IA Test 27

Question 1

Name the coverage that applies to the extra cost the insured incurs to make temporary repairs and speed up the permanent repairs or replacement of damaged covered equipment under an Equipment Breakdown policy.

Answer Choices:	Select the Correct Answer
Expediting expense coverage	
Extra expense coverage	
Removal expense coverage	
Contributing expense coverage	

Question 1 of 100

Answer 1

Your answer: Expediting expense coverage is correct.

EXPLANATION:
This is called expediting expense coverage.

Question 1 of 100

Question 2

Michelle Winters seeks coverage for her manufacturing company to include premises liability coverage, products liability coverage, insured contracts, and completed operations coverage. Which of the following policies would cover all of these potential loss exposures?

Answer Choices: Select the Correct Answer
Commercial General Liability
Contractual Liability
Products and Completed Operations Liability
Personal Injury Liability

Question 2 of 100

Answer 2

Your answer: Commercial General Liability is correct.

EXPLANATION:
Only the CGL policy can include all the coverages the insured is requesting.

Question 2 of 100

Question 3

Which of the following dwelling forms may provide replacement cost coverage for buildings?

Answer Choices:	Select the Correct Answer
The broad and special forms only	
The basic, broad, and special forms	
The basic and broad forms only	
The special form only	

Question 3 of 100

Answer 3

Your answer: The special form only is incorrect. The correct answer is: The broad and special forms only.

EXPLANATION:
The broad and special forms provide replacement cost coverage on the structures if the insured carries at least 80% of replacement cost value on the structures. The basic form provides actual cash value coverage only.

Question 3 of 100

Question 4

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 4 of 100

Answer 4

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 4 of 100

Question 5

Six months after a new employee is hired, the insured learns that the employee was fired from a previous job for stealing company property. How will this discovery affect the insured’s crime coverage?

Answer Choices: Select the Correct Answer
Coverage for this employee will be cancelled at the end of the policy period
It will have no effect on coverage because the dishonest act occurred before the employee was hired
Coverage for this employee will be cancelled after 30 days
Coverage for this employee will be cancelled immediately

Question 5 of 100

Answer 5

Your answer: Coverage for this employee will be cancelled immediately is correct.

EXPLANATION:
Coverage for this employee will be cancelled immediately. This happens immediately due to the discovery of the past dishonest acts by that employee. Another example, an employee was caught in May 2011 falsifying documents. The policy in question becomes effective August 2011. In November, the same employee is caught stealing. Since the insured knew of the employee’s dishonest act prior to the policy period, any loss is excluded from coverage.

Question 5 of 100

Question 6

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

Answer Choices:	Select the Correct Answer
Within one year	
Within 30 days	
Immediately	
Does not have to be reported	

Question 6 of 100

Answer 6

Your answer: Within 30 days is correct.

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 6 of 100

Question 7

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 7 of 100

Answer 7

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 7 of 100

Question 8

An insurer has decided to non-renew a Homeowners policy which has a standard mortgage clause. Who must be notified of this action?

Answer Choices:	Select the Correct Answer
The Insured and the mortgagee	
Only the insured	
Only the mortgagee	
The realtor	

Question 8 of 100

Answer 8

Your answer: The Insured and the mortgagee is correct.

EXPLANATION:
The insurer must notify both the insured and the mortgagee in case of a cancellation or non-renewal of the policy.

Question 8 of 100

Question 9

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?

Answer Choices: Select the Correct Answer
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 9 of 100

Answer 9

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 9 of 100

Question 10

Under the dwelling policy, what is the purpose of adding the EC (extended coverage) endorsement?

Answer Choices: Select the Correct Answer
It adds additional perils to the coverage.
It adds broad form perils to the policy.
It adds open peril coverage to the policy.
It limits coverage.

Question 10 of 100

Answer 10

Your answer: It adds broad form perils to the policy. is incorrect. The correct answer is: It adds additional perils to the coverage. .

EXPLANATION:
The EC endorsement is added to the DP-1 form to add additional perils.

Question 10 of 100

Question 11

Which of the following Commercial Inland Marine coverage forms covers payments that are due to the insured from customers when these payments cannot be collected due to loss or damage of records?

Answer Choices:	Select the Correct Answer
Accounts Receivable	
Equipment Dealers	
Electronic Data Processing	
Valuable Papers and Records	

Question 11 of 100

Answer 11

Your answer: Valuable Papers and Records is incorrect. The correct answer is: Accounts Receivable.

EXPLANATION:
The purpose of accounts receivable coverage is to protect the insured when their records have been destroyed or damaged by a peril insured against. It pays to reconstruct the records and it also pays for the losses sustained by the insured due to the destruction of the accounts receivable records.

Question 11 of 100

Question 12

What is the difference between arbitration and mediation in the adjusting of claims?

Answer Choices: Select the Correct Answer
Mediation is not binding whereas with arbitration, the decision is final and binding on the parties
Both involve a signed waiver
Arbitration usually involves a person in the legal profession
Only one involves the law of estoppel

Question 12 of 100

Answer 12

Your answer: Mediation is not binding whereas with arbitration, the decision is final and binding on the parties is correct.

EXPLANATION:
Arbitration is when the parties in a dispute submit their differences to a private body and the private body’s decision is usually final and binding to both parties. Mediation involves an impartial person, usually in the law profession, who helps the parties analyze their dispute and devise a compromise.

Question 12 of 100

Question 13

Assume a commercial umbrella liability policy is in effect and all conditions are met. Identify the correct statement.

Answer Choices: Select the Correct Answer
An individual claims the insured made libelous statements that have damaged the individual’s career. This damage would be covered under the policy’s Bodily Injury and Property Damage Liability coverage.
An individual suffered embarrassment after tripping over a brick someone had left in the insured’s walkway. This damage would be covered under the policy’s Personal and Advertising Injury Liability coverage.
A customer’s leg was fractured by a fall in the insured’s warehouse. This damage would be covered under the policy’s Personal and Advertising Injury Liability coverage.
An insured is responsible for damaging a client’s million dollar shipment of products. This damage would be covered under the policy’s Bodily Injury and Property Damage Liability coverage.

Question 13 of 100

Answer 13

Your answer: A customer’s leg was fractured by a fall in the insured’s warehouse. This damage would be covered under the policy’s Personal and Advertising Injury Liability coverage. is incorrect. The correct answer is: An insured is responsible for damaging a client’s million dollar shipment of products. This damage would be covered under the policy’s Bodily Injury and Property Damage Liability coverage. .

EXPLANATION:
Only the damage done to the client’s property is covered. Libelous statements are covered by personal injury and not bodily injury and property damage, embarrassment is not covered and the fractured leg is bodily injury and not personal or advertising injury.

Question 13 of 100

Question 14

Bill’s business employs Meg to clean offices at night, and recently Meg slipped and fell at work, hurting her back. Bill understands that his Workers’ Compensation insurance will provide Meg with:

Answer Choices: Select the Correct Answer
Medical benefits and lost wages.
Psychological counseling.
A representative to help her get benefits from her union.
A lawyer to present her case in court.

Question 14 of 100

Submit

Answer 14

Your answer: Medical benefits and lost wages. is correct.

EXPLANATION:
Workers’ Compensation insurance provides medical benefits and lost wages. The other choices are all incorrect regarding the benefits of Workers’ Compensation insurance.

