IA Test 4

Question 1

Commercial Glass Coverage is suspended if, at the time of loss, the building has been vacant for more than:

60 consecutive days.
90 consecutive days.
30 consecutive days.
20 consecutive days.

Question 1 of 100

Answer 1

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

EXPLANATION:
60 days is somewhat the standard for vacancy in commercial insurance.

Question 1 of 100

Question 2

The verdict in a personal injury liability suit was higher than the insured’s underlying liability policy’s limit of insurance. In this situation:

The insured, the insurance company providing the insured’s underlying policy and the company providing the insured’s umbrella policy must agree on an appeal and share the expenses of that appeal.
Neither the insured’s underlying insurer nor the umbrella insurer may appeal without the insured’s agreement.
The insurance company providing the insured’s umbrella liability policy can appeal the case at its own expense even if the insured and the company providing the underlying policy do not appeal.
The case cannot be appealed by any of the parties.

Question 2 of 100

Answer 2

Your answer: The case cannot be appealed by any of the parties. is incorrect. The correct answer is: The insurance company providing the insured’s umbrella liability policy can appeal the case at its own expense even if the insured and the company providing the underlying policy do not appeal..

EXPLANATION:
The umbrella insurer has the option to appeal even though the underlying insurer and the insured chooses not to appeal.

Question 2 of 100

Question 3

Which of the following would be eligible to purchase a BOP?

Movie Theater
Automobile repair shop
A six unit apartment building
A credit union

Question 3 of 100

Answer 3

Your answer: A six unit apartment building is correct.

EXPLANATION:
Only the six-unit apartment building would be eligible for the BOP.

Question 3 of 100

Question 4

Which of the following would be considered “economic” losses?

Disfigurement
Loss of consortium
Pain and suffering
Medical expense and lost wages

Question 4 of 100

Answer 4

Your answer: Loss of consortium is incorrect. The correct answer is: Medical expense and lost wages.

EXPLANATION:
Economic losses are those that include out-of-pocket damages, such as incurred medical expenses or lost wages. It does not include disfigurement, pain and suffering or loss of consortium.

Question 4 of 100

Question 5

Each of the following people would be an insured for auto medical payments coverage under Bob Miller’s business auto policy, EXCEPT:

Bob Miller (the named insured), struck by an auto while walking across the street. The auto was not a covered auto.	
Mel Carpenter, Bob’s neighbor, occupying a covered auto.	
Frank Thomas, Bob’s 17-year-old son, occupying an auto that is not a covered auto. Frank lives with his mother, who is divorced from Bob.	
Mary Thomas, Bob’s ex-wife, occupying a covered auto.	

Question 5 of 100

Answer 5

Your answer: Bob Miller (the named insured), struck by an auto while walking across the street. The auto was not a covered auto. is incorrect. The correct answer is: Frank Thomas, Bob’s 17-year-old son, occupying an auto that is not a covered auto. Frank lives with his mother, who is divorced from Bob..

EXPLANATION:
The son is not covered. He does not live with the named insured and is injured by an auto that is not a covered auto owned by Bob Miller.

Question 5 of 100

Question 6

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

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 6 of 100

Answer 6

Your answer: Medical benefits provide unlimited coverage with no dollar limitation. is incorrect. The correct answer is: First aid treatment is not covered under workers compensation coverage..

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

Question 6 of 100

Question 7

The Main Street Department store carries a bond covering all of its employees. The bond limit is $10,000. Three employees acting in collusion steal $30,000. How much will be paid under the policy?

$30,000
$15,000
$10,000
$20,000

Question 7 of 100

Answer 7

Your answer: $10,000 is correct.

EXPLANATION:
The bond limit is the most that will be paid regardless of the number of employees acting in collusion. If they were covered under a named schedule basis the limit would apply per employee.

Question 7 of 100

Question 8

All of the following items have a built in limit (maximum) of coverage if the cause of loss is theft, EXCEPT:

Patterns
Furs
Jewelry
Computers

Question 8 of 100

Answer 8

Your answer: Patterns is incorrect. The correct answer is: Computers.

EXPLANATION:
Although computers may have limitations of coverage if the cause of loss is electrical, viruses or hacking, there is no built in THEFT limit for these items. The other three have a built in $2,500 limit for theft losses.

Question 8 of 100

Question 9

A farmer has unintentionally libeled a neighboring farmer by stating that the neighbor’s dairy products are inferior to his. This is an example of:

Advertising/personal injury.
Bodily injury.
Contractual liability.
Vicarious liability.

Question 9 of 100

Answer 9

Your answer: Vicarious liability. is incorrect. The correct answer is: Advertising/personal injury. .

EXPLANATION:
This is an example of personal/advertising injury. No bodily injury or property damage occurred.

Question 9 of 100

Question 10

An applicant for an independent adjuster license must file with the Commissioner a surety bond in the amount of:

$10,000.
$5,000.
$2,500.
$2,000.

Question 10 of 100

Answer 10

Your answer: $5,000. is incorrect. The correct answer is: $2,000..

EXPLANATION:
No license will be issued unless the applicant files with the Commissioner a surety bond executed by a surety company authorized to do business in the state in the sum of $2,000 conditioned for the faithful and honest conduct of business by the applicant. Such bond as to its form, execution, and sufficiency of the sureties must be approved by the Commissioner.

Question 10 of 100

Question 11

Which of the following is NOT covered by liability coverage under a Homeowner policy?

A snowmobile in a park.
A golf cart on a golf course.
A runaway lawnmower.
Motorized wheelchair.

Question 11 of 100

Answer 11

Your answer: A snowmobile in a park. is correct.

EXPLANATION:
The only owned recreational vehicle that is covered while off the insured’s covered location, is a golf cart while playing golf. Vehicles pertaining to the service of the premises, or for use by the handicapped (such as a wheelchair) are covered.

Question 11 of 100

Question 12

Which of the following is true about “open peril” coverage?

It provides coverage for all perils, unless that peril is specifically excluded.
It provides coverage for scheduled risks.
It provides coverage for the named perils.
It does not exclude any perils from coverage.

Question 12 of 100

Answer 12

Your answer: It provides coverage for all perils, unless that peril is specifically excluded. is correct.

EXPLANATION:
On a “named peril” cause of loss form, the covered perils are named or specified. If the peril is not listed, then coverage does not apply. Conversely, on an “open peril” cause of loss form, ALL perils are covered unless the peril(s) is/are specifically excluded. “Open peril” cause of loss forms contain more exclusions than named peril forms for obvious reasons.

Question 12 of 100

Question 13

What insurers must participate in accepting business under the California FAIR Plan?

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 13 of 100

Answer 13

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 13 of 100

Question 14

A claims-made form of commercial umbrella liability policy is “triggered”:

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 14 of 100

Answer 14

Your answer: At the time the injury or damage occurs. 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 14 of 100

Question 15

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

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 15 of 100

Answer 15

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 15 of 100

Question 16

What does the term “comparative negligence” refer to?

