IA Test 28 Flashcards
1
Q
“Sinkhole collapse” is a peril covered under which of the following ISO Commercial Property Cause of Loss forms?
Answer Choices: Select the Correct Answer The Basic, Broad and Special forms. The Broad only. The Broad and Special only. The Special only.
Question 1 of 100
A
Your answer: The Basic, Broad and Special forms. is correct.
EXPLANATION:
Even the Basic Form provides this coverage.
Question 1 of 100
2
Q
Which of the following contractors would be eligible for a Businessowners policy?
Answer Choices: Select the Correct Answer
A carpenter doing all of his own work building kitchen cabinets in people’s homes and earns $75,000 per year.
A general contractor.
A roofing contractor with an annual payroll of $400,000.
A tree removal service.
Question 2 of 100
A
Your answer: A general contractor. is incorrect. The correct answer is: A carpenter doing all of his own work building kitchen cabinets in people’s homes and earns $75,000 per year. .
EXPLANATION:
The BOP is a commercial package policy that provides property and liability insurance to certain types of small businesses. Some small businesses, such as tree removal services, are not eligible. General contractors and contractors with annual payroll in excess of $300,000 are also ineligible.
Question 2 of 100
3
Q
Which of the following is NOT considered to be a consequential loss coverage under Commercial Property insurance?
Answer Choices: Select the Correct Answer Replacement Cost Coverage Business Income Coverage Leasehold Interest Coverage Extra Expense Coverage
Question 3 of 100
A
Your answer: Extra Expense Coverage is incorrect. The correct answer is: Replacement Cost Coverage.
EXPLANATION:
A consequential loss occurs as the result of a direct loss to the insured property. Replacement cost coverage is used to determine the amount of the loss. If replacement cost coverage is not selected then actual cash value applies.
Question 3 of 100
4
Q
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 4 of 100
A
Your answer: Temporary, total is correct.
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 4 of 100
5
Q
Tea is applying for a new adjuster license in California. What is the fee she will need to submit with her license application?
Answer Choices: Select the Correct Answer $47 $56 $72 $29
Question 5 of 100
A
Your answer: $72 is correct.
EXPLANATION:
The application fee for an original license is: $72. (CIC 14097)
Question 5 of 100
6
Q
Which of the following statements are true regarding eligibility for “low cost automobile insurance” in California?
Answer Choices: Select the Correct Answer
All of the Statements Listed are True
Low cost automobile is now available in all the counties of California as the need is determined by the Commissioner.
Eligibility is Based on Income
Gross annual income of the household is equal to or less than 250% of the federal poverty level.
Question 6 of 100
A
Your answer: All of the Statements Listed are True is correct.
EXPLANATION:
All of the statements are true regarding eligibility for low cost automobile insurance in California.
Question 6 of 100
7
Q
Fidelity bonds which apply their “limit” to each employee involved in a covered loss are called:
Answer Choices: Select the Correct Answer Commercial blanket bonds. Scheduled bonds. License and bid bonds. Blanket position bonds.
Question 7 of 100
A
Your answer: Blanket position bonds. is incorrect. The correct answer is: Commercial blanket bonds..
EXPLANATION:
When written on a scheduled or position basis, the bond limit applies per employee or position. When written this way, the definition of “occurrence” is changed to mean all losses caused by each employee. However, the limit of the commercial crime form applies per loss regardless of the number of employees involved in the loss.
Question 7 of 100
8
Q
Which of the following is covered under the broad form farmowners policy that is not covered under the basic form farmowners policy?
Answer Choices: Select the Correct Answer Accidental shooting of livestock Flood damage to structures Collision Earthquake
Question 8 of 100
A
Your answer: Accidental shooting of livestock is correct.
EXPLANATION:
Accidental shooting of livestock, as well as electrocution of covered livestock, drowning of livestock and accidents involving livestock while loading and unloading are covered by the broad form and not covered by the basic form.
Question 8 of 100
9
Q
The purpose of asking the court to make a declaratory judgment is:
Answer Choices: Select the Correct Answer
To make a binding decision as to the relationship between the parties and their rights with respect to the matter before the court.
To avoid going to court with a lawsuit.
To make a final decision as to who is liable.
To make a final decision as to damages.
Question 9 of 100
A
Your answer: To make a final decision as to who is liable. is incorrect. The correct answer is: To make a binding decision as to the relationship between the parties and their rights with respect to the matter before the court. .
EXPLANATION:
A declaratory judgment is a binding judgment issued by the court that defines the legal relationship between the parties and their rights with respect to the matter before the court. A declaratory judgment does not provide for the enforcement of the judgment. However, a question of coverage is one of the purposes to request a declaratory judgment from a court.
Question 9 of 100
10
Q
Don Davis seeks coverage for his manufacturing company to include Premises Liability, Products Liability, Insured Contracts, and Completed Operations. Which of the following policies would cover all of these loss exposures?
Answer Choices: Select the Correct Answer Commercial General Liability Products and Completed Operations Manufacturers and Contractors Contractual Liability
Question 10 of 100
A
Your answer: Commercial General Liability is correct.
EXPLANATION:
All of these exposures can be included in the Commercial General Liability contract. Products Liability and Completed Operations coverages are optional.
Question 10 of 100
11
Q
Your answer: Commercial General Liability is correct.
EXPLANATION:
All of these exposures can be included in the Commercial General Liability contract. Products Liability and Completed Operations coverages are optional.
Question 10 of 100
A
Your answer: A $500 diamond ring is stolen is incorrect. The correct answer is: The insured hits and damages his fence with his car..
EXPLANATION:
The HO-2 policy is a named peril form and does not provide coverage for the insured damaging his own fence with his car. If someone else, who is not a resident of the household, strikes the fence with their vehicle there is coverage under the HO forms. The HO-3 and HO-5 would cover this loss because it is not excluded.
Question 11 of 100
12
Q
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 12 of 100
A
Your answer: When the owner of the building submits proof of loss for the damage is correct.
EXPLANATION:
When the owner of the building submits a proof of loss for the damage and the loss is paid.
Question 12 of 100
13
Q
The Earthquake Endorsement will provide coverage to the dwelling and/or personal property with the deductible stated as:
Answer Choices: Select the Correct Answer
$1,000
5% of the limit that applies to all Section I coverages.
$500
$2,500
Question 13 of 100
A
Your answer: 5% of the limit that applies to all Section I coverages. is correct.
EXPLANATION:
The Earthquake Endorsement has a base deductible is 5% of the limit that applies to all Section I coverages, but never less than $500.
Question 13 of 100
14
Q
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 14 of 100
A
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
Question 14 of 100
15
Q
What is the procedure for an insured to refuse uninsured motorist coverage in California?
Answer Choices: Select the Correct Answer
The insured must advise the insurer in writing that he or she does not want the coverage.
