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Flashcards in IA Test 2 Deck (100)
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1

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

Answer Choices: Select the Correct Answer
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 1 of 100

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 1 of 100

2

In computing Business Interruption Losses which of the following is the most important?

Answer Choices: Select the Correct Answer
Accounts receivables
Accounts Payable
Journals and Ledgers
Profit and Loss Statement

Question 2 of 100

Your answer: Profit and Loss Statement is correct.

EXPLANATION:
The profit and loss statements are the must important documents to reconstruct a loss of income loss.


Question 2 of 100

3

The insured’s business is covered under a jewelers block policy. The owner's wife decides to wear an expensive piece of jewelry to a party that is for sale by the business. In case of a loss, what will the insurer do?

Answer Choices: Select the Correct Answer
Deny the claim because of an exclusion
Pay the claim
Pay 50% of the claim
Require evidence that she was modeling the jewelry

Question 3 of 100

The correct answer is: Deny the claim because of an exclusion.

EXPLANATION:
One of the exclusions in the form is to exclude coverage while stock is being worn by the insured, an employee or a family member of either.


Question 3 of 100

4

Under the DP-2 broad form, which of the following losses would not be covered?

Answer Choices: Select the Correct Answer
Damage to the dwelling that is suddenly caused by wild animals.
A picture window is blown out during a tornado.
Vandalism damage caused by a prankster to a dwelling that has been vacant for 14 days.
A roof caves in due to the weight of ice and snow.

Question 4 of 100

Under the DP-2 broad form, which of the following losses would not be covered?

Your answer: Damage to the dwelling that is suddenly caused by wild animals. is correct.

EXPLANATION:
The broad form is a named peril form and does not list damage caused by wild animals as a covered peril.


Question 4 of 100

5

The Earthquake Endorsement will provide coverage to the dwelling and/or personal property with the deductible stated as:

Answer Choices: Select the Correct Answer
$1,000
5% of the limit that applies to all Section I coverages.
$500
$2,500

Question 5 of 100

Your answer: 5% of the limit that applies to all Section I coverages. is correct.

EXPLANATION:
The Earthquake Endorsement has a base deductible is 5% of the limit that applies to all Section I coverages, but never less than $500.


Question 5 of 100

6

Which of the following may cancel a Commercial Package Policy?

Answer Choices: Select the Correct Answer
The first named insured
Any named insured
The agent of record
None of the responses listed are correct

Question 6 of 100

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 6 of 100

7

Betty Jones claims that the bicycle manufactured last year by Daryl Lanier's firm was the cause of her daughter's accident. Which of the following coverages would have provided protection for Mr. Lanier?

Answer Choices: Select the Correct Answer
Commercial General Liability
Owners and Contractors Protective Liability
Workers Compensation
Contractual Liability

Question 7 of 100

Your answer: Contractual Liability is incorrect. The correct answer is: Commercial General Liability.

EXPLANATION:
Commercial General Liability policies include products liability coverage. The other policies mentioned cannot include this coverage.


Question 7 of 100

8

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.

Answer Choices: Select the Correct Answer
45
15
60
30

Question 8 of 100

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 8 of 100

9

The limit of liability for "business personal property" will be automatically increased by ______ to provide for seasonal variation under a standard ISO Businessowners policy.

Answer Choices: Select the Correct Answer
25%
The current rate of inflation
8%
15% unless a different percentage amount is shown on the Declarations page.

Question 9 of 100

The correct answer is: 25%.

EXPLANATION:
The business personal property will increase by 25% to provide coverage for seasonal variations in stock but only if the insured had insured the property for at least 100% of its monthly average over the last 12 months.


Question 9 of 100

10

If an adjusting firm intends to add a new branch office, what action must be taken?

Answer Choices: Select the Correct Answer
Report the new location to the Commissioner immediately
Report the new location within 30 days
Must first obtain a branch office certificate
No action needs to be taken

Question 10 of 100

The correct answer is: Must first obtain a branch office certificate.

EXPLANATION:
Adjusters cannot conduct business from any location other than that shown on the records of the Commissioner as his or her place of business unless he or she has received a branch location certificate for that location. A licensee must notify the Commissioner in writing within 10 days after the closing or changing the location of a branch office.


Question 10 of 100

11

Amelia has suffered a covered collision loss to her vehicle. The insurer requires that her vehicle be repaired at a repair shop of the insurer's choice. The insurer:

Answer Choices: Select the Correct Answer
Is guilty of an unfair claims practice act.
Can make this request.
Waives the deductible, if any, in this case.
Can usually get the work done for less and can help to reduce insurance costs.

Question 11 of 100

Your answer: Is guilty of an unfair claims practice act. is correct.

