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Flashcards in IA Test 6 Deck (100)
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1

When someone dies without a will they are said to have died:

In Replevin.
Testate.
Without a Principal.
Intestate.

Question 1 of 100

Your answer: Testate. is incorrect. The correct answer is: Intestate..

EXPLANATION:
When an individual dies intestate, he or she left no will.


Question 1 of 100

2

In workers compensation terminology, "misconduct" refers to:

improper conduct of employees only.
improper conduct of the employer only.
improper or bad behavior on the part of an employee or employer.
intentional acts designed to injure.

Question 2 of 100

Your answer: improper or bad behavior on the part of an employee or employer. is correct.

EXPLANATION:
In workers compensation terminology, "misconduct" means improper or bad behavior.


Question 2 of 100

3

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

Within one year
Within 30 days
Immediately
Does not have to be reported

Question 3 of 100

Your answer: Immediately is incorrect. The correct answer is: Within 30 days.

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 3 of 100

4

Liability coverage under the personal auto policy includes:

Bodily injury coverage.
Property damage coverage.
Both bodily injury and property damage coverage.
Damage to personal property of others in the insured’s vehicle and damaged in an accident.

Question 4 of 100

Your answer: Property damage coverage. is incorrect. The correct answer is: Both bodily injury and property damage coverage..

EXPLANATION:
The policy provides both bodily injury and property damage liability coverage. It does not cover the insured's personal property or personal property of others in the insured's vehicle.


Question 4 of 100

5

Under the farm policy, which of the following is not considered livestock?

Pack mule
Sheep
Poultry
Cattle grazing in a field

Question 5 of 100

Your answer: Pack mule is incorrect. The correct answer is: Poultry.

EXPLANATION:
Poultry have two legs, whereas livestock has four legs. Therefore, poultry is not eligible under the generic livestock form and would require a special endorsement to be covered.


Question 5 of 100

6

Which of the garage policy coverages will pay for physical damage to a garage customer's auto regardless of legal liability?

Section II - Garage Liability coverage.
Section IV - Garage physical damage coverage.
Garagekeepers legal liability coverage.
Garagekeepers direct primary coverage.

Question 6 of 100

Your answer: Section II - Garage Liability coverage. is incorrect. The correct answer is: Garagekeepers direct primary coverage..

EXPLANATION:
The Garagekeepers direct primary coverage pays for damages to a customer's vehicle regardless of fault. The Garagekeepers legal liability form would require that the claimant prove negligence on the part of the garage.


Question 6 of 100

7

On the basic dwelling policy all of the following perils are excluded, EXCEPT:

War
Landslide
Earthquake
Volcanic eruption

Question 7 of 100

Your answer: War is incorrect. The correct answer is: Volcanic eruption.

EXPLANATION:
Under the DP-1 basic form, war, earthquake and landslide are not named perils and are, therefore, excluded.


Question 7 of 100

8

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

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

Question 8 of 100

Your answer: An intervening cause was the proximate cause of the plaintiff's injury rather than the defendant's action (or inaction). is incorrect. The correct answer is: The loss to the plaintiff was caused intentionally by the defendant. .

EXPLANATION:
Intentional acts are excluded by all policies.


Question 8 of 100

9

The additional coverage for Debris Removal will now pay to clean up the debris of others on the insured premises even if the insured has no damage to their own property. The maximum payable to remove this debris of others is:

$25,000
$5,000
$10,000
$50,000

Question 9 of 100

Your answer: $5,000 is correct.

EXPLANATION:
The Debris Removal additional coverage now extends to $5,000 to cleanup debris of others on the insured premises even if the insured property has not been damaged.


Question 9 of 100

10

A deductible usually applies to which of the following automobile policy coverages?

Physical Damage
Bodily Injury Liability
Property Damage Liability
Medical Payments

Question 10 of 100

Your answer: Physical Damage is correct.

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 10 of 100

11

What is the purpose of the "Other States" coverage of a standard Workers Compensation policy?

To provide coverage for exposures which develop in other states during the policy period.
To provide coverage in any other state the employee selects.
To provide blanket coverage in any other state in which the insured may operate.
To provide coverage in one or more of the “monopolistic” states.

Question 11 of 100

Your answer: To provide coverage in one or more of the “monopolistic” states. is incorrect. The correct answer is: To provide coverage for exposures which develop in other states during the policy period..

EXPLANATION:
The "Other States" coverage applies to both Workers Compensation and Employers Liability coverage under a Workers Compensation policy. The purpose is to provide coverage against loss exposures which develop during the policy period (but were not present at policy inception), in any state designated on the information page of the policy.


Question 11 of 100

12

Under the HO-3 form there is no coverage for loss resulting from "earth movement" except when endorsed by which of the following?

Earthquake endorsement.
Volcanic eruption endorsement.
Collapse endorsement.
Explosion endorsement.

