IA Test 30

Question 1

All Homeowner policies provide “Property Removed” coverage for up to how many days?

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

Question 1 of 100

Answer 1

Your answer: 30 days is correct.

EXPLANATION:
These 30 days are standard for all homeowner forms. There are differences in the dwelling forms. For example, the basic dwelling form DP-1 provides only 5 days to cover property removed to protect it from the perils insured against.

Question 1 of 100

Question 2

Which of the following is excluded on the commercial property special causes of loss form?

Answer Choices: Select the Correct Answer
Personal property less than 100 feet from the premises
Smoke from industrial operations
Fire damage if the building has been vacant more than 60 days
Fire damage if the building has been unoccupied more than 60 days

Question 2 of 100

Answer 2

Your answer: Fire damage if the building has been unoccupied more than 60 days is incorrect. The correct answer is: Smoke from industrial operations.

EXPLANATION:
Smoke, vapor, or gas from industrial operations is excluded on the special causes of loss form. Personal property is a subject of the building and personal property coverage form. Fire damage is fully covered when a building is unoccupied. When a building is vacant 60 or more days, fire damage is covered, but settlement will be reduced by 15%.

Question 2 of 100

Question 3

You and your son, who lives with you, are crossing the street when both of you are struck by a drunk driver. The medical payments coverage under your auto policy will:

Answer Choices: Select the Correct Answer
Provide coverage for you, but not your son.
Provide coverage for both you and your son.
Will not apply as you were pedestrians when struck.
Will be deferred to the driver of the vehicle that struck you.

Question 3 of 100

Answer 3

Your answer: Will not apply as you were pedestrians when struck. is incorrect. The correct answer is: Provide coverage for both you and your son..

EXPLANATION:
Auto medical payments cover the insured and members of the household who are relatives.

Question 3 of 100

Question 4

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 4 of 100

Answer 4

Your answer: None of the responses listed are correct. is incorrect. The correct answer is: Coverage Part. .

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.

Question 4 of 100

Question 5

What is the purpose of the Nationwide Definition for inland marine exposures outlined in specific detail:

Answer Choices: Select the Correct Answer
The coverage that marine insurers could write.
The classes of property not eligible for inland marine coverage.
What types of insurance companies could issue inland marine policies.
The role of the National Association of Insurance Commissioners.

Question 5 of 100

Answer 5

Your answer: The classes of property not eligible for inland marine coverage. is incorrect. The correct answer is: The coverage that marine insurers could write..

EXPLANATION:
This defines the types of coverage that inland marine insurers could provide.

Question 5 of 100

Question 6

The insured has a communication failure at his premises due to a lightning strike at the phone company. The insured’s phone system is damaged and he is out of business for four days. Which endorsement is necessary to provide coverage for the loss of business income?

Answer Choices:	Select the Correct Answer
Non owned and Hired Auto	
Earthquake	
Utility Services - Time Element	
Utility Services - Direct Damage	

Question 6 of 100

Answer 6

Your answer: Utility Services - Time Element is correct.

EXPLANATION:
The Utility Services - Time Element endorsement would cover the loss of business income in this example if the phone system was listed on the endorsement and the cause of the loss was covered by the policy.

Question 6 of 100

Question 7

Which endorsement must be attached to a BOP policy for coverage to apply to a freezer that was damaged by the interruption of a power source?

Answer Choices: Select the Correct Answer
Flood insurance endorsement
Earthquake endorsement
Utility Services - Time Element endorsement
Utility Services - Direct Damage endorsement

Question 7 of 100

Answer 7

Your answer: Utility Services - Direct Damage endorsement is correct.

EXPLANATION:
The Utility Services - Direct Damage endorsement would cover the direct damage to the freezer caused by the power interruption, as long as the freezer was specifically listed on the endorsement.

Question 7 of 100

Question 8

All of the following are reasons the federal government encouraged private insurance carriers to participate in the WYO program, EXCEPT:

Answer Choices: Select the Correct Answer
To use the private carriers marketing and customer databases to sell more policies.
To increase the number of flood policies sold over a larger geographic area.
To outsource the servicing of policies to the private insurance carrier.
To provide federal government jobs to insurance agents who would be in charge of selling the WYO policies.

Question 8 of 100

Answer 8

Your answer: To provide federal government jobs to insurance agents who would be in charge of selling the WYO policies. is correct.

EXPLANATION:
The federal government does not hire agents to sell their flood insurance policies.

Question 8 of 100

Question 9

The fee for a duplicate copy of an insurance adjuster’s license in California is:

Answer Choices:	Select the Correct Answer
$7	
$12	
$5	
$10	

Question 9 of 100

Answer 9

Your answer: $10 is correct.

EXPLANATION:
The fee for a duplicate copy of an insurance adjuster’s license is $10 (CCR 2691.23)

Question 9 of 100

Question 10

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 10 of 100

Answer 10

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 10 of 100

Question 11

All of the following are reasons an independent adjuster may be hired, EXCEPT:

Answer Choices: Select the Correct Answer
The insured may retain an independent adjuster if negotiations with their insurer are not progressing forward.
An insurer may contract with an independent adjuster in a location where the insurer does not have claims offices set up.
Due to a catastrophe, an insurer may not have enough adjusters on staff to process all of the claims, and would contract with additional independent adjusters temporarily.
An insurer may contract with an independent adjuster who has special knowledge or expertise to adjust specialized claims.

Question 11 of 100

Answer 11

Your answer: The insured may retain an independent adjuster if negotiations with their insurer are not progressing forward. is correct.

EXPLANATION:
Retaining an adjuster to assist in negotiating a claim with the insurer would be a reason to hire a PUBLIC adjuster, not an INDEPENDENT adjuster.

Question 11 of 100

Question 12

Under a commercial inland marine form, which of the following is true regarding the appraisal clause?

Answer Choices: Select the Correct Answer
The insurer is bound by the decision of the appraisers or umpire
It is not binding to all parties
The insurer is not bound by the appraisal clause
The insurer must seek legal action under the appraisal clause to enforce the terms and conditions

Question 12 of 100

Answer 12

Your answer: The insurer is bound by the decision of the appraisers or umpire is correct.

EXPLANATION:
The insurer is bound by the outcome of a an appraisal on the damaged property as to it’s value. They still reserve the right to deny the claim if there is a coverage, rather than a valuation question.

