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
The ___ clause covers collision damage to another vessel.
Answer Choices: Select the Correct Answer Sistership Sue and Labor Inchmaree Running-Down
Question 41 of 100
Your answer: Inchmaree is incorrect. The correct answer is: Running-Down .
EXPLANATION:
The running-down clause covers collision damage to another vessel. It does not cover docks or injury to passengers.
Question 41 of 100
In California an independent adjuster must post a surety bond. The bond is made payable to:
Answer Choices: Select the Correct Answer The people of the State of California. The Insurance Commissioner. The California Underinsurance Fund. The insurer that employs the adjuster.
Question 42 of 100
Your answer: The people of the State of California. is correct.
EXPLANATION:
The bond is made payable to the people of the State of California.
Question 42 of 100
In California, all the following are considered private passenger vehicles, EXCEPT:
Answer Choices: Select the Correct Answer
a six-wheel recreational vehicle.
a privately owned limousine used exclusively by the owner.
a personally owned four-wheel station wagon used for deliveries as a volunteer.
a four-wheel vehicle used as a taxi by an individual and not a company.
Question 43 of 100
Your answer: a four-wheel vehicle used as a taxi by an individual and not a company. is correct.
EXPLANATION:
A four-wheel vehicle used as a taxi by an individual and not a company is not considered a private passenger vehicle.
Question 43 of 100
Under the commercial auto policy providing physical damage, which of the following offers the broadest coverage?
Answer Choices: Select the Correct Answer Comprehensive. Specified cause of loss. Named perils. Broad named perils.
Question 44 of 100
Your answer: Comprehensive. is correct.
EXPLANATION:
Comprehensive coverage would be the broadest because it covers loss that is not defined as collision. The specified cause of loss is a named peril form and thus, is more limited.
Question 44 of 100
Each of the following is true about Builders Risk Coverage, EXCEPT:
Answer Choices: Select the Correct Answer
Coverage terminates the day after construction is completed.
The amount at risk increases over time.
Land, lawns and trees are not covered.
In effect, the coverage has a 100% coinsurance requirement.
Question 45 of 100
Submit
Your answer: Coverage terminates the day after construction is completed. is correct.
EXPLANATION:
Coverage normally terminates 90 days after the work has been completed or has been accepted. In addition, coverage will cease once the building has been put to its intended use.
Question 45 of 100
How much advance notice must an insurer in California give its policyholders when non-renewing a PAP?
Answer Choices: Select the Correct Answer 30 days 10 days 20 days 45 days
Question 46 of 100
Your answer: 30 days is correct.
EXPLANATION:
An insurer may only legally non-renew an auto policy for certain reasons, but when allowed, notice must be given by the insurer at least 30 days prior to policy expiration.
Question 46 of 100
Which of the following is the definition of “person” according to the California Adjuster Act?
Answer Choices: Select the Correct Answer
Any individual, firm, company, association, organization, partnership, limited liability company, and corporation.
The individual under whose direction, control, charge, or management of the business of a licensee is operated.
A person licensed under the insurance laws of the state of California.
An attorney who is an active member of the State Bar of California.
Question 47 of 100
Your answer: Any individual, firm, company, association, organization, partnership, limited liability company, and corporation. is correct.
EXPLANATION:
According to the California Insurance Code, a “person” is defined as: “Any individual, firm, company, association, organization, partnership, limited liability company, and corporation.”
Question 47 of 100
A tenant leases space in a building. The tenant’s space is damaged by fire. When will the Commercial Property policy pay for the damage?
Answer Choices: Select the Correct Answer
When the owner of the building submits proof of loss for the damage
If the tenant pays for the damage
Will only pay if the lease agreement charges the tenant with the repairs
Will not pay
Question 48 of 100
Your answer: Will not pay is incorrect. The correct answer is: When the owner of the building submits proof of loss for the damage .
EXPLANATION:
When the owner of the building submits a proof of loss for the damage and the loss is paid.
Question 48 of 100
Which of the following injury or damage falls within the products-completed operations hazard as defined in a commercial umbrella liability policy?
Answer Choices: Select the Correct Answer
A spot remover company hired sales representatives across the country to visit potential customers’ homes and demonstrate its product. The company received hundreds of claims from people who said the carpets in their homes were reunited because, during the demonstration, the spot remover ate large holes in the carpet.
