IA Test 29

Question 1

Which of the following would NOT be covered under a workers compensation policy for injury?

Answer Choices: Select the Correct Answer
An intoxicated employee injures an innocent bystander because of horseplay.
A person injured in a work related accident.
A person who contracts a disease as a result of his/her job.
A truck driver working for his/her employer.

Question 1 of 100

Answer 1

Your answer: An intoxicated employee injures an innocent bystander because of horseplay. is correct.

EXPLANATION:
An innocent bystander would not be covered since they are not an employee. Also employees are excluded for injury if they are intoxicated while at work.

Question 1 of 100

Question 2

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:

Answer Choices:	Select the Correct Answer
Salvage.	
Subrogation.	
Warranty.	
Deductible.	

Question 2 of 100

Answer 2

Your answer: Salvage. is correct.

EXPLANATION:
Once the insurer has paid a total loss on an auto the salvage belongs to the insurer.

Question 2 of 100

Question 3

Henry is the first named insured on a $1 million Umbrella policy. His wife, Dorothy, is also an insured. Both Henry and Dorothy were sued for $1 million in separate, unrelated suits by separate third parties. Both insureds lost their suits on the same day. In this possible but rare situation, if the Umbrella policy is applicable and the self-insured retention is not applicable:

Answer Choices: Select the Correct Answer
Henry will receive more protection from the policy than Dorothy because he is the first named insured.
The policy will pay $500,000 toward each award.
The policy will only honor Henry’s claim because he is the first-named insured.
Henry and Dorothy would receive the same amount of coverage, and the policy could ultimately pay a total of the $2 million amount for the two awards, subject to the “aggregate limit”.

Question 3 of 100

Answer 3

Your answer: Henry and Dorothy would receive the same amount of coverage, and the policy could ultimately pay a total of the $2 million amount for the two awards, subject to the “aggregate limit”. is correct.

EXPLANATION:
These are two separate unrelated third-party claims and each would be covered up to the policy limit provided the combined losses do not exceed the “aggregate” limit of the policy.

Question 3 of 100

Question 4

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

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

Question 4 of 100

Answer 4

Your answer: $100,000 is correct.

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

Question 4 of 100

Question 5

Which worker would be covered under Longshoreman’s coverage?

Answer Choices: Select the Correct Answer
Injury to a worker loading a ship at the dock.
Injury to a seaman who works on the ship out at sea.
Injury sustained by a designer working for a beach and shoreline restoration firm.
Injury to a truck driver in Long Island, NY.

Question 5 of 100

Answer 5

our answer: Injury to a worker loading a ship at the dock. is correct.

EXPLANATION:
Longshoreman’s coverage applies to workers who load and unload, build and repair ships.

Question 5 of 100

Question 6

Which of the following is not a duty of an insurer in case of a loss?

Answer Choices: Select the Correct Answer
Conduct a thorough investigation
Establish claim procedures and methods of documentation
Acknowledge receipt of a claim in a timely fashion
Separate the damaged property from the undamaged property and protect the property from further loss

Question 6 of 100

Answer 6

Your answer: Separate the damaged property from the undamaged property and protect the property from further loss is correct.

EXPLANATION:
The insurance company is not required to separate the damaged property from the undamaged property nor to protect the property from further loss. This is the responsibility of the insured.

Question 6 of 100

Question 7

An insured has fabricated a claim that would appear to be legitimate. What kind of hazard would this act represent?

Answer Choices:	Select the Correct Answer
Physical hazard	
Moral hazard	
Morale hazard	
It is a peril, not a hazard.	

Question 7 of 100

Answer 7

Your answer: Moral hazard is correct.

EXPLANATION:
This is the type of hazard that exposes the morals of the individual because of the fraudulent act.

Question 7 of 100

Question 8

The coverage extension “Business Personal Property Temporarily in Portable Storage Units” will provide $10,000 of coverage for up to:

Answer Choices:	Select the Correct Answer
60 days	
120 days	
90 days	
30 days	

Question 8 of 100

Answer 8

Your answer: 90 days is correct.

EXPLANATION:
The extension of coverage is for 90 days, but if the portable unit has been used on a regular basis, the 90 days begins from the time when the unit was first put to use and not when certain property was placed there.

Question 8 of 100

Question 9

Businessowners policies provide “Preservation of Property” coverage when property is removed from the premises to protect it from a covered cause of loss. The coverage will apply at other locations for up to:

Answer Choices:	Select the Correct Answer
60 days	
30 days	
10 days	
20 days	

Question 9 of 100

Answer 9

Your answer: 60 days is incorrect. The correct answer is: 30 days.

EXPLANATION:
If an insured moves property from a covered location in order to preserve it from a loss by a covered peril, that property will be covered for ANY direct loss while it is being moved or is temporarily stored at another location for the next 30 days.

Question 9 of 100

Question 10

Homeowners policies will provide which of the following for personal property located in a self-storage facility?

Answer Choices:	Select the Correct Answer
Full Coverage C limit	
$2,500	
10% of the Coverage C limit	
$5,000	

Question 10 of 100

Answer 10

Your answer: 10% of the Coverage C limit is correct.

EXPLANATION:
The Homeowners forms will limit coverage for personal property at self-storage facilities up to 10% of the Coverage C limit, or $1,000 whichever is higher.

Question 10 of 100

Question 11

The insured has an HO-3 homeowner policy. During the night, a water line in the wall to the upstairs bathroom burst and water ruined the walls, floor and furniture. In this situation all of the damages will be covered, EXCEPT:

Answer Choices: Select the Correct Answer
Damage to remove the wall and replace the wall to gain entrance to the pipe that broke.
Damage to the floor.
Damage to the furniture.
Replace the pipe that broke.

Question 11 of 100

Answer 11

Your answer: Replace the pipe that broke. is correct.

EXPLANATION:
The policy will not pay for the part of the pipe that broke. All of the other damages are covered.

Question 11 of 100

Question 12

The additional coverage under the Commercial Property policy for electronic data provides $2,500 for the cost of replacing and restoring lost information contained on electronic media. Which of the following types of electronic data is NOT included in this additional coverage?

Answer Choices: Select the Correct Answer
Data controlling the building elevator
Data controlling the heating, ventilation, lighting and air conditioning systems
Data controlling the building security system
None of these items are subject to this limit

Question 12 of 100

Answer 12

Your answer: None of these items are subject to this limit is correct.

EXPLANATION:
None of these items are subject to the $2,500 annual aggregate limitation and therefore, covered up to the full cost to restore these items up to the building limit.

Question 12 of 100

Question 13

Which of the following would NOT be found in the conditions section of a homeowner insurance policy?