Question 12 of 100

Question 13

According to the Definitions section of a homeowner policy, the term best described by the phrase an “unforeseen and unintended” event is a/an:

Answer Choices:	Select the Correct Answer
Accident	
Peril	
Hazard	
Risk	

Question 13 of 100

Answer 13

Your answer: Accident is correct.

EXPLANATION:
This is the definition of an accident.

Question 13 of 100

Submit

Question 14

Which statement is true concerning auto Physical Damage coverage in a Personal Auto Policy?

Answer Choices: Select the Correct Answer
Can be endorsed to pay on a replacement cost basis.
It can cover owned and nonowned automobiles.
Applies only when the insured is at fault in an accident.
Excludes physical damage to cars over 10 years old.

Question 14 of 100

Answer 14

Which statement is true concerning auto Physical Damage coverage in a Personal Auto Policy?

Answer Choices: Select the Correct Answer
Can be endorsed to pay on a replacement cost basis.
It can cover owned and nonowned automobiles.
Applies only when the insured is at fault in an accident.
Excludes physical damage to cars over 10 years old.

Question 14 of 100

Question 15

Mark is injured at work in a state that provides a TTD benefit at 66 2/3%, the state minimum is $40 and the state maximum is $540. The waiting period is 3 days and the retroactive period is 15 day. Mark earns $15 per hour and usually works 20 hours per week. He was injured on December 4th and returned to work on December 12th. Which of the following is the amount of TTD benefit he would have received?

Answer Choices:	Select the Correct Answer
$172.00	
$200.00	
$114.29	
$166.29	

Question 15 of 100

Answer 15

Your answer: $172.00 is incorrect. The correct answer is: $114.29.

EXPLANATION:
$15 X 20 = $300 (average weekly wage). 66 2/3% X $300 = $200 (lower than the maximum). December 5th to December 11th = 7 days = 1 week. The 3-day waiting period applies, and only 4 days (4/7th of a week) is compensable. 4/7 X $200 = $114.29.

Question 15 of 100

Question 16

How much additional coverage under a Commercial Property Policy is provided for debris removal?

Answer Choices: Select the Correct Answer
The policy will pay an additional limit of $25,000
The insured can only rely on the total limit of the property covered
The insured can only rely on 25% of the covered property for debris removal expense
The policy will pay an additional limit of $15,000

Question 16 of 100

Answer 16

Your answer: The policy will pay an additional limit of $15,000 is incorrect. The correct answer is: The policy will pay an additional limit of $25,000.

EXPLANATION:
The policy provides for up to 25% of the limit of the property for debris removal. If this limit is not sufficient, the policy will pay an additional $25,000. (this was increased from $10,000)

Question 16 of 100

Question 17

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 17 of 100

Answer 17

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 17 of 100

Question 18

The FAIR Plan is designed to serve hazardous and inner city areas and property being insured must be in a designated plan area (brush area). Both commercial and personal risks may be placed through the plan but farm risks and automobiles are not eligible. All of the perils can be purchased, EXCEPT:

Answer Choices:	Select the Correct Answer
Theft.	
Fire and lightning.	
Riot and civil commotion.	
Windstorm.	

Question 18 of 100

Answer 18

Your answer: Theft. is correct.

EXPLANATION:
The coverage is for very basic perils similar to the DP-1 perils. Theft is not covered.

Question 18 of 100

Question 19

Robert is retired and lives in an older home in Maine. He has an old floor furnace to heat his home that is in need of repair and he forgets to have it checked. In the winter he stays in Florida for a month with his daughter. While Robert is away, the furnace malfunctions and all his water pipes freeze and burst causing massive water damage. The furnace is also destroyed. His house is covered under a Homeowners broad cause of loss form, that includes water damage from a heating or plumbing system. How will the adjuster handle this claim?

Answer Choices: Select the Correct Answer
Pay for all damage except the furnace.
Deny the entire claim because of neglect of the insured.
Pay for the furnace and the resulting water damage only.
Pay for the water damage and depreciate the payment for the replacement of the furnace.

Question 19 of 100

Answer 19

Your answer: Pay for all damage except the furnace. is correct.

EXPLANATION:
In this case, most insurers would pay for all damage except the destroyed furnace. The policy does not pay for the wear and tear of a heating or air conditioning system. Even though the insured was neglectful, the ensuing damage resulting from the frozen pipes would be covered. If the insured had been advised by a contractor that the furnace needed immediate repairs and the insured failed to make them, most adjusters would deny the entire claim. This would then be considered an increased hazard not known to the insurer and intentional neglect on the part of the insured.

Question 19 of 100

Question 20

What is the limit that is paid for water damage under an Equipment Breakdown policy?

Answer Choices:	Select the Correct Answer
$10,000	
$15,000	
$25,000	
Nothing	

Question 20 of 100

Answer 20

Your answer: Nothing is incorrect. The correct answer is: $25,000.

EXPLANATION:
The limit is $25,000.

Question 20 of 100

Question 21

Nixon Construction Company carries a CGL policy that has a $500,000 per occurrence limit, $1,000,000 general aggregate limit and a per person medical payments limit of $25,000. Employees cause $200,000 property damage and $400,000 bodily injury when persons are injured and property is damaged in connection with a construction project. Two of the employees suffer medical expenses of $15,000 each. How much will the insurer pay on behalf of Nixon Construction?

Answer Choices:	Select the Correct Answer
$500,000	
$630,000	
$610,000	
$600,000	

Question 21 of 100

Answer 21

Your answer: $500,000 is correct.

EXPLANATION:
The most the policy can pay is the occurrence limit of $500,000. The employees are not covered under medical payments. They would collect under workers compensation coverage. Remember that the policy cannot pay more than the per occurrence on any one claim. Therefore, in this question the insured would have to pay the remaining $100,000 of this claim because the insurer will only pay $500,000 of this $600,000 claim.

Question 21 of 100

Question 22

Which of the following would not be covered by a Garage Liability policy?

Answer Choices: Select the Correct Answer
The costs incurred by the insured to recall defective products.
A customer falls down and breaks an arm while visiting the dealership building.
Poor workmanship when installing new brakes to a customer’s vehicle causes that customer to be involved in an auto accident.
While driving a dealership-owned pickup, an employee has an accident, injuring another person.

Question 22 of 100

Answer 22

Your answer: The costs incurred by the insured to recall defective products. is correct.

EXPLANATION:
Garage Liability insurance includes automobile liability and general liability as well, but products being recalled are excluded from the ISO Garage Liability form. This is because liability insurance is used to cover occurrences and products are recalled to prevent an occurrence.