A home hair preparation was advertised to “curl hair” within two hours.” Many people used the product and their hair fell out.
A building being constructed by a contractor falls and causes bodily injury.
A contractor is blasting and a rock is thrown and a vehicle is damaged.
Question 49 of 100
Your answer: A home hair preparation was advertised to “curl hair” within two hours.” Many people used the product and their hair fell out. is correct.
EXPLANATION:
Product liability occurs when the product is relinquished to others away from the insured’s premises.
Question 49 of 100
A maid in a hotel neglects to lock a guest’s hotel room door after cleaning the room. Thieves enter the room and steal the guest’s clothing and laptop. What Commercial Crime coverage does the hotel need to cover the loss?
Answer Choices: Select the Correct Answer Kidnap/Ransom Extortion Employee Theft Guest's Property Computer Fraud
Question 50 of 100
Your answer: Guest’s Property is correct.
EXPLANATION:
The Commercial Crime form known as “Guests Property” would cover the loss to guest’s property inside the premises of the hotel.
Question 50 of 100
The base deductible of 5% under the Earthquake Endorsement can be converted to a specific dollar amount by:
Answer Choices: Select the Correct Answer
Multiplying the greater of Coverage A or C, by the deductible percentage scheduled on the policy.
Scheduling a dollar amount on the endorsement form.
Multiplying the limit of liability for Coverage A by the deductible percentage.
Multiplying the limit of liability for Coverage C by the deductible percentage.
Question 51 of 100
Your answer: Multiplying the greater of Coverage A or C, by the deductible percentage scheduled on the policy. is correct.
EXPLANATION:
The deductible for an Earthquake Endorsement is converted to a specific dollar amount by multiplying the greater of Coverage A or C limit of liability, by the deductible percentage.
Question 51 of 100
Under business income coverage, what coverage continues payment of income after the period of restoration is complete?
Answer Choices: Select the Correct Answer Maximum period of Indemnification Extension of coverage Agreed value Extended Business Income
Question 52 of 100
Your answer: Extended Business Income is correct.
EXPLANATION:
The coverage is called Extended Business Income and will allow for payment after the period of restoration is complete up to a maximum of 60 days. This is included in the form automatically. Coverage can be extended for a longer period by paying an additional premium.
Question 52 of 100
The “when more than one coverage applies” condition in Commercial Crime insurance is designed to:
Answer Choices: Select the Correct Answer
Specify how a claim would be allocated among the different insurers.
Allow the insured to choose the company that will pay the claim.
Provide for subrogation of a claim.
Avoid overpayment of a claim.
Question 53 of 100
Your answer: Avoid overpayment of a claim. is incorrect. The correct answer is: Specify how a claim would be allocated among the different insurers. .
EXPLANATION:
The purpose of the clause is to specify how a claim would be allocated among the different insurers.
Question 53 of 100
While in England an insured has her purse stolen and files a claim for $500 of cash, $1,000 in airline tickets, $250 for miscellaneous items and $50 for the value of the purse. How much of this loss would be covered under a DP-1 dwelling form?
Answer Choices: Select the Correct Answer Nothing $1,050 $1,800 $1,750
Question 54 of 100
Your answer: $1,800 is incorrect. The correct answer is: Nothing.
EXPLANATION:
None of the dwelling forms provide theft coverage of personal property unless the theft coverage endorsement is purchased.
Question 54 of 100
Which of the following is the class of insurance, defined by the California Insurance Code (CIC) that includes insurance against financial loss by reason of the nonpayment of principal, interest or other sums agreed to be paid under the terms of any note or bond, or other evidence of indebtedness secured by a mortgage, deed of trust, or other instrument constituting a lien or charge on real estate?
Answer Choices: Select the Correct Answer Insolvency insurance. Credit insurance. Mortgage Guaranty insurance. Legal insurance.
Question 55 of 100
Your answer: Mortgage Guaranty insurance. is correct.
EXPLANATION:
Insurance against financial loss by reason of the nonpayment of principal, interest or other sums agreed to be paid under the terms of any note or bond, or other evidence of indebtedness secured by a mortgage, deed of trust, or other instrument constituting a lien or charge on real estate, is known as Mortgage Guaranty insurance in California.
