IA Test 23

Question 1

An office building is limited in the number of stories it may contain be eligible for coverage under the Businessowners Policy?

Answer Choices:	Select the Correct Answer
Five stories	
Six stories	
Four stories	
Seven stories	

Question 1 of 100

Answer 1

Your answer: Five stories is incorrect. The correct answer is: Six stories.

EXPLANATION:
Office buildings, including office condominium associations, occupied principally for office purposes, are eligible. Buildings, including apartment buildings, cannot exceed six stories in height or 100,000 square feet in total floor area. Eligible incidental occupancies are (1) apartments; (2) eligible wholesaler, mercantile, service or processing occupancies and contractors which in total do not exceed 35,000 square feet; and (3) contractors which do not occupy more than 7,500 square feet or more than 15 percent of the total area.

Question 1 of 100

Question 2

Protection and indemnity coverage contained in an ocean marine policy covers:

I. Liability against injuries to seamen.
II. Injury to stevedores, longshoreman and harbor workers.
III. Cargo, if lost or damaged through negligence.

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

Question 2 of 100

Answer 2

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

EXPLANATION:
Protection and indemnity coverage would apply to all of these types of losses.

Question 2 of 100

Question 3

A customer deposits items in a safe deposit box at the bank. These items are missing the next time the customer opens the box. What crime coverage is necessary to cover this loss?

Answer Choices:	Select the Correct Answer
Safe Depository	
Guests Property	
Lessees of Safe Deposit Boxes	
Extortion-Commercial Entities	

Question 3 of 100

Answer 3

Your answer: Safe Depository is correct.

EXPLANATION:
If the bank is legally liable for the loss, the “Safe Depository” coverage form will cover the loss.

Question 3 of 100

Question 4

A contractor in need of a bid bond to obtain a contract is an example of a(n):

Answer Choices:	Select the Correct Answer
Principal.	
Obligee.	
Surety.	
Fiduciary.	

Question 4 of 100

Answer 4

Your answer: Surety. is incorrect. The correct answer is: Principal. .

EXPLANATION:
A contractor needing a bid bond would be the principal. The bond company is the guarantor and the owner (who receives the benefit of the bond) would be the obligee.

Question 4 of 100

Question 5

Under the comprehensive coverage of a business auto policy, which of the following would not be a covered loss?

Answer Choices: Select the Correct Answer
After sliding on an icy pavement, a driver hits a guardrail.
Electrical wiring in the vehicle catches fire when the ignition is turned on.
All four tires are removed and a truck is put on blocks while it is parked over the weekend, even though there is no evidence of forcible entry into the company parking lot.
A vehicle has its tires slashed by an undetermined person.

Question 5 of 100

Answer 5

Your answer: Electrical wiring in the vehicle catches fire when the ignition is turned on. is incorrect. The correct answer is: After sliding on an icy pavement, a driver hits a guardrail..

EXPLANATION:
Since the vehicle sustained damage by hitting the guard rail, it is considered a collision claim. This is because the definition of collision includes the upset of a vehicle, its impact with another vehicle or object; anything else would be other than collision and thus be covered by comprehensive coverage.

Question 5 of 100

Question 6

Which of the following represents an indirect loss?

Answer Choices: Select the Correct Answer
A tree fell on a house, causing a hole in the roof, which later allowed rain to enter
Rain entered a house after a tree fell onto it, later causing mold to develop
Mold developed in a house, later causing the occupants to become very ill
A kitchen fire made a house untenable, causing the occupants to incur hotel charges

Question 6 of 100

Answer 6

Your answer: A kitchen fire made a house untenable, causing the occupants to incur hotel charges is correct.

EXPLANATION:
An indirect loss is the temporary loss of use caused by a direct property loss. A kitchen fire is a direct loss. If that loss is severe enough to make the house unfit to be used, the insured will need to temporarily find an alternative place to live in until repairs to the house are completed. The cost of that temporary replacement - the hotel charge - is the indirect loss.

Question 6 of 100

Question 7

The standardized Homeowners forms provide ______ for Fire Department Service Charge.

Answer Choices:	Select the Correct Answer
$1,000	
$500	
$250	
$750	

Question 7 of 100

Answer 7

Your answer: $500 is correct.

EXPLANATION:
$500 is paid under the standardized Homeowners forms for Fire Department Service Charge. This is “additional insurance” and the deductible does not apply.

Question 7 of 100

Question 8

Which of the following types of losses will NOT be excluded by Ace Building and Materials Company’s CGL policy?

Answer Choices: Select the Correct Answer
Bodily injury to a customer arising out of a forklift being used by the insured
Damage to a forklift owned by others which was in the custody of the insured
Property damage caused to the water system when a forklift dropped a drum of caustic chemicals owned by the insured
Bodily injury to an employee driving a forklift

Question 8 of 100

Answer 8

Your answer: Bodily injury to a customer arising out of a forklift being used by the insured is correct.

EXPLANATION:
The use of mobile equipment on or off the insured’s premises is covered under the CGL policy. Property in the insured’s care, custody or control is excluded. Pollution is also excluded as well as injuries to employees.

Question 8 of 100

Question 9

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

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

Question 9 of 100

Answer 9

Your answer: Can make this request. is incorrect. The correct answer is: Is guilty of an unfair claims practice act..

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

Question 9 of 100

Question 10

Fidelity bonds which apply coverage to an employee or employees acting in collusion with others are called:

Answer Choices:	Select the Correct Answer
Commercial blanket bonds.	
Scheduled bonds.	
Position bonds.	
Blanket position bonds.	

Question 10 of 100

Answer 10

Your answer: Commercial blanket bonds. is correct.

EXPLANATION:
The commercial blanket bond’s limit applies separately to each employee involved in the loss whether acting alone or in collusion with other employees. However, in case of a loss only the bond limit will apply to the entire loss.

Question 10 of 100

Question 11

A Businessowners policy has a $500,000 occurrence limit for liability, and a $1,000,000 aggregate limit. If claims for $600,000 and $400,000 have been filed in two separate incidents, how much coverage remains, if any, for future claims submitted during the policy term?

Answer Choices:	Select the Correct Answer
$500,000	
$0	
$100,000	
$1,000,000	

Question 11 of 100

Answer 11

Your answer: $100,000 is correct.

EXPLANATION:
The most the policy will pay for any one single occurrence is $500,000, therefore that amount would be payable for the first loss. Once paid that amount must be subtracted from the Aggregate Limit (the most available for all claims in the policy year) leaving $500,000 remaining in the aggregate. The second claim is within the occurrence limit and because there is enough left in the aggregate, the entire $400,000 is payable. After subtracting the $400,000 loss from the remaining aggregate, $100,000 is left to pay any and all future claims for the remainder of the policy term.

Question 11 of 100

Question 12

An applicant for an independent adjuster license must file with the Commissioner a surety bond in the amount of:

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

Question 12 of 100

Answer 12

Your answer: $2,000. is correct.

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

Question 12 of 100

Question 13

How are the HO-2, HO-4 and HO-6 forms similar?