Question 14 of 100

Question 15

What does an insurer do when the insured has possibly waived his or her rights in a liability claim?

Answer Choices: Select the Correct Answer
Send a “reservation of rights” letter.
Deny the claim.
Pay only a portion of the proven liability claim.
Insist the insured obtain his or her own legal counsel.

Question 15 of 100

Answer 15

Your answer: Send a “reservation of rights” letter. is correct.

EXPLANATION:
There are situations where the insured has waived the right to coverage under a liability policy. Failure to report a claim in a timely fashion could cause the insured to waive coverage. The insurer will normally issue a reservation of rights letter to the insured advising that it will investigate the claim but will not commit to pay the claim.

Question 15 of 100

Question 16

If a third party is handed a check from the insured that has been altered and pays the false amount on the check, is such a loss covered? Forgery coverage is carried by the insured.

Answer Choices: Select the Correct Answer
The loss is not covered because it was presented by a third party
The insurance is not designed to cover this type of forgery
The insurance company will honor the claim
The insurance company may send the insured a non-waiver agreement to maintain its rights to conduct a thorough investigation while not admitting liability

Question 16 of 100

Answer 16

Your answer: The insurance company may send the insured a non-waiver agreement to maintain its rights to conduct a thorough investigation while not admitting liability is incorrect. The correct answer is: The insurance company will honor the claim.

EXPLANATION:
This insuring agreement offers the insured protection from forgeries or alterations in several instances. If a forged check is presented to the insured for payment and the insured hands over the money, such a loss is covered. If a third party is handed a check from the insured that has been altered and pays the false amount on the check, such a loss is covered. If an agent of the insured presents a forged draft to a third party and receives a “sum certain in money,” such a loss is covered. This insuring agreement also provides defense costs. If the insured is sued for refusing to pay a check or draft or promissory note because he or she thinks the item is forged or altered, this insuring agreement requires the insurer to pay defense costs. The insured has to have the written consent of the insurer to defend against the lawsuit and the legal expenses have to be reasonable. The defense costs are in addition to the stated limit of insurance applicable to the forgery or alteration coverage. However, the insured has to pay the defense costs up front; this is an indemnification agreement.

Question 16 of 100

Question 17

You are at home having your roof repaired. An employee of the roofing company needs to go to the hardware store to purchase supplies. Your car is blocking the driveway so you allow him to use your car to go to the store. While driving your car, he is at-fault in an auto accident. Your insurance policy will protect:

Answer Choices: Select the Correct Answer
All of the parties would be protected by your policy.
Only you the insured will be protected.
Only the employee will be protected.
Both you and the insured will be protected.

Question 17 of 100

Answer 17

Your answer: Only you the insured will be protected. is incorrect. The correct answer is: All of the parties would be protected by your policy. .

EXPLANATION:
Under liability coverage the definition includes “any person” using “your covered auto.” This would therefore provide coverage for the worker. The insured is covered for the ownership of the auto. The policy also provides coverage “for any person or organization with respect to legal responsibility for acts or omissions of a person for who coverage is afforded.” This would provide coverage for the employer for the actions of the employee as the actions relate to his employment.

Question 17 of 100

Question 18

Which of the following is not eligible for coverage under a homeowner policy form?

Answer Choices: Select the Correct Answer
A tenant living in an apartment building
A condominium unit owner
A residence on a farm
A mobile home used as a permanent residence

Question 18 of 100

Answer 18

Your answer: A tenant living in an apartment building is incorrect. The correct answer is: A residence on a farm.

EXPLANATION:
Farm property is not eligible for the homeowner program. Separate farm programs are available.

Question 18 of 100

Question 19

Kyle owns a woodworking shop where he makes and sells custom furniture. One night, Kyle’s shop is destroyed by a fire, and he files a claim with his insurance company. Which of the following items would be covered under Coverage A - Buildings and Structures of the Building and Personal Property Coverage form of Kyle’s Commercial Property policy?

Answer Choices: Select the Correct Answer
A kitchen table that Kyle has completed.
A bandsaw affixed to the floor.
Kyle’s personal laptop he left in the shop overnight.
A hand-held circular saw.

Question 19 of 100

Answer 19

Your answer: A bandsaw affixed to the floor. is correct.

EXPLANATION:
“Building” by definition is the structure and anything permanently attached to it. The bandsaw is affixed to the floor. The other choices are all personal property and not part of the building.

Question 19 of 100

Question 20

If a seaman is negligent in a claim against the employer, which of the following is correct?

Answer Choices: Select the Correct Answer
The claim is paid in full.
Violation of posted safety standards can affect the outcome of the claim.
The amount of the claim cannot be reduced because of the seaman’s negligence.
The claim is denied.

Answer 20

Your answer: The amount of the claim cannot be reduced because of the seaman’s negligence. is incorrect. The correct answer is: Violation of posted safety standards can affect the outcome of the claim..

EXPLANATION:
Under the Jones Act, violation of posted safety regulations could point to negligence by the seaman and affect the outcome of the claim against the employer.

Question 20 of 100

Question 21

Trailer Interchange insurance:

Answer Choices: Select the Correct Answer
Covers physical damage to a non-owned trailer when the trucker is liable under a written interchange agreement.
Is included under Symbol 47.
Covers truckers physical damages when a vehicle is being used on the Interstate Highway system or connecting roads.
Covers truckers liability when a vehicle is being used on the Interstate Highway system or connecting roads.

Question 21 of 100

Answer 21

Your answer: Covers truckers liability when a vehicle is being used on the Interstate Highway system or connecting roads. is incorrect. The correct answer is: Covers physical damage to a non-owned trailer when the trucker is liable under a written interchange agreement. .

EXPLANATION:
Trailer Interchange insurance covers damage to a non-owned trailer and applies when truckers borrow or lease a trailer from another firm for use in their own business - a very frequent practice in the industry.

Question 21 of 100

Question 22

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

Answer Choices:	Select the Correct Answer
Advertising/personal injury.	
Bodily injury.	
Contractual liability.	
Vicarious liability.	

Question 22 of 100

Answer 22

Your answer: Advertising/personal injury. is correct.

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

Question 22 of 100

Question 23

The insured has a one family dwelling with a detached garage. The dwelling is insured for $200,000. How much coverage applies to the garage?

Answer Choices:	Select the Correct Answer
$10,000	
$15,000	
$20,000	
None	

Question 23 of 100

Answer 23

Your answer: $20,000 is correct.

EXPLANATION:
The policy provides for 10% of the dwelling limit. Therefore, the garage is insured for $20,000 for the same perils that apply to the dwelling.

Question 23 of 100

Question 24

As a prerequisite to receive an adjuster license in California, the applicant must have at least two years of claims adjusting experience. The California Insurance Code defines one year of experience as:

Answer Choices: Select the Correct Answer
Not less than 1,000 hours of actual compensated work performed by an applicant, completed prior to submitting the license application.
Not less than 2,000 hours of actual compensated work performed by an applicant, completed prior to submitting the license application.
Not less than 2,000 hours of actual compensated work performed by an applicant, completed after submitting the license application.
Not less than 1,000 hours of actual compensated work performed by an applicant, completed after submitting the license application.

Question 24 of 100

Answer 24

Your answer: Not less than 2,000 hours of actual compensated work performed by an applicant, completed prior to submitting the license application. is correct.