Question 55 of 100
A California Independent Adjuster license expires every:
Answer Choices: Select the Correct Answer Year Three years Two years Four years
Question 56 of 100
Your answer: Two years is correct.
EXPLANATION:
The license expires every two years on the last calendar day of the month in which the initial license was initially issued.
Question 56 of 100
The insured owns a four family dwelling insured on a HO-5 Form. The dwelling is insured for $500,000. What is the percentage of Coverage A for contents?
Answer Choices: Select the Correct Answer 50% 20% 25% 30%
Question 57 of 100
Your answer: 25% is correct.
EXPLANATION:
A four family dwelling is covered for 25% of Coverage A for contents. A three family dwelling is covered for 30% and a one or two family dwelling is covered for 50% of the Coverage A limit.
Question 57 of 100
Which of the following is excluded under the Ordinance or Law Endorsement form?
Answer Choices: Select the Correct Answer
The cost to comply with any ordinance or law requiring a higher grade of pipe to be used in a home’s plumbing system.
The cost to comply with any ordinance or law regulating or enforcing the type of insulation that may be used in the attics of homes located in the jurisdiction.
The cost to comply with any ordinance or law requiring that handrails be installed on any porch that is greater than 2 feet in height, and is attached to the covered dwelling.
The cost to comply with any ordinance or law regulating or enforcing the clean up and removal of pollutants.
Question 58 of 100
Your answer: The cost to comply with any ordinance or law regulating or enforcing the clean up and removal of pollutants. is correct.
EXPLANATION:
The cost to comply with any ordinance or law regulating or enforcing the clean up and removal of pollutants is excluded under the Ordinance or Law endorsement.
Question 58 of 100
Submit
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 59 of 100
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 59 of 100
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 60 of 100
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 60 of 100
The manager of an independent adjusting company in California leaves the business. The Department of Insurance requires notification of the manager’s departure within:
Answer Choices: Select the Correct Answer 10 days 30 days 60 days At license renewal
Question 61 of 100
Your answer: 30 days is correct.
EXPLANATION:
The Insurance Department must be advised within 30 days.
Question 61 of 100
Which of the following statements is FALSE concerning coverage under the Business Auto policy?
Answer Choices: Select the Correct Answer
Medical payments coverage is automatically provided.
It may be used to cover specifically described autos only.
If written to cover “any auto”, non-owned and hired autos are automatically covered.
Whether newly acquired autos are automatically covered depends upon the applicable coverage symbol.
Question 62 of 100
Your answer: Medical payments coverage is automatically provided. is correct.
EXPLANATION:
Medical payments coverage is an optional coverage (and not automatically provided) for autos under the Business Auto policy.
Question 62 of 100
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 63 of 100
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 63 of 100
Mrs. Vincent is covered on a PAP policy which covers her 2012 Ford SUV. She carries liability and full physical damage coverage. Her neighbor owns a 2002 Chevrolet pick up truck with liability coverage only. Mrs. Vincent borrows the truck to pick up lawn furniture, parks the truck at Home Depot and leaves the keys in the ignition. The truck is stolen and later found wrecked. Which of the following would apply?
Answer Choices: Select the Correct Answer
The loss is covered under Mrs. Vincent’s “other than collision coverage.”
The loss would be covered under her neighbor’s policy.
The loss is covered under Mrs. Vincent’s collision coverage.
The loss would be covered under her neighbor’s homeowners coverage.
Question 64 of 100
Your answer: The loss is covered under Mrs. Vincent’s “other than collision coverage.” is correct.
EXPLANATION:
The loss is covered under Mrs. Vincent’s policy under the “other than collision” coverage because the damage resulted from the theft. Since the neighbor did not carry physical damage coverage Mrs. Vincent’s policy would be primary. If the neighbor carried full physical damage coverage then Mrs. Vincent’s policy would be excess.
Question 64 of 100
Homeowner policies typically provide coverage for all of the following, EXCEPT:
Answer Choices: Select the Correct Answer Personal liability Personal injury Claim expenses Medical payments
Question 65 of 100
Your answer: Personal injury is correct.
EXPLANATION:
Personal injury covers libel, slander, wrongful eviction and several other coverages. The standard homeowner policy must be endorsed to provide personal injury coverage.
