IA Test 2

Question 1

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 1 of 100

Answer 1

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 1 of 100

Question 2

In computing Business Interruption Losses which of the following is the most important?

Answer Choices:	Select the Correct Answer
Accounts receivables	
Accounts Payable	
Journals and Ledgers	
Profit and Loss Statement	

Question 2 of 100

Answer 2

Your answer: Profit and Loss Statement is correct.

EXPLANATION:
The profit and loss statements are the must important documents to reconstruct a loss of income loss.

Question 2 of 100

Question 3

The insured’s business is covered under a jewelers block policy. The owner’s wife decides to wear an expensive piece of jewelry to a party that is for sale by the business. In case of a loss, what will the insurer do?

Answer Choices: Select the Correct Answer
Deny the claim because of an exclusion
Pay the claim
Pay 50% of the claim
Require evidence that she was modeling the jewelry

Question 3 of 100

Answer 3

The correct answer is: Deny the claim because of an exclusion.

EXPLANATION:
One of the exclusions in the form is to exclude coverage while stock is being worn by the insured, an employee or a family member of either.

Question 3 of 100

Question 4

Under the DP-2 broad form, which of the following losses would not be covered?

Answer Choices: Select the Correct Answer
Damage to the dwelling that is suddenly caused by wild animals.
A picture window is blown out during a tornado.
Vandalism damage caused by a prankster to a dwelling that has been vacant for 14 days.
A roof caves in due to the weight of ice and snow.

Question 4 of 100

Answer 4

Under the DP-2 broad form, which of the following losses would not be covered?

Your answer: Damage to the dwelling that is suddenly caused by wild animals. is correct.

EXPLANATION:
The broad form is a named peril form and does not list damage caused by wild animals as a covered peril.

Question 4 of 100

Question 5

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 5 of 100

Answer 5

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 5 of 100

Question 6

Which of the following may cancel a Commercial Package Policy?

Answer Choices: Select the Correct Answer
The first named insured
Any named insured
The agent of record
None of the responses listed are correct

Question 6 of 100

Answer 6

Your answer: The first named insured is correct.

EXPLANATION:
The first named insured as well as the insurer may cancel a Commercial Package Policy.

Question 6 of 100

Question 7

Betty Jones claims that the bicycle manufactured last year by Daryl Lanier’s firm was the cause of her daughter’s accident. Which of the following coverages would have provided protection for Mr. Lanier?

Answer Choices: Select the Correct Answer
Commercial General Liability
Owners and Contractors Protective Liability
Workers Compensation
Contractual Liability

Question 7 of 100

Answer 7

Your answer: Contractual Liability is incorrect. The correct answer is: Commercial General Liability.

EXPLANATION:
Commercial General Liability policies include products liability coverage. The other policies mentioned cannot include this coverage.

Question 7 of 100

Question 8

Under the standard ISO Farm insurance Special Cause of Loss form, coverage for vandalism or breakage of glass is excluded if the premises has been vacant for _____ days or more.

Answer Choices:	Select the Correct Answer
45	
15	
60	
30	

Question 8 of 100

Answer 8

Your answer: 60 is correct.

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

Question 8 of 100

Question 9

The limit of liability for “business personal property” will be automatically increased by ______ to provide for seasonal variation under a standard ISO Businessowners policy.

Answer Choices: Select the Correct Answer
25%
The current rate of inflation
8%
15% unless a different percentage amount is shown on the Declarations page.

Question 9 of 100

Answer 9

The correct answer is: 25%.

EXPLANATION:
The business personal property will increase by 25% to provide coverage for seasonal variations in stock but only if the insured had insured the property for at least 100% of its monthly average over the last 12 months.

Question 9 of 100

Question 10

If an adjusting firm intends to add a new branch office, what action must be taken?

Answer Choices: Select the Correct Answer
Report the new location to the Commissioner immediately
Report the new location within 30 days
Must first obtain a branch office certificate
No action needs to be taken

Question 10 of 100

Answer 10

The correct answer is: Must first obtain a branch office certificate.

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

Question 10 of 100

Question 11

Amelia has suffered a covered collision loss to her vehicle. The insurer requires that her vehicle be repaired at a repair shop of the insurer’s choice. The insurer:

Answer Choices: Select the Correct Answer
Is guilty of an unfair claims practice act.
Can make this request.
Waives the deductible, if any, in this case.
Can usually get the work done for less and can help to reduce insurance costs.

Question 11 of 100

Answer 11

Your answer: Is guilty of an unfair claims practice act. is correct.

EXPLANATION:
The insurer can recommend a repair shop, but cannot require that a particular shop be used.

Question 11 of 100

Question 12

Which of the following is the definition of “person” according to the California Adjuster Act?

Answer Choices: Select the Correct Answer
Any individual, firm, company, association, organization, partnership, limited liability company, and corporation.
The individual under whose direction, control, charge, or management of the business of a licensee is operated.
A person licensed under the insurance laws of the state of California.
An attorney who is an active member of the State Bar of California.

Question 12 of 100

Answer 12

Your answer: Any individual, firm, company, association, organization, partnership, limited liability company, and corporation. is correct.

EXPLANATION:
According to the California Insurance Code, a “person” is defined as: “Any individual, firm, company, association, organization, partnership, limited liability company, and corporation.”

Question 12 of 100

Question 13

Robert boards his dog at a kennel while he is on vacation. While at the kennel, the dog bites a meter reader. How would Robert’s HO-3 policy respond to the meter reader’s request for repayment of his emergency room costs?

Answer Choices: Select the Correct Answer
The insurer will pay for necessary emergency room expenses under the Medical Payments to Others provision.
The insurer will pay for the emergency room fees only if Robert is found negligent in leaving his dog at the kennel.
The insurer will not pay for the loss because the injuries occurred away from the insured location.
The insurer will not pay for the loss because it arose out of the kennel owner’s failure to render professional services.

