Practice Questions

All of the following are true regarding the CA Standard Form Fire Insurance Policy, EXCEPT: A. the content and wording of the policy is stated in the State Insurance Code B. policy is rarely used today but it played an historical role in shaping the structure of today's Homeowners policies C. the exact wording of the Standard Form is contained in most fire policies that insure property in CA D. in situations where the form is not utilized, the form that is used is required to contain at least the same or better coverage

A

All of the following statements about binders are true, except: A. a binder specifies the premium amount B. a binder specifies the perils covered C. a binder specifies the insurer providing the coverage D. a binder specifies the effective date of coverage and amount of coverage

A

All the following losses would be covered under the special form of a dwelling policy except: A. water damage from roof drains and gutters B. freezing of a plumbing system in a vacant dwelling in which the insured had turned off the water C. when damage to the interior of a dwelling after the exterior was first damaged D. theft after finishing construction of the dwelling

A

An insured has a DP-3 with $100,000 of Coverage A. The dwelling's replacement value is $120,000. Fire completely destroys the dwelling, causes $25,000 worth of damage to a separate garage and kills 7 trees valued at $750 each. How much will the policy pay? Ignore any deductible that may apply. A. $113,500 B. $93,750 C. $125,000 D. $128,750

A

Before a regulation proposed by the Insurance Commissioner takes effect, all of the following must occur, except: A. the state legislature must enact the regulation after the OAL has approved it B. Office of Administrative Law must review the regulation for conformity with other state laws C. public hearing is held to receive comment on the proposed regulation D. proposed regulations must be published for public comment

A

Commercial Property policies cover all of the following perils, except: A. Ordinance or law B. Vandalism C. Riot or civil Commotion D. Fire

A

Garage 'Operations' refers to: A. ownership, maintenance or use of a garage premises and autos in the insured's care B. the sale of auto parts C. the repairs completed on vehicles in the insured's care, custody or control D. the liability exposure of an insured that has customers entering and exiting the property at various times

A

How much insurance is required to pay any loss without a penalty for underinsurance under a Builders Risk form? A. 100% of completed value B. 80% of value at time of loss C. 100% of value at time of loss D. 80% of completed value

A

Jack hit a deer with his car. He had a $250 deductible Collision coverage and $50 deductible Other Than Collision coverage. The damage to his car was $450. How much will his policy cover? A. $400 B. $150 C. $200 D. Nothing

A

Loss under a Homeowners Policy is included in all of the following, except: A. theft of the insured's boat from a slip at a Marina B. theft of an insured's camera stolen by a visitor C. theft of the insured's shotgun, valued at $1500 D. fire damage to personal property of a guest of the insured

A

Part D - Coverage for Damage to Your Auto under the Personal Auto Policy will not pay for which of the following? A. losses to the covered auto caused by damage due to wear and tear, freezing, mechanical or electric breakdown, or road damage to tires B. loss to electronic ignition equipment of the covered auto C. earthquake damage to the covered auto D. losses to permanently installed sound reproduction equipment of the covered auto

A

Recreational activities exposure the insured to liability claims. The types of recreational vehicles whose liability coverage can be broadened under the homeowner policy are: A. watercraft and snowmobiles B. dirt bikes and off road vehicles C. hovercraft and gliders D. the homeowner's policy can be broaden to cover all of these

A

The Miscellaneous Type Vehicle Endorsement attached to a Personal Auto Policy allows coverage for a motorcycle by: A. providing an expanded definition of covered auto B. specifically naming it in the Declarations C. altering the four-wheel requirement D. adding motorcycles to the list of eligible vehicles

A

The Personal Auto Policy does not provide coverage for which of the following? A. any vehicle with fewer than four wheels or designed mainly for the use off public roads B. a pickup truck or van C. off-road vehicles used in a medical emergency D. a non-owned golf cart

A

Under Section II of the Homeowners Policy, a 1-4 family dwelling where the insured resides in one of the units, including other structures and grounds at that location, is defined as: A. Residence Premises B. Dwelling Structures C. Insured Location D. Non-business Premises

A

Under a Building and Personal Property Policy, all of the following properties are included in the definition of "building" except: A. patio B. outdoor fixtures C. permanently installed fixures D. personal property used to maintain the premises

A

What additional coverage is provided in a DP-3 (Special Form) that is not provided in a DP-3 (special form) that is not provided in a DP-1 (basic form)? A. collapse B. 10% worldwide coverage C. fire department service charge D. additional living expenses

A

Which statement is false? A. under Section II additional coverages, First Aid Expenses include first aid to an insured in the event of an injury B. subrogation does not apply to payments made under Section II, Medical Payments to Others, or Damage to the Property of Others C. under Section II, coverage applies only to bodily injury or property damage that occurs during the policy period D. the policy will not provide coverage for an insured who has intentionally concealed or misrepresented any material fact or circumstance

A

Which statement is true of a Special Form (DP-3) Dwelling Policy? A. subject to coinsurance, coverage for the structure is provided on a replacement cost basis B. coverage is provided for structures used for commercial, manufacturing, or farming purposes C. losses caused by power failure off the premises or enforcement of any ordinance or law are covered D. coverage is not provided for collapse of a building

A

Which of the following is true regarding the Personal Liability Supplement? A. it provides coverage for claim expenses, first aid expenses and damage to property of others B. it covers Professional Services rendered by the insured C. it covers the insured's personal autos D. the Limit of Liability is the same as the Coverage A amount

A (DP) - Additional Coverages - Personal Liability Supplement: claims expenses, first aid expenses, and damage to property of others Coverage L - Personal Liability Coverage M - Medical Payments

Every year California suffers enormous economic loss from uncontrolled forest fires. Fire mitigation laws require property owners to do all of the following, Except: A. Maintain a vegetative clearance area greater than 20 feet B. Pruned trees of dead or dying wood C. Remove any portion of a tree that extends within 10 feet of the outlet of any stovepipe or chimney D. Keep the roof free of needles, leaves and other vegetative materials

A 10 ft

The endorsement to a homeowner policy would extend liability coverage only, not property damage coverage, to a rental dwelling owned by the insured, for injuries which the insured may be liable for, is known as: A. additional residence rented to others endorsement and it does not pay lost rent as a result of a tenant unexpectedly vacating the premises B. additional residence rented to others endorsement and it does pay loss of rent as a result of a tenant unexpectedly vacating the premises C. structures rented to others endorsement and it does not pay lost rent as a result of a tenant unexpectedly vacating the premise D. structures rented to others endorsement and it does pay lost rent as a result of a tenant unexpectedly vacating the premises

