IA Test 22 Flashcards
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 1 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 1 of 100
Tommy’s Tip Top TV Store is delivering a new flat screen TV to Jerry’s house. The delivery people set the TV down on the floor in the hallway to get a better grip. While picking it up, the TV makes deep scratches in the wood floor. How will the business auto policy for Tommy’s Tip Top TV Store respond to Jerry’s demand for damage to his floor?
Answer Choices: Select the Correct Answer
There is no coverage for the damage to the floor.
The damage to the floor is covered under the liability coverage of the business auto form.
The damage to the floor is covered under the CGL form.
The damage must result from an auto accident before coverage will apply.
Question 2 of 100
Your answer: The damage to the floor is covered under the CGL form. is incorrect. The correct answer is: The damage to the floor is covered under the liability coverage of the business auto form..
EXPLANATION:
The business auto form provides property damage liability coverage caused by the unloading or loading of property from the time it is picked up until the time it is delivered to its final destination.
Question 2 of 100
Under workers compensation coverage, if an employee is injured while participating in a voluntary soft ball game at the optional company picnic, compensation will be:
Answer Choices: Select the Correct Answer
denied.
reduced by 50%
paid as usual.
reduced proportionately by the employees degree of negligence
Question 3 of 100
Your answer: reduced by 50% is incorrect. The correct answer is: denied..
EXPLANATION:
If the injury arises out of voluntary participation in any off-duty recreational, social, or athletic activity not constituting part of the employee’s work-related duties, no benefits will be paid. However, if these activities are a reasonable expectancy of, or are expressly required by the employer, benefits will be paid.
Question 3 of 100
Any misinformation provided by an applicant which is such that the insurance company would not have issued a policy if the true facts were known is:
Answer Choices: Select the Correct Answer Material misrepresentation. Malfeasance. Fraud. Concealment.
Question 4 of 100
Your answer: Concealment. is incorrect. The correct answer is: Material misrepresentation. .
EXPLANATION:
This statement defines material misrepresentation, which is deliberately withholding an important fact that would have a bearing on the acceptability and/or pricing of the risk.
Question 4 of 100
An inland marine coverage which covers the insured’s merchandise held for sale, such property that is sold but not delivered, customers property in the care and custody of the insured, and property being transported to or from the insured, is a:
Answer Choices: Select the Correct Answer Dealers form Commercial articles floater. Floor plan merchandise coverage form. Bailee's customers policy.
Question 5 of 100
Your answer: Commercial articles floater. is incorrect. The correct answer is: Dealers form.
EXPLANATION:
An equipment dealers form is an example.
Question 5 of 100
Betty Jones claims that the bicycle manufactured last year by Darryl Lanier’s firm was the cause of her daughter’s accident. Which of the following coverages would have provided protection for Mr. Lanier?
Answer Choices: Select the Correct Answer
Commercial General Liability
Owners and Contractors Protective Liability
Workers Compensation
Contractual Liability
Question 6 of 100
Your answer: Commercial General Liability is correct.
EXPLANATION:
The general liability policy provides products coverage and would respond to cover this claim.
Question 6 of 100
Which of the following is generally not considered to be a legal defense against claims of negligence?
Answer Choices: Select the Correct Answer
The loss to the plaintiff was caused intentionally by the defendant.
A state law gives specific immunity from liability to the defendant.
An intervening cause was the proximate cause of the plaintiff’s injury rather than the defendant’s action (or inaction).
The relevant statute of limitation for filing a lawsuit has expired.
Question 7 of 100
Your answer: An intervening cause was the proximate cause of the plaintiff’s injury rather than the defendant’s action (or inaction). is incorrect. The correct answer is: The loss to the plaintiff was caused intentionally by the defendant. .
EXPLANATION:
Obviously, the fact that the act of the defendant against the plaintiff was intentional, could not be used as a “defense”.
Question 7 of 100
Policies issued under the National Flood Insurance Program provide removal coverage for property which is moved to another location to protect it from a flood. This coverage applies for up to:
Answer Choices: Select the Correct Answer 45 days. 10 days. 30 days. 60 days.