Question 13 of 100

Answer 13

The correct answer is: The insurer will pay for necessary emergency room expenses under the Medical Payments to Others provision..

EXPLANATION:
The policy stipulates that “Medical Payments to Others” applies if caused by an animal owned or in the care of the insured either on or off the insured’s premises. This could also develop into a liability claim if the insured is brought into a law suit.

Question 14

Which of the following statements about “additional coverages” in most property insurance policies is true?

Answer Choices: Select the Correct Answer
They are automatically included only when the loss is less than a deductible.
They are optional on the part of the insured.
They are included at no extra cost.
They are included for a minimum premium.

Question 14 of 100

Answer 14

Your answer: They are included at no extra cost. is correct.

EXPLANATION:
An example of an “additional coverage” would be debris removal, which is automatically included in most property forms.

Question 14 of 100

Question 15

Trevor purchases a condemned house in a run-down neighborhood that is scheduled for demolition by the city. He paid $10,000 for the house and wants to protect his financial investment by purchasing insurance. Which of the following statements is true?

Answer Choices: Select the Correct Answer
The property is not insurable because it is not definable.
The property is not insurable because the loss is expected.
The property is not insurable because it does not have a quantifiable value.
The property is not insurable because the loss would not be substantial.

Question 15 of 100

Answer 15

Your answer: The property is not insurable because the loss is expected. is correct.

EXPLANATION:
A property scheduled to be demolished is an expected loss and losses must be uncertain or not expected in order to be insurable.

Question 15 of 100

Question 16

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 16 of 100

Answer 16

he 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 16 of 100

Question 17

Which of the following would NOT be covered by a flood insurance policy?

Answer Choices: Select the Correct Answer
Overflow of water from a pond on the insured property
Mudslides from recent heavy rain.
Collapse of land along the shore of a body of water
Inundation and overflow of surface waters

Question 17 of 100

Answer 17

The correct answer is: Mudslides from recent heavy rain..

EXPLANATION:
Damage caused by mudflow is covered under the policy. Mudslides are not.

Question 17 of 100

Submit

Question 18

When a claimant is represented by an attorney, which of the following is prohibited by the adjuster?

Answer Choices: Select the Correct Answer
Negotiate with a claimant’s attorney
Make a claim check payable to the claimant
Contact the claimant without the consent of the attorney
Have an attorney prepare a release

Question 18 of 100

Answer 18

Your answer: Contact the claimant without the consent of the attorney is correct.

EXPLANATION:
Once a claimant has hired an attorney, the adjuster may not contact the claimant directly without the consent of the attorney.

Question 18 of 100

Question 19

Which of the following watercraft would be covered under the liability section (Section II) of the HO form?

Answer Choices: Select the Correct Answer
Watercraft with a 40 horsepower outboard motor
A 28 foot sailboat
A kayak
Watercraft with a 100 horsepower inboard motor

Question 19 of 100

Answer 19

The correct answer is: A kayak.

EXPLANATION:
A kayak would be covered with no endorsement or additional premium under Section II of a homeowner policy.

Question 19 of 100

Question 20

Motels insured under an ISO Businessowners may not exceed how many stories?

Answer Choices:	Select the Correct Answer
3 stories	
4 stories	
5 stories	
No limit	

Question 20 of 100

Answer 20

Your answer: 3 stories is correct.

EXPLANATION:
Motels not exceeding three stories may be insured. There is no floor area restriction. Motels closed for more than 30 days are not eligible.

Question 20 of 100

Question 21

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 21 of 100

Answer 21

The correct answer is: Within 6 business days after receiving the notice of claim..

EXPLANATION:
The California Fair Claims Settlement Practices Regulations state that if an insurer chooses to exercise its right to inspect the damaged vehicle on a first-party claim, it must do so within 6 business days of receiving the claims notice.

Question 21 of 100

Question 22

All of the following would be considered “property damage”, EXCEPT:

Answer Choices: Select the Correct Answer
Mobile equipment damaged by the insured.
A pedestrian injured by the insured and off work one week.
Damage to a public sidewalk caused by the insured.
Loss of the use of a public sidewalk which has been damaged by the insured.

Question 22 of 100

Answer 22

The correct answer is: A pedestrian injured by the insured and off work one week..

EXPLANATION:
The injury to the pedestrian is considered to be bodily injury. All of the other choices are considered to be property damage.

Question 22 of 100

Question 23

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 23 of 100

Answer 23

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 23 of 100

Question 24

Basic benefits available under a typical workers compensation policy include which of the following?

I. Medical expenses.
II. Loss of income.
III. Rehabilitation.
IV. Pain and suffering.

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

Question 24 of 100

Answer 24

The correct answer is: I, II, and III only. .

EXPLANATION:
Workers compensation indemnifies an injured or ill worker for direct expenses resulting from the cause with rehabilitation provided to encourage a worker to return to productivity. It does not pay for intangible losses such as paid and suffering.

Question 24 of 100

Question 25

In lieu of suspending or revoking a license, the Commissioner may impose of civil penalty of:

Answer Choices:	Select the Correct Answer
$500.	
$2,500.	
$1,000.	
$5,000.	

Question 25 of 100

Answer 25

Your answer: $5,000. is incorrect. The correct answer is: $500..

EXPLANATION:
The Commissioner, in lieu of suspending or revoking a license, may impose a civil penalty not to exceed $500 upon a licensee.

Question 25 of 100

Question 26

In a liability situation, “proximate cause” includes what important feature?

Answer Choices: Select the Correct Answer
An unbroken chain of events must lead to the bodily injury or property damage.
The cause of the loss must be proven as negligent.
The indirect cause of loss must be proven before the proximate cause can be proven.
An intervening cause of loss must have broken the chain of events for the proximate cause of the loss to be proven.

Question 26 of 100

Answer 26

Your answer: An unbroken chain of events must lead to the bodily injury or property damage. is correct.

EXPLANATION:
There must be an unbroken link or chain of events between the occurrence and the bodily injury or property damage.

