IA Test 25

Question 1

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

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

Question 1 of 100

Answer 1

Your answer: 60 days following expiration of the policy. is incorrect. The correct answer is: An unlimited period following expiration of the policy. .

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

Question 1 of 100

Question 2

The crew of a ship is guilty of fraud with the intention of reaping gains at the expense of the owner. In ocean marine coverage, what is this called?

Answer Choices:	Select the Correct Answer
Perils of the sea	
Jettison	
General average	
Barratry	

Question 2 of 100

Answer 2

Your answer: Barratry is correct.

EXPLANATION:
Barratry means fraud by the master or the crew with the intention of reaping gains at the expense of the owner. Examples include setting the ship on fire, diverting the ship from its course, or embezzlement of the cargo.

Question 2 of 100

Question 3

In California, the class of insurance that provides coverage against loss of property and liability for damage to persons or property from explosion of, or accident to, boilers, tanks, pipes, pressure vessels, engines, wheels, electrical machinery, or apparatus connected them, is known as:

Answer Choices:	Select the Correct Answer
Marine insurance.	
Fire insurance.	
Mechanical Breakdown insurance.	
Boiler & Machinery insurance.	

Question 3 of 100

Answer 3

Your answer: Boiler & Machinery insurance. is correct.

EXPLANATION:
In California, the class of insurance that provides coverage against loss of property and liability for damage to persons or property from explosion of, or accident to, boilers, tanks, pipes, pressure vessels, engines, wheels, electrical machinery, or apparatus connected them, is known as Boiler & Machinery insurance. In most states, this type of insurance is now referred to as Equipment Breakdown insurance. Mechanical Breakdown insurance covers automobile breakdowns.

Question 3 of 100

Question 4

Julian owns a automobile repair shop. He purchases a policy that covers his customer’s automobiles while they are in his care, if they suffer damage by fire, theft, vandalism or collision. Which of the following policies did Julian purchase?

Answer Choices:	Select the Correct Answer
Garagekeepers Legal Liability Insurance	
Garage Liability Insurance	
On-Hook Towing Insurance	
Commercial Automobile Insurance	

Question 4 of 100

Answer 4

Your answer: Garagekeepers Legal Liability Insurance is correct.

EXPLANATION:
Garagekeepers Legal Liability protects the automobiles of a customer for physical damage coverage while the auto is parked or stored at the covered location.

Question 4 of 100

Question 5

Which of the following does not have to be included in the inspection report required to participate in the California Fair Access to Insurance Requirements (FAIR) Plan?

Answer Choices:	Select the Correct Answer
Structural inspection	
Condition of surrounding structures	
Occupancy features	
Photographs of the occupants	

Question 5 of 100

Answer 5

Your answer: Photographs of the occupants is correct.

EXPLANATION:
According to the California Insurance Code (CIC 10093(b)), the inspection must include, but need not be limited to, pertinent structural and occupancy features as well as the general condition of the building and surrounding structures. A representative photograph of the property may be taken as part of the inspection.

Question 5 of 100

Question 6

Claims adjusters have a close relationship to the legal profession, but must be careful not to become involved in the unauthorized practice of law. Which of the following would be an example of an adjuster who is engaged in the unauthorized practice of law?

Answer Choices: Select the Correct Answer
The adjuster has transmitted settlement offers on behalf of the principal.
The adjuster has managed claims in compliance with their state’s adopted Unfair Claim Settlement laws.
The adjuster has expressed an opinion, formed from a factual analysis, regarding the extent of damage or injury.
The adjuster has drafted the legally binding settlement papers on a claim.

Question 6 of 100

Answer 6

Your answer: The adjuster has drafted the legally binding settlement papers on a claim. is correct.

EXPLANATION:
Adjuster are not permitted to draft any document that is intended to have a legally binding effect.

Question 6 of 100

Question 7

Lightning strikes a 50-foot oak tree in an insured’s yard splitting the tree in half. The tree falls hitting several small trees causing extensive damage to the trees and scattering debris in the yard. The HO-2 Homeowners Policy will pay:

Answer Choices: Select the Correct Answer
A maximum of $250 per tree.
$500 per tree plus the cost of debris removal.
A maximum of $500 per tree.
$250 per tree plus the cost of debris removal.

Question 7 of 100

Answer 7

Your answer: A maximum of $500 per tree. is correct.

EXPLANATION:
Most homeowner policies provide a maximum limit of 5% of coverage A and a maximum of $500 for any one tree, shrub or plant.

Question 7 of 100

Question 8

Which of the following coverages is NOT provided by the Farm Employers Liability and Farm Employees Medical Payments insurance endorsement?

Answer Choices: Select the Correct Answer
Pays statutory workers’ compensation benefits.
Pays medical payments to an injured farm employee.
Provides employers legal liability coverage where a bodily injury has occurred to an employee.
Provides defense coverage to the farm owner as a result of an injured employee who brings a legal action.

Question 8 of 100

Answer 8

Your answer: Pays statutory workers’ compensation benefits. is correct.

EXPLANATION:
This endorsement offers farm employers liability coverage and farm employees medical payments insurance. It can be attached to FL 00 20 or to the CGL form. FL 04 65 offers to pay those sums that the insured becomes legally obligated to pay as damages because of BI sustained by a farm employee arising out of and in the course of employment by the insured. And, the endorsement offers to pay to or for each farm employee who sustains BI caused by an accident, all reasonable medical expenses to which the insurance applies. FL 04 65 basically combines the employers liability coverage from a workers comp policy with med pay coverage. This endorsement does not provide statutory workers compensation benefits.

Question 8 of 100

Question 9

Which of the following losses would be covered under commercial auto physical damage coverage?

Answer Choices: Select the Correct Answer
Fire
Loss to equipment used for radar or laser detection
Losses resulting from wear and tear
Loss caused by war or military action

Question 9 of 100

Answer 9

Your answer: Fire is correct.

EXPLANATION:
Fire is covered and the other choices are excluded.

Question 9 of 100

Question 10

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 10 of 100

Answer 10

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 10 of 100

Question 11

All of the following injuries occurring on the job would probably be deemed compensable, EXCEPT:

Answer Choices: Select the Correct Answer
A cerebral hemorrhage occurring at work and caused from years of high blood pressure.
A back injury resulting from lifting a heavy object with another employee.
A heart attack from overexertion while moving an object at work.
A foot injury caused by a fellow employee running over it with a tow motor.

Question 11 of 100

Answer 11

Your answer: A cerebral hemorrhage occurring at work and caused from years of high blood pressure. is correct.

EXPLANATION:
A cerebral hemorrhage that occurred from years of having high blood pressure is not an injury that arose out of and in the course of employment. This would not be covered under workers compensation.

Question 11 of 100

Question 12

In California, a Homeowners policy may be cancelled during the 60-day underwriting period, and for the reasons acceptable by law, if a notice of _____ is provided to the insured.