Answer Choices:	Select the Correct Answer
Subrogation rights	
Duties of the insured	
Insurance premium	
Mortgagee clause	

Question 13 of 100

Answer 13

Your answer: Insurance premium is correct.

EXPLANATION:
The insurance premium is not shown in the conditions section of the homeowner policy.

Question 13 of 100

Question 14

During a tornado, Natalie’s house is destroyed when a section of a wall is blown down, knocking over a heater, which sets the house on fire and creates smoke. The proximate cause of this loss is:

Answer Choices:	Select the Correct Answer
The tornado.	
The fire.	
The collapse of the wall.	
The heater.	

Question 14 of 100

Answer 14

Your answer: The tornado. is correct.

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

Question 14 of 100

Question 15

Which of the following is the provision in a liability policy that allows an insured to report incidents or circumstances that result in claims being filed in the future?

Answer Choices:	Select the Correct Answer
Defense Within Limits provision.	
Other Insurance provision.	
Supplementary Payments provision.	
Discovery provision.	

Question 15 of 100

Answer 15

Your answer: Discovery provision. is correct.

EXPLANATION:
The Discovery provision allows an insured to report incidents or circumstances that may result in a claim being filed in the future. This provision is found mainly in liability policies with “claims-made” coverage triggers.

Question 15 of 100

Question 16

The commercial inland marine conditions form:

Answer Choices: Select the Correct Answer
Contains the basic policy conditions that apply to many controlled inland marine coverage.
Is used to write standard commercial fire coverage.
Must be used with any commercial inland marine form.
Can stand alone as a complete insurance policy.

Question 16 of 100

Answer 16

Your answer: Contains the basic policy conditions that apply to many controlled inland marine coverage. is correct.

EXPLANATION:
Policy conditions contain the duties of the insured in case of a loss, as well as the appraisal clause, pair and set clause, no benefit to bailee clause etc. They are included in most controlled inland marine policies.

Question 16 of 100

Question 17

In the event of a loss under a personal auto policy, an insured is required to submit to the insurance company all of the following information, EXCEPT:

Answer Choices:	Select the Correct Answer
An appraisal of the damaged property.	
A list of any known witnesses.	
A notice of claim.	
Proof of loss statement if requested.	

Question 17 of 100

Answer 17

Your answer: An appraisal of the damaged property. is correct.

EXPLANATION:
Obtaining an appraisal of damaged property is not a required duty of the insured. Verification of the damage is the duty of the auto appraiser.

Question 17 of 100

Question 18

Which of the following would not be considered a “first party” coverage under the personal auto policy?

Answer Choices:	Select the Correct Answer
Liability	
Collision	
Other than collision	
Uninsured Motorist Coverage	

Question 18 of 100

Answer 18

Your answer: Collision is incorrect. The correct answer is: Liability.

EXPLANATION:
Liability is considered to be “third party coverage.” The other coverages pay the insured (the first party) to the policy.

Question 18 of 100

Question 19

The three parties to a contract bond are:

Answer Choices:	Select the Correct Answer
Principal, obligee, surety.	
Obligor, principal, surety.	
Principal, obligee, employee.	
Employee, obligor, principal.	

Question 19 of 100

Answer 19

Your answer: Principal, obligee, surety. is correct.

EXPLANATION:
The three parties to a contract bond are the principal (contractor), obligee (the protected party) and the surety (the guarantor) who pays the loss to the obligee because the principal failed to perform.

Question 19 of 100

Question 20

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 20 of 100

Answer 20

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 20 of 100

Question 21

Rudy, a licensed California independent adjuster, has received a letter from a claimant requesting information about a claim. Rudy is required to respond within:

Answer Choices:	Select the Correct Answer
30 calendar days.	
15 working days.	
15 calendar days.	
10 days.	

Question 21 of 100

Answer 21

Your answer: 15 calendar days. is correct.

EXPLANATION:
Upon receiving any communication from a claimant, regarding a claim, that reasonably suggests that a response is expected, every licensee must immediately, but in no event more than 15 calendar days after receipt of that communication, furnish the claimant with a complete response based on the facts as then known by the licensee.

Question 21 of 100

Question 22

Which of the following statements BEST describes the reason it was necessary to create a federal flood insurance program in 1968?

Answer Choices: Select the Correct Answer
Because other property policies routinely exclude flood from coverage.
Because people were building their homes closer and closer to large bodies of water than ever before.
Because the United States was experiencing more flooding than ever before.
Because the flood insurance policies that were being issued at the time, did not provide adequate coverage for contents.

Question 22 of 100

Answer 22

Your answer: Because other property policies routinely exclude flood from coverage. is correct.

EXPLANATION:
It was necessary to create a federal flood insurance program because other property policies routinely exclude flood from coverage. Many citizens were losing everything because they could not purchase insurance to cover their home and their belongings in case of flood.

Question 22 of 100

Question 23

The “coverage territory” of umbrella liability policies is usually:

Answer Choices: Select the Correct Answer
The United States of America, its territories and possessions, Puerto Rico and Canada only.
Anywhere in the world but sometimes with a requirement that suits be brought in the United States or Canada.
The continental United States of America only.
The state in which the insurance company is domiciled.

Question 23 of 100

Answer 23

Your answer: The United States of America, its territories and possessions, Puerto Rico and Canada only. is incorrect. The correct answer is: Anywhere in the world but sometimes with a requirement that suits be brought in the United States or Canada..

EXPLANATION:
The umbrella policy expands the coverage territory of the underlying coverages. The coverage is on a “worldwide” basis.

Question 23 of 100

Question 24

Bridges and tunnels may be insured under:

Answer Choices:	Select the Correct Answer
Inland Marine Forms	
Business floater forms.	
Transportation forms.	
Equipment dealer’s forms.	

Question 24 of 100

Answer 24

Your answer: Inland Marine Forms is correct.

EXPLANATION:
These are instrumentalities of transportation and can be covered under inland marine forms.

Question 24 of 100

Question 25

What is the definition of “custom farming”?

Answer Choices: Select the Correct Answer
Sharecropping.
Raising genetically modified crops.
Farming for others.
Placing farm equipment for hire by other farms.

Question 25 of 100

Answer 25

Your answer: Farming for others. is correct.

EXPLANATION:
Custom farming is a “neighborly exchange of services”. A special endorsement is required to cover “custom farming” if the receipts are in excess of $5,000 per year.

Question 25 of 100

Question 26

Under the Farm insurance liability coverage, which of the following would be covered?

Answer Choices: Select the Correct Answer
Aircraft spraying.
Pollution.
Products Liability for the insured’s farm produce sold.
Injury to a farm employee.