Question 22 of 100

Question 23

The amount it would cost to repair or replace property minus depreciation is the definition of:

Answer Choices:	Select the Correct Answer
Actual cash value.	
Replacement cost.	
Market value.	
Functional replacement cost.	

Question 23 of 100

Answer 23

our answer: Actual cash value. is correct.

EXPLANATION:
This is the definition of actual cash value (ACV) - the cost new at the time of the loss, less depreciation equals actual cash value.

Question 23 of 100

Question 24

A person takes bank deposits to the bank every day. In crime insurance terminology, this person is known as a:

Answer Choices:	Select the Correct Answer
Messenger.	
Custodian.	
Cashier.	
Manager.	

Question 24 of 100

Submit

Answer 24

Your answer: Custodian. is incorrect. The correct answer is: Messenger. .

EXPLANATION:
This person is called a messenger. A messenger has custody of the insured’s property outside the insured’s premises.

Question 24 of 100

Question 25

Which of the following is not a purpose of interviewing witnesses in adjusting losses? Answer Choices: Select the Correct Answer To assess how the witness will hold up if a formal trial is needed To determine coverage issues To determine the relationship between the witness and the insured To delay payment of a claim Question 25 of 100

Answer 25

Your answer: To delay payment of a claim is correct. EXPLANATION: Witness interviews are not to be used to delay payment of a claim in any circumstance. Question 25 of 100

Question 26

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 26 of 100

Answer 26

Your answer: Pay the premium for the insured. is correct. EXPLANATION: The mortgagee has the right to pay the premium if the insured fails to do so. Question 26 of 100

Question 27

An independent adjuster acts on behalf of his or her principal. Which of the following is the principal for an independent adjuster? ``` Answer Choices: Select the Correct Answer The court. The lawyer. The insurer. The insured. ``` Question 27 of 100

Answer 27

Your answer: The insurer. is correct. EXPLANATION: The "principal" for an independent adjuster is the insurer. Independent adjusters work on behalf of the insurance company against which, the claim is being made. Question 27 of 100

Question 28

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 28 of 100

Answer 28

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 28 of 100

Question 29

What insurers must participate in accepting business under the California FAIR Plan? Answer Choices: Select the Correct Answer All insurers licensed to write basic property insurance or any component of property insurance in multi-peril policies. Companies who specialize in difficult or hard to place property insurance. Only those property insurers holding a certificate of authority for 5 years or less in California. Only those insurers wanting to enter California and have received approval from their board of directors. Question 29 of 100

Answer 29

Your answer: All insurers licensed to write basic property insurance or any component of property insurance in multi-peril policies. is correct. EXPLANATION: The purpose of the FAIR Plan is designed to provide a market for those property owners who are unable to obtain insurance through the normal market. Therefore, the California legislature enacted legislation requiring the participation of admitted insurers licensed to write property insurance to participate. Question 29 of 100

Question 30

Under a business auto policy, which of the following types of physical damage loss is not covered? Answer Choices: Select the Correct Answer Collision with an animal Loss to radar detection equipment Transportation expenses following theft of an entire private passenger auto Glass breakage caused by vandals Question 30 of 100

Answer 30

Your answer: Loss to radar detection equipment is correct. EXPLANATION: This type of equipment is usually excluded for physical damage coverage because it is normally not legal in most states to use them. Question 30 of 100

Question 31

The Commercial Building and Personal Property coverage form provides five extensions of coverage, but only if: Answer Choices: Select the Correct Answer An 80% or higher coinsurance percentage is shown on the Declarations page, and the property amount of coverage, based on that percentage, is purchased. The extensions are listed on the Declarations page of the policy, and an additional premium is paid. The coverage for buildings is written on a replacement cost basis. All coverages under the policy are written on a blanket basis. Question 31 of 100

Answer 31

Your answer: An 80% or higher coinsurance percentage is shown on the Declarations page, and the property amount of coverage, based on that percentage, is purchased. is correct. EXPLANATION: The property must be insured for 80% of its value. The 5 extensions are: newly acquired or constructed property, personal effects and property of others, valuable papers and records, property off premises, and outdoor property. Question 31 of 100

Question 32

A power surge sparks a small electrical fire in an office building. The electrical fire triggers the automatic sprinkler system and the water from the sprinklers, soaks the carpet and shorts-out all the computers, causing thousands of dollars in damage. The office must close for two months during repairs. The cost of renting a temporary office space while the physical damage to the office building is repaired is considered: ``` Answer Choices: Select the Correct Answer An indirect loss. A physical loss. A direct loss. An occurrence. ``` Question 32 of 100

Answer 32

Your answer: An indirect loss. is correct. EXPLANATION: An indirect loss is created when a direct loss has created a situation when damaged property cannot be used. The cost of renting temporary office space because the damaged space is unusable, is an indirect loss, sometimes known as a consequential loss. Question 32 of 100

Question 33

The Equipment Breakdown policy (formerly called Boiler & Machinery) provides for replacement cost coverage in case of a covered claim. Under what conditions would the insurer only pay actual cash value in case of a loss? Answer Choices: Select the Correct Answer Only if the policy is endorsed to provide ACV coverage The policy pays replacement only if the repairs are made within twenty four months of the accident. The policy will pay replacement cost as long as the repairs are expedited regardless of a time limit. The policy always provides replacement cost coverage in case of a covered claim. Question 33 of 100

Answer 33

Your answer: The policy will pay replacement cost as long as the repairs are expedited regardless of a time limit. is incorrect. The correct answer is: The policy pays replacement only if the repairs are made within twenty four months of the accident. . EXPLANATION: The valuation clause provides for replacement cost coverage on all property, except if repair or replacement is not made within 24 months of the date of the accident, actual cash value will be paid. (The 2013 Equipment Breakdown forms increased this time limit from 18 months to 24 months.) Question 33 of 100

Question 34

Under the workers compensation guidelines, permanent total disability is rated at what percent? ``` Answer Choices: Select the Correct Answer 50% 60% 90% 100% ``` Question 34 of 100

Answer 34

Your answer: 100% is correct. EXPLANATION: Permanent total disability is rated at 100%. Question 34 of 100

Question 35

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 35 of 100

Answer 35

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 35 of 100

Question 36

Which of the following is NOT covered by the extra expense coverage of the standardized Commercial Property insurance policy? ``` Answer Choices: Select the Correct Answer Rent payments at a temporary location. Moving expenses. Overtime pay required to make repairs. Loss of income. ``` Question 36 of 100