Question 26 of 100

Question 27

Which party has the right to request information about a claim at any time?

Answer Choices:	Select the Correct Answer
The California Department of Insurance	
The plaintiff’s attorney	
Law enforcement	
The agent	

Question 27 of 100

Answer 27

The correct answer is: The California Department of Insurance .

EXPLANATION:
Only the California Department of Insurance (CDI) has the absolute right to request and be provided any claim information at any time. A plaintiff’s attorney may subpoena such information, but it may be considered private information. Law enforcement would also need a subpoena for claim information.

Question 27 of 100

Question 28

Which of the following is the meaning of a “time element” loss?

Answer Choices: Select the Correct Answer
Incurred losses such as loss of rents
Amount of time allowed resolving a claim
Specific time and date that the loss occurred
Policy effective date versus date of loss

Question 28 of 100

Answer 28

The correct answer is: Incurred losses such as loss of rents.

EXPLANATION:
Time element losses provide coverage for loss of income (e.g. loss of rental income or loss of income from a business) where there is an element of time to restore the premise to its original condition before the loss.

Question 28 of 100

Question 29

Garagekeepers specified causes of loss coverage would apply to each of the following, EXCEPT:

Answer Choices:	Select the Correct Answer
Fire.	
Vandalism.	
Theft.	
Windstorm.	

Question 29 of 100

Answer 29

Your answer: Theft. is incorrect. The correct answer is: Windstorm..

EXPLANATION:
Specified causes of loss are named peril coverage for physical damage and are not nearly as broad as comprehensive coverage. Windstorm happens to not be one of the named perils.

Question 29 of 100

Question 30

Which of the following is covered under Coverage A of the HO-2?

Answer Choices: Select the Correct Answer
Paint to be used on the building
Riding lawnmower used to service the premises
A detached fence
Grave marker

Question 30 of 100

Answer 30

Your answer: Paint to be used on the building is correct.

EXPLANATION:
The paint used for the building would be covered under the building limit under Coverages A and B (other structures). The mower is personal property covered under Coverage C. A detached fence is considered to be a separate structure and is covered under Coverage B. Grave markers have a separate limit in the policy for $5,000.

Question 30 of 100

Question 31

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 31 of 100

Answer 31

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 31 of 100

Question 32

A dry cleaner wants to insure the pressure boilers used in the business. They also would like to cover some equipment and accessories that can be used in the boilers but have not yet been installed. Which of the following, if any, can be used to cover this exposure?

Answer Choices:	Select the Correct Answer
Expediting Expense Coverage	
Extra Expense Coverage	
Ordinance and Law Coverage	
Spare Parts and Equipment Coverage	

Question 32 of 100

Answer 32

Your answer: Spare Parts and Equipment Coverage is correct.

EXPLANATION:
The Spare Parts and Equipment Endorsement can be used to schedule the value of this extra equipment and accessories.

Question 32 of 100

Question 33

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 33 of 100

Answer 33

Your answer: It provides coverage for all perils, unless that peril is specifically excluded. is correct.

EXPLANATION:
On a “named peril” cause of loss form, the covered perils are named or specified. If the peril is not listed, then coverage does not apply. Conversely, on an “open peril” cause of loss form, ALL perils are covered unless the peril(s) is/are specifically excluded. “Open peril” cause of loss forms contain more exclusions than named peril forms for obvious reasons.

Question 33 of 100

Question 34

What costs are paid under an Umbrella policy?

Answer Choices: Select the Correct Answer
The policy limit and any defense costs minus any applicable retained limit (deductible).
The policy limit that includes the defense costs.
The policy limit minus any retained limit (deductible).
Only the required underlying limits and the defense costs.

Question 34 of 100

Answer 34

Your answer: The policy limit and any defense costs minus any applicable retained limit (deductible). is correct.

EXPLANATION:
The Umbrella policy, like most liability policies, pays up to the limit of liability for covered claims. In addition, it pays defense costs incurred by the company in the defense of the insured. When the underlying coverage does not cover a claim and the Umbrella policy DOES cover the claim there is usually a retained limit, otherwise known as a deductible, that the insured must pay.

Question 34 of 100

Question 35

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 35 of 100

Answer 35

The correct answer is: Replacement Cost.

EXPLANATION:
The RCBAP settles losses on a replacement cost basis.

Question 35 of 100

Question 36

An employer has been accused of negligently causing an employee to be injured on the job because of failure to repair a safety device on a machine.. What coverage would apply to any legal action brought against the employer by the injured employee?

Answer Choices:	Select the Correct Answer
Employer's liability.	
Workers compensation coverage.	
Personal liability coverage.	
Commercial umbrella coverage.	

Question 36 of 100

Answer 36

The correct answer is: Employer’s liability. .

EXPLANATION:
Usually workers compensation coverage is the exclusive and only right for recovery. In cases of intentional injury caused by the employer, a civil suit can be made against the employer. The employer would have to rely on “employer’s liability” coverage for defense coverage as well as a judgment against the employer. This is Part II of the workers compensation coverage.

Question 36 of 100

Question 37

In a commercial crime coverage form with the computer fraud coverage, which of the following would be covered?

Answer Choices: Select the Correct Answer
Fraudulent instructions to a financial institution to pay money from a customer’s transfer account
Computer virus
Employee dishonesty
Theft of the computer

Question 37 of 100

Answer 37

The correct answer is: Fraudulent instructions to a financial institution to pay money from a customer’s transfer account.

EXPLANATION:
Computer fraud coverage covers loss or damage to money, securities and other property due to the use of a computer to fraudulently transfer that property from inside the premises or banking premises to a place or person (other than a messenger) outside the premises.

Question 37 of 100

Question 38

The chief deputy of the county auditor steals $2.5 million from the county and gambles it away. What bond if any would the county need to have in place in order to try and recoup this loss?

