IA Test 21 Flashcards
If both the Condominium Association form and the Condominium Unit-Owners form cover the same property, how would a covered loss be handled?
Answer Choices: Select the Correct Answer
Each policy will pay on a pro-rata basis.
Association policy will be excess over the Unit-Owner’s policy.
Each policy will share equally in the loss.
The Unit-Owner’s policy will be excess over the Association policy.
Question 1 of 100
Your answer: Each policy will pay on a pro-rata basis. is incorrect. The correct answer is: The Unit-Owner’s policy will be excess over the Association policy..
EXPLANATION:
If both policies cover the same property, the Condominium Unit-Owner’s form will be excess over the Condominium Association form.
Question 1 of 100
The insured is a trucking company that carries cargo. One of the insured trucks is involved in an accident and the goods it is transporting are damaged. Which of the following coverages would respond to cover this loss?
Answer Choices: Select the Correct Answer
The Commercial Auto policy would respond and pay under “property damage”.
A General Liability policy.
An Inland Marine Motor Truck Cargo policy.
A Commercial Umbrella policy.
Question 2 of 100
Your answer: An Inland Marine Motor Truck Cargo policy. is correct.
EXPLANATION:
Property in the insured’s care, custody and control is excluded. The insured would need to carry a motor truck cargo inland marine type of policy.
Question 2 of 100
Alec goes to an amusement park and rides a roller coaster that was designed to flip the riders upside down. Alec is taller than the average person so when the roller coaster flips, he hits his head on the safety bar. After receiving medical care, Alec files a claim against the amusement park, seeking payment for his medical bills, pain and suffering. What defense against negligence would the amusement park most likely use to deny this claim?
Answer Choices: Select the Correct Answer Assumption of Risk Contributory Negligence Comparative Negligence Intervening Cause
Question 3 of 100
Your answer: Contributory Negligence is incorrect. The correct answer is: Assumption of Risk.
EXPLANATION:
The “Assumption of Risk” defense applies when a person knowingly exposes him/herself to danger or injury.
Question 3 of 100
On Monday afternoon, Carissa’s boss requested that she finish updating the company website by Tuesday morning. Carissa did not want to stay at the office late into the evening so she took her work home to complete it there. On the way home, Carissa remembers that she left an external hard drive back at the office. This hard drive contained files that she needed to complete the website updates so she turns her car around and heads back to the office to retrieve it. Two blocks away from her office, another car runs a stop light and smashes into Carissa’s car, severely injuring her. Which of the following statements would be TRUE in how Carissa would be handled by her employer’s workers compensation coverage?
Answer Choices: Select the Correct Answer
Carissa’s injuries are not compensable because she contributed to her injuries by forgetting the hard drive.
Carissa’s injuries are compensable because she was driving to retrieve a work-related item.
Carissa’s injuries are not compensable as she was commuting to work and coverage does not apply in that case.
Carissa’s injuries are compensable because she was technically “at work”, she was simply taking work home.
Question 4 of 100
Your answer: Carissa’s injuries are not compensable as she was commuting to work and coverage does not apply in that case. is correct.
EXPLANATION:
Workers compensation does not apply to employees when they are commuting to and from work.
Question 4 of 100
The insured owns the following properties. Which one of them would be considered to be “business property” by the personal umbrella liability policy?
Answer Choices: Select the Correct Answer
A farm used for personal use
An apartment building
A cabin at a lake where the insured spends occasional weekends
A single-family home used only as residence by the insured
Your answer: An apartment building is correct.
EXPLANATION:
In this case the apartment building would be considered “business property”.
Question 5 of 100
What does the phrase “free on board destination” mean?
Answer Choices: Select the Correct Answer
Makes the seller responsible to the buyer until the goods have been delivered as agreed.
An ocean term referring to jettison.
The title to the goods to be shipped is transferred to the buyer at the shipping point.
The term is in reference to a cruise ship agreement for passengers.
Question 6 of 100
Your answer: Makes the seller responsible to the buyer until the goods have been delivered as agreed. is correct.
EXPLANATION:
The term is used in two common phrases, “FOB shipping point” and “FOB destination,” to distinguish when the title of goods passes from the seller to the buyer. Under the terms of “FOB shipping point,” the title of the goods passes to the buyer at the shipping point. Similarly, under the terms of “FOB destination,” the title of the goods passes to the buyer when the goods arrive at their destination. The distinction is important because it determines who pays for the shipping costs of the merchandise - whoever holds the title to the merchandise at the time of its shipping pays for its transportation costs unless otherwise noted (e.g., freight prepaid or freight collect). Also, it is important that if the shipment is damaged while traveling the owner must file the freight claim.
Question 6 of 100
Claims filed against the insurance company by the insured are known as:
Answer Choices: Select the Correct Answer First-party claims. Third-party claims. Self-insured claims. Subrogation claims.
Question 7 of 100
Your answer: First-party claims. is correct.
EXPLANATION:
Claims filed against the insurance company by the insured are known as first-party claims.
Question 7 of 100
Oliver Dogwood was in an auto accident which destroyed his car. While investigating the accident, Adjuster Doright found that Mr. Dogwood paid $1,000 for the vehicle. After checking with others he found the same vehicle with an asking price of $1,700, a retail price of $2,150 and a dealer price of $1,750. What amount will Mr. Dogwood receive?
Answer Choices: Select the Correct Answer $1,950 $2,150 $1,000 $1,700
Question 8 of 100
2150,
Under California law, the degree of care owed to a trespasser by a property owner is not which of the following?
Answer Choices: Select the Correct Answer
To warn of hidden dangers
Ordinary care
To not set traps
Guarantee safe passage on and off the premises
Question 9 of 100
Your answer: Guarantee safe passage on and off the premises is correct.
EXPLANATION:
Guaranteeing safe passage is not required.
Question 9 of 100
Following a loss by earthquake in California, how many days does the insured have, unless extended in writing by the insurer, to present proof of loss for payment?
Answer Choices: Select the Correct Answer 60 days 30 days 20 days 45 days
Question 10 of 100
Your answer: 60 days is correct.
EXPLANATION:
The 60-day period is established because the insured is required to protect the property from further damage, and separate the damaged property from the undamaged.
Question 10 of 100
Under an equipment dealer’s form, which of the following would not be covered?