EXPLANATION:
The CIC defines “one year of experience” as not less than 2,000 hours of actual compensated work performed by an applicant, completed prior to submitting the license application. Therefore, if an applicant must have the equivalent of two years of experience, they would need a total of 4,000 hours of compensated work.

Question 24 of 100

Question 25

A department store has a large inventory of costume jewelry and watches. No single item is valued for more than $100.00. A customer steals most of the items and flees the scene. What theft coverage would be provided by an unendorsed ISO standardized BOP policy? Answer Choices: Select the Correct Answer $500 Full contents limit $2,500 No coverage for the theft of jewelry and watches Question 25 of 100

Answer 25

Your answer: Full contents limit is correct. EXPLANATION: An unendorsed BOP provides theft of jewelry and watches up to the full contents limit if the value per item does not exceed $100.00. For high-end jewelry and watches, the policy provides a maximum theft limit of $2,500 for the entire theft loss. Please keep in mind that these limitations would not apply to losses from the other insured perils. Question 25 of 100

Question 26

Insurers conducting business in California must establish an operate a "Special Investigative Unit" to investigate suspected insurance fraud. Employees of the SIU must: I. Have the ability to conduct effective investigations of suspected insurance fraud. II. Be familiar with insurance and related laws. III. Have knowledge or experience in general claims practices. IV. Have knowledge of current trends in insurance fraud. ``` Answer Choices: Select the Correct Answer I, II and III only I, III and IV only I, II, III and IV I and IV only ``` Question 26 of 100

Answer 26

Your answer: I, II, III and IV is correct. EXPLANATION: A Special Investigative Unit must be composed of employees who have knowledge and/or experience in general claims practices, the analysis of claims for patterns of fraud, and current trends in insurance fraud, education and training in specific red flags, red flag events, and other criteria indicating possible fraud. They must have the ability to conduct effective investigations of suspected insurance fraud and be familiar with insurance and related law and the use of available insurer related database resources. Question 26 of 100

Question 27

The Ordinance or Law Endorsement can be added to a Homeowners form to increase the amount of coverage in ______ increments, up to ______ coverage. ``` Answer Choices: Select the Correct Answer 20% increments, up to 80% coverage. 25% increments, up to 100% coverage. 30% increments, up to 70% coverage. 15% increments, up to 95% coverage. ``` Question 27 of 100

Answer 27

Your answer: 25% increments, up to 100% coverage. is correct. EXPLANATION: Coverage for Ordinance or Law is already included on all Homeowners forms except the HO-8. The Ordinance or Law Endorsement can be attached to the form, increasing the coverage in 25% increments, up to 100% coverage. Question 27 of 100

Question 28

A deductible usually applies to which of the following automobile policy coverages? ``` Answer Choices: Select the Correct Answer Physical Damage Bodily Injury Liability Property Damage Liability Medical Payments ``` Question 28 of 100

Answer 28

Your answer: Property Damage Liability is incorrect. The correct answer is: Physical Damage. 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 28 of 100

Question 29

The Now Company carries a special BOP policy with a liability limit of $500,000. The company is involved in an accident causing $200,000 bodily injury damage and $200,000 property damage. The total amount collectible under the policy is: ``` Answer Choices: Select the Correct Answer $500,000 $400,000 $200,000 $100,000 ``` Question 29 of 100

Answer 29

Your answer: $400,000 is correct. EXPLANATION: BOP policies provide a single limit of liability. Both bodily injury and property damage coverage is provided. Since the amounts for bodily injury and property damage combined do not exceed the 500,000 occurrence limit, the total amount of the claim would be covered. Question 29 of 100

Question 30

How are losses settled under a typical inland marine policy? ``` Answer Choices: Select the Correct Answer Actual Cash Value Replacement Cost Functional Replacement Cost Cost to repair only basis ``` Question 30 of 100

Answer 30

Your answer: Replacement Cost is incorrect. The correct answer is: Actual Cash Value. EXPLANATION: Most inland marine policies pay on an actual cash value basis. Question 30 of 100

Question 31

An application for an independent adjuster license in California must include: I. The full name and business address of the applicant. II. A recent photograph of the applicant and one classifiable set of his or her fingerprints. III. A verified statement of his or her experience qualifications. IV. A statement as to the classification or classifications under which the applicant desires to be qualified. ``` Answer Choices: Select the Correct Answer I, II, III and IV I, II and III only I, III and IV only I and II only ``` Question 31 of 100

Answer 31

Your answer: I, III and IV only is correct. EXPLANATION: Two recent photographs of the applicant, of a type prescribed by the Commissioner, and two classifiable sets of his or her fingerprints is required. Question 31 of 100

Question 32

Under an Equipment Breakdown policy, all of the following are supplementary payments, EXCEPT: ``` Answer Choices: Select the Correct Answer Expediting expenses. Defense costs. Interest on judgment. Premiums on appeal bonds. ``` Question 32 of 100

Answer 32

Your answer: Premiums on appeal bonds. 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 32 of 100

Question 33

An insured carries a Personal Property Replacement Cost endorsement attached to his Homeowners policy. He has suffered a loss to his personal property. He submits a claim for actual cash value (ACV) at the time of the loss, but notifies the insurer that he intends to make a claim for replacement cost later. The insurer will honor the insured's request, but only if the cost to repair or replace the property is: ``` Answer Choices: Select the Correct Answer More than $500. Less than $500. More than $1,000. Less than $5,000. ``` Question 33 of 100

Answer 33

Your answer: More than $500. is correct. EXPLANATION: If the cost to repair or replace the property is more than $500, the insurer will pay the actual cash value for the loss, until the actual repair or replacement is made. Question 33 of 100

Question 34

Under workers compensation rules, if an employee suffers a 5% loss of use of his left arm, he will receive a disability rating of: ``` Answer Choices: Select the Correct Answer Temporary, partial. Temporary, total. Permanent, total. Permanent, partial. ``` Question 34 of 100

Answer 34

Your answer: Permanent, partial. is correct. EXPLANATION: Any rating between 1% and 99% indicates a permanent, partial disability. Question 34 of 100

Question 35

Which is false regarding the California Good Driver Discount? Answer Choices: Select the Correct Answer A person must have maintained at least a “B” average in high school. It shall be at least 20% below the rate the insured would otherwise be charged. A driver does not have to prior coverage in force to receive the discount. An insurer may refuse the discount for motorcycles in some cases. Question 35 of 100

Answer 35

Your answer: A person must have maintained at least a “B” average in high school. is correct. EXPLANATION: To qualify for the discount, a driver does not have to be a student. Question 35 of 100

Question 36

Under the Commercial Building and Personal Property Coverage form, if no optional coverages are selected, loss valuation/settlement is based on: ``` Answer Choices: Select the Correct Answer Actual cash value. Market value. Original cost. Replacement cost. ``` Question 36 of 100

Answer 36

Your answer: Actual cash value. is correct. EXPLANATION: Losses are settled on an ACTUAL CASH VALUE basis. If the insured desires replacement cost coverage, then that option must be selected by indicating it on the property declarations. The insured limit should be increased to reflect the higher values involved with a replacement cost settlement. Question 36 of 100

Question 37

Which type of damages is not intended to indemnify the plaintiff? ``` Answer Choices: Select the Correct Answer Special damages. Punitive damages. General damages. Compensatory damages. ``` Question 37 of 100