The insured may advise the Insurance Department that he or she does not want the coverage.
The insured may phone the insurance agent and decline the coverage.
The insured may phone the insurance company and decline the coverage.
Question 15 of 100
A
Your answer: The insured must advise the insurer in writing that he or she does not want the coverage. is correct.
EXPLANATION:
According to the California Insurance Code (CIC 11580.2), prior to issuance or renewal of the policy the insured must state in writing that he or she does not want the coverage.
Question 15 of 100
Submit
16
Q
An insured’s work is considered a “completed operation” under the CGL policy when:
Answer Choices: Select the Correct Answer
The operations at any single job site have been completed.
Any part of the insured’s work is put to its intended use.
The entire operation, at all job sites, is completed.
All of the responses are correct.
Question 16 of 100
A
Your answer: All of the responses are correct. is correct.
EXPLANATION:
All of the responses reflect when operations liability coverage ceases and completed operations coverage begins.
Question 16 of 100
17
Q
Under the business auto policy, the endorsement used to protect the owner of a leased vehicle is:
Answer Choices: Select the Correct Answer Named Owner endorsement Employers Non Owned Auto Joint Ownership Endorsement Additional Insured – Lessor
Question 17 of 100
A
Under the business auto policy, the endorsement used to protect the owner of a leased vehicle is:
Answer Choices: Select the Correct Answer Named Owner endorsement Employers Non Owned Auto Joint Ownership Endorsement Additional Insured – Lessor
Question 17 of 100
18
Q
The California Insurance Code (CIC) further details the items required on a valid insurance contract. All of the following are required, EXCEPT:
Answer Choices: Select the Correct Answer The parties to the contract. The insured's mailing address. The objects of insurance. The policy period.
Question 18 of 100
A
Your answer: The objects of insurance. is incorrect. The correct answer is: The insured’s mailing address..
EXPLANATION:
The California Insurance Code (CIC) requires six specific items of information be included in an insurance policy issued in California. The insured’s mailing address is not one of them.
Question 18 of 100
19
Q
Under the terms of a Homeowners policy, which of the following is a mortgagee permitted to do if the insured fails to pay his or her Homeowners policy premium?
Answer Choices: Select the Correct Answer
Cancel the Homeowners policy.
Pay the premium for the insured.
Issue a new Homeowners policy for the insured.
Foreclose on the insured’s property.
Question 19 of 100
A
Your answer: Issue a new Homeowners policy for the insured. is incorrect. The correct answer is: Pay the premium for the insured..
EXPLANATION:
The mortgagee has the right to pay the premium if the insured fails to do so.
Question 19 of 100
20
Q
Under an HO-4, which of the following would be covered?
Answer Choices: Select the Correct Answer
The insured’s contents and personal liability
The dwelling
A detached garage
Excess jewelry coverage
Question 20 of 100
A
Your answer: Excess jewelry coverage is incorrect. The correct answer is: The insured’s contents and personal liability.
EXPLANATION:
The HO-4 is designed for apartment dwellers or those that live in a rented dwelling. Since they do not own the structures, no coverage is needed to cover the real property.
Question 20 of 100
21
Q
Inland Marine insurance is commonly used to insure all of the following, EXCEPT:
Answer Choices: Select the Correct Answer Automobiles. Stamps. Camera equipment. Jewelry.
Question 21 of 100
A
our answer: Stamps. is incorrect. The correct answer is: Automobiles. .
EXPLANATION:
Autos are best covered under an automobile policy.
Question 21 of 100
22
Q
A business owner would be covered for wrongful eviction, defamation of character, false arrest, and malicious prosecution under which of the following Commercial General Liability coverage part?
Answer Choices: Select the Correct Answer Completed operations. Contractual liability. Strict liability. Personal and Advertising Injury.
Question 22 of 100
A
Your answer: Personal and Advertising Injury. is correct.
EXPLANATION:
The “Personal and Advertising Injury” coverage of the CGL policy would cover a business owner for wrongful eviction, defamation of character, false arrest, and malicious prosecution.
Question 22 of 100
23
Q
Under a Commercial Auto policy with respect to physical damage to a covered vehicle, which of the following is true regarding diminution of value?
Answer Choices: Select the Correct Answer
It is specifically excluded.
It is covered.
The deductible is waived.
The renewal premium is reduced for physical damage coverages on the damaged vehicle.
Question 23 of 100
A
Your answer: The deductible is waived. is incorrect. The correct answer is: It is specifically excluded..
EXPLANATION:
A decrease in the value because of an accident is not a covered loss in most states. The policy excludes this decrease in value when a covered vehicle has been damaged and causes a decrease in value even though it has been repaired.
Question 23 of 100
24
Q
Which section of the Commercial Package Policy varies based on the lines of coverage included?
Answer Choices: Select the Correct Answer
Coverage Part.
Common Policy Conditions.
Common Policy Declarations.
None of the responses listed are correct.
Question 24 of 100
A
Your answer: Coverage Part. is correct.
EXPLANATION:
Each line of insurance that is eligible for the Commercial Package Policy has its own coverage part consisting of a variety of mandatory and optional forms that are used to provide the coverage desired.
25
When an insured is fulfilling the duty of proving a loss by taking an inventory of the damaged property, who pays the expenses incurred by the insured?
Answer Choices: Select the Correct Answer
The insured.
The insurer.
The adjuster will provide funds to pay for these expenses.
Who pays these expenses will be negotiated at the settlement of the claim.
Question 25 of 100
Your answer: The insured. is correct.
EXPLANATION:
The insured is instructed to “keep a record of your expenses for emergency and temporary repairs, for consideration in the settlement of the claim.” Reasonable expenses paid by the insured to protect the property from further loss are the obligation of the insurer. Thus any other expenses incurred by the insured are NOT paid by the insurer and the insurer will only pay the "reasonable expenses" to protect the property if the insured maintains an inventory of expenses paid. Until that time, the insured is responsible for all expenses.
Question 25 of 100
26
What does the "employer's non-ownership coverage" under a business auto policy cover?
Answer Choices: Select the Correct Answer
Covers the employer when the employee is using their vehicle on company business.
Covers the employee while using their vehicle on company business.
Covers hired employee autos.
Covers all non-owned vehicles.
Question 26 of 100
Your answer: Covers all non-owned vehicles. is incorrect. The correct answer is: Covers the employer when the employee is using their vehicle on company business. .
EXPLANATION:
The purpose of the coverage is to protect the employer and not the employee when the employee uses his or her vehicle on company business and is involved in an at-fault accident that may bring the employer into a claim with the claimant.
Question 26 of 100
27
A surety which provides a Performance Bond to a contractor might also provide another performance bond which guarantees the materials will be provided at the price quoted and the quality and quantity specified. This bond is referred to as a:
```
Answer Choices: Select the Correct Answer
Completion Bond.