Answer Choices: Select the Correct Answer
Inventory
Serviced items
Customer’s property on the insured’s premises
Vehicles for highway use
Question 11 of 100
Your answer: Vehicles for highway use is correct.
EXPLANATION:
Inland marine forms provide coverage for the insured’s goods as well as property of others, but they do not cover automobiles.
Question 11 of 100
The aggregate limit on a liability policy can be expressed as:
Answer Choices: Select the Correct Answer
Per occurrence
Premises/operations
Products and Completed Operations
Both Premises/operations and products/completed operations
Question 12 of 100
Your answer: Both Premises/operations and products/completed operations is correct.
EXPLANATION:
The aggregate is the most the policy will pay for all claims submitted during the policy period. The policy will establish a general aggregate for all claims submitted in the policy period and a separate aggregate for products and completed operations type of claims for the entire year.
Question 12 of 100
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.
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 13 of 100
In insurance terms, the phrase severability of insurance means:
Answer Choices: Select the Correct Answer
Several insured’s are covered by the policy.
The insurance applies separately to each insured.
Each accident will be treated as a separate occurrence.
The insurer may dissolve its relationship with the insured after a loss.
Question 14 of 100
Your answer: The insurer may dissolve its relationship with the insured after a loss. is incorrect. The correct answer is: The insurance applies separately to each insured..
EXPLANATION:
This means that the insurance applies separately to each insured. However, if more than one insured is involved in the same loss the limits are not increased.
Question 14 of 100
Under an ISO standardized Businessowners policy, which of the following is NOT automatically covered under the policy?
Answer Choices: Select the Correct Answer
Hired and Non-owned Automobile coverage
Loss of earnings after a covered fire
Limited Sign coverage
Replacement cost settlement on building losses
Question 15 of 100
Your answer: Hired and Non-owned Automobile coverage is correct.
EXPLANATION:
“Hired and Non-owned Automobile” coverage must be added by endorsement.
Question 15 of 100
Which of the following would be covered under the building coverage of an NFIP policy?
Answer Choices: Select the Correct Answer
A portable dishwasher.
A clothes washing machine.
The plumbing system of the covered building.
Window curtains.
Question 16 of 100
Your answer: Window curtains. is incorrect. The correct answer is: The plumbing system of the covered building..
EXPLANATION:
Only the plumbing system of the building would be covered under the “building” section of the NFIP policy. The other three answer choices would be covered under the contents (personal property) section of the policy.
Question 16 of 100
Mary left an expensive ring on her bedroom dresser before leaving on a business trip. When she returned, the ring was gone. Under the terms of her HO-3 policy, this loss would be considered:
Answer Choices: Select the Correct Answer Robbery Burglary Malicious mischief Theft
Question 17 of 100
Your answer: Theft is correct.
EXPLANATION:
This would be a theft loss. In this case there is the presumption of theft.
Question 17 of 100
A payment bond is what type of instrument?
Answer Choices: Select the Correct Answer Financial Guarantee Bond Performance Bond Bid Bond Fidelity Bond
Question 18 of 100
Your answer: Financial Guarantee Bond is correct.
EXPLANATION:
A payment bond guarantees that bills for labor and materials will be paid by the contractor.
Question 18 of 100
Sierra’s home is located in a flood zone. In insurance terms, the location of Sierra’s home is considered:
Answer Choices: Select the Correct Answer A peril. A hazard. A risk. A proximate cause.
Question 19 of 100
Your answer: A risk. is incorrect. The correct answer is: A hazard..
EXPLANATION:
A hazard increases the possibility of loss or the severity of a loss. The home located in a flood zone is considered to be a physical hazard.
Question 19 of 100
Jonathan, a licensed California independent adjuster, has received a notice of claim from an insured. How soon must is he transmit this notice to the insurer?
Answer Choices: Select the Correct Answer Within 5 calendar days Within 10 calendar days Within 21 calendar days Immediately
Question 20 of 100
Your answer: Within 5 calendar days is incorrect. The correct answer is: Immediately.
EXPLANATION:
Upon receiving notice of claim, every licensee or claims agent must immediately transmit notice of claim to the insurer. Failure of the licensee or claims agent to immediately transmit notice of claim to the insurer will constitute a separate and distinct violation of California Insurance Code
Question 20 of 100
In the ocean marine insurance policy, the term “average” means:
Answer Choices: Select the Correct Answer
Loss or damage.
The ACV of the ship.
The average value of the claim insured against by the perils of the sea .
That coverage is written on a named peril basis.
Question 21 of 100
Your answer: The average value of the claim insured against by the perils of the sea . is incorrect. The correct answer is: Loss or damage. .
EXPLANATION:
The term “average” in ocean marine insurance refers to loss or damage. In order to protect the ship, its cargo and passengers, some of the cargo may be jettisoned (thrown overboard) to save the ship and cargo. Particular average means only one party pays for the loss. General average means all parties share in the loss.
Question 21 of 100
In a bond that has been in place and renewed for several years with the same carrier, under the “loss sustained under previous insurance condition” which would respond to a claim that was just discovered but which actually happened two years ago?
Answer Choices: Select the Correct Answer The current bond The bond in place two years ago The two bonds would share the loss Neither bond would respond
Question 22 of 100
Your answer: The current bond is correct.
EXPLANATION:
The answer is the current bond as per the policy conditions section of the bond.
Question 22 of 100
Braden has his commercial contents valued at $100,000, insured under a Commercial Property policy for $60,000. Disregarding deductibles and using an 80% coinsurance clause, what is the maximum amount Braden can collect when he suffers a $40,000 loss to the contents in his commercial building?
Answer Choices: Select the Correct Answer $30,000 $20,000 $40,000 $25,000
Question 23 of 100
Your answer: $25,000 is incorrect. The correct answer is: $30,000.
EXPLANATION:
The insured should carry at least $80,000. The coinsurance formula states that the insurance carried is divided by the insurance amount required, times the loss, equals the amount that should be paid. In this case, the insured is underinsured and can only be paid 3/4 (75%) of the loss or $30,000.
Question 23 of 100
Each of the following is true about Farm insurance coverage, EXCEPT:
Answer Choices: Select the Correct Answer
The principal residence may be covered by a Farm policy or a Homeowners form.
Farm coverage may be written as a monoline policy or part of a package policy.
Livestock may be insured.
Property and liability coverages may be included.
