IA Test 6

Question 1

When someone dies without a will they are said to have died:

In Replevin.
Testate.
Without a Principal.
Intestate.

Question 1 of 100

Answer 1

Your answer: Testate. is incorrect. The correct answer is: Intestate..

EXPLANATION:
When an individual dies intestate, he or she left no will.

Question 1 of 100

Question 2

In workers compensation terminology, “misconduct” refers to:

improper conduct of employees only.
improper conduct of the employer only.
improper or bad behavior on the part of an employee or employer.
intentional acts designed to injure.

Question 2 of 100

Answer 2

Your answer: improper or bad behavior on the part of an employee or employer. is correct.

EXPLANATION:
In workers compensation terminology, “misconduct” means improper or bad behavior.

Question 2 of 100

Question 3

How soon must a change in the qualified manager of an adjusting firm be reported to the California Department of Insurance?

Within one year
Within 30 days
Immediately
Does not have to be reported

Question 3 of 100

Answer 3

Your answer: Immediately is incorrect. The correct answer is: Within 30 days.

EXPLANATION:
A change in the qualified manager, branch manager, officer or partner must be reported to the DOI within 30 days of the change.

Question 3 of 100

Question 4

Liability coverage under the personal auto policy includes:

Bodily injury coverage.
Property damage coverage.
Both bodily injury and property damage coverage.
Damage to personal property of others in the insured’s vehicle and damaged in an accident.

Question 4 of 100

Answer 4

Your answer: Property damage coverage. is incorrect. The correct answer is: Both bodily injury and property damage coverage..

EXPLANATION:
The policy provides both bodily injury and property damage liability coverage. It does not cover the insured’s personal property or personal property of others in the insured’s vehicle.

Question 4 of 100

Question 5

Under the farm policy, which of the following is not considered livestock?

Pack mule
Sheep
Poultry
Cattle grazing in a field

Question 5 of 100

Answer 5

Your answer: Pack mule is incorrect. The correct answer is: Poultry.

EXPLANATION:
Poultry have two legs, whereas livestock has four legs. Therefore, poultry is not eligible under the generic livestock form and would require a special endorsement to be covered.

Question 5 of 100

Question 6

Which of the garage policy coverages will pay for physical damage to a garage customer’s auto regardless of legal liability?

Section II - Garage Liability coverage.
Section IV - Garage physical damage coverage.
Garagekeepers legal liability coverage.
Garagekeepers direct primary coverage.

Question 6 of 100

Answer 6

Your answer: Section II - Garage Liability coverage. is incorrect. The correct answer is: Garagekeepers direct primary coverage..

EXPLANATION:
The Garagekeepers direct primary coverage pays for damages to a customer’s vehicle regardless of fault. The Garagekeepers legal liability form would require that the claimant prove negligence on the part of the garage.

Question 6 of 100

Question 7

On the basic dwelling policy all of the following perils are excluded, EXCEPT:

War
Landslide
Earthquake
Volcanic eruption

Question 7 of 100

Answer 7

Your answer: War is incorrect. The correct answer is: Volcanic eruption.

EXPLANATION:
Under the DP-1 basic form, war, earthquake and landslide are not named perils and are, therefore, excluded.

Question 7 of 100

Question 8

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 8 of 100

Answer 8

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 8 of 100

Question 9

The additional coverage for Debris Removal will now pay to clean up the debris of others on the insured premises even if the insured has no damage to their own property. The maximum payable to remove this debris of others is:

$25,000
$5,000
$10,000
$50,000

Question 9 of 100

Answer 9

Your answer: $5,000 is correct.

EXPLANATION:
The Debris Removal additional coverage now extends to $5,000 to cleanup debris of others on the insured premises even if the insured property has not been damaged.

Question 9 of 100

Question 10

A deductible usually applies to which of the following automobile policy coverages?

Physical Damage
Bodily Injury Liability
Property Damage Liability
Medical Payments

Question 10 of 100

Answer 10

Your answer: Physical Damage is correct.

EXPLANATION:
Deductibles are never used with medical payment coverage and very seldom used for bodily injury and property damage. Deductibles usually apply only to physical damage coverage.

Question 10 of 100

Question 11

What is the purpose of the “Other States” coverage of a standard Workers Compensation policy?

To provide coverage for exposures which develop in other states during the policy period.
To provide coverage in any other state the employee selects.
To provide blanket coverage in any other state in which the insured may operate.
To provide coverage in one or more of the “monopolistic” states.

Question 11 of 100

Answer 11

Your answer: To provide coverage in one or more of the “monopolistic” states. is incorrect. The correct answer is: To provide coverage for exposures which develop in other states during the policy period..

EXPLANATION:
The “Other States” coverage applies to both Workers Compensation and Employers Liability coverage under a Workers Compensation policy. The purpose is to provide coverage against loss exposures which develop during the policy period (but were not present at policy inception), in any state designated on the information page of the policy.

Question 11 of 100

Question 12

Under the HO-3 form there is no coverage for loss resulting from “earth movement” except when endorsed by which of the following?

Earthquake endorsement.
Volcanic eruption endorsement.
Collapse endorsement.
Explosion endorsement.

Question 12 of 100

Answer 12

Under the HO-3 form there is no coverage for loss resulting from “earth movement” except when endorsed by which of the following?

Your answer: Earthquake endorsement. is correct.

EXPLANATION:
An insured may add earthquake as an insured peril for Coverages A, B and C by adding the earthquake endorsement. This endorsement defines as a “single earthquake” all earthquake shocks occurring within a 72-hour period. The peril of earthquake is defined to include land shock waves or tremors accompanying a volcanic eruption.