Question 8 of 100
Your answer: 30 days. is incorrect. The correct answer is: 45 days. .
EXPLANATION:
Removal coverage is designed to avoid loss if the property can be moved elsewhere for protection against flood damage. This coverage is provided for up to 45 days.
Question 8 of 100
Registration of a non-licensed independent adjuster in California during an emergency situation is valid for:
Answer Choices: Select the Correct Answer 90 working days. 180 days. One year. 120 days.
Question 9 of 100
Your answer: 180 days. is correct.
EXPLANATION:
Registration of a non-licensed adjuster in an emergency situation is valid for a period of 180 days from the date of a registration letter is sent to the Commissioner from the supervising licensed adjuster or admitted insurer. Before the lapse of that period, the Commissioner may grant a further 180-day extension as deemed appropriate upon written request from the supervising licensed adjuster or the admitted insurer.
Question 9 of 100
According to the commercial auto policy definitions, an “accident:”
Answer Choices: Select the Correct Answer
Includes continuous or repeated exposure to the same conditions.
Must be sudden and unexpected.
Must be unexpected and unpreventable.
Is any event that causes injury or damage.
Question 10 of 100
Your answer: Must be sudden and unexpected. is incorrect. The correct answer is: Includes continuous or repeated exposure to the same conditions. .
EXPLANATION:
The auto forms of the past used to simply cover the term “accident.” It did not include continuous or repeated exposure to the same conditions. Many claims were denied because of this restriction. The current forms now include the broader definition and provide better coverage.
Question 10 of 100
Tort Law applies to all of the following, EXCEPT:
Answer Choices: Select the Correct Answer
Liability arising from the commission of an unintentional tort.
Liability arising from negligence.
Liability arising from a breach of duty.
Liability arising from breach of contract.
Question 11 of 100
Your answer: Liability arising from breach of contract. is correct.
EXPLANATION:
A tort is a civil wrong, not arising from a contract. Contract law is a completely different branch of law.
Question 11 of 100
QUESTION:
The California Insurance Code (CIC) further details the items required on a valid insurance contract. All of the following are required, EXCEPT:
Answer Choices: Select the Correct Answer The parties to the contract. The insured's mailing address. The objects of insurance. The policy period.
Question 12 of 100
Your answer: The insured’s mailing address. is correct.
EXPLANATION:
The California Insurance Code (CIC) requires six specific items of information be included in an insurance policy issued in California. The insured’s mailing address is not one of them.
Question 12 of 100
Under what circumstances may an adjuster contact a claimant who is represented by an attorney?
Answer Choices: Select the Correct Answer
If permission is granted by the attorney.
If permission is granted by the claimant.
If permission is granted by the insurance company.
If permission is granted by the court.
Question 13 of 100
Your answer: If permission is granted by the attorney. is correct.
EXPLANATION:
Permission to contact a claimant represented by an attorney must be granted by the attorney representing the claimant.
Question 13 of 100
Submit
Premises liability exposure is faced by:
I. Banks.
II. Landlords.
III. Retail stores.
IV. Car dealers.
Answer Choices: Select the Correct Answer I, II, III and IV I and II only II and III only I, II, and III only
Question 14 of 100
Your answer: I, II, III and IV is correct.
EXPLANATION:
All parties/businesses that occupy the covered premises, or have a financial stake in the premises, face liability exposure. The customer is the potential claimant.
Question 14 of 100
An insured carries a Personal Property Replacement Cost endorsement attached to her Homeowners policy and has suffered a loss to her personal property. The insured submits a claim for actual cash value (ACV) at the time of the loss, but she intends to make a claim for replacement cost later. What is the time frame in which the insured must notify the insurer that she intends to make the replacement cost claim later?
Answer Choices: Select the Correct Answer Within 120 days of the loss. Within 180 days of the loss. Within 90 days of the loss. Within 30 days of the loss.
Question 15 of 100
Your answer: Within 180 days of the loss. is correct.