A Additional Residence Rented to Others endorsement provides personal liability and medical payments coverage; does not pay the lost rent

All of the following are true in regard to the causes of loss forms, except: A. Basic Cause of Loss covers both above and below ground volcanic action B. vacancy coverage is limited to 60 days in the basic cause of loss form C. Special Cause of Loss Form covers open perils of direct loss except those specifically excluded D. Broad Form Cause of Loss Form does not include settling, cracking, bulging or expansion

A Basic Cause of Loss form covers only the ABOVE GROUND action of volcano

Which statement is false? A. under a Dwelling Basic Form without Extended Coverage, if an insured were to accidentally hit a fence in the backyard with his car, the damage to the fence would be covered B. Dwelling Broad Form will cover trees, shrubs and plants up to $500 each C. personal property of a guest or servant is covered while located on the described location D. Special Dwelling Form will cover damage to the building from a vehicle

A Basic Dwelling Form does not cover damage to the property done by the insured's owned or operated auto

Which Cause of Loss form for the Commercial Property Coverage Part will cover loss of sales merchandise due to a burglary? A. Special Form B. no Burglary coverage in the Property Policy C. Broad Form and Special Form D. Broad Form

A Burglary and Theft included in Open Perils (broad includes damage by burglars)

All of the following are true, except: A. Coverage D of a Homeowners Policy includes loss of income from an incidental business B. Homeowners Policy will not cover theft of a boat away from premises C. Coverage D of a Homeowners Policy covers additional living expenses D. a private school would be permitted under a Homeowners Policy

A Coverage D includes lost rental value, but does NOT cover loss of income from incidental business

Which statement is true of a Special Form (DP-3) Dwelling Policy? A. subject to coinsurance, coverage for the structure is provided on a replacement cost basis B. coverage is provided for structures used for commercial, manufacturing, or farming purposes C. coverage is not provided for collapse of a building D. losses caused by power failure off the premises or enforcement of any ordinance or law are covered

A DP-3 perils cover physical damage losses to structure on RC basis, subject to 80% coinsurance; personal property covered on ACV basis

All of the following are included in Section I - Property, of the Businessowners Coverage Form, except: A. an automatic 90% coinsurance clause B. automatic increase in Business Personal Property Coverage to offset seasonal variations in stock C. automatic increase in the limit of insurance for the building D. business Income and Extra Expense coverages

A NOT subject to coinsurance

All of the following are true of Uninsured Motorists Property Damage Coverage in California, except: A. purchase of the coverage is required for motorists to fulfill their financial responsibility requirements in California B. if a vehicle is insured for collision losses, the coverage is a waiver of the collision deductible C. if a vehicle is not insured for collision losses, the coverage pays up to $3,500 of the actual cash value of the damage to the insured vehicle D. auto insurers are required to offer the coverage

A UMPD must be offered by auto insurers in CA, but NOT a required purchase by consumer; max limit of $3,500 in CA

All of the following are true, except: A. the aggregate limits of the policy that are stated in the Declarations are the maximum amount payable for a single claim in any policy period B. Section III of the Commercial General Liability Coverage Forms describes the limits of insurance C. the general aggregate limit is the most the company will pay for all damages during a policy period under Coverage A, Coverage B, and medical payments under Coverage C, except for products and completed operations claims D. the each occurrence limit is the most the company will pay for damages under Coverage A and Coverage C, arising out of any one occurrence

A aggregate limit is the amount payable for ALL claims in a single policy period

Under Personal Marine Insurance, the Personal Articles Floater (Scheduled Articles Floater) is: A. used to insure individual personal property on an itemized or scheduled basis B. used to replace Coverage C of the Homeowners Policy C. used to insure personal property on a blanket basis D. used to provide replacement cost coverage on personal property

A articles covered under this floater no longer covered under Coverage C of HO

All of the following are correct regarding the Broad Theft Endorsement on a Dwelling policy, except: A. only on-premises coverage is available B. it may be added to any of the Dwelling forms C. it applies only to owner-occupied structures D. it also includes vandalism resulting from theft

A both on- and off-premises coverage available

The Businessowners Policy will cover damage to the building on which of the following basis? A. Replacement Cost B. Functional Replacement Cost C. Agreed Value D. Actual Cash Value

A buildings and contents both RC

Which of the following is an example of concealment? A. Mary answers 'No' to the question 'Have you been convicted of driving under the influence in the past ten years?' when she is scheduled to appear for trial for a DUI arrest tomorrow morning B. Mary indicates on her application that her annual mileage is 15,000, when she knows that she drives more than 450 miles per week to and from work C. Mary tells her agent she paid a traffic citation for speeding ten days ago, but her agent marks the application 'No' without Mary's knowledge because he knows the ticket will not show up on her driving record for at least 90 days D. Mary inadvertently answers 'No' to the question, 'Have you been involved in more than one traffic collision in the past three years?' believing her accident happened more than three years ago

A concealment involves failure to communicate known information or information material to a risk; an inadvertent or intentional incorrect answer is a misrepresentation, not a concealment, even if committed by the agent without the insured's knowledge; failure to communicate an upcoming trial for a traffic offense is a concealment of material information, even though the answer may be technically correct

The Businessowners Liability Coverage Form includes coverage for bodily injury, property damage, personal injury, and advertising injury to which coverage applies, plus: A. liability assumed under an insured contract B. Liquor Liability C. Employers Liability D. Mobile Equipment being transported on an auto owned or operated by an insured

A contractual liability excluded EXCEPT for insured contracts: contract for lease of premises, sidetrack agreement, an easement or license agreement, an obligation to indemnify a municipality, and an elevator maintenance agreement

All of the following are common policy conditions under the CPP, except: A. interline endorsement B. examinations of books and records C. changes D. cancellations

A coordinate coverage contained in one part of policy with other coverage parts to prevent duplication and are not considered a policy condition

All of the following are true of Builders Risk forms, except: A. coverage is always written on an open perils basis B. there is no vacancy provision C. coverage terminates when the policy expires or it is cancelled D. coverage does not apply to outside radio and television antennas

A coverage may be written with any of Cause of Loss forms (Basic, Broad, or Special)

A home is damaged minutes after an earthquake, first by fire, and then by fuel pipes bursting and causing an explosion. Under the homeowner's HO-3 form: A. there is coverage, but only for the damage caused by the ensuing fire and explosion B. there is no coverage, because HO-3 covers only named perils C. policy covers all the damage, since explosion is an insured peril D. there is no coverage unless insured made an earthquake endorsement as part of his policy