Question 12 of 100

Question 13

When someone dies without a will, their assets will be handled by a court appointed:

Arbitrator.
Executor.
Testator.
Administrator.

Question 13 of 100

Answer 13

Your answer: Executor. is incorrect. The correct answer is: Administrator..

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 13 of 100

Question 14

Which of the following pollution losses would be covered by Garage policy liability coverage?

Pollution of a stream caused by gasoline leaking from the ruptured fuel tank of a covered auto following a collision.
Escape of toxic sludge from a dump site used by the named insured to store waste produced in its garage operations.
The cost of a governmentally ordered clean-up of the pollution from a dump site used by the named insured.
None of the losses described would be covered.

Question 14 of 100

Answer 14

Your answer: None of the losses described would be covered. is incorrect. The correct answer is: Pollution of a stream caused by gasoline leaking from the ruptured fuel tank of a covered auto following a collision..

EXPLANATION:
The policy would provide pollution liability in the case of escaped fluids and fuels as a result of an accident. The other choices are excluded.

Question 14 of 100

Question 15

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:

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 15 of 100

Answer 15

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 15 of 100

Question 16

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 16 of 100

Answer 16

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:

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 16 of 100

Question 17

A Personal Umbrella liability policy:

Only covers what the base policy covers.
Is not designed to act as a primary policy.
Will not cover professional liability.
May cover risks not covered in an underlying policy.

Question 17 of 100

Answer 17

Your answer: May cover risks not covered in an underlying policy. is correct.

EXPLANATION:
Umbrella liability policies are excess coverage over the primary policy in force. There are some situations where an umbrella may cover a risk that’s not covered in an underlying policy.

Question 17 of 100

Question 18

Water damage to an insured building covered under the Commercial Property - Special form would be covered under all of the following circumstances, EXCEPT:

Damage to the building caused by water to extinguish a fire.
Water from a pipe that suddenly breaks and causes wall and floor damage.
Water damage to the building caused by a pipe that has leaked over a period of 14 days.
A water pump in an appliance has cracked and water escapes, causing damage to the building.

Question 18 of 100

Answer 18

Your answer: Water damage to the building caused by a pipe that has leaked over a period of 14 days. is correct.

EXPLANATION:
Water damage caused by a pipe that has been leaking beyond 14 days is excluded by this Commercial Property form.

Question 18 of 100

Question 19

The insured has a commercial umbrella liability policy with $1 million limit of insurance. Claims were filed against the insured’s umbrella policy three times during one policy period for three different occurrences. The claims are: for $75,000 on February 5; for $800,000 on May 4; and for $500,000 on July 10. Which of these claims will be paid?

The February 5 claim only
The February 5 and May 4 claims only
All three claims
None of the claims

Question 19 of 100

Answer 19

Your answer: The February 5 and May 4 claims only is incorrect. The correct answer is: All three claims.

EXPLANATION:
Assuming these claims came from three different occurrences, all three would be paid. Keep in mind that the umbrella policy has two limits. One is the occurrence limit and the other is the aggregate limit that limits the total claim payment amounts during the policy year. The aggregate limit does not apply under most umbrella policies to automobile claims.

Question 19 of 100

Question 20

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

A family pub
A funeral home
An auto repair shop
A credit union

Question 20 of 100

Answer 20

Your answer: A funeral home is correct.

EXPLANATION:
There are many classes that are not eligible for coverage under a Businessowners policy. Businesses connected with automobiles, such as repair or service stations, dealerships, or parking lots or garages, are not eligible unless one of these is incidental to an eligible business. Bars and pubs are ineligible for coverage, as well as a credit union. A funeral home WOULD BE eligible.

Question 20 of 100

Question 21

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

Aircraft spraying.
Pollution.
Products Liability for the insured’s farm produce sold.
Injury to a farm employee.

Question 21 of 100

Answer 21

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

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

Question 21 of 100

Question 22

Under a Commercial Auto policy with respect to physical damage to a covered vehicle, which of the following is true regarding diminution of value?

It is specifically excluded.
It is covered.
The deductible is waived.
The renewal premium is reduced for physical damage coverages on the damaged vehicle.

Question 22 of 100

Answer 22

Your answer: It is covered. is incorrect. The correct answer is: It is specifically excluded..

EXPLANATION:
A decrease in the value because of an accident is not a covered loss in most states. The policy excludes this decrease in value when a covered vehicle has been damaged and causes a decrease in value even though it has been repaired.

Question 22 of 100

Question 23

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

60 days
30 days
10 days
20 days

Question 23 of 100

Answer 23

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

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

Question 23 of 100

Question 24

Which of the following may cancel a Commercial Package Policy?

The first named insured
Any named insured
The agent of record
None of the responses listed are correct

Question 24 of 100

Answer 24

Your answer: The first named insured is correct.

EXPLANATION:
The first named insured as well as the insurer may cancel a Commercial Package Policy.

Question 24 of 100

Question 25

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

Accident
Peril
Hazard
Risk

Question 25 of 100

Answer 25

Your answer: Accident is correct.

EXPLANATION:
This is the definition of an accident.

Question 25 of 100

Question 26

Which of the following is excluded under the Ordinance or Law Endorsement form?

The cost to comply with any ordinance or law requiring a higher grade of pipe to be used in a home’s plumbing system.
The cost to comply with any ordinance or law regulating or enforcing the type of insulation that may be used in the attics of homes located in the jurisdiction.
The cost to comply with any ordinance or law requiring that handrails be installed on any porch that is greater than 2 feet in height, and is attached to the covered dwelling.
The cost to comply with any ordinance or law regulating or enforcing the clean up and removal of pollutants.

