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Flashcards in IA Test 26 Deck (100)
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1

What is the purpose of an adjuster's initial report?

Answer Choices: Select the Correct Answer
It provides the results of the initial investigation of the claim.
It provides an interim claim status.
It provides details of medical records and claim outlines the demands of claimants.
It provides an evaluation of the pain and suffering demands of a claimant.

Question 1 of 100

Your answer: It provides the results of the initial investigation of the claim. is correct.

EXPLANATION:
This report merely details the result of the initial investigation and not the anticipated end result or even if coverage is applicable.


Question 1 of 100

2

Which of the following would not be eligible for coverage under a livestock floater?

Answer Choices: Select the Correct Answer
Poultry
Cattle
Sheep
Swine

Question 2 of 100

Your answer: Poultry is correct.

EXPLANATION:
Poultry is not eligible property under the livestock floater.


Question 2 of 100

3

A Commercial General Liability form provides automatic coverage for newly acquired organizations for up to:

Answer Choices: Select the Correct Answer
Thirty days.
Ninety days.
One year.
Six months.

Question 3 of 100

Your answer: Thirty days. is incorrect. The correct answer is: Ninety days..

EXPLANATION:
Newly acquired organizations are covered for up to 90 days.


Question 3 of 100

4

What should be the central goal of the claims adjuster?

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

Question 4 of 100

Your answer: Comply with the provisions of the insurance contract to obtain a full release settlement of the claim. is correct.

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


Question 4 of 100

5

Helena has not paid her insurance premium for a significant amount of time. Which of the following is likely to happen in this scenario?

Answer Choices: Select the Correct Answer
Her policy will be "voided to inception".
Her policy will be suspended.
Her policy will be voided.
Her policy will be cancelled.

Question 5 of 100

Your answer: Her policy will be cancelled. is correct.

EXPLANATION:
Helena's policy will be cancelled for "nonpayment of premium".


Question 5 of 100

6

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

Answer Choices: Select the Correct Answer
A small retail store.
A neighborhood tavern.
An auto body shop.
A branch bank.

Question 6 of 100

Your answer: An auto body shop. is incorrect. The correct answer is: A small retail store. .

EXPLANATION:
The BOP is intended for small, owner-operated light businesses. Bars and taverns, auto body and auto repair shops are excluded from the BOP. The branch bank would not meet the general criteria due to the large crime exposure.


Question 6 of 100

7

A 2 to 4-Family Dwelling is covered under the NFIP for incidental occupancies if it occupies less than:

Answer Choices: Select the Correct Answer
25% of the building's replacement cost value.
25% of the building's actual cash value.
25% of the building's total floor area.
25% of the building's common living areas.

Question 7 of 100

our answer: 25% of the building's total floor area. is correct.

EXPLANATION:
The NFIP provides coverage for incidental occupancies for a 2 to 4-Family Dwelling if it occupies less than 25% of the building's total floor area.


Question 7 of 100

8

If an employee accidentally turns off the restaurant’s freezer and the entire inventory of ice cream is ruined, does the Businessowners Coverage Form cover the loss?

Answer Choices: Select the Correct Answer
The loss is covered
The loss is not covered
The coverage is limited to $500.00 as an extension of coverage
The loss is covered for ACV value

Question 8 of 100

Your answer: The loss is covered is incorrect. The correct answer is: The loss is not covered.

EXPLANATION:
This loss is not covered. It can be covered using BP 04 15–Spoilage Coverage endorsement.


Question 8 of 100

9

Which of the following time periods is ordinary payroll coverage limited to in case of a business income loss under the BOP?

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

Question 9 of 100

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

EXPLANATION:
The insurance company pays for only the loss of business income sustained during the restoration period that takes place within 12 consecutive months after the date of the covered loss or damage. However, it pays for ordinary payroll expenses for only 60 days after the date of loss unless a higher number of days is on the declarations.


Question 9 of 100

10

A settlement in which the claimant receives payment in installments over a period of time instead of a lump sum is:

Answer Choices: Select the Correct Answer
A Structured Settlement.
Scheduled Payment Release.
Full Release Settlement.
Open-Ended Release.

Question 10 of 100

Your answer: A Structured Settlement. is correct.

EXPLANATION:
A structured settlement is usually reserved for large settlements. Structured settlements may call for part of the full amount to be paid as a lump sum.


Question 10 of 100

11

All of the following items would be covered under a Personal Property Replacement Cost Endorsement attached to a Homeowners policy, EXCEPT:

Answer Choices: Select the Correct Answer
A refrigerator in the covered home.
Jewelry that is described in the policy and subject to an agreed value loss settlement.
Carpeting that was damaged inside the covered dwelling.
An awning covering the front porch of the insured home.

Question 11 of 100

Your answer: Jewelry that is described in the policy and subject to an agreed value loss settlement. is correct.

EXPLANATION:
If the property is already subject to an "agreed value" loss settlement under the Homeowners policy, it will not be covered by the Personal Property Replacement Cost Endorsement.