Answer Choices:	Select the Correct Answer
20 days.	
30 days.	
45 days.	
10 days.	

Question 12 of 100

Answer 12

Your answer: 20 days. is correct.

EXPLANATION:
In California, when a Homeowners policy is still within the 60-day underwriting period, the insurance company can cancel the policy if a 20-day notice is provided to the insured.

Question 12 of 10

Question 13

A 2 to 4-Family Dwelling is covered under the NFIP for incidental occupancies if it occupies less than:

Answer Choices: Select the Correct Answer
25% of the building’s replacement cost value.
25% of the building’s actual cash value.
25% of the building’s total floor area.
25% of the building’s common living areas.

Question 13 of 100

Answer 13

Your answer: 25% of the building’s total floor area. is correct.

EXPLANATION:
The NFIP provides coverage for incidental occupancies for a 2 to 4-Family Dwelling if it occupies less than 25% of the building’s total floor area.

Question 13 of 100

Question 14

Which of the following is excluded under the Ordinance or Law Endorsement form?

Answer Choices: Select the Correct Answer
The cost to comply with any ordinance or law requiring a higher grade of pipe to be used in a home’s plumbing system.
The cost to comply with any ordinance or law regulating or enforcing the type of insulation that may be used in the attics of homes located in the jurisdiction.
The cost to comply with any ordinance or law requiring that handrails be installed on any porch that is greater than 2 feet in height, and is attached to the covered dwelling.
The cost to comply with any ordinance or law regulating or enforcing the clean up and removal of pollutants.

Question 14 of 100

Answer 14

Your answer: The cost to comply with any ordinance or law regulating or enforcing the clean up and removal of pollutants. is correct.

EXPLANATION:
The cost to comply with any ordinance or law regulating or enforcing the clean up and removal of pollutants is excluded under the Ordinance or Law endorsement.

Question 14 of 100

Question 15

Bob is purchasing a commercial property policy to cover contents of a building valued at $100,000. The policy includes an 80 percent coinsurance clause. To avoid a coinsurance penalty in the event of a partial loss, Bob should purchase a policy with minimum limits of at least:

Answer Choices:	Select the Correct Answer
$80,000	
$100,000	
$90,000	
$20,000	

Question 15 of 100

Answer 15

Your answer: $80,000 is correct.

EXPLANATION:
The value of the covered property is ($100,000) times 80% = $80,000.

Question 15 of 100

Question 16

All of the following describe one of the four elements of a negligent act, EXCEPT:

Answer Choices: Select the Correct Answer
The defendant had a legal duty to perform in a given manner but did not.
The loss or injury to the plaintiff was a direct result of the breach of duty by the defendant.
The defendant entered into a legal contract with the plaintiff.
The plaintiff suffered actual loss of injury due to the defendant’s action or inaction.

Question 16 of 100

Answer 16

Your answer: The defendant entered into a legal contract with the plaintiff. is correct.

EXPLANATION:
There would be nothing negligent about the defendant and claimant entering into a legal contract.

Question 16 of 100

Question 17

The auto liability limits $100/300/50 are an example of:

Answer Choices:	Select the Correct Answer
Split limits.	
Single limits.	
Aggregate limits.	
Occurrence limits.	

Question 17 of 100

Answer 17

Your answer: Occurrence limits. is incorrect. The correct answer is: Split limits. .

EXPLANATION:
This is an example of a split limit. Separate limits apply to bodily injury per person, bodily injury per accident, and property damage per accident.

Question 17 of 100

Question 18

Which of the following may cancel a Commercial Package Policy?

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

Question 18 of 100

Answer 18

Your answer: The first named insured is correct.

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

Question 18 of 100

Submit

Question 19

In California, it is permissible for a automobile insurer to request photographs of a damaged vehicle in lieu of performing a physical inspection. With first party claims, the insurer must request the photographs from the claimant:

Answer Choices: Select the Correct Answer
Within 7 calendar days after receiving the notice of claim.
Within 6 business days after receiving the notice of claim.
Within 3 business days after receiving the notice of claim.
Within 4 calendar days after receiving the notice of claim.

Question 19 of 100

Answer 19

Your answer: Within 7 calendar days after receiving the notice of claim. is incorrect. The correct answer is: Within 3 business days after receiving the notice of claim..

EXPLANATION:
The insurer must request the photographs within 3 business days after receiving the claims notice.

Question 19 of 100

Question 20

Which of the following is the amount of coverage provided on an attached garage of a home insured under an HO-3 for $100,000?

Answer Choices:	Select the Correct Answer
$25,000	
$20,000	
No additional coverage	
$10,000	

Question 20 of 100

Answer 20

Your answer: No additional coverage is correct.

EXPLANATION:
A garage attached to a dwelling is considered to be one structure therefore, no additional coverage over and above the $100,000 is provided. If the structure were a separate structure it would be covered for an additional $10,000.

Question 20 of 100

Question 21

The purpose of asking the court to make a declaratory judgment is:

Answer Choices: Select the Correct Answer
To make a binding decision as to the relationship between the parties and their rights with respect to the matter before the court.
To avoid going to court with a lawsuit.
To make a final decision as to who is liable.
To make a final decision as to damages.

Question 21 of 100

Answer 21

Your answer: To make a final decision as to who is liable. is incorrect. The correct answer is: To make a binding decision as to the relationship between the parties and their rights with respect to the matter before the court. .

EXPLANATION:
A declaratory judgment is a binding judgment issued by the court that defines the legal relationship between the parties and their rights with respect to the matter before the court. A declaratory judgment does not provide for the enforcement of the judgment. However, a question of coverage is one of the purposes to request a declaratory judgment from a court.

Question 21 of 100

Question 22

Which of the following are covered under the Homeowners “Additional Residence Rented to Others” endorsement?

I. Personal Liability (Injury)
II. Medical Payment to Others
III. Dwelling
IV. Personal Property

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

Question 22 of 100

Answer 22

Your answer: I and II only. is correct.

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

Question 22 of 100

Question 23

Under the commercial property condominium association form, coverage is based on:

Answer Choices:	Select the Correct Answer
The commercial property form	
The association agreement and bylaws	
The special cause of loss form	
State and local ordinances	

Question 23 of 100

Answer 23

Your answer: The association agreement and bylaws is correct.

EXPLANATION:
The coverage provided by the form will be based on the condominium association agreement and by laws.

