtain basic property insurance through normal channels may apply to the FAIR Plan. Any person who does not have an insurable interest in property may apply to the FAIR Plan. Question 59 of 100

Answer 59

Your answer: Any person who is unable to obtain basic property insurance through normal channels may apply to the FAIR Plan. is correct. EXPLANATION: According to the California Insurance Code (CIC 10093), any person having an insurable interest in real or tangible personal property who, after diligent effort, has been unable to obtain basic property insurance through normal channels from an admitted insurer or a licensed surplus line broker, will be entitled upon application to the facility to an inspection of the property by representatives of the inspection bureau. Question 59 of 100

Question 60

Under Coverage E - Scheduled Farm Property, how is the property covered? Answer Choices: Select the Correct Answer For the limit shown in the policy declarations Unlimited Blanket coverage Replacement cost basis Question 60 of 100

Answer 60

Your answer: Replacement cost basis is incorrect. The correct answer is: For the limit shown in the policy declarations. EXPLANATION: The property is covered for the limit shown on the declarations page of the policy for the property specifically scheduled. Question 60 of 100

Question 61

Collision is referred to as colliding with another object or _____of the vehicle. ``` Answer Choices: Select the Correct Answer Loss Upset or rollover Impact Destruction ``` Question 61 of 100

Answer 61

Your answer: Impact is incorrect. The correct answer is: Upset or rollover. EXPLANATION: Other terms for collision include "upset" and "rollover." Question 61 of 100

Question 62

Under the comprehensive coverage of a business auto policy, which of the following would not be a covered loss? Answer Choices: Select the Correct Answer After sliding on an icy pavement, a driver hits a guardrail. Electrical wiring in the vehicle catches fire when the ignition is turned on. All four tires are removed and a truck is put on blocks while it is parked over the weekend, even though there is no evidence of forcible entry into the company parking lot. A vehicle has its tires slashed by an undetermined person. Question 62 of 100

Answer 62

Your answer: Electrical wiring in the vehicle catches fire when the ignition is turned on. is incorrect. The correct answer is: After sliding on an icy pavement, a driver hits a guardrail.. EXPLANATION: Since the vehicle sustained damage by hitting the guard rail, it is considered a collision claim. This is because the definition of collision includes the upset of a vehicle, its impact with another vehicle or object; anything else would be other than collision and thus be covered by comprehensive coverage. Question 62 of 100

Question 63

Under workers compensation rules, if an employee suffers a 5% loss of use of his left arm, he will receive a disability rating of: ``` Answer Choices: Select the Correct Answer Temporary, partial. Temporary, total. Permanent, total. Permanent, partial. ``` Question 63 of 100

Answer 63

Your answer: Permanent, partial. is correct. EXPLANATION: Any rating between 1% and 99% indicates a permanent, partial disability. Question 63 of 100

Question 64

What is the purpose of the "sue and labor clause" in ocean marine insurance? Answer Choices: Select the Correct Answer Pertains to protecting the ship and other property from further damage. Affects the benefits payable to injured crew members. Provides defense costs from suits from passengers. A clause in a labor contract with the crewmembers. Question 64 of 100

Answer 64

Your answer: A clause in a labor contract with the crewmembers. is incorrect. The correct answer is: Pertains to protecting the ship and other property from further damage.. EXPLANATION: The clause provides that in the event of a loss, the insured must immediately take all reasonable steps to minimize the loss and protect the property from further loss. Failure to do so may invalidate the coverage or reduce the amount of any claims. Question 64 of 100

Question 65

Requirements that truckers be financially responsible for cargo they carry are imposed by: ``` Answer Choices: Select the Correct Answer The federal government. State government. City and county governments. Both state and federal governments. ``` Question 65 of 100

Answer 65

Your answer: Both state and federal governments. is correct. EXPLANATION: Both the state and federal governments have laws regarding the responsibility of trucking risks that transport cargo. Question 65 of 100

Question 66

Which of the following losses would be covered under commercial auto physical damage coverage? Answer Choices: Select the Correct Answer Fire Loss to equipment used for radar or laser detection Losses resulting from wear and tear Loss caused by war or military action Question 66 of 100

Answer 66

Your answer: Loss caused by war or military action is incorrect. The correct answer is: Fire. EXPLANATION: Fire is covered and the other choices are excluded. Question 66 of 100

Question 67

A commercial property policy is written to Tom Smith and Jim Jones, d/b/a Smith & Jones Hardware. If the insurer chooses to cancel the policy, the cancelation notice will be mailed to: Answer Choices: Select the Correct Answer Tom Smith only Tom Smith and Jim Jones Smith & Jones Hardware Tom Smith, Jim Jones, and Smith & Jones Hardware Question 67 of 100