Question 24 of 100
Your answer: Livestock may be insured. is incorrect. The correct answer is: The principal residence may be covered by a Farm policy or a Homeowners form..
EXPLANATION:
The principal residence must be covered under a Farmowners policy. The Homeowners policy is not designed to cover farm property, even the residence.
Question 24 of 100
As an independent adjuster in California, your investigation of a two-car traffic accident indicates that both drivers are equally at fault. After speaking with the claimant’s adjuster the two of you agree that both drivers are equally to blame. Your subrogation demand would be for:
Answer Choices: Select the Correct Answer
100% of your insured’s damages as your analysis does not affect what is owed by the other party.
75% of your insured’s damages as each side’s 25% totals 50%.
50% of your insured’s damage, because the insured and the other driver were both 50% at fault.
Nothing. Because both drivers were 50% at fault, each insurance company will pay 100% of the claim on their own insured’s damages.
Question 25 of 100
Your answer: 50% of your insured’s damage, because the insured and the other driver were both 50% at fault. is correct.
EXPLANATION:
California is a “comparative negligence” state. In California the person most at fault is deemed to be the primary cause of the accident. If investigation either by law enforcement or the insurance adjuster determines that there was “comparative negligence” on the part of the other driver(s), all damages owed are subject to apportionment.
Question 25 of 100
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 26 of 100
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 26 of 100
The methods of financing workers’ compensation benefits include voluntary private insurance, excess insurance, qualified self-insurance plans, insurance through state funds, and:
Answer Choices: Select the Correct Answer Federal insurance programs. Assumption of the risk. Federal employer assistance programs. Insurance through assigned risk plans.
Question 27 of 100
Your answer: Federal employer assistance programs. is incorrect. The correct answer is: Insurance through assigned risk plans..
EXPLANATION:
Assigned risk plans are state plans to assist employers with financing workers’ compensation benefits.
Question 27 of 100
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 28 of 100
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 28 of 100
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 29 of 100
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 29 of 100
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 30 of 100
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 30 of 100
Indemnify Insurance has been using a specific ISO Homeowners forms for several years in all the states where they are an admitted insurer. Indemnify Insurance has recently been admitted to an additional state, but the laws of that state contradict a few of the provisions in the ISO form. How is this situation likely to be handled?
Answer Choices: Select the Correct Answer
Indemnify Insurance will need to change their underwriting practices in order to issue a Homeowners policy that falls in line with state laws.
Indemnify Insurance can write Homeowners policies as usual because the nationally standardized form supersedes state law.
Indemnify Insurance will be prohibited to issue Homeowners policies in the state.
A statutory form will be drawn up and attached to each Homeowners policy Indemnify Insurance writes in the state.
Question 31 of 100
Your answer: Indemnify Insurance will need to change their underwriting practices in order to issue a Homeowners policy that falls in line with state laws. is incorrect. The correct answer is: A statutory form will be drawn up and attached to each Homeowners policy Indemnify Insurance writes in the state..
EXPLANATION:
A statutory form will be drawn up and attached to each Homeowners policy Indemnify Insurance sells in the state.
Question 31 of 100
All of the following are types of “independent adjusters”, EXCEPT:
Answer Choices: Select the Correct Answer A public adjuster. A "cat" adjuster. A staff adjuster. A property and casualty adjuster.
Question 32 of 100
Your answer: A public adjuster. is correct.
EXPLANATION:
A public adjuster works on behalf of the policyholder. A “cat”, staff, and property and casualty adjuster are all types of independent adjuster licenses.
Question 32 of 100
The homeowner policy written to cover only personal property and personal liability is an:
Answer Choices: Select the Correct Answer H0-2 H0-3 H0-4 H0-8
Question 33 of 100
Your answer: H0-2 is incorrect. The correct answer is: H0-4.
EXPLANATION:
This is the HO-4 also referred to as a tenant’s homeowner policy or renters insurance.
Question 33 of 100
Which of the following businesses is NOT eligible to be covered by a Businessowners policy?
Answer Choices: Select the Correct Answer
A credit union.
A commercial office building.
An apartment building with rental units.
A small retail gift shop.
Question 34 of 100
Your answer: A credit union. is correct.
EXPLANATION:
Credit unions, banks and savings and loan companies are not eligible for the BOP because the crime exposure would be too large for the Businessowners policy to cover. The office building, small gift shop, and apartment building are all acceptable risks for a BOP policy.
Question 34 of 100
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 35 of 100
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 35 of 100
The law recognizes two types of waivers. They are:
Answer Choices: Select the Correct Answer Estoppel/indemnity Apparent/implied Express/implied Specific/contractual
Question 36 of 100
Your answer: Specific/contractual is incorrect. The correct answer is: Express/implied.
EXPLANATION:
They are express and implied. An express waiver occurs when the insurer or its representative knowingly gives up a known right under the insurance contract. Perhaps the right to request an appraisal of the damaged property is an example. By comparison, an implied waiver may be the result from some act of neglect on the part of the adjuster.
Question 36 of 100
The purpose of the California Fair Access to Insurance Requirements (FAIR Plan) is to:
Answer Choices: Select the Correct Answer
Assure the availability of automobile liability insurance.
Assure the availability of basic property insurance.
Guarantee the issue of basic property insurance to any applicant.
Pay the obligations of insolvent insurers in California.
Question 37 of 100
Your answer: Guarantee the issue of basic property insurance to any applicant. is incorrect. The correct answer is: Assure the availability of basic property insurance..
EXPLANATION:
The FAIR Plan assures the availability of basic property insurance in California.
Question 37 of 100
All of the following are listed on the common Declarations page of a Commercial Package Policy (CPP), EXCEPT:
Answer Choices: Select the Correct Answer
A list of perils insured against.
The policy period.
The name and mailing address of the insured.
The insured’s premium for each coverage part purchased.
Question 38 of 100
Your answer: The name and mailing address of the insured. is incorrect. The correct answer is: A list of perils insured against. .
EXPLANATION:
A list of perils insured against is not included on the common policy Declarations page of a Commercial Package Policy. The policy period, the premium for each coverage part, and the name and mailing address of the insured ARE listed.
Question 38 of 100
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
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 39 of 100
Submit
Which of the following would not be addressed by a court in the determination of a declaratory judgment?