Question 26 of 100

Answer 26

Your answer: The cost to comply with any ordinance or law requiring a higher grade of pipe to be used in a home’s plumbing system. is incorrect. The correct answer is: The cost to comply with any ordinance or law regulating or enforcing the clean up and removal of pollutants. .

EXPLANATION:
The cost to comply with any ordinance or law regulating or enforcing the clean up and removal of pollutants is excluded under the Ordinance or Law endorsement.

Question 26 of 100

Question 27

Which of the following statements describes an action that the adjuster cannot take after a claimant has hired an attorney to represent him/her in handing a claim?

Negotiate with the attorney.
Write the draft for payment of the claim directly to the claimant.
Contact the claimant without the consent of the attorney.
Have an attorney prepare releases.

Question 27 of 100

Answer 27

Your answer: Contact the claimant without the consent of the attorney. is correct.

EXPLANATION:
Once the claimant has hired an attorney to represent the claimant, the adjuster may not contact the claimant directly without the consent of the attorney.

Question 27 of 100

Question 28

Adjusters have a relationship to the legal profession, and must exercise care to avoid the unauthorized practice of law. In California, the insurance code states that nothing in the code will be construed as entitling any person to practice law in the state, UNLESS:

He/she is a licensed independent adjuster.
He/she has graduated from an accredited law school.
He/she is an active member of the State Bar of California.
He/she is a licensed public adjuster.

Question 28 of 100

Answer 28

Your answer: He/she is an active member of the State Bar of California. is correct.

EXPLANATION:
In California, the insurance code states that nothing in the code will be construed as entitling any person to practice law in the state, UNLESS he/she is an active member of the State Bar of California.

Question 28 of 100

Question 29

The cost of defense is paid without limitation and does not affect the limit of liability for damages. When does the insurer’s duty to defend and pay these defense costs end?

There are no limitations.
When the cost of defense and the requested demands reach the policy limit.
After the statute of limitations is exhausted.
When the limit of liability is exhausted through the payment of settlements or judgments.

Question 29 of 100

Answer 29

Your answer: After the statute of limitations is exhausted. is incorrect. The correct answer is: When the limit of liability is exhausted through the payment of settlements or judgments..

EXPLANATION:
The insurer’s duty to defend ends when the limits of the policy are paid out in either settlements and/or judgments.

Question 29 of 100

Question 30

Personal property normally kept at other residences owned or rented to the insured is covered under the Homeowners program for:

10% of the Coverage C limit
10% of the Coverage C limit or $1,000 whichever is greater
The full Coverage C limit
$2,500 limit for theft

Question 30 of 100

Answer 30

Your answer: The full Coverage C limit is incorrect. The correct answer is: 10% of the Coverage C limit or $1,000 whichever is greater.

EXPLANATION:
The Homeowner forms state the limit of coverage for personal property normally at other residences owned by or rented to the insured as 10% of the Coverage C limit or $1,000 whichever is greater.

Question 30 of 100

Question 31

A common carrier has signed a contract to deliver goods of the seller. The goods are to be shipped “Free on Board Destination”. When does the responsibility of the seller end?

When they are picked up by the carrier.
When the goods to be shipped are placed on the loading dock of the seller.
Not until the goods are delivered to the buyer in accordance with the contract terms.
When the buyer confirms the purchase of transportation coverage.

Question 31 of 100

Answer 31

Your answer: Not until the goods are delivered to the buyer in accordance with the contract terms. is correct.

EXPLANATION:
The title to the property in transit remains with the shipper until it arrives at the buyer’s destination point and has been accepted by the buyer. These clauses in the cargo policy will determine where the responsibility lies for damage to cargo in transit. These clauses are usually contained in the Bill of Lading which is the contract between the shipper (seller) and the buyer (purchaser) of the goods or the contract to transport the goods with the carrier.

Question 31 of 100

Question 32

Overinsurance can create a:

Morale hazard for the insured, because it may create apathetic disregard to loss prevention.
Moral hazard for the insured, because it may motivate them to intentionally cause a loss to make a profit.
Physical hazard because the insured is unmotivated to repair items that may result in a bodily injury loss.
Reason for the insurance company to suspend insurance coverage without the return of any premium.

Question 32 of 100

Answer 32

Your answer: Moral hazard for the insured, because it may motivate them to intentionally cause a loss to make a profit. is correct.

EXPLANATION:
Overinsurance creates a moral hazard for the insured because it can provide a reason for the insured to intentionally create a loss in which he or she can profit.

Question 32 of 100

Question 33

Under an Equipment Breakdown policy, all of the following are supplementary payments, EXCEPT:

Expediting expenses.
Defense costs.
Interest on judgment.
Premiums on appeal bonds.

Question 33 of 100

Answer 33

Your answer: Defense costs. is incorrect. The correct answer is: Expediting expenses. .

EXPLANATION:
Expediting expenses are covered in the limit of the coverage. The other items are part of the supplementary payments that are “in addition to” the policy limit.

Question 33 of 100

Question 34

In crime insurance under the loss sustained form, what is the length of the discovery period after the bond has expired to discover an employee crime?

One year
Six months
Nine months
Two years

Question 34 of 100

Answer 34

Your answer: Two years is incorrect. The correct answer is: One year.

EXPLANATION:
The discovery period under the loss sustained form is one year. The discovery clause in the discovery form provides for only 60 days after the coverage has expired. This only describes the period of time for discovery of a loss that occurred during the policy period.

Question 34 of 100

Question 35

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

The California Department of Insurance
The plaintiff’s attorney
Law enforcement
The agent

Question 35 of 100

Answer 35

Your answer: The California Department of Insurance is correct.

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

Question 35 of 100

Question 36

Which of the following does not have to be included in the inspection report required to participate in the California Fair Access to Insurance Requirements (FAIR) Plan?