Answer 67

Your answer: Tom Smith only is correct. EXPLANATION: The “first named insured” on a commercial policy is the first party named on the declarations page as an insured. The first named insured is designated as the only recipient of communications from the insurer, and the party with sole responsibility to make premium payments. Question 67 of 100

Question 68

A standard commercial inland marine form is not available for which of the following? ``` Answer Choices: Select the Correct Answer Equipment dealers Accounts receivable Valuable papers Release bill of lading ``` Question 68 of 100

Answer 68

Your answer: Valuable papers is incorrect. The correct answer is: Release bill of lading. EXPLANATION: Commercial inland marine offers many different coverage forms for specific needs of policyholders, including equipment, accounts receivable, and valuable papers. Question 68 of 100

Question 69

An insured had a $300,000 underlying liability policy and a $1 million umbrella liability policy with a $300,000 retained limit and a $2,000 self-insured retained limit. An occurrence resulted in $400,000 in personal injury damages which are not excluded by either policy. Shortly thereafter the insurer providing the underlying policy became insolvent. How much of the damages would be covered by the umbrella liability policy? ``` Answer Choices: Select the Correct Answer $100,000 $300,000 $398,000 $400,000 ``` Question 69 of 100

Answer 69

Your answer: $398,000 is incorrect. The correct answer is: $100,000. EXPLANATION: The fact that the underlying insurer became insolvent has no bearing on the retained limit. It would still pay the excess of $100,000 over the retained (underlying) limit of $300,000. Question 69 of 100

Question 70

All of the following are reasons that an adjuster should keep very detailed log notes, EXCEPT: Answer Choices: Select the Correct Answer To assist in determining the negligent parties. To assist in determining if the claim is fraudulent. To produce notes that will support a fraudulent denial of claims. To be used in case of a future arbitration, mediation, or litigation proceeding. Question 70 of 100

Answer 70

Your answer: To be used in case of a future arbitration, mediation, or litigation proceeding. is incorrect. The correct answer is: To produce notes that will support a fraudulent denial of claims. . EXPLANATION: The adjuster's log notes are used to determine negligent parties, to assist in detecting fraud, to become a part of the claims file, and to be used in future proceedings. The log notes are not intended to produce a fraudulent record to deny a claim. Question 70 of 100

Question 71

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 71 of 100

Answer 71

Your answer: $370,000 is correct. 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 71 of 100

Question 72

The insured car dealer carries dealer's physical damage coverage with comprehensive and collision coverage. One of the salesmen allows an old customer to test drive a van. The customer steals the car and it is later found heavily damaged in an accident. The adjuster will: Answer Choices: Select the Correct Answer Pay the claim under “theft” since the insured carries comprehensive coverage. Pay the claim under “collision” since the insured carries collision coverage. Deny the claim unless the insured carries “false pretense” coverage. Deny the claim unless the insured carries “drive other car” coverage. Question 72 of 100

Answer 72

Your answer: Pay the claim under “collision” since the insured carries collision coverage. is incorrect. The correct answer is: Deny the claim unless the insured carries “false pretense” coverage.. EXPLANATION: False pretense coverage is an optional coverage purchased in addition to the other physical damage coverage. False pretense protection provides coverage when the insured voluntarily parts with property by means of a fraud. An example would be a dealer letting someone test drive a car and they do not return the vehicle. Question 72 of 100

Question 73

Which of the following results in immediate payment when the claimant signs a release relinquishing his or her right to sue? ``` Answer Choices: Select the Correct Answer Full Release Settlement Scheduled Payment Release Advance Payment Structured Settlement ``` Question 73 of 100

Answer 73

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 73 of 100

Question 74

In commercial property insurance, how would the insured receive replacement cost lost settlement on damage (as a result of a covered peril) to the personal property of others left in the insured’s care custody and control? Answer Choices: Select the Correct Answer Request a separate replacement cost endorsement on the Personal Property of Others coverage on the policy. Request the replacement cost endorsement on Business Personal Property Insure the property of others for at least 100% of the cost to replace it. Send in periodic reports to the insurer on the value of the property of others left in the insured’s care custody and control Question 74 of 100

Answer 74

Your answer: Request a separate replacement cost endorsement on the Personal Property of Others coverage on the policy. is correct. EXPLANATION: Even if the replacement cost endorsement is attached to the building and business personal property coverage, a separate endorsement is necessary for replacement cost settlement on the property of others left in the insured’s care custody and control. Question 74 of 100