EXPLANATION:
The insured must notify the insured within 180 days of the loss of their intention to seek replacement cost coverage at a later date.
Question 15 of 100
An insurance company in California has cancelled a Homeowners policy for a reason acceptable by law. How long does the insurer have to return the unearned premium to the insured?
Answer Choices: Select the Correct Answer
The unearned premium must be returned along with the notice provided to the insured that the policy is being cancelled.
Within 30 days of the date of cancellation.
Within 25 days of the date of cancellation.
The unearned premium must be returned within 10 days of mailing the notice of cancellation to the insured.
Question 16 of 100
Your answer: Within 30 days of the date of cancellation. is incorrect. The correct answer is: Within 25 days of the date of cancellation..
EXPLANATION:
When a Homeowners policy is cancelled in California, any unearned premium must be returned to the insured within 25 days of the cancellation date of the policy.
Question 16 of 100
When can an adjuster in California operate under a fictitious name?
Answer Choices: Select the Correct Answer
Never.
Only when he or she has obtained written permission from the Commissioner.
For a 30 day period only.
For a 60 day period only.
Question 17 of 100
Your answer: Only when he or she has obtained written permission from the Commissioner. is correct.
EXPLANATION:
Only when he or she has obtained written permission from the Commissioner.
Question 17 of 100
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 18 of 100
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 18 of 100
The insured’s diamond ring valued at $10,000 has been destroyed in a fire. She is insured by a HO-3 policy. What is the responsibility of the insurance company with respect to this loss?
Answer Choices: Select the Correct Answer
Pay the ACV of the ring
Deny the claim because of the jewelry limitation
Pay the loss and waive the deductible
Pay only the replacement value of the ring and waive any deductible
Question 19 of 100
Your answer: Pay only the replacement value of the ring and waive any deductible is incorrect. The correct answer is: Pay the ACV of the ring.
EXPLANATION:
The policy contains a limitation for the theft of the jewelry. Since the ring was destroyed in the fire the insurer is responsible for the actual cash value of the ring unless the insured purchased replacement cost coverage.
Question 19 of 100
Which of the following is the first duty of the insured after suffering a property loss?
Answer Choices: Select the Correct Answer
Take steps to protect the property from further loss.
Have the damaged property appraised.
Hire an outside claims adjuster.
Increase his coverage.
Question 20 of 100
Your answer: Take steps to protect the property from further loss. is correct.
EXPLANATION:
The insured is required to protect the property from further loss. The insurance company will pay all reasonable costs involved in protecting the property from further loss or damage.
Question 20 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 21 of 100
Your answer: $240 is correct.
EXPLANATION:
The supplementary coverage within a general liability policy provides for wage reimbursement of up to $250.00 per day.
Question 21 of 100
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 22 of 100
Your answer: Scheduled personal property is correct.
EXPLANATION:
Coverage E covers scheduled farm personal property. Each item to be covered is listed and an amount of insurance is stated.
Question 22 of 100
Which of the following would not be improvements or betterments?
Answer Choices: Select the Correct Answer Carpet Furniture Interior walls Electrical wiring
Question 23 of 100
Your answer: Furniture is correct.
EXPLANATION:
Improvements and betterments are items added to a tenant’s rented structure that are permanent in nature. The tenant has insurable interest in them during occupancy of the building, and therefore can insure them. Furniture is not an improvement or betterment; it is personal property.
Question 23 of 100
Which of the following are qualifications of an applicant for an independent insurance adjuster license in California?
I. Be at least 18 years of age.
II. Must not have committed acts or crimes constituting grounds for denial of a license.
III. Must have had at least 6 months of experience in adjusting insurance claims or the equivalent as determined by the Commissioner.
IV. Must pay the required fees.
Answer Choices: Select the Correct Answer I, II, III and IV I, II and IV only I, II and III only II, III and IV only
Question 24 of 100
Your answer: I, II and IV only is correct.
EXPLANATION:
An applicant must have two years of experience. All the other statements are correct.