Answer Choices:	Select the Correct Answer
The perils covered	
The risk of damage to the dwelling	
The type of residence insured	
The property insurance	

Question 13 of 100

Answer 13

Your answer: The perils covered is correct.

EXPLANATION:
All three forms use the broad form, named perils approach for covered property. But property insured under these three forms varies to accommodate policyholder’s needs. The HO-2 covers the dwelling building, whereas the HO-4 does not and the HO-6 includes the building coverage as needed by the unit owner.

Question 13 of 100

Question 14

All of the following are “advertisements” as defined by the California Code of Regulations (CCR), EXCEPT:

Answer Choices: Select the Correct Answer
Any written or printed communication for the purpose of soliciting, describing, or promoting the licensed business of the licensee, including a brochure, letter, pamphlet, newspaper, periodical, publication, or other writing.
A directory listing caused or permitted by the licensee that also indicates his licensed activity.
Any printing or writing on buildings used as the licensee’s place of business or branch office.
A radio, television or similar airwaves transmission that solicits or promotes the licensed business of the licensee.

Question 14 of 100

Answer 14

Your answer: Any printing or writing on buildings used as the licensee’s place of business or branch office. is correct.

EXPLANATION:
“Any printing or writing on buildings used as the licensee’s place of business or branch office” is actually listed as NOT being included in the definition of “advertisement”. All the other answer choices ARE considered “advertisements” according to the CCR. (CCR 2691.17)

Question 14 of 100

Question 15

On an unendorsed special form BOP, how much coverage is there for theft of money & securities?

Answer Choices: Select the Correct Answer
$5000 on the premises only
$5000 on the premises but only $2500 off
$1000 on and off the premises
Nothing

Question 15 of 100

Answer 15

Your answer: $5000 on the premises but only $2500 off is incorrect. The correct answer is: Nothing.

EXPLANATION:
Even though the special BOP is “open peril” coverage which includes theft, the loss of money and securities are still not a covered form of property. The endorsement for Money & Securities is necessary to cover this exposure.

Question 15 of 100

Question 16

QUESTION:
All of the following statements are true regarding state Guaranty Associations, EXCEPT:

Answer Choices: Select the Correct Answer
The Association covers the claims of insurers that become insolvent in the state.
The Association assesses admitted insurers a percentage of net premiums written in the state to finance the fund.
The fund assists insurers in gaining new insurance business by allowing them to advertise their membership in the Guaranty Association.
The fund pays the workers compensation claims of an insolvent insurance in full with no limit.

Question 16 of 100

Answer 16

Your answer: The fund assists insurers in gaining new insurance business by allowing them to advertise their membership in the Guaranty Association. is correct.

EXPLANATION:
The fund does NOT assists insurers in gaining new insurance business by allowing them to advertise their membership in the Guaranty Association. In fact, the Association prohibits insurers from advertising that they are a member of the Guaranty Association. COVERED IN INSURANCE FUNDAMENTALS.

Question 16 of 100

Question 17

Adjusters have a relationship to the legal profession, and must exercise care to avoid the unauthorized practice of law. In California, the insurance code states that nothing in the code will be construed as entitling any person to practice law in the state, UNLESS:

Answer Choices: Select the Correct Answer
He/she is a licensed independent adjuster.
He/she has graduated from an accredited law school.
He/she is an active member of the State Bar of California.
He/she is a licensed public adjuster.

Question 17 of 100

Answer 17

Your answer: He/she is an active member of the State Bar of California. is correct.

EXPLANATION:
In California, the insurance code states that nothing in the code will be construed as entitling any person to practice law in the state, UNLESS he/she is an active member of the State Bar of California.

Question 17 of 100

Question 18

An application for an independent adjuster license in California must include:

I. The full name and business address of the applicant.
II. A recent photograph of the applicant and one classifiable set of his or her fingerprints.
III. A verified statement of his or her experience qualifications.
IV. A statement as to the classification or classifications under which the applicant desires to be qualified.

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

Question 18 of 100

Answer 18

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

EXPLANATION:
Two recent photographs of the applicant, of a type prescribed by the Commissioner, and two classifiable sets of his or her fingerprints is required.

Question 18 of 100

Question 19

Which of the following is NOT needed for rating the premium for an ISO standardized Businessowners policy?

Answer Choices:	Select the Correct Answer
Square foot area	
Property coverage amount	
Protection class	
Rate group	

Question 19 of 100

Answer 19

Your answer: Protection class is incorrect. The correct answer is: Square foot area .

EXPLANATION:
Square footage is not needed in the rating of the premium for the ISO BOP policy, however, square footage DOES play a role in determining the ELIGIBILITY of the risk to be covered under a BOP. The property coverage amount, the protection class, and the rate group all play a role in the premium RATING process.

Question 19 of 100

Question 20

All the following are cause for nonrenewal or cancellation of an automobile policy in California, EXCEPT:

Answer Choices: Select the Correct Answer
a subtantial increase in the hazard insured against.
nonpayment of premium.
the insured declaring bankruptcy.
fraud or material misrepresentation.

Question 20 of 100

Answer 20

Your answer: the insured declaring bankruptcy. is correct.

EXPLANATION:
According to the California Insurance Code (CIC 661), an insured declaring bankruptcy is not a cause for cancellation or nonrenewal of an auto policy.

Question 20 of 100

Question 21

Under the Commercial Building and Personal Property form, all of the following are extensions of coverage, EXCEPT:

Answer Choices:	Select the Correct Answer
Appraisal.	
Personal effects.	
Property Off Premises.	
Valuable papers.	

Question 21 of 100

Answer 21

Your answer: Personal effects. is incorrect. The correct answer is: Appraisal. .

EXPLANATION:
The appraisal clause is not an extension of coverage. This clause is in most, if not all, property insurance contracts to assist in the resolving of disputes between the insured and the insurer as to the value of the damaged property.

Question 21 of 100

Question 22

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

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

Question 22 of 100

Answer 22

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

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

Question 22 of 100

Question 23

For the insured dwelling and other detached structures, the DP-3 provides:

Answer Choices: Select the Correct Answer
Open peril coverage.
Broad perils coverage.
Basic perils coverage.
Fire, lightning, extended coverage and vandalism & malicious mischief coverage.

Question 23 of 100

Answer 23

Your answer: Broad perils coverage. is incorrect. The correct answer is: Open peril coverage. .

EXPLANATION:
The DP-3 provides open perils protection for the dwelling and other structures, and named perils protection for personal property. The DP-1 and DP-2 forms provide named peril protection only for the dwelling, other structures, and personal property.

Question 23 of 100

Question 24

Jerusha has her business automobiles covered under a Business Auto policy. She has purchased a new business automobile recently but was not required under her policy provisions to report her newly acquired auto. Based on this information, which BAP symbol is listed on the Declarations page of Jerusha’s policy?

Answer Choices:	Select the Correct Answer
Symbol 1.	
Symbol 7.	
Symbol 5.	
Symbol 3.	

Question 24 of 100

Answer 24

Your answer: Symbol 5. is incorrect. The correct answer is: Symbol 1..

EXPLANATION:
When Symbol 1 is listed on the Declarations page, the insured is not required to report “newly acquired autos” to the insurer. This is because Symbol 1 covers “any auto”.

