IA Test 20

Question 1

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

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

Question 1 of 100

Answer 1

Your answer: 20 days is incorrect. The correct answer is: 60 days.

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

Question 1 of 100

Question 2

An insured carries a Personal Property Replacement Cost endorsement attached to his Homeowners policy. He has suffered a loss to his personal property. He submits a claim for actual cash value (ACV) at the time of the loss, but notifies the insurer that he intends to make a claim for replacement cost later. The insurer will honor the insured’s request, but only if the cost to repair or replace the property is:

Answer Choices:	Select the Correct Answer
More than $500.	
Less than $500.	
More than $1,000.	
Less than $5,000.	

Question 2 of 100

Answer 2

Your answer: More than $500. is correct.

EXPLANATION:
If the cost to repair or replace the property is more than $500, the insurer will pay the actual cash value for the loss, until the actual repair or replacement is made.

Question 2 of 100

Question 3

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 3 of 100

Answer 3

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 3 of 100

Question 4

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 4 of 100

Answer 4

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 4 of 100

Question 5

Under the Physical Damage portion of a Personal Auto Policy, if the insured’s car is stolen, transportation expenses will be provided after a waiting period of:

Answer Choices:	Select the Correct Answer
36 hours.	
12 hours.	
48 hours.	
24 hours.	

Question 5 of 100

Answer 5

Your answer: 48 hours. is correct.

EXPLANATION:
When the vehicle is stolen transportation expenses are not paid until a 48-hour waiting period has passed.

Question 5 of 100

Question 6

In an application for marine insurance, a yacht owner states that the yacht will only be sailed on inland waters. If the insured subsequently sails the yacht on the seas, coverage may be denied because the insured has breached:

Answer Choices:	Select the Correct Answer
A warranty.	
The Inchmaree clause.	
The policy clause.	
A representation.	

Question 6 of 100

Answer 6

Your answer: A representation. is incorrect. The correct answer is: A warranty. .

EXPLANATION:
In marine insurance, and more often in ocean marine, the statement made by the insured may be a guarantee that all the information is correct. Warranties are much more restrictive than representations. Incidentally, Inchmaree was the name of a ship that suffered an uncovered machinery loss.

Question 6 of 100

Question 7

What is the difference between replacement cost and actual cash value?

Answer Choices: Select the Correct Answer
Replacement cost does not make a deduction for depreciation, while actual cash value does.
Actual cash value is the amount one is willing to pay in cash for an item of property while replacement value equals market value.
They are substantially similar in the context of insurance policies.
Replacement cost takes market appreciation into account, while actual cash value does not.

Question 7 of 100

Answer 7

Your answer: Replacement cost does not make a deduction for depreciation, while actual cash value does. is correct.

EXPLANATION:
Actual cash value is defined as replacement cost less depreciation.

Question 7 of 100

Question 8

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 8 of 100

Answer 8

Your answer: When authorized by the Commissioner to do so is correct.

EXPLANATION:
No licensee may conduct a business under a fictitious or other business name unless and until he or she has obtained the written authorization of the Commissioner to do so.

Question 8 of 100

Question 9

Which of the following is not an HO policy form?

Answer Choices:	Select the Correct Answer
DP-1	
HO-4	
HO-6	
HO-8	

Question 9 of 100

Answer 9

Your answer: DP-1 is correct.

EXPLANATION:
The DP-1 form is a dwelling form.

Question 9 of 100

Question 10

A “full release settlement” when properly prepared, should include:

Answer Choices: Select the Correct Answer
The name of the attorney of record.
The name of the insurance company.
The names of the releasee and releasor.
The name of the adjuster resolving the claim.

Question 10 of 100

Answer 10

Your answer: The names of the releasee and releasor. is correct.

EXPLANATION:
Both the full legal names of the releasee and the releasor should be included in a release of all claims.

Question 10 of 100

Question 11

In crime insurance terminology, an officer of the company, having custody of insured property off the insured premises, is known as a/an:

Answer Choices:	Select the Correct Answer
Messenger.	
Custodian.	
Scheduled executive.	
Insured property executive.	

Question 11 of 100

Answer 11

Your answer: Messenger. is correct.

EXPLANATION:
A messenger means the named insured, any of the insured’s partners or employees, while having care and custody of the property outside the premises.

Question 11 of 100

Question 12

Joseph Jones purchased a new car stereo system from Dailey’s Auto Enhancements. Daily’s permanently installed the stereo system in Joseph’s car in an area of the dashboard not typically used by the automobile manufacturer for such installations. One week after installation, Joseph’s car was broken into and the stereo was stolen. Under Part D of the personal auto form, what would be the limit of coverage?

Answer Choices: Select the Correct Answer
$1,000
$1,200
$2,000
Because the stereo was not permanently installed in the location used by the auto manufacturer, the loss would not be covered.

Question 12 of 100

Answer 12

Your answer: Because the stereo was not permanently installed in the location used by the auto manufacturer, the loss would not be covered. is incorrect. The correct answer is: $1,000.

EXPLANATION:
The auto form provides for a limit of $1,000 for electronic equipment that reproduces, receives or transmits audio, visual or data signals that is permanently installed in an auto, but not in the location used by the auto manufacturer.

Question 12 of 100

Question 13

In California, which of the following is an untrue statement regarding the adjustment of a total auto physical damage loss?

Answer Choices: Select the Correct Answer
The insurer may elect a cash settlement that is based upon the actual cost of a “comparable automobile” less any deductible provided in the policy.
A cash settlement does not include sales taxes.
The cash settlement includes one-time fees incident to transfer of evidence of ownership of a comparable automobile.
The cash settlement must also include the license fee and other annual fees to be computed based upon the remaining term of the loss vehicle’s current registration.

Question 13 of 100

Answer 13

Your answer: The cash settlement must also include the license fee and other annual fees to be computed based upon the remaining term of the loss vehicle’s current registration. is incorrect. The correct answer is: A cash settlement does not include sales taxes..

EXPLANATION:
The cash settlement amount must include all applicable taxes, license fees and other one-time fees incident to transfer of evidence of ownership of a comparable automobile. This amount must also include the license fee and other annual fees to be computed based upon the remaining term of the loss vehicle’s current registration.

Question 13 of 100

Question 14

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 14 of 100

Answer 14

Your answer: The California Department of Insurance is correct.