Supply Bond
Performance Bond.
Financial Guarantee Bond.
```
Question 27 of 100
Your answer: Supply Bond is correct.
EXPLANATION:
This is called a supply bond.
Question 27 of 100
28
Cameron has his home covered under a Homeowners policy and his limit for bodily injury is $100,000. He also purchased a Personal Umbrella policy with a $1,000,000 limit of liability. Cameron is sued and a judgement was made against him for $500,000. To trigger his Umbrella policy, his Homeowners policy must pay $100,000, but he finds that the insurance company from which he purchased his Homeowners policy has become insolvent. How will the Umbrella insurer pay the claim (disregarding any retention limit)?
Answer Choices: Select the Correct Answer
The Umbrella policy will become primary when the underlying insurer becomes insolvent, and will pay the $100,000, plus the remaining $400,000 due under the Umbrella policy.
The Umbrella policy will pay nothing. The underlying insurance must be kept in place for the Umbrella policy to pay any amount.
The Umbrella policy will not become primary when the underlying insurance when that insurer becomes insolvent, but will pay the $400,000 as if the underlying insurer had paid its $100,000 limit of liability.
The Umbrella policy will become primary when the underlying insurer becomes insolvent, but will only pay the underlying policies limit of $100,000, and only $300,000 of the remaining judgement, for a total of $400,000.
Question 28 of 100
Your answer: The Umbrella policy will become primary when the underlying insurer becomes insolvent, and will pay the $100,000, plus the remaining $400,000 due under the Umbrella policy. is incorrect. The correct answer is: The Umbrella policy will not become primary when the underlying insurance when that insurer becomes insolvent, but will pay the $400,000 as if the underlying insurer had paid its $100,000 limit of liability..
EXPLANATION:
The Umbrella policy will not replace the underlying insurance when that insurer becomes insolvent, but will pay the $400,000 as if the underlying insurer had paid its $100,000 limit of liability.
Question 28 of 100
29
The purpose of a builder’s risk policy is:
Answer Choices: Select the Correct Answer
To cover a completed and occupied newly constructed building
To cover personal property in a newly constructed building
To cover a building under construction from accidental damage from the perils insured against
To cover only the contractor for direct physical losses in the construction of a building
Question 29 of 100
Your answer: To cover a building under construction from accidental damage from the perils insured against is correct.
EXPLANATION:
The purpose of the builder’s risk policy is to cover a building during the course of construction from accidental damage from the perils insured against.
Question 29 of 100
30
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 30 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 30 of 100
31
Herb has a duplex covered under an HO-8 form in California. The property is damaged by an insured peril that falls under the status of a declared state of emergency. Herb realizes that the standardized HO-8 policy only provides loss settlement at Actual Cash Value (ACV), but he also understands that the California mandatory special provisions form will allow him to make a claim to recoup his cost to repair or replace the damaged property if all of the following are TRUE regarding Herb's claim, EXCEPT:
Answer Choices: Select the Correct Answer
If he restores the duplex to the same occupancy level and does not increase that level.
He restores the duplex on the same site where it was located at the time of the loss.
He submits his claim for the cost to repair or replace the property within 12 months of the loss.
He submits his claim for the cost to repair or replace the property within 24 months of the loss.
Question 31 of 100
Your answer: He submits his claim for the cost to repair or replace the property within 12 months of the loss. is correct.
EXPLANATION:
The question is asking you to choose the answer that is NOT TRUE. The only answer choice that is not true regarding Herb's claim is: "He submits his claim for the cost to repair or replace the property within 12 months of the loss." This answer choice is not true because the California mandatory special provisions form allows Herb 24 months to submit his claim.
Question 31 of 100
32
Under the medical payments coverage of Ben Green's personal auto policy, each of the following would qualify as a "family member" EXCEPT:
Answer Choices: Select the Correct Answer
Alice Green, Ben’s sister, who lives in Ben’s household.
Susan Green, Ben’s wife. Susan maintains a separate residence although she and Ben are not divorced.
Ben Green, Jr., Ben’s 16- year-old son, living with his father.
Patty Green, Ben’s 28-year-old daughter. She also lives with her father.
Question 32 of 100
Your answer: Susan Green, Ben’s wife. Susan maintains a separate residence although she and Ben are not divorced. is correct.
EXPLANATION:
The question is asking which person is NOT a family member. Susan Green is no longer a member of the insured's residence and would not be covered. A spouse is considered to be a family member of the insured IF they live with the insured in the same household.
Question 32 of 100
33
The insured owns a two family dwelling and is covered under a Homeowner policy. One of the units is rented. The insured also maintains a small incidental business in the structure. In case of a covered loss, which of the following would NOT be paid under Coverage D - Loss of Use?
Answer Choices: Select the Correct Answer
Rental income from the rental unit
Additional living expenses incurred by the insured
Loss of income from the incidental business
Rental income and additional living expenses
Question 33 of 100
Your answer: Loss of income from the incidental business is correct.
EXPLANATION:
Loss of use coverage would not apply to the loss of income from the business. It would cover the loss of rental income and the additional living expenses of the insured.
Question 33 of 100
34
All of the following are true regarding the "Write Your Own" program of the NFIP, EXCEPT:
Answer Choices: Select the Correct Answer
Insurers are required to participate in the program.
Rates are determined by the NFIP.
The WYO program operates as part of the NFIP and is subject to its rules and regulations.
Insurers participating in the NFIP are responsible for adjusting the claims.
Question 34 of 100
Your answer: Insurers are required to participate in the program. is correct.
EXPLANATION:
Insurers voluntarily participate in the program; they are not required to do so.
Question 34 of 100
35
The medical payments coverage of a Farm policy can be claimed for up to:
Answer Choices: Select the Correct Answer
1 year.
3 years.
2 years.
5 years by a resident employee injured picking up groceries for the insured.
Question 35 of 100
Your answer: 3 years. is correct.
EXPLANATION:
Medical payment claims can be made up to three years from the date of the injury under the Farm liability coverage.
Question 35 of 100
36
The insured has a commercial umbrella liability policy with $1 million limit of insurance. Claims were filed against the insured's umbrella policy three times during one policy period for three different occurrences. The claims are: for $75,000 on February 5; for $800,000 on May 4; and for $500,000 on July 10. Which of these claims will be paid?
```
Answer Choices: Select the Correct Answer
The February 5 claim only
The February 5 and May 4 claims only
All three claims
None of the claims
```
Question 36 of 100
Your answer: All three claims is correct.
EXPLANATION:
Assuming these claims came from three different occurrences, all three would be paid. Keep in mind that the umbrella policy has two limits. One is the occurrence limit and the other is the aggregate limit that limits the total claim payment amounts during the policy year. The aggregate limit does not apply under most umbrella policies to automobile claims.