Question 23 of 100

Question 24

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 24 of 100

Answer 24

Your 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 24 of 100

Question 25

You own an independent adjusting company in California. In order to open a second office in a different location you must obtain: Answer Choices: Select the Correct Answer Written permission from the Department of Insurance. A branch manager's license. A fidelity bond. A branch office certificate. Question 25 of 100

Answer 25

Your answer: A branch office certificate. is correct. EXPLANATION: According to the California Insurance Code, "If the licensee intends to conduct business from any location in California other than the principal place of business, a Branch Office Certificate must be obtained by submitting an Application for Branch Office Certificate along with the appropriate fee." Question 25 of 100

Question 26

Property with no occupants or contents is considered to be _____ whereas property with no occupants but with contents is considered: ``` Answer Choices: Select the Correct Answer Occupied/Unoccupied Rented/Unrented Vacant/Unoccupied Unrestricted/Restricted ``` Question 26 of 100

Answer 26

Your answer: Vacant/Unoccupied is correct. EXPLANATION: Vacancy means the building is void of contents and people. The building is simply not being used. Perils such as freezing, vandalism and malicious mischief are limited when a building is vacant. Unoccupancy means the premises are void of people but has contents. In most cases, unoccupancy will not affect the coverage provided by the policy. Question 26 of 100

Question 27

Each of the following is true about commercial property floaters filed by the Insurance Service Office (ISO), EXCEPT: Answer Choices: Select the Correct Answer The rates for these coverages are unregulated. Individual insurers are not required to use the ISO forms. The coverages may be written as a monoline or part of a package policy. The coverages are usually written on an open perils basis. Question 27 of 100

Answer 27

Your answer: The rates for these coverages are unregulated. is correct. EXPLANATION: Rates for Commercial Property Floaters filed with ISO are regulated. Each type of form requires a rating formula. These are audited by ISO. There are many forms, not filed with ISO, where the rates are not regulated. These are called "non-controlled" lines of insurance. Question 27 of 100

Question 28

When the Personal Liability Supplement is purchased as a monoline policy, all of the following are required conditions, EXCEPT: ``` Answer Choices: Select the Correct Answer Assignment. Liberalization. Death. Bankruptcy. ``` Question 28 of 100

Answer 28

Your answer: Bankruptcy. is correct. EXPLANATION: There is not a condition in the Personal Liability policy outlining what the insured must do in case of bankruptcy. Question 28 of 100

Question 29

Loss of rental income on an apartment building caused by an insured peril is best described as: Answer Choices: Select the Correct Answer A direct loss. A loss that can never be covered under a Commercial Property policy. A consequential loss. A loss that would be covered only if the fire was friendly. Question 29 of 100

Answer 29

Your answer: A consequential loss. is correct. EXPLANATION: Consequential losses include time element losses. This coverage provides loss of income incurred by a business that is caused by a direct loss from an insured peril. Question 29 of 100

Question 30

David has damaged his vehicle by striking a tree. He can: I. Take the car to a repair garage recommended by the insurer. II. Take the car to a garage of his choice. III. Accept payment based on the adjuster's estimate. Answer Choices: Select the Correct Answer I, II and III I and II only I and III only I only Question 30 of 100

Answer 30

Your answer: I, II and III is correct. EXPLANATION: The choice belongs to the David, the insured. Question 30 of 100

Question 31

The plumbing in Mrs. Jones' home suddenly burst and the ceilings were damaged by water. All of the following Homeowners forms would cover the loss, EXCEPT an: ``` Answer Choices: Select the Correct Answer HO-2 form. HO-8 form. HO-3 form. HO-5 form. ``` Question 31 of 100

Answer 31

Your answer: HO-8 form. is correct. EXPLANATION: All HO forms (except the HO-8) cover "Accidental Discharge or Overflow of Water or Steam" from a plumbing, heating, air conditioning, or fire protective sprinkler system or from within a household appliance. Question 31 of 100

Question 32

The Common Policy Conditions apply to which coverage parts of a Commercial Package Policy? ``` Answer Choices: Select the Correct Answer All parts of the policy. The property insurance coverages. The optional insurance coverages. The liability insurance coverages. ``` Question 32 of 100

Answer 32

Your answer: All parts of the policy. is correct. EXPLANATION: With a Commercial Package Policy, the Common Policy Conditions apply to all of the coverage parts. Question 32 of 100

Question 33

Which of the following is not an "additional coverage" under Homeowners Liability -- Section II coverage? Answer Choices: Select the Correct Answer Payments made by the insurer to settle a claim. Interest accruing after a legal judgment is entered. The insurer’s costs to investigate a claim. Damage to Property of Others. Question 33 of 100

Answer 33

Your answer: Payments made by the insurer to settle a claim. is correct. EXPLANATION: Settlements paid by the insurer come from the limits of liability shown on the Declarations page and are not an "additional coverage." Question 33 of 100

Question 34

What is the purpose of an adjuster's interim report? Answer Choices: Select the Correct Answer To report on the ongoing status of the claim. To render a final opinion on the claim. To provide the status on all releases. To provide final estimates of the damages claimed. Question 34 of 100

Answer 34

Your answer: To report on the ongoing status of the claim. is correct. EXPLANATION: This report merely provides the status of a claim prior to finalization. Question 34 of 100

Question 35

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 35 of 100

Answer 35

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 35 of 100

Question 36

Miranda's home is covered under a Homeowners policy with an Earthquake Endorsement attached. She has selected the base deductible of 5% and her limit of liability under Coverage C is greater than Coverage A. Her Coverage C limit of liability is $1,000. What is the deductible that Miranda will have to pay? ``` Answer Choices: Select the Correct Answer $50 $5 $5,000 $500 ``` Question 36 of 100

Answer 36

Your answer: $500 is correct. EXPLANATION: Although 5% multiplied by $1,000 is $50, the endorsement states that the deductible will never be less than $500.

Question 37

Under "Coverage A - Building" of the BOP form, which of the following is NOT covered? Answer Choices: Select the Correct Answer Completed additions, and additions under construction All permanently installed fixtures, machinery and equipment Outdoor fixtures Valuable papers and records Question 37 of 100

Answer 37

Your answer: Valuable papers and records is correct. EXPLANATION: Valuable papers and records are NOT included in Coverage A - Building. If business personal property is insured there is a limited amount of coverage ($10,000) provided under the extensions of coverage. Permanently installed fixtures, machinery, and equipment, outdoor fixtures, and completed additions and additions under construction are all considered "buildings" by definition. Question 37 of 100

Question 38

Which of the following is true regarding the homeowners HO-5 form? Answer Choices: Select the Correct Answer Provides open peril coverage on buildings and broad form peril coverage on their contents Provides open peril coverage on the buildings and their contents Provides broad form peril coverage on the buildings and their contents Provides broad form peril coverage on the buildings and named peril coverage on their contents Question 38 of 100

Answer 38

Your answer: Provides open peril coverage on buildings and broad form peril coverage on their contents is incorrect. The correct answer is: Provides open peril coverage on the buildings and their contents. EXPLANATION: The HO-5 form provides open peril coverage on the dwelling, other detached structures and personal property of the insured. Question 38 of 100

Question 39

According to the nationwide marine definition as adopted in this state, which of the following structures may be written under an inland marine insurance form? ``` Answer Choices: Select the Correct Answer Bridges and Piers Occupied Dwellings Oceangoing Hulls Warehouses ``` Question 39 of 100