Question 26 of 100

Answer 26

Your answer: Injury to a farm employee. is incorrect. The correct answer is: Products Liability for the insured’s farm produce sold..

EXPLANATION:
Products liability for the insured’s products would be covered. The others are specifically excluded.

Question 26 of 100

Question 27

Which of the following businesses would be eligible for a Businessowners policy?

Answer Choices: Select the Correct Answer
A dental office.
A contractors business that provides insulation services.
A savings and loan.
A small wig manufacturing business.

Question 27 of 100

Answer 27

Your answer: A dental office. is correct.

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

Question 27 of 100

Question 28

Which of the following flood zones show a “flood depth” instead of a “base flood elevation” on a FIRM?

Answer Choices:	Select the Correct Answer
V	
AO	
AE	
VE	

Question 28 of 100

Answer 28

Your answer: AO is correct.

EXPLANATION:
The AO zones are subject to only shallow flooding during the base flood, therefore “flood depths” are shown in these zones.

Question 28 of 100

Question 29

In cases involving the repair of an auto covered under a policy in California, no insurer may:

Answer Choices: Select the Correct Answer
Require that an automobile be repaired at a specific repair shop.
Require a claimant to travel an unreasonable distance to inspect a replacement automobile, to conduct an inspection of the vehicle or to obtain a repair estimate.
Suggest or recommend that an automobile be repaired at a specific repair shop.
All of the responses are correct.

Question 29 of 100

Answer 29

Your answer: All of the responses are correct. is correct.

EXPLANATION:
All of the responses are correct.

Question 29 of 100

Question 30

The Declarations section of an insurance policy contains:

Answer Choices: Select the Correct Answer
The name and address of the insured and the duration of the policy.
Specifications for the necessary method to submit a proof of loss.
The insurance companies promise to pay in exchange for the premium payment.
A list of conditions and exclusions under the policy.

Question 30 of 100

Answer 30

Your answer: A list of conditions and exclusions under the policy. is incorrect. The correct answer is: The name and address of the insured and the duration of the policy..

EXPLANATION:
Usually the first page of an insurance policy, the Declarations section, also includes other important information including the name of insurer, limits of liability, the policy period, a list of endorsements that have been attached to the policy, deductibles, etc.

Question 30 of 100

Question 31

Under the basic dwelling form DP-1, which of the following water damages would be covered?

Answer Choices:	Select the Correct Answer
Leaking swimming pool	
Flood	
Water used to put out a fire	
Sewer backup	

Question 31 of 100

Answer 31

Your answer: Water used to put out a fire is correct.

EXPLANATION:
The only water damage covered under the basic dwelling form would be damage caused by water used to extinguish a fire.

Question 31 of 100

Question 32

As an independent adjuster in California, your investigation of a two-car traffic accident indicates that both drivers are equally at fault. After speaking with the claimant’s adjuster the two of you agree that both drivers are equally to blame. Your subrogation demand would be for:

Answer Choices: Select the Correct Answer
100% of your insured’s damages as your analysis does not affect what is owed by the other party.
75% of your insured’s damages as each side’s 25% totals 50%.
50% of your insured’s damage, because the insured and the other driver were both 50% at fault.
Nothing. Because both drivers were 50% at fault, each insurance company will pay 100% of the claim on their own insured’s damages.

Question 32 of 100

Answer 32

Your answer: 50% of your insured’s damage, because the insured and the other driver were both 50% at fault. is correct.

EXPLANATION:
California is a “comparative negligence” state. In California the person most at fault is deemed to be the primary cause of the accident. If investigation either by law enforcement or the insurance adjuster determines that there was “comparative negligence” on the part of the other driver(s), all damages owed are subject to apportionment.

Question 32 of 100

Question 33

The insured was working with a subcontractor installing wiring in an office building the insured was remodeling for a customer. The insured accidentally caused a fire when he crossed some wires. Two of the offices were damaged, and the wiring had to be replaced. Which of the damages will the insured’s commercial umbrella liability policy likely cover if it is needed?

Answer Choices: Select the Correct Answer
The damages to the two offices and the wiring
The damages to the two offices only
The damages to the wiring only
The damages to one of the offices only

Question 33 of 100

Answer 33

Your answer: The damages to the two offices only is correct.

EXPLANATION:
The coverage would only apply to the damage to the two offices only. The wiring is not covered. It is part of their work.

Question 33 of 100

Question 34

The California Special Provisions Homeowners form amends the standard Homeowners forms to allow the insured _______ from the date of the loss to bring a lawsuit against the insurer.

Answer Choices:	Select the Correct Answer
18 months.	
3 years.	
1 year.	
2 years.	

Question 34 of 100

Answer 34

Your answer: 2 years. is incorrect. The correct answer is: 1 year..

EXPLANATION:
The standardized Homeowners forms allow 2 years from the date of the loss for the insured to bring a lawsuit against the insurance company. However, the California mandatory special provisions form amends this time frame to 1 year.

Question 34 of 100

Question 35

What is the purpose of CAARP?

Answer Choices: Select the Correct Answer
To provide auto insurance for those unable to obtain it from admitted insurers.
To provide watercraft coverage for sport fishermen.
To provide coverage for retired persons in the state of California.
To provide discounted automobile insurance to students with good grades.

Question 35 of 100

Answer 35

Your answer: To provide auto insurance for those unable to obtain it from admitted insurers. is correct.

EXPLANATION:
CAARP is a residual market for vehicle owners who cannot obtain coverage voluntarily from admitted insurers.

Question 35 of 100

Question 36

An insured auto dealer has purchased a Garage policy with physical damage coverage against specified causes of loss. Which of the following losses will not be covered by the policy?

Answer Choices: Select the Correct Answer
Flood damage to a covered auto.
Vandalism damage to a covered auto.
Damage resulting from the collision of the truck carrying a covered auto with another vehicle.
Explosion.

Question 36 of 100

Answer 36

Your answer: Flood damage to a covered auto. is incorrect. The correct answer is: Damage resulting from the collision of the truck carrying a covered auto with another vehicle..

EXPLANATION:
A specified cause of loss is named perils coverage and collision is not one of the named perils. Collision is a separate physical damage coverage requiring the upset of the covered vehicle, or its impact with another vehicle or object.

Question 36 of 100

Question 37

In order for a “full release settlement” to become closed, what MUST occur?

Answer Choices: Select the Correct Answer
The release must contain the proper names of both the first and third party.
The release must contain the date, time and place that the accident occurred.
The release must be properly signed.
The claim check must be cashed by the claimant.

Question 37 of 100

Answer 37

Your answer: The release must be properly signed. is incorrect. The correct answer is: The claim check must be cashed by the claimant..

EXPLANATION:
The claim check for damages must be cashed by the claimant.