A damage due to earthquake not covered unless earthquake endorsement was purchased

Which of the following is not covered by Supplementary payments under a BOP? A. first aid B. insurer expenses C. loss of earnings D. bail bonds

A first aid included in Medical Expenses

When a licensee has completed the continuing education requirements but has not yet paid his renewal fee, how many days past his expiration date may he continue to conduct business? A. 0 days - licensee may not continue conducting business past expiration B. 15 days C. 30 day D. 60 days

A if ALL requirements were completed then 60 days but because did not pay renewal fees, then 0 days

Which of the following is not an optional property coverage on Homeowners policies? A. coverage for loss of use of the premises B. inflation guard coverage C. personal property replacement cost D. increased limits for jewelry, watches and furs

A included coverage in HO (under Coverage D)

An insurer has subrogation rights under all personal auto policy coverages, except which of the following? A. Part D - Physical damage coverage B. Part C - Uninsured motorists coverage C. Part B - Medical payments D. Part A - Liability coverage

A insured might be the only one responsible for the loss or nobody so no point in subrogating

All of the following are elements of negligence, except: A. intervening cause B. duty breached C. proximate cause D. duty owed

A intervening cause is a defense to negligence, not an element of negligence

What would be covered under a homeowners policy? A. property, in an apartment on the residence premises rented to others, valued at $2,000 B. aircraft and parts except for model or hobby aircraft C. property of boarders or tenants D. animals, birds, or fish

A landlord's furnishings in an apartment on residence premises are covered up to $2,500

All of the following are true of dwelling policies, except: A. trees, shrubs and plants are covered for up to $1,000 total B. mobile homes are eligible if written on a DP-1 C. farm dwellings are not eligible D. incidental business occupancies are permitted, but they must provide service rather than sales

A limit for trees, shrubs and plants is $500 for any 1 item or 5% of Coverage A

The Outdoor Property Extension under the Building and Personal Coverage Form insures against which perils? A. fire, lightning, explosion, riot, civil commotion and aircraft B. fire, lightning, windstorm, hail, riot, civil commotion and aircraft C. fire, lightning, riot, civil commotion, aircraft, and vandalism D. fire, lightning, windstorm, hail, explosion, aircraft, and vehicles

A most that is paid under the Outdoor Property Extension is $1,000 per Occurrence, but not more than $250 on any one tree, shrub, or plant

Which statement is false regarding a newly acquired additional vehicle? A. insurer must be notified immediately B. it may be a pickup truck with a GVW of up to 10,000 lbs C. it is covered as soon as the insured has insurable interest D. coverage is as broad as the broadest coverage for any vehicle now insured by the insurer

A must be notify insurer within ___ days newly acquired vehicle must be reported to the insurer within 14 days in order to be covered from the date of acquisition; must be reported within 4 days if there is only other than collision coverage on any other vehicle on the policy

Which of the following will not be used to determine whether a person is eligible for the Good Driver Discount? A. annual miles driven B. did the driver acquire his license anywhere other than in the United States or Canada? C. driving record D. years of driving experience. Must be licensed for the previous three years

A not considered for this discount

In Liability Insurance policies, Medical Payments Coverage include: A. payment of necessary medical, surgical, x-ray, dental, ambulance, hospital, professional nursing, and funeral expenses incurred by invitees, and licensees on the insured's premises B. payment of medical, surgical, and nursing expenses caused by illness manifesting itself on the insured's premises C. payment of medical, surgical, and nursing expenses incurred by persons who occupy the premises D. payment of medical, surgical, and nursing expenses incurred by an insured while at work on the premises

A not intended for insureds, employees, or residents of premises; coverage is for BI caused by accident

The broader definition of an accident that also includes a continuous and repeated exposure, can best be defined as a(n): A. Occurrence B. Incident C. Exposure D. Disaster

A occurrence - event that results in loss; accident that includes continuous and repeated exposure

Which of the following would not reduce the General Aggregate Limit under a Commercial General Liability Coverage Form? A. insurer pays a claimant injured by a product made by the insured B. small fire in the insured's office causes damage to the leased premises C. customer is injured on premises and the insured calls an ambulance to take the injured party to the hospital for treatment D. insured misappropriates the advertising slogan of a competitor

A products claim has its own aggregate (Products and Completed Operation Hazard limit); product losses DO NOT REDUCE General Aggregate limit B is Damages to Rented Premises, C is Med. Expenses, D is Advertising Injury

When Transit Coverage Forms are written on an open cargo basis they: A. cover all shipments B. cover only inbound shipments from suppliers C. cover losses due to improper packing or handling D. cover only outbound shipments to customers

A protect property of all kinds being shipped to, or received from, others by common carrier

Under a Homeowners Policy, the term residence premises means: A. no more than a 4-family dwelling (insured must reside in one of the units) B. land upon which a residence is being built for the insured C. any premises where the insured is residing D. vacant land, other than farmland, owned by the insured

A residence premises is only the dwelling and grounds where the insured resides, compared to insured locations, which include other grounds

Coverage F Medical Payments under a homeowners policy would cover: A. a resident employee who is injured on the job B. a tenant who is injured while on the premises C. a family member who was injured while residing in the insureds premise D. the insured for injuries sustained while working at home

A resident employees are eligible for medical payments, if injured in course of employment and not otherwise covered by WC

General liability insurance does not cover liability arising out of: A. street sweeper B. contractual liability C. host liquor liability D. mobile equipment on construction sites

A road licensed so would be covered under Commercial Auto

If an Equipment Breakdown policy owner has a $100,000 policy limit, how much would be collected if a boiler explosion had the following results: $25,000 damage to the boiler itself, $50,000 damage to the building, $15,000 of expediting expenses, $30,000 of damage to property of others in your care, and $20,000 for expenses related to defense costs? A. $120,000 correct B. $25,000, as only damage to the boiler is covered C. the policy limit-- $100,000 incorrect! D. $140,000

A supplementary payments pay for defense costs not affecting limits; $100,000 policy face plus $20,000 defense costs = $120,000

What statement regarding the inland marine jewelers block policy is NOT true? A. an extension of coverage is provided for theft damage to buildings B. it covers the insured's merchandise held for sale and customer's property C. property is not covered while being exhibited away from the insured's premises D. loss of money can be added to a jewelers block, as this is a crime coverage only

