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Flashcards in IA Test 7 Deck (100)
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1

Under the "Additional Coverages" of the liability section of HO policies, damage to property of others (whether or not in the insured's custody and regardless of fault) is covered up to:

$1,500 per occurrence
$5,000 per occurrence
$1,000 per occurrence
$2,500 per occurrence

Question 1 of 100

Your answer: $1,500 per occurrence is incorrect. The correct answer is: $1,000 per occurrence.

EXPLANATION:
The limit is $1,000. This pays regardless of legal liability. The form says, "if caused by the insured."


Question 1 of 100

2

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

Within 5 calendar days
Within 10 calendar days
Within 21 calendar days
Immediately

Question 2 of 100

Your answer: Within 10 calendar days is incorrect. The correct answer is: Immediately.

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


Question 2 of 100

3

Collin suffered a work-related injury on the morning of February 5th and was off work completely until he returned to work on full duty on February 19th. Collin had worked for his employer for four years and was paid $42,125 per year. Collin's state sets the TTD rate at 66 2/3rd percent of the average weekly wage. The state sets the maximum compensation rate at $420 per week and the waiting period at 3 days retroactive after 10 days. Collin was not paid for working on February 5th. Collin's average weekly wage is approximately:

$810.
$770.
$534.
$420.

Question 3 of 100

Collin suffered a work-related injury on the morning of February 5th and was off work completely until he returned to work on full duty on February 19th. Collin had worked for his employer for four years and was paid $42,125 per year. Collin's state sets the TTD rate at 66 2/3rd percent of the average weekly wage. The state sets the maximum compensation rate at $420 per week and the waiting period at 3 days retroactive after 10 days. Collin was not paid for working on February 5th. Collin's average weekly wage is approximately:

Your answer: $420. is incorrect. The correct answer is: $810..

EXPLANATION:
Collins average weekly wage is approximately $810. We arrive at this number by dividing Collin's annual salary of $42,125 by 52 weeks.


Question 3 of 100

4

An insured leases his building to a tenant. The tenant subsequently suffers a loss when the insured's building burns. What should the tenant do?

Submit the claim to the insured’s (landlord’s) insurance company
The tenant must prove liability on the part of the insured landlord
Tenant must submit a claim to his/her own carrier
None of the responses are correct

Question 4 of 100

Your answer: Tenant must submit a claim to his/her own carrier is correct.

EXPLANATION:
The commercial property building and personal property form includes under “your business property”, coverage for the tenants improvements and betterments to the landlords property. This coverage applies if the tenant purchases business personal property coverage. However, proper limits of coverage must be in place.


Question 4 of 100

5

What is generally excluded on the Condominium commercial unit-owners form?

The improvements and betterments of the unit owner
Hostile Fire damage
Building coverage
Inside appliances and fixtures

Question 5 of 100

Your answer: Building coverage is correct.

EXPLANATION:
Coverage for the building is generally excluded for the unit-owners form as that should be covered on the Condominium association form.


Question 5 of 100

6

In California an independent adjuster must post a surety bond. The bond is made payable to:

The people of the State of California.
The Insurance Commissioner.
The California Underinsurance Fund.
The insurer that employs the adjuster.

Question 6 of 100

Your answer: The people of the State of California. is correct.

EXPLANATION:
The bond is made payable to the people of the State of California.


Question 6 of 100

7

The retroactive date indicated on the Declarations page of a claims-made commercial umbrella liability policy provides that coverage for injury or damage will be:

Excluded after that date.
Included before that date under every circumstance.
Excluded before that date.
Included before that date if a supplemental extended reporting period has been purchased.

Question 7 of 100

Your answer: Included before that date under every circumstance. is incorrect. The correct answer is: Excluded before that date. .

EXPLANATION:
The retroactive date is the date that claims-made coverage begins. Claims before that date are excluded by the policy.


Question 7 of 100

8

In the CGL, which of the following would be included under the definition of a personal injury?

A tenant evicted by his landlord sues the landlord for invasion of privacy and wrongful eviction
A customer injured in a department store when a sign falls on her and sues the store for medical costs and pain and suffering
An employee injured lifting a heavy carton sues his employer for costs
An individual fired from her job sues her employer for unemployment benefits

Question 8 of 100

Your answer: An employee injured lifting a heavy carton sues his employer for costs is incorrect. The correct answer is: A tenant evicted by his landlord sues the landlord for invasion of privacy and wrongful eviction.

EXPLANATION:
Invasion of privacy and wrongful evictions are part of the personal injury coverage.