Question 37 of 100

Question 38

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 38 of 100

Answer 38

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 38 of 100

Question 39

The methods of financing workers’ compensation benefits include voluntary private insurance, excess insurance, qualified self-insurance plans, insurance through state funds, and:

Answer Choices:	Select the Correct Answer
Federal insurance programs.	
Assumption of the risk.	
Federal employer assistance programs.	
Insurance through assigned risk plans.	

Question 39 of 100

Answer 39

Your answer: Assumption of the risk. is incorrect. The correct answer is: Insurance through assigned risk plans..

EXPLANATION:
Assigned risk plans are state plans to assist employers with financing workers’ compensation benefits.

Question 39 of 100

Question 40

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 40 of 100

Answer 40

Your answer: All of the responses are correct. is correct.

EXPLANATION:
The protection and indemnity coverage applies to all of the responses.

Question 40 of 100

Question 41

A contractor has completed putting a new roof on a building. Six months later there is a storm and the roof leaks causing damage to the contents in the building. What coverage should the contractor carry to cover this claim?

Answer Choices:	Select the Correct Answer
Premises liability	
Operations liability	
Products liability	
Completed operations liability	

Question 41 of 100

Answer 41

Your answer: Completed operations liability is correct.

EXPLANATION:
Completed operations coverage applies when the work has been completed and put to its intended use. The faulty roof would not be covered, but the water damage to the personal property (contents) caused by the faulty roof, would be covered.

Question 41 of 100

Question 42

To be defined as a burglary, an event must include which of the following conditions?

Answer Choices:	Select the Correct Answer
Visible signs of forced entry or exit	
Fear or threat of violence	
Bodily injury	
Mysterious disappearance	

Question 42 of 100

Answer 42

Your answer: Visible signs of forced entry or exit is correct.

EXPLANATION:
To collect for a burglary claim, forcible entry or exit damage must be proved.

Question 42 of 100

Question 43

An umbrella policy without any special endorsements would NOT cover:

Answer Choices:	Select the Correct Answer
Bodily Injury	
Personal Injury	
Uninsured Motorists	
Property Damage	

Question 43 of 100

Answer 43

Your answer: Uninsured Motorists is correct.

EXPLANATION:
Uninsured motorists must be added by endorsement in order for the umbrella policy to cover this exposure.

Question 43 of 100

Question 44

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 44 of 100

Answer 44

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 44 of 100

Question 45

Which of the following claims would not be covered by the liability Section II of a Homeowner’s Policy?

Answer Choices: Select the Correct Answer
The insured’s neighbor files a claim for damage to his house caused by the named insured’s dog.
The named insured files a claim for damage to his house caused by his dog.
An insured accidentally runs over his neighbor with a golf cart at the local country club.
An insured’s dog attacks and damages his neighbor’s golf cart.

Question 45 of 100

Answer 45

Your answer: The named insured files a claim for damage to his house caused by his dog. is correct.

EXPLANATION:
Section II is liability coverage while a claim for damage to a named insured’s house is a property claim.

Question 45 of 100

Question 46

An interline endorsement used in a Commercial Package Policy (CPP):

I. May be mandatory or optional.
II. Is an endorsement that applies to more than one line of insurance.

Answer Choices:	Select the Correct Answer
Both I and II	
I only	
II only	
Neither I nor II	

Question 46 of 100

Answer 46

Your answer: Both I and II is correct.

EXPLANATION:
Interline endorsements are used in the CPP to simplify coverages and conditions among many different forms. Many of the same policy conditions apply to the various coverage parts.

Question 46 of 100

Question 47

All the following are reasons employers liability insurance is needed in addition to workers compensation insurance, EXCEPT:

Answer Choices:	Select the Correct Answer
To pay medical bills.	
To cover non-compensable injuries.	
To cover illegal employments.	
To cover exempt employments.	

Question 47 of 100

Answer 47

Your answer: To cover non-compensable injuries. is incorrect. The correct answer is: To pay medical bills..

EXPLANATION:
Employers liability coverage is not needed to address the payment of medical bills.

Question 47 of 100

Question 48

Under a personal auto policy, what is Coverage D?

Answer Choices:	Select the Correct Answer
Coverage for Damage to Your Auto	
Property Damage	
Bodily Injury	
Medical Payments	

Question 48 of 100

Answer 48

Your answer: Coverage for Damage to Your Auto is correct.

EXPLANATION:
Coverage D includes collision and other than collision (comprehensive) coverage. The insured selects one or both of these coverages, and they are indicated on the declarations page.

Question 48 of 100

Question 49

In California, all the following are permissible reasons for a consumer reporting agency to furnish motor vehicle claims history, or credit reports, EXCEPT:

Answer Choices: Select the Correct Answer
A request from an underwriter in connection with an application for insurance.
A request from a local television news reporter for an investigative story.
A request from a prospective employer.
In response to a court order issued by a federal grand jury.

Question 49 of 100

Answer 49

Your answer: A request from a local television news reporter for an investigative story. is correct.

EXPLANATION:
A request from a local television news reporter for an investigative story is not a permissible reason for a consumer reporting agency to furnish information about a consumer.

Question 49 of 100

Question 50

What is the meaning of “diminution of value?”

Answer Choices: Select the Correct Answer
The value of a vehicle decreases each year.
A reduction in the value of a vehicle even after repairs have been made.
Removing parts of a vehicle decreases its value.
A loss that affects only a total loss to a vehicle.

Question 50 of 100

Answer 50

Your answer: A reduction in the value of a vehicle even after repairs have been made. is correct.

EXPLANATION:
The damage to a vehicle results in a reduction or “diminution” in the market value of the vehicle, even after competent repairs have been completed.

Question 50 of 100

Question 51

You are assigned the investigation of a head-on collision involving major injuries in both the insured and claimant vehicles. First contact should be made with the:

Answer Choices:	Select the Correct Answer
Driver of the insured vehicle.	
Any passengers in the insured vehicle.	
Driver of the claimant vehicle.	
Any passengers of the claimant vehicle.	

Question 51 of 100

Answer 51

Your answer: Driver of the claimant vehicle. is correct.

EXPLANATION:
Since this will be a possible third party claim the adjuster should first contact the driver of the claimant vehicle.

Question 51 of 100

Question 52

Which one of the following situations best illustrates an “occurrence” to which liability insurance applies?

Answer Choices: Select the Correct Answer
Ned was awakened by a night prowler. As Ned nervously took his gun from the drawer of the bedside table, he shot himself in the leg.
Jane was tired of her boyfriend’s constant attention, so she tricked him into falling off a cliff into the ocean.
Florist LaRosa secretly poured ice water on his competitor’s rose plants every night. As a result, their growth was stunted.
Anita’s four-year old son was playing with matches on the premises of the family’s business. The building next door caught on fire and was destroyed.