Answer 39

Your answer: Bridges and Piers is correct. EXPLANATION: Usually we think of inland marine as applying to non-stationary items. Bridges and piers and several others are exceptions to the rule. Question 39 of 100

Question 40

Which of the following businesses would be eligible for a Businessowners policy? Answer Choices: Select the Correct Answer A dental office. A contractors business that provides insulation services. A savings and loan. A small wig manufacturing business. Question 40 of 100

Answer 40

Your answer: A dental office. is correct. EXPLANATION: A dental office is the only business listed that would be eligible for coverage under a Businessowners policy. Manufacturing businesses are generally not accepted for BOP coverage due to the "Products" liability exposure. The contractor providing insulation services would not be eligible for a Businessowners policy due to the risk involved in performing the service. The savings and loan would not be covered due to the large crime risk. Question 40 of 100

Question 41

As an independent adjuster in California, your investigation of a two-car traffic accident indicates that both drivers are equally at fault. After speaking with the claimant's adjuster the two of you agree that both drivers are equally to blame. Your subrogation demand would be for: Answer Choices: Select the Correct Answer 100% of your insured's damages as your analysis does not affect what is owed by the other party. 75% of your insured's damages as each side's 25% totals 50%. 50% of your insured's damage, because the insured and the other driver were both 50% at fault. Nothing. Because both drivers were 50% at fault, each insurance company will pay 100% of the claim on their own insured's damages. Question 41 of 100

Answer 41

Your answer: 50% of your insured's damage, because the insured and the other driver were both 50% at fault. is correct. EXPLANATION: California is a "comparative negligence" state. In California the person most at fault is deemed to be the primary cause of the accident. If investigation either by law enforcement or the insurance adjuster determines that there was "comparative negligence" on the part of the other driver(s), all damages owed are subject to apportionment. Question 41 of 100

Question 42

When a claimant is represented by an attorney, which of the following is prohibited by the adjuster? Answer Choices: Select the Correct Answer Negotiate with a claimant’s attorney Make a claim check payable to the claimant Contact the claimant without the consent of the attorney Have an attorney prepare a release Question 42 of 100

Answer 42

Your answer: Contact the claimant without the consent of the attorney is correct. EXPLANATION: Once a claimant has hired an attorney, the adjuster may not contact the claimant directly without the consent of the attorney. Question 42 of 100

Question 43

When preparing an auto body repair estimate to submit to an adjuster, the included operations that may be performed simultaneously are known as: ``` Answer Choices: Select the Correct Answer Overlap areas Shared areas Co-occurrence tasks Coinciding tasks ``` Question 43 of 100

Answer 43

Your answer: Coinciding tasks is incorrect. The correct answer is: Overlap areas. EXPLANATION: Overlap areas are included operations that may be performed simultaneously, and cannot be charged for separately. Question 43 of 100

Question 44

When can an adjuster in California use a fictitious name while conducting business? Answer Choices: Select the Correct Answer Never When authorized by the Commissioner to do so When it does not conflict with another’s name in the same business Anytime Question 44 of 100

Answer 44

Your answer: When authorized by the Commissioner to do so is correct. EXPLANATION: No licensee may conduct a business under a fictitious or other business name unless and until he or she has obtained the written authorization of the Commissioner to do so. Question 44 of 100

Question 45

Your answer: When authorized by the Commissioner to do so is correct. EXPLANATION: No licensee may conduct a business under a fictitious or other business name unless and until he or she has obtained the written authorization of the Commissioner to do so. Question 44 of 100

Answer 45

Your answer: The Per Occurrence Limit is correct. EXPLANATION: Claims paid under this limit are deducted from the aggregate limit and the remaining amount is all the insured has available for future occurrences until the policy is renewed. Liquor and Pollution Liability coverage is excluded under the CGL. The retroactive date "triggers" coverage and has nothing to do with the policy limits and how much will be paid on the loss. Question 45 of 100

Question 46

What is the additional limit under the ISO standard BOP for debris removal in case the basic coverage is inadequate? ``` Answer Choices: Select the Correct Answer $25,000 $20,000 $10,000 $15,000 ``` Question 46 of 100

Answer 46

Your answer: $15,000 is incorrect. The correct answer is: $25,000. EXPLANATION: The additional limit is $25,000 when the basic coverage provided by the policy is not enough. The basic coverage provides debris removal coverage up to 25% of the actual amount of the loss up to the policy limit. Sometimes the amount of the loss PLUS the debris cleanup will exhaust the limit and the company will pay up to an additional $25,000 for debris removal. Question 46 of 100

Question 47

Which of the following statements about risk is the most accurate? Answer Choices: Select the Correct Answer Risk can be retained, shared, transferred, avoided, or reduced. Risk is most properly assumed when loss potential is catastrophic. Risk is any characteristic or condition that increases the chance of loss. Total risk is reduced by the use of deductibles and insurance. Question 47 of 100

Answer 47

Your answer: Risk is any characteristic or condition that increases the chance of loss. is incorrect. The correct answer is: Risk can be retained, shared, transferred, avoided, or reduced.. EXPLANATION: These are the methods used to manage risk. Question 47 of 100

Question 48

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 48 of 100

Answer 48

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 48 of 100

Question 49

An insured who had a $500,000 primary liability policy purchased a $1 million Umbrella liability policy with a $2,000 self-insured retention limit. Later, the insured allowed the required underlying primary policy with a limit of $100,000 to expire. A week after that, the insured became liable for a $100,000 loss that is not excluded by the provisions of either the primary policy or the Umbrella policy. How will this loss likely be settled? Answer Choices: Select the Correct Answer The insured will pay the full $100,000 loss. The umbrella policy will pay the full $100,000 loss. The underlying policy will pay the full $100,000 loss. The insured will pay $2,000, and the umbrella policy will pay the remainder of the loss.

Answer 49

Your answer: The insured will pay $2,000, and the umbrella policy will pay the remainder of the loss. is incorrect. The correct answer is: The insured will pay the full $100,000 loss.. EXPLANATION: Because the insured allowed the required underlying policy to expire, he is responsible for the $100,000 loss. The Umbrella policy does not recognize a reduction in the underlying limits nor the non-renewal of underlying coverage. Question 49 of 100

Question 50

Which of the following coverages is NOT provided by the Business Income Coverage Form? ``` Answer Choices: Select the Correct Answer Leasehold Interest Coverage Coverage for loss of net income Coverage for continuing expenses Extra Expense Coverage ``` Question 50 of 100

Answer 50

Your answer: Extra Expense Coverage is incorrect. The correct answer is: Leasehold Interest Coverage. EXPLANATION: Leasehold interest coverage is a separate coverage to cover the value of a favorable lease when the premises have been damaged by an insured peril. Question 50 of 100