Question 36 of 100
37
A claim is made on an excess liability policy. It is discovered during the claims investigation, that the underlying liability policy and the excess liability policy have different inception and expiration dates. The adjuster finds that the different dates has created a situation where the underlying policy was not in effect at the time of the occurrence, and therefore cannot trigger the excess liability policy to pay the claim. This situation is known as:
```
Answer Choices: Select the Correct Answer
Contribution by Equal Shares.
Nonconcurrency.
Liability Discrepancy.
Split Limits.
```
Question 37 of 100
Your answer: Nonconcurrency. is correct.
EXPLANATION:
"Nonconcurrency" is a situation where an underlying policy and an excess liability policy, have different inception and expiration dates, creating a situation where the underlying policy is not in force to trigger coverage under the excess liability policy.
Question 37 of 100
38
A written modification of an insurance policy is known as a(n):
```
Answer Choices: Select the Correct Answer
Modifying form.
Supplement form.
Additional coverage form.
Endorsement form.
```
Question 38 of 100
Your answer: Supplement form. is incorrect. The correct answer is: Endorsement form. .
EXPLANATION:
An endorsement is used to add, subtract or modify the coverage. Endorsements are added to the policy in writing and take precedent over the original contract wording. COVERED IN INSURANCE FUNDAMENTALS.
Question 38 of 100
39
When can an adjuster in California use a fictitious name while conducting business?
Answer Choices: Select the Correct Answer
Never
When authorized by the Commissioner to do so
When it does not conflict with another’s name in the same business
Anytime
Question 39 of 100
Your answer: When authorized by the Commissioner to do so is correct.
EXPLANATION:
No licensee may conduct a business under a fictitious or other business name unless and until he or she has obtained the written authorization of the Commissioner to do so.
Question 39 of 100
40
An insured has her property covered under an "open peril" cause of loss form. She experiences a loss. The burden of proof that the peril that was the actual cause of loss in the claim, lies with:
Answer Choices: Select the Correct Answer
The mediator.
The contractor that will repair the damage.
The insured.
The insurance company.
Question 40 of 100
Your answer: The insured. is incorrect. The correct answer is: The insurance company..
EXPLANATION:
When coverage is provided under an open peril (all-risk) form, the burden of proof lies with the insurance company to prove that the cause of loss is excluded.
Question 40 of 100
41
The increased cost of compliance coverage on flood insurance provides:
I. Policy limit coverage for ordinance and law changes.
II. Coverage for flood plain management ordinance or law changes.
III. $30,000 of coverage per building.
```
Answer Choices: Select the Correct Answer
III only
II only
I, II and III
II and III only
```
Question 41 of 100
Your answer: III only is incorrect. The correct answer is: II and III only.
EXPLANATION:
The increased cost of compliance coverage will provide up to $30,000 of coverage to handle the flood plain management ordinance or law changes affecting the repair and reconstruction of a flood-damaged structure.
Question 41 of 100
42
What are the automatic perils covered under every dwelling policy form?
I. Fire.
II. Lightning.
III. Internal explosion.
IV. Flood.
```
Answer Choices: Select the Correct Answer
I, II, and III only
I and II only
I, III, and IV only
I and III only
```
Question 42 of 100
Submit
Your answer: I, II, and III only is correct.
EXPLANATION:
Flood is always excluded as a peril under dwelling policies.
Question 42 of 100
43
The insured is moving to a new location. Coverage for contents provided under a Homeowner Policy would be:
Answer Choices: Select the Correct Answer
The coverage limit at the old location.
On a pro-rata basis between the two locations.
Only apply at the new location.
No coverage would apply once the move commences.
Question 43 of 100
Your answer: The coverage limit at the old location. is incorrect. The correct answer is: On a pro-rata basis between the two locations..
EXPLANATION:
Coverage would apply at both locations on a pro-rata basis for 30 days.
Question 43 of 100
44
Under the Commercial Building and Personal Property Coverage form, if no optional coverages are selected, loss valuation/settlement is based on:
```
Answer Choices: Select the Correct Answer
Actual cash value.
Market value.
Original cost.
Replacement cost.
```
Question 44 of 100
Your answer: Replacement cost. is incorrect. The correct answer is: Actual cash value. .
EXPLANATION:
Losses are settled on an ACTUAL CASH VALUE basis. If the insured desires replacement cost coverage, then that option must be selected by indicating it on the property declarations. The insured limit should be increased to reflect the higher values involved with a replacement cost settlement.
Question 44 of 100
45
The insured is liable for $500,000 in damages for a personal injury claim that is covered under the insured's primary liability policy. The primary liability policy has a $300,000 limit per occurrence. The insured also has a $1 million Umbrella policy with a $3,000 self-insured retention limit. How would this claim likely be settled?
Answer Choices: Select the Correct Answer
The primary policy would pay $300,000 and the insured would pay $200,000.
The primary policy would pay $300,000, the insured would pay $3,000, and the Umbrella policy would pay $197,000.
The primary policy would pay nothing; the Umbrella policy would pay the full $500,000.
The primary policy would pay $300,000 and the Umbrella policy would pay $200,000.
Question 45 of 100
Your answer: The primary policy would pay $300,000, the insured would pay $3,000, and the Umbrella policy would pay $197,000. is incorrect. The correct answer is: The primary policy would pay $300,000 and the Umbrella policy would pay $200,000. .
EXPLANATION:
Because the claim is covered with the underlying liability coverage policy, the Umbrella policy picks up and pays the remaining portion of the claim, without the application of the self-insured retention. If the Umbrella policy was required to pay first, the self-insured retention would apply.
Question 45 of 100
46
Alec goes to an amusement park and rides a roller coaster that was designed to flip the riders upside down. Alec is taller than the average person so when the roller coaster flips, he hits his head on the safety bar. After receiving medical care, Alec files a claim against the amusement park, seeking payment for his medical bills, pain and suffering. What defense against negligence would the amusement park most likely use to deny this claim?
```
Answer Choices: Select the Correct Answer
Assumption of Risk
Contributory Negligence
Comparative Negligence
Intervening Cause
```
Question 46 of 100
Your answer: Assumption of Risk is correct.
EXPLANATION:
The "Assumption of Risk" defense applies when a person knowingly exposes him/herself to danger or injury.
Question 46 of 100
47
Your insurance company pays for the damages to your auto and for your bodily injury after your car is struck by a hit and run driver. The accident is witnessed by several individuals who can describe the car and its driver but who failed to get a license number. A year after the accident, the owner of the hit and run vehicle turns himself in. It is determined that he was fully insured at the time of the accident but fled because he had been drinking. Pursuant to the California Insurance Regulations, your insurance company can:
Answer Choices: Select the Correct Answer
Do nothing as a full year has passed since the accident occurred
Subrogate against the other insurance company to recover only for the damages to your vehicle
Subrogate against the other driver to recover all sums paid for your vehicle repair and your bodily injury
File a lawsuit to waive the statute of limitations then proceed with subrogation
Question 47 of 100
Your answer: Subrogate against the other driver to recover all sums paid for your vehicle repair and your bodily injury is correct.