A theft, damage or vandalism should be covered by property policy not jeweler's block form

Anne is Kevin's next-door neighbor. If she falls in Kevin's house and has immediate medical expenses totaling $1,000, how much will Kevin's Homeowners Policy pay? A. $1,000 B. Anne is entitled to unlimited medical expenses for up to 3 years C. $0. To be covered Anne must be resident in Kevin's household. D. $1,000 less deductible

A will pay actual amount of medical expenses up to policy limit of Coverage F

The California Financial Information Privacy Act provides for all of the following as compared to the GLBA, except: A. an Opt-Out standard concerning information sharing with unrelated third parties B. penalties for identity theft perpetrators are doubled C. financial profiling of consumers is greatly restricted D. consumers have the final say in the sharing of their information

A California Financial Information Privacy Act provides that the Opt-Out provisions of GLBA were changed to an Opt-In standard concerning information sharing with unrelated third parties

The JKL Insurance Company is incorporated in Zurich, Switzerland, has its home office in Orlando, Florida, and is authorized to conduct the business of insurance to Californians through its branch office in Rancho Mirage, California. To the state of California, JKL is a: A. alien insurer B. sovereign insurer C. foreign insurer D. domestic insurer

A JKL incorporated in another country => alien insurer to CA

Furnishing false information to the Commissioner is subject to a civil penalty of $100,000 plus what amount per 30 days period of noncompliance? A. $5,000 B. $1,000 C. $10,000 D. $500

A civil penalties for furnishing false information to Commissioner may be issued up to $100,000 per violation, as well as $5,000 penalty for every 30-day period during which non-compliant

Bill has three liability policies on the property. Policy A is for $80,000; Policy B is for $100,000; and Policy C is for $20,000. In the event of a $120,000 liability loss, how much will Policy A pay? A. $48,000 B. $40,000 C. $ 120,000 D. nothing

A total policy limits greater than loss Policy A's liability is 40% of total coverages so pay 40% of loss (pro rate liability)

Under the California insurance code an application for insurance used in determining the insurability of the applicant can require the applicant's: A. sexual orientation B. age and gender C. national origin and ancestry D. race and color

B

A commercial auto policy liability would extend coverage to mobile equipment in which of the following? A. when it is being operated or driven on public roads B. when it is being carried or towed by a covered auto C. only when its being used off premises D. commercial auto does not extend coverage to mobile equipment. General liability covers mobile equipment

B

A dwelling is insured for $60,000 and its contents for $30,000. According to the DP-1, what part of the insurance may the insured have applied to rental value coverage? A. 5% of the entire policy with a monthly maximum of $750 B. 20% of the coverage on the dwelling C. 5% of the coverage on the dwelling, and a monthly maximum of $250 D. 10% of the policy limits with a monthly maximum of $750

B

All of the following are false about Workers Compensation except: A. the accident or illness must be a on the job to be covered B. the program is regulated mostly by state government C. the program pays for limited medical bills due to work related injury D. the program allows a death benefit and no survivor benefits

B

All of the following are part of the six specifications of an insurance policy except: A. names of parties between whom the contract is made B. the duties of an insured after a claim is filed C. statement of premium D. the risks that are insured against

B

All of the following are true of a Homeowners Policy, except: A. cemetery plots, burial vaults and vacant land are insured locations B. Section II provides coverage for damage to the insured's property C. Personal Liability Coverage in Section II is written on a single limit basis D. Section II is the same in all Homeowners Policies

B

Any person who makes a loan of money using real property as security: A. is allowed to make available the information contained in a P&C insurance policy for the purpose of soliciting either PorC insurance B. shall not make available the information contained in a borrower's PorC policy if borrowed has filed a statement with the lender that they do not want the lender to disclose this information C. can give out any borrower information to a solicitor if lender discloses its practices to the borrower at the time loan is made D. there are no current laws regarding lenders disclosing borrower's information in CA

B

Are standardized Umbrella policies available? A. yes, standardized umbrella policies are now available B. no, because each company defines covered exposures based upon their own loss experience C. no, because of unique needs of insured requires specialized attention D. no, because each company wants the ability to establish their own pricing

B

Coverage C of a Homeowners Policy includes: A. the insured's personal automobiles, while on the Residence Premises B. personal property including clothing of the named insured and all members of the household anywhere in the world C. the insured's pet animals D. aircraft stored on the Residence Premises

B

Damage to covered property caused by glass breakage is: A. excluded under all dwelling forms B. covered in the DP-2 and DP-3 forms C. covered under all dwelling forms D. covered in the DP-1 form

B

In addition to the named insured in a property policy, coverage is automatically provided for: A. insured's employer B. persons who are legal representatives of the insured C. persons who purchase the insured's property D. persons who appraise the property

B

In regards to the insurer's rights when settling a claim, the insurer may: A. delay paying the claim until the insured agrees to accept the offer. B. pay the claim, repair the property, or replace the damaged property C. only repair with like kind D. call a meeting of real estate appraisers to determine the value

B

Part One in a Workers' Compensation contract provides payment for which of the following? A. sums the employer is legally required to pay according to the Master-Servant Doctrine B. sums the employer is legally required to pay under State Workers' Compensation laws C. sums the insured is legally required to pay under common law due to work related injuries D. sums the insured is legally required to pay in order to upgrade working and safety conditions at the insured location

B

Representations and/or warranties are incorrectly stated in which of the following statements? A. statements that an applicant believes to be true but does not guarantee are considered to be representations B. an applicants statements on an application are considered warranties C. statements made by an applicant that are guaranteed true are considered to be warranties D. an applicants statements on an application are considered representations

B

The Building and Personal Property Coverage Form pays for covered losses on an actual cash value (ACV), except: A. a loss to outdoor equipment or furniture B. a loss of $2,500 or less to a building and the coinsurance requirement is met C. a loss to awnings and floor coverings D. a loss to appliances, whether attached or not

B

The Homeowners Policy would cover personal property, such as: A. insured's registered pet dog B. a camera that is stolen while the insured is on vacation C. business data stored on the insured's laptop computer D. property of the tenant of an apartment located in the insured's garage

B

The financial strength rating of an insurer offers consumers which of the following? A. a statement of the insurance company's history of paying claims B. an opinion of the insurance company's ability to pay claims C. a guarantee that the insurance company has the ability to pay claims D. a standard method of comparing insurance companies' products and services

B

The term loss exposure refers to: A. the increase in the possibility of a loss B. the possibility of a loss C. the actual cause of the loss D. the uncertainty of a loss occurring