The percentage of fault is shared by each driver in an accident in which both contribute to causing the accident.
The one who is most negligent receives no payment when the claim is settled.
The one who is the least negligent receives no payment when the claim is settled.
If both parties have contributed to causing the accident, neither party receives any payment when the claim is settled.

Question 16 of 100

Answer 16

Your answer: The percentage of fault is shared by each driver in an accident in which both contribute to causing the accident. is correct.

EXPLANATION:
Comparative negligence establishes the percentage of fault shared by each driver in an accident in which both contribute to causing the accident. Comparative negligence laws vary by state.

Question 16 of 100

Question 17

The insured carries a personal auto policy providing a bodily injury limit of $50,000 each person with a per accident injury limit of $100,000. He injures two occupants in another vehicle. Their injuries total $60,000 for Mr. Jones and $50,000 for Mrs. Jones. The insurance company spent $40,000 in defense and investigation costs. How much will the insured’s policy pay?

$50,000
$100,000
$140,000
$110,000

Question 17 of 100

Answer 17

Your answer: $100,000 is incorrect. The correct answer is: $140,000.

EXPLANATION:
The per person limit is $50,000. The most that can be paid for this claim is the $100,000 per accident injury limit plus the $40,000 to defend and investigate the claim. The costs to defend and investigate are supplementary coverages and are in addition to the policy limits.

Question 17 of 100

Question 18

You own an independent adjusting company in California. In order to open a second office in a different location you must obtain:

Written permission from the Department of Insurance.
A branch manager’s license.
A fidelity bond.
A branch office certificate.

Question 18 of 100

Answer 18

Your answer: A branch office certificate. is correct.

EXPLANATION:
According to the California Insurance Code, “If the licensee intends to conduct business from any location in California other than the principal place of business, a Branch Office Certificate must be obtained by submitting an Application for Branch Office Certificate along with the appropriate fee.”

Question 18 of 100

Question 19

Bridges and tunnels may be insured under:

Inland Marine Forms
Business floater forms.
Transportation forms.
Equipment dealer’s forms.

Question 19 of 100

Answer 19

Your answer: Transportation forms. is incorrect. The correct answer is: Inland Marine Forms.

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

Question 19 of 100

Question 20

Workers compensation insurance is a contract between:

Employer and employee.
State and employer.
Insurance company and the employee.
Insurance company and the employer.

Question 20 of 100

Answer 20

Your answer: State and employer. is incorrect. The correct answer is: Insurance company and the employer..

EXPLANATION:
Workers compensation coverage is a contract between the insurance company and the employer. It is the employer that contracts with the insurance company to provide the statutorily required workers compensation benefits for the injured employee.

Question 20 of 100

Question 21

When a liability policy is contested, which of the following entities ultimately determines legal liability?

I. The insurance company.
II. A court of law.
III. The claimant.

I or II
I only
II only
III only

Question 21 of 100

Answer 21

Your answer: I or II is incorrect. The correct answer is: II only.

EXPLANATION:
In cases of litigation it is the court/jury/judge that determines legal liability.

Question 21 of 100

Question 22

Byron has submitted his application for a California Adjuster license, and then begins studying a course that will allow him to take the state licensing exam. Byron is working 40 hours a week, so he feels satisfied that he finished the course and passed the state licensing exam only 14 months after submitting his application. Which of the following is the response Byron will receive from the California Department of Insurance?

He will receive notice that his license application is denied because he was required to fulfill all licensing requirements within 12 months of submitting his application.
He will receive his license from the Department because he fulfilled all the requirements for licensing.
He will receive notice that his license application is denied because he was required to fulfill all licensing requirements within 6 months of submitting his application.
He will receive notice that his license application has been approved and he will receive it within 60 days.

Question 22 of 100

Answer 22

Your answer: He will receive notice that his license application is denied because he was required to fulfill all licensing requirements within 12 months of submitting his application. is correct.

EXPLANATION:
He will receive notice that his license application is denied because he was required to fulfill all licensing requirements within 12 months of submitting his application. (CCR 2691.9)

Question 22 of 100

Question 23

Dan parks his car on a hill in front of his house. His 7-year-old daughter gets into the car and releases the parking brake. The car rolls down a hill and does $2,000 damage to the property of others. What part of his policy might respond to pay the claim?

Property Damage
Other Than Collision
Not covered since the daughter is not licensed and too young to obtain one.
Collision Coverage

Question 23 of 100

Answer 23

Your answer: Property Damage is correct.

EXPLANATION:
The loss is covered under property damage. The fact that the daughter is underage and not licensed is not a factor.

Question 23 of 100

Question 24

Which of the following is NOT a claim settlement option in a property loss?

Replace the property with like kind and quality.
Replace the property with new.
Repair the property.
Pay market value only.

Question 24 of 100

Answer 24

Your answer: Pay market value only. is correct.

EXPLANATION:
Offering market value only is not a claim settlement option. If the insured carries replacement cost coverage then the adjuster needs to address the payment of the claim accordingly.

Question 24 of 100

Question 25

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?

30 days
15 working days
21 calendar days
10 calendar days

Question 25 of 100

Answer 25

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 25 of 100

Question 26

The Main Street Gazette is interested in protecting against the additional costs of continuing to print the newspaper, at a temporary location in the event its building was destroyed. Which of the following coverages should the Main Street Gazette purchase for this purpose?

Extra Expense
Open Perils
Loss of Rents
Contingent Gross Earnings

Question 26 of 100

Answer 26

Your answer: Open Perils is incorrect. The correct answer is: Extra Expense.

EXPLANATION:
The purpose of Extra Expense coverage is to cover any increase in expenses incurred by the insured (after a direct property loss which interrupts the business) to decrease the amount of time the business is idle or interrupted, and keep it operating, even at another location.

Question 26 of 100

Question 27

Which of the following is true if an employer hires an employee who is under 16 years of age and that employee is injured on the job?

The employee will be 50% lower than the normal rate.
No benefits will be paid to the employee.
The employee will be 50% higher than the normal rate.
Benefits will be the same as that paid to any other employee, regardless of age.

Question 27 of 100

Answer 27

Your answer: Benefits will be the same as that paid to any other employee, regardless of age. is incorrect. The correct answer is: The employee will be 50% higher than the normal rate..

EXPLANATION:
It is incumbent upon the employer to confirm the age of his/her employees. If an employee is under 16 years of age, any workers compensation injury will be paid at a 50% higher rate than normal.

Question 27 of 100

Question 28

How is a combined deductible applied in an Equipment Breakdown policy?

