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Flashcards in IA Test 22 Deck (100)
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1

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 1 of 100

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

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 1 of 100

2

Tommy's Tip Top TV Store is delivering a new flat screen TV to Jerry's house. The delivery people set the TV down on the floor in the hallway to get a better grip. While picking it up, the TV makes deep scratches in the wood floor. How will the business auto policy for Tommy's Tip Top TV Store respond to Jerry's demand for damage to his floor?

Answer Choices: Select the Correct Answer
There is no coverage for the damage to the floor.
The damage to the floor is covered under the liability coverage of the business auto form.
The damage to the floor is covered under the CGL form.
The damage must result from an auto accident before coverage will apply.

Question 2 of 100

Your answer: The damage to the floor is covered under the CGL form. is incorrect. The correct answer is: The damage to the floor is covered under the liability coverage of the business auto form..

EXPLANATION:
The business auto form provides property damage liability coverage caused by the unloading or loading of property from the time it is picked up until the time it is delivered to its final destination.


Question 2 of 100

3

Under workers compensation coverage, if an employee is injured while participating in a voluntary soft ball game at the optional company picnic, compensation will be:

Answer Choices: Select the Correct Answer
denied.
reduced by 50%
paid as usual.
reduced proportionately by the employees degree of negligence

Question 3 of 100

Your answer: reduced by 50% is incorrect. The correct answer is: denied..

EXPLANATION:
If the injury arises out of voluntary participation in any off-duty recreational, social, or athletic activity not constituting part of the employee's work-related duties, no benefits will be paid. However, if these activities are a reasonable expectancy of, or are expressly required by the employer, benefits will be paid.


Question 3 of 100

4

Any misinformation provided by an applicant which is such that the insurance company would not have issued a policy if the true facts were known is:

Answer Choices: Select the Correct Answer
Material misrepresentation.
Malfeasance.
Fraud.
Concealment.

Question 4 of 100

Your answer: Concealment. is incorrect. The correct answer is: Material misrepresentation. .

EXPLANATION:
This statement defines material misrepresentation, which is deliberately withholding an important fact that would have a bearing on the acceptability and/or pricing of the risk.


Question 4 of 100

5

An inland marine coverage which covers the insured's merchandise held for sale, such property that is sold but not delivered, customers property in the care and custody of the insured, and property being transported to or from the insured, is a:

Answer Choices: Select the Correct Answer
Dealers form
Commercial articles floater.
Floor plan merchandise coverage form.
Bailee's customers policy.

Question 5 of 100

Your answer: Commercial articles floater. is incorrect. The correct answer is: Dealers form.

EXPLANATION:
An equipment dealers form is an example.


Question 5 of 100

6

Betty Jones claims that the bicycle manufactured last year by Darryl 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 6 of 100

Your answer: Commercial General Liability is correct.

EXPLANATION:
The general liability policy provides products coverage and would respond to cover this claim.


Question 6 of 100

7

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

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

Question 7 of 100

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


Question 7 of 100

8

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

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

Question 8 of 100

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

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


Question 8 of 100

9

Registration of a non-licensed independent adjuster in California during an emergency situation is valid for:

Answer Choices: Select the Correct Answer
90 working days.
180 days.
One year.
120 days.

Question 9 of 100

Your answer: 180 days. is correct.

EXPLANATION:
Registration of a non-licensed adjuster in an emergency situation is valid for a period of 180 days from the date of a registration letter is sent to the Commissioner from the supervising licensed adjuster or admitted insurer. Before the lapse of that period, the Commissioner may grant a further 180-day extension as deemed appropriate upon written request from the supervising licensed adjuster or the admitted insurer.


Question 9 of 100

10

According to the commercial auto policy definitions, an "accident:"

Answer Choices: Select the Correct Answer
Includes continuous or repeated exposure to the same conditions.
Must be sudden and unexpected.
Must be unexpected and unpreventable.
Is any event that causes injury or damage.

Question 10 of 100

Your answer: Must be sudden and unexpected. is incorrect. The correct answer is: Includes continuous or repeated exposure to the same conditions. .

EXPLANATION:
The auto forms of the past used to simply cover the term "accident." It did not include continuous or repeated exposure to the same conditions. Many claims were denied because of this restriction. The current forms now include the broader definition and provide better coverage.