Question 24 of 100

Question 25

Which of the following is the type of report indicating the initial results of the investigation of a claim? ``` Answer Choices: Select the Correct Answer Field Report Interim Report Full Report Claims Report ``` Question 25 of 100

Answer 25

Your answer: Interim Report is incorrect. The correct answer is: Field Report. EXPLANATION: This report can also be called the initial report and is the result of the initial investigation. Question 25 of 100

Question 26

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 26 of 100

Answer 26

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 26 of 100

Question 27

An insured auto dealer has purchased a Garage policy with physical damage coverage against specified causes of loss. Which of the following losses will not be covered by the policy? Answer Choices: Select the Correct Answer Flood damage to a covered auto. Vandalism damage to a covered auto. Damage resulting from the collision of the truck carrying a covered auto with another vehicle. Explosion. Question 27 of 100

Answer 27

Your answer: Flood damage to a covered auto. is incorrect. The correct answer is: Damage resulting from the collision of the truck carrying a covered auto with another vehicle.. EXPLANATION: A specified cause of loss is named perils coverage and collision is not one of the named perils. Collision is a separate physical damage coverage requiring the upset of the covered vehicle, or its impact with another vehicle or object. Question 27 of 100

Question 28

The conditions section of an insurance contract specifies which of the following? I. The property location. II. The insurance company's responsibilities. III. The insured's responsibilities. IV. The policy duration. ``` Answer Choices: Select the Correct Answer II and III only I and II only I and IV only I, II, III and IV ``` Question 28 of 100

Answer 28

Your answer: I, II, III and IV is incorrect. The correct answer is: II and III only. EXPLANATION: The location of the property and policy duration is shown on the declarations page of the policy. The responsibilities of both parties are contained in the conditions section of the contract. Question 28 of 100

Question 29

Under the farm forms, theft of certain types of property has a theft coverage limitation. The theft limitation on firearms and other related equipment is: ``` Answer Choices: Select the Correct Answer $1,500. $500. $3,000. $5,000. ``` Question 29 of 100

Answer 29

Your answer: $5,000. is incorrect. The correct answer is: $3,000.. EXPLANATION: The theft limitation on firearms and other related equipment is $3,000. Question 29 of 100

Question 30

How may days notice are required in the case of cancellation of an auto policy in California which has been in effect for more than 60 days? Answer Choices: Select the Correct Answer 20 days, except for 10 days in the case of nonpayment of premium. 30 days, except for 10 days in the case of nonpayment of premium. 45 days, except for 10 days in the case of nonpayment of premium. 10 days in any case. Question 30 of 100

Answer 30

Your answer: 30 days, except for 10 days in the case of nonpayment of premium. is incorrect. The correct answer is: 20 days, except for 10 days in the case of nonpayment of premium. . EXPLANATION: There are only a few legal reasons an insurer may cancel an auto policy that has been in force for 60 days or longer, but when allowed, 20 days notice is required before the cancellation date, unless for nonpayment of premium, in which case 10 days notice is sufficient. Question 30 of 100

Question 31

The Fit and Trim Fitness Center wants to reduce its carbon footprint. A covered loss destroys some treadmills, damages the roof and most of the interior walls. Fit and Trim finds replacement treadmills that generate and actually return energy to the power grid. The cost is 15% higher than standard equipment. Which of the following, if any, would pay the increase? Answer Choices: Select the Correct Answer Ordinance and Law Coverage Fungi, Wet and Dry Rot Increased cost of loss and related expenses for "green" updates Consequential Loss Coverage Question 31 of 100

Answer 31

Your answer: Increased cost of loss and related expenses for "green" updates is correct. EXPLANATION: The increased cost of loss and related expenses for green updates will pay an extra 25% of the property loss for the increased cost to “go green” up to $100,000 maximum. Question 31 of 100

Question 32

What is "break-bulk" cargo as respects ocean marine cargo coverage? ``` Answer Choices: Select the Correct Answer Loose cargo, such as cartons. Containerized cargo. Bulk shipments. Tanker cargo. ``` Question 32 of 100

Answer 32

Your answer: Bulk shipments. is incorrect. The correct answer is: Loose cargo, such as cartons. . EXPLANATION: Break bulk cargo refers to loose cargo, such as cartons or boxes, that are stowed directly (or placed on pallets) in the ship’s hold, as opposed to containerized cargo or bulk shipments. Question 32 of 100

Question 33

A non-waiver agreement would allow the insurance company to do which of the following? Answer Choices: Select the Correct Answer Hire an attorney to protect its rights Decline to investigate the claim due to policy exclusions Investigate the loss without verifying that the loss is covered Hire a public adjuster to provide a second opinion Question 33 of 100

Answer 33

Your answer: Investigate the loss without verifying that the loss is covered is correct. EXPLANATION: Insurers can use a non-waiver agreement when there is a question about coverage or limits. In such a signed agreement, the claimant/policyholder stipulates and acknowledges that the insurer’s continued investigation into and the adjustment of the loss is not to be construed as an admission of coverage by the insurer. Question 33 of 100

Question 34

Which of the following homeowner forms offers the broadest coverage? ``` Answer Choices: Select the Correct Answer HO-1 HO-3 HO-5 HO-2 ``` Question 34 of 100

Answer 34

Your answer: HO-2 is incorrect. The correct answer is: HO-5. EXPLANATION: The HO-5 is the broadest homeowner form. It provides open peril coverage on both buildings and contents. Question 34 of 100

Question 35

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 35 of 100

Answer 35

Your answer: The damage to the floor is covered under the liability coverage of the business auto form. is correct. 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 35 of 100

Question 36

Which of the following losses is NOT excluded under the Physical Damage coverage of a personal auto policy? Answer Choices: Select the Correct Answer Damage to a covered auto while being used as part of a car pool. Damage to equipment designed for the detection of radar. Loss caused by freezing of the cooling system. Loss of custom furnishings in a customized van. Question 36 of 100

Answer 36

Your answer: Damage to equipment designed for the detection of radar. is incorrect. The correct answer is: Damage to a covered auto while being used as part of a car pool. . EXPLANATION: An exception is made in the policy to allow coverage while the vehicle is involved in a car pool. Coverage is excluded if the vehicle is used as a livery. The other three choices are excluded. Coverage for the custom furnishings in a van must be added by endorsement. Question 36 of 100

Question 37

A change in the Qualified Manager of a California independent adjusting business must be reported to the Department of Insurance within ____ days of such change. ``` Answer Choices: Select the Correct Answer 30 20 15 10 ``` Question 37 of 100

Answer 37

Your answer: 30 is correct. EXPLANATION: The change must be reported within 30 days. Question 37 of 100

Question 38

Workers compensation insurance is a contract between: ``` Answer Choices: Select the Correct Answer Employer and employee. State and employer. Insurance company and the employee. Insurance company and the employer. ``` Question 38 of 100

Answer 38

Your answer: State and employer. is incorrect. The correct answer is: Insurance company and the employer.. EXPLANATION: Workers compensation coverage is a contract between the insurance company and the employer. It is the employer that contracts with the insurance company to provide the statutorily required workers compensation benefits for the injured employee. Question 38 of 100