Answer Choices:	Select the Correct Answer
Employee dishonesty	
Blanket Public Official Bond	
Fiduciary bond	
Extortion-Commercial entities	

Question 38 of 100

Answer 38

Your answer: Employee dishonesty is incorrect. The correct answer is: Blanket Public Official Bond.

EXPLANATION:
The county as the Obligee, would need to make claim to the surety issuing the Public Official Bond on behalf of the auditor, the principal.

Question 38 of 100

Question 39

Commercial glass coverage will not pay for damages caused by:

Answer Choices:	Select the Correct Answer
Vehicles	
Vandalism or malicious mischief	
Riot	
War	

Question 39 of 100

Answer 39

Your answer: War is correct.

EXPLANATION:
Damage as a result of war is excluded.

Question 39 of 100

Question 40

Coverage for goods in transit is usually provided by which of the following types of insurance?

Answer Choices:	Select the Correct Answer
Inland Marine	
Casualty	
Surety	
Automobile	

Question 40 of 100

Answer 40

Your answer: Inland Marine is correct.

EXPLANATION:
There are various types of transit coverage provided by inland marine insurance. None of the other forms mentioned would provide physical damage to cargo.

Question 40 of 100

Question 41

If there were other existing insurance, coverage under crime insurance would be:

Answer Choices:	Select the Correct Answer
Primary	
Pro rated	
Excess	
Excluded	

Question 41 of 100

Answer 41

Your answer: Excess is incorrect. The correct answer is: Pro rated.

EXPLANATION:
Crime insurance has the “other insurance clause” which states that the coverage would be pro-rated between the other insurance coverage if the other insurance is subject to the same terms and conditions. The insurer will only pay its share of the loss.

Question 41 of 100

Question 42

QUESTION:
Which of the following scenarios would fall under the scope of the “Products Liability” section of a CGL policy?

Answer Choices: Select the Correct Answer
A visitor to a business steps on a nail.
A driver for Maid-Your-Day cleaning services causes an accident when she runs a stop sign.
An exercise machine snaps a belt, injuring a consumer in a sporting good store.
A team of contractor’s employees install a toilet in the wrong area of a bathroom.

Question 42 of 100

Answer 42

Your answer: An exercise machine snaps a belt, injuring a consumer in a sporting good store. is correct.

EXPLANATION:
Product liability covers injuries or damage caused by a faulty product. The exercise machine is faulty. The other three choices have nothing to do with a faulty product.

Question 42 of 100

Question 43

Paul had his roof inspected by a local contractor, after a strong storm with high winds and hail, passed through his neighborhood. The contractor found damage to the roof and gave Paul an estimate of $9,850 to replace it. Paul filed a claim with his insurance company, and the company promptly sent an adjuster to inspect the roof. The adjuster’s estimate to repair the roof came to $9,650. How will the adjuster likely attempt to settle this claim?

Answer Choices: Select the Correct Answer
Negotiate the claim in an attempt to persuade Paul to agree to the lesser amount.
Let the claim go to court because it is non-negotiable.
Accept the estimate of Paul’s contractor, because the difference between the two amounts is small enough to settle in Paul’s favor.
Reject the claim because the amount of the adjuster’s estimate is the limit that the insurer will pay.

Question 43 of 100

Answer 43

Your answer: Negotiate the claim in an attempt to persuade Paul to agree to the lesser amount. is correct.

EXPLANATION:
Even though the difference in the two amounts is small, it is the responsibility of an adjuster to negotiate the settlement, keeping in mind their fiduciary responsibilities to the insurer.

Question 43 of 100

Question 44

Which of the following losses is NOT excluded under the Physical Damage coverage of a personal auto policy?

Answer Choices: Select the Correct Answer
Damage to a covered auto while being used as part of a car pool.
Damage to equipment designed for the detection of radar.
Loss caused by freezing of the cooling system.
Loss of custom furnishings in a customized van.

Question 44 of 100

Answer 44

Your answer: Damage to a covered auto while being used as part of a car pool. is correct.

EXPLANATION:
An exception is made in the policy to allow coverage while the vehicle is involved in a car pool. Coverage is excluded if the vehicle is used as a livery. The other three choices are excluded. Coverage for the custom furnishings in a van must be added by endorsement.

Question 44 of 100

Question 45

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 45 of 100

Answer 45

Your answer: II only is correct.

EXPLANATION:
In cases of litigation it is the court/jury/judge that determines legal liability.

Question 45 of 100

Question 46

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

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

Question 46 of 100

Answer 46

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

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

Question 46 of 100

Question 47

All the following statements are true regarding earthquake insurance under residential property coverage in California, EXCEPT:

Answer Choices: Select the Correct Answer
Earthquake insurance must be offered with any new policy, or policy renewal.
The offer of earthquake insurance may be made by mail or electronically.
A separate earthquake policy must be issued; an endorsement is not permitted.
The offer may be made prior to, concurrent with, or within 60 days following the policy effective date.

Question 47 of 100

Answer 47

The correct answer is: A separate earthquake policy must be issued; an endorsement is not permitted..

EXPLANATION:
According to the California Insurance Code (CIC 10081), earthquake coverage may be provided in the policy of residential property insurance itself, either by specific policy provision or endorsement, or in a separate policy or certificate of insurance which specifically provides coverage for loss or damage caused by the peril of earthquake alone or in combination with other perils.

Question 47 of 100

Question 48

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 48 of 100

Answer 48

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 48 of 100

Question 49

Which of the following best describes an “occurrence?”

Answer Choices: Select the Correct Answer
A sudden and unforeseen event.
Two or more sudden and unforeseen events.
An accident including a continuous or repeated exposure to the same general harmful conditions.
All of the events that have resulted in a claim from a single insured.

Question 49 of 100

Answer 49

The correct answer is: An accident including a continuous or repeated exposure to the same general harmful conditions..

EXPLANATION:
An “occurrence” can be considered a sudden and unforeseen event or a repeated or continuous exposure to the same event.