It applies per piece of covered equipment damaged as a result of a breakdown
It is first deducted from the aggregate amount of any loss to which it applies
The insurer will not be liable for any loss that occurs during the specified time period immediately following a breakdown
It is based on a percentage of the breakdown loss

Question 28 of 100

Answer 28

Your answer: The insurer will not be liable for any loss that occurs during the specified time period immediately following a breakdown is incorrect. The correct answer is: It is first deducted from the aggregate amount of any loss to which it applies.

EXPLANATION:
If a combined deductible applies to two or more coverages provided, it is first deducted from the aggregate amount of any loss to which it applies.

Question 28 of 100

Question 29

Under the “Emergency Program” in all states except Alaska and Hawaii, the National Flood Insurance Program will insure a single-family residence for up to:

$35,000.
$100,000.
$150,000.
$250,000.

Question 29 of 100

Answer 29

Your answer: $250,000. is incorrect. The correct answer is: $35,000. .

EXPLANATION:
The maximum coverage under the Emergency Program for a dwelling is $35,000. After the community becomes a designated flood zone, coverage is available under the “Regular Program” and the limit can be up to $500,000. The NFIP will insure a single-family residence in Alaska, Hawaii, Guam and the Virgin Islands for up to $150,000 under the Emergency Program.

Question 29 of 100

Question 30

What is the meaning of “diminution of value?”

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 30 of 100

Answer 30

Your answer: A loss that affects only a total loss to a vehicle. is incorrect. The correct answer is: A reduction in the value of a vehicle even after repairs have been made..

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 30 of 100

Question 31

A weather report would be considered what type of evidence?

Documentary
Demonstrative
Interrogatory
Material

Question 31 of 100

Answer 31

Your answer: Demonstrative is incorrect. The correct answer is: Documentary.

EXPLANATION:
A weather report is a documentary report that is considered to be an official report. It is in a list of other official reports such as police reports, fire department reports, autopsy reports and court records showing previous convictions of crimes.

Question 31 of 100

Question 32

An insured, covered under an ISO standardized Businessowners Policy, has sustained a fire loss to his building. Due to changes in the building codes it’s going to cost $20,000 more to make the repairs. How much, if any, will the BOP pay for these extra costs?

$5,000
Nothing
$10,000
$20,000

Question 32 of 100

Answer 32

Your answer: $20,000 is incorrect. The correct answer is: $10,000.

EXPLANATION:
There is a limited amount of $10,000 for the increased cost of construction due to compliance with ordinance or law. However, this coverage applies only to buildings insured on a replacement cost basis. Further, the $10,000 coverage cannot be used to pay any costs after a loss for an ordinance or law, that the insured was required to comply with before the loss, but failed do so. It is important to note that the ordinance or law exclusion is still in place, preventing the insured from assuming that the entire policy limit is available to pay these costs to bring the building up to code after a claim. The policy will then provide ordinance or law coverage through an “additional coverage”, but these costs are limited to $10,000.

Question 32 of 100

Question 33

The Homeowners Policy excludes liability coverage for which of the following motorized vehicles owned by an insured?

Residence Service Vehicle
A four wheeler operated on the insured’s premises
A Snowmobile operated off the insured’s premises
Wheelchair

Question 33 of 100

Answer 33

Your answer: Wheelchair is incorrect. The correct answer is: A Snowmobile operated off the insured’s premises.

EXPLANATION:
The only recreational vehicle that is covered off the insured location and is designed for off road use is a golf cart while being used to play golf.

Question 33 of 100

Question 34

Jim is covered under a Personal Automobile policy with liability limits of 25/50/25 and $5,000 in “medical payments” coverage. Jim causes an accident which leaves him with $7,500 in medical costs and $50,000 in property damage to a parked BMW. How much must Jim pay out of pocket in total for all damages occurring in this accident?

$27,500
$42,500
$45,000
$32,000

Question 34 of 100

Answer 34

Your answer: $32,000 is incorrect. The correct answer is: $27,500.

EXPLANATION:
The question is asking how much Jim’s out-of-pocket expenses will be. He will owe the difference between the $50,000 in property damage to the BMW and the $25,000 property damage policy limit for the accident. He also will be responsible for the $2,500 in medical bills that are over his $5,000 medical payment limit.

Question 34 of 100

Question 35

Claims that are paid under a CGL policy coverage, are charged against the aggregate policy limits, and reduce the amount of insurance remaining to pay future claims under the current policy. When will the limits be reinstated?

Six months after the payment of the last claim that caused the aggregate limits to become exhausted.
On the effective date of the next policy renewal.
As soon as the aggregate is actually exhausted.
If the insured pays an extra premium for reinstatement.

Question 35 of 100

Answer 35

Your answer: On the effective date of the next policy renewal. is correct.

EXPLANATION:
The effective date of the next policy renewal would be correct. The policy aggregate limit applies during the current policy period. Once a new policy period begins or the policy is renewed, a new aggregate limit is activated.

Question 35 of 100

Question 36

In lieu of suspending or revoking a license, the Commissioner may impose of civil penalty of:

$500.
$2,500.
$1,000.
$5,000.

Question 36 of 100

Answer 36

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 36 of 100

Question 37

In the property insurance field, a “friendly fire” is one which:

Remains within its intended limits.
Has an accidental origin but causes no damage.
Has an unknown origin and only causes minor damages.
Is the type of fire covered by fire insurance.

Question 37 of 100

Answer 37

Your answer: Has an accidental origin but causes no damage. is incorrect. The correct answer is: Remains within its intended limits. .

EXPLANATION:
Conversely, a hostile fire is one that is not contained within its intended limits. A fire in a fireplace is a friendly fire until it spreads beyond the fireplace. Insurance will only cover hostile fires.

Question 37 of 100

Question 38

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:

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 38 of 100

Answer 38

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 38 of 100

Question 39

Part I of the Workers Compensation policy describes:

The insurer’s duty to pay promptly, when due, the benefits required of the employer by the workers compensation statute.
Those situations in which an injured worker can sue the insured.
The coverage in the states where an insured’s operations are known to exist and are designated in the policy.
The insured’s duties in the event of injury.

Question 39 of 100

Answer 39

Your answer: The insurer’s duty to pay promptly, when due, the benefits required of the employer by the workers compensation statute. is correct.

EXPLANATION:
Under Part I the insurer agrees to pay promptly, when due, the benefits required of the employer by the Workers Compensation law.

Question 39 of 100

Question 40

David has damaged his vehicle by striking a tree. He can:

I. Take the car to a repair garage recommended by the insurer.
II. Take the car to a garage of his choice.
III. Accept payment based on the adjuster’s estimate.
I, II and III
I and II only
I and III only
I only

Question 40 of 100

Answer 40

Your answer: I, II and III is correct.

EXPLANATION:
The choice belongs to the David, the insured.

Question 40 of 100

Question 41

Under a dwelling broad or special form, what is the maximum that would be paid for “loss of use” if Coverage A was $60,000?