Question 12 of 100

Under the HO-3 form there is no coverage for loss resulting from "earth movement" except when endorsed by which of the following?

Your answer: Earthquake endorsement. is correct.

EXPLANATION:
An insured may add earthquake as an insured peril for Coverages A, B and C by adding the earthquake endorsement. This endorsement defines as a "single earthquake" all earthquake shocks occurring within a 72-hour period. The peril of earthquake is defined to include land shock waves or tremors accompanying a volcanic eruption.


Question 12 of 100

13

When someone dies without a will, their assets will be handled by a court appointed:

Arbitrator.
Executor.
Testator.
Administrator.

Question 13 of 100

Your answer: Executor. is incorrect. The correct answer is: Administrator..

EXPLANATION:
When an individual dies intestate, he or she left no will. An intestate death requires a person be appointed by the court to administer the estate and also requires that this administrator secure an administrator’s bond.


Question 13 of 100

14

Which of the following pollution losses would be covered by Garage policy liability coverage?

Pollution of a stream caused by gasoline leaking from the ruptured fuel tank of a covered auto following a collision.
Escape of toxic sludge from a dump site used by the named insured to store waste produced in its garage operations.
The cost of a governmentally ordered clean-up of the pollution from a dump site used by the named insured.
None of the losses described would be covered.

Question 14 of 100

Your answer: None of the losses described would be covered. is incorrect. The correct answer is: Pollution of a stream caused by gasoline leaking from the ruptured fuel tank of a covered auto following a collision..

EXPLANATION:
The policy would provide pollution liability in the case of escaped fluids and fuels as a result of an accident. The other choices are excluded.


Question 14 of 100

15

Your insurance company pays for the damages to your auto and for your bodily injury after your car is struck by a hit and run driver. The accident is witnessed by several individuals who can describe the car and its driver but who failed to get a license number. A year after the accident, the owner of the hit and run vehicle turns himself in. It is determined that he was fully insured at the time of the accident but fled because he had been drinking. Pursuant to the California Insurance Regulations, your insurance company can:

Do nothing as a full year has passed since the accident occurred
Subrogate against the other insurance company to recover only for the damages to your vehicle
Subrogate against the other driver to recover all sums paid for your vehicle repair and your bodily injury
File a lawsuit to waive the statute of limitations then proceed with subrogation

Question 15 of 100

Your answer: Subrogate against the other driver to recover all sums paid for your vehicle repair and your bodily injury is correct.

EXPLANATION:
Payments made under both your Uninsured Motorist Bodily Injury and Uninsured Motorist Property Damage coverages can be recovered from the responsible party by subrogation if his/her identity is later confirmed.


Question 15 of 100

16

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:

A one-family dwelling.
A two-family dwelling.
A one to four-family dwelling.
A one to two-family dwelling.

Question 16 of 100

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:

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 16 of 100

17

A Personal Umbrella liability policy:

Only covers what the base policy covers.
Is not designed to act as a primary policy.
Will not cover professional liability.
May cover risks not covered in an underlying policy.

Question 17 of 100

Your answer: May cover risks not covered in an underlying policy. is correct.

EXPLANATION:
Umbrella liability policies are excess coverage over the primary policy in force. There are some situations where an umbrella may cover a risk that's not covered in an underlying policy.


Question 17 of 100

18

Water damage to an insured building covered under the Commercial Property - Special form would be covered under all of the following circumstances, EXCEPT:

Damage to the building caused by water to extinguish a fire.
Water from a pipe that suddenly breaks and causes wall and floor damage.
Water damage to the building caused by a pipe that has leaked over a period of 14 days.
A water pump in an appliance has cracked and water escapes, causing damage to the building.

Question 18 of 100

Your answer: Water damage to the building caused by a pipe that has leaked over a period of 14 days. is correct.

EXPLANATION:
Water damage caused by a pipe that has been leaking beyond 14 days is excluded by this Commercial Property form.


Question 18 of 100

19

The insured has a commercial umbrella liability policy with $1 million limit of insurance. Claims were filed against the insured's umbrella policy three times during one policy period for three different occurrences. The claims are: for $75,000 on February 5; for $800,000 on May 4; and for $500,000 on July 10. Which of these claims will be paid?

The February 5 claim only
The February 5 and May 4 claims only
All three claims
None of the claims

Question 19 of 100

Your answer: The February 5 and May 4 claims only is incorrect. The correct answer is: All three claims.

EXPLANATION:
Assuming these claims came from three different occurrences, all three would be paid. Keep in mind that the umbrella policy has two limits. One is the occurrence limit and the other is the aggregate limit that limits the total claim payment amounts during the policy year. The aggregate limit does not apply under most umbrella policies to automobile claims.


Question 19 of 100

20

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

A family pub
A funeral home
An auto repair shop
A credit union

Question 20 of 100

Your answer: A funeral home is correct.