Question 49 of 100

Question 50

The California Insurance Code (CIC) further details the items required on a valid insurance contract. All of the following are required, EXCEPT:

Answer Choices:	Select the Correct Answer
The parties to the contract.	
The insured's mailing address.	
The objects of insurance.	
The policy period.	

Question 50 of 100

Answer 50

The correct answer is: The insured’s mailing address..

EXPLANATION:
The California Insurance Code (CIC) requires six specific items of information be included in an insurance policy issued in California. The insured’s mailing address is not one of them.

Question 50 of 100

Question 51

What is the limit of insurance that applies to “property in transit” under the ISO standard BOP policy?

Answer Choices:	Select the Correct Answer
$1,000	
$2,500	
$5,000	
$10,000	

Question 51 of 100

Answer 51

The correct answer is: $10,000 .

EXPLANATION:
The BOP provides a $10,000 limit for property in transit as an extension of coverage. Extensions of coverage are provided by the BOP policy, but ONLY IF the insured complied with the coinsurance clause.

Question 51 of 100

Question 52

What insurers must participate in accepting business under the California FAIR Plan?

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

Question 52 of 100

Answer 52

The correct answer is: All insurers licensed to write basic property insurance or any component of property insurance in multi-peril policies..

EXPLANATION:
The purpose of the FAIR Plan is designed to provide a market for those property owners who are unable to obtain insurance through the normal market. Therefore, the California legislature enacted legislation requiring the participation of admitted insurers licensed to write property insurance to participate.

Question 52 of 100

Question 53

When an insured suffers a property loss, he or she is obligated by the terms of the policy to do all of the following, EXCEPT:

Answer Choices: Select the Correct Answer
Separate the damaged from the undamaged property.
Mitigate the loss.
Produce books and records relevant to the claim.
Hire a public adjuster to represent them in the claims process.

Question 53 of 100

Answer 53

Your answer: Hire a public adjuster to represent them in the claims process. is correct.

EXPLANATION:
The insured is not obligated to employ a ‘public adjuster” to assist in the claim against the insurance company. It is an option on the part of the insured.

Question 53 of 100

Question 54

What is generally excluded on the Condominium commercial unit-owners form?

Answer Choices: Select the Correct Answer
The improvements and betterments of the unit owner
Hostile Fire damage
Building coverage
Inside appliances and fixtures

Question 54 of 100

Answer 54

Your answer: Building coverage is correct.

EXPLANATION:
Coverage for the building is generally excluded for the unit-owners form as that should be covered on the Condominium association form.

Question 54 of 100

Question 55

A California Homeowners policy may be cancelled for non-payment of premium, provided the insurance company provides the insured with a _____ notice.

Answer Choices:	Select the Correct Answer
30-day	
20-day	
25-day	
10-day	

Question 55 of 100

Answer 55

Your answer: 30-day is incorrect. The correct answer is: 10-day.

EXPLANATION:
A Homeowners policy may be cancelled in California for non-payment of premium if the insurance company provides at least a 10-day notice to the insured.

Question 55 of 100

Question 56

Tom Newman is the sole owner of his small corporation. He purchases an auto in the company name but also has to sign for the loan on the car personally. He does not have a personal auto policy. Which of the following would be necessary to cover Tom personally if sued in a lawsuit while driving the company car?

Answer Choices:	Select the Correct Answer
Drive Other Car Coverage	
Individual Named Insured	
Employee as Insureds	
None of the responses apply	

Question 56 of 100

Answer 56

The correct answer is: Individual Named Insured.

EXPLANATION:
The “individual named insured” endorsement (CA 99 17) would be needed to cover Tom personally in a lawsuit brought by the injured party when Tom was driving the company car.

Question 56 of 100

Question 57

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 57 of 100

Answer 57

The correct answer is: Pay the property damage and rental car expense and settle the bodily injury at a later time..

EXPLANATION:
In this case the adjuster should pay for the parts of the claim where he can easily determine its value. He sould seek a partial release for these items. He can then settle the bodily injury claim and get a release at a later time.

Question 57 of 100

Question 58

The fee for a duplicate copy of an insurance adjuster’s license in California is:

Answer Choices:	Select the Correct Answer
$7	
$12	
$5	
$10	

Question 58 of 100

Answer 58

The correct answer is: $10.

EXPLANATION:
The fee for a duplicate copy of an insurance adjuster’s license is $10 (CCR 2691.23)

Question 58 of 100

Question 59

The minimum liability amount per occurrence for bodily injury and property damage claims available under the BOP is:

Answer Choices:	Select the Correct Answer
$500,000	
$1,000,000	
$100,000	
$300,000	

Question 59 of 100

Answer 59

Your answer: $100,000 is incorrect. The correct answer is: $300,000.

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

Question 59 of 100

Question 60

Medical payments coverage under the Farmowners policy covers which of the following?

Answer Choices: Select the Correct Answer
Injuries sustained by an invitee.
Injuries sustained by a farm employee.
Injuries sustained by the insured.
Injuries sustained by a tenant living in the insured’s dwelling.

Question 60 of 100

Answer 60

The correct answer is: Injuries sustained by an invitee..

EXPLANATION:
Medical payments would pay for the injuries sustained by an invitee or guest. Coverage does not apply to members of the insured’s family, roomers or boarders or tenants of the dwelling, or to farm employees.

Question 60 of 100

Question 61

A commercial umbrella liability policy with a supplemental reporting period extends the period for reporting claims to:

Answer Choices: Select the Correct Answer
A period specified in the policy.
60 days following expiration of the policy.
Five years or inception of a new policy, whichever comes first.
An unlimited period following expiration of the policy.

Question 61 of 100

Answer 61

The correct answer is: An unlimited period following expiration of the policy. .

EXPLANATION:
When this option is purchased, coverage is provided for “claims made” for an unlimited period following the expiration date of the policy. The damages must have occurred before the expiration date of the policy.