Question 65 of 100
Which of the following is NOT excluded under Section II - Liability of the Businessowners policy?
Answer Choices: Select the Correct Answer
Aircraft, auto or watercraft bodily injury
Professional services bodily injury
Pollution property damage
Valet services bodily injury
Question 66 of 100
Your answer: Aircraft, auto or watercraft bodily injury is incorrect. The correct answer is: Valet services bodily injury.
EXPLANATION:
Coverage is included for valet service bodily injury claims. However, the coverage only applies to the ways and means of the insured’s premises that are owned or rented and not when the valet service is operating the vehicle on public roads. The vehicle must be one that is not owned, rented or loaned to the insured. Coverage is the same in the general liability form.
Question 66 of 100
Which of the following is the BEST explanation as to the reason insurance policies are called “unilateral contracts”?
Answer Choices: Select the Correct Answer
Because the insurance contract will only restore one party to the contract to his or her previously held financial position.
Because insurance contract is based on the insured’s personal insurable interest.
Because the insured is the only party to the contract that is required to pay a premium.
Because the insurance company is the only party to the contract that can be sued if they do not meet the terms.
Question 67 of 100
Your answer: Because the insured is the only party to the contract that is required to pay a premium. is incorrect. The correct answer is: Because the insurance company is the only party to the contract that can be sued if they do not meet the terms..
EXPLANATION:
An insurance policy is unilateral because only one party is legally-bound to perform its part of the agreement.
Question 67 of 100
How would you classify the disability for a back sprain suffered at work?
Answer Choices: Select the Correct Answer Temporary, partial Temporary, total Permanent, partial Permanent, total
Question 68 of 100
Your answer: Temporary, partial is incorrect. The correct answer is: Temporary, total.
EXPLANATION:
An employee with a strained back will be temporarily unable to perform any work, but would be expected to recover; thus, the disability would be temporary total.
Question 68 of 100
What is the standard minimum limit of liability for Section II – Personal Liability coverage on Homeowners policies?
Answer Choices: Select the Correct Answer $100,000 per occurrence. $50,000 per occurrence. $1,000 per person. $1,000,000 per occurrence.
Question 69 of 100
Your answer: $100,000 per occurrence. is correct.
EXPLANATION:
Coverage E – Personal Liability coverage of the Homeowner policies, has a standard minimum limit of $100,000 per occurrence. An insured can request a higher limit if desired.
Question 69 of 100
Without a vacancy permit, vandalism is not covered under Commercial Property if the building has been vacant for how many consecutive days prior to a loss?
Answer Choices: Select the Correct Answer 30 45 60 90
Question 70 of 100
Your answer: 60 is correct.
EXPLANATION:
In commercial property insurance, when a building is vacant for 60 days prior to a loss, there is no coverage for certain perils like vandalism and glass breakage, and there is a 15% reduction in payment for any other covered loss. For example a fire loss.
Question 70 of 100
Liability arising out of expected or intended injury is excluded on the CGL. The exclusion does not apply if:
Answer Choices: Select the Correct Answer
Bodily injury results from using reasonable force to protect people or property.
Bodily injury occurring after the police are called.
Bodily injury sustained during a shooting incident.
None of the answer choices are an exception to the exclusion.
Question 71 of 100
Your answer: Bodily injury results from using reasonable force to protect people or property. is correct.
EXPLANATION:
Using reasonable force to protect people or property is not considered to be expected or intended and therefore not excluded.
Question 71 of 100
Which of the following best describes the reason for using various work classifications in the calculation of Workers Compensation premiums?
Answer Choices: Select the Correct Answer
To prevent discrimination by employers.
To assure a proper profit margin for insurers.
To accurately reflect the risks of each employer.
To encourage safety in the workplace.
Question 72 of 100
Your answer: To accurately reflect the risks of each employer. is correct.
EXPLANATION:
There are hundreds of different work classifications which are used in the calculation of Workers Compensation premiums, with a different rate for each one. By classifying an employer’s payroll according to work classification, the premiums charged more accurately reflect the actual risk of loss for each employer.
Question 72 of 100
Which of the following is TRUE regarding those who qualify for coverage under the California Fair Access to Insurance Requirements (FAIR) Plan?
Answer Choices: Select the Correct Answer
Any person who applies will receive more competitive premiums than that available through normal channels.