B

Under the Property Removed coverage extension of a Dwelling Policy, which of the following is incorrect? A. coverage applies up to 5 days in the DP-1, and up to 30 days in the DP-2 B. policy will not provide any coverage while insured property is being removed from endangered property C. property is covered against direct loss from any cause D. extension does not change the Limit of Liability that applies to the property

B

What does an HO 6 cover? A. this form covers the tenant's personal property, loss of use and liability exposures in renter's insurance. B. this form covers perils to condominium units and the exposure of liability, as well as loss assessment coverage. C. an HO 6 is coverage by the broad form perils. D. this form covers all risks except those excluded

B

Which of the following incidents is not covered under the Inside Theft of Money and Securities Form? A. damage to a locked safe B. attempted robbery of a custodian C. disappearance of money by a customer D. damage to the bank itself caused during a theft

B

Which of the following is true concerning medical payments as they relate to Products Liability Coverage? A. they are made regardless of fault B. medical payments to others is not included because the coverage of Products Liability does not commence until care, custody and control of the product has been relinquished to the purchaser C. all medical expenses incurred within one year of the date of the accident are covered D. payment of medical expenses under Medical Payments is not an admission of fault

B

Which of the following is true when there are two or more policies covering an auto? A. The primary policy covers the loss B. The loss is shared proportionately by all the policies C. The policy with the most coverage covers the loss D. The policy with the most coverage covers the loss and then the secondary policy covers any remaining amount

B

Which of the following losses would be covered under a dwelling policy known as DP-3? A. Mechanical breakdown B. Collapse due weight of rain on the roof C. Repeated leakage over a period of time from the dishwasher D. Damage to the insureds landscaping when the insured accidently hit the gas pedal instead of the brake

B

Which statement is true of a Special Form (DP-3) Dwelling Policy? A. coverage is provided for structures used for commercial, manufacturing, or farming purposes B. subject to coinsurance, coverage for the structure is provided on a replacement cost basis C. coverage is not provided for collapse of a building D. losses caused by power failure off the premises or enforcement of any ordinance or law are covered

B

Choose the false statement regarding commercial auto coverage. A. a Garage Coverage Form - Section II does not provide physical damage coverage to a customer's car B. the Garage Coverage Form - Section II does not include completed operations C. the form most frequently used for insuring automobiles of a commercial business is the Business Auto Coverage Form D. the Business Auto Coverage Form will cover liability from mobile equipment while being carried or towed

B (it does not include Advertising or Personal Injury)

Common carriers need to purchase Common Carrier Cargo Liability because: A. in case goods in their custody are damaged by an act of God B. they can be held legally liable for loss or damage to property in their custody C. in case goods improperly packaged by the shipper are damaged in shipment D. in case of an inherent flaw in property that manifests itself while in the shipper's possession

B (others are exclusions)

What would NOT be excluded from Section II of your homeowners policy? A. bodily injury to any person covered under Workers' Compensation B. your pet Doberman bites the mailman C. business pursuits D.professional liability

B (personal liability)

Which of the following is an additional coverage provided by an HO-3 policy? A. defective planning B. trees, shrubs, and other plants C. personal property D. government action

B A and D are exclusions; C is a major coverage (Part C)

Policyholder B has a BAP with limits of 100/300/50. In an accident for which B was liable, there were BI claims in the amounts of $80,000; $100,000; and $125,000; and PD claims of $20,000 and $35,000. How much will his policy pay? A. $305,000 BI and $55,000 PD B. $280,000 BI and $50,000 PD C. $305,000 BI and $50,000 PD D. $300,000 BI and $50,000 PD

B BI per person/BI per accident/PD per accident

The Basic Cause of Loss Form covers all of the following losses, except: A. sprinkler leakage B. steam boiler explosion C. volcanic action D. sinkhole collapse

B Basic Causes of Loss form generally covers same limited perils as Basic Dwelling Form, with addition of Sprinkler Leakage, Vandalism, and Sinkhole Collapse

All of the following are true, except: A. insurer's written consent is required for any transfer of rights and duties to another person B. Dram Shop Liability protects against legal liability that may be imposed on a seller of a packaged liquor store C. insurer may examine the insured's books anytime during the policy period, or within 3 years after the policy ends D. Contingent Liability Policies are also called Owners and Contractors Protective Liability

B Dram Shop Liability applies to seller of liquor by the drink, i.e., a bar, etc

Which of the following is true regarding the Earthquake Causes of Loss Form? A. it includes coverage for earthquakes that start within 268 hours after the initial shock B. it can be used only with another Causes of Loss Form C. it can be used by itself to provide a stand alone Earthquake policy D. it provides coverage for mudslides

B Earthquake Causes of Loss Form cannot be used alone to provide Earthquake policy; intended only to add the Earthquake peril to other Causes of Loss forms

Which statement is true regarding the Businessowners Policy? A. coverage on the building is replacement cost, and on the contents is actual cash value B. coverage for the building and contents is for replacement cost with no coinsurance clause C. the Businessowners Policy automatically includes a coinsurance clause of 80% or higher D. the Businessowners Policy automatically includes a coinsurance clause of 80%

B NO COINSURANCE CLAUSE

In an HO-3 and HO-8 homeowners policy what would similar? A. personal property and loss of use B. personal liability and medical payment C. dwellings and other structures D. other structures and loss of use

B Personal Liability and Medical Payments are the SAME on all HO policies

The medical expense coverage in a Workers' Compensation policy: A. does not have a dollar limit, but does have a maximum time limit B. does not have a time limit nor a dollar limit C. does not have a time limit, but does have a maximum dollar limit D. has both a maximum dollar limit and a maximum time limit

B UNLIMITED

Which coverage is added by endorsement to the BOP policy? A. Outdoor Signs B. Earthquake C. Boiler & Machinery D. Money & Securities

B all others are optional coverages

Which coverage is added by endorsement to the BOP policy? A. outdoor Signs B. earthquake C. boiler & Machinery D. money & Securities

B all others are optional coverages

The Claims Made and Reported (CMR) form differs from the Claims Made (CM) form in which respect? A. CMR does not offer an optional extended reporting period B. CMR form provides a grace period for claims made toward the end of the coverage period C. CMR form is more similar to an occurrence form D. CMR form does not use a retroactive date

B both claim and report first be made during policy period; but, grace period of 60-90 days for claim made during last month or two of coverage