Question 52 of 100

Answer 52

Your answer: Anita’s four-year old son was playing with matches on the premises of the family’s business. The building next door caught on fire and was destroyed. is correct.

EXPLANATION:
The florist is not covered because it was an intentional act, as is the action by Jane. Had those actions been unintentional, the claims could be covered under the policy. Ned cannot sue himself for his own injury. The only claim that would be covered is the fire started by the four year old.

Question 52 of 100

Question 53

Which of the following is not a subject for supplementary payments under a CGL policy?

Answer Choices: Select the Correct Answer
Reasonable expenses incurred by the insured at the insurance company’s request
Expenses for first aid at the time of an accident
Cost of bail bonds
Interest on the amount of a judgment not yet paid by the insurer

Question 53 of 100

Answer 53

Your answer: Interest on the amount of a judgment not yet paid by the insurer is incorrect. The correct answer is: Expenses for first aid at the time of an accident.

EXPLANATION:
Expenses for first aid are not found under the supplementary coverages. The others are.

Question 53 of 100

Question 54

No insurer may issue checks or drafts or partial settlement of a loss or claim that is still being negotiated that:

Answer Choices: Select the Correct Answer
Releases the insurer from additional liability.
Releases the insurer unless the policy or bond limit has been paid.
Releases the insurer unless a compromise has been made.
Releases the insurer from liability in one instance but leaves open future demands for payment in an agreement agreed to by all interested parties.

Question 54 of 100

Answer 54

Your answer: Releases the insurer from additional liability. is correct.

EXPLANATION:
An insurer cannot issue a check for partial payment of a claim that contains language that releases the insurer from total liability unless the limit of the policy or the bond has been paid or a compromise has been otherwise made.

Question 54 of 100

Question 55

In California, which of the following is the definition of an “insurable event”?

Answer Choices: Select the Correct Answer
California law requires insurance companies to compensate a policyholder for a covered loss, but that holders should be neither penalized nor rewarded by a loss.
An expected or unexpected event, that is covered by an insurance policy, subject to California law.
Any contingent or unknown event, whether past or future, which may indemnify a person having an insurable interest, or create a liability against him, may be insured against, subject to California law.
Any event caused by a third-party, against an insured, that is covered by insurance and subject to California law.

Question 55 of 100

Answer 55

Your answer: Any contingent or unknown event, whether past or future, which may indemnify a person having an insurable interest, or create a liability against him, may be insured against, subject to California law. is correct.

EXPLANATION:
The definition of an “insured event” as detailed by California law is: “Any contingent or unknown event, whether past or future, which may indemnify a person having an insurable interest, or create a liability against him, may be insured against, subject to California law.”

Question 55 of 100

Question 56

A large tree has fallen into Paul’s yard caused by wind. The claims service representative (CSR) advises Paul to call a contractor to remove the tree and send the bill to the insurance company. The bill is $1,200. However, the policy coverage for the debris removal of a tree that has fallen by wind, is only $500 unless the tree hits the house, which was not the case. What should the adjuster do?

Answer Choices: Select the Correct Answer
Pay only $500.
Pay the $1,200.
Pay the $1,200, but then explain the policy provisions and ask to insured to reimburse the insurer for the difference.
Negotiate.

Question 56 of 100

Answer 56

Your answer: Pay the $1,200. is correct.

EXPLANATION:
The consumer relied on the statements of the claims representative so the insurance company would be estopped from denying the claim. The insurer had already waived its right to deny full payment of the claim because of the statements of the claims representative. Therefore, the $1,200 should be paid.

Question 56 of 100

Question 57

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 57 of 100

Answer 57

Your answer: $72 is correct.

EXPLANATION:
The application fee for an original license is: $72. (CIC 14097)

Question 57 of 100

Question 58

Which of the following businesses would be eligible for a Businessowners policy?

I. Donut shop.
II. Wholesale florist.
III. Barber shop.
IV. Taxidermist.

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

Question 58 of 100

Answer 58

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

EXPLANATION:
Generally, Businessowners policies are written to cover light businesses with limited locations and size. Most insurers would cover all of the ones in this question. The Donut shop will probably be required to install the proper fire extinguishing equipment if the donuts are made on the premises.

Question 58 of 100

Question 59

Which of the following is the first duty of the insured after suffering a property loss?

Answer Choices: Select the Correct Answer
Take steps to protect the property from further loss.
Have the damaged property appraised.
Hire an outside claims adjuster.
Increase his coverage.

Question 59 of 100

Answer 59

Your answer: Take steps to protect the property from further loss. is correct.

EXPLANATION:
The insured is required to protect the property from further loss. The insurance company will pay all reasonable costs involved in protecting the property from further loss or damage.

Question 59 of 100

Question 60

Which of the following is correct regarding the differences in coverage between an HO-3 and an HO-5?

Answer Choices: Select the Correct Answer
HO-3 covers personal property on a named peril basis, while personal property under an HO-5 is covered on an open peril basis.
HO-3 pays market value for dwelling losses while the HO-5 pays replacement cost.
HO-3 only covers personal property owned by the insured, while HO-5 can cover personal property owned or used by the insured.
HO-3 has more exclusions pertaining to the insured dwelling than the HO-5.

Question 60 of 100

Answer 60

Your answer: HO-3 has more exclusions pertaining to the insured dwelling than the HO-5. is incorrect. The correct answer is: HO-3 covers personal property on a named peril basis, while personal property under an HO-5 is covered on an open peril basis..

EXPLANATION:
The HO-3 and the HO-5 are the same in terms of dwelling exclusions, valuation on dwelling losses, and the type of personal property insured. They are different in terms of perils insured against for personal property losses.

Question 60 of 100

Question 61

A commercial building worth $400,000 is insured under a Commercial Property policy for $240,000, and an 80% coinsurance clause applies. A $20,000 loss to the building has occurred. How much will the insured receive when a claim is filed?

Answer Choices:	Select the Correct Answer
$14,000	
$10,000	
$12,000	
$15,000	

Question 61 of 100

Answer 61

Your answer: $12,000 is incorrect. The correct answer is: $15,000.

EXPLANATION:
The insured should have carried $320,000 to be in compliance with the 80% coinsurance clause, therefore the building is 25% underinsured, penalizing the insured. $240,000 (the amount carried) divided by $320,000 (the amount required) multiplied by $20,000 loss, equals $15,000.