Answer 36

Your answer: Overtime pay required to make repairs. is incorrect. The correct answer is: Loss of income.. EXPLANATION: Extra Expense Coverage is a form of Business Interruption Coverage. It covers all reasonable extra expenses incurred by the insured in order to continue as nearly as practical the normal operation of a business that has been damaged by an insured peril. It does not cover the loss of income a business may suffer. Other forms like the “loss of income” forms would cover the loss of income. Question 36 of 100

Question 37

Which of the following is the definition of "person" according to the California Adjuster Act? Answer Choices: Select the Correct Answer Any individual, firm, company, association, organization, partnership, limited liability company, and corporation. The individual under whose direction, control, charge, or management of the business of a licensee is operated. A person licensed under the insurance laws of the state of California. An attorney who is an active member of the State Bar of California. Question 37 of 100

Answer 37

Your answer: Any individual, firm, company, association, organization, partnership, limited liability company, and corporation. is correct. EXPLANATION: According to the California Insurance Code, a "person" is defined as: "Any individual, firm, company, association, organization, partnership, limited liability company, and corporation." Question 37 of 100

Question 38

Coverage D - Loss of Use on a farm policy will include coverage for: I. Additional living expenses incurred by the resident family. II. Loss of rental income of the owner for tenants who cannot live there due to a covered loss. ``` Answer Choices: Select the Correct Answer I only II only Both I and II Neither I nor II ``` Question 38 of 100

Answer 38

Your answer: I only is incorrect. The correct answer is: Both I and II. EXPLANATION: Similar to the loss of use coverage on the homeowner policy, Coverage D on the farm policy will pay both the additional living expenses of the owner occupant and any loss of rental income if a tenant is also unable to live there after a covered loss. Question 38 of 100

Question 39

The HO-3 form insures for direct physical loss to covered property involving collapse of a building caused by all of the following, EXCEPT: ``` Answer Choices: Select the Correct Answer Hidden decay Settling Weight of contents Use of defective materials ``` Question 39 of 100

Answer 39

Your answer: Settling is correct. EXPLANATION: Settling or earth movement is excluded under the policy. Question 39 of 100

Question 40

Isaac owns a home with an older furnace in need of repair. He leaves his home for a month to avoid the cold weather. He returns to find that the furnace had stopped working. Water pipes have frozen and burst and his property has been damaged. Since the water ran for almost a month, his water bill is extremely high. What will the adjuster pay? Answer Choices: Select the Correct Answer The water damage. The increased cost of the water bill. The cost to replace the particular part in the plumbing system that busted and caused the damage. The furnace repairs and/or replacement. Question 40 of 100

Answer 40

Your answer: The water damage. is correct. EXPLANATION: One could argue that this was caused by neglect, but the damage cannot be tied to the neglect exclusion. This exclusion applies post-loss and not before a loss has occurred. The company would have to prove intent on the part of the insured to damage his own property. Even if the furnace caused a fire, the company would have to prove an intentional act such as arson. Water is not considered covered property so the value of its loss (the water bill) is not covered. Question 40 of 100

Question 41

A Commercial Package Policy (CPP) always includes: I. A single Declarations page common to all coverages. II. A single Conditions section common to all coverages. III. A single Exclusions section common to all coverages. ``` Answer Choices: Select the Correct Answer I only I, II and III I and II only II and III only ``` Question 41 of 100

Answer 41

Your answer: I, II and III is incorrect. The correct answer is: I and II only. EXPLANATION: A Commercial Package Policy (CPP) always includes a common Declarations page and Conditions section. It does not include a common Exclusions section, as the items excluded would be specific to the coverage part. Question 41 of 100

Question 42

Which of the following would be covered by the "advertising injury" coverage of the Farm insurance forms? Answer Choices: Select the Correct Answer An insured farmer who unknowingly disparaged the crops grown by another farm. Advertising the wrong price of the goods. Advertising the wrong description of the goods. Intentionally making disparaging remarks about another’s farm products. Question 42 of 100

Answer 42

Your answer: An insured farmer who unknowingly disparaged the crops grown by another farm. is correct. EXPLANATION: "Advertising injury" would cover a farmer who unknowingly disparages the crops grown by another farmer when advertising his own crops. Intentional acts, advertising incorrect prices or descriptions are not covered. Question 42 of 100

Question 43

A Homeowners Form has a $50,000 personal property limit. Disregarding any deductibles, what is the most the insured can collect if a boat valued at $1,500 is stolen from the premises? ``` Answer Choices: Select the Correct Answer $1,000 $1,500 $1,400 $2,000 ``` Question 43 of 100

Answer 43

Your answer: $1,500 is correct. EXPLANATION: The insured can collect up to $1,500 because of the "special limits" that apply to watercraft. An insured could collect this full amount even when the deductible is factored in. For example, if a policyholder had a deductible of $500 and a covered loss to watercraft valued at more than $2000, they could collect a maximum of $1500. Theft of watercraft off the insured's premises is covered only under the HO-5 form. Question 43 of 100

Question 44

Bill may be negligent if he or she: Answer Choices: Select the Correct Answer Fails to do what a reasonably prudent person would do in the same circumstance. Injures another person even though he acted prudently. Commits a deliberate act with the intent to injure another person. Hires a nefarious person to deliberately damage the property of another person. Question 44 of 100

Answer 44

Your answer: Fails to do what a reasonably prudent person would do in the same circumstance. is correct. EXPLANATION: This is the most widely accepted definition of negligence. Often times, it is a jury that determines if the acts committed by the defendant were negligent. Question 44 of 100

Question 45

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 45 of 100

Answer 45

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 45 of 100

Question 46

All of the following are considered to be family members on the PAP, EXCEPT: Answer Choices: Select the Correct Answer Insured’s son who lives in the household. Insured’s foster child who lives in the household. Insured’s mother who doesn’t live in the household. Insured’s step-son residing in the home. Question 46 of 100

Answer 46

Your answer: Insured’s mother who doesn’t live in the household. is correct. EXPLANATION: The insured’s mother although a relative by blood is not living in the household so therefore is not considered to be a family member. A family member is related to the insured by blood, marriage or adoption and resides in the household. Question 46 of 100

Question 47

The most common method of settling liability insurance claims is through: ``` Answer Choices: Select the Correct Answer ADRs. Arbitration. Mediation. Negotiated settlement. ``` Question 47 of 100

Answer 47

Your answer: Arbitration. is incorrect. The correct answer is: Negotiated settlement.. EXPLANATION: The most common method of settling liability insurance claims is through negotiated settlement. Question 47 of 100