Question 51

An insured had a $300,000 underlying liability policy and a $1 million umbrella liability policy with a $300,000 retained limit and a $2,000 self-insured retained limit. An occurrence resulted in $400,000 in personal injury damages which are not excluded by either policy. Shortly thereafter the insurer providing the underlying policy became insolvent. How much of the damages would be covered by the umbrella liability policy? ``` Answer Choices: Select the Correct Answer $100,000 $300,000 $398,000 $400,000 ``` Question 51 of 100

Answer 51

Your answer: $398,000 is incorrect. The correct answer is: $100,000. EXPLANATION: The fact that the underlying insurer became insolvent has no bearing on the retained limit. It would still pay the excess of $100,000 over the retained (underlying) limit of $300,000. Question 51 of 100

Question 52

An employer in California does not have to provide workers compensation coverage to its employees if: Answer Choices: Select the Correct Answer The employer is an independent contractor The employer only has one part-time employee The employer only acts as a subcontractor None of the responses are correct Question 52 of 100

Answer 52

Your answer: None of the responses are correct is correct. EXPLANATION: Employers that employ at least one person are required to provide workers compensation coverage to employees. Question 52 of 100

Question 53

Compensation payable for the delaying a vessel carrying freight: Answer Choices: Select the Correct Answer Is called demurrage. Not payable under an ocean marine contract Not subject to any deductible to negotiation. Limit is predetermined prior to the voyage. Question 53 of 100

Answer 53

Your answer: Is called demurrage. is correct. EXPLANATION: The compensation payable for delaying a vessel carrying freight as by failing to load/unload cargo is called demurrage. Question 53 of 100

Question 54

In workers compensation terminology, "misconduct" refers to: Answer Choices: Select the Correct Answer improper conduct of employees only. improper conduct of the employer only. improper or bad behavior on the part of an employee or employer. intentional acts designed to injure. Question 54 of 100

Answer 54

Your answer: intentional acts designed to injure. is incorrect. The correct answer is: improper or bad behavior on the part of an employee or employer.. EXPLANATION: In workers compensation terminology, "misconduct" means improper or bad behavior. Question 54 of 100

Question 55

In commercial property what is the effect of exercising the "agreed value" option? Answer Choices: Select the Correct Answer Negates coinsurance Pays replacement cost The insurer and insured must agree on the value of all insured property after a loss The insured reports values at an agreed upon date Question 55 of 100

Answer 55

Your answer: Negates coinsurance is correct. 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 55 of 100

Question 56

In cases involving the repair of an auto covered under a policy in California, no insurer may: Answer Choices: Select the Correct Answer Require that an automobile be repaired at a specific repair shop. Require a claimant to travel an unreasonable distance to inspect a replacement automobile, to conduct an inspection of the vehicle or to obtain a repair estimate. Suggest or recommend that an automobile be repaired at a specific repair shop. All of the responses are correct. Question 56 of 100

Answer 56

Your answer: All of the responses are correct. is correct. EXPLANATION: All of the responses are correct. Question 56 of 100

Question 57

Adele Sullivan's car is hit from the rear by Clarence Brown's car. Mrs. Sullivan's insurance company pays her claim under her physical damage coverage and makes a claim against Mr. Brown's insurance company for the same amount. This process is called: ``` Answer Choices: Select the Correct Answer Subrogation. Matriculation. Reciprocity. Arbitration. ``` Question 57 of 100

Answer 57

Your answer: Subrogation. is correct. EXPLANATION: Mr. Brown was at fault. Mrs. Sullivan's insurer paid the loss and is entitled to seek reimbursement from Mr. Brown or Mr. Brown's insurance company via subrogation. Question 57 of 100

Question 58

Which of the following is not true about the coinsurance clause in commercial property insurance? Answer Choices: Select the Correct Answer If an insured does not insure up to a stated % of value, they will become a coinsurer on a partial loss It is not relevant on a total loss. It allows for a variance in the rate depending on the coinsurance percentage. It allows an insured to collect up to 80% on a covered loss Question 58 of 100

Answer 58

Your answer: It allows an insured to collect up to 80% on a covered loss is correct. EXPLANATION: Coinsurance has a negative effect on partial losses if the policy limit does not meet or exceed the “limit required”. For example, with an 80% coinsurance clause, a limit set at 40% of building’s value is only half of the limit required, and the insured would be a co-insurer on any covered loss. When the limit is at or above the amount required, the insured will collect fully on partial losses, without any penalty. Rates are adjusted downward slightly, when higher coinsurance percentages are chosen. Coinsurance does not affect total losses, since the policy limit would be paid in any case. But coinsurance does NOT state that an insured can collect up to 80% on a covered loss; this is a misunderstanding of the “coinsurance percentage.” Question 58 of 100

Question 59

The homeowner policy written to cover only personal property and personal liability is an: ``` Answer Choices: Select the Correct Answer H0-2 H0-3 H0-4 H0-8 ``` Question 59 of 100

Answer 59

Your answer: H0-4 is correct. EXPLANATION: This is the HO-4 also referred to as a tenant’s homeowner policy or renters insurance. Question 59 of 100

Question 60

All of the following is considered an "insured" under a CGL policy, EXCEPT: ``` Answer Choices: Select the Correct Answer Officers and directors. The named insured's spouse. Stockholders of the named insured. Lawyers of the named insured. ``` Question 60 of 100

Answer 60

Your answer: The named insured's spouse. is incorrect. The correct answer is: Lawyers of the named insured.. EXPLANATION: The lawyers for the named insured are not by definition an "insured" under the CGL policy. The other three choices are by definition, an insured under the policy. Question 60 of 100

Question 61

All of the following are differences between surety bonds and insurance contracts, EXCEPT: Answer Choices: Select the Correct Answer Insurance premiums are paid to cover potential losses, surety premiums are used as a form of credit. A transfer of risk occurs with surety bonds but not with insurance. Insurance is a two-party contract and surety bonding is a three-party contract. Insurance companies expect losses, surety underwriters expect few losses, if any. Question 61 of 100

Answer 61

Your answer: Insurance companies expect losses, surety underwriters expect few losses, if any. is incorrect. The correct answer is: A transfer of risk occurs with surety bonds but not with insurance.. EXPLANATION: A transfer of risk occurs with insurance, but no transfer of risk occurs when a surety bond is issued. All three of the answer choices are differences between insurance contracts and surety bonds. Question 61 of 100

Question 62

All of the following items would be covered under a Personal Property Replacement Cost Endorsement attached to a Homeowners policy, EXCEPT: Answer Choices: Select the Correct Answer A refrigerator in the covered home. Jewelry that is described in the policy and subject to an agreed value loss settlement. Carpeting that was damaged inside the covered dwelling. An awning covering the front porch of the insured home. Question 62 of 100

Answer 62

Your answer: Jewelry that is described in the policy and subject to an agreed value loss settlement. is correct. EXPLANATION: If the property is already subject to an "agreed value" loss settlement under the Homeowners policy, it will not be covered by the Personal Property Replacement Cost Endorsement. Question 62 of 100