Answer 37

Which type of damages is not intended to indemnify the plaintiff? Your answer: Compensatory damages. is incorrect. The correct answer is: Punitive damages.. EXPLANATION: Punitive damages are awarded in cases of gross negligence for the purpose of punishing the defendant. Special and general damages are types of compensatory damages, which are intended to indemnify the plaintiff. Question 37 of 100

Question 38

Which of the following is generally intended to cover property that moves from one location to another? ``` Answer Choices: Select the Correct Answer Floaters Endorsements Riders Binders ``` Question 38 of 100

Answer 38

Your answer: Floaters is correct. EXPLANATION: Floaters refer to a form of inland marine insurance. Some, but not all, are designed to cover the property during the course of transportation. Several cover the property wherever it is located. Question 38 of 100

Question 39

George went out for target practice one day with his handgun. He has practiced many times with the same target located in the woods behind his house. Unbeknownst to George, a neighbor was walking in the woods behind the target one day and was shot in the leg by George. Intentional acts are never covered by insurance, however, the claim filed by the injured neighbor may be covered under George's liability coverage. Which of the following is the most likely reason why? Answer Choices: Select the Correct Answer Shooting the gun was an intentional act committed by George, but the neighbor did not assume the risk because he did not know George was shooting that day. Because George's intent is not taken into account when another person is harmed. Shooting the gun was an intentional act committed by George, but the consequences of act (his neighbor being shot) were not intended. Because liability insurance is required to provide a civil remedy to an injured person, no matter if the insured intended to commit the act or not. Question 39 of 100

Answer 39

Your answer: Because liability insurance is required to provide a civil remedy to an injured person, no matter if the insured intended to commit the act or not. is incorrect. The correct answer is: Shooting the gun was an intentional act committed by George, but the consequences of act (his neighbor being shot) were not intended. . EXPLANATION: Intentional acts may be covered if the consequences of the act was not intended. Shooting the gun was an intentional act committed by George, but the consequences of act (his neighbor being shot) was not intended. Question 39 of 100

Question 40

The coinsurance clause in commercial property policies encourages the insured to carry insurance: Answer Choices: Select the Correct Answer At the full value, or at least 80% to value of the property. At 70% of the full value of the property. At 60% of the full value of the property. At one-half the full value of the property. Question 40 of 100

Answer 40

Your answer: At the full value, or at least 80% to value of the property. is correct. EXPLANATION: The coinsurance clause encourages the insured to insure at full value or to at least 80% of the value of the property. In exchange, the insured will receive a discount in the property insurance rates. Failure to comply with this clause reduces payments for a loss to the insured for partial losses. The insured will be penalized the same percentage as the percentage that he was underinsured. If he would insure the property for 70% to value instead of 80% to value he would receive 10% less on his partial loss. The coinsurance clause does not apply to total losses. Question 40 of 100

Question 41

Which of the following statements about Workers Compensation laws is correct? Answer Choices: Select the Correct Answer The scope of coverage is identical in all states. Every state provides “extraterritorial” coverage for residents working in another state. Limited benefits are provided for non-economic damages such as pain and suffering. The benefits provided under the law are typically the exclusive remedy for injured employees. Question 41 of 100

Answer 41

Your answer: The benefits provided under the law are typically the exclusive remedy for injured employees. is correct. EXPLANATION: Workers Compensation laws in the various states differ, although not materially. Not every state provides extraterritorial benefits. Benefits are restricted to economic damages such as medical costs and loss-of-income. In each state, the benefits provided by the law are the exclusive remedy for the employee in most cases – and the employee is barred from suing the employer for damages arising from a work-related injury. Question 41 of 100

Question 42

The insured has his home insured on a HO-2 policy. Lightning has struck the home and causes a fire. The insured takes as much property out of the house as possible awaiting arrival of the fire department that assists him. Some of the property is damaged by the fire department and some friends while moving the property into a pickup truck not owned by the insured. What coverage and under what clause could the insured pursue coverage for his damage? ``` Answer Choices: Select the Correct Answer Debris Removal Clause Removal Clause Impaired Property Clause Reasonable Repair Property Clause ``` Question 42 of 100

Answer 42

Your answer: Reasonable Repair Property Clause is incorrect. The correct answer is: Removal Clause. EXPLANATION: This damage is covered under the removal clause. It is designed to cover the property that is damaged during the course of attempting to protect it from the perils insured against. Question 42 of 100

Question 43

Tea is applying for a new adjuster license in California. What is the fee she will need to submit with her license application? ``` Answer Choices: Select the Correct Answer $47 $56 $72 $29 ``` Question 43 of 100

Answer 43

Your answer: $72 is correct. EXPLANATION: The application fee for an original license is: $72. (CIC 14097) Question 43 of 100

Question 44

Which of the following best describes "no release or walk-away" release? Answer Choices: Select the Correct Answer A form of advanced payment to the claimant. A structured settlement. The bills are paid and no attempt to obtain a separate release is made. The insurer agrees to waive its right to subrogation against a third party who caused the damage. Question 44 of 100

Answer 44

Your answer: The bills are paid and no attempt to obtain a separate release is made. is correct. EXPLANATION: The bills presented are paid with no attempt to obtain a separate release, although the wording on the draft or check may also serve as a form of release. After a certain amount of time has passed with no further contact with the claimant, the file is considered closed. Question 44 of 100

Question 45

All of the following are excluded from garage policy liability coverage, EXCEPT: Answer Choices: Select the Correct Answer The use of covered autos in an organized race. Injury or damage arising out of a motorboat the named insured keeps stored in the back of his repair garage. The use of covered autos leased to others (except as a replacement for a customer’s car being worked on). Damage to property being transported by the insured. Question 45 of 100

Answer 45

Your answer: Damage to property being transported by the insured. is incorrect. The correct answer is: Injury or damage arising out of a motorboat the named insured keeps stored in the back of his repair garage.. EXPLANATION: Boats are covered on the insured's premises and not off the premises for liability coverage only. The other items are excluded. Question 45 of 100

Question 46

When an insured is fulfilling the duty of proving a loss by taking an inventory of the damaged property, who pays the expenses incurred by the insured? Answer Choices: Select the Correct Answer The insured. The insurer. The adjuster will provide funds to pay for these expenses. Who pays these expenses will be negotiated at the settlement of the claim. Question 46 of 100

Answer 46

Your answer: The insured. is correct. EXPLANATION: The insured is instructed to “keep a record of your expenses for emergency and temporary repairs, for consideration in the settlement of the claim.” Reasonable expenses paid by the insured to protect the property from further loss are the obligation of the insurer. Thus any other expenses incurred by the insured are NOT paid by the insurer and the insurer will only pay the "reasonable expenses" to protect the property if the insured maintains an inventory of expenses paid. Until that time, the insured is responsible for all expenses. Question 46 of 100

Question 47

The insured is covered under a personal auto policy with collision coverage and a $500. deductible. He is involved in an at-fault accident. The loss involves $4,000 damage to the vehicle and a $45.00 storage fee. How much will the insurer pay? ``` Answer Choices: Select the Correct Answer $3,545 $4,000 $3,500 $4,045 ``` Question 47 of 100

Answer 47

our answer: $3,545 is correct. EXPLANATION: The insurer will pay the $4,000 plus the storage fees, minus the $500 deductible. Question 47 of 100