$12,000
$2,500
$6,000
$5,000

Question 41 of 100

Answer 41

Your answer: $6,000 is incorrect. The correct answer is: $12,000.

EXPLANATION:
The forms provides 20% of Coverage A for fair rental value and additional living expense under the DP-2 and DP-3. Therefore, the correct response is $12,000 ($60,000 X 20% = $12,000).

Question 41 of 100

Question 42

When it is known that an employee is guilty of theft or other dishonest act, how is coverage affected?

Coverage will continue if the employee agrees to make complete restitution.
Coverage continues until the expiration date of the coverage.
Coverage is cancelled immediately.
Coverage will continue if an additional premium is charged for the increased exposure.

Question 42 of 100

Answer 42

Your answer: Coverage will continue if the employee agrees to make complete restitution. is incorrect. The correct answer is: Coverage is cancelled immediately..

EXPLANATION:
When it is known that an employee has committed a crime, the coverage for that employee terminates immediately for future losses.

Question 42 of 100

Question 43

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

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 43 of 100

Answer 43

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

EXPLANATION:
All of the responses are correct.

Question 43 of 100

Question 44

The minimum liability amount per occurrence for bodily injury and property damage claims available under the BOP is:

Your answer: $100,000 is incorrect. The correct answer is: $300,000.request of the insured and at the discretion of the company.

Question 44 of 100

Answer 44

Your answer: $100,000 is incorrect. The correct answer is: $300,000.

EXPLANATION:
$300,000 of liability per occurrence is automatically included on the BOP. Higher limits are available at the request of the insured and at the discretion of the company.

Question 44 of 100

Question 45

According to the Assignment Condition of insurance policies:

An insurer may reassign a policy to another insurer, as long as it provides the insured with advanced notice.
An insurer may reassign a policy to another insurer, but only with the insured’s permission.
An insured may transfer a policy to a spouse or dependent, but only if all terms and conditions remain the same.
Insurance coverage may transfer to an insured’s legal representative when the insured dies.

Question 45 of 100

Answer 45

Your answer: Insurance coverage may transfer to an insured’s legal representative when the insured dies. is correct.

EXPLANATION:
The insured may assign policy to another party, but never without the prior permission of the insurer. There is a condition in the policy that upon death of the insured, the policy automatically is assigned to the insured’s legal representative.

Question 45 of 100

Question 46

If an employee in California suffers an “at work” injury or illness, they are entitled to ______ % of their lost wages.

66 2/3.
70
75.
65.

Question 46 of 100

Answer 46

Your answer: 65. is incorrect. The correct answer is: 66 2/3. .

EXPLANATION:
The employee is entitled to 66 2/3% of their lost wages as a result of a job related injury or illness. Current law limits benefits to a 2 year maximum and increases the maximum to 4 years for certain specified injuries.

Question 46 of 100

Question 47

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

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 47 of 100

Answer 47

Your answer: An intervening cause was the proximate cause of the plaintiff’s injury rather than the defendant’s action (or inaction). is incorrect. The correct answer is: The loss to the plaintiff was caused intentionally by the defendant. .

EXPLANATION:
Intentional acts are excluded by all policies.

Question 47 of 100

Question 48

Coach Joe loans his car, covered under a personal auto policy, to assistant coach Tom to take several members of the Lake Recreation Swim Team home after a meet. In the event of an accident, the liability section of the personal auto policy would cover all of the following, EXCEPT:

The auto manufacturer.
Joe.
Tom.
Lake Recreation Swim Team.

Question 48 of 100

Answer 48

Your answer: Joe. is incorrect. The correct answer is: The auto manufacturer. .

EXPLANATION:
Coach Joe is covered because he owns the car. Assistant coach Tom is covered because he had Joe’s permission to drive his car. Lake Recreation Swim Team is also an insured but only with respect to legal responsibilities for acts or omissions of a person for whom coverage is afforded. The auto maker would not be an insured any any personal automobile policy.

Question 48 of 100

Question 49

The first effort to provide insurance for land transportation risks involved an extension of ocean marine coverage known as the:

“Inland waters” condition.
“Warehouse to warehouse” clause.
“Overland rail” extension.
“Overland transit” clause.

Question 49 of 100

Answer 49

Your answer: “Inland waters” condition. is incorrect. The correct answer is: “Warehouse to warehouse” clause..

EXPLANATION:
This is called the “warehouse to warehouse” clause. Coverage applies from the warehouse from which the goods are shipped to the warehouse of the recipient.

Question 49 of 100

Question 50

In California an independent adjuster must post a surety bond. The bond is made payable to:

The people of the State of California.
The Insurance Commissioner.
The California Underinsurance Fund.
The insurer that employs the adjuster.

Question 50 of 100

Answer 50

Your answer: The Insurance Commissioner. is incorrect. The correct answer is: The people of the State of California..

EXPLANATION:
The bond is made payable to the people of the State of California.

Question 50 of 100

Question 51

Which of the following homeowner forms provide the least amount of peril coverage?

HO-8
HO-2
HO-3
HO-5

Question 51 of 100

Answer 51

Your answer: HO-3 is incorrect. The correct answer is: HO-8.

EXPLANATION:
The HO-8 form provides only limited peril coverage similar to the DP-1 dwelling form except the HO-8 form provides theft coverage.

Question 51 of 100

Question 52

All of the following are sections of a CGL form, EXCEPT:

Conditions
Definitions
Prior Acts coverage
Who is an insured

Question 52 of 100

Answer 52

Your answer: Who is an insured is incorrect. The correct answer is: Prior Acts coverage.

EXPLANATION:
Although wording in the policy could exclude coverage for prior acts and events that happened prior to the policy, that is not a section of the policy. The other three choices are all separate sections of the CGL.

Question 52 of 100

Question 53

The “period of restoration” that applies to business income coverage under a Commercial Property form:

Ends on the date when the property should be repaired within reason.
Starts on the first day reconstruction begins.
Ends on the date the property is actually repaired.
Ends upon expiration of the policy.

Question 53 of 100

Answer 53

Your answer: Ends on the date the property is actually repaired. is incorrect. The correct answer is: Ends on the date when the property should be repaired within reason. .

EXPLANATION:
The “period of restoration” is a defined term in the form. The form states: “Ends on the date when the property at the described premises should be repaired, rebuilt or replaced with reasonable speed and similar quality.” This period starts after a 72-hour waiting period.

Question 53 of 100

Question 54

In California, a Homeowners policy may be cancelled during the 60-day underwriting period, and for the reasons acceptable by law, if a notice of _____ is provided to the insured.

20 days.
30 days.
45 days.
10 days.

Question 54 of 100

Answer 54

Your answer: 30 days. is incorrect. The correct answer is: 20 days..