Answer Choices: Select the Correct Answer
Determine if a particular exclusion would apply
Determine if a particular insuring agreement would apply
Determine fault or monetary damages
Determine if other insurance policies apply
Question 40 of 100
Your answer: Determine if a particular insuring agreement would apply is incorrect. The correct answer is: Determine fault or monetary damages.
EXPLANATION:
The court would not determine the fault or monetary judgment in the determination of a declaratory judgment.
Question 40 of 100
An insured has reported a claim late that occurred over one year ago and now seeks defense representation and coverage under his automobile policy. What should the adjuster do?
Answer Choices: Select the Correct Answer
Deny the claim
Investigate the claim
Issue a reservation of rights letter to the insured
Advise the insured to seek his own legal counsel
Question 41 of 100
Your answer: Issue a reservation of rights letter to the insured is correct.
EXPLANATION:
In this case since the facts are not clear and probably no witnesses or police reports and a lack of physical evidence, the adjuster should issue a “reservation of rights” letter to the insured.
Question 41 of 100
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 42 of 100
Your answer: Joint issuance of a workers compensation policy and a life insurance policy is incorrect. The correct answer is: Joint issuance of a workers compensation policy and a disability insurance policy.
EXPLANATION:
Twenty-four hour coverage is the joint issuance of a workers compensation policy with a disability insurance policy, health care service plan contract, or other medical insurance coverage for non-occupational injuries and illnesses. This product does not include a life insurance policy.
Question 42 of 100
If a loss is valued using functional replacement cost, which of the following would apply?
Answer Choices: Select the Correct Answer
Market value of the loss is paid.
Deductibles are suspended.
The coinsurance clause is not applicable.
Replacement cost up to an agreed amount is payable.
Question 43 of 100
Your answer: Deductibles are suspended. is incorrect. The correct answer is: The coinsurance clause is not applicable..
EXPLANATION:
The coinsurance clause is not applicable because the coverage limit is based on the market value of the property which is probably below the 80% cost to replace it. This has been agreed to in the contract when functional replacement cost is the basis for loss settlement. Used particularly in losses involving antique, ornate or custom construction with less expensive, but functionally equivalent materials.
Question 43 of 100
All of the following are reasons an independent adjuster may be hired, EXCEPT:
Answer Choices: Select the Correct Answer
The insured may retain an independent adjuster if negotiations with their insurer are not progressing forward.
An insurer may contract with an independent adjuster in a location where the insurer does not have claims offices set up.
Due to a catastrophe, an insurer may not have enough adjusters on staff to process all of the claims, and would contract with additional independent adjusters temporarily.
An insurer may contract with an independent adjuster who has special knowledge or expertise to adjust specialized claims.
Question 44 of 100
Your answer: The insured may retain an independent adjuster if negotiations with their insurer are not progressing forward. is correct.
EXPLANATION:
Retaining an adjuster to assist in negotiating a claim with the insurer would be a reason to hire a PUBLIC adjuster, not an INDEPENDENT adjuster.
Question 44 of 100
Coach Joe loans his car, covered under a personal auto policy, to assistant coach Tom to take several members of the Lake Recreation Swim Team home after a meet. In the event of an accident, the liability section of the personal auto policy would cover all of the following, EXCEPT:
Answer Choices: Select the Correct Answer The auto manufacturer. Joe. Tom. Lake Recreation Swim Team.
Question 45 of 100
Your answer: The auto manufacturer. is correct.
EXPLANATION:
Coach Joe is covered because he owns the car. Assistant coach Tom is covered because he had Joe’s permission to drive his car. Lake Recreation Swim Team is also an insured but only with respect to legal responsibilities for acts or omissions of a person for whom coverage is afforded. The auto maker would not be an insured any any personal automobile policy.
Question 45 of 100
Which of the following is NOT a claim settlement option in a property loss?
Answer Choices: Select the Correct Answer
Replace the property with like kind and quality.
Replace the property with new.
Repair the property.
Pay market value only.
Question 46 of 100
Your answer: Pay market value only. is correct.
EXPLANATION:
Offering market value only is not a claim settlement option. If the insured carries replacement cost coverage then the adjuster needs to address the payment of the claim accordingly.
Question 46 of 100
Which of the following would be covered under the Commercial Property Builders Risk Coverage Form?
Answer Choices: Select the Correct Answer
All of the responses are correct
Buildings under construction
Foundation of a building under construction
Fixtures, machinery and equipment used to service the building if they become a permanent part of the building and are located within 100 feet of the premises
Question 47 of 100
Your answer: Fixtures, machinery and equipment used to service the building if they become a permanent part of the building and are located within 100 feet of the premises is incorrect. The correct answer is: All of the responses are correct.
EXPLANATION:
All of the responses are correct as regards the builders risk coverage.
Question 47 of 100
QUESTION:
Which of the following is the provision in a liability policy that allows an insured to report incidents or circumstances that result in claims being filed in the future?
Answer Choices: Select the Correct Answer Defense Within Limits provision. Other Insurance provision. Supplementary Payments provision. Discovery provision.
Question 48 of 100
Your answer: Discovery provision. is correct.
EXPLANATION:
The Discovery provision allows an insured to report incidents or circumstances that may result in a claim being filed in the future. This provision is found mainly in liability policies with “claims-made” coverage triggers.
Question 48 of 100
In workers compensation the term “willful” means which of the following?
Answer Choices: Select the Correct Answer Unsupervised Negligent With good reason Intentional
Question 49 of 100
Your answer: Intentional is correct.
EXPLANATION:
The terms “willful” and “intentional” are synonymous.
Question 49 of 100
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 50 of 100
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 50 of 100
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 51 of 100
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 51 of 100
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 52 of 100
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 52 of 100
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 53 of 100
Your answer: 30 days is correct.
EXPLANATION:
The Insurance Department must be advised within 30 days.
Question 53 of 100
Samantha misses three days from work because of a lawsuit against her, which requires her appearance in court. She loses $80 in wages each day that she is at court. Her CGL insurance company will pay:
Answer Choices: Select the Correct Answer $240 $300 $160 $0
Question 54 of 100
Your answer: $0 is incorrect. The correct answer is: $240.
EXPLANATION:
The supplementary coverage within a general liability policy provides for wage reimbursement of up to $250.00 per day.
Question 54 of 100
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 55 of 100
Your answer: Injuries sustained by a farm employee. is incorrect. The correct answer is: Injuries sustained by an invitee..