Question 48

Henry is the first named insured on a $1 million Umbrella policy. His wife, Dorothy, is also an insured. Both Henry and Dorothy were sued for $1 million in separate, unrelated suits by separate third parties. Both insureds lost their suits on the same day. In this possible but rare situation, if the Umbrella policy is applicable and the self-insured retention is not applicable: Answer Choices: Select the Correct Answer Henry will receive more protection from the policy than Dorothy because he is the first named insured. The policy will pay $500,000 toward each award. The policy will only honor Henry's claim because he is the first-named insured. Henry and Dorothy would receive the same amount of coverage, and the policy could ultimately pay a total of the $2 million amount for the two awards, subject to the "aggregate limit". Question 48 of 100

Answer 48

Your answer: Henry and Dorothy would receive the same amount of coverage, and the policy could ultimately pay a total of the $2 million amount for the two awards, subject to the "aggregate limit". is correct. EXPLANATION: These are two separate unrelated third-party claims and each would be covered up to the policy limit provided the combined losses do not exceed the "aggregate" limit of the policy. Question 48 of 100

Question 49

Compensation payable for the delaying a vessel carrying freight: Answer Choices: Select the Correct Answer Is called demurrage. Not payable under an ocean marine contract Not subject to any deductible to negotiation. Limit is predetermined prior to the voyage. Question 49 of 100

Answer 49

Your answer: Is called demurrage. is correct. EXPLANATION: The compensation payable for delaying a vessel carrying freight as by failing to load/unload cargo is called demurrage. Question 49 of 100

Question 50

In California, the class of insurance that provides coverage against loss of property and liability for damage to persons or property from explosion of, or accident to, boilers, tanks, pipes, pressure vessels, engines, wheels, electrical machinery, or apparatus connected them, is known as: ``` Answer Choices: Select the Correct Answer Marine insurance. Fire insurance. Mechanical Breakdown insurance. Boiler & Machinery insurance. ``` Question 50 of 100

Answer 50

Your answer: Boiler & Machinery insurance. is correct. ``` EXPLANATION: In California, the class of insurance that provides coverage against loss of property and liability for damage to persons or property from explosion of, or accident to, boilers, tanks, pipes, pressure vessels, engines, wheels, electrical machinery, or apparatus connected them, is known as Boiler & Machinery insurance. In most states, this type of insurance is now referred to as Equipment Breakdown insurance. Mechanical Breakdown insurance covers automobile breakdowns. ``` Question 50 of 100

Question 51

A commercial building worth $400,000 is insured under a Commercial Property policy for $240,000, and an 80% coinsurance clause applies. A $20,000 loss to the building has occurred. How much will the insured receive when a claim is filed? ``` Answer Choices: Select the Correct Answer $14,000 $10,000 $12,000 $15,000 ``` Question 51 of 100

Answer 51

Your answer: $14,000 is incorrect. The correct answer is: $15,000. EXPLANATION: The insured should have carried $320,000 to be in compliance with the 80% coinsurance clause, therefore the building is 25% underinsured, penalizing the insured. $240,000 (the amount carried) divided by $320,000 (the amount required) multiplied by $20,000 loss, equals $15,000. Question 51 of 100

Question 52

A Flood Insurance Rate Map: Answer Choices: Select the Correct Answer Rates each building insured under the NFIP on a scale of 1 to 10. Shows the areas of a community that already have NFIP coverage. Outlines the special flood hazard areas and community flood zones. Details the locations of every WYO insurer in the area. Question 52 of 100

Answer 52

Your answer: Outlines the special flood hazard areas and community flood zones. is correct. EXPLANATION: Flood insurance rate maps outline the special flood hazard areas and community flood zones. Question 52 of 100

Question 53

The purpose of the California Fair Access to Insurance Requirements (FAIR Plan) is to: Answer Choices: Select the Correct Answer Assure the availability of automobile liability insurance. Assure the availability of basic property insurance. Guarantee the issue of basic property insurance to any applicant. Pay the obligations of insolvent insurers in California. Question 53 of 100

Answer 53

Your answer: Guarantee the issue of basic property insurance to any applicant. is incorrect. The correct answer is: Assure the availability of basic property insurance.. EXPLANATION: The FAIR Plan assures the availability of basic property insurance in California. Question 53 of 100

Question 54

Commercial Inland coverages can be written as a stand alone policy and not included in the Commercial Package Policy (CPP), this would be called: ``` Answer Choices: Select the Correct Answer A monoline policy A BOP An endorsement An individual policy ``` Question 54 of 100

Answer 54

Your answer: A monoline policy is correct. EXPLANATION: A monoline policy is a stand alone policy with policy forms that pertain to just that coverage. Question 54 of 100

Question 55

All of the following are acceptable methods to satisfy the motor vehicle financial responsibility requirement in California, EXCEPT: Answer Choices: Select the Correct Answer A certificate of self-insurance issued by the Department of Motor Vehicles. A motor vehicle liability insurance policy. A cash deposit of $35,000 with the Department of Motor Vehicles. A personal savings account with a consistent balance of $50,000. Question 55 of 100

Answer 55

Your answer: A personal savings account with a consistent balance of $50,000. is correct. EXPLANATION: A personal savings account is not an acceptable method to satisfy the California financial responsibility requirement. Question 55 of 100

Question 56

ort 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 56 of 100

Answer 56

Your answer: Liability arising from the commission of an unintentional tort. is incorrect. The correct answer is: Liability arising from breach of contract.. EXPLANATION: A tort is a civil wrong, not arising from a contract. Contract law is a completely different branch of law. Question 56 of 100

Question 57

In cases involving the repair of an auto covered under a policy in California, no insurer may: Answer Choices: Select the Correct Answer Require that an automobile be repaired at a specific repair shop. Require a claimant to travel an unreasonable distance to inspect a replacement automobile, to conduct an inspection of the vehicle or to obtain a repair estimate. Suggest or recommend that an automobile be repaired at a specific repair shop. All of the responses are correct. Question 57 of 100

Answer 57

Your answer: All of the responses are correct. is correct. EXPLANATION: All of the responses are correct. Question 57 of 100

Question 58

If a commercial building has been vacant for more than sixty days, which of the perils are affected as regards coverage? ``` Answer Choices: Select the Correct Answer Vandalism Freezing Fire All of the perils are affected ``` Question 58 of 100

Answer 58

Your answer: All of the perils are affected is correct. EXPLANATION: All of the perils listed are affected as a result of the vacancy. Some of the coverage for certain perils is voided and fire losses are reduced by 15%. Question 58 of 100

Question 59

What is the primary purpose of the California Automobile Assigned Risk Plan (CAARP)? Answer Choices: Select the Correct Answer To guarantee coverage for low-income applicants. To monitor automobile rates of insurers in this state. To provide availability of coverage for applicants who are unable to obtain it through ordinary methods. To train agents to place coverage through the Plan. Question 59 of 100

Answer 59

Your answer: To provide availability of coverage for applicants who are unable to obtain it through ordinary methods. is correct. EXPLANATION: According to the California Insurance Code (CIC 11620), the purpose of the California Automobile Assigned Risk Plan is to provide availability of coverage to applicants for automobile bodily injury and property damage liability insurance who are in good faith entitled to coverge but are unable to procure that insurance through ordinary methods. Question 59 of 100