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 14 of 100

Question 15

The Ordinance or Law Endorsement can be added to a Homeowners form to increase the amount of coverage in ______ increments, up to ______ coverage.

Answer Choices:	Select the Correct Answer
20% increments, up to 80% coverage.	
25% increments, up to 100% coverage.	
30% increments, up to 70% coverage.	
15% increments, up to 95% coverage.	

Question 15 of 100

Answer 15

Your answer: 25% increments, up to 100% coverage. is correct.

EXPLANATION:
Coverage for Ordinance or Law is already included on all Homeowners forms except the HO-8. The Ordinance or Law Endorsement can be attached to the form, increasing the coverage in 25% increments, up to 100% coverage.

Question 15 of 100

Question 16

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 16 of 100

Answer 16

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

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

Question 16 of 100

Question 17

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 17 of 100

Answer 17

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 17 of 100

Question 18

Commercial Property Insurance usually imposes a penalty if, at the time of loss, the insured failed to maintain a minimum amount of coverage. This penalty may apply because of the:

Answer Choices:	Select the Correct Answer
Coinsurance clause.	
Valuation clause.	
Deductible provision.	
Value policy law.	

Question 18 of 100

Answer 18

Your answer: Valuation clause. is incorrect. The correct answer is: Coinsurance clause. .

EXPLANATION:
Commercial property forms contain an 80% coinsurance clause. This means the insured must insure the property for 80% of its value or risk a penalty in case of a partial loss.

Question 18 of 100

Question 19

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 19 of 100

Answer 19

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 19 of 100

Question 20

Steve has removed the rear seat in the company car and installed stereo equipment and two speakers. The maximum the physical damage coverage will pay for damage to the items in an accident is:

Answer Choices: Select the Correct Answer
The actual cash value of the equipment since it is permanently installed in the car.
Nothing, because the equipment was not factory equipment.
$1,000 because the equipment was permanently installed in a place where the auto maker would normally not have it put it minus deductible.
$1,500 for the equipment but nothing for the labor to install it.

Question 20 of 100

Answer 20

Your answer: $1,000 because the equipment was permanently installed in a place where the auto maker would normally not have it put it minus deductible. is correct.

EXPLANATION:
For any electronic equipment that reproduces audio, video or data signals that are permanently installed in the auto in a place where the auto maker would not normally install is covered up to a total of $1,000 per loss.

Question 20 of 100

Question 21

An insured has a vacation home covered under a Dwelling policy and he would like to add coverage to his policy for Personal Liability and Medical Payments. The insured purchased a Personal Liability Supplement with the minimum limits for Coverage M - Medical Payments. How much coverage for medical payments will the insured have for each person?

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

Question 21 of 100

Answer 21

Your answer: $1,500. is incorrect. The correct answer is: $1,000..

EXPLANATION:
The coverage limit for Coverage M of the Personal Liability Supplement is $1,000 per person.

Question 21 of 100

Question 22

Which of the following statements is true regarding controlled forms?

Answer Choices: Select the Correct Answer
These forms are very flexible and can be manuscripted to meet the needs of individual insured’s.
These forms are always issued by state insurance departments.
Conditions and rates for these forms are determined solely on the basis of underwriting judgment.
These forms are usually issued according to published rules and rates.

Question 22 of 100

Answer 22

Your answer: These forms are usually issued according to published rules and rates. is correct.

EXPLANATION:
Controlled forms and their rates are filed for approval with the state insurance departments. They are usually issued according to published rules and rates. A jewelers block policy is an example.

Question 22 of 100

Question 23

A basic extended reporting period of a commercial umbrella liability policy can:

Answer Choices: Select the Correct Answer
Provide coverage to the insured for occurrences that happen after the policy expiration.
Provide coverage to the insured for claims reported after the policy expiration.
Increase the limits of liability.
Provide coverage to the insured for occurrences that happen and for claims reported after the policy expiration.

Question 23 of 100

Answer 23

Your answer: Provide coverage to the insured for claims reported after the policy expiration. is correct.

EXPLANATION:
The basic extended reporting period is part of the umbrella policy without additional premium. It is a provision that provides very limited coverage to the insured for claims reported after the policy expiration.

Question 23 of 100

Question 24

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 24 of 100

Answer 24

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

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 24 of 100

Question 25

A claims dispute where a disinterested third party who has decision making authority has been asked to intervene is known as: ``` Answer Choices: Select the Correct Answer Mediation Resolution Arbitration Settlement ``` Question 25 of 100

Answer 25

Your answer: Mediation is incorrect. The correct answer is: Arbitration. EXPLANATION: Arbitration involves a disinterested third party (the arbitrator) who helps to resolve a disputed claim. Question 25 of 100

Question 26

Which worker would be covered under Longshoreman's coverage? Answer Choices: Select the Correct Answer Injury to a worker loading a ship at the dock. Injury to a seaman who works on the ship out at sea. Injury sustained by a designer working for a beach and shoreline restoration firm. Injury to a truck driver in Long Island, NY. Question 26 of 100

Answer 26

Your answer: Injury to a worker loading a ship at the dock. is correct. EXPLANATION: Longshoreman's coverage applies to workers who load and unload, build and repair ships. Question 26 of 100

Question 27

Which of the following statements is correct? I. Both DP-2 and DP-3 settle losses to covered personal property at actual cash value (ACV). II. Both DP-2 and DP-3 settle partial losses to covered dwellings at replacement value in all situations. ``` Answer Choices: Select the Correct Answer I only II only Both I and II Neither I nor II ``` Question 27 of 100

Answer 27

Your answer: Both I and II is incorrect. The correct answer is: I only. EXPLANATION: Both DP-2 and DP-3 cover partial dwelling losses at replacement value only if adequate insurance to value is in force. (Adequate insurance to value must be 80% or more of the replacement cost value of the structures.) Question 27 of 100

Question 28

Tamika has her dwelling covered under an HO-8 form in California. She suffers damage to her dwelling by a covered peril. The limit of liability of her HO-8 policy is $60,000. Tamika hires a contractor to make the repairs to her dwelling using common or functionally equivalent materials. The cost of the materials used to repair the dwelling amount to $75,000. Three months following the loss, Tamika submits a claim to recoup the amount she spent to repair her dwelling. How much will her insurance company pay on this claim? ``` Answer Choices: Select the Correct Answer Actual Cash Value (ACV) $15,000 $75,000 $60,000 ``` Question 28 of 100