Question 24 of 100
Under the dwelling insurance program, an endorsement may be attached to the policy to cover dwellings during the course of construction. The insurance company must be advised when construction is completed, and within ____ after the insured takes occupancy of the dwelling.
Answer Choices: Select the Correct Answer 30 days 45 days 60 days 90 days
Question 25 of 100
Your answer: 30 days is correct.
EXPLANATION:
When the intended occupant of a dwelling under construction is the named insured, the dwelling under construction endorsement is attached to the dwelling policy to provide coverage. The insurance company must be advised when construction is completed and within 30 days after the insured takes occupancy of the dwelling.
Question 25 of 100
Which of the following is NOT a part of a Commercial Package Policy?
Answer Choices: Select the Correct Answer Declaration page Condition section One or more policy parts Earthquake coverage
Question 26 of 100
Your answer: Earthquake coverage is correct.
EXPLANATION:
Earthquake coverage must be added by endorsement for coverage to apply.
Question 26 of 100
Which of the following is a true statement regarding crime insurance with computer fraud coverage?
Answer Choices: Select the Correct Answer
Applies to criminal activity wherein the perpetrator gave false electronic instructions to remove insured’s funds from a bank account
Covers acts of employees
Covers losses that occur as the result of a messenger of the insured
Does not provide coverage on a “worldwide basis”
Question 27 of 100
Your answer: Applies to criminal activity wherein the perpetrator gave false electronic instructions to remove insured’s funds from a bank account is correct.
EXPLANATION:
Computer fraud covers loss of or damage to money, securities and other property due to the use of a computer to fraudulently transfer that property from inside the premises of a banking premises to a place or person (other than a messenger) outside the premises.
Question 27 of 100
The insured has a communication failure at his premises due to a lightning strike at the phone company. The insured’s phone system is damaged and he is out of business for four days. Which endorsement is necessary to provide coverage for the loss of business income?
Answer Choices: Select the Correct Answer Non owned and Hired Auto Earthquake Utility Services - Time Element Utility Services - Direct Damage
Question 28 of 100
Your answer: Utility Services - Direct Damage is incorrect. The correct answer is: Utility Services - Time Element.
EXPLANATION:
The Utility Services - Time Element endorsement would cover the loss of business income in this example if the phone system was listed on the endorsement and the cause of the loss was covered by the policy.
Question 28 of 100
Which endorsement must be attached to a BOP policy for coverage to apply to a freezer that was damaged by the interruption of a power source?
Answer Choices: Select the Correct Answer
Flood insurance endorsement
Earthquake endorsement
Utility Services - Time Element endorsement
Utility Services - Direct Damage endorsement
Question 29 of 100
Your answer: Utility Services - Direct Damage endorsement is correct.
EXPLANATION:
The Utility Services - Direct Damage endorsement would cover the direct damage to the freezer caused by the power interruption, as long as the freezer was specifically listed on the endorsement.
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
hich of the following types of property may be insured under a furriers block policy?
Answer Choices: Select the Correct Answer
Stocks of furs owned by the insured furrier.
Customer’s furs entrusted to the furrier for storage.
Furs or pelts on the premises of a breeder.
Fur garments sold and delivered to customers.
Question 31 of 100
Your answer: Customer’s furs entrusted to the furrier for storage. is incorrect. The correct answer is: Stocks of furs owned by the insured furrier..
EXPLANATION:
The furriers block policy is used to cover stocks of furs owned by the insured furrier and held for sale.
Question 31 of 100
In the newest edition of the Commercial Property form, which of the following is now considered part of the building?
Answer Choices: Select the Correct Answer Signs permanently attached Vegetated Roofs Outdoor Property Detached signs
Question 32 of 100
Your answer: Vegetated Roofs is correct.
EXPLANATION:
Vegetated roofs are now part of the building and not subject to the tree, shrubs and plants exclusion under covered property nor the tree, shrubs and plants extension of coverage.
Question 32 of 100
Which of the following Homeowners forms is intended to cover renters?