Question 39

Which of the following would be excluded under Personal and Advertising Injury Liability Coverage of a CGL policy? I. Breach of contract. II. Incorrect price descriptions of goods, products or services. III. Failure of goods, products or services to perform as advertised. IV. Any offense committed by an insured who is in the business of advertising or publishing. ``` 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 39 of 100

Answer 39

Your answer: I, II, and III only is incorrect. The correct answer is: I, II, III, and IV. EXPLANATION: CGL Coverage B-Personal and Advertising Injury Liability excludes coverage for anyone in the advertising business and excludes claims for breach of contract, incorrect prices on goods, and failure of goods to perform as advertised. Question 39 of 100

Question 40

What insurers must participate in accepting business under the California FAIR Plan? Answer Choices: Select the Correct Answer All insurers licensed to write basic property insurance or any component of property insurance in multi-peril policies. Companies who specialize in difficult or hard to place property insurance. Only those property insurers holding a certificate of authority for 5 years or less in California. Only those insurers wanting to enter California and have received approval from their board of directors. Question 40 of 100

Answer 40

Your answer: All insurers licensed to write basic property insurance or any component of property insurance in multi-peril policies. is correct. EXPLANATION: The purpose of the FAIR Plan is designed to provide a market for those property owners who are unable to obtain insurance through the normal market. Therefore, the California legislature enacted legislation requiring the participation of admitted insurers licensed to write property insurance to participate. Question 40 of 100

Question 41

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 41 of 100

Answer 41

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 41 of 100

Question 42

The retroactive date indicated on the Declarations page of a claims-made commercial umbrella liability policy provides that coverage for injury or damage will be: Answer Choices: Select the Correct Answer Excluded after that date. Included before that date under every circumstance. Excluded before that date. Included before that date if a supplemental extended reporting period has been purchased. Question 42 of 100

Answer 42

Your answer: Excluded before that date. is correct. EXPLANATION: The retroactive date is the date that claims-made coverage begins. Claims before that date are excluded by the policy. Question 42 of 100

Question 43

A person, firm, or corporation that, for compensation, acts on behalf of an insured in negotiating the settlement of certain claims for loss or damage to property is known as a/an: ``` Answer Choices: Select the Correct Answer Independent adjuster. Consultant. Public adjuster. Insurance agent. ``` Question 43 of 100

Answer 43

Your answer: Public adjuster. is correct. EXPLANATION: This is the definition of public adjuster. Question 43 of 100

Question 44

Byron has submitted his application for a California Adjuster license, and then begins studying a course that will allow him to take the state licensing exam. Byron is working 40 hours a week, so he feels satisfied that he finished the course and passed the state licensing exam only 14 months after submitting his application. Which of the following is the response Byron will receive from the California Department of Insurance? Answer Choices: Select the Correct Answer He will receive notice that his license application is denied because he was required to fulfill all licensing requirements within 12 months of submitting his application. He will receive his license from the Department because he fulfilled all the requirements for licensing. He will receive notice that his license application is denied because he was required to fulfill all licensing requirements within 6 months of submitting his application. He will receive notice that his license application has been approved and he will receive it within 60 days. Question 44 of 100

Answer 44

Your answer: He will receive notice that his license application is denied because he was required to fulfill all licensing requirements within 12 months of submitting his application. is correct. EXPLANATION: He will receive notice that his license application is denied because he was required to fulfill all licensing requirements within 12 months of submitting his application. (CCR 2691.9) Question 44 of 100

Question 45

When an insured is liable for causing intentional "bodily injury", under what circumstances, if any, will an umbrella liability policy cover such a loss? Answer Choices: Select the Correct Answer Only when the injury is "bodily injury", and the insured inflicted this injury on another person while exercising reasonable force to protect persons or property When the injury is personal injury, bodily injury or property damage, and the insured used reasonable force to protect persons or property Always, as long as the policy terms are met Never, because the injury was intentional Question 45 of 100

Answer 45

Your answer: Always, as long as the policy terms are met is incorrect. The correct answer is: Only when the injury is "bodily injury", and the insured inflicted this injury on another person while exercising reasonable force to protect persons or property. EXPLANATION: The intentional act by the insured, who inflicted bodily injury on another person, must have been committed in an attempt to save persons or property for coverage to apply. Imagine that someone intrudes into your home and you strike them with a baseball bat in an attempt to save your family and property. Later, the injured intruder sues you for the injuries they sustained. The umbrella policy excludes coverage for bodily injury that is intentionally inflicted by the insured, BUT there is an exception to this exclusion that states coverage WOULD apply if the insured intentionally inflicted bodily injury in an attempt to save persons or property. Question 45 of 100

Question 46

Which of the following is covered property under the HO-3 form? I. Belongings of the insured's daughter while she is away at college II. The insured's garage III. The insured's dog IV. Personal property of a tenant ``` Answer Choices: Select the Correct Answer I, II, and III only I, II, III, and IV I and II only II and III only ``` Question 46 of 100

Answer 46

Your answer: I, II, and III only is incorrect. The correct answer is: I and II only. EXPLANATION: Pets, no matter how valuable, are excluded under Coverage C, as is the property of boarders or renters. Question 46 of 100

Question 47

Which of the following would be considered vacant on an unendorsed Commercial Property policy? Answer Choices: Select the Correct Answer A building which is 25% vacant A leased building in which less than 31% of the building is occupied A retail store located in a shopping mall which closed and has been completely vacant for 42 days A building whose utilities were turned off 31 days ago Question 47 of 100

Answer 47

Your answer: A building whose utilities were turned off 31 days ago is incorrect. The correct answer is: A leased building in which less than 31% of the building is occupied. EXPLANATION: In the Building and Personal Property Coverage form, under Loss Conditions, the Vacancy Clause states that when the policy is issued to the owner or general lessee of a building, such building is vacant unless at least 31% of its total square footage is either (a) rented to and in use by a lessee or sub-lessee, or (b) used by the owner to conduct normal operations. Question 47 of 100

Question 48

The insured has liability coverage with a limit of $300,000 per occurrence. She purchases a $1 million Personal Umbrella to extend and broaden her coverage. The Umbrella policy includes a $10,000 retained limit. The insured becomes liable for $800,000 in damages that are excluded by the underlying liability policy, but is covered by the Umbrella policy. How would this case likely be settled? Answer Choices: Select the Correct Answer The underlying policy would pay nothing, the insured would pay $10,000, and the Umbrella policy would pay $200,000. The insured would pay $10,000 and the Umbrella policy would pay $790,000. The underlying liability policy would pay $300,000 and the insured would pay $500,000. The underlying liability policy would pay $300,000 and the Umbrella policy would pay $500,000. Question 48 of 100

Answer 48

Your answer: The insured would pay $10,000 and the Umbrella policy would pay $790,000. is correct. EXPLANATION: Because the underlying liability policy excludes coverage and assuming claim was covered under the broadened coverage purchased under the Personal Umbrella policy, the Umbrella policy would pay the claim less the $10,000 retained limit. Question 48 of 100