Answer 28

Your answer: $60,000 is correct. EXPLANATION: The standard HO-8 forms pays only ACV, however the California mandatory special provisions form requires the insurance company to pay the lesser of the limit of liability, or the necessary amount actually spent to repair or replace using common or functionally equivalent materials. Because the limit of liability under Tamika's HO-8 policy is $60,000, this is the total amount that the insurance company will pay. Question 28 of 100

Question 29

Which of the following is NOT excluded under Section II - Liability of the Businessowners policy? Answer Choices: Select the Correct Answer Aircraft, auto or watercraft bodily injury Professional services bodily injury Pollution property damage Valet services bodily injury Question 29 of 100

Answer 29

Your answer: Pollution property damage is incorrect. The correct answer is: Valet services bodily injury. EXPLANATION: Coverage is included for valet service bodily injury claims. However, the coverage only applies to the ways and means of the insured's premises that are owned or rented and not when the valet service is operating the vehicle on public roads. The vehicle must be one that is not owned, rented or loaned to the insured. Coverage is the same in the general liability form. Question 29 of 100

Question 30

Mark is injured at work in a state that provides a TTD benefit at 66 2/3%, the state minimum is $40 and the state maximum is $540. The waiting period is 3 days and the retroactive period is 15 day. Which of the following is Mark's TTD benefit if he earns $20 per hour and usually works a 40-hour week. Mark is injured on July 14th and does not return to work until September 3rd. Which of the following is the amount of TTD benefit he would have received? ``` Answer Choices: Select the Correct Answer $2,666.65 $3,696.00 $3,809.50. $4,266.64 ``` Question 30 of 100

Answer 30

Your answer: $4,266.64 is incorrect. The correct answer is: $3,809.50.. EXPLANATION: $20 X 40 - $800 (This is the average weekly wage). 66 2/3% X $800 = $533.33 (Still lower than the maximum). July 15th to September 2nd = 50 days, which is 7 weeks and one day (7 1/7th) weeks. The waiting period does not apply because the disability exceeded 15 days. 7 1/7 X $533.33 = $3,809.50. Question 30 of 100

Question 31

When an insured is fulfilling the duty of proving a loss by taking an inventory of the damaged property, who pays the expenses incurred by the insured? Answer Choices: Select the Correct Answer The insured. The insurer. The adjuster will provide funds to pay for these expenses. Who pays these expenses will be negotiated at the settlement of the claim. Question 31 of 100

Answer 31

Your answer: The insured. is correct. EXPLANATION: The insured is instructed to “keep a record of your expenses for emergency and temporary repairs, for consideration in the settlement of the claim.” Reasonable expenses paid by the insured to protect the property from further loss are the obligation of the insurer. Thus any other expenses incurred by the insured are NOT paid by the insurer and the insurer will only pay the "reasonable expenses" to protect the property if the insured maintains an inventory of expenses paid. Until that time, the insured is responsible for all expenses. Question 31 of 100

Question 32

The manager of an independent adjusting company in California leaves the business. The Department of Insurance requires notification of the manager's departure within: ``` Answer Choices: Select the Correct Answer 10 days 30 days 60 days At license renewal ``` Question 32 of 100

Answer 32

Your answer: 30 days is correct. EXPLANATION: The Insurance Department must be advised within 30 days. Question 32 of 100

Question 33

Under a Commercial Property Policy, what must the insured do to be covered for the peril of freezing? Answer Choices: Select the Correct Answer Maintain heat in the building or cut off the water and drain the lines. Install a freezing sensor. Inspect the water pipes on a regular basis. Contract with a plumbing company to maintain the system. Question 33 of 100

Answer 33

Your answer: Maintain heat in the building or cut off the water and drain the lines. is correct. EXPLANATION: The policy specifies that the insured must either maintain heat in the building or turn off the water and drain the water lines. Question 33 of 100

Question 34

All of the following are covered under the definition of money in commercial crime insurance, except: ``` Answer Choices: Select the Correct Answer Proof of debt. Money. Currency. Coins. ``` Question 34 of 100

Answer 34

Your answer: Proof of debt. is correct. EXPLANATION: Proof of debt is not covered under the definition of money. This could be covered under an inland marine Accounts Receivable form. Question 34 of 100

Question 35

The California Insurance Commissioner, in lieu of suspending or revoking a license issued to an independent adjuster for a violation, may impose which of the following? Answer Choices: Select the Correct Answer Jail sentence for up to six months $500 monetary penalty Both a $500 penalty and a jail sentence of up to six months $1,000 monetary penalty Question 35 of 100

Answer 35

Your answer: $500 monetary penalty is correct. EXPLANATION: The monetary penalty is $500, but no jail time. Question 35 of 100

Question 36

Which of the following watercraft losses are excluded under a homeowner policy? I. Theft off the residence premises II. Windstorm damage while the insured's boat is docked at the marina III. Fading of the canvas tarp which covers a boat IV. Earthquake damage ``` Answer Choices: Select the Correct Answer I and II only I, II, and IV only I, II, III, and IV I, II, and III only ``` Question 36 of 100

Answer 36

Your answer: I, II, III, and IV is correct. EXPLANATION: Homeowner policies have specific limits and exclusions applying to watercraft. Whereas earthquake damage to and fading of ANY property would be excluded (because fading is inevitable and not accidental)theft of watercraft off-premises and windstorm damage to a boat that is not in an enclosed building are specifically excluded. Question 36 of 100

Question 37

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 37 of 100

Answer 37

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 37 of 100

Question 38

The retroactive date on a claims-made CGL form specifies: Answer Choices: Select the Correct Answer The latest date in the policy to which coverage applies. That losses occurring after the retroactive date will not be covered by the policy. That losses occurring before the date will not be covered by the policy. The dates between which coverage will apply. Question 38 of 100

Answer 38

Your answer: The dates between which coverage will apply. is incorrect. The correct answer is: That losses occurring before the date will not be covered by the policy.. EXPLANATION: The retroactive date is when claims-made coverage begins. Claims that occur before that date will not be covered. Question 38 of 100