Question 75

Under the workers compensation guidelines, permanent total disability is rated at what percent? ``` Answer Choices: Select the Correct Answer 50% 60% 90% 100% ``` Question 75 of 100

Answer 75

Your answer: 60% is incorrect. The correct answer is: 100%. EXPLANATION: Permanent total disability is rated at 100%. Question 75 of 100

Question 76

The insured has a CGL policy with a $600,000 aggregate limit and a $300,000 per occurrence limit. The insured has one claim for $350,000 and another for $100,000. How much of the aggregate limit will remain for future claims? ``` Answer Choices: Select the Correct Answer $200,000. $50,000. $600,000. $400,000. ``` Question 76 of 100

Answer 76

our answer: $200,000. is correct. EXPLANATION: The policy can only pay $300,000 on the first claim and the full $100,000 for the second claim. The total of the two claims is $400,000 and leaves $200,000 of the aggregate limit. Question 76 of 100

Question 77

The purpose of a builder’s risk policy is: Answer Choices: Select the Correct Answer To cover a completed and occupied newly constructed building To cover personal property in a newly constructed building To cover a building under construction from accidental damage from the perils insured against To cover only the contractor for direct physical losses in the construction of a building Question 77 of 100

Answer 77

Your answer: To cover a building under construction from accidental damage from the perils insured against is correct. EXPLANATION: The purpose of the builder’s risk policy is to cover a building during the course of construction from accidental damage from the perils insured against. Question 77 of 100

Question 78

Farm liability coverages include each of the following, EXCEPT: ``` Answer Choices: Select the Correct Answer Bodily injury and property damage. Personal injury and advertising injury. Medical payments to others. Professional liability. ``` Question 78 of 100

Answer 78

Your answer: Bodily injury and property damage. is incorrect. The correct answer is: Professional liability.. EXPLANATION: Professional liability coverage is provided by other types of policies, but not under farm liability coverage. Question 78 of 100

Question 79

An insured has an HO-5 policy. He borrows a friend's camera and takes it on vacation. The item is stolen. Coverage for the stolen camera is: Answer Choices: Select the Correct Answer Excluded by the care, custody & control rule. Included anywhere in the world. More appropriately turned in under the friend’s policy. Included for up to $500. Question 79 of 100

Answer 79

Your answer: Included anywhere in the world. is correct. EXPLANATION: The Homeowner policy provides coverage for the insured's items of personal property anywhere in the world. The policy covers personal property "owned or used." The only exceptions are limitations placed on personal property that is used for business and for personal property that is kept in a secondary location owned by the insured. Some items such as jewelry, furs, guns and silverware have a dollar limitation for theft. 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

After a Homeowners policy in California has been in effect for more than one year, the insurer may cancel the policy for any reason at the anniversary date, so long as the insured is notified: Answer Choices: Select the Correct Answer At least 25 days in advance of the anniversary date. At least 30 days in advance of the anniversary date. At least 20 days in advance of the cancellation date. At least 45 days in advance of the cancellation date. Question 81 of 100

Answer 81

Your answer: At least 20 days in advance of the cancellation date. is incorrect. The correct answer is: At least 45 days in advance of the cancellation date.. EXPLANATION: The insurer may cancel the policy for any reason at the anniversary date, so long as the insured is notified at least 45 days in advance of the cancellation date of the policy. Question 81 of 100

Question 82

As an independent adjuster in California, your investigation of a two-car traffic accident indicates that both drivers are equally at fault. After speaking with the claimant's adjuster the two of you agree that both drivers are equally to blame. Your subrogation demand would be for: Answer Choices: Select the Correct Answer 100% of your insured's damages as your analysis does not affect what is owed by the other party. 75% of your insured's damages as each side's 25% totals 50%. 50% of your insured's damage, because the insured and the other driver were both 50% at fault. Nothing. Because both drivers were 50% at fault, each insurance company will pay 100% of the claim on their own insured's damages. Question 82 of 100

Answer 82

Your answer: 50% of your insured's damage, because the insured and the other driver were both 50% at fault. is correct. EXPLANATION: California is a "comparative negligence" state. In California the person most at fault is deemed to be the primary cause of the accident. If investigation either by law enforcement or the insurance adjuster determines that there was "comparative negligence" on the part of the other driver(s), all damages owed are subject to apportionment.