Question 63

Under an HO form with replacement cost coverage, what is the maximum amount that will be paid in case of a covered loss? ``` Answer Choices: Select the Correct Answer The limit of coverage Limit of liability Actual cash value Depreciated value less the deductible ``` Question 63 of 100

Answer 63

Your answer: The limit of coverage is correct. EXPLANATION: In property insurance, the maximum the insurer will pay in case of a covered claim is the limit of the coverage. Deductibles are subtracted from the loss and not the limit of the coverage. Question 63 of 100

Question 64

When a liability policy is contested, which of the following entities ultimately determines legal liability? I. The insurance company. II. A court of law. III. The claimant. ``` Answer Choices: Select the Correct Answer I or II I only II only III only ``` Question 64 of 100

Answer 64

Your answer: II only is correct. EXPLANATION: In cases of litigation it is the court/jury/judge that determines legal liability. Question 64 of 100

Question 65

The "special limits of liability" section of the HO forms provides watercraft coverage up to $1,500 aggregate for which of the following? ``` Answer Choices: Select the Correct Answer Sailboats Sailboards Boat trailers All of the responses are correct ``` Question 65 of 100

Answer 65

Your answer: All of the responses are correct is correct. EXPLANATION: All of the responses are correct. The $1,500 applies in the aggregate to all personal watercraft including their trailers, furnishings, equipment and outboard motors. Question 65 of 100

Question 66

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 66 of 100

Answer 66

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 66 of 100

Question 67

Which of the following businesses would not be affected by the liquor liability exclusion? Answer Choices: Select the Correct Answer A European wine distributor. Triple-A Liquor Store. An insurance company offering wine at an open-house for agents. A grocery store that sells wine. Question 67 of 100

Answer 67

Your answer: An insurance company offering wine at an open-house for agents. is correct. EXPLANATION: The policy only provides "host liquor liability" coverage and is not intended to cover any business involved in the manufacturing, sale, or distribution of alcohol. Question 67 of 100

Question 68

A business auto insured is legally liable for an automobile accident involving a covered auto. Which of the following damages would be covered by BAP liability insurance? Answer Choices: Select the Correct Answer Medical expenses of the other driver injured in the accident. The cost to repair the other auto damaged in the accident. Expenses incurred because of the loss of use of the other auto damaged in the accident. All of the responses are correct. Question 68 of 100

Answer 68

Your answer: All of the responses are correct. is correct. EXPLANATION: The BAP would respond to cover all of these claims for injuries and/or damages. Question 68 of 100

Question 69

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 69 of 100

Answer 69

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 69 of 100

Question 70

Under California law, the degree of care owed to a trespasser by a property owner is not which of the following? Answer Choices: Select the Correct Answer To warn of hidden dangers Ordinary care To not set traps Guarantee safe passage on and off the premises Question 70 of 100

Answer 70

Your answer: Guarantee safe passage on and off the premises is correct. EXPLANATION: Guaranteeing safe passage is not required. Question 70 of 100

Question 71

Which of the following physical damage losses would be covered by a Personal Auto Policy providing Comprehensive (other than collision) and Collision Coverage? Answer Choices: Select the Correct Answer A front tire blows out in a high-speed head-on collision, which also causes extensive damage to the vehicle. An insured did not add antifreeze to his radiator and the engine is damaged when the cooling system freezes. A radar detector is destroyed when an insured hits a tree after skidding on a patch of ice. The bearings in a rear wheel burn out after 85,000 miles of use. Question 71 of 100

Answer 71

Your answer: A front tire blows out in a high-speed head-on collision, which also causes extensive damage to the vehicle. is correct. EXPLANATION: Road damage to tires is specifically excluded under the PAP, however, this claim involves a collision, therefore the entire claim would be covered minus the deductible. The policy does not cover losses due to freezing or any radar equipment designed to help the drive avoid police. The damage to the bearings is due to wear and tear which is also excluded. Question 71 of 100

Question 72

In workers compensation the term "willful" means which of the following? ``` Answer Choices: Select the Correct Answer Unsupervised Negligent With good reason Intentional ``` Question 72 of 100

Answer 72

Your answer: Intentional is correct. EXPLANATION: The terms "willful" and "intentional" are synonymous. Question 72 of 100 Submit

Question 73

Which of the following is true regarding Uninsured Motorist Coverage in California? Answer Choices: Select the Correct Answer The coverage may be waived in writing by an insured. The insurer does not have to offer the coverage to the insured. The coverage must be added to all existing auto liability policies. The coverage protects occupants of an auto which strikes the insured auto. Question 73 of 100

Answer 73

Which of the following is true regarding Uninsured Motorist Coverage in California? Answer Choices: Select the Correct Answer The coverage may be waived in writing by an insured. The insurer does not have to offer the coverage to the insured. The coverage must be added to all existing auto liability policies. The coverage protects occupants of an auto which strikes the insured auto. Question 73 of 100

Question 74

Which of the following is covered by the NFIP? ``` Answer Choices: Select the Correct Answer Overflow of inland or tidal water. Vehicles. A broken water main. Livestock. ``` Question 74 of 100

Answer 74

our answer: Overflow of inland or tidal water. is correct. EXPLANATION: Overflow of inland or tidal water is the prime coverage under the NFIP. Mudflow is also covered, mudslides are not. The coverage does not include damage or loss to livestock, vehicles or roads. Question 74 of 100

Question 75

When is abandonment of insured property to an insurer permitted under a commercial property policy? Answer Choices: Select the Correct Answer When written prior notice is lawfully delivered to the insurer When the insured desires immediate settlement When the property is certain to be a total loss Never Question 75 of 100

Answer 75

Your answer: Never is correct. EXPLANATION: Today’s property policies follow the tradition of the Standard Fire Policy by totally prohibiting abandonment of insured property by any party. The abandonment clause is brief: There can be no abandonment to this Company of any property. Question 75 of 100

Question 76

Public Official bonds are meant to: Answer Choices: Select the Correct Answer Guarantee faithful performance of the elected or appointed public official. Guarantee financial obligations. Assure the employees are faithful in their jobs. None of the responses are correct. Question 76 of 100

Answer 76

Your answer: Guarantee faithful performance of the elected or appointed public official. is correct. EXPLANATION: A Public Official bond is meant to guarantee the performance of the official in the job to which they are either elected or appointed. They are usually time required, and the lack of promised performance amounts to a penalty on the bond. Question 76 of 100

Question 77

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 77 of 100

Answer 77

Your answer: $2,000 is correct. EXPLANATION: For independent adjuster candidates, the bond amount is $2,000. Question 77 of 100 Submit

Question 78

Which of the following might be covered by a general liability policy issued to Mack’s Meat Market? Answer Choices: Select the Correct Answer A butcher’s apprentice slices off the end of his finger while slicing meat for a customer. A customer falls down when the stairs at the market collapse. Mack’s delivery van collides with an automobile during a delivery run. A neighbor slips and falls off a doorstep at Mack’s vacation home. Question 78 of 100