An inspection of the property will be waived for any person who applies to the FAIR Plan.
Any person who is unable to obtain basic property insurance through normal channels may apply to the FAIR Plan.
Any person who does not have an insurable interest in property may apply to the FAIR Plan.
Question 73 of 100
Your answer: Any person who is unable to obtain basic property insurance through normal channels may apply to the FAIR Plan. is correct.
EXPLANATION:
According to the California Insurance Code (CIC 10093), any person having an insurable interest in real or tangible personal property who, after diligent effort, has been unable to obtain basic property insurance through normal channels from an admitted insurer or a licensed surplus line broker, will be entitled upon application to the facility to an inspection of the property by representatives of the inspection bureau.
Question 73 of 100
Secondary injury funds (also known as second or subsequent injury funds) are a part of most states’ workers compensation laws. Which of the following most closely identifies their purpose?
Answer Choices: Select the Correct Answer
Designed to save the employer premium
Designed to cover all employers within the state
All employers which have had two or more workers compensation claims in the past years have their premiums surcharged
The Fund reimburses employers who employ employees with a pre-existing partial disability who suffer a secondary injury.
Question 74 of 100
Your answer: Designed to save the employer premium is incorrect. The correct answer is: The Fund reimburses employers who employ employees with a pre-existing partial disability who suffer a secondary injury..
EXPLANATION:
Insurers pay into these funds. In some states, all insurers writing workers compensation coverage must pay into the fund, in other states, the stipulations for contribution are spelled out in the law. The Fund is a state agency which reimburses employers or, if insured, their insurance carriers for part of the workers’ compensation costs in certain instances when an employee with a pre-existing permanent partial disability is injured on the job.
Question 74 of 100
If an adjusting firm intends to add a new branch office, what action must be taken?
Answer Choices: Select the Correct Answer
Report the new location to the Commissioner immediately
Report the new location within 30 days
Must first obtain a branch office certificate
No action needs to be taken
Question 75 of 100
Your answer: Must first obtain a branch office certificate is correct.
EXPLANATION:
Adjusters cannot conduct business from any location other than that shown on the records of the Commissioner as his or her place of business unless he or she has received a branch location certificate for that location. A licensee must notify the Commissioner in writing within 10 days after the closing or changing the location of a branch office.
Question 75 of 100
An independent adjuster must complete ___ hours of continuing education during each license renewal cycle.
Answer Choices: Select the Correct Answer 12 20 24 36
Question 76 of 100
Your answer: 24 is correct.
EXPLANATION:
An individual who holds an insurance adjuster license and who is not exempt must satisfactorily complete a minimum of 24 hours, of which three hours are to be in ethics, of continuing education courses pertinent to the duties and responsibilities of an insurance adjuster license reported to the Insurance Commissioner on a biennial basis in conjunction with his or her license renewal cycle.
Question 76 of 100
In terms of fidelity bonds, what does “position scheduled” refer to?
Answer Choices: Select the Correct Answer
The bond covers anyone who works in a “scheduled position.”
Employees listed as working in certain positions are not covered by the bond.
The bond only provides coverage during “scheduled” work hours.
The bond only provides coverage at “scheduled” locations.
Question 77 of 100
Your answer: The bond covers anyone who works in a “scheduled position.” is correct.
EXPLANATION:
Rather than schedule the individuals by name to be covered under the bond, their positions are scheduled.
Question 77 of 100
Under what circumstances does an insurer allow the transfer of an insured’s rights and duties under a Commercial Package Policy without the permission of the insurer?
Answer Choices: Select the Correct Answer
When the named insured dies.
When the named insured is in the hospital.
When the named insured is out of the United States.
When the named insured is informed of a terminal illness.
Question 78 of 100
Your answer: When the named insured dies. is correct.
EXPLANATION:
If the named insured dies his or her rights and duties are transferred to the deceased’s legal representative. This occurs automatically, the insurer’s permission is not required.