EXPLANATION:
Medical payments would pay for the injuries sustained by an invitee or guest. Coverage does not apply to members of the insured’s family, roomers or boarders or tenants of the dwelling, or to farm employees.
Question 55 of 100
Under the medical payments coverage of Ben Green’s personal auto policy, each of the following would qualify as a “family member” EXCEPT:
Answer Choices: Select the Correct Answer
Alice Green, Ben’s sister, who lives in Ben’s household.
Susan Green, Ben’s wife. Susan maintains a separate residence although she and Ben are not divorced.
Ben Green, Jr., Ben’s 16- year-old son, living with his father.
Patty Green, Ben’s 28-year-old daughter. She also lives with her father.
Question 56 of 100
Your answer: Alice Green, Ben’s sister, who lives in Ben’s household. is incorrect. The correct answer is: Susan Green, Ben’s wife. Susan maintains a separate residence although she and Ben are not divorced..
EXPLANATION:
The question is asking which person is NOT a family member. Susan Green is no longer a member of the insured’s residence and would not be covered. A spouse is considered to be a family member of the insured IF they live with the insured in the same household.
Question 56 of 100
According to the Definitions section of a homeowner policy, the term best described by the phrase an “unforeseen and unintended” event is a/an:
Answer Choices: Select the Correct Answer Accident Peril Hazard Risk
Question 57 of 100
Your answer: Accident is correct.
EXPLANATION:
This is the definition of an accident.
Question 57 of 100
The BOP provides liability coverages. Which of the following is a correct statement regarding the limits of coverage?
Answer Choices: Select the Correct Answer
The BOP only provides a Per Occurrence limit.
The BOP only provides Aggregate Limits of Liability coverage.
The BOP Liability section provides for Split Limits of Liability coverage.
The BOP contains two Aggregate limits, one for Premises and Operations Liability and one for Products and Completed Operations. The coverage also has a Per Occurrence limit.
Your answer: The BOP contains two Aggregate limits, one for Premises and Operations Liability and one for Products and Completed Operations. The coverage also has a Per Occurrence limit. is correct.
EXPLANATION:
The BOP contains both a Per Occurrence Limit and Aggregate Limits for Premises/Operations and Products/Completed Operations.
Question 58 of 100
Which of the following is the correct description of the “AMA Guide to the Evaluation of Permanent Impairment”?
Answer Choices: Select the Correct Answer
The guide has an extensive listing of the physical requirements of various job functions and the maximum level of impairment a person could have and still perform that function.
The guide has a listing of possible job functions that can be performed by individuals with given impairments, listed in a chart.
The guide has a set of symptoms that are typically associated with given impairments to assist physicians in determining whether to declare that a person is impaired.
The guide lists a set of medical criteria used by physicians to form the basis for established medical ratings of permanent impairment.
Question 59 of 100
Your answer: The guide lists a set of medical criteria used by physicians to form the basis for established medical ratings of permanent impairment. is correct.
EXPLANATION:
There are several different editions of this guide and states use different editions to make the impairment determination.
Question 59 of 100
The insured has primary bodily injury and property damage liability coverage with a $100,000 limit, and a $1 million umbrella liability policy with a $5,000 self-insured retention limit. In which one of the following situations would the insured’s umbrella liability policy typically not provide defense coverage?
Answer Choices: Select the Correct Answer
Five people sued the insured for property damage arising out of one occurrence. One of the cases was settled out of court for $100,000.
The insured was sued for $150,000 in personal injury damages.
The insured was sued for $10,000 in bodily injury damages.
The umbrella liability policy would provide a defense in all three cases.
Question 60 of 100
Your answer: The insured was sued for $150,000 in personal injury damages. is incorrect. The correct answer is: The insured was sued for $10,000 in bodily injury damages. .
EXPLANATION:
The claim would fall under the underlying coverage and not the umbrella because the underlying coverage has sufficient limits in place.
Question 60 of 100
A business down the street from your insured has suffered an explosion loss from a hot water heating boiler. The civil authorities have blocked off the street and your insured’s customers cannot get to his store, causing a loss of income. The insured carries an ISO standard Businessowners policy. Before his policy will pay any loss of income there is a _____ waiting period and the policy will then pay for loss of income up to _____ .
Answer Choices: Select the Correct Answer 72-hour/four weeks. 24-hour/two weeks. 12-hour/four weeks. 48-hour/three weeks.
Question 61 of 100
Your answer: 48-hour/three weeks. is incorrect. The correct answer is: 72-hour/four weeks. .
EXPLANATION:
The policy has a 72-hour waiting period before coverage will pay. It will pay for loss of income due to the actions of a civil authority for up to four weeks or until the expiration date of the policy, whichever is earlier.
Question 61 of 100
Which of the following statements is FALSE concerning coverage under the Business Auto policy?
Answer Choices: Select the Correct Answer
Medical payments coverage is automatically provided.
It may be used to cover specifically described autos only.
If written to cover “any auto”, non-owned and hired autos are automatically covered.
Whether newly acquired autos are automatically covered depends upon the applicable coverage symbol.
Question 62 of 100
Which of the following statements is FALSE concerning coverage under the Business Auto policy?
Your answer: Whether newly acquired autos are automatically covered depends upon the applicable coverage symbol. is incorrect. The correct answer is: Medical payments coverage is automatically provided. .
EXPLANATION:
Medical payments coverage is an optional coverage (and not automatically provided) for autos under the Business Auto policy.
Question 62 of 100
Which of the following injury or damage falls within the products-completed operations hazard as defined in a commercial umbrella liability policy?
Answer Choices: Select the Correct Answer
A spot remover company hired sales representatives across the country to visit potential customers’ homes and demonstrate its product. The company received hundreds of claims from people who said the carpets in their homes were reunited because, during the demonstration, the spot remover ate large holes in the carpet.
A home hair preparation was advertised to “curl hair” within two hours.” Many people used the product and their hair fell out.
A building being constructed by a contractor falls and causes bodily injury.
A contractor is blasting and a rock is thrown and a vehicle is damaged.
Question 63 of 100
Your answer: A home hair preparation was advertised to “curl hair” within two hours.” Many people used the product and their hair fell out. is correct.
EXPLANATION:
Product liability occurs when the product is relinquished to others away from the insured’s premises.
Question 63 of 100
In a situation where liability is obviously clear and an insurer refuses to settle, which of the following is correct according to the California Insurance Code?