Question 61 of 100

Question 62

Under the CGL policy, all of the following are “insured contracts” as defined by the policy, EXCEPT:

Answer Choices:	Select the Correct Answer
Land and mine surveyor agreements.	
Lease of premises agreements.	
Railroad sidetrack agreements.	
Elevator maintenance agreements.	

Question 62 of 100

Answer 62

Your answer: Railroad sidetrack agreements. is incorrect. The correct answer is: Land and mine surveyor agreements..

EXPLANATION:
The CGL policy contains a contractual liability exclusion, which eliminates coverage for risks of others that the insured assumes in any written contract except an “insured contract.” A land and mine surveyor agreement is not an “insured contract.” The other three are covered as “insured contracts.”

Question 62 of 100

Question 63

Which of the following is generally not considered to be a legal defense against claims of negligence?

Answer Choices: Select the Correct Answer
The loss to the plaintiff was caused intentionally by the defendant.
A state law gives specific immunity from liability to the defendant.
An intervening cause was the proximate cause of the plaintiff’s injury rather than the defendant’s action (or inaction).
The relevant statute of limitation for filing a lawsuit has expired.

Question 63 of 100

Answer 63

Your answer: The loss to the plaintiff was caused intentionally by the defendant. is correct.

EXPLANATION:
Obviously, the fact that the act of the defendant against the plaintiff was intentional, could not be used as a “defense”.

Question 63 of 100

Question 64

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 64 of 100

Answer 64

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 64 of 100

Question 65

Why do insurers file declaratory judgment actions with the courts?

Answer Choices: Select the Correct Answer
To determine the merits of the case
To determine negligence
To determine the tortfeasor or joint tortfeasors
To determine if a claim falls within the insuring agreement of a policy

Question 65 of 100

Answer 65

Your answer: To determine the tortfeasor or joint tortfeasors is incorrect. The correct answer is: To determine if a claim falls within the insuring agreement of a policy.

EXPLANATION:
A declaratory judgment action is a lawsuit seeking a judicial determination of whether policy coverage applies to a claim. Insurers usually file declaratory actions to determine whether a claim falls within the provisions of the insuring agreement of a policy.

Question 65 of 100

Question 66

In which of the following situations should an adjuster consider obtaining a non-waiver agreement?

Answer Choices: Select the Correct Answer
When requested by an insurer
In dealing with a potential coverage dispute
When subrogation may be involved
When directed by the court

Question 66 of 100

Answer 66

Your answer: In dealing with a potential coverage dispute is correct.

EXPLANATION:
In coverage dispute situations, an adjuster may want to make clear that a known right is NOT being waived by any party.

Question 66 of 100

Question 67

Which of the following is not an “insured” under business auto liability coverage?

Answer Choices: Select the Correct Answer
The owner of a trailer borrowed by the named insured.
Employees of the named insured while loading a truck owned by the insured’s business.
A contractor who uses one of the insured’s vehicles to travel to a job site with the insured’s business.
A partner of the named insured (if the insured is a partnership).

Question 67 of 100

Answer 67

Your answer: The owner of a trailer borrowed by the named insured. is correct.

EXPLANATION:
The owner of a trailer borrowed by the named insured is not an “insured” under the BAP if the trailer is connected to a covered auto owned by the insured.

Question 67 of 100

Question 68

A Commercial Property Policy includes a protective safeguard endorsement indicating there are protective safeguards installed in the risk such as a sprinkler system. Should the system become inoperative, how long does the insured have to report this fact to the insurer?

Answer Choices:	Select the Correct Answer
48 hours	
24 hours	
36 hours	
2 weeks	

Question 68 of 100

Answer 68

Your answer: 48 hours is correct.

EXPLANATION:
If repairs cannot be completed within 48 hours, the insurer must be notified in order to comply with the conditions of the form.

Question 68 of 100

Question 69

Jeremy’s home is valued at $950,000. How much insurance does he need to carry on his home, in order to be fully insured under a typical Homeowners insurance policy?

Answer Choices:	Select the Correct Answer
$855,000	
$874,000	
$950,000	
$760,000	

Question 69 of 100

Answer 69

Your answer: $760,000 is correct.

EXPLANATION:
The coinsurance provision requires Jim to cover his home for at least 80% of the cost to replace it. 80% of $950,000 is $760,000.

Question 69 of 100

Question 70

The agent or insurer must obtain the applicant’s signature acknowledging receipt of the California Residential Property Insurance disclosure form within ____ of the date of the application.

Answer Choices:	Select the Correct Answer
10 days	
20 days	
60 days	
90 days	

Question 70 of 100

Answer 70

Your answer: 60 days is correct.

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

Question 70 of 100

Question 71

Steve has removed the rear seat in the company car and installed stereo equipment and two speakers. The maximum the physical damage coverage will pay for damage to the items in an accident is:

Answer Choices: Select the Correct Answer
The actual cash value of the equipment since it is permanently installed in the car.
Nothing, because the equipment was not factory equipment.
$1,000 because the equipment was permanently installed in a place where the auto maker would normally not have it put it minus deductible.
$1,500 for the equipment but nothing for the labor to install it.

Question 71 of 100

Answer 71

Your answer: $1,000 because the equipment was permanently installed in a place where the auto maker would normally not have it put it minus deductible. is correct.

EXPLANATION:
For any electronic equipment that reproduces audio, video or data signals that are permanently installed in the auto in a place where the auto maker would not normally install is covered up to a total of $1,000 per loss.

Question 71 of 100

Question 72

The Ordinance or Law Endorsement can be added to a Homeowners form to increase the amount of coverage in ______ increments, up to ______ coverage.

Answer Choices:	Select the Correct Answer
20% increments, up to 80% coverage.	
25% increments, up to 100% coverage.	
30% increments, up to 70% coverage.	
15% increments, up to 95% coverage.	

Question 72 of 100

Answer 72

Your answer: 25% increments, up to 100% coverage. is correct.

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

Question 72 of 100

Question 73

A contractor has borrowed funds from a bank in order to finance a construction project. A surety bond which guarantees the lender that the contractor will use the borrowed funds to finish the contract free and clear of liens is known as a:

Answer Choices:	Select the Correct Answer
Completion bond.	
Bid bond.	
Performance bond.	
Labor and materials bond.	

Question 73 of 100

Answer 73

Your answer: Performance bond. is incorrect. The correct answer is: Completion bond..

EXPLANATION:
A completion bond guarantees the lender (obligee) that the contractor will apply the funds to the project and complete the project free of any liens or encumbrances.

Question 73 of 100

Question 74

Each of the following is true about Difference in Conditions (DIC) insurance, EXCEPT:

Answer Choices: Select the Correct Answer
Coverage is usually written on an open peril basis.
Traditional perils (such as wind and hail) are usually excluded.
Difference in Conditions insurance can provide Flood insurance.
Difference in Conditions insurance can provide Earthquake coverage.