Answer Choices: Select the Correct Answer HO-8 HO-5 HO-3 HO-4
Question 33 of 100
Your answer: HO-8 is incorrect. The correct answer is: HO-4.
EXPLANATION:
The HO-4 was designed to cover insured’s who are renting their place of residence.
Question 33 of 100
Under the appraisal clause in a commercial inland form, which of the following is true?
Answer Choices: Select the Correct Answer
The insurer still retains its right to deny the claim entirely
It is not binding on all parties
The insurer is not bound by the decision of the appraisers and/or umpire
The insurer must seek legal action under the appraisal clause to enforce the terms and conditions
Question 34 of 100
Your answer: The insurer is not bound by the decision of the appraisers and/or umpire is incorrect. The correct answer is: The insurer still retains its right to deny the claim entirely.
EXPLANATION:
The insurer is bound by the outcome of the appraisal. They still reserve, however, the right to deny the claim if there is a coverage, rather than a valuation question.
Question 34 of 100
When is it appropriate for an adjuster to secure a non-waiver agreement with an insured?
Answer Choices: Select the Correct Answer
If the adjuster senses the claim may be fraudulent in nature.
If the adjuster is unsure of coverage.
If there is a question of coverage.
When the adjuster has verified coverage.
Question 35 of 100
Your answer: If the adjuster senses the claim may be fraudulent in nature. is incorrect. The correct answer is: If there is a question of coverage. .
EXPLANATION:
A properly executed non-waiver agreement allows the insurance company to complete a thorough investigation without implying that coverage is available for the loss.
Question 35 of 100
Which of the following statements are true regarding eligibility for “low cost automobile insurance” in California?
Answer Choices: Select the Correct Answer
All of the Statements Listed are True
Low cost automobile is now available in all the counties of California as the need is determined by the Commissioner.
Eligibility is Based on Income
Gross annual income of the household is equal to or less than 250% of the federal poverty level.
Question 36 of 100
Your answer: All of the Statements Listed are True is correct.
EXPLANATION:
All of the statements are true regarding eligibility for low cost automobile insurance in California.
Question 36 of 100
What is the definition of custom farming?
Answer Choices: Select the Correct Answer
Farming for others.
Sharecropping.
Raising specialty crops.
Crops grown using genetically modified seeds.
Question 37 of 100
Your answer: Farming for others. is correct.
EXPLANATION:
Custom farming is farming for others for a fee under a contract or agreement. A special endorsement is required if the receipts are in excess of $5,000 per year.
Question 37 of 100
An ISO Homeowners policy has been issued with $75,000 coverage on the dwelling. What is the automatic amount of insurance coverage on personal property?
Answer Choices: Select the Correct Answer $37,500 $7,500 $15,000 $45,000
Question 38 of 100
Your answer: $15,000 is incorrect. The correct answer is: $37,500.
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 38 of 100
Farm liability coverages include each of the following, EXCEPT:
Answer Choices: Select the Correct Answer Bodily injury and property damage. Personal injury and advertising injury. Medical payments to others. Professional liability.
Question 39 of 100
Your answer: Personal injury and advertising injury. is incorrect. The correct answer is: Professional liability..
EXPLANATION:
Professional liability coverage is provided by other types of policies, but not under farm liability coverage.
Question 39 of 100
Submit
In 2011 Ace Agency writes a fidelity bond for Doe Carpeting. Two months later a claim for theft by one of Doe’s employees that occurred back in 2008 is brought against Doe Carpeting. Doe should submit this claim to:
Answer Choices: Select the Correct Answer
The company with whom Doe had their fidelity bond in 2008
The company with whom Doe currently have their fidelity bond
Neither company because the bonding period has expired
Both companies because both must share in indemnification
Question 40 of 100
Your answer: Both companies because both must share in indemnification is incorrect. The correct answer is: The company with whom Doe currently have their fidelity bond.
EXPLANATION:
Fidelity bonds contain a superseded suretyship clause. This clause states in essence that the new (current) bond will pay all losses that would have been recoverable under the prior bond if the discovery period under the prior bond had expired.
Question 40 of 100