Answer 78

Your answer: Mack’s delivery van collides with an automobile during a delivery run. is incorrect. The correct answer is: A customer falls down when the stairs at the market collapse. . EXPLANATION: The CGL policy is designed to cover accidents that occur on the premises involving a “third party”. Injury to employees is excluded as well as automobile liability exposures. Question 78 of 100

Question 79

Which one of the following situations would be considered an example of absolute (strict) liability? Answer Choices: Select the Correct Answer Wayne keeps a large police-trained dog in his jewelry store as a deterrent to burglars. During the time the store is open for business, the dog is confined to a back room. One day, the dog escaped, ran into the showroom and bit a customer. The roof of a grocery store blew off during a tornado. Pieces of the roof struck the side of the store next door, damaged the siding and broke several windows. Carl thinks of himself as a master handyman but is careless with his tools. A trespasser tripped on a hammer and was injured. Alice deliberately hit Fred over the head with her heavy leather handbag after he remarked that she was overweight. Question 79 of 100

Answer 79

Your answer: Wayne keeps a large police-trained dog in his jewelry store as a deterrent to burglars. During the time the store is open for business, the dog is confined to a back room. One day, the dog escaped, ran into the showroom and bit a customer. is correct. ``` EXPLANATION: With absolute (strict) liability there is little if any defense. In most jurisdictions where absolute liability is imposed, the defendant is held responsible whether or not he or she is negligent. Wayne had a duty to keep the dog restrained when open for business. ``` Question 79 of 100

Question 80

The agent or insurer must obtain the applicant's signature acknowledging receipt of the California Residential Property Insurance disclosure form within ____ of the date of the application. ``` Answer Choices: Select the Correct Answer 10 days 20 days 60 days 90 days ``` Question 80 of 100

Answer 80

our answer: 60 days is correct. EXPLANATION: No policy of residential property insurance may be issued in this state by any insurer unless the named insured is provided a copy of the California Residential Property Insurance disclosure statement. The agent or insurer must obtain the applicant’s signature acknowledging receipt of the disclosure form within 60 days of the date of the application. Question 80 of 100

Question 81

If an insured fails to report a claim in a timely fashion, the adjuster will immediately: Answer Choices: Select the Correct Answer Deny the claim. Send the insured a reservation of rights letter. Cease the claims investigation. Seek the advice of the company's attorney. Question 81 of 100

Answer 81

Your answer: Send the insured a reservation of rights letter. is correct. EXPLANATION: Failure to report a claim in a timely fashion denies the insurer of the opportunity to promptly investigate the circumstances of the claim. Valuable information from witness could be lost, as well as other physical evidence. When this occurs, the insurer will normally send the insured a reservation letter to protect the rights of the insurer. Question 81 of 100

Question 82

Following a loss by earthquake in California, how many days does the insured have, unless extended in writing by the insurer, to present proof of loss for payment? ``` Answer Choices: Select the Correct Answer 60 days 30 days 20 days 45 days ``` Question 82 of 100

Answer 82

Your answer: 60 days is correct. EXPLANATION: The 60-day period is established because the insured is required to protect the property from further damage, and separate the damaged property from the undamaged. Question 82 of 100

Question 83

The Now Company carries a special BOP policy with a liability limit of $500,000. The company is involved in an accident causing $200,000 bodily injury damage and $200,000 property damage. The total amount collectible under the policy is: ``` Answer Choices: Select the Correct Answer $500,000 $400,000 $200,000 $100,000 ``` Question 83 of 100

Answer 83

Your answer: $400,000 is correct. EXPLANATION: BOP policies provide a single limit of liability. Both bodily injury and property damage coverage is provided. Since the amounts for bodily injury and property damage combined do not exceed the 500,000 occurrence limit, the total amount of the claim would be covered. Question 83 of 100

Question 84

All of the following people/businesses would have a personal injury liability exposure that should be covered by insurance, EXCEPT: Answer Choices: Select the Correct Answer The owner of a store in a mall who may follow customers around the store if he suspects them of shoplifting. A TV station whose reporters may do feature stories on high profile persons that might include private information about their personal lives. A landlord who evicts a tenant for not paying the rent and suspicion of illegal use of the premises. The owner of a store in a mall who detains customers he suspects of shoplifting until the police arrive. Question 84 of 100

Answer 84

Your answer: A landlord who evicts a tenant for not paying the rent and suspicion of illegal use of the premises. is incorrect. The correct answer is: The owner of a store in a mall who may follow customers around the store if he suspects them of shoplifting.. EXPLANATION: The owner that follows a person he suspects of shoplifting, but does not detain them, would not have a personal injury liability exposure unless he takes some action such as having the suspect falsely arrested, detained or imprisoned. Question 84 of 100

Question 85

You throw a roast in the oven and decide to go to the movies, thinking that you have plenty of time. After the movie, you are caught behind an accident and it takes you several hours to get home. You return to a blackened carcass and the contents of your home are thoroughly covered in soot from the smoke. Would a claim for smoke damage be covered under the Homeowner forms? Answer Choices: Select the Correct Answer Yes, the loss is covered under the peril of fire. No, the loss is not covered. Yes, the loss is covered under the peril of smoke. No, the smoke was not caused by an unfriendly fire and therefore the loss is excluded. Question 85 of 100

Answer 85

Your answer: Yes, the loss is covered under the peril of smoke. is correct. EXPLANATION: Even though this was not a fire, the loss is still covered under the peril of smoke. Property forms include the peril of smoke. This is a separate peril and the smoke damage does not have to occur as a result of a fire. Question 85 of 100

Question 86

When an insured cancels a Homeowners policy before the renewal date, the unearned premium (UEP) is returned to the insured on a short-rate basis. Which of the following is true when a short-rate cancellation occurs? Answer Choices: Select the Correct Answer The insurer is permitted to retain a higher percentage of the UEP than when the insurer cancels the policy. The insurer must return only 50% of the premium the insured has paid. The insurer must return 100% of the premium the insured has paid. The insurer is permitted to retain a smaller amount of the UEP with a short-rate cancellation than with a mid-term cancellation. Question 86 of 100

Answer 86

Your answer: The insurer is permitted to retain a smaller amount of the UEP with a short-rate cancellation than with a mid-term cancellation. is incorrect. The correct answer is: The insurer is permitted to retain a higher percentage of the UEP than when the insurer cancels the policy.. EXPLANATION: When an insured cancels a Homeowners policy before the renewal date, the insurer is permitted to retain a higher percentage of the UEP than when the insurer cancels the policy. The amount of the short-rate premium return is usually determined by a table within the policy itself. Question 86 of 100

Question 87

Harry runs a stop sign and hits Sue's vehicle causing $5,000 in damage. It is determined that Sue was speeding and was 20% responsible for the accident. Harry was only 80% responsible. How much can Sue collect under the doctrine of comparative negligence? Answer Choices: Select the Correct Answer Sue will get $4,000. Since Sue was 20% negligent, she gets nothing. Sue will get $5,000 because Harry hit her and was mainly at fault. Since both were at fault their individual policies will pay the damage to each ones vehicle. Question 87 of 100