Question 60

Which statement is true about the "per occurrence" limits of liability under a Commercial General Liability policy? Answer Choices: Select the Correct Answer The per occurrence limits of liability are the maximum amounts to be paid in the event of a covered loss. The per occurrence limits of liability are the maximum amounts to be paid on behalf of an insured during a single policy year. If the per occurrence limits of liability are insufficient, they can be increased at the time of loss. The per occurrence limits of liability represent payments under the Supplementary Payments coverage. Question 60 of 100

Answer 60

Your answer: The per occurrence limits of liability are the maximum amounts to be paid on behalf of an insured during a single policy year. is incorrect. The correct answer is: The per occurrence limits of liability are the maximum amounts to be paid in the event of a covered loss.. EXPLANATION: Amounts paid under liability insurance are indemnity payments to third parties on behalf of the insured, subject to an occurrence limit as stated on the Declaration page of the policy, and this limit is the maximum payable for that one occurrence (event). Question 60 of 100

Question 61

Which of the following is covered property under the HO-3 form? I. Belongings of the insured's daughter while she is away at college II. The insured's garage III. The insured's dog IV. Personal property of a tenant ``` Answer Choices: Select the Correct Answer I, II, and III only I, II, III, and IV I and II only II and III only ``` Question 61 of 100

Answer 61

Your answer: I and II only is correct. EXPLANATION: Pets, no matter how valuable, are excluded under Coverage C, as is the property of boarders or renters. Question 61 of 100

Question 62

What is the percentage of coverage for the "loss of use" under HO-3, homeowner form? ``` Answer Choices: Select the Correct Answer 30% 20% 25% 10% ``` Question 62 of 100

Answer 62

Your answer: 30% is correct. EXPLANATION: The percentage of Coverage A for this coverage is 30%. Question 62 of 100

Question 63

Under the commercial auto policy providing physical damage, which of the following offers the broadest coverage? ``` Answer Choices: Select the Correct Answer Comprehensive. Specified cause of loss. Named perils. Broad named perils. ``` Question 63 of 100

Answer 63

Your answer: Comprehensive. is correct. EXPLANATION: Comprehensive coverage would be the broadest because it covers loss that is not defined as collision. The specified cause of loss is a named peril form and thus, is more limited. Question 63 of 100

Question 64

The insured sets a fire to his home and is found to be guilty of arson. There is a lien on the burned property by a mortgage company in the amount of $150,000. The property is insured for $300,000 and is a total loss. The personal property of the insured, covered separately by a Homeowners policy for $150,000, is also a total loss. How will this claim most likely be paid? Answer Choices: Select the Correct Answer The insured is paid a total of $300,000. The mortgagee is paid $150,000. The insured is paid $150,000 for the personal property loss. Since the loss is from an intentional act of the insured the entire loss is denied. Question 64 of 100

Answer 64

Your answer: The mortgagee is paid $150,000. is correct. EXPLANATION: The provisions relative to the suspension of payment due to arson do not apply to a lender that holds a valid recorded mortgage on the property in question. Therefore, the lien holder is fully reimbursed for its insurable interest in the property. The insured is not paid due to the charge and conviction of arson. Question 64 of 100

Question 65

Which of the following is the provision in a liability policy that allows an insured to report incidents or circumstances that result in claims being filed in the future? ``` Answer Choices: Select the Correct Answer Defense Within Limits provision. Other Insurance provision. Supplementary Payments provision. Discovery provision. ``` Question 65 of 100

Answer 65

Your answer: Discovery provision. is correct. EXPLANATION: The Discovery provision allows an insured to report incidents or circumstances that may result in a claim being filed in the future. This provision is found mainly in liability policies with "claims-made" coverage triggers. Question 65 of 100

Question 66

Personal Liability Coverage of the Homeowners program covers the insured for all of the following, EXCEPT: Answer Choices: Select the Correct Answer Business activities. Personal activities anywhere in the United States. Personal activities outside of the United States. Personal activities of the insured's young children. Question 66 of 100

Answer 66

Your answer: Business activities. is correct. EXPLANATION: Personal Liability Coverage E provides liability protection for insureds anywhere in the world for their non-business activities. Of course coverage would be subject to the policy exclusions. Question 66 of 100

Question 67

What is the definition of "custom farming"? Answer Choices: Select the Correct Answer Sharecropping. Raising genetically modified crops. Farming for others. Placing farm equipment for hire by other farms. Question 67 of 100

Answer 67

Your answer: Farming for others. is correct. EXPLANATION: Custom farming is a "neighborly exchange of services". A special endorsement is required to cover "custom farming" if the receipts are in excess of $5,000 per year. Question 67 of 100

Question 68

The Dye family hosts a party. When the guests arrive, they place their coats in the bedroom. Two days later, Mr. Dye discovers that his ring is missing from the dresser. This loss is referred to as a: ``` Answer Choices: Select the Correct Answer Mysterious disappearance. Burglary. Robbery. Theft. ``` Question 68 of 100

Answer 68

Your answer: Theft. is incorrect. The correct answer is: Mysterious disappearance. . EXPLANATION: This is an example of a mysterious disappearance which can be a presumption of theft. Property is missing from a known place where the property should be. Question 68 of 100

Question 69

In a bond that has been in place and renewed for several years with the same carrier, under the "loss sustained under previous insurance condition" which would respond to a claim that was just discovered but which actually happened two years ago? ``` Answer Choices: Select the Correct Answer The current bond The bond in place two years ago The two bonds would share the loss Neither bond would respond ``` Question 69 of 100

Answer 69

Your answer: The bond in place two years ago is incorrect. The correct answer is: The current bond. EXPLANATION: The answer is the current bond as per the policy conditions section of the bond. Question 69 of 100

Question 70

In an insurance contract, "consideration" from both parties is comprised of: Answer Choices: Select the Correct Answer Premiums from the insured and the promise to pay from the insurer. Risk from the insured and surety from the insurer. Surety from the insured and risk from the insurer. Peace of mind from the insured and premiums for the insurer. Question 70 of 100

Answer 70

Your answer: Premiums from the insured and the promise to pay from the insurer. is correct. EXPLANATION: "Consideration" is something of value in the eyes of the law, given or shared with another party. In insurance the premium from the insured and the promise to pay claims from the insurer is the valuable consideration they give to each other. Question 70 of 100

Question 71

Which of the following would be covered by the "advertising injury" coverage of the Farm insurance forms? Answer Choices: Select the Correct Answer An insured farmer who unknowingly disparaged the crops grown by another farm. Advertising the wrong price of the goods. Advertising the wrong description of the goods. Intentionally making disparaging remarks about another’s farm products. Question 71 of 100

Answer 71

Your answer: An insured farmer who unknowingly disparaged the crops grown by another farm. is correct. EXPLANATION: "Advertising injury" would cover a farmer who unknowingly disparages the crops grown by another farmer when advertising his own crops. Intentional acts, advertising incorrect prices or descriptions are not covered. Question 71 of 100

Question 72

Which of the following is NOT needed for rating the premium for an ISO standardized Businessowners policy? ``` Answer Choices: Select the Correct Answer Square foot area Property coverage amount Protection class Rate group ``` Question 72 of 100

Answer 72

Your answer: Square foot area is correct. EXPLANATION: Square footage is not needed in the rating of the premium for the ISO BOP policy, however, square footage DOES play a role in determining the ELIGIBILITY of the risk to be covered under a BOP. The property coverage amount, the protection class, and the rate group all play a role in the premium RATING process. Question 72 of 100