EXPLANATION:
In California, when a Homeowners policy is still within the 60-day underwriting period, the insurance company can cancel the policy if a 20-day notice is provided to the insured.

Question 54 of 100

Question 55

With Inland Marine insurance, each of the following would be classified as “Instrumentalities of Communication and Transportation,” EXCEPT:

Cargo on long-haul trucks.
Bridges and tunnels.
Power transmission lines.
Pipelines.

Question 55 of 100

Answer 55

Your answer: Cargo on long-haul trucks. is correct.

EXPLANATION:
Cargo in transit would fall under a different category of the nationwide marine definition called “domestic shipments.”

Question 55 of 100

Question 56

Gavin operates a small manufacturing plant and is covered under a Commercial Property Business Income form. Under which of the following scenarios will Gavin be covered?

His loss of profit while out of business as a result of a fire loss.
His loss of earnings as the result of a market decline.
His employees’ loss of earnings when they went on strike.
His loss of earnings as a result of a discontinued product line.

Question 56 of 100

Answer 56

Your answer: His employees’ loss of earnings when they went on strike. is incorrect. The correct answer is: His loss of profit while out of business as a result of a fire loss..

EXPLANATION:
The loss of income as a result of a “direct physical loss” is the only scenario listed that the business income form will cover.

Question 56 of 100

Question 57

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:

A one-family dwelling.
A two-family dwelling.
A one to four-family dwelling.
A one to two-family dwelling.

Question 57 of 100

Answer 57

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

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 57 of 100

Question 58

The base deductible of 5% under the Earthquake Endorsement can be converted to a specific dollar amount by:

Multiplying the greater of Coverage A or C, by the deductible percentage scheduled on the policy.
Scheduling a dollar amount on the endorsement form.
Multiplying the limit of liability for Coverage A by the deductible percentage.
Multiplying the limit of liability for Coverage C by the deductible percentage.

Question 58 of 100

Answer 58

Your answer: Multiplying the limit of liability for Coverage A by the deductible percentage. is incorrect. The correct answer is: Multiplying the greater of Coverage A or C, by the deductible percentage scheduled on the policy..

EXPLANATION:
The deductible for an Earthquake Endorsement is converted to a specific dollar amount by multiplying the greater of Coverage A or C limit of liability, by the deductible percentage.

Question 58 of 100

Question 59

Personal property that is covered under the Personal Property Replacement Cost Endorsement is damaged and a claim has been filed. The replacement cost of the property at the time of the loss is $2,500. The full cost to repair the property is $2,000. The Coverage C limit of the Homeowners policy is $8,000. No special limits apply to this property and there is no limit applied to the type of property being claimed. Which of the following is the amount that will be paid under the endorsement?

$2,500.
$2,000.
$8,000.
$500.

Question 59 of 100

Answer 59

Your answer: $2,000. is correct.

EXPLANATION:
The endorsement will pay the smallest amount of the replacement cost at the time of the loss, the full repair cost, the Coverage C limit, any applicable special limits, or the limit that applies to the type of property being claimed.

Question 59 of 100

Question 60

QUESTION:

Under a Homeowner Policy (HO-5), if the insured carries 80% to value, what does Replacement Cost Coverage NOT apply to?

Answer 60

Your answer: Contents is correct.

EXPLANATION:
Replacement Cost Coverage does not apply to contents unless the replacement cost for contents coverage is purchased by endorsement. Without endorsement, replacement cost coverage only applies to covered structures.

Question 60 of 100

Question 61

The insured has his home insured on a HO-2 policy. Lightning has struck the home and causes a fire. The insured takes as much property out of the house as possible awaiting arrival of the fire department that assists him. Some of the property is damaged by the fire department and some friends while moving the property into a pickup truck not owned by the insured. What coverage and under what clause could the insured pursue coverage for his damage?

Debris Removal Clause
Removal Clause
Impaired Property Clause
Reasonable Repair Property Clause

Question 61 of 100

Answer 61

Your answer: Removal Clause is correct.

EXPLANATION:
This damage is covered under the removal clause. It is designed to cover the property that is damaged during the course of attempting to protect it from the perils insured against.

Question 61 of 100

Question 62

Al has an umbrella liability policy which does not pay damages until such time as Al is legally obligated to pay them. This type of policy is known as:

A reimbursement policy.
A pay-on-behalf-of policy.
An indemnification policy.
An obligation policy.

Question 62 of 100

Answer 62

Al is legally obligated to pay them. This type of policy is known as:

Your answer: An obligation policy. is incorrect. The correct answer is: An indemnification policy..

EXPLANATION:
Most insurance contracts are indemnification policies.

Question 62 of 100

Question 63

ABC Office Temps and Clean-Rite Dry Cleaning are both located in a strip mall and share a common party wall. Fire begins in the dry cleaners and damages the party wall. Clean-Rite decides to go out of business. How will the BOP policy of ABC Office Temps respond regarding the party wall?

Each policy will split the cost of the repair to the party wall
Clean-Rite will be responsible for the entire loss
ABC’s policy will repair the party wall and subrogate against Clean-Rite
ABC will be responsible for the entire loss

Question 63 of 100

Answer 63

Your answer: ABC’s policy will repair the party wall and subrogate against Clean-Rite is correct.

EXPLANATION:
Normally, when there is loss to a party wall, the companies will share the loss in the cost to repair. If one party chooses not to make the repair, then the insurer for the other party will pay the entire cost of the loss and maintain subrogation rights against the other party.

Question 63 of 100

Question 64

In California, the class of insurance that provides coverage against loss of property and liability for damage to persons or property from explosion of, or accident to, boilers, tanks, pipes, pressure vessels, engines, wheels, electrical machinery, or apparatus connected them, is known as:

Marine insurance.
Fire insurance.
Mechanical Breakdown insurance.
Boiler & Machinery insurance.

Question 64 of 100

Answer 64

Your answer: Boiler & Machinery insurance. is correct.

EXPLANATION:
In California, the class of insurance that provides coverage against loss of property and liability for damage to persons or property from explosion of, or accident to, boilers, tanks, pipes, pressure vessels, engines, wheels, electrical machinery, or apparatus connected them, is known as Boiler & Machinery insurance. In most states, this type of insurance is now referred to as Equipment Breakdown insurance. Mechanical Breakdown insurance covers automobile breakdowns.

Question 64 of 100

Question 65

A building is insured by three insurance companies to spread coverage on a particular type of hazardous risk. In case of a loss under a Commercial Property policy, the payment of the claim would invoke the pro-rata liability clause which means:

Each insurer pays its limits under the policy.
Neither insurer pays.
Each insurer pays in accordance to the percentage its coverage bears to the total amount of insurance in force.
A claim will be paid according to the coinsurance clause.

Question 65 of 100

Answer 65

Your answer: Each insurer pays in accordance to the percentage its coverage bears to the total amount of insurance in force. is correct.