Question 39

A 2 to 4-Family Dwelling is covered under the NFIP for incidental occupancies if it occupies less than: Answer Choices: Select the Correct Answer 25% of the building's replacement cost value. 25% of the building's actual cash value. 25% of the building's total floor area. 25% of the building's common living areas. Question 39 of 100

Answer 39

Your answer: 25% of the building's common living areas. is incorrect. The correct answer is: 25% of the building's total floor area.. EXPLANATION: The NFIP provides coverage for incidental occupancies for a 2 to 4-Family Dwelling if it occupies less than 25% of the building's total floor area. Question 39 of 100

Question 40

The limits of liability are found in which of the following sections of a casualty policy? ``` Answer Choices: Select the Correct Answer Declarations Insuring Agreement Definitions Conditions ``` Question 40 of 100

Answer 40

Your answer: Declarations is correct. EXPLANATION: The declarations section of a policy includes the identity and address of the named insured, the policy term or period, the amount of insurance or limits of liability, the policy premium, and any applicable deductibles. The conditions section spells out the duties of the insured in case of a loss. Insuring agreements are the promises and obligations of the insurer. Definitions are in the policy to add clarification to the meaning of certain important terms. Question 40 of 100

Question 41

A prospective insured wishes to protect her firm against criminals taking money from a messenger going from the firm to a bank. In this situation, the prospect should purchase coverage for: ``` Answer Choices: Select the Correct Answer Robbery. Fidelity. Assault. Burglary. ``` Question 41 of 100

Answer 41

Your answer: Fidelity. is incorrect. The correct answer is: Robbery. . EXPLANATION: Robbery is defined as the taking of property by force with the threat of violence or injury. Question 41 of 100

Question 42

Rudy, a licensed California independent adjuster, has received a letter from a claimant requesting information about a claim. Rudy is required to respond within: ``` Answer Choices: Select the Correct Answer 30 calendar days. 15 working days. 15 calendar days. 10 days. ``` Question 42 of 100

Answer 42

Your answer: 10 days. is incorrect. The correct answer is: 15 calendar days.. EXPLANATION: Upon receiving any communication from a claimant, regarding a claim, that reasonably suggests that a response is expected, every licensee must immediately, but in no event more than 15 calendar days after receipt of that communication, furnish the claimant with a complete response based on the facts as then known by the licensee. Question 42 of 100

Question 43

The Dwelling Form Flood policy will cover: I. A single-family residence. II. A three-family residence. III. Manufactured housing. ``` Answer Choices: Select the Correct Answer II and III only. I and III only. I only. I, II, and III. ``` Question 43 of 100

Answer 43

Your answer: I, II, and III. is correct. EXPLANATION: The Dwelling Form Flood policy will cover residential structures up to four families or manufactured housing. Question 43 of 100

Question 44

Which of the following perils is NOT covered by the commercial property causes of loss basic form? ``` Answer Choices: Select the Correct Answer Falling objects Vandalism Sinkhole collapse Sprinkler leakage ``` Question 44 of 100

Answer 44

Your answer: Falling objects is correct. EXPLANATION: Only the broad and special forms provide falling object coverage. Question 44 of 100

Question 45

Which of the following best describes a sidetrack agreement which is an insured contract under the CGL? Answer Choices: Select the Correct Answer Rock-N-Jocks enters into a lease agreement to open a store at the mall. ABC General Contracting has "hold harmless" wording in their contract with XYZ Plumbing for worked performed on behalf of ABC. B&O railroad builds an extension track off of their main line and runs the track right behind the loading dock of the Ford Motor Company. Otis Elevator Company installs the elevators in the new office tower. Question 45 of 100

Answer 45

Your answer: ABC General Contracting has "hold harmless" wording in their contract with XYZ Plumbing for worked performed on behalf of ABC. is incorrect. The correct answer is: B&O railroad builds an extension track off of their main line and runs the track right behind the loading dock of the Ford Motor Company.. EXPLANATION: Even though the track is the property of B&O railroad, it was built for the benefit of the Ford Motor Company. Ford enters into a sidetrack agreement with the railroad. This is an insured contract under Ford's CGL in case of injuries sustained on the side track. Question 45 of 100

Question 46

Under the Additional Coverages of the Businessowners Property forms, property removed to protect it from loss will be covered at another location for up to: ``` Answer Choices: Select the Correct Answer 5 days. 10 days. 30 days. 20 days. ``` Question 46 of 100

Answer 46

Your answer: 30 days. is correct. EXPLANATION: The policy specifies open peril coverage for 30 days. This is the standard time period for coverage at another location. Question 46 of 100

Question 47

Coverage E under the farm forms covers which of the following? ``` Answer Choices: Select the Correct Answer Unscheduled personal property Scheduled personal property Scheduled real property coverage Blanket real property coverage ``` Question 47 of 100

Answer 47

Your answer: Blanket real property coverage is incorrect. The correct answer is: Scheduled personal property. EXPLANATION: Coverage E covers scheduled farm personal property. Each item to be covered is listed and an amount of insurance is stated. Question 47 of 100

Question 48

All of the following would need a License and Permit Bond, EXCEPT: ``` Answer Choices: Select the Correct Answer Plumbers Electricians Lawyers Real Estate Agents ``` Question 48 of 100

Answer 48

Your answer: Lawyers is correct. EXPLANATION: A lawyer does not need to have a bond in order to practice law. They should have professional liability insurance. The other three would all need a bond to be licensed to do work in the city, state or other municipality. Question 48 of 100

Question 49

In order for coverage to apply under an occurrence commercial umbrella liability policy: Answer Choices: Select the Correct Answer A claim for actual damages must be made before the retroactive date. The occurrence causing the injury or damage must take place during the policy period. First notice of the claim must be made during the policy period. The injury must take place before the policy period. Question 49 of 100

Answer 49

Your answer: The occurrence causing the injury or damage must take place during the policy period. is correct. EXPLANATION: The occurrence causing the injury must take place during the policy period. Question 49 of 100

Question 50

What symbol is used for a hired auto in a commercial automobile policy? ``` Answer Choices: Select the Correct Answer Symbol 8. Symbol 2. Symbol 5. Symbol 4. ``` Question 50 of 100