Question 49

Insurance that guarantees or indemnifies owners of real or personal property, or the holders of liens or encumbrances on that property, is classified in California as which of the following types of insurance? ``` Answer Choices: Select the Correct Answer Title insurance. Surety insurance. Credit insurance. Mortgage Guaranty insurance. ``` Question 49 of 100

Answer 49

Your answer: Mortgage Guaranty insurance. is incorrect. The correct answer is: Title insurance.. EXPLANATION: Insurance that guarantees or indemnifies owners of real or personal property, or the holders of liens or encumbrances on that property, is classified in California as Title insurance. Question 49 of 100

Question 50

You are at home having your roof repaired. An employee of the roofing company needs to go to the hardware store to purchase supplies. Your car is blocking the driveway so you allow him to use your car to go to the store. While driving your car, he is at-fault in an auto accident. Your insurance policy will protect: Answer Choices: Select the Correct Answer All of the parties would be protected by your policy. Only you the insured will be protected. Only the employee will be protected. Both you and the insured will be protected. Question 50 of 100

Answer 50

our answer: All of the parties would be protected by your policy. is correct. EXPLANATION: Under liability coverage the definition includes "any person" using "your covered auto." This would therefore provide coverage for the worker. The insured is covered for the ownership of the auto. The policy also provides coverage "for any person or organization with respect to legal responsibility for acts or omissions of a person for who coverage is afforded." This would provide coverage for the employer for the actions of the employee as the actions relate to his employment. Question 50 of 100

Question 51

What does an insurer do when the insured has possibly waived his or her rights in a liability claim? Answer Choices: Select the Correct Answer Send a "reservation of rights" letter. Deny the claim. Pay only a portion of the proven liability claim. Insist the insured obtain his or her own legal counsel. Question 51 of 100

Answer 51

Your answer: Send a "reservation of rights" letter. is correct. EXPLANATION: There are situations where the insured has waived the right to coverage under a liability policy. Failure to report a claim in a timely fashion could cause the insured to waive coverage. The insurer will normally issue a reservation of rights letter to the insured advising that it will investigate the claim but will not commit to pay the claim. Question 51 of 100

Question 52

Which of the following best describes "no release or walk-away" release? Answer Choices: Select the Correct Answer A form of advanced payment to the claimant. A structured settlement. The bills are paid and no attempt to obtain a separate release is made. The insurer agrees to waive its right to subrogation against a third party who caused the damage. Question 52 of 100

Answer 52

Your answer: The bills are paid and no attempt to obtain a separate release is made. is correct. EXPLANATION: The bills presented are paid with no attempt to obtain a separate release, although the wording on the draft or check may also serve as a form of release. After a certain amount of time has passed with no further contact with the claimant, the file is considered closed. Question 52 of 100

Question 53

During a tornado, Natalie's house is destroyed when a section of a wall is blown down, knocking over a heater, which sets the house on fire and creates smoke. The proximate cause of this loss is: ``` Answer Choices: Select the Correct Answer The tornado. The fire. The collapse of the wall. The heater. ``` Question 53 of 100

Answer 53

Your answer: The tornado. is correct. EXPLANATION: The proximate cause of a loss is an unbroken chain of events, that leads to the loss. In this question, the tornado started the chain of events that lead up to the fire and smoke loss. Question 53 of 100

Question 54

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 54 of 100

Answer 54

Your answer: $7,500 is incorrect. The correct answer is: $5,000. EXPLANATION: The custom farming endorsement is used when a farmer is farming for others and the receipts exceed $5,000 per year. Question 54 of 100

Question 55

Under workers compensation rules, if an employee suffers a 5% loss of use of his left arm, he will receive a disability rating of: ``` Answer Choices: Select the Correct Answer Temporary, partial. Temporary, total. Permanent, total. Permanent, partial. ``` Question 55 of 100

Answer 55

Your answer: Permanent, partial. is correct. EXPLANATION: Any rating between 1% and 99% indicates a permanent, partial disability. Question 55 of 100

Question 56

Under what circumstances does an insurer allow the transfer of an insured's rights and duties under a Commercial Package Policy without the permission of the insurer? Answer Choices: Select the Correct Answer When the named insured dies. When the named insured is in the hospital. When the named insured is out of the United States. When the named insured is informed of a terminal illness. Question 56 of 100

Answer 56

Your answer: When the named insured dies. is correct. EXPLANATION: If the named insured dies his or her rights and duties are transferred to the deceased's legal representative. This occurs automatically, the insurer's permission is not required. Question 56 of 100

Question 57

Claims that are paid under a CGL policy coverage, are charged against the aggregate policy limits, and reduce the amount of insurance remaining to pay future claims under the current policy. When will the limits be reinstated? Answer Choices: Select the Correct Answer Six months after the payment of the last claim that caused the aggregate limits to become exhausted. On the effective date of the next policy renewal. As soon as the aggregate is actually exhausted. If the insured pays an extra premium for reinstatement. Question 57 of 100

Answer 57

Your answer: On the effective date of the next policy renewal. is correct. EXPLANATION: The effective date of the next policy renewal would be correct. The policy aggregate limit applies during the current policy period. Once a new policy period begins or the policy is renewed, a new aggregate limit is activated. Question 57 of 100

Question 58

The loss assessment additional coverage under Section II of the homeowner policy will pay for loss: ``` Answer Choices: Select the Correct Answer To the association of property owners To the corporation of property owners Due to the liability of the insured All of the responses are correct ``` Question 58 of 100

Answer 58

Your answer: Due to the liability of the insured is incorrect. The correct answer is: All of the responses are correct. EXPLANATION: The $1,000 loss assessment coverage would be paid on the insured's behalf if they are liable to either the association or corporation of property owners. Question 58 of 100

Question 59

While stopped in traffic at a red light your car is hit in the rear by Mr. Jones. The damage to your car would be addressed by which of the following coverages? Answer Choices: Select the Correct Answer Your collision insurance only. Your comprehensive only. Mr. Jones property damage liability and your collision insurance. Mr. Jones property damage liability only. Question 59 of 100

Answer 59

Your answer: Mr. Jones property damage liability and your collision insurance. is correct. EXPLANATION: If Mr. Jones is negligent his policy should pay for the damage under his property damage coverage. The insured can also request payment under his collision insurance and let his insurer subrogate against Mr. Jones. Question 59 of 100

Question 60

A building with a value of $100,000 is insured as follows: $30,000 with Company A; $20,000 with Company B; and $25,000 with Company C. How much would each carrier pay in case of a loss of $18,750? Answer Choices: Select the Correct Answer Company A - $5,000; Company B - $7,500; Company C - $6,250 Company A - $6,250; Company B - $6,250; Company C - $6,250 Company A - $7,500; Company B - $5,000; Company C - $6,250 Company A - $6,000; Company B - $4,000; Company C - $5,000 Question 60 of 100

Answer 60

Company A - $7,500; Company B - $5,000; CompanYour answer: The insurer and insured must agree on the value of all insured property after a loss is incorrect. The correct answer is: Negates coinsurance. EXPLANATION: Agreed value is an option on the Building and Personal Property Coverage form. If selected and indicated on the Declaration page, the coinsurance condition does not apply. Question 61 of 100y C - $6,250

Question 61

In commercial property what is the effect of exercising the "agreed value" option?

