IA Test 26 Flashcards
What is the purpose of an adjuster’s initial report?
Answer Choices: Select the Correct Answer
It provides the results of the initial investigation of the claim.
It provides an interim claim status.
It provides details of medical records and claim outlines the demands of claimants.
It provides an evaluation of the pain and suffering demands of a claimant.
Question 1 of 100
Your answer: It provides the results of the initial investigation of the claim. is correct.
EXPLANATION:
This report merely details the result of the initial investigation and not the anticipated end result or even if coverage is applicable.
Question 1 of 100
Which of the following would not be eligible for coverage under a livestock floater?
Answer Choices: Select the Correct Answer Poultry Cattle Sheep Swine
Question 2 of 100
Your answer: Poultry is correct.
EXPLANATION:
Poultry is not eligible property under the livestock floater.
Question 2 of 100
A Commercial General Liability form provides automatic coverage for newly acquired organizations for up to:
Answer Choices: Select the Correct Answer Thirty days. Ninety days. One year. Six months.
Question 3 of 100
Your answer: Thirty days. is incorrect. The correct answer is: Ninety days..
EXPLANATION:
Newly acquired organizations are covered for up to 90 days.
Question 3 of 100
What should be the central goal of the claims adjuster?
Answer Choices: Select the Correct Answer
Follow the rules dictated by the principal
Not violate state insurance laws
Comply with the provisions of the insurance contract to obtain a full release settlement of the claim.
Maximize profit for the insurance company
Question 4 of 100
Your answer: Comply with the provisions of the insurance contract to obtain a full release settlement of the claim. is correct.
EXPLANATION:
The central goal of the adjuster is to comply with the insurance contract to obtain a full-release settlement of the claim.
Question 4 of 100
Helena has not paid her insurance premium for a significant amount of time. Which of the following is likely to happen in this scenario?
Answer Choices: Select the Correct Answer
Her policy will be “voided to inception”.
Her policy will be suspended.
Her policy will be voided.
Her policy will be cancelled.
Question 5 of 100
Your answer: Her policy will be cancelled. is correct.
EXPLANATION:
Helena’s policy will be cancelled for “nonpayment of premium”.
Question 5 of 100
Which of the following would be eligible for coverage under a Businessowners policy?
Answer Choices: Select the Correct Answer A small retail store. A neighborhood tavern. An auto body shop. A branch bank.
Question 6 of 100
Your answer: An auto body shop. is incorrect. The correct answer is: A small retail store. .
EXPLANATION:
The BOP is intended for small, owner-operated light businesses. Bars and taverns, auto body and auto repair shops are excluded from the BOP. The branch bank would not meet the general criteria due to the large crime exposure.
Question 6 of 100
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 7 of 100
our 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 7 of 100
If an employee accidentally turns off the restaurant’s freezer and the entire inventory of ice cream is ruined, does the Businessowners Coverage Form cover the loss?
Answer Choices: Select the Correct Answer
The loss is covered
The loss is not covered
The coverage is limited to $500.00 as an extension of coverage
The loss is covered for ACV value
Question 8 of 100
Your answer: The loss is covered is incorrect. The correct answer is: The loss is not covered.
EXPLANATION:
This loss is not covered. It can be covered using BP 04 15–Spoilage Coverage endorsement.
Question 8 of 100
Which of the following time periods is ordinary payroll coverage limited to in case of a business income loss under the BOP?
Answer Choices: Select the Correct Answer 30 days 60 days 90 days 180 days
Question 9 of 100
Your answer: 30 days is incorrect. The correct answer is: 60 days .
EXPLANATION:
The insurance company pays for only the loss of business income sustained during the restoration period that takes place within 12 consecutive months after the date of the covered loss or damage. However, it pays for ordinary payroll expenses for only 60 days after the date of loss unless a higher number of days is on the declarations.
Question 9 of 100
A settlement in which the claimant receives payment in installments over a period of time instead of a lump sum is:
Answer Choices: Select the Correct Answer A Structured Settlement. Scheduled Payment Release. Full Release Settlement. Open-Ended Release.
Question 10 of 100
Your answer: A Structured Settlement. is correct.
EXPLANATION:
A structured settlement is usually reserved for large settlements. Structured settlements may call for part of the full amount to be paid as a lump sum.
Question 10 of 100
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 11 of 100
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 11 of 100
With surety bonds, who is to be protected under a performance bond?
Answer Choices: Select the Correct Answer The Obligee The Surety The Sub-contractors The Contractor
Question 12 of 100
Your answer: The Obligee is correct.