Statements in the application that are guaranteed true but later found to be false at the time of application may result in which of the following? A. waiver of the provisions of the warranty B. voidance of the contract C. establishment of a monetary penalty D. nullification of the warranty

B breach of warranty is determination that warranty has proven to be untrue, whether intended as falsehood or not, and may void contract

Which of the following would not be considered a breakdown? A. Mechanical failure of a conveyor belt B. Valve leakage C. Boiler explosion D. Electrical failure

B breakdown excludes any valve, fitting, shaft seal, gland packing, joint, or connection

All of the following are major advantages of a Businessowners Policy, except: A. automatic peak season coverage B. unlimited business income for up to 6 months C. extra expense coverage for 12 months D. replacement cost coverage automatically provided

B business income covered up to 12 months

Which of the following loss exposures is NOT covered by Section II of insured's Homeowners Policy? A. insured's activities while rebuilding an engineless car for pleasure in his home's garage B. insured's use of registered personal auto while used on his own property, which includes 10 acres of undeveloped land C. insured's use of riding a lawnmower while mowing his lawn D. insured's use of motorized golf cart while playing golf on a public golf course

B covers for non-business and non-auto

All of the following are false in regard to deductibles in property insurance, except: A. deductibles reduce the total amount of insurance available B. deductibles help reduce the number of frivolous or small claims C. deductibles apply only to larger losses D. deductibles tend to increase premiums

B deductible is the amount of each loss that insured must bear before the policy responds to the loss; eliminates expense of processing small claims, resulting in reduced premiums

Policyholder W has had an accident in which her covered auto was totaled. The insurer has promised to replace the car with a comparable auto. The insurer must re-open its claim if Policyholder W cannot locate a comparable auto within how many days? A. 30 B. 35 C. 45 D. 10

B if insured cannot purchase a comparable auto within 35 days after receiving settlement payment or offer, insurer must reopen its claim

Which of he following describes an insurer who has enough financial resources only to provide for all of its liabilities and for reinsurance of all outstanding risks? A. guaranteed B. insolvent C. non-participating D. solvent

B in addition to covering its potential losses, insurer also needs sufficient paid-in capital to cover its business operations

An insured's duties after a loss are described in the Homeowners Section I Conditions. Which of the following is NOT a correct statement about these duties? A. insured must submit to questions under oath while not in the presence of any other insured B. must make all necessary repairs to protect the property from further damage. expense is paid by insured C. insured must prepare an inventory of the damaged personal property showing the quantity, description, ACV, and amount of loss D. must notify police if it is a theft loss

B insurer will cover the cost of repairs up to stated limits

All of the following are true of Part A automobile liability coverage, except: A. it provides third party protection B. it is written on an aggregate limit basis C. it protects the insured for losses when the insured is legally liable D. it may be written either split or single limit

B insurer's liability under PAP limited only by per person/per occurrence limits

The owner of a public parking lot wants to purchase liability coverage for damage to vehicles left in his custody. Which type of policy should he purchase? A. Garage Liability coverage B. Garagekeepers coverage C. Business Auto coverage D. Commercial Auto coverage

B insures autos in CCC of insured

Cargo Coverage under Ocean Marine Insurance provides coverage: A. for the duration of the voyage B. during the time the insured has an interest in the property C. until the cargo is delivered to its destination D. from the time the cargo is loaded on the vessel until it is unloaded

B interest in the cargo may reside in either the seller or the buyer of the cargo, depending upon the terms of shipment

Which bill of lading is less expensive than the straight bill of lading? A. cargo B. released C. waiver D. carrier

B issued when carrier and shipper agree that the carrier's responsibility is limited to value stated on bill of lading

All of the following are true, except: A. Fine Arts Floater covers etchings, rare manuscripts and art glass windows B. under Personal Articles Floater, a loss to a part of a set is paid by the insurer as a total loss of the set C. Fine Arts Floater may be written on an antique lamp D. theft and burglary are both covered under an open peril Inland Marine Policy

B loss of part of a pair or set is compensated by payment of set's ACV minus value of remaining piece(s)

Which of the following is an example of loss prevention? A. homeowner installs a home security system B. homeowner decides not to install a pool in the backyard C. homeowner decides not to restore water damage to basement D. homeowner installs a home sprinkler system

B loss prevention is avoidance loss, not reduction

The Dwelling Broad Form (DP-2) includes coverage for all of the following, except: A. damage caused by burglars (but not property taken by burglars) B. water damage by flood C. breakage of glass that is a part of a building, storm door or window D. accidental discharge or overflow of water or steam from a heating or air conditioning system or household appliance

B no flood coverage under DP

The Garage Coverage Form may be written for all of the following firms, except a: A. public parking garage B. car rental agency C. service station D. car dealership

B not eligible as this form is primarily for businesses that sell, service, or store automobiles

All of the following are true of the Dwelling Special Form, except: A. losses to the dwelling are paid on a replacement cost basis B. dwelling and contents are both covered on an open peril basis C. mobile homes are not eligible D. dwelling must be used principally for dwelling purposes

B only dwelling is open peril; contents are broad form

Which coverage is not available under the Garage Coverage Form? A. physical damage B. advertising liability C. Garagekeepers D. product liability

B other available coverages include premises and auto liability

An agent has authority to do all of the following, except: A. countersign insurance contracts B. represent the insured's interest C. solicit applications on insurer's behalf D. appoint a solicitor as his or her representative

B primarily representative of insurer

A loss caused by which of the following is covered under the BOP? A. off-premises power failure B. increased cost of construction C. mechanical breakdown D. earth movement

B provides $10,000 coverage for costs incurred to comply with an ordinance or law regulating repairing or replacing damaged building parts

Which of the following is not an insured under a Personal Auto Policy? A. resident teenage son of the insured who drives the vehicle without a license B. spouse living in a different household C. spouse living in the same household D. foreign exchange student living with the insured for the school year

B spouse must reside in SAME HOUSEHOLD for coverage to apply

The Personal Effects and Property of Others Extension under the Building and Personal Property Coverage Form does not include: A. personal effects owned by the insured B. loss by theft of personal effects C. personal property of others in the insured's care D. personal effects owned by any partner or member of the insured

B theft excluded; personal effects to insured, and of others that is in the insured's care, custody, or control, covered up to $2,500

The National Flood Policy covers all of the following losses, except: A. unusual and rapid accumulation or runoff of surface water B. leakage of underground water systems C. overflow of inland or tidal waters D. mudslide caused by accumulation of water