Question 74 of 100

Answer 74

Your answer: Traditional perils (such as wind and hail) are usually excluded. is incorrect. The correct answer is: Coverage is usually written on an open peril basis. .

EXPLANATION:
Coverage is usually written on a named peril basis.

Question 74 of 100

Question 75

Which party has the right to request information about a claim at any time?

Answer Choices:	Select the Correct Answer
The California Department of Insurance	
The plaintiff’s attorney	
Law enforcement	
The agent	

Question 75 of 100

Answer 75

Your answer: The California Department of Insurance is correct.

EXPLANATION:
Only the California Department of Insurance (CDI) has the absolute right to request and be provided any claim information at any time. A plaintiff’s attorney may subpoena such information, but it may be considered private information. Law enforcement would also need a subpoena for claim information.

Question 75 of 100

Question 76

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 76 of 100

Answer 76

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 76 of 100

Question 77

What type of bond might an executor of an estate be required to purchase?

Answer Choices:	Select the Correct Answer
Cost bond	
Completion bond	
Fiduciary bond	
Performance bond	

Question 77 of 100

Answer 77

Your answer: Fiduciary bond is correct.

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

Question 77 of 100

Question 78

A change in the Qualified Manager of a California independent adjusting business must be reported to the Department of Insurance within ____ days of such change.

Answer Choices:	Select the Correct Answer
30	
20	
15	
10	

Question 78 of 100

Answer 78

Your answer: 30 is correct.

EXPLANATION:
The change must be reported within 30 days.

Question 78 of 100

Question 79

What type of coverage would a heating and cooling contractor need when work has been done on a newly renovated building but not yet accepted by the owner?

Answer Choices:	Select the Correct Answer
An Installation Floater	
A Builder’s Risk Policy	
A Bailee Form of Coverage	
A Transportation Floater	

Question 79 of 100

Answer 79

Your answer: A Builder’s Risk Policy is incorrect. The correct answer is: An Installation Floater.

EXPLANATION:
The contractor would need an installation floater that provides property coverages for work performed until accepted by the owner.

Question 79 of 100

Question 80

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 80 of 100

Answer 80

Your answer: The Broad and Special only. is incorrect. The correct answer is: The Basic, Broad and Special forms..

EXPLANATION:
Even the Basic Form provides this coverage.

Question 80 of 100

Question 81

All of the following are EXCLUDED under the Earthquake Endorsement to a Homeowners policy, EXCEPT:

Answer Choices:	Select the Correct Answer
Flood and tidal wave.	
Land shock waves.	
Waves and tsunami.	
The cost of filling land.	

Question 81 of 100

Answer 81

our answer: Land shock waves. is correct.

EXPLANATION:
All of the items listed are excluded under the Earthquake Endorsement to a Homeowners policy, EXCEPT: Land shock waves, they are covered.

Question 81 of 100

Question 82

Commercial property insurance essentially provides protection for: (choose the best answer)

Answer Choices:	Select the Correct Answer
Physical loss	
Direct or indirect loss	
Intangible loss	
Tangible loss	

Question 82 of 100

Answer 82

Your answer: Direct or indirect loss is correct.

EXPLANATION:
The commercial property forms can provide direct or indirect loss coverage separately or both together.

Question 82 of 100

Question 83

Which of the following is not a true statement regarding workers compensation coverage in California?

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

Question 83 of 100

Answer 83

Your answer: First aid treatment is not covered under workers compensation coverage. is correct.

EXPLANATION:
First aid treatment is covered under workers compensation coverage; it is not excluded.

Question 83 of 100

Question 84

An insured carries a Personal Property Replacement Cost endorsement attached to her Homeowners policy and has suffered a loss to her personal property. The insured submits a claim for actual cash value (ACV) at the time of the loss, but she intends to make a claim for replacement cost later. What is the time frame in which the insured must notify the insurer that she intends to make the replacement cost claim later?

Answer Choices:	Select the Correct Answer
Within 120 days of the loss.	
Within 180 days of the loss.	
Within 90 days of the loss.	
Within 30 days of the loss.	

Question 84 of 100

Answer 84

Your answer: Within 90 days of the loss. is incorrect. The correct answer is: Within 180 days of the loss..

EXPLANATION:
The insured must notify the insured within 180 days of the loss of their intention to seek replacement cost coverage at a later date.

Question 84 of 100

Question 85

The DP-3 dwelling form provides:

Answer Choices: Select the Correct Answer
Open peril coverage on structures and broad form peril coverage on contents.
Broad form peril coverage on buildings and contents.
Basic peril coverage only.
Fire, lightning, extended coverage and vandalism & malicious mischief coverage only.

Question 85 of 100

Answer 85

Your answer: Broad form peril coverage on buildings and contents. is incorrect. The correct answer is: Open peril coverage on structures and broad form peril coverage on contents..

EXPLANATION:
The DP-3 provides open peril coverage on structures and broad form peril coverage on contents. The other forms are named peril forms and are not as broad as the open peril form.

Question 85 of 100

Question 86

The sprinkler leakage coverage of a Commercial Property form does not provide coverage for:

Answer Choices: Select the Correct Answer
Loss by water to another person’s property.
Damage to growing crops from malfunctioning sprinklers.
Loss by water to insured property caused by leakage or breakage of automatic fire protection sprinklers.
Damage to the building flooring.

Question 86 of 100

Answer 86

Your answer: Damage to growing crops from malfunctioning sprinklers. is correct.

EXPLANATION:
The coverage does not apply to growing crops. Crop insurance is a separate line of insurance.

Question 86 of 100

Question 87

The Homeowners “Additional Residence Rented to Others” endorsement will provide coverage for an additional structure, used as a residence, that is rented by the insured as a:

Answer Choices:	Select the Correct Answer
A one-family dwelling.	
A two-family dwelling.	
A one to four-family dwelling.	
A one to two-family dwelling.	

Question 87 of 100

Answer 87

Your answer: A one to four-family dwelling. is correct.

EXPLANATION:
The Homeowners “Additional Residence Rented to Others” endorsement provides coverage for an additional structure, used as a residence, for one to four families.

Question 87 of 100

Question 88

Each of the following is true about Homeowners personal property coverage, EXCEPT:

Answer Choices: Select the Correct Answer
The HO-8 does not include coverage for personal property.
Personal property of a guest may be covered.
The full limit applies to personal property anywhere in the world.
Special sub-limits apply to some types of personal property.

Question 88 of 100

Answer 88

Your answer: The HO-8 does not include coverage for personal property. is correct.

EXPLANATION:
All the Homeowners forms include coverage for personal property.