Answer 87

Your answer: Sue will get $4,000. is correct. EXPLANATION: Under the comparative negligence law in California, a plaintiff's damages are reduced in proportion to his/her own negligence. Therefore, Sue will have her damage amount reduced by 20%. Question 87 of 100

Question 88

Who signs the Declarations page on an Equipment Breakdown policy? ``` Answer Choices: Select the Correct Answer An Authorized Representative The Named Insured Two officers of the company An Authorized Inspector ``` Question 88 of 100

Answer 88

Your answer: The Named Insured is incorrect. The correct answer is: An Authorized Representative. EXPLANATION: An authorized representative of the company signs the policy Declarations page. This would be the agent. Question 88 of 100

Question 89

All of the following are examples of insurable interest, EXCEPT: Answer Choices: Select the Correct Answer The interest an individual has in the property her parents will someday leave to her. An individual's interest in property she is buying on contract. A tenant's interest in improvements she has made to a leased building. A TV repairman's interest in a customer's TV which has been repaired but is still on premises. Question 89 of 100

Answer 89

Your answer: The interest an individual has in the property her parents will someday leave to her. is correct. EXPLANATION: In property and casualty insurance the insurable interest must exist at the time of the loss. Insurable interests that may be created in the future or based on certain events are not currently insurable interests. Question 89 of 100

Question 90

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 90 of 100

Answer 90

Your answer: 60 days is incorrect. The correct answer is: 30 days. 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 90 of 100

Question 91

The insured sets a fire to his home and is found to be guilty of arson. There is a lien on the burned property by a mortgage company in the amount of $150,000. The property is insured for $300,000 and is a total loss. The personal property of the insured, covered separately by a Homeowners policy for $150,000, is also a total loss. How will this claim most likely be paid? Answer Choices: Select the Correct Answer The insured is paid a total of $300,000. The mortgagee is paid $150,000. The insured is paid $150,000 for the personal property loss. Since the loss is from an intentional act of the insured the entire loss is denied. Question 91 of 100

Answer 91

Your answer: The mortgagee is paid $150,000. is correct. EXPLANATION: The provisions relative to the suspension of payment due to arson do not apply to a lender that holds a valid recorded mortgage on the property in question. Therefore, the lien holder is fully reimbursed for its insurable interest in the property. The insured is not paid due to the charge and conviction of arson. Question 91 of 100

Question 92

What is generally excluded on the Condominium commercial unit-owners form? Answer Choices: Select the Correct Answer The improvements and betterments of the unit owner Hostile Fire damage Building coverage Inside appliances and fixtures Question 92 of 100

Answer 92

Your answer: Building coverage is correct. EXPLANATION: Coverage for the building is generally excluded for the unit-owners form as that should be covered on the Condominium association form. Question 92 of 100

Question 93

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 93 of 100

Answer 93

Your answer: I, II and III. is correct. EXPLANATION: Protection and indemnity coverage would apply to all of these types of losses. Question 93 of 100

Question 94

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 94 of 100

Answer 94

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 94 of 100

Question 95

The "outside the premises" policy insuring agreement covers: Answer Choices: Select the Correct Answer Theft of money and securities while outside the premises. Loss of other property by robbery outside the premises. Loss of money and securities and other property outside the premises. Loss of money and other property off the premises caused by employee dishonesty. Question 95 of 100

Answer 95

Your answer: Theft of money and securities while outside the premises. is incorrect. The correct answer is: Loss of money and securities and other property outside the premises.. EXPLANATION: The outside the premises insuring agreement covers the loss of both money as well as other property when outside the premises. Sometimes a messenger is taking deposits to the bank and sometimes they have other property outside the premises which is exposed to loss. Question 95 of 100

Question 96

A BOP policy liability limits are $500,000 per occurrence and $1,000,000 aggregate. The losses for the policy term are $100,000, $750,000 and $400,000. What is the correct amount the insurance company pays for all three losses? ``` Answer Choices: Select the Correct Answer $500,000 $750,000 $1,000,000 $1,250,000 ``` Question 96 of 100

Answer 96

Your answer: $1,000,000 is correct. EXPLANATION: The aggregate limit is the most the policy can pay per policy period. In this case a maximum of $1,000,000. The $100,000 can be paid; $500,000 of the $750,000 claim can be paid since that is the most that is available in any one occurrence. The $400,000 claim can be paid. After paying these three claims, the 1,000,000 aggregate limits have been reached and no future claims will be paid. Question 96 of 100

Question 97

The first step that any adjuster must take when commencing a claims investigation is: Answer Choices: Select the Correct Answer To verify that the insured has insurable interest in the claim. To verify the coverage under the policy. To verify that the loss was not due to illegal or intentional activities by the claimant. To verify that the loss occurred within the policy territory. Question 97 of 100

Answer 97

Your answer: To verify the coverage under the policy. is correct. EXPLANATION: The first step in a claims investigation is to verify that the loss is covered under the policy. Question 97 of 100

Question 98

Which of the following is considered robbery? Answer Choices: Select the Correct Answer Taking someone else’s property by use of violence Taking someone else’s property by use of fear of violence Taking the property of another by any overt, felonious act committed in the victim’s presence All of the responses are correct Question 98 of 100

Answer 98

Your answer: All of the responses are correct is correct. EXPLANATION: All of the responses are correct because they fit the definition of a threat of violence or injury in the taking of property. Question 98 of 100 Submit

Question 99

What type of bond might an executor of an estate be required to purchase? ``` Answer Choices: Select the Correct Answer Cost bond Completion bond Fiduciary bond Performance bond ``` Question 99 of 100

Answer 99

Your answer: Fiduciary bond is correct. EXPLANATION: These are sometimes referred to as court bonds. They are filed in conjunction with court proceedings and are usually required. Some court bonds are referred to as fiduciary bonds and include: 1. Administrators - appointed by the court when a person dies and does not leave a will with an appointed executor. 2. Executors - executes the provisions of a will. 3. Guardians - when parents are deceased, a person is usually appointed by the court to manage and care for the minors and the estate. Sometimes a guardian is appointed for an adult who is incapacitated through mental illness or physical problems. An executor bond guarantees that the will is to be fulfilled in accordance with the desires of the deceased. All funds and other assets must be accounted for and if improperly handled the court will ask that the bond be forfeited. Question 99 of 100

Question 100

The fee for a duplicate copy of an insurance adjuster's license in California is: ``` Answer Choices: Select the Correct Answer $7 $12 $5 $10 ``` Question 100 of 100

Answer 100

Your answer: $10 is correct. EXPLANATION: The fee for a duplicate copy of an insurance adjuster's license is $10 (CCR 2691.23) Question 100 of 100