Structural inspection
Condition of surrounding structures
Occupancy features
Photographs of the occupants

Question 36 of 100

Answer 36

Your answer: Photographs of the occupants is correct.

EXPLANATION:
According to the California Insurance Code (CIC 10093(b)), the inspection must include, but need not be limited to, pertinent structural and occupancy features as well as the general condition of the building and surrounding structures. A representative photograph of the property may be taken as part of the inspection.

Question 36 of 100

Question 37

Which of the following is not covered by an unendorsed HO policy?

Fire
Lightning
Theft
Flood

Question 37 of 100

Answer 37

Your answer: Flood is correct.

EXPLANATION:
All dwelling and homeowner forms exclude flood coverage.

Question 37 of 100

Question 38

After an auto collision loss an insurance company may elect to pay the insured’s claim and take possession of the vehicle. This practice is referred to as:

Salvage.
Subrogation.
Warranty.
Deductible.

Question 38 of 100

Answer 38

Your answer: Salvage. is correct.

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

Question 38 of 100

Question 39

Max lives in a large apartment complex where there is no guard station or gate. Several hundred people live in the complex so its very easy to determine the schedules of the neighbors living around him. One morning Max leaves for work at 6:30 AM as he usually does, but he forgets to lock the front door. Later that morning someone comes into the apartment and steals Max’s computer. What was the peril in this situation?

The fact that the apartment complex does not have a guard station.
That Max left the door unlocked.
The theft of the computer.
The number of people living in the apartment complex increasing the chance that one of them may be a thief.

Question 39 of 100

Answer 39

Your answer: The theft of the computer. is correct.

EXPLANATION:
A peril is a cause of loss. The cause of loss in this situation is the “theft”.

Question 39 of 100

Question 40

No policy covering residential property can be issued in California unless coverage is offered for:

Earthquakes.
Mudslides.
Hurricanes and hail storms.
Wild fires.

Question 40 of 100

Answer 40

Your answer: Earthquakes. is correct.

EXPLANATION:
No policy of residential property insurance may be issued or delivered or initially renewed in this state by any insurer unless the named insured is offered coverage for loss or damage caused by the peril of earthquake.

Question 40 of 100

Question 41

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 41 of 100

Answer 41

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

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

Question 41 of 100

Question 42

Another name for umbrella liability insurance is:

Excess.
Primary.
Malpractice.
Errors and omissions.

Question 42 of 100

Answer 42

Your answer: Excess. is correct.

EXPLANATION:
Excess is another name given to umbrella coverage. It pays in excess of the limits of underlying coverage.

Question 42 of 100

Question 43

An independent adjuster may satisfy the security requirement in California by providing:

I. A $2,000 surety bond
II. A $2,000 property bond
III. A $2,000 cash deposit with the state of California
IV. Proof of the sum of $2,000 deposited in a bank authorized to do business in California

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

Question 43 of 100

Answer 43

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

EXPLANATION:
An independent adjuster may satisfy the security requirement with a $2,000 surety bond; by depositing with the State of California the sum of $2,000 in cash; providing evidence of deposit of the sum of $2,000 in banks authorized to do business in this state and insured by the Federal Deposit Insurance Corporation; providing investment certificates or share accounts in the amount of $2,000 issued by a savings association doing business in this state and insured by the Federal Deposit Insurance Corporation; or providing evidence of a certificate of funds or share account of the sum of $2,000 in a credit union whose share deposits are guaranteed by the National Credit Union Administration. A property bond is not a method of satisfying the requirement.

Question 43 of 100

Question 44

A standard ISO Homeowners policy is best described as a:

Property policy that offers optional liability insurance.
Package policy that provides property and liability insurance.
Personal insurance policy for anyone who owns property.
Personal insurance contract between the insured and the agent.

Question 44 of 100

Answer 44

Your answer: Package policy that provides property and liability insurance. is correct.

EXPLANATION:
The Homeowners policy provides both property and liability coverage.

Question 44 of 100

Question 45

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.

I only
II only
Both I and II
Neither I nor II

Question 45 of 100

Answer 45

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 45 of 100

Question 46

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?

Household appliances
Carpeting
Outdoor antennas
All of the responses are correct

Question 46 of 100

Answer 46

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 46 of 100

Question 47

If a dwelling or commercial building has been without occupants for a significant period of time, but personal property still exists within the dwelling or building, it is said to be:

Vacant.
Empty.
Abandoned.
Unoccupied.

Question 47 of 100

Answer 47

Your answer: Unoccupied. is correct.

EXPLANATION:
If a dwelling or building has had no occupants for a period of time specified by state law, but still has personal property within its walls, the dwelling or building is said to be “unoccupied”.

Question 47 of 100

Question 48

Jack rents a home to Tanya and maintains a DP-3 policy on the dwelling. Tanya accidentally leaves the oven on all day while she is out, her Lasagna catches fire, burning Jack’s house to the ground, along with all the contents located inside. Which of the following items would be covered under Coverage C of Jack’s DP-3 policy?

Jack’s appliances.
The fire damage to the structure.
Tanya’s personal property.
Damage to Tanya’s items in the attached garage.

Question 48 of 100

Answer 48

Your answer: The fire damage to the structure. is incorrect. The correct answer is: Jack’s appliances..

EXPLANATION:
Coverage C is for personal property (contents). Since this is Jack’s policy, it will cover his appliances but nothing belonging to Tanya (her renters insurance would cover it). The damage to the structure would be covered under Coverage A of Jack’s policy.

Question 48 of 100

Question 49

Which of the following is true regarding the dealers’ physical damage coverage under the Garage policy?