Question 10 of 100

11

Tort Law applies to all of the following, EXCEPT:

Answer Choices: Select the Correct Answer
Liability arising from the commission of an unintentional tort.
Liability arising from negligence.
Liability arising from a breach of duty.
Liability arising from breach of contract.

Question 11 of 100

Your answer: Liability arising from breach of contract. is correct.

EXPLANATION:
A tort is a civil wrong, not arising from a contract. Contract law is a completely different branch of law.


Question 11 of 100

12


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

Answer Choices: Select the Correct Answer
The parties to the contract.
The insured's mailing address.
The objects of insurance.
The policy period.

Question 12 of 100

Your answer: The insured's mailing address. is correct.

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 12 of 100

13

Under what circumstances may an adjuster contact a claimant who is represented by an attorney?

Answer Choices: Select the Correct Answer
If permission is granted by the attorney.
If permission is granted by the claimant.
If permission is granted by the insurance company.
If permission is granted by the court.

Question 13 of 100

Your answer: If permission is granted by the attorney. is correct.

EXPLANATION:
Permission to contact a claimant represented by an attorney must be granted by the attorney representing the claimant.


Question 13 of 100

Submit

14

Premises liability exposure is faced by:

I. Banks.
II. Landlords.
III. Retail stores.
IV. Car dealers.

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

Question 14 of 100

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

EXPLANATION:
All parties/businesses that occupy the covered premises, or have a financial stake in the premises, face liability exposure. The customer is the potential claimant.


Question 14 of 100

15

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

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

Question 15 of 100

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

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


Question 15 of 100

16

An insurance company in California has cancelled a Homeowners policy for a reason acceptable by law. How long does the insurer have to return the unearned premium to the insured?

Answer Choices: Select the Correct Answer
The unearned premium must be returned along with the notice provided to the insured that the policy is being cancelled.
Within 30 days of the date of cancellation.
Within 25 days of the date of cancellation.
The unearned premium must be returned within 10 days of mailing the notice of cancellation to the insured.

Question 16 of 100

Your answer: Within 30 days of the date of cancellation. is incorrect. The correct answer is: Within 25 days of the date of cancellation..

EXPLANATION:
When a Homeowners policy is cancelled in California, any unearned premium must be returned to the insured within 25 days of the cancellation date of the policy.


Question 16 of 100

17

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

Answer Choices: Select the Correct Answer
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 17 of 100

Your answer: Only when he or she has obtained written permission from the Commissioner. is correct.

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


Question 17 of 100

18

All of the following are violations of "good faith duty" by the adjuster, EXCEPT:

Answer Choices: Select the Correct Answer
Paying a settlement within 30 days after an agreement is reduced to writing.
Denying coverage or attempting to settle a claim on the basis of an application which the insurer knows was altered without notice to, or knowledge or consent of, the insured.
Failing to pay the amount of any claim due any person insured by the contract within 60 days after receipt of satisfactory proof of loss from the claimant when such failure is arbitrary, capricious, or without probable cause.
Misrepresenting pertinent facts or insurance policy provisions relating to any coverages at issue.

Question 18 of 100

Your answer: Paying a settlement within 30 days after an agreement is reduced to writing. is correct.

EXPLANATION:
Paying a claim within 30 days after an agreement is reduced to writing is not a violation but a requirement. The other responses are violations of "good faith duty."


Question 18 of 100

19

The insured's diamond ring valued at $10,000 has been destroyed in a fire. She is insured by a HO-3 policy. What is the responsibility of the insurance company with respect to this loss?

Answer Choices: Select the Correct Answer
Pay the ACV of the ring
Deny the claim because of the jewelry limitation
Pay the loss and waive the deductible
Pay only the replacement value of the ring and waive any deductible

Question 19 of 100

Your answer: Pay only the replacement value of the ring and waive any deductible is incorrect. The correct answer is: Pay the ACV of the ring.

EXPLANATION:
The policy contains a limitation for the theft of the jewelry. Since the ring was destroyed in the fire the insurer is responsible for the actual cash value of the ring unless the insured purchased replacement cost coverage.