Answer 50

Your answer: Symbol 5. is incorrect. The correct answer is: Symbol 8. . EXPLANATION: Symbol 8 is used to provide hired auto coverage in a commercial automobile policy. It also includes leased, rented or borrowed. Question 50 of 100

Question 51

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 51 of 100

Answer 51

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 51 of 100

Question 52

A Commercial Package Policy (CPP) always includes: I. A single Declarations page common to all coverages. II. A single Conditions section common to all coverages. III. A single Exclusions section common to all coverages. ``` Answer Choices: Select the Correct Answer I only I, II and III I and II only II and III only ``` Question 52 of 100

Answer 52

Your answer: I, II and III is incorrect. The correct answer is: I and II only. EXPLANATION: A Commercial Package Policy (CPP) always includes a common Declarations page and Conditions section. It does not include a common Exclusions section, as the items excluded would be specific to the coverage part. Question 52 of 100

Question 53

Which of the following pollution losses would be covered under the garage liability policy? I. Escape of toxic sludge from a dump site the named insured utilizes to store garage waste. II. Pollution of a creek caused by gasoline leaking from the ruptured fuel tank of a truck following a collision with another vehicle. ``` Answer Choices: Select the Correct Answer II only. I only. Neither I nor II. Both I and II. ``` Question 53 of 100

Answer 53

Your answer: II only. is correct. EXPLANATION: Only escaped pollutants that are needed for the proper operation of the vehicle (such as fuel, oil, or battery), or pollutants that escape as a result of an auto accident are covered. Question 53 of 100

Question 54

QUESTION: What is the limit of insurance that applies to property in transit in the BOP? ``` Answer Choices: Select the Correct Answer $1,000 $2,500 $5,000 $10,000 ``` Question 54 of 100

Answer 54

Your answer: $5,000 is incorrect. The correct answer is: $10,000 . EXPLANATION: The BOP provides a $10,000 limit for property in transit. Question 54 of 100

Question 55

A Commercial Property Policy includes a protective safeguard endorsement indicating there are protective safeguards installed in the risk such as a sprinkler system. Should the system become inoperative, how long does the insured have to report this fact to the insurer? ``` Answer Choices: Select the Correct Answer 48 hours 24 hours 36 hours 2 weeks ``` Question 55 of 100

Answer 55

Your answer: 2 weeks is incorrect. The correct answer is: 48 hours. EXPLANATION: If repairs cannot be completed within 48 hours, the insurer must be notified in order to comply with the conditions of the form. Question 55 of 100

Question 56

Under an Equipment Breakdown policy, all of the following are supplementary payments, EXCEPT: ``` Answer Choices: Select the Correct Answer Expediting expenses. Defense costs. Interest on judgment. Premiums on appeal bonds. ``` Question 56 of 100

Answer 56

Your answer: Premiums on appeal bonds. is incorrect. The correct answer is: Expediting expenses. . EXPLANATION: Expediting expenses are covered in the limit of the coverage. The other items are part of the supplementary payments that are "in addition to" the policy limit. Question 56 of 100

Question 57

The Commercial Building & Personal Property coverage form includes an Additional Coverage for property removed from the premises because of being endangered by an insured peril. The coverage lasts for: Answer Choices: Select the Correct Answer 30 days after the property is first moved. 5 days after the property is first moved. 10 days after the property is first moved. 15 days after the property is first moved. Question 57 of 100

Answer 57

Your answer: 30 days after the property is first moved. is correct. EXPLANATION: Property removed is covered for up to 30 days after being removed to another location. Removed property is covered for any direct physical loss. Question 57 of 100

Question 58

What coverage is provided under the BOP for a steam boiler explosion? Answer Choices: Select the Correct Answer The steam boiler itself is covered. The steam boiler and the damage to the building and contents are covered. Steam boiler explosions are excluded under the BOP. A separate limit is provided under the BOP for steam boiler explosions. Question 58 of 100

Answer 58

Your answer: A separate limit is provided under the BOP for steam boiler explosions. is incorrect. The correct answer is: Steam boiler explosions are excluded under the BOP.. EXPLANATION: Steam boiler explosions are excluded under the Businessowners policy. Separate equipment breakdown coverage is required to cover steam boiler explosions. Question 58 of 100

Question 59

A contractor has borrowed funds from a bank in order to finance a construction project. A surety bond which guarantees the lender that the contractor will use the borrowed funds to finish the contract free and clear of liens is known as a: ``` Answer Choices: Select the Correct Answer Completion bond. Bid bond. Performance bond. Labor and materials bond. ``` Question 59 of 100

Answer 59

Your answer: Performance bond. is incorrect. The correct answer is: Completion bond.. EXPLANATION: A completion bond guarantees the lender (obligee) that the contractor will apply the funds to the project and complete the project free of any liens or encumbrances. Question 59 of 100

Question 60

Common and Contract Carriers Liability that covers damage to cargo, may be insured under: ``` Answer Choices: Select the Correct Answer Means of transportation forms. Motor truck cargo forms. Transit forms. Equipment dealer’s forms. ``` Question 60 of 100

Answer 60

Your answer: Motor truck cargo forms. is correct. EXPLANATION: Motor truck cargo forms are used to cover common and contract carriers against damage to the property being transported. Question 60 of 100

Question 61

Which of the following factors is the most crucial in distinguishing between an employee-employer relationship and an independent contractor relationship? Answer Choices: Select the Correct Answer The number of hours a worker spends doing the job for the employer. The place at which the work is performed. Whether the worker used his or her own "tools of the trade" to complete work for the employer. Whether the employer controls the manner in which the work is performed. Question 61 of 100

Answer 61

Your answer: Whether the worker used his or her own "tools of the trade" to complete work for the employer. is incorrect. The correct answer is: Whether the employer controls the manner in which the work is performed.. EXPLANATION: When an employer controls the manner in which an employee or an independent contractor performs the work, the employer could be responsible for work-related injuries. Question 61 of 100

Question 62

A building is insured by three insurance companies to spread coverage on a particular type of hazardous risk. In case of a loss under a Commercial Property policy, the payment of the claim would invoke the pro-rata liability clause which means: Answer Choices: Select the Correct Answer Each insurer pays its limits under the policy. Neither insurer pays. Each insurer pays in accordance to the percentage its coverage bears to the total amount of insurance in force. A claim will be paid according to the coinsurance clause. Question 62 of 100