Question 8 of 100

9

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

Evaluation.
Resolution.
Investigation.
Negotiation.

Question 9 of 100

Your answer: Investigation. is correct.

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


Question 9 of 100

10

In California, an insurer may not recommend a specific body shop to make repairs on the auto involved in a claim, unless:

The body shop has non-manufacture parts on hand to do the job.
It is the only body shop available in the immediate area.
A referral is expressly requested by the insured.
Never.

Question 10 of 100

Your answer: Never. is incorrect. The correct answer is: A referral is expressly requested by the insured..

EXPLANATION:
California regulations state that the insured has his or her choice of repair facilities. The insured may ask for a recommendation, but still makes the final decision.


Question 10 of 100

11

Ocean marine coverage for losses to the insured vessel caused by bursting boilers, latent defects in the vessel and negligence of the master or crew members are addressed by which of the following?

The Inchmaree clause.
Protection and indemnity coverage.
Hull coverage
Barratry

Question 11 of 100

Your answer: Protection and indemnity coverage. is incorrect. The correct answer is: The Inchmaree clause. .

EXPLANATION:
Inchmaree was a steam ship that suffered a machinery loss that was not covered. A lawsuit followed, and future policies offered this coverage under what is commonly referred to as the Inchmaree clause.


Question 11 of 100

12

Personal Liability Coverage of the Homeowners program covers the insured for all of the following, EXCEPT:

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 12 of 100

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 12 of 100

13

The low-cost policy limits for automobile insurance for low-income drivers who are insured by the California Automobile Assigned Risk Plan are:

$20,000/$40,000/$10,000
$25,000/$50,000/$25,000
$10,000/$20,000/$3,000
$12,500/$25,000/$10,000

Question 13 of 100

Your answer: $10,000/$20,000/$3,000 is correct.

EXPLANATION:
The policy must offer coverage in the amount of $10,000 for bodily injury to, or death of, each person as a result of any one accident and, subject to that limit as to one person, the amount of $20,000 for bodily injury to, or death of all persons as a result of any one accident,and the amount of $3,000 for damage to property of others as a result of any one accident.


Question 13 of 100

14

An umbrella policy without any special endorsements would NOT cover:

Bodily Injury
Personal Injury
Uninsured Motorists
Property Damage

Question 14 of 100

Your answer: Uninsured Motorists is correct.

EXPLANATION:
Uninsured motorists must be added by endorsement in order for the umbrella policy to cover this exposure.


Question 14 of 100

15

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:

An appraisal of the damaged property.
A list of any known witnesses.
A notice of claim.
Proof of loss statement if requested.

Question 15 of 100

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:

Your answer: A list of any known witnesses. is incorrect. The correct answer is: An appraisal of the damaged property. .

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 15 of 100

16

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?

$14,000
$10,000
$12,000
$15,000

Question 16 of 100

Your answer: $12,000 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 16 of 100

17

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?

$500,000
$0
$100,000
$1,000,000

Question 17 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 17 of 100

18

All of the following are EXCLUDED under the Earthquake Endorsement to a Homeowners policy, EXCEPT:

Flood and tidal wave.
Land shock waves.
Waves and tsunami.
The cost of filling land.

Question 18 of 100

Your answer: The cost of filling land. is incorrect. The correct answer is: Land shock waves..

EXPLANATION:
All of the items listed are excluded under the Earthquake Endorsement to a Homeowners policy, EXCEPT: Land shock waves, they are covered.


Question 18 of 100

19

All of the following items may be covered by a Commercial Inland Marine policy, EXCEPT:

Transport vehicles.
Radio towers.
Bridges.
Property being transported.

Question 19 of 100

Your answer: Transport vehicles. is correct.

EXPLANATION:
"Instrumentalities of Transportation or Communication" are acceptable items to be covered under a Commercial Inland Marine policy and this would include a "transport vehicle". The property being transported is also eligible for coverage. The vehicle transporting the items is covered under a Business Auto policy, not Commercial Inland Marine.


Question 19 of 100

20

Before an application for an independent adjuster license is granted, the applicant must meet all of the following requirements, EXCEPT:

The applicant must be at least 21 years of age.
The applicant must have at least two years of experience in insurance claims adjusting.
The applicant must not have committed acts constituting grounds for denial of a license.
Payment of the application fee.

Question 20 of 100

Your answer: The applicant must be at least 21 years of age. is correct.

EXPLANATION:
The applicant must be at least 18 years of age.


Question 20 of 100

21

The clause in an ocean marine policy that refers to "particular average" means:

Only one party shares in the loss.
Damage to cargo losses will be shared by all parties.
Payment must be made under the freight insurance coverage.
Payment must be made under the ‘running down clause’.