B underground leakage is not considered a flood

What type of coverage is provided by the HO-3 under the 'property removed' provision? A. open peril coverage for 10 days B. open peril coverage for 30 days C. named peril coverage for 10 days D. named peril coverage for 30 days

B when property removed because endangered by covered peril, coverage is OPEN PERIL for 30 days

A Theft, Disappearance, and Destruction policy would not cover which loss listed below? A. while on the way to the bank, you lose the night deposit to a stick-up man B. an employee steals $2500 worth of securities C. the door to your building is destroyed by burglars D. your cashier is robbed during normal business hours

B without endorsement, crime policies do not cover losses caused by dishonest acts of people in positions of trust

All of the following are covered under a Homeowners Policy, except: A. property of guests and servants B. all living expenses that occurred elsewhere after covered loss C. a garage that rented to a neighbor for private garage purposes D. equipment that is used to maintain the property

B does not cover ALL expense; only the NECESSARY increase in living expenses

All of the following are included under Section II (Who is an Insured) of the Commercial General Liability Coverage Forms that is written on an occurrence basis, except: A. aAn operator of a forklift B. a partner of an insured partnership while on personal business C. any individual, partnership, joint venture or corporation that is named in the Declarations D. a real estate manager

B partner of insured partnership would be covered, but only with respect to business of partnership

Under Coverage C of a Homeowners Policy, all of the following losses are included, except: A. damage to lawn furniture caused by vandals B. windstorm damage to personal property contained in the building, unless the opening is caused by a covered peril C. lightning damage to the living room television set D. windstorm damage to a riding lawnmower sitting outside the garage

B wind damage to personal property within the building is covered only if the opening allowing the interior damage is ALSO CAUSED BY WIND

All of the following are considered intentional torts except: A. Slander B. Libel C. Ownership of a wild animal D. Assault

C it is an absolute liability tort

Under the BOP, which of the following properties are not covered? A. tenants improvements made to structures not owned by the tenant B. aircraft, automobiles, motor trucks and other vehicles subject to motor vehicle registration C. building materials, equipment or supplies located in the open D. Business Personal Property located outside the building

B. vehicles subject to MV registration not covered and there are no optional coverages available to them since more properly insured under automobile policies

A Trucker Coverage Form may be used for all of the following, except: A. a truck that is owned by an insured B. a trailer that is owned by an insured C. a borrowed tractor used for non-trucking purposes D. a non-owned unit that is operated over routes for which the licensee is licensed

C

All are exclusions on an inland marine policy, except: A. wear and tear B. electrical and mechanical breakdown C. earth movement D. insects or vermin

C

All of the following are true of the Businessowners Policy, except: A. property damage liability includes physical injury to tangible property, including loss of use of that property B. occurrence means an accident, including continuous or repeated exposure, to the same general harmful conditions C. personal injury means an injury to a third-party other than an employee, including bodily injury D. negligence is a type of tort

C

An ocean marine total loss may occur in which ways? A. actual total loss: loss/damage to the entire property B. constructive total loss; cost to repair/replace exceeds the policy limit C. either of the above D. neither of the above

C

Concealment is defined as: A. a statement to the insurer by the insured that depicts how valid the insurance policy is B. a false statement of a material fact given to an insurer with intent to defraud and could likely be voided C. hiding information that is vital in making a decision about a contract D. when one party gives another party false information so that they will benefit from the unlawful gain

C

For cancellation due to reasons other than nonpayment or non-renewal, how much advance notice must an insurer give an insured for mid-term cancellation? A. 10 days B. 15 days C. 20 days D. 30 days

C

If a shipowner who purchases an Ocean Marine policy on an All Risk form runs into a dock while transporting cargo for a customer, the policy would pay for: A. damages to ship, dock, and cargo B. damages to ship, dock, cargo, and any resulting bodily injury C. damages to ship, dock, cargo, and any resulting bodily injury; including that of injured employees D. there is no Collision coverage on an Ocean Marine policy

C

In Liability Insurance, the maximum amount payable for loss (per location and/or per person) from all occurrences within a policy period regardless of the number of separate accidents (occurrences), is known as: A. Combined Single Limit B. Per Occurrence Limit C. Aggregate Limit D. Per Person Limit

C

In a business auto policy which physical damage coverages can be used together to cover a vehicle? A. collision comprehensive, specified cause of loss, transportation expenses B. specified causes of loss, collision, rental reimbursement, comprehensive C. collision, specified cause of loss, towing and labor, rental reimbursement D. towing and labor, specified causes of loss, collision, property damage liability

C

Property Damage in Liability Insurance includes: A. damage to property owned by, or leased to, the insured B. damage to property of others in the insured's care, custody, or control C. damage to tangible property, including loss of use of that property caused by the insured's negligence D. damage to the insured's products arising out of the products

C

Since the Business owners policy is written with an 80% co-insurance requirement, it gives the insured an incentive to insure to value. If the property is insured to less than 80% of its value, losses are settled on a(n) A. stated value basis B. replacement cost basis C. actual cash value basis D. percentage basis depending on what percentage of actual value is insured

C

Under the terms of the Mortgage condition which of the following is incorrect: A. the mortgagee can file a proof of loss when the insured fails to do so to protect their rights under the policy B. the mortgage may still have coverage under the policy even if the insureds actions causes the insurer to deny the claim C. the mortgagee may not pay the premium if the insured does not, they must place their own insurance on the property D. the mortgagee has a minimum number of days the insurer must notify them of cancellation or nonrenewal of the policy

C

What course of action does a party to a contract have if the other party is found to be in breach of that contract? A. nothing, unless the injured party can prove the damages are substantial B. reasonable attorney fees and costs only C. damages for breach, reasonable attorney fees, and costs D. damages caused by the breach only

C

What factor determines the classification of commercial autos as owned, hired, or non-owned? A. whether or not payment is being required for the use of such autos determines classification B. who is operating the vehicles, the insured or an employee of the insured determines classification C. ownership of the vehicle D. All of these apply to classifying the vehicle as owned, hired, or non-owned

C

What is the difference between a personal articles floater and a personal property floater? A. personal property floater is part of the Homeowners policy B. personal property floater is scheduled, the personal articles floater is not C. personal articles floater is scheduled, the personal property floater is not D. personal articles floater is for coverage during travel only

C

What is true regarding the " broad theft coverage?" A. animals, birds, and fish are covered for theft, but only up to $1,000 per loss B. it automatically covers property of a roomer or boarder C. the insured is required to notify the police if a theft loss occurs D. it is available for owner-occupant insureds only

C

When a licensee is found guilty of violating the Code for the first time, the Commissioner is most likely to issue a: A. a misdemeanor B. restricted license C. cease and desist order D. all of the above

C

Which of the following Personal Auto Coverage's would pay for the insured's travel expenses and loss of earnings while involved in the settlement process of a covered loss? A. comprehensive coverage B. collision coverage C. liability coverage D. medical payments

C

Which of the following are not reasons either party may rescind a contract? A. one party hides material information from the other B. one party intentionally omits their son as a driver in the household C. an insured knowingly tells the insurer he has a Nissan Altima SE when it really is a LE model D. an insured by accident tells the insurer he is accident and ticket free when he really has 1 speeding ticket.