EXPLANATION:
With the pro-rata approach, each insurer will pay a percentage of the claim as its limit bears to the total amount of coverage in force. For example: If an insurer is covering 20% of a property risk it will only pay 20% of a loss. Assume that the total amount of insurance is $300,000 and the risk is split evenly by each insurer writing a third of the total coverage. Each would pay up to their limit of 33% of the loss.

Question 65 of 100

Question 66

QUESTION:
What is a definition of a surety bond?

Guarantees the Performance of a Duty
Covers an Individual Employee’s Dishonest Acts
A Form of Court Bond
Covers Public Officials

Question 66 of 100

Answer 66

Your answer: A Form of Court Bond is incorrect. The correct answer is: Guarantees the Performance of a Duty.

EXPLANATION:
The surety guarantees the performance of a duty by the principal.

Question 66 of 100

Question 67

Under a Commercial Package Policy, how many days does one have to notify the insurance company of a claim?

The insurer must be notified promptly. The number of days is not specified
30 days
60 days
10 days

Question 67 of 100

Answer 67

Your answer: 30 days is incorrect. The correct answer is: The insurer must be notified promptly. The number of days is not specified.

EXPLANATION:
The policy language states that all claims will be promptly reported to the insurer.

Question 67 of 100

Question 68

Under Homeowners insurance, “Medical Payments to Others” coverage will cover necessary medical expenses incurred within:

1 year of the accident causing the injury.
4 years of the accident causing the injury.
3 years of the accident causing the injury.
2 years of the accident causing the injury.

Question 68 of 100

Answer 68

Your answer: 1 year of the accident causing the injury. is incorrect. The correct answer is: 3 years of the accident causing the injury..

EXPLANATION:
Medical Payments to others will cover necessary medical expenses within 3 years. Note also that medical payments do not include “pain and suffering.”

Question 68 of 100

Question 69

For the insured dwelling and other detached structures, the DP-3 provides:

Open peril coverage.
Broad perils coverage.
Basic perils coverage.
Fire, lightning, extended coverage and vandalism & malicious mischief coverage.

Question 69 of 100

Answer 69

Your answer: Basic perils coverage. is incorrect. The correct answer is: Open peril coverage. .

EXPLANATION:
The DP-3 provides open perils protection for the dwelling and other structures, and named perils protection for personal property. The DP-1 and DP-2 forms provide named peril protection only for the dwelling, other structures, and personal property.

Question 69 of 100

Question 70

What is a “proof of loss”?

A full release of all claims.
A statement made by the insurer as to the coverage that may apply on a claim.
A formal statement made by the insured to the insurance company regarding a loss.
Special requirements made to the insured by the insurance company in case of a claim.

Question 70 of 100

Answer 70

Your answer: A formal statement made by the insured to the insurance company regarding a loss. is correct.

EXPLANATION:
A proof of loss is submitted to the company in case of a claim. It provides the details of the claim and what is damaged or the details of an accident.

Question 70 of 100

Question 71

In crime insurance, which of the following terms is defined as “any unlawful taking of property to the deprivation of the insured”?

Theft.
Mysterious disappearance.
Burglary.
Robbery.

Question 71 of 100

Answer 71

Your answer: Burglary. is incorrect. The correct answer is: Theft. .

EXPLANATION:
“Theft” is a very broad term encompassing any type of stealing, whether it is robbery, burglary, or some other type of unlawful taking like embezzlement or shoplifting.

Question 71 of 100

Question 72

Which of the following would be covered under Coverage A of a Farm insurance policy?

A structure attached to the dwelling.
A structure detached from the dwelling.
Dwelling personal property.
Livestock.

Question 72 of 100

Answer 72

Your answer: A structure detached from the dwelling. is incorrect. The correct answer is: A structure attached to the dwelling..

EXPLANATION:
Coverage A covers the dwelling and any attached structures such as a garage.

Question 72 of 100

Question 73

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:

Driver of the insured vehicle.
Any passengers in the insured vehicle.
Driver of the claimant vehicle.
Any passengers of the claimant vehicle.

Question 73 of 100

Answer 73

Your answer: Driver of the insured vehicle. is incorrect. The correct answer is: Driver of the claimant vehicle..

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

Question 73 of 100

Question 74

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.

I, II and III only
I, III and IV only
I, II, III and IV
I and IV only

Question 74 of 100

Answer 74

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 74 of 100

Question 75

What is the maximum that will be paid under replacement cost coverage under the HO forms for dwellings?

The total price to replace the dwelling up to the dwelling limit, if adequate coverage is in place
50% of Coverage A
The actual cash value of the dwelling
The full market value of the dwelling

Question 75 of 100

Answer 75

Your answer: The total price to replace the dwelling up to the dwelling limit, if adequate coverage is in place is correct.

EXPLANATION:
The purpose of the replacement cost coverage is to pay replacement cost without depreciation on the dwelling. Obviously, the insured must be insured for at least 80% of the full replacement value of the dwelling to qualify for replacement cost coverage up to the coverage limit.

Question 75 of 100

Question 76

Once the adjuster is appointed by the insurer to represent the insurer, the adjuster has the power to do all of the following, EXCEPT:

Bind additional coverage.
Make advance payments.
Determine coverage.
Make statements that the insured can assume the adjuster has the authority to make.

Question 76 of 100

Answer 76

Your answer: Bind additional coverage. is correct.

EXPLANATION:
The adjuster does not have the power to bind additional coverage when adjusting a claim.

Question 76 of 100

Question 77

With surety bonds, who is to be protected under a performance bond?

The Obligee
The Surety
The Sub-contractors
The Contractor

Question 77 of 100

Answer 77

Your answer: The Surety is incorrect. The correct answer is: The Obligee.

EXPLANATION:
The obligee is protected by the bond in case the contractor defaults under the contract for the work to be performed. The surety issuing the bond is the guarantor under the bond.

Question 77 of 100

Question 78

Which of the following would be covered under a Commercial General Liability policy?

Property damaged by a customer bumping into a merchandise display.
A customer slipping and falling on a wet floor in a department store.
Injuries to an employee while at work.
An insured falling and injuring his/her arm in their own store.

Question 78 of 100

Answer 78

Your answer: Injuries to an employee while at work. is incorrect. The correct answer is: A customer slipping and falling on a wet floor in a department store..

EXPLANATION:
“Falling down” claims are very common occurrences for a business. These are covered under the Commercial General Liability policy based on the negligence of the insured for failure to maintain the premises. Injuries to the insured or the employees are covered by Workers’ Compensation insurance and not the CGL policy.

Question 78 of 100

Question 79

Medical payments coverage under the Farmowners policy covers which of the following?

Injuries sustained by an invitee.
Injuries sustained by a farm employee.
Injuries sustained by the insured.
Injuries sustained by a tenant living in the insured’s dwelling.