Answer Choices: Select the Correct Answer
The insurer has the right to delay payment for a period of up to six months even when liability is clear.
The insurer is permitted to exercise the right of appeal.
The insurer has the right to delay payment for a period of up to 90 days months even when liability is clear.
The insurer is committing an unfair claims settlement practice in California.
Question 64 of 100
Your answer: The insurer is committing an unfair claims settlement practice in California. is correct.
EXPLANATION:
Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear is an unfair claims settlement practice in California.
Question 64 of 100
What should be the central goal of the claims adjuster?
Answer Choices: Select the Correct Answer
Follow the rules dictated by the principal
Not violate state insurance laws
Comply with the provisions of the insurance contract to obtain a full release settlement of the claim.
Maximize profit for the insurance company
Question 65 of 100
Your answer: Comply with the provisions of the insurance contract to obtain a full release settlement of the claim. is correct.
EXPLANATION:
The central goal of the adjuster is to comply with the insurance contract to obtain a full-release settlement of the claim.
Question 65 of 100
Which of the following is true regarding the homeowners HO-5 form?
Answer Choices: Select the Correct Answer
Provides open peril coverage on buildings and broad form peril coverage on their contents
Provides open peril coverage on the buildings and their contents
Provides broad form peril coverage on the buildings and their contents
Provides broad form peril coverage on the buildings and named peril coverage on their contents
Question 66 of 100
Your answer: Provides open peril coverage on buildings and broad form peril coverage on their contents is incorrect. The correct answer is: Provides open peril coverage on the buildings and their contents.
EXPLANATION:
The HO-5 form provides open peril coverage on the dwelling, other detached structures and personal property of the insured.
Question 66 of 100
The Homeowners “Additional Residence Rented to Others” endorsement will provide coverage for an additional structure, used as a residence, that is rented by the insured as a:
Answer Choices: Select the Correct Answer A one-family dwelling. A two-family dwelling. A one to four-family dwelling. A one to two-family dwelling.
Question 67 of 100
Your answer: A one to four-family dwelling. is correct.
EXPLANATION:
The Homeowners “Additional Residence Rented to Others” endorsement provides coverage for an additional structure, used as a residence, for one to four families.
Question 67 of 100
All of the following are exclusions under Equipment Breakdown coverage, EXCEPT:
Answer Choices: Select the Correct Answer Sudden and accidental loss. Fire losses. Flood. Wear and tear.
Question 68 of 100
Your answer: Sudden and accidental loss. is correct.
EXPLANATION:
The Equipment Breakdown policy covers sudden and accidental loss. It can be modified to cover indirect loss (loss of income) as a result of a direct loss. The commercial property forms would cover a fire loss as a result of a boiler explosion since this would be an ensuing loss.
Question 68 of 100
Jim and Mary are celebrating their 50th wedding anniversary and are on a worldwide cruise. They carry a DP-3 policy with a personal property limit of $50,000. While off the coast of Africa the ship catches fire and their property is completely destroyed. How much, if anything, will they collect?
Answer Choices: Select the Correct Answer Nothing. $5,000. Up to the personal property limit. $1,000 on a replacement cost basis.
Question 69 of 100
Your answer: $5,000. is correct.
EXPLANATION:
The DP-3 policy provides for up to 10% of the insured’s personal property limit anywhere in the world. Therefore, the policy would pay up to $5,000 on an actual cash basis.
Question 69 of 100
Each of the following is a comprehensive loss under the physical damage coverage of a Commercial Auto policy, EXCEPT:
Answer Choices: Select the Correct Answer
Damage to a covered auto caused by hail during a thunderstorm.
Damage caused when the auto overturned on a sharp curve.
Damage to the auto caused by flood waters.
Damage caused when vandals spray-painted graffiti on the auto.
Question 70 of 100
Your answer: Damage caused when the auto overturned on a sharp curve. is correct.
EXPLANATION:
Damage caused by overturn is considered to be a “collision” claim. The other three answer choices are all “comprehensive” or “other than collision” losses.
Question 70 of 100
If a third party is handed a check from the insured that has been altered and pays the false amount on the check, is such a loss covered? Forgery coverage is carried by the insured.
Answer Choices: Select the Correct Answer
The loss is not covered because it was presented by a third party
The insurance is not designed to cover this type of forgery
The insurance company will honor the claim
The insurance company may send the insured a non-waiver agreement to maintain its rights to conduct a thorough investigation while not admitting liability
Question 71 of 100
Your answer: The insurance company may send the insured a non-waiver agreement to maintain its rights to conduct a thorough investigation while not admitting liability is incorrect. The correct answer is: The insurance company will honor the claim.
EXPLANATION:
This insuring agreement offers the insured protection from forgeries or alterations in several instances. If a forged check is presented to the insured for payment and the insured hands over the money, such a loss is covered. If a third party is handed a check from the insured that has been altered and pays the false amount on the check, such a loss is covered. If an agent of the insured presents a forged draft to a third party and receives a “sum certain in money,” such a loss is covered. This insuring agreement also provides defense costs. If the insured is sued for refusing to pay a check or draft or promissory note because he or she thinks the item is forged or altered, this insuring agreement requires the insurer to pay defense costs. The insured has to have the written consent of the insurer to defend against the lawsuit and the legal expenses have to be reasonable. The defense costs are in addition to the stated limit of insurance applicable to the forgery or alteration coverage. However, the insured has to pay the defense costs up front; this is an indemnification agreement.
Question 71 of 100
All of the following would be covered under a Builders Risk Policy, EXCEPT:
Answer Choices: Select the Correct Answer Prospective buyer. Contractor. Owner. Sub-contractor.
Question 72 of 100
Your answer: Prospective buyer. is correct.
EXPLANATION:
A prospective buyer could not be added to the policy as an insured. They would not have an insurable interest in the property.
Question 72 of 100
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 73 of 100
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 73 of 100
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
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 74 of 100
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 75 of 100
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 75 of 100
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 76 of 100
Your answer: $12 is incorrect. The correct answer is: $10.
EXPLANATION:
The fee for a duplicate copy of an insurance adjuster’s license is $10 (CCR 2691.23)
Question 76 of 100
Which of the following property is excluded under homeowner personal property coverages?
Answer Choices: Select the Correct Answer
A valuable baseball card collection owned by the named insured’s son that is covered under a separate personal articles floater.