Question 61 of 100

Question 62

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 62 of 100

Answer 62

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 62 of 100

Question 63

An insured travels to Europe and has her fur coat stolen. The fur is worth $1,000. She is insured under an HO-4 contents policy. What will be paid by the insurer?

Answer Choices: Select the Correct Answer
$1,000 less the deductible
Nothing because the property is out of the US
$500
Furs are excluded for theft coverage

Question 63 of 100

Answer 63

Your answer: $1,000 less the deductible is correct.

EXPLANATION:
Personal property is covered on a worldwide basis. Theft is an insured peril. The value of the fur falls within the theft limitation for furs. Therefore, the loss will be paid less the deductible.

Question 63 of 100

Question 64

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 64 of 100

Answer 64

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 64 of 100

Question 65

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 65 of 100

Answer 65

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 65 of 100

Question 66

The insured carries a Loss Sustained Policy Form. An employee has been stealing for years, unknown to the insured. The bond has been cancelled and the insured discovers the loss 11 months afterwards. What will the insurance company do?

Answer Choices:	Select the Correct Answer
Deny the claim	
Pay the claim	
Pay a portion of the claim	
Send a reservation of rights letter	

Question 66 of 100

Answer 66

Your answer: Pay the claim is correct.

EXPLANATION:
The Loss Sustained Policy Form has a one-year discovery period after the policy has expired or been terminated. The loss was discovered within that time frame and would be covered since the loss actually occurred during the policy period.

Question 66 of 100

Question 67

Which of the following would qualify for a homeowner policy?

Answer Choices: Select the Correct Answer
A seasonal dwelling (not the prime residence premises)
A rental dwelling
The insured’s primary dwelling
All are eligible properties

Question 67 of 100

Answer 67

The correct answer is: The insured’s primary dwelling.

EXPLANATION:
The homeowner policy is designed for owner occupied property and also the primary residence. Once coverage is in place on the residence premises, many companies will cover a seasonal dwelling if it meets their underwriting standards. A dwelling under construction by the insured can be covered but not for someone else to occupy. A rental dwelling would be covered under a dwelling policy and not a homeowner policy.

Question 67 of 100

Question 68

Garagekeeper’s coverage excludes all of the following losses, EXCEPT:

Answer Choices: Select the Correct Answer
Loss to a high-value audio system permanently installed in a covered auto.
Loss to CDs from a covered auto.
Faulty work performed by a mechanic.
Theft of equipment from a covered auto by a garage employee.

Question 68 of 100

Answer 68

The correct answer is: Loss to a high-value audio system permanently installed in a covered auto. .

EXPLANATION:
Garagekeeper’s coverage is added to the Garage Liability policy. Its only purpose is to provide physical damage coverage to customers’ vehicles left at the garage site. It basically covers collision and comprehensive type claims. The garage is acting as a bailee and by law, is required to exercise more than reasonable care. Theft by employees can only be covered by a fidelity bond. The audio system is permanently installed, therefore it is consider to be part of the vehicle. The other choices are all excluded.

Question 68 of 100

Question 69

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 69 of 100

Answer 69

Your answer: Protection and Indemnity is correct.

EXPLANATION:
Coverage would be obtained by purchasing protection and indemnity coverage.

Question 69 of 100

Question 70

In ocean marine, what is covered by protection and indemnity coverage?

Answer Choices: Select the Correct Answer
All of the responses are correct.
Loss of life, injury and illness.
Crew member burial expense.
Damage to docks, buoys and other structures not owned, leased, or hired by the insured.

Question 70 of 100

Answer 70

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

EXPLANATION:
The protection and indemnity coverage applies to all of the responses.

Question 70 of 100

Question 71

The Equipment Breakdown policy (formerly called Boiler & Machinery) provides for replacement cost coverage in case of a covered claim. Under what conditions would the insurer only pay actual cash value in case of a loss?

Answer Choices: Select the Correct Answer
Only if the policy is endorsed to provide ACV coverage
The policy pays replacement only if the repairs are made within twenty four months of the accident.
The policy will pay replacement cost as long as the repairs are expedited regardless of a time limit.
The policy always provides replacement cost coverage in case of a covered claim.

Question 71 of 100

Answer 71

The correct answer is: The policy pays replacement only if the repairs are made within twenty four months of the accident. .

EXPLANATION:
The valuation clause provides for replacement cost coverage on all property, except if repair or replacement is not made within 24 months of the date of the accident, actual cash value will be paid. (The 2013 Equipment Breakdown forms increased this time limit from 18 months to 24 months.)

Question 71 of 100

Question 72

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 72 of 100

Answer 72

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 72 of 100

Question 73

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

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

Question 73 of 100Under the personal auto policy the “supplementary payments” coverage is:

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

Question 73 of 100

Answer 73

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

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

Question 73 of 100

Question 74

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 74 of 100

Answer 74

The correct answer is: Extra Expense Coverage.

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 74 of 100

Question 75

If an insured fails to report a claim in a timely fashion, the adjuster will immediately:

Answer Choices: Select the Correct Answer
Deny the claim.
Send the insured a reservation of rights letter.
Cease the claims investigation.
Seek the advice of the company’s attorney.

Question 75 of 100

Answer 75

Your answer: Send the insured a reservation of rights letter. is correct.

EXPLANATION:
Failure to report a claim in a timely fashion denies the insurer of the opportunity to promptly investigate the circumstances of the claim. Valuable information from witness could be lost, as well as other physical evidence. When this occurs, the insurer will normally send the insured a reservation letter to protect the rights of the insurer.

Question 75 of 100

Question 76

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 76 of 100

Answer 76

Your answer: A person must have maintained at least a “B” average in high school. is correct.

EXPLANATION:
To qualify for the discount, a driver does not have to be a student.

Question 76 of 100

Question 77

All of the following items may be covered by a Commercial Inland Marine policy, EXCEPT:

Answer Choices:	Select the Correct Answer
Transport vehicles.	
Radio towers.	
Bridges.	
Property being transported.	

Question 77 of 100

Answer 77

The correct answer is: Transport vehicles..