Question 88 of 100

Question 89

Name the coverage that applies to the extra cost the insured incurs to make temporary repairs and speed up the permanent repairs or replacement of damaged covered equipment under an Equipment Breakdown policy.

Answer Choices:	Select the Correct Answer
Expediting expense coverage	
Extra expense coverage	
Removal expense coverage	
Contributing expense coverage	

Question 89 of 100

Answer 89

Your answer: Expediting expense coverage is correct.

EXPLANATION:
This is called expediting expense coverage.

Question 89 of 100

Question 90

QUESTION:
Which of the following statements is true regarding controlled forms?

Answer Choices: Select the Correct Answer
These forms are very flexible and can be manuscripted to meet the needs of individual insured’s.
These forms are always issued by state insurance departments.
Conditions and rates for these forms are determined solely on the basis of underwriting judgment.
These forms are usually issued according to published rules and rates.

Question 90 of 100

Answer 90

Your answer: These forms are usually issued according to published rules and rates. is correct.

EXPLANATION:
Controlled forms and their rates are filed for approval with the state insurance departments. They are usually issued according to published rules and rates. A jewelers block policy is an example.

Question 90 of 100

Question 91

Which statement best describes “defense” coverage under the Section II - Liability coverage of the Businessowners policy?

Answer Choices: Select the Correct Answer
Defense costs are not subject to a limit.
Defense costs are included in the aggregate limit of insurance.
Defense costs are paid but limited to claims submitted during the policy period.
Defense costs are paid at twice the limit of the policy.

Question 91 of 100

Answer 91

Your answer: Defense costs are not subject to a limit. is correct.

EXPLANATION:
Defense coverage is not subject to a policy limit. The insurer can spend whatever it desires in the defense of a claim and it has no effect on the policy limit.

Question 91 of 100

Question 92

The California Standard Fire policy contains all the following, EXCEPT:

Answer Choices:	Select the Correct Answer
Name of the insurance company.	
The amount of coverage.	
The address of the insured.	
The premium being charged.	

Question 92 of 100

Answer 92

Your answer: The address of the insured. is correct.

EXPLANATION:
According to the California Insurance Code (CIC 2070-2084), the California Standard Fire policy does not include the address of the insured.

Question 92 of 100

Question 93

Which of the following is not an optional property coverage under a homeowner policy?

Answer Choices: Select the Correct Answer
Coverage for loss of use of the premises
Inflation guard coverage
Personal property replacement cost
Increased limits for jewelry, watches, and furs

Question 93 of 100

Answer 93

Your answer: Inflation guard coverage is incorrect. The correct answer is: Coverage for loss of use of the premises.

EXPLANATION:
Coverage for loss of use is an included coverage in the homeowner policy without additional premium.

Question 93 of 100

Question 94

Policies issued under the National Flood Insurance Program provide removal coverage for property which is moved to another location to protect it from a flood. This coverage applies for up to:

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

Question 94 of 100

Answer 94

Your answer: 30 days. is incorrect. The correct answer is: 45 days. .

EXPLANATION:
Removal coverage is designed to avoid loss if the property can be moved elsewhere for protection against flood damage. This coverage is provided for up to 45 days.

Question 94 of 100

Question 95

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 95 of 100

Answer 95

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 95 of 100

Question 96

Which of the following losses would be covered under a crime policy’s “Inside the Premises - Robbery or Safe Burglary of Other Property?”

Answer Choices: Select the Correct Answer
Broken windows and damage to a door
Theft of money and securities
Fire damage to the insured building caused by a burglar
Vandalism to a trailer on the insured premises caused by a burglar

Question 96 of 100

Answer 96

Your answer: Broken windows and damage to a door is correct.

EXPLANATION:
This question deals with robbery or safe burglary of “other property” which means, in crime insurance “other than money and securities”. There is another crime form to cover money and securities. Property insurance on the building/contents, would cover the fire loss if caused by burglars to conceal evidence of fingerprints, etc. Vandalism is another property peril. Burglary covers the damage when there are “signs” of forceful entry or exit. Damage to the doors and windows is a prime example of the damage covered by burglary insurance but not fire. Assume a burglar is upset that he cannot break into the building. He damages the doors and windows trying to break in. He sprays red paint all over the building. The damage caused by his attempt to break in is covered under burglary. The spray painting is vandalism and covered under property insurance.

Question 96 of 100

Question 97

Insurers conducting business in California must establish an operate a “Special Investigative Unit” to investigate suspected insurance fraud. Employees of the SIU must:

I. Have the ability to conduct effective investigations of suspected insurance fraud.
II. Be familiar with insurance and related laws.
III. Have knowledge or experience in general claims practices.
IV. Have knowledge of current trends in insurance fraud.

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

Question 97 of 100

Answer 97

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

EXPLANATION:
A Special Investigative Unit must be composed of employees who have knowledge and/or experience in general claims practices, the analysis of claims for patterns of fraud, and current trends in insurance fraud, education and training in specific red flags, red flag events, and other criteria indicating possible fraud. They must have the ability to conduct effective investigations of suspected insurance fraud and be familiar with insurance and related law and the use of available insurer related database resources.

Question 97 of 100

Question 98

Dram shop liability refers to:

Answer Choices:	Select the Correct Answer
Personal injury	
Bodily injury	
Damage to property of others	
Liquor law liability	

Question 98 of 100

Answer 98

Your answer: Damage to property of others is incorrect. The correct answer is: Liquor law liability .

EXPLANATION:
A dram is a measure of liquor. Dram shop laws refer to liquor law liability coverage for those in the business of selling or serving alcohol beverages.

Question 98 of 100

Question 99

Which of the following expenses would be covered, in full or in part, by the “supplementary payments” section of the personal automobile policy?

I. Bail bonds.
II. Loss of earnings for attendance at trials or hearings.
III. Post judgment interest.
IV. Arbitrator’s fees.

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

Question 99 of 100

Answer 99

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

EXPLANATION:
Coverage A (supplementary payments) includes up to $250 for bail bonds plus premiums for appeal bonds, post judgment interest and up to $200 a day for loss of earnings while attending trial or hearings (plus reasonable expenses.

Question 99 of 100

Question 100

The California Insurance Commissioner, in lieu of suspending or revoking a license issued to an independent adjuster for a violation, may impose which of the following?

Answer Choices: Select the Correct Answer
Jail sentence for up to six months
$500 monetary penalty
Both a $500 penalty and a jail sentence of up to six months
$1,000 monetary penalty

Question 100 of 100

Answer 100

Your answer: $500 monetary penalty is correct.

EXPLANATION:
The monetary penalty is $500, but no jail time.

Question 100 of 100