Answer 62

Your answer: Each insurer pays in accordance to the percentage its coverage bears to the total amount of insurance in force. is correct. EXPLANATION: With the pro-rata approach, each insurer will pay a percentage of the claim as its limit bears to the total amount of coverage in force. For example: If an insurer is covering 20% of a property risk it will only pay 20% of a loss. Assume that the total amount of insurance is $300,000 and the risk is split evenly by each insurer writing a third of the total coverage. Each would pay up to their limit of 33% of the loss. Question 62 of 100

Question 63

To be compensable under a Workers Compensation policy, which of the following about an employee's injury must be true? I. The injury must arise out of employment II. The injury must arise within the scope of employment III. The injury must not be the fault of the employee ``` Answer Choices: Select the Correct Answer I only I and II only I, II, and III II and III only ``` Question 63 of 100

Answer 63

Your answer: I and II only is correct. EXPLANATION: To be compensable, employee injuries must arise out of and in the scope of employment. Benefits for such injuries are to be paid by the employer or its insurer without regard to fault. Question 63 of 100

Question 64

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 64 of 100

Answer 64

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 64 of 100

Question 65

A settlement in which the claimant receives payment in installments over a period of time instead of a lump sum is: ``` Answer Choices: Select the Correct Answer A Structured Settlement. Scheduled Payment Release. Full Release Settlement. Open-Ended Release. ``` Question 65 of 100

Answer 65

Your answer: A Structured Settlement. is correct. EXPLANATION: A structured settlement is usually reserved for large settlements. Structured settlements may call for part of the full amount to be paid as a lump sum.

Question 66

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 66 of 100

Answer 66

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 66 of 100

Question 67

Which of the following dwelling forms may provide replacement cost coverage for buildings? ``` Answer Choices: Select the Correct Answer The broad and special forms only The basic, broad, and special forms The basic and broad forms only The special form only ``` Question 67 of 100

Answer 67

Your answer: The special form only is incorrect. The correct answer is: The broad and special forms only. EXPLANATION: The broad and special forms provide replacement cost coverage on the structures if the insured carries at least 80% of replacement cost value on the structures. The basic form provides actual cash value coverage only. Question 67 of 100

Question 68

Virtually all inland marine named perils forms include coverage for: ``` Answer Choices: Select the Correct Answer Theft. Gradual deterioration. Fire and lightening. Dampness and extremes of temperature. ``` Question 68 of 100

Answer 68

Your answer: Theft. is incorrect. The correct answer is: Fire and lightening.. EXPLANATION: Virtually all of the named peril forms provide the perils of fire and lightning. Question 68 of 100

Question 69

Which of the following is a statement that is guaranteed to be the truth throughout the duration of the policy? ``` Answer Choices: Select the Correct Answer A representation. A warranty. A waiver. A condition. ``` Question 69 of 100

Answer 69

Your answer: A condition. is incorrect. The correct answer is: A warranty.. EXPLANATION: A warranty is something that becomes part of the contract and is a statement that is considered to be a guarantee of truth for the entire term of the policy. Question 69 of 100

Question 70

In California, an insurer may not recommend a specific body shop to make repairs on the auto involved in a claim, unless: Answer Choices: Select the Correct Answer The body shop has non-manufacture parts on hand to do the job. It is the only body shop available in the immediate area. A referral is expressly requested by the insured. Never. Question 70 of 100

Answer 70

Your answer: Never. is incorrect. The correct answer is: A referral is expressly requested by the insured.. EXPLANATION: California regulations state that the insured has his or her choice of repair facilities. The insured may ask for a recommendation, but still makes the final decision. Question 70 of 100

Question 71

Under the workers compensation guidelines, permanent total disability is rated at what percent? ``` Answer Choices: Select the Correct Answer 50% 60% 90% 100% ``` Question 71 of 100

Answer 71

Your answer: 100% is correct. EXPLANATION: Permanent total disability is rated at 100%. Question 71 of 100

Question 72

A furrier customers policy does not cover: Answer Choices: Select the Correct Answer Property in the custody of the insured. Property owned by the insured’s customers. Loss in excess of the value of the property as declared by the owner. The furrier’s liability as a bailee. Question 72 of 100

Answer 72

Your answer: Loss in excess of the value of the property as declared by the owner. is correct. EXPLANATION: The furrier is not responsible for a value beyond what is declared by the owner of the property. Question 72 of 100

Question 73

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 73 of 100

Answer 73

Your answer: No limit is incorrect. The correct answer is: 3 stories. 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 73 of 100

Question 74

When a homeowner policy is issued with $200,000 coverage on a dwelling, what is the automatic amount of insurance on personal property? ``` Answer Choices: Select the Correct Answer $100,000 $75,000 $25,000 $45,000 ``` Question 74 of 100

Answer 74

Your answer: $100,000 is correct. EXPLANATION: Personal property is automatically covered for 50% of the amount of the dwelling limit. If replacement cost coverage is purchased on the personal property, the limit of insurance will be increased. The insured can always increase the contents limit for an additional premium. Question 74 of 100

Question 75

An applicant for an independent adjuster license must file with the Commissioner a surety bond in the amount of: ``` Answer Choices: Select the Correct Answer $10,000. $5,000. $2,500. $2,000. ``` Question 75 of 100

Answer 75

Your answer: $2,000. is correct. EXPLANATION: No license will be issued unless the applicant files with the Commissioner a surety bond executed by a surety company authorized to do business in the state in the sum of $2,000 conditioned for the faithful and honest conduct of business by the applicant. Such bond as to its form, execution, and sufficiency of the sureties must be approved by the Commissioner. Question 75 of 100

Question 76

The FAIR Plan is designed to serve hazardous and inner city areas and property being insured must be in a designated plan area (brush area). Both commercial and personal risks may be placed through the plan but farm risks and automobiles are not eligible. All of the perils can be purchased, EXCEPT: ``` Answer Choices: Select the Correct Answer Theft. Fire and lightning. Riot and civil commotion. Windstorm. ``` Question 76 of 100

Answer 76

he FAIR Plan is designed to serve hazardous and inner city areas and property being insured must be in a designated plan area (brush area). Both commercial and personal risks may be placed through the plan but farm risks and automobiles are not eligible. All of the perils can be purchased, EXCEPT: Your answer: Theft. is correct. EXPLANATION: The coverage is for very basic perils similar to the DP-1 perils. Theft is not covered. Question 76 of 100