Question 78 of 100
Which of the following is covered property under the HO-3 form? I. Belongings of the insured’s daughter while she is away at college II. The insured’s garage III. The insured’s dog IV. Personal property of a tenant
Answer Choices: Select the Correct Answer I, II, and III only I, II, III, and IV I and II only II and III only
Question 79 of 100
Which of the following is covered property under the HO-3 form? I. Belongings of the insured’s daughter while she is away at college II. The insured’s garage III. The insured’s dog IV. Personal property of a tenant
Answer Choices: Select the Correct Answer I, II, and III only I, II, III, and IV I and II only II and III only
Question 79 of 100
The HO-6 policy provides full replacement cost coverage if it is rendered a total loss by fire, EXCEPT:
Answer Choices: Select the Correct Answer
The structure portion occupied by the insured as a residence
Improvements and betterments made to the structure by the insured
Structures owned by the insured other than the residence
Replacement cost coverage does not apply under the HO-6 form
Question 80 of 100
Your answer: Structures owned by the insured other than the residence is incorrect. The correct answer is: The structure portion occupied by the insured as a residence.
EXPLANATION:
The HO-6 condominium policy does not provide coverage for the structure. It insures the interior furnishings and contents and provides liability protection to the condominium owner. Separate structures such as a private garage would be covered for replacement cost coverage if added to the policy. Replacement cost coverage would have to be added separately to cover the contents.
Question 80 of 100
A building is being constructed and will cost $200,000 to complete. The amount of insurance equals $100,000 and there is a loss of $80,000. What percentage of the loss will be paid?
Answer Choices: Select the Correct Answer 50% 25% 40% 30%
Question 81 of 100
Your answer: 50% is correct.
EXPLANATION:
The policy will pay 50% of the loss or $40,000. The insured should have carried $200,000 and only carried $100,000. Therefore, the insured is only entitled to receive 50% of the loss.
Question 81 of 100
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 82 of 100
Your answer: I, II and III. is correct.
EXPLANATION:
Protection and indemnity coverage would apply to all of these types of losses.
Question 82 of 100
Which of the following statements about Equipment Breakdown protection coverage is FALSE?
Answer Choices: Select the Correct Answer
It would cover the mechanical failure of a bottle-making machine in a glass factory.
It would cover hail damage to industrial air conditioning units on the roof of an insured business.
It would cover the clean-up costs after a refrigeration unit experienced a sudden pressure failure of the vacuum system and sprayed hazardous refrigerant everywhere.
It would cover the damage to a company’s computer server after an electrical failure shorted out many of its internal components.
Question 83 of 100
Your answer: It would cover the damage to a company’s computer server after an electrical failure shorted out many of its internal components. is incorrect. The correct answer is: It would cover hail damage to industrial air conditioning units on the roof of an insured business..
EXPLANATION:
Equipment Breakdown protection does not cover damage caused by the peril of hail. Damage to the industrial air conditioning units caused by hail would be covered by the Commercial Property policy.
Question 83 of 100
Business Income Protection is designed to:
Answer Choices: Select the Correct Answer
Provide continued income to the policyholder after a covered loss.
Provide the same income the business would have received if there had been no loss.
Pay what the net profit or loss before income taxes would have been.
All of the responses are correct.
Question 84 of 100
Your answer: All of the responses are correct. is correct.
EXPLANATION:
All of the responses are correct. This coverage is designed to provide for the policyholder, during the period of business interruption caused by a covered peril, what the business would have produced had no loss occurred. Coverage provides for net income (net profit or loss before income taxes) that would have been earned or incurred and continuing normal operating expenses incurred, including payroll.
Question 84 of 100
Jerry’s car is involved in an accident that has left him without a vehicle to drive. How much, if any, can he collect for his transportation expenses from the policy?
Answer Choices: Select the Correct Answer
Nothing as it was not stolen.
$20 per day after a 48 hour waiting period.
$20 per day after a 24 hour waiting period.
$30 per day after a 48 hour waiting period.
Question 85 of 100
Your answer: $20 per day after a 48 hour waiting period. is incorrect. The correct answer is: $20 per day after a 24 hour waiting period..
EXPLANATION:
Transportation expenses are an additional coverage if the insured has purchased collision and/or other than collision coverage. $20 per day up to $600 is available. Coverage begins 48 hours after a theft loss and 24 hours for any other covered loss.
Question 85 of 100
According the California Insurance Code, upon receiving notice of a claim, an adjuster must transmit notice of claim to the insurer:
Answer Choices: Select the Correct Answer within five working days. immediately. within 48 hours. within 10 days.