Question 79 of 100

Answer 79

Your answer: Injuries sustained by a farm employee. is incorrect. The correct answer is: Injuries sustained by an invitee..

EXPLANATION:
Medical payments would pay for the injuries sustained by an invitee or guest. Coverage does not apply to members of the insured’s family, roomers or boarders or tenants of the dwelling, or to farm employees.

Question 79 of 100

Question 80

Which is false regarding the California Good Driver Discount?

A person must have maintained at least a “B” average in high school.
It shall be at least 20% below the rate the insured would otherwise be charged.
A driver does not have to prior coverage in force to receive the discount.
An insurer may refuse the discount for motorcycles in some cases.

Question 80 of 100

Answer 80

Your answer: A person must have maintained at least a “B” average in high school. is correct.

EXPLANATION:
To qualify for the discount, a driver does not have to be a student.

Question 80 of 100

Question 81

All the following statements are true regarding earthquake insurance under residential property coverage in California, EXCEPT:

Earthquake insurance must be offered with any new policy, or policy renewal.
The offer of earthquake insurance may be made by mail or electronically.
A separate earthquake policy must be issued; an endorsement is not permitted.
The offer may be made prior to, concurrent with, or within 60 days following the policy effective date.

Question 81 of 100

Answer 81

Your answer: A separate earthquake policy must be issued; an endorsement is not permitted. is correct.

EXPLANATION:
According to the California Insurance Code (CIC 10081), earthquake coverage may be provided in the policy of residential property insurance itself, either by specific policy provision or endorsement, or in a separate policy or certificate of insurance which specifically provides coverage for loss or damage caused by the peril of earthquake alone or in combination with other perils.

Question 81 of 100

Question 82

All of the following are “evidence of financial responsibility” as outlined in the California Insurance Code, EXCEPT:

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 82 of 100\

Answer 82

Your answer: An insurance form or certificate from an insurance company or charitable risk pool. is incorrect. The correct answer is: The title to the automobile issued by a financial institution..

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 82 of 100

Submit

Question 83

A fire in Josh’s factory causes him to shut the doors for 45 days. While repairs take place, Josh spends $190,000 renting another building and equipment, to keep production going. Even though Josh’s Commercial Property policy doesn’t cover his lost business income, he does have Extra Expense Coverage with a $200,000 limit and Limits of Loss Payment set at 40% / 80% / 100%. How much indemnification can Josh recover from his insurer in this case?

$80,000
$152,000
$160,000
$190,000

Question 83 of 100

Answer 83

Your answer: $190,000 is incorrect. The correct answer is: $160,000.

EXPLANATION:
Josh can collect 40% of the limit or $80.000 in the first month. (40% X 200,000=80,000) He can collect up to 80% of the limit in the second month (80% X 200,000=160,000) He has suffered a 190,000 loss in 45 days so 160,000 is payable as that is the most he can collect in the first 60 days.

Question 83 of 100

Question 84

If an independent adjuster owns more than ____ of a salvage, repair or another firm that is being used in connection with a loss being handled, he must divest themselves of the claim.

5%
4%
3%
2%

Question 84 of 100

Answer 84

Your answer: 5% is incorrect. The correct answer is: 3%.

EXPLANATION:
If an adjuster owns 3% or more, he must divest himself of the firm because of a conflict of interest.

Question 84 of 100

Question 85

Under a Commercial Property policy, the coinsurance clause does all of the following, EXCEPT:

Grants the insured a reduction in premiums for accepting a condition that the insured maintain insurance at a specified percentage of either the actual cash value or replacement cost of the covered property.
The insured could become a co-insurer to a partial loss if the insured is in violation of the clause.
The coinsurance clause does not operate in the event of a total loss.
There are no exceptions, all of the responses are correct.

Question 85 of 100

Answer 85

Your answer: Grants the insured a reduction in premiums for accepting a condition that the insured maintain insurance at a specified percentage of either the actual cash value or replacement cost of the covered property. is incorrect. The correct answer is: There are no exceptions, all of the responses are correct..

EXPLANATION:
There are no exceptions, all of the responses are correct.

Question 85 of 100

Question 86

The insured has suffered a severe storm and some of his trees, shrubs, and plants are heavily damaged by the wind. How much coverage could the insured expect to receive for his claim under his DP-3 dwelling policy?

$500 for each plant subject to 5% of the Coverage A limit
Nothing
5% of the Dwelling limit
A total of $500.00

Question 86 of 100

Answer 86

Your answer: Nothing is correct.

EXPLANATION:
The dwelling policy provides an additional coverage for trees, shrubs, and plants. The limit for this coverage is $500 for any one tree shrub or plant. However, the coverage applies for specified perils and wind is NOT included. The insured will not collect anything for this loss.

Question 86 of 100

Question 87

The insured is covered under a personal auto policy with collision coverage and a $500. deductible. He is involved in an at-fault accident. The loss involves $4,000 damage to the vehicle and a $45.00 storage fee. How much will the insurer pay?

$3,545
$4,000
$3,500
$4,045

Question 87 of 100

Answer 87

Your answer: $3,545 is correct.

EXPLANATION:
The insurer will pay the $4,000 plus the storage fees, minus the $500 deductible.

Question 87 of 100

Question 88

Underground gasoline tanks on an insured’s property leak damaging the property next door. Which policy would pay for clean up?

Errors and Omissions
General Liability
Pollution Liability endorsement
Professional Liability

Question 88 of 100

Answer 88

Your answer: Errors and Omissions is incorrect. The correct answer is: Pollution Liability endorsement.

EXPLANATION:
The insured would need to add the pollution liability endorsement to their CGL to provide the clean up of pollutants.

Question 88 of 100

Question 89

In a situation where liability is obviously clear and an insurer refuses to settle, which of the following is correct according to the California Insurance Code?

The insurer has the right to delay payment for a period of up to six months even when liability is clear.
The insurer is permitted to exercise the right of appeal.
The insurer has the right to delay payment for a period of up to 90 days months even when liability is clear.
The insurer is committing an unfair claims settlement practice in California.

Question 89 of 100

Answer 89

Your answer: The insurer is committing an unfair claims settlement practice in California. is correct.

EXPLANATION:
Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear is an unfair claims settlement practice in California.

Question 89 of 100

Question 90

Sarah is shopping at a grocery store and wants to purchase a bottle of juice. The aisle is marked off with a rope awaiting the clerk to clean up a previously broken bottle and spill on the floor. Sarah moves the rope to get the item and slips and falls on the floor, cutting her face on the scattered glass. Which of the following would be the defense that the insurance company would most likely use in this situation?

Breach of duty on the part of the customer.
Assumption of risk and contributory negligence on the part of the customer.
Trespassing on non-entry areas by the customer.
Comparative negligence.