The coverage is provided by a blanket limit for covered autos.
The coverage extends to customers’ autos.
The coverage provides an annual maximum limit for comprehensive and collision losses.
The coverage sets a maximum limit per auto.

Question 49 of 100

Answer 49

Your answer: The coverage extends to customers’ autos. is incorrect. The correct answer is: The coverage is provided by a blanket limit for covered autos. .

EXPLANATION:
The dealers’ physical damage limit would be set up on a blanket limit basis. This would apply to comprehensive and collision losses to the auto inventory of the dealership. A blanket limit is used because it is simply not practical to schedule each dealer-owned vehicle for physical damage coverage. Additionally, the amount of the coverage is adjusted by the use of a monthly reporting form.

Question 49 of 100

Question 50

The Ordinance or Law Endorsement, when attached to a Commercial Property policy, provides:

Coverage for the additional costs of rebuilding/repairing/upgrading structures after a covered loss, to comply with a law or ordinance.
Coverage for loss due to government seizure of property.
Coverage for the loss of rent after to the imposition of a new zoning law.
Coverage for the insured’s expenses to comply with local ordinances or laws when constructing a new commercial building.

Question 50 of 100

Answer 50

Your answer: Coverage for the additional costs of rebuilding/repairing/upgrading structures after a covered loss, to comply with a law or ordinance. is correct.

EXPLANATION:
An unendorsed commercial property policy would deny coverage for items the insured did not have before the loss, in order to uphold the principle of indemnity. Sometimes, however, a local law or ordinance will require an insured who has suffered a property loss to rebuild/repair to new standards and require items (such as an extra exit, guardrail, sprinkler, etc) that were not required before the loss. The Ordinance or Law endorsement pays for these extras up to its limit.

Question 50 of 100

Question 51

Sally Roe’s vehicle is rear-ended by John Doe. Sally and John are good friends. Sally tells John not to worry about the damage. She says she has insurance and will tell her insurance company to pay for the damage. She will waive her subrogation right so that John won’t have to pay anything. Her insurer will:

Honor the waiver.
Not honor the waiver.
Proceed with subrogation against John Doe and will not honor the waiver.
Refuse to pay the claim because of the waiver of subrogation.

Question 51 of 100

Answer 51

Your answer: Proceed with subrogation against John Doe and will not honor the waiver. is correct.

EXPLANATION:
Sally does not have to file a claim. She can pay for the damage herself if she chooses. However, she cannot ask her insurance company to pay for her damage without allowing it the right to subrogate. With insurance, subrogation is the substitution of one party (insurer) for another party (insured) to pursue any rights the insured may have against a third party liable for the loss paid by the insurer. Once the insurer has paid for the insured’s (Sally’s) damage, it has the contractual right to recover not only Sally’s deductible, but also the money it paid for Sally’s repairs from the at-fault party (John). Sally cannot “waive” this contractual right.

Question 51 of 100

Question 52

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.

1,000
500
2,000
750

Question 52 of 100

Answer 52

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 52 of 100

Question 53

Claims filed against the insurance company by the insured are known as:

First-party claims.
Third-party claims.
Self-insured claims.
Subrogation claims.

Question 53 of 100

Answer 53

Your answer: First-party claims. is correct.

EXPLANATION:
Claims filed against the insurance company by the insured are known as first-party claims.

Question 53 of 100

Question 54

A customer is tripped by an employee of The Dairy Mart. The customer falls through a plate glass counter and suffers severe bodily injury. The Dairy Mart first has an obligation to notify its insurer:

Promptly after the incident
As soon as the customer notifies Dairy Mart she is going to sue
As soon as the customer actually files suit
When Dairy Mart is found legally liable

Question 54 of 100

Answer 54

Your answer: Promptly after the incident is correct.

EXPLANATION:
Claims should be reported promptly after the accident to allow for a prompt and full investigation of the event.

Question 54 of 100

Question 55

Which of the following statements are true regarding eligibility for “low cost automobile insurance” in California?

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: All of the Statements Listed are True is correct.

EXPLANATION:
All of the statements are true regarding eligibility for low cost automobile insurance in California.

Question 55 of 100

Question 56

The ISO standardized Businessowners policy provides a limit of $2,500 for Fire Department Service charges. This limit applies:

Per policy year.
To one specified location.
Regardless of the number of services or number of buildings.
Coverage is limited as to the number of fire departments that respond.

Question 56 of 100

Answer 56

Your answer: Regardless of the number of services or number of buildings. is correct.

EXPLANATION:
The limit applies regardless of the number of services provided, the number of buildings, and/or the number of emergency departments that respond.

Question 56 of 100

Question 57

Following a loss by earthquake in California, how many days does the insured have, unless extended in writing by the insurer, to present proof of loss for payment?

60 days
30 days
20 days
45 days

Question 57 of 100

Answer 57

Your answer: 20 days is incorrect. The correct answer is: 60 days.

EXPLANATION:
The 60-day period is established because the insured is required to protect the property from further damage, and separate the damaged property from the undamaged.

Question 57 of 100

Question 58

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 58 of 100

Answer 58

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

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

Question 58 of 100

Question 59

Jones Construction Company has a CGL policy with coverage dates of 03/01/17 to 03/01/18. The per occurrence limit is $500,000 and the general aggregate limit of $1,000,000. The maximum that can be paid out on the insured’s behalf is:

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

Question 59 of 100

Answer 59

Your answer: $1,000,000. is correct.

EXPLANATION:
The maximum per claim is $500,000 but, the maximum for all claims paid during the policy period is the aggregate limit of $1,000,000.

Question 59 of 100

Question 60

Which of the following may be included in the Commercial Package Policy?