Question 11 of 100

12

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

Answer Choices: Select the Correct Answer
The Obligee
The Surety
The Sub-contractors
The Contractor

Question 12 of 100

Your answer: The Obligee is correct.

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


Question 12 of 100

13

Which of the following coverages are not automatically included in the BOP?

Answer Choices: Select the Correct Answer
Seasonal increase in contents coverage
Loss of income
Employee dishonesty
General liability coverages

Question 13 of 100

Your answer: Employee dishonesty is correct.

EXPLANATION:
Employee dishonesty coverage is not automatically included in the BOP, it must be added by endorsement for an additional premium.


Question 13 of 100

14

Which of the following is NOT a claim settlement option for liability claims?

Answer Choices: Select the Correct Answer
Excessive amounts claimed.
Lost wages claimed.
Loss of Use.
Disfigurement.

Question 14 of 100

Your answer: Excessive amounts claimed. is correct.

EXPLANATION:
Excessive amounts claimed are always contested by the insurer. Liability losses are categorized as "special damages"or "general damages." Special damages include medical expenses and loss of wages or the costs of other known expenses. General damages would include pain and suffering, punitive damages, loss of consortium, disfigurement and disability claims.


Question 14 of 100

15

What is the "retained limit" of a Personal Umbrella policy?

Answer Choices: Select the Correct Answer
The cost of defending the insured in a lawsuit.
Supplementary Payments coverage.
A deductible that the insured pays when the Personal Umbrella policy covers a claim that was excluded by the underlying liability policy.
A percentage of the policy limits.

Question 15 of 100

Your answer: A deductible that the insured pays when the Personal Umbrella policy covers a claim that was excluded by the underlying liability policy. is correct.

EXPLANATION:
This is the deductible that the insured pays under the Personal Umbrella policy when the underlying liability coverage does not apply on a claim, but the Personal Umbrella policy will cover the claim.


Question 15 of 100

16

Kate is a claims representative who has been involved in adjusting a very complex claim. During a meeting with the claimant and the claimant's attorney, Kate asks the claimant to sign an authorization for access to his medical records. Which of the following is the term used to describe this stage of the claims process?

Answer Choices: Select the Correct Answer
Evaluation.
Resolution.
Investigation.
Negotiation.

Question 16 of 100

Your answer: Investigation. is correct.

EXPLANATION:
If Kate is requesting authorization to review information, the term best used to describe this stage is "investigation".


Question 16 of 100

17

Which of the following are covered under the Homeowners "Additional Residence Rented to Others" endorsement?

I. Personal Liability (Injury)
II. Medical Payment to Others
III. Dwelling
IV. Personal Property

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

Question 17 of 100

Your answer: I and II only. is correct.

EXPLANATION:
The "Additional Residence Rented to Others" endorsement provides personal liability (injury) and medical payments to others coverage to cover the insured's liability arising out of the ownership of a residence regularly rented to others.


Question 17 of 100

18

In California, which of the following is an untrue statement regarding the adjustment of a total auto physical damage loss?

Answer Choices: Select the Correct Answer
The insurer may elect a cash settlement that is based upon the actual cost of a "comparable automobile" less any deductible provided in the policy.
A cash settlement does not include sales taxes.
The cash settlement includes one-time fees incident to transfer of evidence of ownership of a comparable automobile.
The cash settlement must also include the license fee and other annual fees to be computed based upon the remaining term of the loss vehicle’s current registration.

Question 18 of 100

Your answer: The cash settlement includes one-time fees incident to transfer of evidence of ownership of a comparable automobile. is incorrect. The correct answer is: A cash settlement does not include sales taxes..

EXPLANATION:
The cash settlement amount must include all applicable taxes, license fees and other one-time fees incident to transfer of evidence of ownership of a comparable automobile. This amount must also include the license fee and other annual fees to be computed based upon the remaining term of the loss vehicle’s current registration.


Question 18 of 100

19

Which of the following bests describes the process of mediation?

Answer Choices: Select the Correct Answer
A summons to give testimony
Estoppel because of certain acts of others
Both parties present their dispute to a person usually in the legal profession; nothing is binding on either party
All parties submit their differences to a disinterested third party; the result is binding on both parties

Question 19 of 100

Your answer: Both parties present their dispute to a person usually in the legal profession; nothing is binding on either party is correct.

EXPLANATION:
In mediation, both opposing parties present their dispute to an impartial third party, usually a trial lawyer or retired judge, who helps the parties analyze their dispute and devise a compromise. Nothing is binding on either party until an agreement is formulated and agreed to by the opposing parties.


Question 19 of 100

20

In order for a claim to be a "products" claim, which of the following must be satisfied?

Answer Choices: Select the Correct Answer
Injuries sustained must have occurred on the insured's premises.
The insured in most cases must have relinquished possession of the product to the purchaser.
A single limit of liability must be provided.
An employee injury must have occurred.