EXPLANATION:
The obligee is protected by the bond in case the contractor defaults under the contract for the work to be performed. The surety issuing the bond is the guarantor under the bond.
Question 12 of 100
Which of the following coverages are not automatically included in the BOP?
Answer Choices: Select the Correct Answer Seasonal increase in contents coverage Loss of income Employee dishonesty General liability coverages
Question 13 of 100
Your answer: Employee dishonesty is correct.
EXPLANATION:
Employee dishonesty coverage is not automatically included in the BOP, it must be added by endorsement for an additional premium.
Question 13 of 100
Which of the following is NOT a claim settlement option for liability claims?
Answer Choices: Select the Correct Answer Excessive amounts claimed. Lost wages claimed. Loss of Use. Disfigurement.
Question 14 of 100
Your answer: Excessive amounts claimed. is correct.
EXPLANATION:
Excessive amounts claimed are always contested by the insurer. Liability losses are categorized as “special damages”or “general damages.” Special damages include medical expenses and loss of wages or the costs of other known expenses. General damages would include pain and suffering, punitive damages, loss of consortium, disfigurement and disability claims.
Question 14 of 100
What is the “retained limit” of a Personal Umbrella policy?
Answer Choices: Select the Correct Answer
The cost of defending the insured in a lawsuit.
Supplementary Payments coverage.
A deductible that the insured pays when the Personal Umbrella policy covers a claim that was excluded by the underlying liability policy.
A percentage of the policy limits.
Question 15 of 100
Your answer: A deductible that the insured pays when the Personal Umbrella policy covers a claim that was excluded by the underlying liability policy. is correct.
EXPLANATION:
This is the deductible that the insured pays under the Personal Umbrella policy when the underlying liability coverage does not apply on a claim, but the Personal Umbrella policy will cover the claim.
Question 15 of 100
Kate is a claims representative who has been involved in adjusting a very complex claim. During a meeting with the claimant and the claimant’s attorney, Kate asks the claimant to sign an authorization for access to his medical records. Which of the following is the term used to describe this stage of the claims process?
Answer Choices: Select the Correct Answer Evaluation. Resolution. Investigation. Negotiation.
Question 16 of 100
Your answer: Investigation. is correct.
EXPLANATION:
If Kate is requesting authorization to review information, the term best used to describe this stage is “investigation”.
Question 16 of 100
Which of the following are covered under the Homeowners “Additional Residence Rented to Others” endorsement?
I. Personal Liability (Injury)
II. Medical Payment to Others
III. Dwelling
IV. Personal Property
Answer Choices: Select the Correct Answer I and II only. I, II, III and IV. I and IV only. III and IV only.
Question 17 of 100
Your answer: I and II only. is correct.
EXPLANATION:
The “Additional Residence Rented to Others” endorsement provides personal liability (injury) and medical payments to others coverage to cover the insured’s liability arising out of the ownership of a residence regularly rented to others.
Question 17 of 100
In California, which of the following is an untrue statement regarding the adjustment of a total auto physical damage loss?
Answer Choices: Select the Correct Answer
The insurer may elect a cash settlement that is based upon the actual cost of a “comparable automobile” less any deductible provided in the policy.
A cash settlement does not include sales taxes.
The cash settlement includes one-time fees incident to transfer of evidence of ownership of a comparable automobile.
The cash settlement must also include the license fee and other annual fees to be computed based upon the remaining term of the loss vehicle’s current registration.
Question 18 of 100
Your answer: The cash settlement includes one-time fees incident to transfer of evidence of ownership of a comparable automobile. is incorrect. The correct answer is: A cash settlement does not include sales taxes..
EXPLANATION:
The cash settlement amount must include all applicable taxes, license fees and other one-time fees incident to transfer of evidence of ownership of a comparable automobile. This amount must also include the license fee and other annual fees to be computed based upon the remaining term of the loss vehicle’s current registration.
Question 18 of 100
Which of the following bests describes the process of mediation?
Answer Choices: Select the Correct Answer
A summons to give testimony
Estoppel because of certain acts of others
Both parties present their dispute to a person usually in the legal profession; nothing is binding on either party
All parties submit their differences to a disinterested third party; the result is binding on both parties
Question 19 of 100
Your answer: Both parties present their dispute to a person usually in the legal profession; nothing is binding on either party is correct.
EXPLANATION:
In mediation, both opposing parties present their dispute to an impartial third party, usually a trial lawyer or retired judge, who helps the parties analyze their dispute and devise a compromise. Nothing is binding on either party until an agreement is formulated and agreed to by the opposing parties.