Question 83

A fidelity bond is designed to protect the employer against: Answer Choices: Select the Correct Answer Damage to property on which he is working Slander or libel Personal injury Theft by an employee Question 83 of 100

Answer 83

Your answer: Damage to property on which he is working is incorrect. The correct answer is: Theft by an employee. EXPLANATION: The fidelity bond is designed to protect the employer from loss stemming from dishonest acts by his employees. The bond may be written to cover specific employees or positions (scheduled) or all employees (blanket). Question 83 of 100

Question 84

The HO-3 form insures for direct physical loss to covered property involving collapse of a building caused by all of the following, EXCEPT: ``` Answer Choices: Select the Correct Answer Hidden decay Settling Weight of contents Use of defective materials ``` Question 84 of 100

Answer 84

Your answer: Hidden decay is incorrect. The correct answer is: Settling. EXPLANATION: Settling or earth movement is excluded under the policy. Question 84 of 100

Question 85

In cases involving the repair of an auto in California, no insurer may: Answer Choices: Select the Correct Answer All of the responses are correct. Require that an automobile be repaired at a specific repair shop. Require a claimant to travel an unreasonable distance to inspect a replacement automobile, to conduct an inspection of the vehicle, to obtain a repair estimate or to have the automobile repaired at a specific shop. Suggest or recommend that an automobile be repaired at a specific repair shop, unless all of the requirements set forth in the California Insurance code, section 758. Question 85 of 100

Answer 85

Your answer: All of the responses are correct. is correct. EXPLANATION: All of these responses are correct regarding the repair of an auto. Question 85 of 100

Question 86

The purpose of the California Fair Access to Insurance Requirements (FAIR Plan) is to: Answer Choices: Select the Correct Answer Assure the availability of automobile liability insurance. Assure the availability of basic property insurance. Guarantee the issue of basic property insurance to any applicant. Pay the obligations of insolvent insurers in California. Question 86 of 100

Answer 86

Your answer: Assure the availability of automobile liability insurance. is incorrect. The correct answer is: Assure the availability of basic property insurance.. EXPLANATION: The FAIR Plan assures the availability of basic property insurance in California. Question 86 of 100

Question 87

A claim is made on an excess liability policy. It is discovered during the claims investigation, that the underlying liability policy and the excess liability policy have different inception and expiration dates. The adjuster finds that the different dates has created a situation where the underlying policy was not in effect at the time of the occurrence, and therefore cannot trigger the excess liability policy to pay the claim. This situation is known as: ``` Answer Choices: Select the Correct Answer Contribution by Equal Shares. Nonconcurrency. Liability Discrepancy. Split Limits. ``` Question 87 of 100

Answer 87

Your answer: Nonconcurrency. is correct. EXPLANATION: "Nonconcurrency" is a situation where an underlying policy and an excess liability policy, have different inception and expiration dates, creating a situation where the underlying policy is not in force to trigger coverage under the excess liability policy. Question 87 of 100

Question 88

Which of the following are always included in a Commercial Package Policy (CPP)? I. Common Policy Declarations. II. Common Policy Conditions. ``` Answer Choices: Select the Correct Answer Both I and II Neither I nor II II only I only ``` Question 88 of 100

Answer 88

Your answer: Both I and II is correct. EXPLANATION: Since the Commercial Package Policy is a collection of coverages, it has common declarations and conditions to avoid confusion. Also included would be two or more coverages. Question 88 of 100

Question 89

Coverage under the National Flood Insurance Program may be written: Answer Choices: Select the Correct Answer Only in eligible communities. For any property located in the United States. For any property located in flood prone areas. Only in participating states. Question 89 of 100

Answer 89

Your answer: For any property located in flood prone areas. is incorrect. The correct answer is: Only in eligible communities. . EXPLANATION: To be a participating community, FEMA guidelines must be accepted. Once an application to be a designated flood zone is received by FEMA, the community can be covered under the emergency flood program. After the community adopts the required flood control measures, they are eligible for coverage under the regular flood insurance program. Question 89 of 100

Question 90

Which of the following would be covered under the homeowners policy for "off premises" liability? Answer Choices: Select the Correct Answer An unlicensed recreational dirt bike used in a state park An antique car used in a parade A golf cart used to play golf off the insured's premises A 50 hp outboard motor boat owned by the insured on a lake Question 90 of 100

Answer 90

Your answer: An antique car used in a parade is incorrect. The correct answer is: A golf cart used to play golf off the insured's premises. EXPLANATION: A golf cart is covered off the insured's premises for liability purposes. Question 90 of 100

Question 91

Which of the following losses may not be determined by an adjuster? ``` Answer Choices: Select the Correct Answer Use of a rental vehicle Bodily injury Medical bills Loss of income ``` Question 91 of 100