Question 48

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 48 of 100

Answer 48

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 48 of 100

Question 49

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 49 of 100

Answer 49

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 49 of 100

Question 50

Because the insurance company drafts the insurance contract and it is not negotiable, if the language in the contract is found to be ambiguous, the courts will interpret the contract against the party that prepared it. This is an example of: Answer Choices: Select the Correct Answer The doctrine of reasonable expectations. The doctrine of utmost good faith. A contract of adhesion. A conditional contract. Question 50 of 100

Answer 50

Your answer: The doctrine of reasonable expectations. is incorrect. The correct answer is: A contract of adhesion.. EXPLANATION: There is unequal bargaining power between parties in this situation. Therefore any ambiguous language will bring a court decision in favor of the insured. Question 50 of 100

Question 51

Workers compensation benefits will provide payments for all of the following, EXCEPT: ``` Answer Choices: Select the Correct Answer Pain and suffering. Loss of income. Death benefits. Rehabilitation benefits. ```

Answer 51

Your answer: Pain and suffering. is correct. EXPLANATION: Workers compensation laws provide for the payment of tangible expenses such as medical benefits, income benefits, death benefits and rehabilitation benefits. There are no benefits for intangibles such as pain and suffering. Question 51 of 100

Question 52

An adjuster, acting as a fiduciary agent, should: I. Not represent interests that are ADVERSE to those of the principal. II. Not seek to profit from an outside source as a consequence of actions for, and on behalf of, the principal. III. Act with a high degree of fidelity and loyalty to the interests of the principal. ``` Answer Choices: Select the Correct Answer I only I, II, and III I and II only II only ``` Question 52 of 100

Answer 52

Your answer: I, II, and III is correct. EXPLANATION: A fiduciary agent represents a principal, and therefore must place the principal's financial interests above any other and act with the utmost degree of care to protect the principal's financial interests. Question 52 of 100

Question 53

Which of the following would be considered vacant on an unendorsed Commercial Property policy? Answer Choices: Select the Correct Answer A building which is 25% vacant A leased building in which less than 31% of the building is occupied A retail store located in a shopping mall which closed and has been completely vacant for 42 days A building whose utilities were turned off 31 days ago Question 53 of 100

Answer 53

Your answer: A building whose utilities were turned off 31 days ago is incorrect. The correct answer is: A leased building in which less than 31% of the building is occupied. EXPLANATION: In the Building and Personal Property Coverage form, under Loss Conditions, the Vacancy Clause states that when the policy is issued to the owner or general lessee of a building, such building is vacant unless at least 31% of its total square footage is either (a) rented to and in use by a lessee or sub-lessee, or (b) used by the owner to conduct normal operations. Question 53 of 100

Question 54

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 54 of 100

Answer 54

Your answer: Tornado is correct. EXPLANATION: The proximate cause of loss would be the tornado (wind). Question 54 of 100 Submit

Question 55

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 55 of 100

Answer 55

Your answer: Low cost automobile is now available in all the counties of California as the need is determined by the Commissioner. is incorrect. The correct answer is: All of the Statements Listed are True. EXPLANATION: All of the statements are true regarding eligibility for low cost automobile insurance in California. Question 55 of 100

Question 56

The conditions section of an insurance contract specifies which of the following? I. The property location. II. The insurance company's responsibilities. III. The insured's responsibilities. IV. The policy duration. ``` Answer Choices: Select the Correct Answer II and III only I and II only I and IV only I, II, III and IV ``` Question 56 of 100

Answer 56

Your answer: II and III only is correct. EXPLANATION: The location of the property and policy duration is shown on the declarations page of the policy. The responsibilities of both parties are contained in the conditions section of the contract. Question 56 of 100

Question 57

What is the grace period in which an expired California independent adjuster license may be renewed? ``` Answer Choices: Select the Correct Answer Five years Four years Three years One year ``` Question 57 of 100

Answer 57

Your answer: One year is correct. EXPLANATION: An expired license or branch office certificate may be renewed at any time within one year after its expiration on the filing of an application for renewal. The licensee, as a condition precedent to renewal, must also pay any required delinquency fee. Question 57 of 100

Question 58

“Policy territory” in the CGL includes: Answer Choices: Select the Correct Answer The United States only The United States and Canada The United States, Canada, and Mexico The United States, Canada, Mexico, and England Question 58 of 100

Answer 58

Your answer: The United States and Canada is correct. EXPLANATION: The policy territory includes the United States, Canada, Puerto Rico and other possessions of the U.S. Question 58 of 100

Question 59

In terms of fidelity bonds, what does “position scheduled” refer to? Answer Choices: Select the Correct Answer The bond covers anyone who works in a “scheduled position.” Employees listed as working in certain positions are not covered by the bond. The bond only provides coverage during “scheduled” work hours. The bond only provides coverage at “scheduled” locations. Question 59 of 100

Answer 59

Your answer: The bond covers anyone who works in a “scheduled position.” is correct. EXPLANATION: Rather than schedule the individuals by name to be covered under the bond, their positions are scheduled. Question 59 of 100

Question 60

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 60 of 100

Answer 60

our answer: The insurer must be notified promptly. The number of days is not specified is correct. EXPLANATION: The policy language states that all claims will be promptly reported to the insurer. Question 60 of 100

Question 61

Which of the following is TRUE regarding those who qualify for coverage under the California Fair Access to Insurance Requirements (FAIR) Plan?

Answer 61

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 61 of 100

Question 62

What feature is common to most property insured under a commercial inland marine policy? ``` Answer Choices: Select the Correct Answer Usually in transit Rarity Changing values Named peril coverage ``` Question 62 of 100

Answer 62

Your answer: Usually in transit is correct. EXPLANATION: Historically speaking, inland marine policies involved movement of goods over land. While some inland marine policies cover property at a fixed location (like fine art or maps and drawings), the common thread to most IM policies is transit risk, or property being off of an insured’s main premises – like cargo on trucks or contractor’s equipment. Question 62 of 100

Question 63

The full replacement cost of an insured building does not include the value of any: ``` Answer Choices: Select the Correct Answer Attached garage Underground pipes Room addition Basement ``` Question 63 of 100

Answer 63

Your answer: Basement is incorrect. The correct answer is: Underground pipes. EXPLANATION: Underground pipes, flues, wiring and drains are not included in the calculations for replacement cost coverage. Question 63 of 100