A suitcase full of clothes while the named insured is vacationing in Russia.
A suitcase full of clothes while the named insured is vacationing in Mexico.
A valuable baseball card collection that the named insured’s young son owns, but the agent is unaware of.
Question 77 of 100
Your answer: A valuable baseball card collection owned by the named insured’s son that is covered under a separate personal articles floater. is correct.
EXPLANATION:
Personal property more specifically insured elsewhere is specifically excluded in homeowners personal property coverage. Homeowner personal property coverage covers insured’s personal property anywhere in the world.
Question 77 of 100
Mr. Vickers was in a hurry to catch a plane. He parks his car in the parking garage at the airport and leaves the keys in the ignition. When he returns he finds that his car has been stolen. Later the car was discovered with severe collision damage. The airport carries Garagekeeper’s Legal Liability coverage and Mr. Vickers carries Liability and Comprehensive coverage on his auto. What coverage would apply?
Answer Choices: Select the Correct Answer
No coverage because there were no signs of forcible entry into the vehicle.
Mr. Vickers’ Collision coverage.
Mr. Vickers’ Comprehensive coverage (Other Than Collision).
The airport coverage.
Your answer: Mr. Vickers’ Comprehensive coverage (Other Than Collision). is correct.
EXPLANATION:
This is an example of an “Other Than Collision” loss, sometimes referred to as Comprehensive. Even though the vehicle was involved in a collision the theft coverage would respond since the damage originated from the theft of the vehicle.
Question 78 of 100
Personal property that is covered under the Personal Property Replacement Cost Endorsement is damaged and a claim has been filed. The replacement cost of the property at the time of the loss is $2,500. The full cost to repair the property is $2,000. The Coverage C limit of the Homeowners policy is $8,000. No special limits apply to this property and there is no limit applied to the type of property being claimed. Which of the following is the amount that will be paid under the endorsement?
Answer Choices: Select the Correct Answer $2,500. $2,000. $8,000. $500.
Question 79 of 100
Your answer: $2,500. is incorrect. The correct answer is: $2,000..
EXPLANATION:
The endorsement will pay the smallest amount of the replacement cost at the time of the loss, the full repair cost, the Coverage C limit, any applicable special limits, or the limit that applies to the type of property being claimed.
Question 79 of 100
The custom farming endorsement should be attached to a farmowner policy when the annual receipts are at least _____for farming for others.
Answer Choices: Select the Correct Answer $5,000 $4,000 $10,000 $7,500
Question 80 of 100
Your answer: $5,000 is correct.
EXPLANATION:
The custom farming endorsement is used when a farmer is farming for others and the receipts exceed $5,000 per year.
Question 80 of 100
Under California law, an “automobile insurance policy” means an automobile liability, automobile physical damage, or automobile collision policy, issued to an individual that covers all of the following types of vehicles, EXCEPT:
Answer Choices: Select the Correct Answer
Private passenger type vehicles, pick-up trucks and vans
A 6-wheel RV
A motorcycle
A public or livery conveyance for passengers
Question 81 of 100
Your answer: A public or livery conveyance for passengers is correct.
EXPLANATION:
Vehicles used for public or livery conveyance for passengers are not eligible for personal auto coverage. An endorsement must be used for some of the other types of vehicles.
Question 81 of 100
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.
Your answer: Theft. is correct.
EXPLANATION:
The coverage is for very basic perils similar to the DP-1 perils. Theft is not covered.
Question 82 of 100
When filing for an adjuster license in California, an independent adjuster candidate must post a bond in the amount of:
Answer Choices: Select the Correct Answer $20,000 $5,000 $2,000 $25,000
Question 83 of 100
Your answer: $2,000 is correct.
EXPLANATION:
For independent adjuster candidates, the bond amount is $2,000.
Question 83 of 100
Which of the following endorsements to a Commercial Crime policy affects employee theft coverage?
I. Name or position schedule.
II. Client’s property.
III. Forgery.
IV. Safe depository.
Answer Choices: Select the Correct Answer I and II only I, II, III, and IV I, II, and IV only I, II, and III only
Question 84 of 100
Your answer: I and II only is correct.
EXPLANATION:
Employee theft coverage covers loss to the insured’s property due to “theft” by an employee, whether identified or not. The name or position schedule endorsement requires that the guilty employee’s name or position be named on the endorsement; the client’s property endorsement extends coverage to property owned by a client, as long as the “theft” was by an “identified employee”.
Question 84 of 100
QUESTION:
An insured purchased business auto physical damage coverage against specified causes of loss. Protection applies to all of the following perils, except:
Answer Choices: Select the Correct Answer Theft Fire Falling objects Vandalism
Question 85 of 100
Your answer: Falling objects is correct.
EXPLANATION:
This is named peril coverage (specified causes of loss) and is not nearly as broad as comprehensive coverage. This coverage form names the perils that will be covered and falling objects is not a named peril. Comprehensive covers anything other than collision.
Question 85 of 100
All of the following are true of the liability coverage in a Businessowners policy, EXCEPT:
Answer Choices: Select the Correct Answer
Coverage is provided for products and operations liability.
Coverage is provided for both bodily injury and property damage from business operations and premises.
Coverage comes with a series of separate aggregate limits.
Coverage is provided on a “claims-made” basis.
Question 86 of 100
Your answer: Coverage comes with a series of separate aggregate limits. is incorrect. The correct answer is: Coverage is provided on a “claims-made” basis..
EXPLANATION:
The question is asking which answer choice is not true about the liability coverage under a Businessowners policy. The liability on a BOP is provided on an occurrence form, not a claims made form.
Question 86 of 100
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 87 of 100
Your answer: Replacement cost basis is incorrect. The correct answer is: For the limit shown in the policy declarations.
EXPLANATION:
The property is covered for the limit shown on the declarations page of the policy for the property specifically scheduled.
Question 87 of 100
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 88 of 100
Your answer: $500. is correct.
EXPLANATION:
The Commissioner, in lieu of suspending or revoking a license, may impose a civil penalty not to exceed $500 upon a licensee.
Question 88 of 100
The “when more than one coverage applies” condition in Commercial Crime insurance is designed to:
Answer Choices: Select the Correct Answer
Specify how a claim would be allocated among the different insurers.
Allow the insured to choose the company that will pay the claim.