I. Commercial Auto.
II. Commercial Inland Marine.
III. Equipment Breakdown coverage.
IV. Aviation.

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

Question 60 of 100

Answer 60

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

EXPLANATION:
Aviation and Ocean Marine are not included in the broad range of coverages that are available under the CPP.

Question 60 of 100

Question 61

A California Independent Adjuster license expires every:

Year
Three years
Two years
Four years

Question 61 of 100

Answer 61

Your answer: Two years is correct.

EXPLANATION:
The license expires every two years on the last calendar day of the month in which the initial license was initially issued.

Question 61 of 100

Question 62

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

$500,000
$0
$100,000
$1,000,000

Question 62 of 100

Answer 62

Your answer: $0 is incorrect. The correct answer is: $100,000.

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

Question 62 of 100

Question 63

Many stationary objects, such as bridges, tunnels and power lines fall within the nationwide marine definition because they are considered to be:

Instrumentalities of transportation and communication.
Of substantially high values.
Capable of being transported.
Exposed to the same perils as vessels at sea.

Question 63 of 100

Answer 63

Your answer: Instrumentalities of transportation and communication. is correct.

EXPLANATION:
Items such as bridges, tunnels, power lines, pipelines, and radio transmission towers fall specifically under the nationwide marine definition category because they are “instrumentalities of transportation or communication.” They are not insured under typical commercial property insurance. They fall specifically under the nationwide marine definition category called “bridges, tunnels, and other instrumentalities of transportation and communication”.

Question 63 of 100

Question 64

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 64 of 100

Answer 64

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 64 of 100

Question 65

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 65 of 100

Answer 65

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 65 of 100

Question 66

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?

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 66 of 100

Answer 66

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 66 of 100

Question 67

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

60 days
120 days
90 days
30 days

Question 67 of 100

Answer 67

Your answer: 60 days is incorrect. The correct answer is: 90 days.

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

Question 67 of 100

Question 68

The purpose of liability insurance is to protect an insured from financial loss:

Arising out of intentional liability claims by shifting the legal liability from the individual to the insurance company.
Caused by a third party, and for which that third party has either been found legally liable or has agreed on a settlement with the insured and the insurance company.
Arising out of liability claims by transferring the burden of financial loss from the individual to the insurance company.
Arising out of physical damage or bodily injury to the named insured and other insured’s.

Question 68 of 100

Answer 68

Your answer: Arising out of liability claims by transferring the burden of financial loss from the individual to the insurance company. is correct.

EXPLANATION:
The purpose of liability coverage is to indemnify the insured for actions brought by a third party action for damages caused as a result of the legal liability of the insured.

Question 68 of 100

Question 69

How is personal property of a dwelling covered under a farm policy?

Actual Cash Value Basis
Stated Amount Basis
Agreed Amount Basis
Replacement Cost Basis

Question 69 of 100

Answer 69

Your answer: Replacement Cost Basis is incorrect. The correct answer is: Actual Cash Value Basis.

EXPLANATION:
The property is covered on an actual cash value basis. Like a homeowner policy, the replacement cost endorsement may be attached for an additional premium.

Question 69 of 100

Question 70

In connection with the bonding business which of the following statements is NOT true?

A surety bond protects the principal from sustaining a loss.
Ideally, underwritten surety bonds should not produce any loss.
Court bonds are prescribed by the individual courts and not by the insurance companies.
A surety bond protects the obligee from sustaining a loss.

Question 70 of 100

Answer 70

Your answer: Court bonds are prescribed by the individual courts and not by the insurance companies. is incorrect. The correct answer is: A surety bond protects the principal from sustaining a loss..

EXPLANATION:
The purpose of a surety bond is to protect the obligee from sustaining a loss. A contractor provides the bond, which is issued by the surety for the benefit of the obligee who would be the party contracting with the contractor to perform under a contract.

Question 70 of 100

Question 71

All of the following are a “cause of loss” form, EXCEPT:

Basic
Broad
Comprehensive
Special

Question 71 of 100

Answer 71

Your answer: Comprehensive is correct.

EXPLANATION:
The cause of loss forms used with property insurance are the basic, broad, and special. The comprehensive form does not exist.

Question 71 of 100

Question 72

A Commercial General Liability policy provides coverage for exposures to loss arising out of which of the following operations?

On or away from the insured’s premises
Business and Personal
Away from the insured’s premises only
On the insured’s premises only

Question 72 of 100

Answer 72

Your answer: On or away from the insured’s premises is correct.

EXPLANATION:
The policy is rather comprehensive in that incidents occurring both on and off the insured’s premises are covered for liability. “Commercial” policies generally do not cover “personal” exposures.

Question 72 of 100

Question 73

The premiums for workers compensation are based on:

The job description of the employees (the work they perform).
The location of the risk.
The state schedule of benefits.
Claim loss ratio.

Question 73 of 100

Answer 73

Your answer: The job description of the employees (the work they perform). is correct.

EXPLANATION:
The premium is based on the job description of the employee. The more hazardous the work the higher the base rate per $100 of payroll.

Question 73 of 100

Question 74

Before an application for an independent adjuster license is granted, the applicant must meet all of the following requirements, EXCEPT:

The applicant must be at least 21 years of age.
The applicant must have at least two years of experience in insurance claims adjusting.
The applicant must not have committed acts constituting grounds for denial of a license.
Payment of the application fee.

Question 74 of 100

Answer 74

Your answer: The applicant must be at least 21 years of age. is correct.

EXPLANATION:
The applicant must be at least 18 years of age.

Question 74 of 100

Question 75

A standard commercial inland marine form is not available for which of the following?

Equipment dealers
Accounts receivable
Valuable papers
Release bill of lading

Question 75 of 100

Answer 75

Your answer: Accounts receivable is incorrect. The correct answer is: Release bill of lading.