EXPLANATION:
Payments made under both your Uninsured Motorist Bodily Injury and Uninsured Motorist Property Damage coverages can be recovered from the responsible party by subrogation if his/her identity is later confirmed.
Question 47 of 100
48
Evergreen Lawn Care has two lawn maintenance crews on separate job sites. Coverage for the lawn maintenance equipment on the way to the site, while at the site and in transit back to the shop can be covered by which of the following forms?
```
Answer Choices: Select the Correct Answer
Commercial Articles Coverage Form
Contractors Equipment Floater
Floor Plan Coverage Form
Jewelers Block Coverage Form
```
Question 48 of 100
Your answer: Contractors Equipment Floater is correct.
EXPLANATION:
The Contractors equipment Floater will cover the lawn maintenance equipment usually on an open peril basis. The covered territory is the US, its possessions, Puerto Rico and Canada.
Question 48 of 100
49
Which of the following is NOT covered under most commercial crime policies?
```
Answer Choices: Select the Correct Answer
Legal expenses
Employee theft
Computer fraud
Forgery and alteration
```
Question 49 of 100
Your answer: Employee theft is incorrect. The correct answer is: Legal expenses.
EXPLANATION:
The commercial crime policy does not provide legal defense coverage with one exception. Under the forgery or alteration coverage, legal expense coverage is provided.
Question 49 of 100
50
Under an HO-3 form, what coverage is provided for watercraft lost due to theft?
Answer Choices: Select the Correct Answer
None since watercraft is excluded
None since theft is not covered
Up to the actual cash value of the watercraft
$1,500 maximum under special limits
Question 50 of 100
Your answer: $1,500 maximum under special limits is correct.
EXPLANATION:
Under personal property coverage, HO policies have several categories of property with "special limits." Among them is watercraft of all types, including their trailers. For this property, the special limit is $1,500. Theft of watercraft and their accessories is covered on the insured's residence premises only and not off the premises. A watercraft policy is needed for broader coverage.
Question 50 of 100
51
Mr. and Mrs. Smith own a building worth $100,000 and have it insured under three policies, each containing a pro-rata "Other Insurance" clause. Carrier A provides $10,000; Carrier B provides $10,000, and Carrier C provides $80,000. If there is a $20,000 fire loss, how will the claim be divided, if at all?
Answer Choices: Select the Correct Answer
Carrier C will pay the entire loss since its limit is higher than the loss.
Carrier A will pay $2,000, Carrier B will pay $2,000, and Carrier C will pay $16,000.
Carrier A will pay $10,000 and Carrier B will pay $10,000.
Each carrier will pay $6,666.66.
Question 51 of 100
Your answer: Each carrier will pay $6,666.66. is incorrect. The correct answer is: Carrier A will pay $2,000, Carrier B will pay $2,000, and Carrier C will pay $16,000..
EXPLANATION:
Since more than one policy covers the loss, the "Other Insurance" clause will be invoked, and each carrier will pay according to how its limit compares to the total amount of insurance in force. Carrier A writes 10% of the total, and would pay 10% of the loss, and so on.
Question 51 of 100
52
Registration of a non-licensed independent adjuster in California during an emergency situation is valid for:
```
Answer Choices: Select the Correct Answer
90 working days.
180 days.
One year.
120 days.
```
Question 52 of 100
Your answer: 180 days. is correct.
EXPLANATION:
Registration of a non-licensed adjuster in an emergency situation is valid for a period of 180 days from the date of a registration letter is sent to the Commissioner from the supervising licensed adjuster or admitted insurer. Before the lapse of that period, the Commissioner may grant a further 180-day extension as deemed appropriate upon written request from the supervising licensed adjuster or the admitted insurer.
Question 52 of 100
53
A chemical company accidentally released toxic fumes into the air. The fumes reached two other businesses which eventually had to be evacuated for two business days while the air cleared. The evacuation caused loss of income to the businesses due to their inability to open their doors for business. This situation is an example of:
```
Answer Choices: Select the Correct Answer
The insured’s work.
Completed operations.
Property damage.
An intentional tort.
```
Question 53 of 100
Your answer: Property damage. is correct.
EXPLANATION:
This is an example of a property damage loss which includes damages incurred due to loss of use of the property. The two businesses affected cannot open their doors and use their property. For this type of claim to be covered under a CGL policy, the insured would need to have added the "Pollution Liability" endorsement to the policy.
Question 53 of 100
54
A BOP policy liability limits are $500,000 per occurrence and $1,000,000 aggregate. The losses for the policy term are $100,000, $750,000 and $400,000. What is the correct amount the insurance company pays for all three losses?
```
Answer Choices: Select the Correct Answer
$500,000
$750,000
$1,000,000
$1,250,000
```
Question 54 of 100
Your answer: $1,000,000 is correct.
EXPLANATION:
The aggregate limit is the most the policy can pay per policy period. In this case a maximum of $1,000,000. The $100,000 can be paid; $500,000 of the $750,000 claim can be paid since that is the most that is available in any one occurrence. The $400,000 claim can be paid. After paying these three claims, the 1,000,000 aggregate limits have been reached and no future claims will be paid.
Question 54 of 100
55
Which of the following dwelling forms may provide replacement cost coverage for buildings?
```
Answer Choices: Select the Correct Answer
The broad and special forms only
The basic, broad, and special forms
The basic and broad forms only
The special form only
```
Question 55 of 100
Your answer: The special form only is incorrect. The correct answer is: The broad and special forms only.
EXPLANATION:
The broad and special forms provide replacement cost coverage on the structures if the insured carries at least 80% of replacement cost value on the structures. The basic form provides actual cash value coverage only.
Question 55 of 100
56
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 56 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 56 of 100
57
A tornado blows over a wall of a barn which, in turn, knocks over a lamp and starts a fire. What is the proximate cause of loss?
```
Answer Choices: Select the Correct Answer
Tornado
Smoke
Fire
Water Damage
```
Question 57 of 100
Your answer: Tornado is correct.
EXPLANATION:
The proximate cause of loss would be the tornado (wind).
Question 57 of 100
58
All of the following are common-low duties of an employer under a Workers' Compensation policy, EXCEPT:
Answer Choices: Select the Correct Answer
Warn workers of inherent dangers.
Provide a safe working environment.
Assumption of risk.
Provide an adequate number of competent fellow workers.
Question 58 of 100
Your answer: Assumption of risk. is correct.
