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Flashcards in IA Test 29 Deck (100)
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1

Which of the following would NOT be covered under a workers compensation policy for injury?

Answer Choices: Select the Correct Answer
An intoxicated employee injures an innocent bystander because of horseplay.
A person injured in a work related accident.
A person who contracts a disease as a result of his/her job.
A truck driver working for his/her employer.

Question 1 of 100

Your answer: An intoxicated employee injures an innocent bystander because of horseplay. is correct.

EXPLANATION:
An innocent bystander would not be covered since they are not an employee. Also employees are excluded for injury if they are intoxicated while at work.


Question 1 of 100

2

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

Answer Choices: Select the Correct Answer
Salvage.
Subrogation.
Warranty.
Deductible.

Question 2 of 100

Your answer: Salvage. is correct.

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


Question 2 of 100

3

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 3 of 100

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 3 of 100

4

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

Answer Choices: Select the Correct Answer
$500,000
$0
$100,000
$1,000,000

Question 4 of 100

Your answer: $100,000 is correct.

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


Question 4 of 100

5

Which worker would be covered under Longshoreman's coverage?

Answer Choices: Select the Correct Answer
Injury to a worker loading a ship at the dock.
Injury to a seaman who works on the ship out at sea.
Injury sustained by a designer working for a beach and shoreline restoration firm.
Injury to a truck driver in Long Island, NY.

Question 5 of 100

our answer: Injury to a worker loading a ship at the dock. is correct.

EXPLANATION:
Longshoreman's coverage applies to workers who load and unload, build and repair ships.


Question 5 of 100

6

Which of the following is not a duty of an insurer in case of a loss?

Answer Choices: Select the Correct Answer
Conduct a thorough investigation
Establish claim procedures and methods of documentation
Acknowledge receipt of a claim in a timely fashion
Separate the damaged property from the undamaged property and protect the property from further loss

Question 6 of 100

Your answer: Separate the damaged property from the undamaged property and protect the property from further loss is correct.

EXPLANATION:
The insurance company is not required to separate the damaged property from the undamaged property nor to protect the property from further loss. This is the responsibility of the insured.


Question 6 of 100

7

An insured has fabricated a claim that would appear to be legitimate. What kind of hazard would this act represent?

Answer Choices: Select the Correct Answer
Physical hazard
Moral hazard
Morale hazard
It is a peril, not a hazard.

Question 7 of 100

Your answer: Moral hazard is correct.

EXPLANATION:
This is the type of hazard that exposes the morals of the individual because of the fraudulent act.


Question 7 of 100

8

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

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

Question 8 of 100

Your answer: 90 days is correct.

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


Question 8 of 100

9

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

Answer Choices: Select the Correct Answer
60 days
30 days
10 days
20 days

Question 9 of 100

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

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


Question 9 of 100

10

Homeowners policies will provide which of the following for personal property located in a self-storage facility?

Answer Choices: Select the Correct Answer
Full Coverage C limit
$2,500
10% of the Coverage C limit
$5,000

Question 10 of 100

Your answer: 10% of the Coverage C limit is correct.

EXPLANATION:
The Homeowners forms will limit coverage for personal property at self-storage facilities up to 10% of the Coverage C limit, or $1,000 whichever is higher.


Question 10 of 100

11

The insured has an HO-3 homeowner policy. During the night, a water line in the wall to the upstairs bathroom burst and water ruined the walls, floor and furniture. In this situation all of the damages will be covered, EXCEPT:

Answer Choices: Select the Correct Answer
Damage to remove the wall and replace the wall to gain entrance to the pipe that broke.
Damage to the floor.
Damage to the furniture.
Replace the pipe that broke.

Question 11 of 100

Your answer: Replace the pipe that broke. is correct.

EXPLANATION:
The policy will not pay for the part of the pipe that broke. All of the other damages are covered.


Question 11 of 100

12

The additional coverage under the Commercial Property policy for electronic data provides $2,500 for the cost of replacing and restoring lost information contained on electronic media. Which of the following types of electronic data is NOT included in this additional coverage?

Answer Choices: Select the Correct Answer
Data controlling the building elevator
Data controlling the heating, ventilation, lighting and air conditioning systems
Data controlling the building security system
None of these items are subject to this limit

Question 12 of 100

Your answer: None of these items are subject to this limit is correct.

EXPLANATION:
None of these items are subject to the $2,500 annual aggregate limitation and therefore, covered up to the full cost to restore these items up to the building limit.


Question 12 of 100

13

Which of the following would NOT be found in the conditions section of a homeowner insurance policy?

Answer Choices: Select the Correct Answer
Subrogation rights
Duties of the insured
Insurance premium
Mortgagee clause

Question 13 of 100

Your answer: Insurance premium is correct.

EXPLANATION:
The insurance premium is not shown in the conditions section of the homeowner policy.


Question 13 of 100

14

During a tornado, Natalie's house is destroyed when a section of a wall is blown down, knocking over a heater, which sets the house on fire and creates smoke. The proximate cause of this loss is:

Answer Choices: Select the Correct Answer
The tornado.
The fire.
The collapse of the wall.
The heater.

Question 14 of 100

Your answer: The tornado. is correct.

EXPLANATION:
The proximate cause of a loss is an unbroken chain of events, that leads to the loss. In this question, the tornado started the chain of events that lead up to the fire and smoke loss.


Question 14 of 100

15

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 15 of 100

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 15 of 100

16

The commercial inland marine conditions form:

Answer Choices: Select the Correct Answer
Contains the basic policy conditions that apply to many controlled inland marine coverage.
Is used to write standard commercial fire coverage.
Must be used with any commercial inland marine form.
Can stand alone as a complete insurance policy.