EXPLANATION:
Commercial inland marine offers many different coverage forms for specific needs of policyholders, including equipment, accounts receivable, and valuable papers.

Question 75 of 100

Question 76

Which of the following statements is correct regarding pollution caused by smoke released from an industrial operation covered under the Commercial Property Policy?

Always covered
A gradual release of pollution from industrial operations is not covered
Covered on an “excess basis”
Covered if caused by a covered cause of loss peril

Question 76 of 100

Answer 76

Your answer: Covered if caused by a covered cause of loss peril is correct.

EXPLANATION:
The Commercial Property Policy will not pay for loss or damage caused by or resulting from the discharge, dispersal, seepage, migration, release or escape of pollutants unless the discharge, dispersal, seepage, migration, release or escape was caused by a covered cause of loss.Therefore if a fire or explosion causes the release of pollution, the loss would be covered. The gradual release of smoke from normal agricultural and industrial operations is not a covered cause of loss.

Question 76 of 100

Question 77

When is a value reporting best used?

To provide an appraisal to the insurer
To report a theft of property to law enforcement
To provide fluid limits of coverage for fluctuating values of property at risk
To prove a loss

Question 77 of 100

Answer 77

Your answer: To provide fluid limits of coverage for fluctuating values of property at risk is correct.

EXPLANATION:
The value reporting form is an option for commercial property insureds, used when insured values fluctuate frequently. The insured reports values periodically to the insurer, and policy limits are automatically adjusted to the values reported. This eliminates the chance of being underinsured, and also allows the insured to pay premiums commensurate with the changing values.

Question 77 of 100

Question 78

An insured whose legally parked car is damaged by a mudslide may collect for damages under which of the following coverages?

Comprehensive (other than collision) coverage.
Property damage liability coverage.
Medical payments coverage.
Collision coverage.

Question 78 of 100

Answer 78

Your answer: Comprehensive (other than collision) coverage. is correct.

EXPLANATION:
Comprehensive (other than collision) coverage is a type of “open peril” coverage. Unless excluded, losses from “other than collision” are covered.

Question 78 of 100

Question 79

When can an adjuster in California operate under a fictitious name?

Never.
Only when he or she has obtained written permission from the Commissioner.
For a 30 day period only.
For a 60 day period only.

Question 79 of 100

Answer 79

Your answer: Never. is incorrect. The correct answer is: Only when he or she has obtained written permission from the Commissioner..

EXPLANATION:
Only when he or she has obtained written permission from the Commissioner.

Question 79 of 100

Question 80

An adjuster’s report that contains all the facts, evidence and disposition of the claim and is considered to be the final report is known as the:

Full Report.
Field Report.
Interim Report.
Settlement Report.

Question 80 of 100

Answer 80

Your answer: Full Report. is correct.

EXPLANATION:
The “full report” is the third and final report containing all the information gathered.

Question 80 of 100

Question 81

All of the following are reasonable duties of care that are required of employers, EXCEPT:

Provide an adequate number of competent employees.
Provide safe tools and equipment to workers.
Warn workers of obvious dangers.
Make and enforce rules for the safety of all workers.

Question 81 of 100

Answer 81

Your answer: Provide an adequate number of competent employees. is incorrect. The correct answer is: Warn workers of obvious dangers..

EXPLANATION:
Employers are required to warn workers of INHERENT dangers. In the case of workers compensation coverage, this would mean the employer has the duty to warn workers of the dangers that are a part (inherent) to the job. Employers are not required to point out obvious dangers.

Question 81 of 100

Question 82

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

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

Question 82 of 100

Answer 82

Your answer: 3 years of the accident causing the injury. is correct.

EXPLANATION:
Coverage F - Medical Payments will pay expenses incurred as long as they are claimed within three years of the date of the accident.

Question 82 of 100

Question 83

An insured has a $1,000 claim and is able to prove his loss and its value. The adjuster offers $500 knowing that the claimant would probably take the amount because of incurring the cost of an attorney. This is considered

Misrepresenting the policy provisions
False advertising of the insurance product
An unfair trade
An unfair claims practice

Question 83 of 100

Answer 83

Your answer: An unfair claims practice is correct.

EXPLANATION:
This is considered to be an unfair claims settlement act.

Question 83 of 100

Question 84

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

30 calendar days.
15 working days.
15 calendar days.
10 days.

Question 84 of 100

Answer 84

Your answer: 15 working days. is incorrect. The correct answer is: 15 calendar days..

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

Question 84 of 100

Question 85

All of the following statements regarding the Commercial Package Policy are correct, EXCEPT:

Commercial Package Policies can include Ocean Marine and Aviation Insurance coverage.
Almost all commercial risks are eligible for coverage under the Commercial Package Policy.
The insured can choose a variety of eligible commercial coverages to tailor the package to specific business insurance needs.
A complete Commercial Package Policy (CPP) includes a common policy Declarations page, a common policy Conditions sections, and two or more coverage parts.

Question 85 of 100

Answer 85

Your answer: Almost all commercial risks are eligible for coverage under the Commercial Package Policy. is incorrect. The correct answer is: Commercial Package Policies can include Ocean Marine and Aviation Insurance coverage. .

EXPLANATION:
Ocean Marine and/or Aviation insurance are “specialty” policies that cannot be packages together with other commercial risks into a package policy.

Question 85 of 100

Question 86

The insured has a $1,000,000 personal umbrella policy with a $5,000 retention limit. For a $7,000 liability loss not covered under the insured’s personal auto policy, but covered under the umbrella policy, the insurance company would pay:

$5,000.
$3,000.
$2,000.
$1,000.