EXPLANATION:
Assumption of risk is a common-law defense if a claim is filed. All of the other three answer choices are common-law duties.
Question 58 of 100
59
Under Homeowners insurance, "Medical Payments to Others" coverage will cover necessary medical expenses incurred within:
Answer Choices: Select the Correct Answer
3 years of the accident causing the injury.
1 year of the accident causing the injury.
2 years of the accident causing the injury.
4 years of the accident causing the injury.
Question 59 of 100
Your answer: 3 years of the accident causing the injury. is correct.
EXPLANATION:
Coverage F - Medical Payments will pay expenses incurred as long as they are claimed within three years of the date of the accident.
Question 59 of 100
60
What commercial auto policy form would be used to cover a company that transports their own property and property of others?
```
Answer Choices: Select the Correct Answer
The Motor Carrier form.
The Business Auto form.
The Truckers form.
The Garage Liability form.
```
Question 60 of 100
Your answer: The Motor Carrier form. is correct.
EXPLANATION:
A motor carrier is anyone who transports property by auto in a commercial enterprise, regardless of whether he or she was hired for that purpose. The BAP can be used to cover an insured when transporting his or her own property. However, if an insured is transporting property of others and his or her own property, the Motor Carrier form should be used. Damage to the cargo itself would be covered under a Commercial Inland Marine form.
Question 60 of 100
61
Which of the following policies would be used to cover imports and exports?
```
Answer Choices: Select the Correct Answer
Ocean marine
Personal Property
General Liability
Businessowners policy
```
Question 61 of 100
Your answer: Ocean marine is correct.
EXPLANATION:
Ocean marine pertains to import and export risk, including the cargo being shipped as well as the vessel transporting goods or people.
Question 61 of 100
62
In lieu of suspending or revoking a license, the Commissioner may impose of civil penalty of:
```
Answer Choices: Select the Correct Answer
$500.
$2,500.
$1,000.
$5,000.
```
Question 62 of 100
Your answer: $500. is correct.
EXPLANATION:
The Commissioner, in lieu of suspending or revoking a license, may impose a civil penalty not to exceed $500 upon a licensee.
Question 62 of 100
63
Which of the following zones is not expected to flood during the "base flood"?
```
Answer Choices: Select the Correct Answer
V zones.
X zones.
A zones.
AO zones.
```
Question 63 of 100
Your answer: AO zones. is incorrect. The correct answer is: X zones..
EXPLANATION:
X zones are not expected to flood during the base flood.
Question 63 of 100
64
The California Code states that standard fire policies must be written on the standard form with very limited omissions. Which of the following modifications are permitted to be made under a Standard Fire policy in California?
Answer Choices: Select the Correct Answer
The coverage can be substantially equivalent to or more favorable to the insured.
The insured can sign a waiver and accept lesser coverage.
The Commissioner can approve any variance in coverage.
The insurer can offer lesser coverage at a lower premium.
Question 64 of 100
Your answer: The coverage can be substantially equivalent to or more favorable to the insured. is correct.
EXPLANATION:
According to the California Insurance Code (CIC 2070), the coverage can be substantially equivalent to or more favorable to the insured than that contained in the Standard Fire insurance policy.
Question 64 of 100
65
When completing an application for an independent claims adjuster license in California, one year of experience consists of not less than _____ hours of actual compensated work performed by the applicant.
```
Answer Choices: Select the Correct Answer
1,000
500
2,000
750
```
Question 65 of 100
Your answer: 2,000 is correct.
EXPLANATION:
One year of experience consists of not less than 2,000 hours of actual compensated work performed by each applicant preceding the filing of the application. Applicants must substantiate claimed years and hours of qualifying experience and the exact details as to the character and nature by written certifications from employers, subject to independent verification by the Commissioner.
Question 65 of 100
66
Which of the following is an obligation of the insured involving a covered property insurance loss?
Answer Choices: Select the Correct Answer
Protect the property from further loss
Pay the renewal premium
Settle the claim as soon as possible
Review the coverages of the policy to confirm coverage
Question 66 of 100
Your answer: Protect the property from further loss is correct.
EXPLANATION:
The insured is obligated to protect the property from further loss or damage.
Question 66 of 100
67
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 67 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 67 of 100
68
Adele Sullivan's car is hit from the rear by Clarence Brown's car. Mrs. Sullivan's insurance company pays her claim under her physical damage coverage and makes a claim against Mr. Brown's insurance company for the same amount. This process is called:
```
Answer Choices: Select the Correct Answer
Subrogation.
Matriculation.
Reciprocity.
Arbitration.
```
Question 68 of 100
Your answer: Subrogation. is correct.
EXPLANATION:
Mr. Brown was at fault. Mrs. Sullivan's insurer paid the loss and is entitled to seek reimbursement from Mr. Brown or Mr. Brown's insurance company via subrogation.
Question 68 of 100
69
Angie has suffered an automobile physical damage loss. All of the following are the insured's duties after a loss under Angie's personal automobile policy, EXCEPT:
Answer Choices: Select the Correct Answer
Take reasonable steps after the loss to protect the property from further damage.
Promptly notify the police if the vehicle is stolen.
Allow the insurer to inspect and appraise the damaged property.
Facilitate the repairs to the vehicle and submit the invoice to the insurer.
Question 69 of 100
Your answer: Facilitate the repairs to the vehicle and submit the invoice to the insurer. is correct.
EXPLANATION:
The insured is not permitted to make repairs on the vehicle until after the vehicle has been inspected and/or appraised and an agreement as to the damages has been reached with the insurer.
70
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 70 of 100
If an adjusting firm intends to add a new branch office, what action must be taken?
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 70 of 100
71
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 71 of 100
Your answer: II and III only is correct.
EXPLANATION:
Money and securities are covered under a crime insurance form and not covered in the valuable papers and records form.
Question 71 of 100
72
Under a Workers Compensation policy, the insurer is considered to have received notice of a claim:
Answer Choices: Select the Correct Answer
When the employee informs the insurer.
On the day the insurer receives notice of the claim by certified mail.
When the employer has notice of the claim.
When the employer informs the insurer.
Question 72 of 100
Your answer: When the employer has notice of the claim. is correct.
EXPLANATION:
The insurer is considered to have notice of a claim at the moment the employer has notice. An injured employee has no duty to inform the insurer. The employer is required to promptly file a claim with its insurer when it has notice of a workplace accident.
Question 72 of 100
73
Jack Tate ignores the safety warnings and instructions when setting the controls of the steam boiler and as a result, the boiler explodes. Jack carries Equipment Breakdown coverage. The adjuster for Pressure R Us Insurance Company may do which of the following?