Provide for subrogation of a claim.
Avoid overpayment of a claim.
Question 89 of 100
Your answer: Avoid overpayment of a claim. is incorrect. The correct answer is: Specify how a claim would be allocated among the different insurers. .
EXPLANATION:
The purpose of the clause is to specify how a claim would be allocated among the different insurers.
Question 89 of 100
To be covered under the “medical payments” coverage provided by the Commercial General Liability policy, bodily injury must be caused by:
Answer Choices: Select the Correct Answer An accident An occurrence Legal liability Negligence
Question 90 of 100
Your answer: An accident is correct.
EXPLANATION:
Medical payments coverage applies to accidents and the limit of coverage applies per person per accident. Legal liability and negligence are not required to be proven.
Question 90 of 100
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 91 of 100
Your answer: Within 6 business days after receiving the notice of claim. is correct.
EXPLANATION:
The California Fair Claims Settlement Practices Regulations state that if an insurer chooses to exercise its right to inspect the damaged vehicle on a first-party claim, it must do so within 6 business days of receiving the claims notice.
Question 91 of 100
The HO-3 provides _____ coverage on the dwelling and ____ coverage on personal property.
Answer Choices: Select the Correct Answer broad peril / open peril basic peril / basic peril open peril / broad peril named peril / open peril
Question 92 of 100
Your answer: broad peril / open peril is incorrect. The correct answer is: open peril / broad peril.
EXPLANATION:
The HO-3 (Special form) provides open peril coverage for loss to the dwelling and other structures. It provides broad peril coverage for personal property.
Question 92 of 100
Under an unendorsed CGL “claims-made” policy, a claim is covered if it is reported:
Answer Choices: Select the Correct Answer
During the policy period or 60 days after the expiration date of the policy.
Anytime after the policy has expired.
Within one year of the expiration date.
Anytime.
Question 93 of 100
Your answer: Within one year of the expiration date. is incorrect. The correct answer is: During the policy period or 60 days after the expiration date of the policy. .
EXPLANATION:
Under the claims-made policy, claims are covered if the occurrence took place after the retroactive date and it is reported within 60 days after the current policy expiration date. If another claim for that same occurrence is made within five years from the policy expiration date, coverage will be triggered.
Question 93 of 100
Your car is damaged in an auto accident. While it is being repaired, the body shop loans you a replacement. From a coverage standpoint this replacement vehicle is known as:
Answer Choices: Select the Correct Answer A temporary substitute. A non-owned auto. A newly acquired auto. A replacement vehicle.
Question 94 of 100
Your answer: A non-owned auto. is incorrect. The correct answer is: A temporary substitute. .
EXPLANATION:
The auto policy provides coverage in this example. Since the vehicle owned by the insured is being repaired, a loaner would be covered by the insured’s policy as a temporary substitute.
Question 94 of 100
Which optional coverage is not required to be described by the California Residential Property Insurance Disclosure?
Answer Choices: Select the Correct Answer
Seasonal Residence Coverage
Guaranteed replacement cost with full building code upgrade.
Extended Replacement Cost Coverage
Actual Cash Value Coverage
Question 95 of 100
Your answer: Seasonal Residence Coverage is correct.
EXPLANATION:
There is no such coverage as Seasonal Residence Coverage. The other three answer choices are coverages that are required to be described by the CRPID.
Question 95 of 100
Water damage to an insured building covered under the Commercial Property - Special form would be covered under all of the following circumstances, EXCEPT:
Answer Choices: Select the Correct Answer
Damage to the building caused by water to extinguish a fire.
Water from a pipe that suddenly breaks and causes wall and floor damage.
Water damage to the building caused by a pipe that has leaked over a period of 14 days.
A water pump in an appliance has cracked and water escapes, causing damage to the building.
Question 96 of 100
Your answer: Water damage to the building caused by a pipe that has leaked over a period of 14 days. is correct.
EXPLANATION:
Water damage caused by a pipe that has been leaking beyond 14 days is excluded by this Commercial Property form.
Question 96 of 100
Under the “supplemental extended reporting period” of their claims-made CGL policy, the We-Cure-Em Drug Company can rely on all of the following, EXCEPT:
Answer Choices: Select the Correct Answer
It will give them up to ten years to report newly-made claims which allegedly occurred prior to the policy’s expiration date.
An additional premium will be charged (up to 200% of the expiring premium).
It is optional coverage and must be requested by the insured.
It may not be cancelled once the insurer has issued the coverage.
Question 97 of 100
Your answer: It may not be cancelled once the insurer has issued the coverage. is incorrect. The correct answer is: It will give them up to ten years to report newly-made claims which allegedly occurred prior to the policy’s expiration date. .
EXPLANATION:
The supplemental extended reporting period extends the reporting period (of newly-made claims which allegedly occurred prior to the policy’s expiration date) to an UNLIMITED duration.
Question 97 of 100
Which of the following are are essential if a salvage award is to be made?
I. The property involved must be in peril from some hazard.
II. The salvage service must be voluntary.
III. The effort must be successful.
Answer Choices: Select the Correct Answer I and III only I and II only I, II and III II and III only
Question 98 of 100
Your answer: I, II and III is correct.
EXPLANATION:
All of these are essential if a salvage award is to be made.
Question 98 of 100
Under the Commercial Building and Personal Property Coverage Form, the Valuable Papers Extension applies to:
Answer Choices: Select the Correct Answer
The cost of restoring lost information.
Replacing antique goods.
Replacing the original while the duplicate is being used.
All of the listed answers are correct.
Question 99 of 100
Your answer: All of the listed answers are correct. is incorrect. The correct answer is: The cost of restoring lost information. .
EXPLANATION:
Without this extension, the company would only pay for the blank paper. The limit of coverage is $2,500 unless increased.
Question 99 of 100
What feature is common to most property insured under a commercial inland marine policy?
Answer Choices: Select the Correct Answer Usually in transit Rarity Changing values Named peril coverage
Question 100 of 100
Your answer: Named peril coverage is incorrect. The correct answer is: Usually in transit.
EXPLANATION:
Historically speaking, inland marine policies involved movement of goods over land. While some inland marine policies cover property at a fixed location (like fine art or maps and drawings), the common thread to most IM policies is transit risk, or property being off of an insured’s main premises – like cargo on trucks or contractor’s equipment.
Question 100 of 100