Question 86 of 100
Your answer: immediately. is correct.
EXPLANATION:
Upon receiving notice of claim, every licensee or adjuster must immediately transmit notice of claim to the insurer. Failure of the licensee or claims agent to immediately transmit notice of claim to the insurer will constitute a separate and distinct violation of California Insurance Code.
Question 86 of 100
Amelia has suffered a covered collision loss to her vehicle. The insurer requires that her vehicle be repaired at a repair shop of the insurer’s choice. The insurer:
Answer Choices: Select the Correct Answer
Is guilty of an unfair claims practice act.
Can make this request.
Waives the deductible, if any, in this case.
Can usually get the work done for less and can help to reduce insurance costs.
Question 87 of 100
Your answer: Is guilty of an unfair claims practice act. is correct.
EXPLANATION:
The insurer can recommend a repair shop, but cannot require that a particular shop be used.
Question 87 of 100
The insured has liability coverage with a limit of $300,000 per occurrence. She purchases a $1 million Personal Umbrella to extend and broaden her coverage. The Umbrella policy includes a $10,000 retained limit. The insured becomes liable for $800,000 in damages that are excluded by the underlying liability policy, but is covered by the Umbrella policy. How would this case likely be settled?
Answer Choices: Select the Correct Answer
The underlying policy would pay nothing, the insured would pay $10,000, and the Umbrella policy would pay $200,000.
The insured would pay $10,000 and the Umbrella policy would pay $790,000.
The underlying liability policy would pay $300,000 and the insured would pay $500,000.
The underlying liability policy would pay $300,000 and the Umbrella policy would pay $500,000.
Question 88 of 100
Your answer: The insured would pay $10,000 and the Umbrella policy would pay $790,000. is correct.
EXPLANATION:
Because the underlying liability policy excludes coverage and assuming claim was covered under the broadened coverage purchased under the Personal Umbrella policy, the Umbrella policy would pay the claim less the $10,000 retained limit.
Question 88 of 100
Coverage B covered by the general liability policy provides coverage for:
Answer Choices: Select the Correct Answer
Personal and advertising injury liability
Bodily injury and property damage liability
Medical payments
Supplementary payments
Question 89 of 100
Your answer: Bodily injury and property damage liability is incorrect. The correct answer is: Personal and advertising injury liability.
EXPLANATION:
Coverage B in the CGL policy covers personal and advertising injury liability. Normally these claims do not involve bodily injury. The forms provide coverage for consequential bodily injury when an injury occurs when a person such as a shoplifter has been detained, and a scuffle occurs.
Question 89 of 100
Collin suffered a work-related injury on the morning of June 2nd and was off work completely until he returned to work on full duty on June 20th. Collin had worked for his employer for four years and was paid $55,650 per year. Collin’s state sets the TTD rate at 70% percent of the average weekly wage. The state sets the maximum compensation rate at $580 per week and the waiting period at 5 days retroactive after 7 days. Collin was not paid for working on February 5th. Collin’s average weekly wage is approximately ____ and the amount of compensation benefits he will receive per week while off work is approximately ____.
Answer Choices: Select the Correct Answer $1,070 / $749 $1,070 / $580 $749 / $580 $580 / $580
Question 90 of 100
Your answer: $1,070 / $580 is correct.
EXPLANATION:
Collins average weekly wage is $1,070 ($55,650 divided by 52 weeks). Then, we calculate 70% of $1,070 to determine 70% of Collins’ AWW would be, which is $749. However, Collin’s state sets TTD payment rates to a maximum limit of $580, therefore, Collin’s compensation payments will be $580.
Question 90 of 100
A Commercial Auto policy can be used to cover which of the following?
Answer Choices: Select the Correct Answer
A snow mobile.
A semi-trailer.
Mobile equipment that is not subject to compulsory auto financial responsibility.
An unlicensed three-wheeler.
Question 91 of 100
Your answer: A snow mobile. is incorrect. The correct answer is: A semi-trailer..
EXPLANATION:
The semi-trailer is the only one that fits the definition of a “vehicle” under a Commercial Auto policy. Mobile equipment must be added by endorsement. The three-wheeler and the snow mobile should be covered under a Recreational Vehicle policy.
Which of the following would be covered by the “advertising injury” coverage of the Farm insurance forms?