Question 64

How may days notice are required in the case of cancellation of an auto policy in California which has been in effect for more than 60 days? Answer Choices: Select the Correct Answer 20 days, except for 10 days in the case of nonpayment of premium. 30 days, except for 10 days in the case of nonpayment of premium. 45 days, except for 10 days in the case of nonpayment of premium. 10 days in any case. Question 64 of 100

Answer 64

Your answer: 45 days, except for 10 days in the case of nonpayment of premium. is incorrect. The correct answer is: 20 days, except for 10 days in the case of nonpayment of premium. . EXPLANATION: There are only a few legal reasons an insurer may cancel an auto policy that has been in force for 60 days or longer, but when allowed, 20 days notice is required before the cancellation date, unless for nonpayment of premium, in which case 10 days notice is sufficient. Question 64 of 100

Question 65

Which of the following would be covered under the personal property (contents) coverage of an NFIP policy? Answer Choices: Select the Correct Answer The foundation of the insured building. Permanently installed carpeting. The insured's riding lawn mower kept inside an attached garage. Window blinds. Question 65 of 100

Answer 65

Your answer: Permanently installed carpeting. is incorrect. The correct answer is: The insured's riding lawn mower kept inside an attached garage.. EXPLANATION: The insured's riding lawn mower that is kept inside an attached garage is the only item listed that is covered under the personal property (contents). All of the other items listed are covered under the building coverage. Question 65 of 100

Question 66

Under an HO-4 policy, which of the following would be covered by Section I? Answer Choices: Select the Correct Answer The policyholder's house. The insured's dog. Personal property used by the insured in Switzerland. A detached garage that the insured rents from others. Question 66 of 100

Answer 66

Your answer: The policyholder's house. is incorrect. The correct answer is: Personal property used by the insured in Switzerland.. EXPLANATION: The HO-4 is designed for tenants. Section I of an HO-4 covers direct damage to personal property owned or used by an insured while it is anywhere in the world. It does not include dwellings or other structures. Some types of property are specifically excluded, such as animals. Question 66 of 100

Question 67

An insurance company can audit the named insured's books and records: Answer Choices: Select the Correct Answer Only during the policy period. Up to one year after the termination of the policy. Up to three years after the termination of the policy. Up to five years after the termination of the policy. Question 67 of 100

Answer 67

Your answer: Up to three years after the termination of the policy. is correct. EXPLANATION: Normally an audit is performed at the end of each policy year. However, the policy provides that the insurer can perform an audit anytime during the policy period, and up to three years after the policy's termination date. Question 67 of 100

Question 68

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 68 of 100

Answer 68

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 68 of 100

Question 69

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 69 of 100

Answer 69

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 69 of 100

Question 70

An insured has purchased "replacement cost coverage" endorsement for her personal property under an HO-3 homeowner policy. After the purchase of this endorsement, which of the following types of property would now be covered on a replacement cost basis that were previously covered only on an actual cash value basis? ``` Answer Choices: Select the Correct Answer Household appliances Carpeting Outdoor antennas All of the responses are correct ``` Question 70 of 100

Answer 70

Your answer: All of the responses are correct is correct. EXPLANATION: This endorsement adds replacement cost coverage to all of these items whereas without this endorsement the property would be covered on an actual cash value basis. This endorsement eliminates the deduction for depreciation for these types of property. Question 70 of 100

Question 71

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 71 of 100

Answer 71

Your answer: 1 year. is correct. 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 71 of 100

Question 72

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 72 of 100

Answer 72

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 73

QUESTION: Which of the following would qualify for a homeowner policy? Answer Choices: Select the Correct Answer A seasonal dwelling (not the prime residence premises) A rental dwelling The insured’s primary dwelling All are eligible properties Question 73 of 100

Answer 73

Your answer: All are eligible properties is incorrect. The correct answer is: The insured’s primary dwelling. EXPLANATION: The homeowner policy is designed for owner occupied property and also the primary residence. Once coverage is in place on the residence premises, many companies will cover a seasonal dwelling if it meets their underwriting standards. A dwelling under construction by the insured can be covered but not for someone else to occupy. A rental dwelling would be covered under a dwelling policy and not a homeowner policy. Question 73 of 100

Question 74

When an insured is liable for causing intentional "bodily injury", under what circumstances, if any, will an umbrella liability policy cover such a loss? Answer Choices: Select the Correct Answer Only when the injury is "bodily injury", and the insured inflicted this injury on another person while exercising reasonable force to protect persons or property When the injury is personal injury, bodily injury or property damage, and the insured used reasonable force to protect persons or property Always, as long as the policy terms are met Never, because the injury was intentional Question 74 of 100

Answer 74

Your answer: Only when the injury is "bodily injury", and the insured inflicted this injury on another person while exercising reasonable force to protect persons or property is correct. EXPLANATION: The intentional act by the insured, who inflicted bodily injury on another person, must have been committed in an attempt to save persons or property for coverage to apply. Imagine that someone intrudes into your home and you strike them with a baseball bat in an attempt to save your family and property. Later, the injured intruder sues you for the injuries they sustained. The umbrella policy excludes coverage for bodily injury that is intentionally inflicted by the insured, BUT there is an exception to this exclusion that states coverage WOULD apply if the insured intentionally inflicted bodily injury in an attempt to save persons or property. Question 74 of 100

Question 75

All of the following are "evidence of financial responsibility" as outlined in the California Insurance Code, EXCEPT: Answer Choices: Select the Correct Answer A certificate of self-insurance or the assignment of deposit letter issued by the Insurance Department. An insurance form or certificate from an insurance company or charitable risk pool. The title to the automobile issued by a financial institution. An insurance "covering letter" or "binder" that complies with the California Insurance Code. Question 75 of 100

Answer 75

Your answer: The title to the automobile issued by a financial institution. is correct. EXPLANATION: The title to the automobile issued by a financial institution would only provide evidence that the driver is the owner of the vehicle. It would not provide evidence that the proper amount of insurance is carried to cover the vehicle. Question 75 of 100

Question 76

What is the difference between a Businessowners policy and a Commercial Property policy? I. The Businessowners policy automatically provides earthquake coverage whereas a Commercial Property policy does not. II. The Businessowners policy includes liability coverage, while a Commercial Property policy would not. ``` Answer Choices: Select the Correct Answer I only II only Both I and II Neither I nor II ``` Question 76 of 100

Answer 76

Your answer: II only is correct. EXPLANATION: The Businessowners coverage form automatically provides property and liability coverage, but a Commercial Property policy does not offer liability coverage. Neither a Businessowners nor a Commercial Property policy would automatically provide earthquake coverage, although endorsements are available to add it. Question 76 of 100