Question 20 of 100

Your answer: The insured in most cases must have relinquished possession of the product to the purchaser. is correct.

EXPLANATION:
Premises liability ends and Products Liability begins the moment the product is relinquished to the purchaser.


Question 20 of 10

21

After a Homeowners policy in California has been in effect for more than one year, the insurer may cancel the policy for any reason at the anniversary date, so long as the insured is notified:

Answer Choices: Select the Correct Answer
At least 25 days in advance of the anniversary date.
At least 30 days in advance of the anniversary date.
At least 20 days in advance of the cancellation date.
At least 45 days in advance of the cancellation date.

Question 21 of 100

Your answer: At least 45 days in advance of the cancellation date. is correct.

EXPLANATION:
The insurer may cancel the policy for any reason at the anniversary date, so long as the insured is notified at least 45 days in advance of the cancellation date of the policy.


Question 21 of 100

22

Which of the following losses is NOT excluded under the Physical Damage coverage of a personal auto policy?

Answer Choices: Select the Correct Answer
Damage to a covered auto while being used as part of a car pool.
Damage to equipment designed for the detection of radar.
Loss caused by freezing of the cooling system.
Loss of custom furnishings in a customized van.

Question 22 of 100

Your answer: Damage to a covered auto while being used as part of a car pool. is correct.

EXPLANATION:
An exception is made in the policy to allow coverage while the vehicle is involved in a car pool. Coverage is excluded if the vehicle is used as a livery. The other three choices are excluded. Coverage for the custom furnishings in a van must be added by endorsement.


Question 22 of 100

23

With a "full release settlement" of an insurance claim:

Answer Choices: Select the Correct Answer
The claimant does not have to sign a release.
The insurer can make payments over 90 days.
The insurer has 60 days to make payment.
All damages are paid immediately in one lump sum.

Question 23 of 100

Your answer: All damages are paid immediately in one lump sum. is correct.

EXPLANATION:
A "full release settlement" is also known as a "final release" and all sums due have been paid and the file is closed.


Question 23 of 100

24

Jonathan, a licensed California independent adjuster, has received a notice of claim from an insured. How soon must is he transmit this notice to the insurer?

Answer Choices: Select the Correct Answer
Within 5 calendar days
Within 10 calendar days
Within 21 calendar days
Immediately

Question 24 of 100

Your answer: Immediately is correct.

EXPLANATION:
Upon receiving notice of claim, every licensee or claims agent must immediately transmit notice of claim to the insurer. Failure of the licensee or claims agent to immediately transmit notice of claim to the insurer will constitute a separate and distinct violation of California Insurance Code

25

A type of insurance that permits an insured to collect from his/her own insurance company, without proving the negligence of a third-party, is known as:

Answer Choices: Select the Correct Answer
Intentional negligence.
All-risk.
No-fault.
Non-negligence.

Question 25 of 100

Your answer: No-fault. is correct.

EXPLANATION:
No-fault insurance allows an insured to collect from his or her own insurance policy without the need to prove the negligence of a third-party. No-Fault Automobile policies and Workers Compensation coverage fall into the "No-Fault" category.


Question 25 of 100

26

On a Business Auto policy, Symbol #8 represents:

Answer Choices: Select the Correct Answer
Hired autos.
Non-owned autos.
Specifically described autos.
Owned private passenger cars.

Question 26 of 100

Your answer: Specifically described autos. is incorrect. The correct answer is: Hired autos..

EXPLANATION:
Symbol #8 is for liability caused by hired autos.


Question 26 of 100

27

Milton agrees to steal and wreck Albert's car for $4,000, so that Albert can collect $8,000 under his auto insurance policy. Which of the elements of a valid contract are missing in this agreement?

Answer Choices: Select the Correct Answer
A valuable consideration.
Legal purpose.
Competent parties.
An offer and an acceptance.

Question 27 of 100

Your answer: Legal purpose. is correct.

EXPLANATION:
All elements of a valid contract are present except a legal purpose.


Question 27 of 100

28

Property with no occupants or contents is considered to be _____ whereas property with no occupants but with contents is considered:

Answer Choices: Select the Correct Answer
Occupied/Unoccupied
Rented/Unrented
Vacant/Unoccupied
Unrestricted/Restricted

Question 28 of 100

Property with no occupants or contents is considered to be _____ whereas property with no occupants but with contents is considered:

Answer Choices: Select the Correct Answer
Occupied/Unoccupied
Rented/Unrented
Vacant/Unoccupied
Unrestricted/Restricted

Question 28 of 100

29

Under the Section II -- Personal Liability of a Homeowner policy, a cemetery plot is considered to be:

Answer Choices: Select the Correct Answer
An insured location.
The insured premises.
A non-insured location.
A non-insured premises.

Question 29 of 100

Your answer: A non-insured location. is incorrect. The correct answer is: An insured location. .

EXPLANATION:
In the definitions of the HO policy, a cemetery plot is defined as an insured location.


Question 29 of 100

30

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 30 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 30 of 100