Question 86 of 100

Answer 86

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

EXPLANATION:
The company will deduct the $5,000 retention limit and pay on the insured’s behalf the sum of $2,000. The retention limit acts a deductible when a loss is covered by the umbrella policy but not under the underlying insurance.

Question 86 of 100

Question 87

An insurance coverage which is designed to supplement other coverages and fill insurance gaps is:

Difference in Conditions insurance.
Special Causes of Loss coverage.
Consequential loss coverage.
Blanket insurance coverage.

Question 87 of 100

Answer 87

Your answer: Special Causes of Loss coverage. is incorrect. The correct answer is: Difference in Conditions insurance..

EXPLANATION:
Difference in conditions insurance is used to cover perils that would ordinarily be excluded or the coverage is limited under standard property forms. Years ago, before flood insurance became available, limited coverage was often written under this form.

Question 87 of 100

Question 88

Under the standard ISO Farm insurance Special Cause of Loss form, coverage for vandalism or breakage of glass is excluded if the premises has been vacant for _____ days or more.

45
15
60
30

Question 88 of 100

Answer 88

Your answer: 60 is correct.

EXPLANATION:
Under the standard ISO Farm insurance policy, if a property has been vacant for 60 or more days prior to the loss, certain perils become excluded. These exclusions include vandalism and glass breakage. Other perils such as fire and water damage could have limited coverage if the vacancy clause of the policy is violated.

Question 88 of 100

Question 89

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 89 of 100

Answer 89

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

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

Question 89 of 100

Question 90

Under the HO-3 form, an “insured location” includes all of following, EXCEPT:

A furnished garage used as a residence
A hotel room where the insured is temporarily residing
Family cemetery plots
Property in an apartment rented to others away from the insured’s residence premises.

Question 90 of 100

Answer 90

Your answer: A hotel room where the insured is temporarily residing is incorrect. The correct answer is: Property in an apartment rented to others away from the insured’s residence premises..

EXPLANATION:
An insured location does not include property in an apartment rented to others that is away from the insured’s residence premises.

Question 90 of 100

Question 91

What symbol is used for a non-owned auto under a Business Automobile policy?

Symbol 9.
Symbol 1.
Symbol 5.
Symbol 8.

Question 91 of 100

Answer 91

Your answer: Symbol 8. is incorrect. The correct answer is: Symbol 9. .

EXPLANATION:
Symbol 9 is used to provide coverage for non-owned autos used for the businesse under a Business Auto policy.

Question 91 of 100

Question 92

The California Insurance Code (CIC) further details the items required on a valid insurance contract. All of the following are required, EXCEPT:

The parties to the contract.
The insured’s mailing address.
The objects of insurance.
The policy period.

Question 92 of 100

Answer 92

Your answer: The parties to the contract. is incorrect. The correct answer is: The insured’s mailing address..

EXPLANATION:
The California Insurance Code (CIC) requires six specific items of information be included in an insurance policy issued in California. The insured’s mailing address is not one of them.

Question 92 of 100

Question 93

Additional Coverages” in a Homeowner Policy would cover:

The dwelling.
Other structures.
Debris removal.
Materials and supplies.

Question 93 of 100

Answer 93

Your answer: Other structures. is incorrect. The correct answer is: Debris removal..

EXPLANATION:
Debris removal is included as an extension of coverage. It is not an additional amount of coverage. However, if the combined loss and debris removal exceed the policy limit for damaged property, an additional 5% of the property coverage limit will be allowed for debris removal.

Question 93 of 100

Question 94

With inland marine insurance bridges, tunnels, and communication towers are referred to as:

Instrumentalities
Subject to the perils of transportation
Rolling stock
Permanent structures

Question 94 of 100

Answer 94

Your answer: Subject to the perils of transportation is incorrect. The correct answer is: Instrumentalities.

EXPLANATION:
These items are referred to as “Instrumentalities” of transportation.

Question 94 of 100

Question 95

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

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 95 of 100

Answer 95

Your answer: To use the private carriers marketing and customer databases to sell more policies. is incorrect. The correct answer is: To provide federal government jobs to insurance agents who would be in charge of selling the WYO policies..

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

Question 95 of 100

Question 96

If an insured carries Coverage C under a Dwelling form, what is the limit for “personal property off the premises”?

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 96 of 100

Answer 96

Your answer: 50% 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 96 of 100

Question 97

An insured is covered under a homeowner policy with the HO-3 form and $500,000 for coverage A. The dwelling is a total fire loss. What is the extra coverage provided by the policy for debris removal if needed?

The policy pays an extra 3% of the coverage A limit.
The policy pays an extra 5% of the coverage A limit.
The policy will only pay its coverage A limit and nothing else for debris removal.
The policy will pay an extra 10% of the coverage A limit.

Question 97 of 100

Answer 97

Your answer: The policy will pay an extra 10% of the coverage A limit. is incorrect. The correct answer is: The policy pays an extra 5% of the coverage A limit..

EXPLANATION:
The policy will pay an additional 5% of the coverage A limit for debris removal.

Question 97 of 100

Question 98

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

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

Question 98 of 100

Answer 98

Your answer: Pay only $500. is incorrect. The correct answer is: Pay the $1,200..

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

Question 98 of 100

Question 99

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 99 of 100

Answer 99

Your answer: Coverage is cancelled immediately. is correct.

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

Question 99 of 100

Question 100

Common and Contract Carriers Liability that covers damage to cargo, may be insured under:

Means of transportation forms.
Motor truck cargo forms.
Transit forms.
Equipment dealer’s forms.

Question 100 of 100

Answer 100

Your answer: Motor truck cargo forms. is correct.

EXPLANATION:
Motor truck cargo forms are used to cover common and contract carriers against damage to the property being transported.

Question 100 of 100