Question 19 of 100
In order for a claim to be a “products” claim, which of the following must be satisfied?
Answer Choices: Select the Correct Answer
Injuries sustained must have occurred on the insured’s premises.
The insured in most cases must have relinquished possession of the product to the purchaser.
A single limit of liability must be provided.
An employee injury must have occurred.
Question 20 of 100
Your answer: The insured in most cases must have relinquished possession of the product to the purchaser. is correct.
EXPLANATION:
Premises liability ends and Products Liability begins the moment the product is relinquished to the purchaser.
Question 20 of 10
After a Homeowners policy in California has been in effect for more than one year, the insurer may cancel the policy for any reason at the anniversary date, so long as the insured is notified:
Answer Choices: Select the Correct Answer
At least 25 days in advance of the anniversary date.
At least 30 days in advance of the anniversary date.
At least 20 days in advance of the cancellation date.
At least 45 days in advance of the cancellation date.
Question 21 of 100
Your answer: At least 45 days in advance of the cancellation date. is correct.
EXPLANATION:
The insurer may cancel the policy for any reason at the anniversary date, so long as the insured is notified at least 45 days in advance of the cancellation date of the policy.
Question 21 of 100
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 22 of 100
Your answer: Damage to a covered auto while being used as part of a car pool. is correct.
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 22 of 100
With a “full release settlement” of an insurance claim:
Answer Choices: Select the Correct Answer
The claimant does not have to sign a release.
The insurer can make payments over 90 days.
The insurer has 60 days to make payment.
All damages are paid immediately in one lump sum.
Question 23 of 100
Your answer: All damages are paid immediately in one lump sum. is correct.
EXPLANATION:
A “full release settlement” is also known as a “final release” and all sums due have been paid and the file is closed.
Question 23 of 100
Jonathan, a licensed California independent adjuster, has received a notice of claim from an insured. How soon must is he transmit this notice to the insurer?
Answer Choices: Select the Correct Answer Within 5 calendar days Within 10 calendar days Within 21 calendar days Immediately
Question 24 of 100
Your answer: Immediately is correct.
EXPLANATION:
Upon receiving notice of claim, every licensee or claims agent must immediately transmit notice of claim to the insurer. Failure of the licensee or claims agent to immediately transmit notice of claim to the insurer will constitute a separate and distinct violation of California Insurance Code
A type of insurance that permits an insured to collect from his/her own insurance company, without proving the negligence of a third-party, is known as:
Answer Choices: Select the Correct Answer Intentional negligence. All-risk. No-fault. Non-negligence.
Question 25 of 100
Your answer: No-fault. is correct.
EXPLANATION:
No-fault insurance allows an insured to collect from his or her own insurance policy without the need to prove the negligence of a third-party. No-Fault Automobile policies and Workers Compensation coverage fall into the “No-Fault” category.
Question 25 of 100
On a Business Auto policy, Symbol #8 represents:
Answer Choices: Select the Correct Answer Hired autos. Non-owned autos. Specifically described autos. Owned private passenger cars.
Question 26 of 100
Your answer: Specifically described autos. is incorrect. The correct answer is: Hired autos..
EXPLANATION:
Symbol #8 is for liability caused by hired autos.
Question 26 of 100
Milton agrees to steal and wreck Albert’s car for $4,000, so that Albert can collect $8,000 under his auto insurance policy. Which of the elements of a valid contract are missing in this agreement?
Answer Choices: Select the Correct Answer A valuable consideration. Legal purpose. Competent parties. An offer and an acceptance.
Question 27 of 100
Your answer: Legal purpose. is correct.
EXPLANATION:
All elements of a valid contract are present except a legal purpose.
Question 27 of 100
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 28 of 100
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 28 of 100
Under the Section II – Personal Liability of a Homeowner policy, a cemetery plot is considered to be:
Answer Choices: Select the Correct Answer An insured location. The insured premises. A non-insured location. A non-insured premises.
Question 29 of 100
Your answer: A non-insured location. is incorrect. The correct answer is: An insured location. .
EXPLANATION:
In the definitions of the HO policy, a cemetery plot is defined as an insured location.
Question 29 of 100
All of the following are violations of “good faith duty” by the adjuster, EXCEPT:
Answer Choices: Select the Correct Answer
Paying a settlement within 30 days after an agreement is reduced to writing.
Denying coverage or attempting to settle a claim on the basis of an application which the insurer knows was altered without notice to, or knowledge or consent of, the insured.