Question 73

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 73 of 100

Answer 73

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 73 of 100

Question 74

In a work-related injury, the loss of a finger would be characterized as what type of disability? ``` Answer Choices: Select the Correct Answer Permanent total Permanent partial Temporary total Temporary partial ``` Question 74 of 100

Answer 74

Your answer: Permanent partial is correct. EXPLANATION: Loss of a finger or limb is defined as a permanent partial injury, and this characterization is used for the establishment of disability benefits to the injured employee. Question 74 of 100

Question 75

The insured is the principal in a construction endeavor in California. As principal, the insured may be held liable for the actions of an independent contractor if: I. The insured (the principal) fails to exercise due care in the selection of a reasonable competent individual. II. The work to be performed by the independent contractor is inherently dangerous in nature. III. Where the negligent act or omission involves a violation of a duty imposed upon the insured (the principal) either by common law or statute. ``` Answer Choices: Select the Correct Answer I only I and III only II only I, II, and III ``` Question 75 of 100

Answer 75

Your answer: I, II, and III is correct. EXPLANATION: I, II, and III are correct as they are all reasons that the principal can be held legally liable for the acts of independent contractors Question 75 of 100

Question 76

Extended reporting periods under the Commercial General Liability policy apply only to: ``` Answer Choices: Select the Correct Answer Bodily injury claims Property damage claims Claims-made policies Occurrence policies ``` Question 76 of 100

Answer 76

Your answer: Bodily injury claims is incorrect. The correct answer is: Claims-made policies. EXPLANATION: The extended reporting period applies only to the "claims-made" CGL coverage form. Question 76 of 100

Question 77

The standard deductible on the Commercial Property Earthquake Causes of Loss form is: ``` Answer Choices: Select the Correct Answer A percentage of the loss. $1,000. $5,000. A percentage of the building value. ``` Question 77 of 100

Answer 77

Your answer: A percentage of the building value. is correct. EXPLANATION: The deductible will be the percentage shown in the Declarations times the limit of insurance for each type of covered property. Question 77 of 100

Question 78

Tamika has her dwelling covered under an HO-8 form in California. She suffers damage to her dwelling by a covered peril. The limit of liability of her HO-8 policy is $60,000. Tamika hires a contractor to make the repairs to her dwelling using common or functionally equivalent materials. The cost of the materials used to repair the dwelling amount to $75,000. Three months following the loss, Tamika submits a claim to recoup the amount she spent to repair her dwelling. How much will her insurance company pay on this claim? ``` Answer Choices: Select the Correct Answer Actual Cash Value (ACV) $15,000 $75,000 $60,000 ``` Question 78 of 100

Answer 78

Your answer: $60,000 is correct. EXPLANATION: The standard HO-8 forms pays only ACV, however the California mandatory special provisions form requires the insurance company to pay the lesser of the limit of liability, or the necessary amount actually spent to repair or replace using common or functionally equivalent materials. Because the limit of liability under Tamika's HO-8 policy is $60,000, this is the total amount that the insurance company will pay. Question 78 of 100

Question 79

A licensed independent adjuster has received a written or oral request from the California Department of Insurance concerning a claim. How many days does this adjuster have to respond to the inquiry? ``` Answer Choices: Select the Correct Answer 30 days 15 working days 21 calendar days 10 calendar days ``` Question 79 of 100

Answer 79

Your answer: 15 working days is incorrect. The correct answer is: 21 calendar days. EXPLANATION: This adjuster must respond immediately, but no later than 21 calendar days from the date of the request. Question 79 of 100

Question 80

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 80 of 100

Answer 80

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 80 of 100

Question 81

The definition of collapse in the Commercial Property forms that provide this coverage is: Answer Choices: Select the Correct Answer The collapse must involve an abrupt falling down or caving in of the structure, rather than a gradual sequence of damage. The entire building must fall down or cave in. Coverage is provided if caused by hidden insect or vermin damage even if the insured was aware of a problem. The collapse can be a gradual falling down or caving in of the structure. Question 81 of 100

Answer 81

Your answer: The collapse must involve an abrupt falling down or caving in of the structure, rather than a gradual sequence of damage. is correct. EXPLANATION: The collapse must involve an abrupt falling down or caving in of the structure or a part of the structure, rather than a gradual or sequence of damage. Question 81 of 100

Question 82

All of the following is considered an "insured" under a CGL policy, EXCEPT: ``` Answer Choices: Select the Correct Answer Officers and directors. The named insured's spouse. Stockholders of the named insured. Lawyers of the named insured. ``` Question 82 of 100

Answer 82

Your answer: Lawyers of the named insured. is correct. EXPLANATION: The lawyers for the named insured are not by definition an "insured" under the CGL policy. The other three choices are by definition, an insured under the policy. Question 82 of 100

Question 83

Under the Commercial Building and Personal Property Coverage Form, the Valuable Papers Extension applies to: Answer Choices: Select the Correct Answer The cost of restoring lost information. Replacing antique goods. Replacing the original while the duplicate is being used. All of the listed answers are correct. Question 83 of 100

Answer 83

Your answer: All of the listed answers are correct. is incorrect. The correct answer is: The cost of restoring lost information. . EXPLANATION: Without this extension, the company would only pay for the blank paper. The limit of coverage is $2,500 unless increased. Question 83 of 100

Question 84

Under California law, an "automobile insurance policy" means an automobile liability, automobile physical damage, or automobile collision policy, issued to an individual that covers all of the following types of vehicles, EXCEPT: Answer Choices: Select the Correct Answer Private passenger type vehicles, pick-up trucks and vans A 6-wheel RV A motorcycle A public or livery conveyance for passengers Question 84 of 100

Answer 84

Your answer: A public or livery conveyance for passengers is correct. EXPLANATION: Vehicles used for public or livery conveyance for passengers are not eligible for personal auto coverage. An endorsement must be used for some of the other types of vehicles. Question 84 of 100

Question 85

All of the following are listed on the common Declarations page of a Commercial Package Policy (CPP), EXCEPT: Answer Choices: Select the Correct Answer A list of perils insured against. The policy period. The name and mailing address of the insured. The insured's premium for each coverage part purchased. Question 85 of 100

Answer 85

Your answer: A list of perils insured against. is correct. EXPLANATION: A list of perils insured against is not included on the common policy Declarations page of a Commercial Package Policy. The policy period, the premium for each coverage part, and the name and mailing address of the insured ARE listed. Question 85 of 100

Question 86

An insured purchases a $1 million umbrella policy with a $1,000 self-insured retention (SIR) and agrees to maintain the following underlying limits: auto liability - $100/300/50 and personal liability limits of $300,000. The insured is involved in an at-fault auto accident and the claimant is awarded $200,000 for his bodily injuries. What will the umbrella pay if the insured only carries $50/100/50 auto limits? Answer Choices: Select the Correct Answer $100,000 $200,000 $50,000 Nothing because the insured violated the maintenance of the policy’s underlying provision. Question 86 of 100

Answer 86

Your answer: $50,000 is incorrect. The correct answer is: $100,000. EXPLANATION: When the insured does not maintain underlying limits as stated in the umbrella policy, the umbrella carrier pays as though those limits were in effect. The insured would have to pay $50,000, the underlying carrier would pay $50,000 and the umbrella carrier would pay the remainder. Question 86 of 100