EXPLANATION:
“Instrumentalities of Transportation or Communication” are acceptable items to be covered under a Commercial Inland Marine policy and this would include a “transport vehicle”. The property being transported is also eligible for coverage. The vehicle transporting the items is covered under a Business Auto policy, not Commercial Inland Marine.

Question 77 of 100

Question 78

In commercial property coverage, the Utility Service - Time Element Coverage Endorsement covers loss due to the interruption of all of the following, EXCEPT:

Answer Choices:	Select the Correct Answer
Transportation.	
Power.	
Water.	
Communication.	

Question 78 of 100

Answer 78

Your answer: Transportation. is correct.

EXPLANATION:
Loss due to transportation is not a covered loss under this endorsement.

Question 78 of 100

Question 79

The Homeowners policy provides a special limit for Damage to Property of Others in the Section II (liability) Additional Coverages of:

Answer Choices:	Select the Correct Answer
$500.	
$250.	
$1,000.	
$2,000.	

Question 79 of 100

Answer 79

Your answer: $2,000. is incorrect. The correct answer is: $1,000..

EXPLANATION:
This coverage has been increased to $1,000.

Question 79 of 100

Question 80

An adjuster has procured a photograph of the scene of an accident on a claim that he/she is adjusting. This photograph is placed into the claims file as which of the following types of evidence?

Answer Choices:	Select the Correct Answer
Criminal	
Real	
Demonstrative	
Documentary	

Question 80 of 100

Answer 80

Your answer: Documentary is correct.

EXPLANATION:
Documentary evidence is any evidence that is produced in the form of a “document”. Most people think of written documentation, however a photograph or a video can be preserved therefore, they are considered to be documentary evidence.

Question 80 of 100

Question 81

Which of the following best describes the meaning of “contract of adhesion?”

Answer Choices: Select the Correct Answer
Since the insurance company formulates the policy contract, the courts will usually resolve any ambiguities in the insured’s favor.
The insurer should be able to rely on the insured’s representations about the risk and exposures.
Once the insurer has accepted the application from the applicant, it must issue the policy.
The insured’s premium payment is exchanged for the insurer’s promises to pay in the event of a covered loss.

Question 81 of 100

Answer 81

The correct answer is: Since the insurance company formulates the policy contract, the courts will usually resolve any ambiguities in the insured’s favor..

EXPLANATION:
The insurance company is the author of the contract and the insured must accept it “as is. Since there is unequal bargaining strength between the parties, any ambiguous language will bring a court decision in favor of the insured. With a contract of adhesion, one party has greater power over the other party in drafting the terms of the contract.

Question 81 of 100

Question 82

Coverage B-Personal and Advertising Injury Liability under the CGL will not cover:

Answer Choices: Select the Correct Answer
Intentional acts.
Unauthorized use of another’s name or product.
Pollution.
All of the answer choices are correct.

Question 82 of 100

Answer 82

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

EXPLANATION:
The CGL will not cover any of these incidents.

Question 82 of 100

Question 83

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 83 of 100

Answer 83

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 83 of 100

Question 84

Under the business auto policy, the endorsement used to protect the owner of a leased vehicle is:

Answer Choices:	Select the Correct Answer
Named Owner endorsement	
Employers Non Owned Auto	
Joint Ownership Endorsement	
Additional Insured – Lessor	

Question 84 of 100

Answer 84

The correct answer is: Additional Insured – Lessor.

EXPLANATION:
The actual owner of the leased vehicle needs to be listed as an additional insured on the lessee’s policy by using the Additional Insured—Lessor endorsement.

Question 84 of 100

Question 85

The forcible entry into locked premises and the carrying away of the property of others is a definition of:

Answer Choices:	Select the Correct Answer
Burglary.	
Theft.	
Robbery.	
Mysterious disappearance.	

Question 85 of 100

Answer 85

Your answer: Burglary. is correct.

EXPLANATION:
This is the definition of a burglary loss. In this instance there are signs of forced entry and that is required for burglary coverage to apply.

Question 85 of 100

Question 86

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 86 of 100

Answer 86

The correct answer is: I and II only..

EXPLANATION:
The “Additional Residence Rented to Others” endorsement provides personal liability (injury) and medical payments to others coverage to cover the insured’s liability arising out of the ownership of a residence regularly rented to others.

Question 86 of 100

Question 87

An independent adjuster acts on behalf of his or her principal. Which of the following is the principal for an independent adjuster?

Answer Choices:	Select the Correct Answer
The court.	
The lawyer.	
The insurer.	
The insured.	

Question 87 of 100

Answer 87

Your answer: The insurer. is correct.

EXPLANATION:
The “principal” for an independent adjuster is the insurer. Independent adjusters work on behalf of the insurance company against which, the claim is being made.

Question 87 of 100

Question 88

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 88 of 100

Answer 88

Your answer: Never is incorrect. The correct answer is: When authorized by the Commissioner to do so.

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 88 of 100

Question 89

Proceeds from a commercial property insurance policy can be assigned by:

Answer Choices: Select the Correct Answer
No one because assignment is forbidden by the policy
The policyholder
The mortgagee
The loss payee

Question 89 of 100

Answer 89

The correct answer is: The policyholder.

EXPLANATION:
This is not an “assignment of the policy” but simply a directive as to benefit disbursements.

Question 89 of 100

Question 90

All of the following are exclusions under Section I - Forms HO-2 and HO-3, EXCEPT:

Answer Choices:	Select the Correct Answer
Collapse.	
Water including flood.	
Power failure.	
Earth movement.	

Question 90 of 100

Answer 90

Your answer: Collapse. is correct.

EXPLANATION:
The HO-8 form does not include the peril of collapse. However, the broader forms HO-2 and HO-3 include collapse. The other 3 answers are excluded under all of the HO forms.

Question 90 of 100

Question 91

In a work-related injury, the loss of a finger would be characterized as what type of disability?