Question 77

Each of the following is true about Homeowners personal property coverage, EXCEPT: Answer Choices: Select the Correct Answer The HO-8 does not include coverage for personal property. Personal property of a guest may be covered. The full limit applies to personal property anywhere in the world. Special sub-limits apply to some types of personal property. Question 77 of 100

Answer 77

Your answer: The full limit applies to personal property anywhere in the world. is incorrect. The correct answer is: The HO-8 does not include coverage for personal property.. EXPLANATION: All the Homeowners forms include coverage for personal property. Question 77 of 100

Question 78

Which of the following is NOT considered to be a consequential loss coverage under Commercial Property insurance? ``` Answer Choices: Select the Correct Answer Replacement Cost Coverage Business Income Coverage Leasehold Interest Coverage Extra Expense Coverage ``` Question 78 of 100

Answer 78

Which of the following is NOT considered to be a consequential loss coverage under Commercial Property insurance? Your answer: Leasehold Interest Coverage is incorrect. The correct answer is: Replacement Cost Coverage. EXPLANATION: A consequential loss occurs as the result of a direct loss to the insured property. Replacement cost coverage is used to determine the amount of the loss. If replacement cost coverage is not selected then actual cash value applies. Question 78 of 100

Question 79

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 79 of 100

Answer 79

Your answer: The California Assigned Risk Automobile Insurance Plan is correct. 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 80

If a contractor does not properly protect a job site, another person could be injured. This is an example of: I. Negligence II. A tort III. A civil wrong ``` Answer Choices: Select the Correct Answer I only I and II only II only I, II, and III ``` Question 80 of 100

Answer 80

Your answer: I, II, and III is correct. EXPLANATION: I, II, and III are correct and is the purpose of the coverage provided by the CGL policy. Question 80 of 100

Question 81

Under a dwelling policy what is the maximum that would be paid for one month for additional living expenses if Coverage A was $75,000? ``` Answer Choices: Select the Correct Answer $1,250 $500 $1,000 $750 ``` Question 81 of 100

Answer 81

Your answer: $1,250 is correct. EXPLANATION: The form provides 20% of Coverage A for additional living expense under the DP-2 and DP-3. Therefore, $75,000 X 20% = $15,000. This amount divided by 12 months = $1,250/month. Question 81 of 100

Question 82

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 82 of 100

Answer 82

Your answer: To deal with changing values of autos held for sale. is correct. 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 82 of 100