Failing to pay the amount of any claim due any person insured by the contract within 60 days after receipt of satisfactory proof of loss from the claimant when such failure is arbitrary, capricious, or without probable cause.
Misrepresenting pertinent facts or insurance policy provisions relating to any coverages at issue.
Question 30 of 100
Your answer: Paying a settlement within 30 days after an agreement is reduced to writing. is correct.
EXPLANATION:
Paying a claim within 30 days after an agreement is reduced to writing is not a violation but a requirement. The other responses are violations of “good faith duty.”
Question 30 of 100
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 31 of 100
Your answer: $5,000 is correct.
EXPLANATION:
The custom farming endorsement is used when a farmer is farming for others and the receipts exceed $5,000 per year.
Question 31 of 100
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 32 of 100
Your answer: Within 3 business days after receiving the notice of claim. is correct.
EXPLANATION:
The insurer must request the photographs within 3 business days after receiving the claims notice.
Question 32 of 100
On Monday afternoon, Carissa’s boss requested that she finish updating the company website by Tuesday morning. Carissa did not want to stay at the office late into the evening so she took her work home to complete it there. On the way home, Carissa remembers that she left an external hard drive back at the office. This hard drive contained files that she needed to complete the website updates so she turns her car around and heads back to the office to retrieve it. Two blocks away from her office, another car runs a stop light and smashes into Carissa’s car, severely injuring her. Which of the following statements would be TRUE in how Carissa would be handled by her employer’s workers compensation coverage?
Answer Choices: Select the Correct Answer
Carissa’s injuries are not compensable because she contributed to her injuries by forgetting the hard drive.
Carissa’s injuries are compensable because she was driving to retrieve a work-related item.
Carissa’s injuries are not compensable as she was commuting to work and coverage does not apply in that case.
Carissa’s injuries are compensable because she was technically “at work”, she was simply taking work home.
Question 33 of 100
Your answer: Carissa’s injuries are not compensable as she was commuting to work and coverage does not apply in that case. is correct.
EXPLANATION:
Workers compensation does not apply to employees when they are commuting to and from work.
Question 33 of 100
A ship has suffered damage and sunk. Which of the following would respond to cover the loss of the ship?
Answer Choices: Select the Correct Answer Protection and indemnity coverage Shipper’s fees Hull Insurance Cargo coverage
Question 34 of 100
Your answer: Hull Insurance is correct.
EXPLANATION:
Hull insurance would cover the loss.
Question 34 of 100
What is covered by a SP-23 protection and indemnity policy?
Answer Choices: Select the Correct Answer
All of the responses are correct.
Loss of life, injury and illness
Collision liabilities including defense costs.
Damage to docks, buoys and other structures.
Question 35 of 100
Your answer: All of the responses are correct. is correct.
EXPLANATION:
The protection and indemnity coverage applies to all of the responses.
Question 35 of 100
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 36 of 100
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 36 of 100
An insured purchases two homeowner policies from two different insurance companies. If a covered loss occurs, on what basis will the loss be settled by each of the insurers?
Answer Choices: Select the Correct Answer First policy effective basis Excess basis Equal share basis Pro rata basis
Question 37 of 100
Your answer: Pro rata basis is correct.
EXPLANATION:
Each company will pay its pro-rata share of the loss. This means the percentage of coverage (the total amount of insurance carried) that each company provides on the risk.
Question 37 of 100
In a situation where liability is obviously clear and an insurer refuses to settle, which of the following is correct according to the California Insurance Code?
Answer Choices: Select the Correct Answer
The insurer has the right to delay payment for a period of up to six months even when liability is clear.
The insurer is permitted to exercise the right of appeal.
The insurer has the right to delay payment for a period of up to 90 days months even when liability is clear.
The insurer is committing an unfair claims settlement practice in California.
Question 38 of 100
Your answer: The insurer is committing an unfair claims settlement practice in California. is correct.
EXPLANATION:
Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear is an unfair claims settlement practice in California.
Question 38 of 100
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.
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 39 of 100
If the insured is designated in a commercial umbrella liability policy as an individual, who are considered insureds in connection with a business in which the insured is the only owner?
Answer Choices: Select the Correct Answer
The insured and spouse as well as any partners and their spouses
The insured and the insured’s spouse acting in regard to the business
The insured and spouse as well as any stockholders and their spouses
The insured, the insured’s spouse, any employees and their spouses
Question 40 of 100
Your answer: The insured and the insured’s spouse acting in regard to the business is correct.
EXPLANATION:
Both the CGL policy and the umbrella policy cover both the insured and spouse in regard to the business.
Question 40 of 100