Question 21 of 100

Your answer: Damage to cargo losses will be shared by all parties. is incorrect. The correct answer is: Only one party shares in the loss..

EXPLANATION:
The particular average clause means only one party shares in the loss.


Question 21 of 100

22

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 22 of 100

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 22 of 100

23

The Dwelling Form Flood policy will cover:

I. A single-family residence.
II. A three-family residence.
III. Manufactured housing.

II and III only.
I and III only.
I only.
I, II, and III.

Question 23 of 100

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

EXPLANATION:
The Dwelling Form Flood policy will cover residential structures up to four families or manufactured housing.


Question 23 of 100

24

Which of the following losses would be covered under commercial auto physical damage coverage?

Fire
Loss to equipment used for radar or laser detection
Losses resulting from wear and tear
Loss caused by war or military action

Question 24 of 100

Your answer: Fire is correct.

EXPLANATION:
Fire is covered and the other choices are excluded.


Question 24 of 100

25


QUESTION:
All of the following are true regarding the limit of insurance shown on the Declarations page of a Commercial Auto policy, EXCEPT:

The limit of coverage applies to each vehicle listed on the Declarations page.
The number of vehicles involved in the accident does not affect the limit of coverage per accident.
The number of claims per accident does not change the limit of coverage for the accident.
The Commercial Auto policy contains an aggregate limit for all claims paid during the policy year. Once that limit is paid for all accidents, the insured would be uninsured for future claims during the remainder of the year.

Question 25 of 100

Your answer: The Commercial Auto policy contains an aggregate limit for all claims paid during the policy year. Once that limit is paid for all accidents, the insured would be uninsured for future claims during the remainder of the year. is correct.

EXPLANATION:
The Commercial Auto policy does not contain an aggregate limit for all accidents that occur during the policy period. Assume that a policy has a per accident limit of $100,000 and there are five separate accidents during the policy year in which the limit per accident was paid. The insurer would pay out $500,000.


Question 25 of 100

26

The Ordinance or Law Endorsement can be added to a Homeowners form to increase the amount of coverage in ______ increments, up to ______ coverage.

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 26 of 100

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 26 of 100

27

Sue Green has a commercial crime policy on her restaurant, but she only chose the insuring agreement "Inside the Premises - Robbery or Safe Burglary of Other Property". If an employee steals some equipment by breaking into the premises during the daytime on a holiday, the policy would:

Not cover the loss, since acts by employees are excluded.
Cover the loss.
Not cover the loss, since daytime burglaries are excluded.
Not cover the loss, since only loss of merchandise is covered.

Question 27 of 100

Your answer: Cover the loss. is incorrect. The correct answer is: Not cover the loss, since acts by employees are excluded. .

EXPLANATION:
Sue would need to add the insuring agreement "Employee Theft" to her crime policy to cover the dishonest acts of her employees. Even though this fits the definition of burglary due to a forced entry, theft by an employee is not covered on the form. Sue would need employee theft coverage.


Question 27 of 100

28

Of the following businesses, which one is NOT eligible for a Businessowners Policy?

An auto dealership
A barbershop
A beauty salon
A pizza parlor

Question 28 of 100

Your answer: An auto dealership is correct.

EXPLANATION:
Auto dealerships are not eligible for the BOP. The Garage policy would cover these risks and includes special coverages for the automobiles on a dealership lot for sale, and customers' cars left for repair or service. The barbershop, beauty salon, and pizza parlor would qualify for the BOP.


Question 28 of 100

29

An independent adjuster must complete ___ hours of continuing education during each license renewal cycle.

12
20
24
36

Question 29 of 100

Your answer: 20 is incorrect. The correct answer is: 24.

EXPLANATION:
An individual who holds an insurance adjuster license and who is not exempt must satisfactorily complete a minimum of 24 hours, of which three hours are to be in ethics, of continuing education courses pertinent to the duties and responsibilities of an insurance adjuster license reported to the Insurance Commissioner on a biennial basis in conjunction with his or her license renewal cycle.


Question 29 of 100

30

Which of the following policy forms would BEST protect a business that must keep operating at any cost after a loss?

Extra Expense
Business Income
Gross Earnings
Contingent Business Interruption

Question 30 of 100

Your answer: Contingent Business Interruption is incorrect. The correct answer is: Extra Expense.

EXPLANATION:
Certain types of risks cannot be shut down because of a loss. Banks, hospitals, dairies are some examples. Extra Expense coverage is needed.


Question 30 of 100