Question 83

``` QUESTION: Which of the following is the class of insurance, defined by the California Insurance Code (CIC) that includes insurance against financial loss by reason of the nonpayment of principal, interest or other sums agreed to be paid under the terms of any note or bond, or other evidence of indebtedness secured by a mortgage, deed of trust, or other instrument constituting a lien or charge on real estate? ``` ``` Answer Choices: Select the Correct Answer Insolvency insurance. Credit insurance. Mortgage Guaranty insurance. Legal insurance. ``` Question 83 of 100

Answer 83

Your answer: Mortgage Guaranty insurance. is correct. EXPLANATION: Insurance against financial loss by reason of the nonpayment of principal, interest or other sums agreed to be paid under the terms of any note or bond, or other evidence of indebtedness secured by a mortgage, deed of trust, or other instrument constituting a lien or charge on real estate, is known as Mortgage Guaranty insurance in California. Question 83 of 100

Question 84

All of the following are violations of "good faith duty" by the adjuster, EXCEPT: Answer Choices: Select the Correct Answer Paying a settlement within 30 days after an agreement is reduced to writing. Denying coverage or attempting to settle a claim on the basis of an application which the insurer knows was altered without notice to, or knowledge or consent of, the insured. Failing to pay the amount of any claim due any person insured by the contract within 60 days after receipt of satisfactory proof of loss from the claimant when such failure is arbitrary, capricious, or without probable cause. Misrepresenting pertinent facts or insurance policy provisions relating to any coverages at issue. Question 84 of 100

Answer 84

Your answer: Paying a settlement within 30 days after an agreement is reduced to writing. is correct. EXPLANATION: Paying a claim within 30 days after an agreement is reduced to writing is not a violation but a requirement. The other responses are violations of "good faith duty." Question 84 of 100

Question 85

Under a business auto policy, which of the following types of physical damage loss is not covered? Answer Choices: Select the Correct Answer Collision with an animal Loss to radar detection equipment Transportation expenses following theft of an entire private passenger auto Glass breakage caused by vandals Question 85 of 100

Answer 85

Your answer: Loss to radar detection equipment is correct. EXPLANATION: This type of equipment is usually excluded for physical damage coverage because it is normally not legal in most states to use them. Question 85 of 100

Question 86

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 86 of 100

Answer 86

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 86 of 100

Question 87

An insured submits a claim. The adjuster acknowledges receipt of the claim. Nothing more is heard from the adjuster after repeated attempts by the claimant to contact the adjuster. This is considered to be: Answer Choices: Select the Correct Answer An unfair trade practice act An unfair claims practice act Misrepresentation of the conditions clause in the policy An act of discrimination Question 87 of 100

Answer 87

Your answer: An unfair claims practice act is correct. EXPLANATION: Failing to acknowledge with reasonable promptness pertinent communications with respect to a claim is considered an unfair claims practice. Question 87 of 100

Question 88

Who is an insured under the liability section of a Farm insurance policy? Answer Choices: Select the Correct Answer A retail feed store employee. A representative from a farm chemical company. A roadside farm stand employee. A custom farming employee hired to plow the insured’s fields under contract. Question 88 of 100

Answer 88

Your answer: A roadside farm stand employee. is correct. EXPLANATION: A farm employee is covered while acting within the scope of their duties. Farming includes the incidental operation of roadside stands where farm products principally produced by the insured are sold. Question 88 of 100

Question 89

Which of the following would be considered "economic losses" that could result in compensatory damages being awarded in a negligence case? ``` Answer Choices: Select the Correct Answer Disfigurement. Loss of consortium. Pain and suffering. Medical expense and lost wages. ``` Question 89 of 100

Answer 89

Your answer: Loss of consortium. is incorrect. The correct answer is: Medical expense and lost wages.. EXPLANATION: Economic losses are those that include out-of-pocket damages, such as incurred medical expenses or lost wages. It does not include disfigurement, pain and suffering or loss of consortium, as those would be considered "general damages". Question 89 of 100

Question 90

The standard deductible on the Commercial Property Earthquake Causes of Loss form is: ``` Answer Choices: Select the Correct Answer A percentage of the loss. $1,000. $5,000. A percentage of the building value. ``` Question 90 of 100

Answer 90

Your answer: A percentage of the building value. is correct. EXPLANATION: The deductible will be the percentage shown in the Declarations times the limit of insurance for each type of covered property. Question 90 of 100

Question 91

All of the following are EXCLUDED under the Earthquake Endorsement to a Homeowners policy, EXCEPT: ``` Answer Choices: Select the Correct Answer Flood and tidal wave. Land shock waves. Waves and tsunami. The cost of filling land. ``` Question 91 of 100

Answer 91

Your answer: Land shock waves. is correct. EXPLANATION: All of the items listed are excluded under the Earthquake Endorsement to a Homeowners policy, EXCEPT: Land shock waves, they are covered. Question 91 of 100

Question 92

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 92 of 100

Answer 92

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 92 of 100

Question 93

If a commercial building has been vacant for more than sixty days, which of the perils are affected as regards coverage? ``` Answer Choices: Select the Correct Answer Vandalism Freezing Fire All of the perils are affected ``` Question 93 of 100

Answer 93

Your answer: All of the perils are affected is correct. EXPLANATION: All of the perils listed are affected as a result of the vacancy. Some of the coverage for certain perils is voided and fire losses are reduced by 15%. Question 93 of 100

Question 94

A trailer leased by the named insured from another business is a covered auto under the insured's Business Auto policy. While the trailer is connected to a covered truck-tractor owned by the insured, the Business Auto policy provides: Answer Choices: Select the Correct Answer Excess liability coverage on the trailer. Primary liability coverage on the trailer. Either excess or primary liability coverage on the trailer, at the option of the insurer. No liability coverage on the trailer. Question 94 of 100

Answer 94

Your answer: Primary liability coverage on the trailer. is correct. EXPLANATION: The moment the trailer is hooked up to a vehicle, it becomes part of that vehicle. The BAP would provide primary liability coverage on the trailer in this instance. For physical damage to be covered on this loss the insured would need to have the endorsement, Trailer Interchange Coverage. Question 94 of 100

Question 95

Which of the following would be covered under Section II - Liability of the Homeowner policy? Answer Choices: Select the Correct Answer Damage to rented premises occupied by the insured caused by a fire accidentally set by the insured. Intentional acts of the insured. Operating a dirt bike off the insured's premises. Operating a 75-HP boat owned by the insured. Question 95 of 100

Answer 95

Your answer: Operating a 75-HP boat owned by the insured. is incorrect. The correct answer is: Damage to rented premises occupied by the insured caused by a fire accidentally set by the insured.. EXPLANATION: Damage to property rented to, occupied by, used by or in the care, custody or control of an insured for specified perils consisting of fire, smoke and explosion would be covered. An insured would have coverage under an HO-4 if he accidentally sets fire to the apartment where he is residing. Question 95 of 100

Question 96

Which of the following statements is true about additional coverages under a Homeowners policy? Answer Choices: Select the Correct Answer They are automatically included only if medical payments coverage is purchased. They are optional on the part of the insured. They are included at no extra cost. They are included for a minimum premium. Question 96 of 100

Answer 96

Your answer: They are optional on the part of the insured. is incorrect. The correct answer is: They are included at no extra cost.. EXPLANATION: An example would be the collapse hazard included in both the broad and special cause of loss forms at no extra charge. Question 96 of 100

Question 97

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 97 of 100

Answer 97

Your answer: Liability Discrepancy. is incorrect. The correct answer is: Nonconcurrency.. 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 97 of 100

Question 98

Adele Sullivan's car is hit from the rear by Clarence Brown's car. Mrs. Sullivan's insurance company pays her claim under her physical damage coverage and makes a claim against Mr. Brown's insurance company for the same amount. This process is called: ``` Answer Choices: Select the Correct Answer Subrogation. Matriculation. Reciprocity. Arbitration. ``` Question 98 of 100

Answer 98

Your answer: Subrogation. is correct. EXPLANATION: Mr. Brown was at fault. Mrs. Sullivan's insurer paid the loss and is entitled to seek reimbursement from Mr. Brown or Mr. Brown's insurance company via subrogation. Question 98 of 100

Question 99

Which of the following is correct regarding the differences in coverage between an HO-3 and an HO-5? Answer Choices: Select the Correct Answer HO-3 covers personal property on a named peril basis, while personal property under an HO-5 is covered on an open peril basis. HO-3 pays market value for dwelling losses while the HO-5 pays replacement cost. HO-3 only covers personal property owned by the insured, while HO-5 can cover personal property owned or used by the insured. HO-3 has more exclusions pertaining to the insured dwelling than the HO-5. Question 99 of 100

Answer 99

Your answer: HO-3 covers personal property on a named peril basis, while personal property under an HO-5 is covered on an open peril basis. is correct. EXPLANATION: The HO-3 and the HO-5 are the same in terms of dwelling exclusions, valuation on dwelling losses, and the type of personal property insured. They are different in terms of perils insured against for personal property losses. Question 99 of 100

Question 100

A shopper in the supermarket drops a bottle of salad oil and it breaks open on the floor in the aisle. An employee begins to clean up the spill. Halfway through the clean up he realizes that it is time for his break and he proceeds to the break room, intending to finish the clean up after his break. During his absence a customer slips on the oil that has not yet been cleaned up and is injured. Is the store liable? Answer Choices: Select the Correct Answer For premises medical coverage only. The store is not liable as the shopper was obviously inattentive. The store is liable because they had notice of a dangerous condition and failed to remedy it. The store is not liable because they were working to correct the problem when the accident occurred. Question 100 of 100

Answer 100

Your answer: The store is liable because they had notice of a dangerous condition and failed to remedy it. is correct. EXPLANATION: As soon as the employee becomes aware of the spilled oil the store has notice. The store is directly responsible for any accidents that subsequently occur because the hazard has not been removed. Question 100 of 100