Question 90 of 100

Answer 90

Your answer: Trespassing on non-entry areas by the customer. is incorrect. The correct answer is: Assumption of risk and contributory negligence on the part of the customer..

EXPLANATION:
Business owners are only liable for negligence if a failure to carry out their duty caused the accident. For strict liability cases against manufacturers or sellers of defective products, the injury must result from a defect. In this case the grocery store attempted to keep the premises safe and was not negligent and no breach of duty occurred. The customer assumed the risk which contributed to the injuries.

Question 90 of 100

Question 91

Standards for determining eligibility of applicants for insurance under the California Automobile Assigned Risk Plan include all the following, EXCEPT:

Driving record of the applicant.
Mental, physical and moral characteristics which pertain to the applicant’s ability to safely and lawfully operate an automobile.
Education of the applicant.
The condition or use of the automobile.

Question 91 of 100

Answer 91

Your answer: The condition or use of the automobile. is incorrect. The correct answer is: Education of the applicant..

EXPLANATION:
According to the California Insurance Code (CIC 11624), the education of the applicant is not an eligibility requirement under the California Automobile Assigned Risk Plan.

Question 91 of 100

Question 92

If an insured takes precautionary measures to protect property from flood damage such as creating a retaining wall of sand bags, how much coverage if any, will be provided by a flood policy?

$1,000 if the flood is imminent and the property is in danger of flooding.
No coverage at all.
$2,500 but only if the insured provides receipts prior to the flooding.
None of the the responses listed are correct.

Question 92 of 100

Answer 92

Your answer: No coverage at all. is incorrect. The correct answer is: $1,000 if the flood is imminent and the property is in danger of flooding..

EXPLANATION:
The policy will provide additional coverage up to $1,000 for preventative measures taken to prevent the property from an imminent flood loss. This $1,000 however will be subtracted from the policy limit covering any property that may be damaged by the imminent flood.

Question 92 of 100

Question 93

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

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 93 of 100

Answer 93

Your answer: Releases the insurer unless the policy or bond limit has been paid. is incorrect. The correct answer is: Releases the insurer from additional liability..

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 93 of 100

Question 94

A 40-year old commercial building is insured for $300,000 and has suffered a partial loss as a result of a hot water heater explosion. It will cost $17,000 for the increased cost of construction to comply with the building codes and $20,000 for all other covered damages. The building is covered under a standard Commercial Property policy, with the special cause of loss form attached. The insured submits the proof of loss for all of the repairs, including the increased costs to comply with the new building codes. Which of the following describes how this claim will be paid?

The insurer will pay $15,000 for the increased cost of construction, plus $20,000 for the cost of all other covered damages.
The claims investigation will determine if the claim should be settled at “Actual Cash Value” or “Replacement Cost”, and pay the entire amount accordingly.
The insurer will pay $10,000 for the increased cost of construction, plus $20,000 for the cost of all other covered damages.
The insurer will pay only $20,000 under the “Replacement Cost” provision of the form, and deny the “Increased Cost of Construction” costs.

Question 94 of 100

Answer 94

Your answer: The claims investigation will determine if the claim should be settled at “Actual Cash Value” or “Replacement Cost”, and pay the entire amount accordingly. is incorrect. The correct answer is: The insurer will pay $10,000 for the increased cost of construction, plus $20,000 for the cost of all other covered damages. .

EXPLANATION:
The insurer will pay $10,000 because this is the limit of liability specified in the additional coverage, for the “Increased Cost of Construction”, plus the $20,000 for the cost of all other covered damages is covered under the policy.

Question 94 of 100

Question 95

In a CGL policy insuring a business partnership, all are covered, EXCEPT:

Employees for acts beyond the scope of employment.
Employees for acts within the scope of employment.
Partners.
Sole Proprietor.

Question 95 of 100

Answer 95

Your answer: Sole Proprietor. is incorrect. The correct answer is: Employees for acts beyond the scope of employment. .

EXPLANATION:
Even though an employee is, by definition, “an insured”, business activities or personal acts of employees are not covered under the Commercial General Liability policy if those activities or personal acts fall outside the scope of employment.

Question 95 of 100

Question 96

Physical damage to a contractor’s bulldozer is best covered under which of the following?

A Commercial Inland Marine Contractors Equipment Floater
A Commercial Building and Personal Property Form
A Commercial Auto Policy
A Commercial General Liability Policy

Question 96 of 100

Answer 96

Your answer: A Commercial Inland Marine Contractors Equipment Floater is correct.

EXPLANATION:
This form is specifically designed to cover only the physical damage to contractors equipment. The form covers the property wherever it is being used as long as it is within the covered territory. Liability coverage is not provided.

Question 96 of 100

Question 97

If a ship’s captain must jettison a disproportionate amount of his policyholder’s cargo in order to save the ship, there is a provision in Ocean Marine policies that will spread that lost among all of the insureds involved with the ship. What is this provision called?

Free of Particular Average clause.
Cost in Freight clause.
General Average clause.
Free on Board clause.

Question 97 of 100

Answer 97

Your answer: Cost in Freight clause. is incorrect. The correct answer is: General Average clause..

EXPLANATION:
A “general average” is a claim that is shared by all the parties involved in the trip because the jettison of the cargo saved the ship from sinking and saved the other cargo.

Question 97 of 100

Question 98

Each of the following is true about Builders Risk Coverage, EXCEPT:

Coverage terminates the day after construction is completed.
The amount at risk increases over time.
Land, lawns and trees are not covered.
In effect, the coverage has a 100% coinsurance requirement.

Question 98 of 100

Answer 98

Your answer: The amount at risk increases over time. is incorrect. The correct answer is: Coverage terminates the day after construction is completed. .

EXPLANATION:
Coverage normally terminates 90 days after the work has been completed or has been accepted. In addition, coverage will cease once the building has been put to its intended use.

Question 98 of 100

Question 99

Identify the coverage NOT included for a $25,000 limit of insurance under the ISO Equipment Breakdown policy.

Ammonia Contamination
Consequential Loss
Data and Media
Fire Damage

Question 99 of 100

Answer 99

Your answer: Ammonia Contamination is incorrect. The correct answer is: Fire Damage .

EXPLANATION:
Fire damage is not included. Commercial property forms include this coverage.

Question 99 of 100

Question 100

What should be the central goal of the claims adjuster?

Follow the rules dictated by the principal
Not violate state insurance laws
Comply with the provisions of the insurance contract to obtain a full release settlement of the claim.
Maximize profit for the insurance company

Question 100 of 100

Answer 100

Your answer: Maximize profit for the insurance company is incorrect. The correct answer is: Comply with the provisions of the insurance contract to obtain a full release settlement of the claim..

EXPLANATION:
The central goal of the adjuster is to comply with the insurance contract to obtain a full-release settlement of the claim.

Question 100 of 100