Answer 91

Your answer: Medical bills is incorrect. The correct answer is: Use of a rental vehicle. EXPLANATION: The adjuster usually advises the claimant to rent a vehicle similar to that which is damaged and submit the bills at a later date after the claim has been negotiated. Question 91 of 100

Question 92

Under the dwelling forms, personal property moved to a new principal residence will be automatically covered at the new location (subject to policy expiration) for a period of: ``` Answer Choices: Select the Correct Answer 30 days. 10 days. 20 days. 60 days. ``` Question 92 of 100

Answer 92

Your answer: 30 days. is correct. EXPLANATION: This is usually standard in the insurance industry. Coverage is pro-rated between the locations in case of a loss. Question 92 of 100

Question 93

What is the purpose of an installation floater? Answer Choices: Select the Correct Answer To cover property belonging to a contractor or others that is intended to become a part of a structure To cover property to be installed at the insured's location To cover property that has been installed when the contractor has completed the job and the work has been accepted To cover the insured's machinery, tools and other equipment used to install property to become a part of a building Question 93 of 100

Answer 93

Your answer: To cover property to be installed at the insured's location is incorrect. The correct answer is: To cover property belonging to a contractor or others that is intended to become a part of a structure. EXPLANATION: The policy is used to supplement coverage provided by the commercial property forms. It covers property off an insured's location and in transit or at the job site awaiting installation or when it has been installed. Coverage ceases when the property has been accepted by the purchaser.

Question 94

What is the grace period in which an expired California independent adjuster license may be renewed? ``` Answer Choices: Select the Correct Answer Five years Four years Three years One year ``` Question 94 of 100

Answer 94

Your answer: One year is correct. EXPLANATION: An expired license or branch office certificate may be renewed at any time within one year after its expiration on the filing of an application for renewal. The licensee, as a condition precedent to renewal, must also pay any required delinquency fee. Question 94 of 100

Question 95

Which of the following perils would NOT be covered by a Commercial Property policy with a Causes of Loss - Special Form attached to the Building and Personal Property Coverage form? Answer Choices: Select the Correct Answer Carolyn's Fine Gifts must shut down for a month to repair flood damage. When a riot breaks out in the town square, Bonnie's Boutique is looted and vandalized in the commotion. A tornado whips through town, leveling a warehouse belonging to Johnson's Industries. Allen's Appliances loses an entire warehouse in a fire caused by a lightning strike at a nearby power plant. Question 95 of 100

Answer 95

Your answer: Carolyn's Fine Gifts must shut down for a month to repair flood damage. is correct. EXPLANATION: The loss of income due to the shut down of Carolyn's Fine Gifts would not be covered by the Special Cause of Loss form. The cause of the loss and the resulting shut down is FLOOD, which is an excluded peril. Question 95 of 100

Question 96

In California an independent adjuster must post a surety bond. The bond is made payable to: ``` Answer Choices: Select the Correct Answer The people of the State of California. The Insurance Commissioner. The California Underinsurance Fund. The insurer that employs the adjuster. ``` Question 96 of 100

Answer 96

Your answer: The people of the State of California. is correct. EXPLANATION: The bond is made payable to the people of the State of California. Question 96 of 100

Question 97

Which of the following would be covered under a Commercial General Liability policy? Answer Choices: Select the Correct Answer Property damaged by a customer bumping into a merchandise display. A customer slipping and falling on a wet floor in a department store. Injuries to an employee while at work. An insured falling and injuring his/her arm in their own store. Question 97 of 100

Answer 97

Your answer: Injuries to an employee while at work. is incorrect. The correct answer is: A customer slipping and falling on a wet floor in a department store.. EXPLANATION: "Falling down" claims are very common occurrences for a business. These are covered under the Commercial General Liability policy based on the negligence of the insured for failure to maintain the premises. Injuries to the insured or the employees are covered by Workers' Compensation insurance and not the CGL policy. Question 97 of 100

Question 98

Tea is applying for a new adjuster license in California. What is the fee she will need to submit with her license application? ``` Answer Choices: Select the Correct Answer $47 $56 $72 $29 ``` Question 98 of 100

Answer 98

Your answer: $72 is correct. EXPLANATION: The application fee for an original license is: $72. (CIC 14097) Question 98 of 100

Question 99

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 99 of 100

Answer 99

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 99 of 100

Question 100

The limit for the theft of jewelry under the Homeowners policy is: ``` Answer Choices: Select the Correct Answer $1,000. $1,500. $2,000. $5,000. ``` Question 100 of 100

Answer 100

Your answer: $5,000. is incorrect. The correct answer is: $1,500.. EXPLANATION: The limit for the theft of jewelry is $1,500. Question 100 of 10