Question 77

Which of the following conditions is not found in the commercial inland marine conditions form? ``` Answer Choices: Select the Correct Answer Appraisal Pair, Set or Parts No Benefit to Bailee Maintenance of Security Systems ``` Question 77 of 100

Answer 77

Your answer: Pair, Set or Parts is incorrect. The correct answer is: Maintenance of Security Systems. EXPLANATION: Maintenance of security systems is not part of the conditions in the commercial inland marine conditions form. Question 77 of 100

Question 78

Which of the following amounts would be paid on a covered auto suffering a total loss? The retail value is $1,250 and the average trade in value is $1,000. ``` Answer Choices: Select the Correct Answer $1,000 plus applicable taxes $1,500 plus applicable taxes $1,250 plus applicable taxes $2,995 plus applicable taxes ``` Question 78 of 100

Answer 78

Your answer: $1,250 plus applicable taxes is correct. EXPLANATION: In case of a total loss to a covered vehicle the insurer is required to pay the retail value of the vehicle plus any applicable sales taxes. Question 78 of 100

Question 79

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 79 of 100

Answer 79

Your answer: The premium being charged. is incorrect. The correct answer is: The address of the insured.. EXPLANATION: According to the California Insurance Code (CIC 2070-2084), the California Standard Fire policy does not include the address of the insured. Question 79 of 100

Question 80

Marcus has two Commercial Property policies covering his warehouse. Policy A is the primary policy and has a $200,000 limit, and Policy B is an excess policy with a $100,000 limit. After a fire causes $140,000 damage to his warehouse, how will each of Marcus' policies respond (disregarding any deductible)? Answer Choices: Select the Correct Answer Policy A will pay $70,000 and Policy B will pay $70,000. Policy A will pay $40,000 and Policy B will pay $100,000. Policy A will pay $93,333 and Policy B will pay $46,667. Policy A will pay $140,000 and Policy B will pay $0. Question 80 of 100

Answer 80

Your answer: Policy A will pay $140,000 and Policy B will pay $0. is incorrect. The correct answer is: Policy A will pay $93,333 and Policy B will pay $46,667.. EXPLANATION: The question specifies that Marcus has suffered a PROPERTY loss. "Primary" and "Excess" insurance only comes into play with LIABILITY losses. With PROPERTY losses the OTHER INSURANCE clause is triggered. When there are two or more property policies covering the same risk, each policy pays its share of the loss, equal to its share of the total insurance in force. Policy A has 67% of the insurance in force ($200,000 is 67% of the total insurance in force, which is $300,000) and therefore, it will pay 67% of the $140,000 loss, which equals $93,333 and Policy B will pay the difference. Question 80 of 100

Question 81

In the event of an emergency situation, a non-licensed independent adjuster must register with the Commissioner within: ``` Answer Choices: Select the Correct Answer 48 hours. 30 days. 7 working days. 15 working days. ``` Question 81 of 100

Answer 81

Your answer: 15 working days. is correct. EXPLANATION: In the event of an emergency situation as declared by the Commissioner, claims arising out of the emergency, catastrophe, disaster, or other similar occurrence may be adjusted by a non-licensed adjuster upon registration with the Commissioner. Registration must occur within 15 working days. Question 81 of 100

Question 82

What is the purpose of the "sue and labor clause" in ocean marine insurance? Answer Choices: Select the Correct Answer Pertains to protecting the ship and other property from further damage. Affects the benefits payable to injured crew members. Provides defense costs from suits from passengers. A clause in a labor contract with the crewmembers. Question 82 of 100

Answer 82

Your answer: Pertains to protecting the ship and other property from further damage. is correct. EXPLANATION: The clause provides that in the event of a loss, the insured must immediately take all reasonable steps to minimize the loss and protect the property from further loss. Failure to do so may invalidate the coverage or reduce the amount of any claims. Question 82 of 100

Question 83

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 83 of 100

Answer 83

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 83 of 100

Question 84

Which of the following would be excluded under Personal and Advertising Injury Liability Coverage of a CGL policy? I. Breach of contract. II. Incorrect price descriptions of goods, products or services. III. Failure of goods, products or services to perform as advertised. IV. Any offense committed by an insured who is in the business of advertising or publishing. ``` Answer Choices: Select the Correct Answer I, II, III, and IV I and II only II and III only I, II, and III only ``` Question 84 of 100

Answer 84

Your answer: I, II, III, and IV is correct. EXPLANATION: CGL Coverage B-Personal and Advertising Injury Liability excludes coverage for anyone in the advertising business and excludes claims for breach of contract, incorrect prices on goods, and failure of goods to perform as advertised. Question 84 of 100

Question 85

Which of the following is the class of insurance, defined by the California Insurance Code (CIC) that includes insurance against financial loss by reason of the nonpayment of principal, interest or other sums agreed to be paid under the terms of any note or bond, or other evidence of indebtedness secured by a mortgage, deed of trust, or other instrument constituting a lien or charge on real estate? ``` Answer Choices: Select the Correct Answer Insolvency insurance. Credit insurance. Mortgage Guaranty insurance. Legal insurance. ``` Question 85 of 100

Answer 85

Your answer: Mortgage Guaranty insurance. is correct. EXPLANATION: Insurance against financial loss by reason of the nonpayment of principal, interest or other sums agreed to be paid under the terms of any note or bond, or other evidence of indebtedness secured by a mortgage, deed of trust, or other instrument constituting a lien or charge on real estate, is known as Mortgage Guaranty insurance in California. Question 85 of 100

Question 86

A claims-made form of commercial umbrella liability policy is “triggered”: Answer Choices: Select the Correct Answer By injury that occurs only before the policy period. At the time the injury or damage occurs. At the time the claim is first made against the insured during the policy period. By injury that occurs only after the policy period. Question 86 of 100

Answer 86

Your answer: By injury that occurs only before the policy period. is incorrect. The correct answer is: At the time the claim is first made against the insured during the policy period.. EXPLANATION: Coverage is “triggered” at the time the claim is first made against the insured during the policy period. Question 86 of 100

Question 87

When filing for an adjuster license in California, an independent adjuster candidate must post a bond in the amount of: ``` Answer Choices: Select the Correct Answer $20,000 $5,000 $2,000 $25,000 ``` Question 87 of 100

Answer 87

Your answer: $2,000 is correct. EXPLANATION: For independent adjuster candidates, the bond amount is $2,000. Question 87 of 100

Question 88

What costs are paid under an Umbrella policy? Answer Choices: Select the Correct Answer The policy limit and any defense costs minus any applicable retained limit (deductible). The policy limit that includes the defense costs. The policy limit minus any retained limit (deductible). Only the required underlying limits and the defense costs.