EXPLANATION:
The insurer can recommend a repair shop, but cannot require that a particular shop be used.


Question 11 of 100

12

Which of the following is the definition of "person" according to the California Adjuster Act?

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

Question 12 of 100

Your answer: Any individual, firm, company, association, organization, partnership, limited liability company, and corporation. is correct.

EXPLANATION:
According to the California Insurance Code, a "person" is defined as: "Any individual, firm, company, association, organization, partnership, limited liability company, and corporation."


Question 12 of 100

13

Robert boards his dog at a kennel while he is on vacation. While at the kennel, the dog bites a meter reader. How would Robert's HO-3 policy respond to the meter reader's request for repayment of his emergency room costs?

Answer Choices: Select the Correct Answer
The insurer will pay for necessary emergency room expenses under the Medical Payments to Others provision.
The insurer will pay for the emergency room fees only if Robert is found negligent in leaving his dog at the kennel.
The insurer will not pay for the loss because the injuries occurred away from the insured location.
The insurer will not pay for the loss because it arose out of the kennel owner's failure to render professional services.

Question 13 of 100

The correct answer is: The insurer will pay for necessary emergency room expenses under the Medical Payments to Others provision..

EXPLANATION:
The policy stipulates that "Medical Payments to Others" applies if caused by an animal owned or in the care of the insured either on or off the insured's premises. This could also develop into a liability claim if the insured is brought into a law suit.

14

Which of the following statements about "additional coverages" in most property insurance policies is true?

Answer Choices: Select the Correct Answer
They are automatically included only when the loss is less than a deductible.
They are optional on the part of the insured.
They are included at no extra cost.
They are included for a minimum premium.

Question 14 of 100

Your answer: They are included at no extra cost. is correct.

EXPLANATION:
An example of an "additional coverage" would be debris removal, which is automatically included in most property forms.


Question 14 of 100

15

Trevor purchases a condemned house in a run-down neighborhood that is scheduled for demolition by the city. He paid $10,000 for the house and wants to protect his financial investment by purchasing insurance. Which of the following statements is true?

Answer Choices: Select the Correct Answer
The property is not insurable because it is not definable.
The property is not insurable because the loss is expected.
The property is not insurable because it does not have a quantifiable value.
The property is not insurable because the loss would not be substantial.

Question 15 of 100

Your answer: The property is not insurable because the loss is expected. is correct.

EXPLANATION:
A property scheduled to be demolished is an expected loss and losses must be uncertain or not expected in order to be insurable.


Question 15 of 100

16

Under Coverage E - Scheduled Farm Property, how is the property covered?

Answer Choices: Select the Correct Answer
For the limit shown in the policy declarations
Unlimited
Blanket coverage
Replacement cost basis

Question 16 of 100

he correct answer is: For the limit shown in the policy declarations.

EXPLANATION:
The property is covered for the limit shown on the declarations page of the policy for the property specifically scheduled.


Question 16 of 100

17

Which of the following would NOT be covered by a flood insurance policy?

Answer Choices: Select the Correct Answer
Overflow of water from a pond on the insured property
Mudslides from recent heavy rain.
Collapse of land along the shore of a body of water
Inundation and overflow of surface waters

Question 17 of 100

The correct answer is: Mudslides from recent heavy rain..

EXPLANATION:
Damage caused by mudflow is covered under the policy. Mudslides are not.


Question 17 of 100

Submit

18

When a claimant is represented by an attorney, which of the following is prohibited by the adjuster?

Answer Choices: Select the Correct Answer
Negotiate with a claimant’s attorney
Make a claim check payable to the claimant
Contact the claimant without the consent of the attorney
Have an attorney prepare a release

Question 18 of 100

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

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


Question 18 of 100

19

Which of the following watercraft would be covered under the liability section (Section II) of the HO form?

Answer Choices: Select the Correct Answer
Watercraft with a 40 horsepower outboard motor
A 28 foot sailboat
A kayak
Watercraft with a 100 horsepower inboard motor

Question 19 of 100

The correct answer is: A kayak.

EXPLANATION:
A kayak would be covered with no endorsement or additional premium under Section II of a homeowner policy.


Question 19 of 100

20

Motels insured under an ISO Businessowners may not exceed how many stories?

Answer Choices: Select the Correct Answer
3 stories
4 stories
5 stories
No limit

Question 20 of 100

Your answer: 3 stories is correct.

EXPLANATION:
Motels not exceeding three stories may be insured. There is no floor area restriction. Motels closed for more than 30 days are not eligible.


Question 20 of 100

21

In the case of a first-party automobile physical damage claim in California, the auto insurance company must exercise its right to inspect the damaged vehicle:

Answer Choices: Select the Correct Answer
Within 48 hours of receiving the claims notice.
Anytime within 30 days of receiving the claims notice.
Within 7 business days after receiving the notice of claim.
Within 6 business days after receiving the notice of claim.