Answer 61

Your answer: The insurer and insured must agree on the value of all insured property after a loss is incorrect. The correct answer is: Negates coinsurance. EXPLANATION: Agreed value is an option on the Building and Personal Property Coverage form. If selected and indicated on the Declaration page, the coinsurance condition does not apply. Question 61 of 100

Question 62

The loss settlement provision of the California Special Provisions Homeowners form requires that payment be made within _______ after settlement is reached. ``` Answer Choices: Select the Correct Answer 30 days. 45 days. 60 days. 90 days. ``` Question 62 of 100

Answer 62

Your answer: 45 days. is incorrect. The correct answer is: 30 days.. EXPLANATION: The standardized Homeowners forms require payment be made within 60 days after settlement is reached. The California Special Provisions forms amend this to require payment be made within 30 days after settlement is reached. Question 62 of 100

Question 63

The standard deductible on the Commercial Property Earthquake Causes of Loss form is: ``` Answer Choices: Select the Correct Answer A percentage of the loss. $1,000. $5,000. A percentage of the building value. ``` Question 63 of 100

Answer 63

Your answer: A percentage of the building value. is correct. EXPLANATION: The deductible will be the percentage shown in the Declarations times the limit of insurance for each type of covered property. Question 63 of 100

Question 64

The insured is covered under a Businessowners Policy. He owns a hardware store that suffers a loss from a covered peril. His loss of income is $50,000. How will the loss be paid under the BOP? Answer Choices: Select the Correct Answer On an actual loss sustained basis ($50,000). No coverage unless separately added by endorsement. The policy will pay 50% of the loss. The policy will pay $50,000 for the loss of income less the deductible that applies to the building or contents coverage. Question 64 of 100

Answer 64

Your answer: On an actual loss sustained basis ($50,000). is correct. EXPLANATION: The policy pays for the actual loss of business income sustained due to the necessary suspension of "operations" during the "period of restoration." The suspension must be caused by direct physical loss of or damage to property at the described premises. The loss or damage must be caused by or result from a covered cause of loss. Question 64 of 100

Question 65

Most inland marine "all risk" forms exclude loss or damage caused by: ``` Answer Choices: Select the Correct Answer Smoke. Vandalism. War. Vehicles. ``` Question 65 of 100

Answer 65

Your answer: Vehicles. is incorrect. The correct answer is: War.. EXPLANATION: War is a standard exclusion under all of the inland marine forms. Question 65 of 100

Question 66

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 66 of 100

Answer 66

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 66 of 100

Question 67

Jerry is fishing from his 22-foot boat on Lake Norman when he is caught in a sudden hail storm. His boat suffers extensive hail damage. When he files a claim against his Homeowners policy, the most likely reason his claim is denied because: Answer Choices: Select the Correct Answer A Homeowners policy will only cover watercraft smaller than 20 feet. The boat was not fully enclosed inside a building during the hail storm. Boats cannot be covered by a Homeowners policy. The boat was not scheduled on the Declarations page of the Homeowners policy. Question 67 of 100

Answer 67

Your answer: A Homeowners policy will only cover watercraft smaller than 20 feet. is incorrect. The correct answer is: The boat was not fully enclosed inside a building during the hail storm.. EXPLANATION: For the size boat Jerry owns, the boat must have been enclosed inside a building when the hail storm hit or the Homeowners policy would not provide coverage. Question 67 of 100

Question 68

Sue Green has a commercial crime policy on her restaurant, but she only chose the insuring agreement "Inside the Premises - Robbery or Safe Burglary of Other Property". If an employee steals some equipment by breaking into the premises during the daytime on a holiday, the policy would: Answer Choices: Select the Correct Answer Not cover the loss, since acts by employees are excluded. Cover the loss. Not cover the loss, since daytime burglaries are excluded. Not cover the loss, since only loss of merchandise is covered. Question 68 of 100

Answer 68

Your answer: Cover the loss. is incorrect. The correct answer is: Not cover the loss, since acts by employees are excluded. . EXPLANATION: Sue would need to add the insuring agreement "Employee Theft" to her crime policy to cover the dishonest acts of her employees. Even though this fits the definition of burglary due to a forced entry, theft by an employee is not covered on the form. Sue would need employee theft coverage. Question 68 of 100

Question 69

The Ordinance or Law Endorsement can be added to a Homeowners form to increase the amount of coverage in ______ increments, up to ______ coverage. ``` Answer Choices: Select the Correct Answer 20% increments, up to 80% coverage. 25% increments, up to 100% coverage. 30% increments, up to 70% coverage. 15% increments, up to 95% coverage. ``` Question 69 of 100

Answer 69

Your answer: 25% increments, up to 100% coverage. is correct. EXPLANATION: Coverage for Ordinance or Law is already included on all Homeowners forms except the HO-8. The Ordinance or Law Endorsement can be attached to the form, increasing the coverage in 25% increments, up to 100% coverage. Question 69 of 100

Question 70

An insured has a HO-5 Homeowner Policy; they have insured the wife's diamond ring and the husband's guns on a personal articles floater. All of the items are stolen. What policy and deductibles would apply? Answer Choices: Select the Correct Answer The homeowner policy would not pay and the personal articles floater would pay without a deductible. The homeowner policy would be primary insurance with a deductible. The homeowner would pay excess over the personal articles floater with a deductible. Each policy would pay its pro-rata proportion of the loss. Question 70 of 100

Answer 70

Your answer: The homeowner policy would not pay and the personal articles floater would pay without a deductible. is correct. EXPLANATION: Once coverage is purchased on a more specific basis, the coverage no longer applies under the homeowner policy. The floater would pay the claim. Floaters seldom contain deductibles. Question 70 of 100

Question 71

Under the basic dwelling form DP-1, which of the following water damages would be covered? ``` Answer Choices: Select the Correct Answer Leaking swimming pool Flood Water used to put out a fire Sewer backup ``` Question 71 of 100

Answer 71

Your answer: Water used to put out a fire is correct. EXPLANATION: The only water damage covered under the basic dwelling form would be damage caused by water used to extinguish a fire. Question 71 of 100

Question 72

Which of the following is not covered under the Commercial Building and Personal Property Form? ``` Answer Choices: Select the Correct Answer All of the responses are correct Accounts, bills, and currency Animals not held for sale Cost to rebuild foundations ``` Question 72 of 100

Answer 72

Your answer: All of the responses are correct is correct. EXPLANATION: All of the responses are correct. None of these types of property listed would be covered. The builders risk form would cover the cost of foundations. Question 72 of 100

Question 73

Under California law, which of the following is NOT grounds for canceling a Homeowners policy? Answer Choices: Select the Correct Answer An insured files three large claims during the first six months of the policy period. An insured is convicted of intentionally burning insured property. An insured fails to pay the policy premium. An insured told his agent that he did not own any pets, when in fact he owns two champion fighting dogs. Question 73 of 100