Answer 88

Your answer: The policy limit and any defense costs minus any applicable retained limit (deductible). is correct. EXPLANATION: The Umbrella policy, like most liability policies, pays up to the limit of liability for covered claims. In addition, it pays defense costs incurred by the company in the defense of the insured. When the underlying coverage does not cover a claim and the Umbrella policy DOES cover the claim there is usually a retained limit, otherwise known as a deductible, that the insured must pay. Question 88 of 100

Question 89

Under a Personal Automobile policy, "supplementary payments" refer to which of the following? Answer Choices: Select the Correct Answer Payment of defense and other expenses by the insurance company beyond the limits of liability. Payments made by the insured for damages exceeding his policy limits. Payments received by the insured directly from the person or persons who caused a loss. Payments made by the insurance company for the insured's own medical expenses, to supplement any other medical insurance. Question 89 of 100

Answer 89

Your answer: Payment of defense and other expenses by the insurance company beyond the limits of liability. is correct. EXPLANATION: Any expense the insurance company incurs in the processing of a claim is outside the limits of coverage. The insured is not penalized by a reduction in the limits of liability by these expenses incurred by the insurer. Question 89 of 100

Question 90

A home is insured under an HO-3. The home burns and all of the policyholder's jewelry is lost. The maximum the insured can collect under the HO-3 policy for the jewelry is: ``` Answer Choices: Select the Correct Answer $500 $1,000 Actual cash value of jewelry Replacement cost of jewelry ``` Question 90 of 100

Answer 90

Your answer: Actual cash value of jewelry is correct. EXPLANATION: An unendorsed HO form provides actual cash value coverage for personal property. The limit of $1,500 for jewelry, watches, furs, precious and semi-precious stones pertains only to loss by theft. In this case, the jewelry would be covered up to the policy limit for personal property. Question 90 of 100

Question 91

If an insured carries Coverage C under a Dwelling form, what is the limit for "personal property off the premises"? ``` Answer Choices: Select the Correct Answer 10% of the Coverage C limit. 20% of the Coverage C limit. 40% of the Coverage C limit. 50% of the Coverage C limit. ``` Question 91 of 100

Answer 91

Your answer: 20% of the Coverage C limit. is incorrect. The correct answer is: 10% of the Coverage C limit.. EXPLANATION: Whereas Homeowners forms provide the FULL limit of personal property coverage anywhere in the world, Dwelling forms cover only 10% of the personal property limit on a worldwide basis. The remainder of the personal property is covered only while on the designated premises. Question 91 of 100

Question 92

Under the commercial auto policy providing physical damage, which of the following offers the broadest coverage? ``` Answer Choices: Select the Correct Answer Comprehensive. Specified cause of loss. Named perils. Broad named perils. ``` Question 92 of 100

Answer 92

Your answer: Comprehensive. is correct. EXPLANATION: Comprehensive coverage would be the broadest because it covers loss that is not defined as collision. The specified cause of loss is a named peril form and thus, is more limited. Question 92 of 100

Question 93

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 93 of 100

Answer 93

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 93 of 100

Question 94

How is property covered under an unendorsed Businessowners policy form? Answer Choices: Select the Correct Answer Coverage is written on a named peril basis. Coverage is written on a broad peril form. Coverage is written on an open peril basis. Coverage is written on a basic peril basis. Question 94 of 100

Answer 94

Your answer: Coverage is written on a named peril basis. is incorrect. The correct answer is: Coverage is written on an open peril basis.. EXPLANATION: The forms provide open peril coverage on buildings and contents (personal property). Coverage can be amended to named peril coverage by endorsement. Question 94 of 100

Question 95

When an insured suffers a property loss, he or she is obligated by the terms of the policy to do all of the following, EXCEPT: Answer Choices: Select the Correct Answer Separate the damaged from the undamaged property. Mitigate the loss. Produce books and records relevant to the claim. Hire a public adjuster to represent them in the claims process. Question 95 of 100

Answer 95

Your answer: Hire a public adjuster to represent them in the claims process. is correct. EXPLANATION: The insured is not obligated to employ a 'public adjuster" to assist in the claim against the insurance company. It is an option on the part of the insured. Question 95 of 100

Question 96

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 96 of 100

Answer 96

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 96 of 100

Question 97

Which of the following coverages is NOT provided by the Business Income Coverage Form? ``` Answer Choices: Select the Correct Answer Leasehold Interest Coverage Coverage for loss of net income Coverage for continuing expenses Extra Expense Coverage ``` Question 97 of 100

Answer 97

Your answer: Coverage for loss of net income is incorrect. The correct answer is: Leasehold Interest Coverage. EXPLANATION: Leasehold interest coverage is a separate coverage to cover the value of a favorable lease when the premises have been damaged by an insured peril. Question 97 of 100

Question 98

Forcible removal of property from a messenger through the threat of violence is called: ``` Answer Choices: Select the Correct Answer Robbery. Theft. Burglary. Mysterious disappearance. ``` Question 98 of 100

Answer 98

Your answer: Robbery. is correct. EXPLANATION: Robbery must involve a threat of violence or injury. This would include a holdup with a gun or some other form of weapon or other form of violence. Question 98 of 100

Question 99

The general property flood coverage form for commercial property will settle claims on the basis of: Answer Choices: Select the Correct Answer replacement cost. replacement cost if the building is insured for at least 80% of the cost to rebuild. actual cash value. functional replacement cost. Question 99 of 100

Answer 99

Your answer: replacement cost. is incorrect. The correct answer is: actual cash value.. EXPLANATION: The general property flood form is for commercial buildings, co-ops, residential condos in the emergency program and timeshare buildings not in a condo style. But in each case, losses are settled on an actual cash value (ACV) basis only. Question 99 of 100

Question 100

When someone dies without a will, their assets will be handled by a court appointed: ``` Answer Choices: Select the Correct Answer Arbitrator. Executor. Testator. Administrator. ``` Question 100 of 100

Answer 100

Your answer: Administrator. is correct. EXPLANATION: When an individual dies intestate, he or she left no will. An intestate death requires a person be appointed by the court to administer the estate and also requires that this administrator secure an administrator’s bond. Question 100 of 100