Question 87

What is the limit of insurance that applies to property in transit in the BOP? ``` Answer Choices: Select the Correct Answer $1,000 $2,500 $5,000 $10,000 ``` Question 87 of 100

Answer 87

our answer: $5,000 is incorrect. The correct answer is: $10,000 . EXPLANATION: The BOP provides a $10,000 limit for property in transit. Question 87 of 100

Question 88

On an unendorsed special form BOP, how much coverage is there for theft of money & securities? Answer Choices: Select the Correct Answer $5000 on the premises only $5000 on the premises but only $2500 off $1000 on and off the premises Nothing Question 88 of 100

Answer 88

Your answer: $5000 on the premises but only $2500 off is incorrect. The correct answer is: Nothing. EXPLANATION: Even though the special BOP is "open peril" coverage which includes theft, the loss of money and securities are still not a covered form of property. The endorsement for Money & Securities is necessary to cover this exposure. Question 88 of 100

Question 89

Which of the following flood zones show a "flood depth" instead of a "base flood elevation" on a FIRM? ``` Answer Choices: Select the Correct Answer V AO AE VE ``` Question 89 of 100

Answer 89

Your answer: AE is incorrect. The correct answer is: AO. EXPLANATION: The AO zones are subject to only shallow flooding during the base flood, therefore "flood depths" are shown in these zones. Question 89 of 100

Question 90

In claims settlement, an open-ended release: Answer Choices: Select the Correct Answer Refers to all releases. Is a release involving an attorney. Is a conditional, or partial release. Refers to a release where all claims expenses are paid. Question 90 of 100

Answer 90

Your answer: Is a conditional, or partial release. is correct. EXPLANATION: An example would be where the insurance company agrees to pay some additional bills when they become available. These additional bills are viewed as part of the settlement agreement. Open-ended releases are generally subject to specific time and monetary limits. Question 90 of 100

Question 91

If a dwelling insured under an HO-3 is destroyed by fire, what amount should the insured expect to be paid for their loss? ``` Answer Choices: Select the Correct Answer A depreciated value of the dwelling. The assessed value of the dwelling. Up to the policy limits. The market value of the dwelling. ``` Question 91 of 100

Answer 91

Your answer: Up to the policy limits. is correct. EXPLANATION: An insurance company cannot pay in excess of the policy limits. There are 22 states that have a valued policy law in which the company is required to pay the full limit in case of a total loss. For partial losses the insurance company can only pay up to the limits of the policy. The insured would have to prove their loss for the contents damage.

Question 92

The policy territory under the Commercial General Liability policy is found in which section of the policy? ``` Answer Choices: Select the Correct Answer On the Declarations page. In the Definitions section. Under the Limits of Insurance. In the list of perils insured against. ``` Question 92 of 100

Answer 92

Your answer: On the Declarations page. is incorrect. The correct answer is: In the Definitions section.. EXPLANATION: The policy territory is found in the Definitions section of the policy. Question 92 of 100

Question 93

A Commercial Package Policy (CPP) always includes: I. A single Declarations page common to all coverages. II. A single Conditions section common to all coverages. III. A single Exclusions section common to all coverages. ``` Answer Choices: Select the Correct Answer I only I, II and III I and II only II and III only ``` Question 93 of 100

Answer 93

Your answer: I and II only is correct. EXPLANATION: A Commercial Package Policy (CPP) always includes a common Declarations page and Conditions section. It does not include a common Exclusions section, as the items excluded would be specific to the coverage part. Question 93 of 100

Question 94

Oliver Dogwood was in an auto accident which destroyed his car. While investigating the accident, Adjuster Doright found that Mr. Dogwood paid $1,000 for the vehicle. After checking with others he found the same vehicle with an asking price of $1,700, a retail price of $2,150 and a dealer price of $1,750. What amount will Mr. Dogwood receive? ``` Answer Choices: Select the Correct Answer $1,950 $2,150 $1,000 $1,700 ``` Question 94 of 100

Answer 94

Your answer: $2,150 is correct. EXPLANATION: Mr. Dogwood will receive $2,150 plus any sales tax. The insured is required to pay retail price plus sales tax. Question 94 of 100

Question 95

Byron has submitted his application for a California Adjuster license, and then begins studying a course that will allow him to take the state licensing exam. Byron is working 40 hours a week, so he feels satisfied that he finished the course and passed the state licensing exam only 14 months after submitting his application. Which of the following is the response Byron will receive from the California Department of Insurance? Answer Choices: Select the Correct Answer He will receive notice that his license application is denied because he was required to fulfill all licensing requirements within 12 months of submitting his application. He will receive his license from the Department because he fulfilled all the requirements for licensing. He will receive notice that his license application is denied because he was required to fulfill all licensing requirements within 6 months of submitting his application. He will receive notice that his license application has been approved and he will receive it within 60 days. Question 95 of 100

Answer 95

Your answer: He will receive notice that his license application is denied because he was required to fulfill all licensing requirements within 12 months of submitting his application. is correct. EXPLANATION: He will receive notice that his license application is denied because he was required to fulfill all licensing requirements within 12 months of submitting his application. (CCR 2691.9) Question 95 of 100

Question 96

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: ``` Answer Choices: Select the Correct Answer A one-family dwelling. A two-family dwelling. A one to four-family dwelling. A one to two-family dwelling. ``` Question 96 of 100

Answer 96

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 96 of 100

Question 97

Which of the following homeowner coverages does not contain a deductible? ``` Answer Choices: Select the Correct Answer Loss of use Dwelling Other structures Personal property ``` Question 97 of 100

Answer 97

Your answer: Loss of use is correct. EXPLANATION: Loss of use is an indirect loss coverage. The deductible applies only to direct loss to the insured property. Question 97 of 10

Question 98

The agent or insurer must obtain the applicant's signature acknowledging receipt of the California Residential Property Insurance disclosure form within ____ of the date of the application. ``` Answer Choices: Select the Correct Answer 10 days 20 days 60 days 90 days ``` Question 98 of 100

Answer 98

Your answer: 60 days is correct. EXPLANATION: No policy of residential property insurance may be issued in this state by any insurer unless the named insured is provided a copy of the California Residential Property Insurance disclosure statement. The agent or insurer must obtain the applicant’s signature acknowledging receipt of the disclosure form within 60 days of the date of the application. Question 98 of 100

Question 99

A surety that provides a bid bond to a contractor might also provide another bond if the contractor is awarded the contract. The bond that is purchased after a contract is awarded is: ``` Answer Choices: Select the Correct Answer Performance bond. Completion bond. Financial Guarantee bond. Labor and Material bond. ``` Question 99 of 100

Answer 99

Your answer: Completion bond. is incorrect. The correct answer is: Performance bond. . EXPLANATION: The purpose of the bid bond is to guarantee the obligee that the contractor will enter into a contract for the bid price and provide a performance bond. The performance bond, issued by the surety, guarantees the obligee that the work will be completed per the terms of the contract with the contractor. Question 99 of 100

Question 100

Replacement cost coverage is best defined as: Answer Choices: Select the Correct Answer Replacement without deduction for depreciation. Replacement cost minus tax depreciation. Original cost minus physical depreciation. Original cost minus tax depreciation. Question 100 of 100

Answer 100

Your answer: Replacement without deduction for depreciation. is correct. EXPLANATION: With replacement cost coverage, the insured is permitted to replace old with new at today's cost without a deduction for depreciation. Question 100 of 100