Answer 73

Your answer: An insured files three large claims during the first six months of the policy period. is correct. EXPLANATION: Experiencing three claims in a short time span may be just bad luck, and therefore the California Code does not allow cancellation of Homeowners policies merely because of claims activity. The other choices are valid reasons for cancellation. Question 73 of 100

Question 74

The custom farming endorsement is usually attached to a farmowners policy when receipts exceed: ``` Answer Choices: Select the Correct Answer $5,000 $4,000 $10,000 $7,500 ``` Question 74 of 100

Answer 74

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 74 of 100

Question 75

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 75 of 100

Answer 75

Your answer: $2,000 is correct. EXPLANATION: For independent adjuster candidates, the bond amount is $2,000. Question 75 of 100

Question 76

An insured carries a Personal Property Replacement Cost endorsement attached to his Homeowners policy. He has suffered a loss to his personal property. He submits a claim for actual cash value (ACV) at the time of the loss, but notifies the insurer that he intends to make a claim for replacement cost later. The insurer will honor the insured's request, but only if the cost to repair or replace the property is: ``` Answer Choices: Select the Correct Answer More than $500. Less than $500. More than $1,000. Less than $5,000. ``` Question 76 of 100

Answer 76

Your answer: More than $500. is correct. EXPLANATION: If the cost to repair or replace the property is more than $500, the insurer will pay the actual cash value for the loss, until the actual repair or replacement is made. Question 76 of 100

Question 77

Which of the following loss valuations can be stated as "we agree to pay the cost to repair or replace without deduction for depreciation?" ``` Answer Choices: Select the Correct Answer Actual cash value Replacement cost Agreed amount Stated amount ``` Question 77 of 100

Answer 77

Your answer: Replacement cost is correct. EXPLANATION: Replacement cost may be defined as "the cost to repair or replace without deduction for depreciation." Question 77 of 100

Question 78

When would an insured request the Value Reporting endorsement under his or her Commercial Property policy? Answer Choices: Select the Correct Answer For changing or fluctuating levels of personal property. To report the value of a claim. To add a building within 30 days of taking title. To increase limits by 25% during the peak season. Question 78 of 100

Answer 78

Your answer: To increase limits by 25% during the peak season. is incorrect. The correct answer is: For changing or fluctuating levels of personal property.. EXPLANATION: A fixed limit for personal property coverage is not appropriate for an insured with fluctuating inventory values. To avoid being over or under-insured, the Value Reporting endorsement allows an insured to periodically report actual values to the insurance company within the policy term, and coverage limits will float with the values reported. Premiums are adjusted after policy expiration based upon the reported values. Question 78 of 100

Question 79

Coverage F 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 79 of 100

Answer 79

Your answer: Unscheduled personal property is correct. EXPLANATION: Coverage F covers unscheduled personal property on a blanket basis. One limit for all business personal property is stated. The items are not scheduled as they are under Coverage E. Question 79 of 100 Submit

Question 80

A public adjuster represents the interest of: ``` Answer Choices: Select the Correct Answer The insurer The insured The employer The interest of the general public ``` Question 80 of 100

Answer 80

Your answer: The insured is correct. EXPLANATION: The public adjuster represents the interests of the insured and not the insurer. Question 80 of 100

Question 81

The insured has a building worth $500,000 and insures it for $300,000. The policy contains an 80% coinsurance clause. In case of a total loss, what will the insured receive? Answer Choices: Select the Correct Answer $240,000 $500,000 $300,000 Nothing because the insured was not in compliance with the coinsurance clause. Question 81 of 100

Answer 81

Your answer: $240,000 is incorrect. The correct answer is: $300,000. EXPLANATION: The coinsurance clause is an agreement between the insured and the insured. In exchange for a lower rate, the insured must carry at least 80% of the value of the property to be insured. In the case of a total loss to the covered property, the coinsurance clause is not a factor. The insured receives payment up to the limit of the policy. In this case, the insured would receive $300,000. Question 81 of 100

Question 82

The premiums for workers compensation are based on: Answer Choices: Select the Correct Answer The job description of the employees (the work they perform). The location of the risk. The state schedule of benefits. Claim loss ratio. Question 82 of 100

Answer 82

Your answer: The job description of the employees (the work they perform). is correct. EXPLANATION: The premium is based on the job description of the employee. The more hazardous the work the higher the base rate per $100 of payroll. Question 82 of 100

Question 83

Supplemental payments under liability policies are: ``` Answer Choices: Select the Correct Answer In addition to the policy limits. Included in the policy limits. Subject to the policy deductible. Paid by the insured. ``` Question 83 of 100

Answer 83

Your answer: In addition to the policy limits. is correct. EXPLANATION: In liability policies, supplemental payments are in addition to the liability limits. Question 83 of 100

Question 84

All of the following are EXCLUDED under the Earthquake Endorsement to a Homeowners policy, EXCEPT: ``` Answer Choices: Select the Correct Answer Flood and tidal wave. Land shock waves. Waves and tsunami. The cost of filling land. ``` Question 84 of 100

Answer 84

Your answer: Land shock waves. is correct. EXPLANATION: All of the items listed are excluded under the Earthquake Endorsement to a Homeowners policy, EXCEPT: Land shock waves, they are covered. Question 84 of 100

Question 85

Which of the following is not a true statement regarding workers compensation coverage in California? Answer Choices: Select the Correct Answer First aid treatment is not covered under workers compensation coverage. If an employee is under 16 years of age at the time of injury, disability benefits that the employee becomes eligible for are to be paid at a rate 50% higher than normal. The waiting period for disability benefits is three days. Medical benefits provide unlimited coverage with no dollar limitation. Question 85 of 100

Answer 85

Your answer: First aid treatment is not covered under workers compensation coverage. is correct. EXPLANATION: First aid treatment is covered under workers compensation coverage; it is not excluded. Question 85 of 100

Question 86

The FAIR Plan is designed to serve hazardous and inner city areas and property being insured must be in a designated plan area (brush area). Both commercial and personal risks may be placed through the plan but farm risks and automobiles are not eligible. All of the perils can be purchased, EXCEPT: ``` Answer Choices: Select the Correct Answer Theft. Fire and lightning. Riot and civil commotion. Windstorm. ``` Question 86 of 100

Answer 86

Your answer: Theft. is correct. EXPLANATION: The coverage is for very basic perils similar to the DP-1 perils. Theft is not covered. Question 86 of 100

Question 87

How soon must a change in the qualified manager of an adjusting firm be reported to the California Department of Insurance? ``` Answer Choices: Select the Correct Answer Within one year Within 30 days Immediately Does not have to be reported ``` Question 87 of 100

Answer 87

Your answer: Within 30 days is correct. EXPLANATION: A change in the qualified manager, branch manager, officer or partner must be reported to the DOI within 30 days of the change. Question 87 of 100

Question 88

The current version of the nationwide definition recognizes six broad classes of property as eligible for marine coverage. These eligible classes include all of the following, EXCEPT: Answer Choices: Select the Correct Answer Domestic shipments. Imports and exports. Instrumentalities of Transportation and Communication Business personal property. Question 88 of 100