Question 16 of 100

Your answer: Contains the basic policy conditions that apply to many controlled inland marine coverage. is correct.

EXPLANATION:
Policy conditions contain the duties of the insured in case of a loss, as well as the appraisal clause, pair and set clause, no benefit to bailee clause etc. They are included in most controlled inland marine policies.


Question 16 of 100

17

In the event of a loss under a personal auto policy, an insured is required to submit to the insurance company all of the following information, EXCEPT:

Answer Choices: Select the Correct Answer
An appraisal of the damaged property.
A list of any known witnesses.
A notice of claim.
Proof of loss statement if requested.

Question 17 of 100

Your answer: An appraisal of the damaged property. is correct.

EXPLANATION:
Obtaining an appraisal of damaged property is not a required duty of the insured. Verification of the damage is the duty of the auto appraiser.


Question 17 of 100

18

Which of the following would not be considered a "first party" coverage under the personal auto policy?

Answer Choices: Select the Correct Answer
Liability
Collision
Other than collision
Uninsured Motorist Coverage

Question 18 of 100

Your answer: Collision is incorrect. The correct answer is: Liability.

EXPLANATION:
Liability is considered to be "third party coverage." The other coverages pay the insured (the first party) to the policy.


Question 18 of 100

19

The three parties to a contract bond are:

Answer Choices: Select the Correct Answer
Principal, obligee, surety.
Obligor, principal, surety.
Principal, obligee, employee.
Employee, obligor, principal.

Question 19 of 100

Your answer: Principal, obligee, surety. is correct.

EXPLANATION:
The three parties to a contract bond are the principal (contractor), obligee (the protected party) and the surety (the guarantor) who pays the loss to the obligee because the principal failed to perform.


Question 19 of 100

20

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 20 of 100

Your answer: 21 calendar days is correct.

EXPLANATION:
This adjuster must respond immediately, but no later than 21 calendar days from the date of the request.


Question 20 of 100

21

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

Answer Choices: Select the Correct Answer
30 calendar days.
15 working days.
15 calendar days.
10 days.

Question 21 of 100

Your answer: 15 calendar days. is correct.

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


Question 21 of 100

22

Which of the following statements BEST describes the reason it was necessary to create a federal flood insurance program in 1968?

Answer Choices: Select the Correct Answer
Because other property policies routinely exclude flood from coverage.
Because people were building their homes closer and closer to large bodies of water than ever before.
Because the United States was experiencing more flooding than ever before.
Because the flood insurance policies that were being issued at the time, did not provide adequate coverage for contents.

Question 22 of 100

Your answer: Because other property policies routinely exclude flood from coverage. is correct.

EXPLANATION:
It was necessary to create a federal flood insurance program because other property policies routinely exclude flood from coverage. Many citizens were losing everything because they could not purchase insurance to cover their home and their belongings in case of flood.


Question 22 of 100

23

The "coverage territory" of umbrella liability policies is usually:

Answer Choices: Select the Correct Answer
The United States of America, its territories and possessions, Puerto Rico and Canada only.
Anywhere in the world but sometimes with a requirement that suits be brought in the United States or Canada.
The continental United States of America only.
The state in which the insurance company is domiciled.

Question 23 of 100

Your answer: The United States of America, its territories and possessions, Puerto Rico and Canada only. is incorrect. The correct answer is: Anywhere in the world but sometimes with a requirement that suits be brought in the United States or Canada..

EXPLANATION:
The umbrella policy expands the coverage territory of the underlying coverages. The coverage is on a "worldwide" basis.


Question 23 of 100

24

Bridges and tunnels may be insured under:

Answer Choices: Select the Correct Answer
Inland Marine Forms
Business floater forms.
Transportation forms.
Equipment dealer’s forms.

Question 24 of 100

Your answer: Inland Marine Forms is correct.

EXPLANATION:
These are instrumentalities of transportation and can be covered under inland marine forms.


Question 24 of 100

25

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 25 of 100

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 25 of 100

26

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

Answer Choices: Select the Correct Answer
Aircraft spraying.
Pollution.
Products Liability for the insured’s farm produce sold.
Injury to a farm employee.

Question 26 of 100

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

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


Question 26 of 100

27

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

Answer Choices: Select the Correct Answer
A dental office.
A contractors business that provides insulation services.
A savings and loan.
A small wig manufacturing business.

Question 27 of 100

Your answer: A dental office. is correct.

EXPLANATION:
A dental office is the only business listed that would be eligible for coverage under a Businessowners policy. Manufacturing businesses are generally not accepted for BOP coverage due to the "Products" liability exposure. The contractor providing insulation services would not be eligible for a Businessowners policy due to the risk involved in performing the service. The savings and loan would not be covered due to the large crime risk.


Question 27 of 100

28

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 28 of 100

Your answer: AO is correct.

EXPLANATION:
The AO zones are subject to only shallow flooding during the base flood, therefore "flood depths" are shown in these zones.


Question 28 of 100

29

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 29 of 100

Your answer: All of the responses are correct. is correct.

EXPLANATION:
All of the responses are correct.


Question 29 of 100

30

The Declarations section of an insurance policy contains:

Answer Choices: Select the Correct Answer
The name and address of the insured and the duration of the policy.
Specifications for the necessary method to submit a proof of loss.
The insurance companies promise to pay in exchange for the premium payment.
A list of conditions and exclusions under the policy.

Question 30 of 100

Your answer: A list of conditions and exclusions under the policy. is incorrect. The correct answer is: The name and address of the insured and the duration of the policy..

EXPLANATION:
Usually the first page of an insurance policy, the Declarations section, also includes other important information including the name of insurer, limits of liability, the policy period, a list of endorsements that have been attached to the policy, deductibles, etc.


Question 30 of 100