Question 19 of 100

20

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

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

Question 20 of 100

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

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


Question 20 of 100

21

Samantha misses three days from work because of a lawsuit against her, which requires her appearance in court. She loses $80 in wages each day that she is at court. Her CGL insurance company will pay:

Answer Choices: Select the Correct Answer
$240
$300
$160
$0

Question 21 of 100

Your answer: $240 is correct.

EXPLANATION:
The supplementary coverage within a general liability policy provides for wage reimbursement of up to $250.00 per day.


Question 21 of 100

22

Coverage E under the farm forms covers which of the following?

Answer Choices: Select the Correct Answer
Unscheduled personal property
Scheduled personal property
Scheduled real property coverage
Blanket real property coverage

Question 22 of 100

Your answer: Scheduled personal property is correct.

EXPLANATION:
Coverage E covers scheduled farm personal property. Each item to be covered is listed and an amount of insurance is stated.


Question 22 of 100

23

Which of the following would not be improvements or betterments?

Answer Choices: Select the Correct Answer
Carpet
Furniture
Interior walls
Electrical wiring

Question 23 of 100

Your answer: Furniture is correct.

EXPLANATION:
Improvements and betterments are items added to a tenant’s rented structure that are permanent in nature. The tenant has insurable interest in them during occupancy of the building, and therefore can insure them. Furniture is not an improvement or betterment; it is personal property.


Question 23 of 100

24

Which of the following are qualifications of an applicant for an independent insurance adjuster license in California?

I. Be at least 18 years of age.
II. Must not have committed acts or crimes constituting grounds for denial of a license.
III. Must have had at least 6 months of experience in adjusting insurance claims or the equivalent as determined by the Commissioner.
IV. Must pay the required fees.

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

Question 24 of 100

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

EXPLANATION:
An applicant must have two years of experience. All the other statements are correct.


Question 24 of 100

25

Under the dwelling insurance program, an endorsement may be attached to the policy to cover dwellings during the course of construction. The insurance company must be advised when construction is completed, and within ____ after the insured takes occupancy of the dwelling.

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

Question 25 of 100

Your answer: 30 days is correct.

EXPLANATION:
When the intended occupant of a dwelling under construction is the named insured, the dwelling under construction endorsement is attached to the dwelling policy to provide coverage. The insurance company must be advised when construction is completed and within 30 days after the insured takes occupancy of the dwelling.


Question 25 of 100

26

Which of the following is NOT a part of a Commercial Package Policy?

Answer Choices: Select the Correct Answer
Declaration page
Condition section
One or more policy parts
Earthquake coverage

Question 26 of 100

Your answer: Earthquake coverage is correct.

EXPLANATION:
Earthquake coverage must be added by endorsement for coverage to apply.


Question 26 of 100

27

Which of the following is a true statement regarding crime insurance with computer fraud coverage?

Answer Choices: Select the Correct Answer
Applies to criminal activity wherein the perpetrator gave false electronic instructions to remove insured’s funds from a bank account
Covers acts of employees
Covers losses that occur as the result of a messenger of the insured
Does not provide coverage on a "worldwide basis"

Question 27 of 100

Your answer: Applies to criminal activity wherein the perpetrator gave false electronic instructions to remove insured’s funds from a bank account is correct.

EXPLANATION:
Computer fraud covers loss of or damage to money, securities and other property due to the use of a computer to fraudulently transfer that property from inside the premises of a banking premises to a place or person (other than a messenger) outside the premises.


Question 27 of 100

28

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

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

Question 28 of 100

Your answer: Utility Services - Direct Damage is incorrect. The correct answer is: Utility Services - Time Element.

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


Question 28 of 100

29

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

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

Question 29 of 100

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

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


Question 29 of 100

30

An adjuster has procured a photograph of the scene of an accident on a claim that he/she is adjusting. This photograph is placed into the claims file as which of the following types of evidence?

Answer Choices: Select the Correct Answer
Criminal
Real
Demonstrative
Documentary

Question 30 of 100

Your answer: Documentary is correct.

EXPLANATION:
Documentary evidence is any evidence that is produced in the form of a "document". Most people think of written documentation, however a photograph or a video can be preserved therefore, they are considered to be documentary evidence.


Question 30 of 100