Answer 88

Your answer: Business personal property. is correct. EXPLANATION: Business personal property is not a “class” or category of business mentioned in the definition specifically. Obviously this type of property can be covered under the commercial property forms or the BOP. Question 88 of 100

Question 89

How would you classify the disability for a back sprain suffered at work? ``` Answer Choices: Select the Correct Answer Temporary, partial Temporary, total Permanent, partial Permanent, total ``` Question 89 of 100

Answer 89

Your answer: Temporary, partial is incorrect. The correct answer is: Temporary, total. EXPLANATION: An employee with a strained back will be temporarily unable to perform any work, but would be expected to recover; thus, the disability would be temporary total. Question 89 of 100

Question 90

Which of the following pollution losses would be covered by Garage policy liability coverage? Answer Choices: Select the Correct Answer Pollution of a stream caused by gasoline leaking from the ruptured fuel tank of a covered auto following a collision. Escape of toxic sludge from a dump site used by the named insured to store waste produced in its garage operations. The cost of a governmentally ordered clean-up of the pollution from a dump site used by the named insured. None of the losses described would be covered. Question 90 of 100

Answer 90

our answer: Pollution of a stream caused by gasoline leaking from the ruptured fuel tank of a covered auto following a collision. is correct. EXPLANATION: The policy would provide pollution liability in the case of escaped fluids and fuels as a result of an accident. The other choices are excluded. Question 90 of 100

Question 91

In which of the following situations should an adjuster consider obtaining a non-waiver agreement? Answer Choices: Select the Correct Answer When requested by an insurer In dealing with a potential coverage dispute When subrogation may be involved When directed by the court Question 91 of 100

Answer 91

Your answer: In dealing with a potential coverage dispute is correct. EXPLANATION: In coverage dispute situations, an adjuster may want to make clear that a known right is NOT being waived by any party. Question 91 of 100

Question 92

Fred owns two commercial buildings and carries NFIP coverage on them. The area where the buildings are located is a full-risk zone in the Regular Program. Both buildings are 30 years old and when they are damaged by flood, Fred finds that the cost to comply with the new Floodplain Management Ordinance will be quite expensive. What is the total amount of coverage Fred could receive for the Increased Cost of Compliance? ``` Answer Choices: Select the Correct Answer $59,000. $58,000. $60,000. $30,000. ``` Question 92 of 100

Answer 92

Your answer: $30,000. is incorrect. The correct answer is: $60,000.. EXPLANATION: The amount of coverage for ICC under the policy is $30,000 per building and no deductible applies. Therefore, Fred could receive $60,000. Question 92 of 100

Question 93

Under Homeowners insurance, "Medical Payments to Others" coverage will cover necessary medical expenses incurred within: Answer Choices: Select the Correct Answer 1 year of the accident causing the injury. 4 years of the accident causing the injury. 3 years of the accident causing the injury. 2 years of the accident causing the injury. Question 93 of 100

Answer 93

Your answer: 1 year of the accident causing the injury. is incorrect. The correct answer is: 3 years of the accident causing the injury.. EXPLANATION: Medical Payments to others will cover necessary medical expenses within 3 years. Note also that medical payments do not include "pain and suffering." Question 93 of 100

Question 94

In terms of fidelity bonds, what does “name scheduled” refer to? Answer Choices: Select the Correct Answer The bond covers everyone named on the company employee payroll. The bond covers only those persons listed by name on the bond’s schedule. The bond covers only partners, managers or officers as named. The bond schedules those employees that are not to be covered. Question 94 of 100

Answer 94

Your answer: The bond covers everyone named on the company employee payroll. is incorrect. The correct answer is: The bond covers only those persons listed by name on the bond’s schedule.. EXPLANATION: Some fidelity types of coverage do not provide blanket coverage for all employees. As such, coverage is provided for only those individuals named on the schedule attached to the bond. Question 94 of 100

Question 95

The E-commerce endorsement provides which of the following? Answer Choices: Select the Correct Answer Security breaches of customer information. Defense costs for a liability suit brought against the insured for personal customer data that has been compromised. Recovery of the information lost or corrupted in a breach of security. All of the answer choices are correct. Question 95 of 100

Answer 95

Your answer: All of the answer choices are correct. is correct. EXPLANATION: The E-commerce endorsement form is designed to protect the insured from data security breaches. Depending on the coverage selected, the form can provide defense costs and damages in a liability claim against the insured and also the cost of recovery and restoration of the information that was breached. Some forms will also cover the loss of business income due to the breach. Question 95 of 100

Question 96

You are assigned the investigation of a head-on collision involving major injuries in both the insured and claimant vehicles. First contact should be made with the: ``` Answer Choices: Select the Correct Answer Driver of the insured vehicle. Any passengers in the insured vehicle. Driver of the claimant vehicle. Any passengers of the claimant vehicle. ``` Question 96 of 100

Answer 96

Your answer: Driver of the claimant vehicle. is correct. EXPLANATION: Since this will be a possible third party claim the adjuster should first contact the driver of the claimant vehicle. Question 96 of 100

Question 97

Evergreen Lawn Care has two lawn maintenance crews on separate job sites. Coverage for the lawn maintenance equipment on the way to the site, while at the site and in transit back to the shop can be covered by which of the following forms? ``` Answer Choices: Select the Correct Answer Commercial Articles Coverage Form Contractors Equipment Floater Floor Plan Coverage Form Jewelers Block Coverage Form ``` Question 97 of 100

Answer 97

Your answer: Contractors Equipment Floater is correct. EXPLANATION: The Contractors equipment Floater will cover the lawn maintenance equipment usually on an open peril basis. The covered territory is the US, its possessions, Puerto Rico and Canada. Question 97 of 100

Question 98

Which party has the right to request information about a claim at any time? ``` Answer Choices: Select the Correct Answer The California Department of Insurance The plaintiff’s attorney Law enforcement The agent ``` Question 98 of 100

Answer 98

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 98 of 100

Question 99

In the event of an emergency situation, a non-licensed independent adjuster must register with the Commissioner within: ``` Answer Choices: Select the Correct Answer 48 hours. 30 days. 7 working days. 15 working days. ``` Question 99 of 100

Answer 99

Your answer: 15 working days. is correct. EXPLANATION: In the event of an emergency situation as declared by the Commissioner, claims arising out of the emergency, catastrophe, disaster, or other similar occurrence may be adjusted by a non-licensed adjuster upon registration with the Commissioner. Registration must occur within 15 working days. Question 99 of 100

Question 100

Under a Commercial Property policy, the coinsurance clause does all of the following, EXCEPT: Answer Choices: Select the Correct Answer Grants the insured a reduction in premiums for accepting a condition that the insured maintain insurance at a specified percentage of either the actual cash value or replacement cost of the covered property. The insured could become a co-insurer to a partial loss if the insured is in violation of the clause. The coinsurance clause does not operate in the event of a total loss. There are no exceptions, all of the responses are correct. Question 100 of 100

Answer 100

Your answer: There are no exceptions, all of the responses are correct. is correct. EXPLANATION: There are no exceptions, all of the responses are correct. Question 100 of 100