Answer Choices: Select the Correct Answer
An insured farmer who unknowingly disparaged the crops grown by another farm.
Advertising the wrong price of the goods.
Advertising the wrong description of the goods.
Intentionally making disparaging remarks about another’s farm products.
Your answer: An insured farmer who unknowingly disparaged the crops grown by another farm. is correct.
EXPLANATION:
“Advertising injury” would cover a farmer who unknowingly disparages the crops grown by another farmer when advertising his own crops. Intentional acts, advertising incorrect prices or descriptions are not covered.
Question 92 of 100
Medical payments under the general liability policy might pay for medical expenses incurred by:
Answer Choices: Select the Correct Answer
The named insured
A customer of the named insured
An employee of the named insured
A tenant residing on the insured’s premises
Question 93 of 100
Your answer: A tenant residing on the insured’s premises is incorrect. The correct answer is: A customer of the named insured.
EXPLANATION:
Medical payments coverage would only apply to a customer of the named insured. The insured and tenants are not covered.
Question 93 of 100
The commercial inland marine coverage form known as valuable papers and records includes coverage for:
I. Money and securities.
II. Deeds, drawings and maps.
III. Books, files and mortgages.
Answer Choices: Select the Correct Answer II and III only I and II only I and III only I only
Question 94 of 100
Your answer: I only is incorrect. The correct answer is: II and III only.
EXPLANATION:
Money and securities are covered under a crime insurance form and not covered in the valuable papers and records form.
Question 94 of 100
The Homeowners deductible does not apply to which of the following?
Answer Choices: Select the Correct Answer Liability Theft loss Glass loss Vandalism loss
Question 95 of 100
Your answer: Liability is correct.
EXPLANATION:
Neither liability coverage nor medical payment coverages contain a deductible.
Question 95 of 100
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 96 of 100
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 96 of 100
A commercial building with full replacement cost coverage of $240,000 is insured for $200,000. The policy has an 80% co-insurance requirement. Disregarding any deductible, how much would be paid on a $60,000 loss?
Answer Choices: Select the Correct Answer $62,500 $57,600 $48,000 $60,000
Question 97 of 100
Your answer: $57,600 is incorrect. The correct answer is: $60,000.
EXPLANATION:
The entire $60,000 loss would be covered because the insured complied with the co-insurance requirement.
Question 97 of 100
Under the farm forms, a “half a head” of livestock is an animal that is:
Answer Choices: Select the Correct Answer
Under three years of age and the most coverage that will be paid for that animal under the policy is $3,000.
Under two yeara of age and the most coverage that will be paid for that animal under the policy is $2,500.
Under one year of age and the most coverage that will be paid for that animal under the policy is $1,000.
Is under six months of age and the most coverage that will be paid for that animal under the policy is $500.
Question 98 of 100
Your answer: Under one year of age and the most coverage that will be paid for that animal under the policy is $1,000. is correct.
EXPLANATION:
An animal under one year of age, is known as a “half a head.” Coverage F covers farm personal property on a blanket basis both on and off the insured premises. A blanket limit for livestock can be added, however, the most that will be paid for “half a head” of livestock (an animal under one year of age) is $1,000.
Question 98 of 100
Which of the following is not an “additional coverage” under homeowner’s liability Section II coverage?
Answer Choices: Select the Correct Answer
Interest accruing after a legal judgment is entered
Damage to property of others
Payments made by the insurer to settle a claim
Insurer’s costs in investigating a claim
Question 99 of 100
Your answer: Insurer’s costs in investigating a claim is incorrect. The correct answer is: Payments made by the insurer to settle a claim.
EXPLANATION:
Settlements paid by the insurer come from the limits of liability shown on the declarations page and are not an additional coverage.
Question 99 of 100
The definition of collapse under the Homeowners program includes:
Answer Choices: Select the Correct Answer
A gradual falling down of the structure.
Damage caused by vermin known to exist by the insured when the structure collapsed.
An abrupt falling down or caving in of the structure or a part of the structure.
A gradual caving in of the structure.
Question 100 of 100
Your answer: An abrupt falling down or caving in of the structure or a part of the structure. is correct.
EXPLANATION:
The definition defines collapse as an “abrupt falling down or caving in of the structure or a part of the structure.”
Question 100 of 100