Question 21 of 100

The correct answer is: Within 6 business days after receiving the notice of claim..

EXPLANATION:
The California Fair Claims Settlement Practices Regulations state that if an insurer chooses to exercise its right to inspect the damaged vehicle on a first-party claim, it must do so within 6 business days of receiving the claims notice.


Question 21 of 100

22

All of the following would be considered “property damage”, EXCEPT:

Answer Choices: Select the Correct Answer
Mobile equipment damaged by the insured.
A pedestrian injured by the insured and off work one week.
Damage to a public sidewalk caused by the insured.
Loss of the use of a public sidewalk which has been damaged by the insured.

Question 22 of 100

The correct answer is: A pedestrian injured by the insured and off work one week..

EXPLANATION:
The injury to the pedestrian is considered to be bodily injury. All of the other choices are considered to be property damage.


Question 22 of 100

23

Which of the following would meet the definition of "twenty-four hour" coverage?

Answer Choices: Select the Correct Answer
Joint issuance of a workers compensation policy and a disability insurance policy
Joint issuance of a workers compensation policy and a life insurance policy
Joint issuance of a life insurance policy and a disability insurance policy
Issuance of a workers compensation policy

Question 23 of 100

The correct answer is: Joint issuance of a workers compensation policy and a disability insurance policy.

EXPLANATION:
Twenty-four hour coverage is the joint issuance of a workers compensation policy with a disability insurance policy, health care service plan contract, or other medical insurance coverage for non-occupational injuries and illnesses. This product does not include a life insurance policy.


Question 23 of 100

24

Basic benefits available under a typical workers compensation policy include which of the following?

I. Medical expenses.
II. Loss of income.
III. Rehabilitation.
IV. Pain and suffering.

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

Question 24 of 100

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

EXPLANATION:
Workers compensation indemnifies an injured or ill worker for direct expenses resulting from the cause with rehabilitation provided to encourage a worker to return to productivity. It does not pay for intangible losses such as paid and suffering.


Question 24 of 100

25

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

Answer Choices: Select the Correct Answer
$500.
$2,500.
$1,000.
$5,000.

Question 25 of 100

Your answer: $5,000. is incorrect. The correct answer is: $500..

EXPLANATION:
The Commissioner, in lieu of suspending or revoking a license, may impose a civil penalty not to exceed $500 upon a licensee.


Question 25 of 100

26

In a liability situation, "proximate cause" includes what important feature?

Answer Choices: Select the Correct Answer
An unbroken chain of events must lead to the bodily injury or property damage.
The cause of the loss must be proven as negligent.
The indirect cause of loss must be proven before the proximate cause can be proven.
An intervening cause of loss must have broken the chain of events for the proximate cause of the loss to be proven.

Question 26 of 100

Your answer: An unbroken chain of events must lead to the bodily injury or property damage. is correct.

EXPLANATION:
There must be an unbroken link or chain of events between the occurrence and the bodily injury or property damage.


Question 26 of 100

27

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

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

Question 27 of 100

The correct answer is: The California Department of Insurance .

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 27 of 100

28

Which of the following is the meaning of a "time element" loss?

Answer Choices: Select the Correct Answer
Incurred losses such as loss of rents
Amount of time allowed resolving a claim
Specific time and date that the loss occurred
Policy effective date versus date of loss

Question 28 of 100

The correct answer is: Incurred losses such as loss of rents.

EXPLANATION:
Time element losses provide coverage for loss of income (e.g. loss of rental income or loss of income from a business) where there is an element of time to restore the premise to its original condition before the loss.


Question 28 of 100

29

Garagekeepers specified causes of loss coverage would apply to each of the following, EXCEPT:

Answer Choices: Select the Correct Answer
Fire.
Vandalism.
Theft.
Windstorm.

Question 29 of 100

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

EXPLANATION:
Specified causes of loss are named peril coverage for physical damage and are not nearly as broad as comprehensive coverage. Windstorm happens to not be one of the named perils.


Question 29 of 100

30

Which of the following is covered under Coverage A of the HO-2?

Answer Choices: Select the Correct Answer
Paint to be used on the building
Riding lawnmower used to service the premises
A detached fence
Grave marker

Question 30 of 100

Your answer: Paint to be used on the building is correct.

EXPLANATION:
The paint used for the building would be covered under the building limit under Coverages A and B (other structures). The mower is personal property covered under Coverage C. A detached fence is considered to be a separate structure and is covered under Coverage B. Grave markers have a separate limit in the policy for $5,000.


Question 30 of 100