EXPLANATION:
There are many classes that are not eligible for coverage under a Businessowners policy. Businesses connected with automobiles, such as repair or service stations, dealerships, or parking lots or garages, are not eligible unless one of these is incidental to an eligible business. Bars and pubs are ineligible for coverage, as well as a credit union. A funeral home WOULD BE eligible.


Question 20 of 100

21

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

Aircraft spraying.
Pollution.
Products Liability for the insured’s farm produce sold.
Injury to a farm employee.

Question 21 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 21 of 100

22

Under a Commercial Auto policy with respect to physical damage to a covered vehicle, which of the following is true regarding diminution of value?

It is specifically excluded.
It is covered.
The deductible is waived.
The renewal premium is reduced for physical damage coverages on the damaged vehicle.

Question 22 of 100

Your answer: It is covered. is incorrect. The correct answer is: It is specifically excluded..

EXPLANATION:
A decrease in the value because of an accident is not a covered loss in most states. The policy excludes this decrease in value when a covered vehicle has been damaged and causes a decrease in value even though it has been repaired.


Question 22 of 100

23

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:

60 days
30 days
10 days
20 days

Question 23 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 23 of 100

24

Which of the following may cancel a Commercial Package Policy?

The first named insured
Any named insured
The agent of record
None of the responses listed are correct

Question 24 of 100

Your answer: The first named insured is correct.

EXPLANATION:
The first named insured as well as the insurer may cancel a Commercial Package Policy.


Question 24 of 100

25

According to the Definitions section of a homeowner policy, the term best described by the phrase an "unforeseen and unintended" event is a/an:

Accident
Peril
Hazard
Risk

Question 25 of 100

Your answer: Accident is correct.

EXPLANATION:
This is the definition of an accident.


Question 25 of 100

26

Which of the following is excluded under the Ordinance or Law Endorsement form?

The cost to comply with any ordinance or law requiring a higher grade of pipe to be used in a home's plumbing system.
The cost to comply with any ordinance or law regulating or enforcing the type of insulation that may be used in the attics of homes located in the jurisdiction.
The cost to comply with any ordinance or law requiring that handrails be installed on any porch that is greater than 2 feet in height, and is attached to the covered dwelling.
The cost to comply with any ordinance or law regulating or enforcing the clean up and removal of pollutants.

Question 26 of 100

Your answer: The cost to comply with any ordinance or law requiring a higher grade of pipe to be used in a home's plumbing system. is incorrect. The correct answer is: The cost to comply with any ordinance or law regulating or enforcing the clean up and removal of pollutants. .

EXPLANATION:
The cost to comply with any ordinance or law regulating or enforcing the clean up and removal of pollutants is excluded under the Ordinance or Law endorsement.


Question 26 of 100

27

Which of the following statements describes an action that the adjuster cannot take after a claimant has hired an attorney to represent him/her in handing a claim?

Negotiate with the attorney.
Write the draft for payment of the claim directly to the claimant.
Contact the claimant without the consent of the attorney.
Have an attorney prepare releases.

Question 27 of 100

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

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


Question 27 of 100

28

Adjusters have a relationship to the legal profession, and must exercise care to avoid the unauthorized practice of law. In California, the insurance code states that nothing in the code will be construed as entitling any person to practice law in the state, UNLESS:

He/she is a licensed independent adjuster.
He/she has graduated from an accredited law school.
He/she is an active member of the State Bar of California.
He/she is a licensed public adjuster.

Question 28 of 100

Your answer: He/she is an active member of the State Bar of California. is correct.

EXPLANATION:
In California, the insurance code states that nothing in the code will be construed as entitling any person to practice law in the state, UNLESS he/she is an active member of the State Bar of California.


Question 28 of 100

29

The cost of defense is paid without limitation and does not affect the limit of liability for damages. When does the insurer's duty to defend and pay these defense costs end?

There are no limitations.
When the cost of defense and the requested demands reach the policy limit.
After the statute of limitations is exhausted.
When the limit of liability is exhausted through the payment of settlements or judgments.

Question 29 of 100

Your answer: After the statute of limitations is exhausted. is incorrect. The correct answer is: When the limit of liability is exhausted through the payment of settlements or judgments..

EXPLANATION:
The insurer's duty to defend ends when the limits of the policy are paid out in either settlements and/or judgments.


Question 29 of 100

30

Personal property normally kept at other residences owned or rented to the insured is covered under the Homeowners program for:

10% of the Coverage C limit
10% of the Coverage C limit or $1,000 whichever is greater
The full Coverage C limit
$2,500 limit for theft

Question 30 of 100

Your answer: The full Coverage C limit is incorrect. The correct answer is: 10% of the Coverage C limit or $1,000 whichever is greater.

EXPLANATION:
The Homeowner forms state the limit of coverage for personal property normally at other residences owned by or rented to the insured as 10% of the Coverage C limit or $1,000 whichever is greater.


Question 30 of 100