Answer Choices: Select the Correct Answer
Deny coverage under the intentional errors & omissions exclusion
Settle the loss at Actual Cash Value
Pay for the loss of the boiler, but deny any expediting expense coverage due to the error on Jack’s part
All of the responses apply
Question 73 of 100
Your answer: All of the responses apply is incorrect. The correct answer is: Deny coverage under the intentional errors & omissions exclusion.
EXPLANATION:
If a loss occurs as a result of intentional error of the employee, coverage can be denied.
Question 73 of 100
74
What is the purpose of the "Other States" coverage of a standard Workers Compensation policy?
Answer Choices: Select the Correct Answer
To provide coverage for exposures which develop in other states during the policy period.
To provide coverage in any other state the employee selects.
To provide blanket coverage in any other state in which the insured may operate.
To provide coverage in one or more of the “monopolistic” states.
Question 74 of 100
Your answer: To provide coverage for exposures which develop in other states during the policy period. is correct.
EXPLANATION:
The "Other States" coverage applies to both Workers Compensation and Employers Liability coverage under a Workers Compensation policy. The purpose is to provide coverage against loss exposures which develop during the policy period (but were not present at policy inception), in any state designated on the information page of the policy.
Question 74 of 100
75
Which of the following statements is true regarding a standard personal auto coverage?
Answer Choices: Select the Correct Answer
Medical Payments Coverage pays the insured and others without regard to fault.
Liability Coverage pays the insured and others without regard to fault.
Liability Coverage pays for damage or injury to others regardless of legal liability.
Medical payments only cover injury to third parties.
Question 75 of 100
Your answer: Medical payments only cover injury to third parties. is incorrect. The correct answer is: Medical Payments Coverage pays the insured and others without regard to fault..
EXPLANATION:
Auto medical payments under the personal auto policy pay for injuries sustained by the insured and others riding in the insured's car regardless of fault.
Question 75 of 100
76
What is the difference between replacement cost and actual cash value?
Answer Choices: Select the Correct Answer
Replacement cost does not make a deduction for depreciation, while actual cash value does.
Actual cash value is the amount one is willing to pay in cash for an item of property while replacement value equals market value.
They are substantially similar in the context of insurance policies.
Replacement cost takes market appreciation into account, while actual cash value does not.
Question 76 of 100
Your answer: Replacement cost does not make a deduction for depreciation, while actual cash value does. is correct.
EXPLANATION:
Actual cash value is defined as replacement cost less depreciation.
Question 76 of 100
77
Business auto coverage would apply to an accident or loss during the policy period in each of the following places, EXCEPT:
```
Answer Choices: Select the Correct Answer
Toronto, Canada.
San Juan, Puerto Rico.
Unalakleet, Alaska.
Tijuana, Mexico.
```
Question 77 of 100
Your answer: Tijuana, Mexico. is correct.
EXPLANATION:
The policy territory does not include Mexico. The newer versions of the BAP include coverage on a world-wide basis for a private passenger vehicle that the insured hires, rents or borrows without a driver for a period of 30 days or less if after an accident, the liability suit is brought against the insured in the U.S.
Question 77 of 100
78
Requirements that truckers be financially responsible for cargo they carry are imposed by:
```
Answer Choices: Select the Correct Answer
The federal government.
State government.
City and county governments.
Both state and federal governments.
```
Question 78 of 100
Your answer: Both state and federal governments. is correct.
EXPLANATION:
Both the state and federal governments have laws regarding the responsibility of trucking risks that transport cargo.
Question 78 of 100
79
Under the Additional Coverages of the Businessowners Property forms, property removed to protect it from loss will be covered at another location for up to:
```
Answer Choices: Select the Correct Answer
5 days.
10 days.
30 days.
20 days.
```
Question 79 of 100
Your answer: 30 days. is correct.
EXPLANATION:
The policy specifies open peril coverage for 30 days. This is the standard time period for coverage at another location.
Question 79 of 100
80
Which of the following must be true in a burglary?
Answer Choices: Select the Correct Answer
Property must be taken from a custodian or watchperson
There must be no evidence of force or violence
Any unlawful entry or exit from the premises would be evidence of burglary
There must be visible evidence of forcible entry or exit
Question 80 of 100
Your answer: There must be visible evidence of forcible entry or exit is correct.
EXPLANATION:
There must be signs of forcible entry into or exiting the insured premises.
Question 80 of 100
81
Who makes a declaratory judgment?
```
Answer Choices: Select the Correct Answer
A court of law.
The insurance company.
The state insurance department.
The insurance adjuster.
```
Question 81 of 100
Your answer: A court of law. is correct.
EXPLANATION:
A declaratory judgment is a binding judgment, issued by a court of law.
Question 81 of 100
82
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
Your answer: Valet services bodily injury is correct.
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 82 of 100
83
Which optional coverage is not required to be described by the California Residential Property Insurance Disclosure?
Answer Choices: Select the Correct Answer
Seasonal Residence Coverage
Guaranteed replacement cost with full building code upgrade.
Extended Replacement Cost Coverage
Actual Cash Value Coverage
Question 83 of 100
Your answer: Seasonal Residence Coverage is correct.
EXPLANATION:
There is no such coverage as Seasonal Residence Coverage. The other three answer choices are coverages that are required to be described by the CRPID.
Question 83 of 100
84
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 84 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 84 of 100
85
Which of these product liability lawsuits is NOT covered under the BOP?
Answer Choices: Select the Correct Answer
A product is made in Canada and the lawsuit is brought in Canada.
A product is made in New York and the lawsuit is brought in the United States.
A product is made in Zaire and the lawsuit is brought in Germany.
A product is made in the United States and the lawsuit is brought in Canada.
Question 85 of 100
Your answer: A product is made in Zaire and the lawsuit is brought in Germany. is correct.
EXPLANATION:
Product liability would not apply to products made in Zaire and the lawsuit brought in Germany. The product must be manufactured or sold AND the lawsuit must be brought within the coverage territory, which is the United States, its territories or possessions, Puerto Rico and Canada, for coverage to apply.
Question 85 of 100
86
The premiums for workers compensation are based on:
Answer Choices: Select the Correct Answer
The job description of the employees (the work they perform).
The location of the risk.
The state schedule of benefits.
Claim loss ratio.
Question 86 of 100
Your answer: The job description of the employees (the work they perform). is correct.
EXPLANATION:
The premium is based on the job description of the employee. The more hazardous the work the higher the base rate per $100 of payroll.
Question 86 of 100
87
A licensed independent adjuster has received a written or oral request from the California Department of Insurance concerning a claim. How many days does this adjuster have to respond to the inquiry?
```
Answer Choices: Select the Correct Answer
30 days
15 working days
21 calendar days
10 calendar days
```
Question 87 of 100
Your answer: 21 calendar days is correct.
EXPLANATION:
This adjuster must respond immediately, but no later than 21 calendar days from the date of the request.