Answer Choices:	Select the Correct Answer
Permanent total	
Permanent partial	
Temporary total	
Temporary partial	

Question 91 of 100

Answer 91

The correct answer is: Permanent partial.

EXPLANATION:
Loss of a finger or limb is defined as a permanent partial injury, and this characterization is used for the establishment of disability benefits to the injured employee.

Question 91 of 100

Question 92

An insured has purchased “replacement cost coverage” endorsement for her personal property under an HO-3 homeowner policy. After the purchase of this endorsement, which of the following types of property would now be covered on a replacement cost basis that were previously covered only on an actual cash value basis?

Answer Choices:	Select the Correct Answer
Household appliances	
Carpeting	
Outdoor antennas	
All of the responses are correct	

Question 92 of 100

Answer 92

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

EXPLANATION:
This endorsement adds replacement cost coverage to all of these items whereas without this endorsement the property would be covered on an actual cash value basis. This endorsement eliminates the deduction for depreciation for these types of property.

Question 92 of 100

Question 93

In a homeowner policy the term “insured” would include all of the following, EXCEPT:

Answer Choices: Select the Correct Answer
All residents who are related to the named insured.
A legal representative of a deceased named insured.
A non-related tenant living in the insured residence.
A non-related minor being cared for by the named insured’s family.

Question 93 of 100

Answer 93

The correct answer is: A non-related tenant living in the insured residence..

EXPLANATION:
A tenant would have to purchase their own coverage. They may qualify for the HO-4 - a tenants homeowner policy.

Question 93 of 100

Question 94

Which of the following circumstances would NOT be covered under most state Workers Compensation laws?

Answer Choices: Select the Correct Answer
An employee was injured during a lunch break in the factory parking lot
A work-related accident occurred when the risk of injury was well known to the employee
An injury to an employee was caused by the carelessness of another worker
A workplace injury was caused by an employee’s own negligence

Question 94 of 100

Answer 94

The correct answer is: An employee was injured during a lunch break in the factory parking lot.

EXPLANATION:
Workers Compensation laws are designed to cover employees regardless of the hazards of the occupation, the training provided (or not), or who is at fault. However, an injury must arise “out of and in the course of” employment in order to fall within the scope of these laws. In most states an injury that occurred during a lunch break, regardless of its location, would not fall within the workers compensation law.

Question 94 of 100

Question 95

How is property covered under an unendorsed BOP form?

Answer Choices: Select the Correct Answer
Coverage is written on a named peril basis
Coverage is written on a broad peril form
Coverage is written on an open peril basis
Coverage is written on a basic peril bases

Question 95 of 100

Answer 95

How is property covered under an unendorsed BOP form?

Answer Choices: Select the Correct Answer
Coverage is written on a named peril basis
Coverage is written on a broad peril form
Coverage is written on an open peril basis
Coverage is written on a basic peril bases

Question 95 of 100

Question 96

What is the purpose of the California Fair Access to Insurance Requirements (FAIR) Plan?

Answer Choices: Select the Correct Answer
To guarantee low cost property insurance to residents of California.
To train agents in the solicitation and selling of property insurance.
To monitor property insurance rates throughout California.
To assure the availability of property insurance to those who are unable to obtain it through the normal insurance market.

Question 96 of 100

Answer 96

Your answer: To assure the availability of property insurance to those who are unable to obtain it through the normal insurance market. is correct.

EXPLANATION:
According to the California Insurance Code (CIC 10090), the purpose of the FAIR Plan is to assure availability of basic property insurance to those who cannot obtain coverage through the normal insurance market.

Question 96 of 100

Question 97

A building is being constructed and will cost $200,000 to complete. The amount of insurance equals $100,000 and there is a loss of $80,000. What percentage of the loss will be paid?

Answer Choices:	Select the Correct Answer
50%	
25%	
40%	
30%	

Question 97 of 100

Answer 97

Your answer: 50% is correct.

EXPLANATION:
The policy will pay 50% of the loss or $40,000. The insured should have carried $200,000 and only carried $100,000. Therefore, the insured is only entitled to receive 50% of the loss.

Question 97 of 100

Question 98

Which of the following is a significant purpose of a reporting form under the dealer’s physical damage coverage of a Garage policy?

Answer Choices: Select the Correct Answer
To deal with changing values of autos held for sale.
They increase the amount of time an insured has to report a claim.
To provide guidance to the insured in reporting garage claims.
To guard against theft at auto dealerships.

Question 98 of 100

Answer 98

The correct answer is: To deal with changing values of autos held for sale. .

EXPLANATION:
Reporting forms require insureds to periodically report values of autos the insured holds for sale, and premiums are charged accordingly. The reporting form takes into account the fluctuating inventory and provides the proper insurance amount to cover the risk at all times during the year.

Question 98 of 100

Question 99

A risk where both profit and loss are possible is known as:

Answer Choices:	Select the Correct Answer
Speculative.	
Fundamental.	
Pure.	
Dynamic.	

Question 99 of 100

Answer 99

Your answer: Dynamic. is incorrect. The correct answer is: Speculative. .

EXPLANATION:
Speculative risks involve the possibility of both gain and loss, such as investing in the stock market. Speculative risks are common to business.

Question 99 of 100

Question 100

Which of the following pollution losses would be covered by Garage policy liability coverage?

Answer Choices: Select the Correct Answer
Pollution of a stream caused by gasoline leaking from the ruptured fuel tank of a covered auto following a collision.
Escape of toxic sludge from a dump site used by the named insured to store waste produced in its garage operations.
The cost of a governmentally ordered clean-up of the pollution from a dump site used by the named insured.
None of the losses described would be covered.

Question 100 of 100

Answer 100

The correct answer is: Pollution of a stream caused by gasoline leaking from the ruptured fuel tank of a covered auto following a collision..

EXPLANATION:
The policy would provide pollution liability in the case of escaped fluids and fuels as a result of an accident. The other choices are excluded.

Question 100 of 100