Question 87 of 100
88
If an independent contractor subcontracts any part of a job to a subcontractor, can the independent contractor be held liable for a job-related injury of an employee of the subcontractor?
Answer Choices: Select the Correct Answer
No, only the subcontractor is responsible.
Yes, both can be held liable for job-related injuries to any employee of the subcontractor.
No, the employee must seek their own health and disability coverage.
No, there is a special exemption for the job-related injuries to the employees of subcontractors.
Question 88 of 100
Your answer: No, the employee must seek their own health and disability coverage. is incorrect. The correct answer is: Yes, both can be held liable for job-related injuries to any employee of the subcontractor..
EXPLANATION:
Yes. Both the independent contractor who subcontracts part of the job and the principal employer (the entity that hired the independent contractor) can be held liable for job-related injuries to any employee of the subcontractor if the subcontractor has not secured workers compensation coverage for its employees.
Question 88 of 100
89
The fee that must be submitted to the Department with an original adjuster license application in California is:
```
Answer Choices: Select the Correct Answer
$62
$56
$47
$72
```
Question 89 of 100
Your answer: $72 is correct.
EXPLANATION:
The fee that must be submitted to the Department with an original adjuster license application in California is $72.
Question 89 of 100
90
Six months after a new employee is hired, the insured learns that the employee was fired from a previous job for stealing company property. How will this discovery affect the insured's crime coverage?
Answer Choices: Select the Correct Answer
Coverage for this employee will be cancelled at the end of the policy period
It will have no effect on coverage because the dishonest act occurred before the employee was hired
Coverage for this employee will be cancelled after 30 days
Coverage for this employee will be cancelled immediately
Question 90 of 100
Your answer: Coverage for this employee will be cancelled immediately is correct.
EXPLANATION:
Coverage for this employee will be cancelled immediately. This happens immediately due to the discovery of the past dishonest acts by that employee. Another example, an employee was caught in May 2011 falsifying documents. The policy in question becomes effective August 2011. In November, the same employee is caught stealing. Since the insured knew of the employee’s dishonest act prior to the policy period, any loss is excluded from coverage.
Question 90 of 100
91
When an insurance company broadens coverage under a homeowners policy, that change automatically applies to those policies currently in effect under what provision?
Answer Choices: Select the Correct Answer
Waiver of Change of Policy Provisions
Liberalization Clause
Severability of Insurance
Insurable Interest and Limit of Liability
Question 91 of 100
Your answer: Severability of Insurance is incorrect. The correct answer is: Liberalization Clause.
EXPLANATION:
This is called the Liberalization Clause.
Question 91 of 100
92
The insured has a $1,000,000 personal umbrella policy with a $5,000 retention limit. For a $7,000 liability loss not covered under the insured's personal auto policy, but covered under the umbrella policy, the insurance company would pay:
```
Answer Choices: Select the Correct Answer
$5,000.
$3,000.
$2,000.
$1,000.
```
Question 92 of 100
Your answer: $2,000. is correct.
EXPLANATION:
The company will deduct the $5,000 retention limit and pay on the insured's behalf the sum of $2,000. The retention limit acts a deductible when a loss is covered by the umbrella policy but not under the underlying insurance.
Question 92 of 100
93
Under a Commercial Package Policy, how many days does one have to notify the insurance company of a claim?
Answer Choices: Select the Correct Answer
The insurer must be notified promptly. The number of days is not specified
30 days
60 days
10 days
Question 93 of 100
Your answer: 60 days is incorrect. The correct answer is: The insurer must be notified promptly. The number of days is not specified.
EXPLANATION:
The policy language states that all claims will be promptly reported to the insurer.
Question 93 of 100
94
When Todd, an adjuster, shows up to a claimant's property to adjust a claim, he finds that the claimant has an attorney with him. From this point on:
Answer Choices: Select the Correct Answer
Todd should deal directly with the attorney, not the claimant.
Todd should hire an attorney of his own.
Todd knows negotiations will be difficult, and should try to circumvent the attorney.
Todd should deal with both the attorney, and the claimant, depending on the topics being discussed.
Question 94 of 100
Your answer: Todd should deal directly with the attorney, not the claimant. is correct.
EXPLANATION:
Once the claimant has hired an attorney, all future communications between the adjuster and the claimant, must be handled through the attorney.
95
The insured sets a fire to his home and is found to be guilty of arson. There is a lien on the burned property by a mortgage company in the amount of $150,000. The property is insured for $300,000 and is a total loss. The personal property of the insured, covered separately by a Homeowners policy for $150,000, is also a total loss. How will this claim most likely be paid?
Answer Choices: Select the Correct Answer
The insured is paid a total of $300,000.
The mortgagee is paid $150,000.
The insured is paid $150,000 for the personal property loss.
Since the loss is from an intentional act of the insured the entire loss is denied.
Question 95 of 100
Your answer: The mortgagee is paid $150,000. is correct.
EXPLANATION:
The provisions relative to the suspension of payment due to arson do not apply to a lender that holds a valid recorded mortgage on the property in question. Therefore, the lien holder is fully reimbursed for its insurable interest in the property. The insured is not paid due to the charge and conviction of arson.
Question 95 of 100
96
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
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Answer Choices: Select the Correct Answer
I and II only.
I, II, III and IV.
I and IV only.
III and IV only.
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Question 96 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 96 of 100
97
Commercial Insurance coverage under the broad and special forms covers which of the following types of water damage?
Answer Choices: Select the Correct Answer
Flood
Surface waters
Water below the ground which surfaces and causes damage
A water pipe that bursts
Question 97 of 100
Your answer: A water pipe that bursts is correct.
EXPLANATION:
The broad and special cause of loss forms provide coverage for all types of water related damage except that caused by flood, from surface water or water below ground which surfaces.
Question 97 of 100
98
After an auto collision loss an insurance company may elect to pay the insured's claim and take possession of the vehicle. This practice is referred to as:
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Answer Choices: Select the Correct Answer
Salvage.
Subrogation.
Warranty.
Deductible.
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Question 98 of 100
Your answer: Salvage. is correct.
EXPLANATION:
Once the insurer has paid a total loss on an auto the salvage belongs to the insurer.
Question 98 of 100
99
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.
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Answer Choices: Select the Correct Answer
I, II, III and IV
I, II and III only
I, III and IV only
I and II only
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Question 99 of 100
Your answer: I, III and IV only is correct.
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 99 of 100
100
What type of contract is binding on only one party?
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Answer Choices: Select the Correct Answer
Unilateral
Bilateral
Adhesion
Indemnity
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Question 100 of 100
Your answer: Unilateral is correct.
EXPLANATION:
"Unilateral" means "one-sided." An insurance policy is one sided because only the insurance company is legally bound to perform its part of the agreement.
Question 100 of 100