C

Which of the following is false regarding Ocean Marine Insurance? A. there is no Standard Ocean Marine Form B. breach of certain implied warranties may cause the contract to become void C. rates for ocean marine insurance are strictly regulated D. cargo coverage is generally written on a valued basis

C

Which of the following is not an Optional Coverage under the Businessowners Policy? A. outdoor signs B. money and securities C. personal property of others that is in the insured's care, custody and control D. employee dishonesty

C

Which of the following types of property is not covered under protection and indemnity insurance? A. lost cargo when a seaman employed by the captain threw it overboard B. damage to the personal property of passengers onboard when the vessel is damaged by collision C. damage to vessels caused by collision when the insured's vessel was going through a narrow channel D. injury to a seaman while working in the boiler room

C

With experience rating, A. the premium is established based on careful evaluation of the risk, without the use of manuals or tables B. a manual rate is modified to reflect the risks unique characteristics C. the insureds premium is based on the insureds loss experience over a specified period of time D. premiums are based on collected statistics that are published in manuals

C

Workers' Compensation laws are designed to: A. fully indemnify the employee for all work related injuries B. be fair and equitable to both the employee and employer C. provide a guaranteed level of benefits for all workers injured on the job D. provide benefits only for needy workers without other forms of coverage

C

You have a DP-3 covering a home that has a replacement value of $100,000. You carry $60,000 of insurance. Following a loss, you determine that it would cost $12,000 to replace the damaged portion of the home. How much could the insured collect, assuming the ACV of the loss is $6,000? A. $60,000 B. $6,000 C. $9,000 D. $12,000

C

The minimum aggregate liability limit for disease under the Employers Liability policy is how much? A. $100,000 B. $150,000 C. $500,000 D. $300,000

C $100,000 per accident for injuries $100,000 per employee for disease $500,000 aggregate for disease

Several insureds have become liable because of a single loss. How will the policy's limit of liability be affected? A. a Homeowners policy can have no more than one insured B. the full limit applies to each insured individually C. no more than the per occurrence limit applies, no matter how many insureds are involved D. pro rata liability applies

C (severability) applies separately to each insured but does not increase the insurer's liability for any one occurrence

The Business Auto Coverage Form would not cover: A. Private Passenger automobiles owned by the insured and used in the insured's business B. tractor-trailer units used in the insured's business C. an employee using the employee's personal auto in insured's business D. the insured for the use by an employee of the employee's personal auto in the insured's business

C 9. Non-Owned Autos Only covers the insured for use of employee's CAR in insured's business; does NOT cover the employee

Which dwelling forms provide removal from endangerment or preservation of property coverage for 30 days? A. the basic, broad and special forms B. the basic and broad forms only C. the broad and special forms only D. the special form only

C Broad and Special form provide removal coverage for 30 days for open perils Basic provides for 5 days (SFP) (all HO and CP forms cover removal for 30 days, open peril)

Which of the following statements are not true regarding the California Earthquake Authority? A. insurer must always offer earthquake insurance to anyone who buys a mobile home B. insurer may offer an earthquake endorsement instead of a CEA policy C. the CEA policy has a standard deductible of $500, but may be increased. D. pools, fences, driveways, landscaping, and other structures are not covered under a CEA policy

C CEA deductibles are PERCENTAGES (5% to 25% of CSL of Coverage A and B)

Which of the following is a grouping of classes/lines of insurance according to the California Insurance Code? A. Fire, Casualty B. Health, Annuities C. Marine, Crime D. Auto, Homeowners

C Casualty is label for several liability coverages Health comes under class of Disability Annuities are not a class/line and comes under Life Homeowners comes under the class of Fire Fire is class of property

All of the following are true of the Commercial Builders Risk coverage Form, EXCEPT: A. perils insured against depend upon which Causes of Loss Form is attached to the policy B. form is written equivalent to 100% coinsurance C. liability coverage is included in the form D. insurer determines the value of the covered building at actual cash value at the time of the loss

C Commercial Builders Risk form DOES NOT INCLUDE LIABILITY

Coverage E of a Homeowners Policy would cover which of the following? A. transmission of a communicable disease by an insured B. Bodily Injury to an insured C. Bodily Injury to a guest which is caused by the insured's pet dog D. Bodily Injury arising out of the application of corporal punishment by an insured

C Coverage E of the HO provides Personal Liability coverage for BI or PD arising out of an occurrence, with certain limitations and exclusions

Under Dwelling Policies, which of the following require the policy to be written to at least 80% of the full replacement cost of the dwelling at the time of loss to provide replacement cost coverage? A. DP-1 and the DP-2 B. DP-4 C. DP-2 and the DP-3 D. DP-1

C DP-2 and DP-3 provides RC coverage, provided insured insures property to at least 80% of its RC (coinsurance); DP-1 provides ONLY ACV

Section III of the Garage Coverage Form covers: A. damage to the products that are for sale B. product liability exposures C. physical damage to a customer's car that is in the care and custody of an insured D. owned vehicles that are used in the business

C Garagekeepers Coverage pays for damage to customer's cars in care and custody of the insured

All of the following are characteristics of a Mutual Insurance Company, except: A. profits may be returned as policy dividends B. a policyholder votes for the Board of Directors C. stockholders have ownership D. they provide insurance to members

C POLICYHOLDERS have ownership of mutual insurance company

All of the following are true about the Limits of Insurance Section of the Businessowners Coverage Form - Section II, except: A. Damage to Premises Rented to You limit applies only to premises rented to the insured B. The Liability and Medical Expense limit applies per person or organization for personal injury claims C. Products and Completed Operations aggregate limit is equal to the Liability and Medical Expense limit D. Medical Expense limit is a per person limit

C Products and Completed Operations aggregate limit is twice the Liability and Medical Expense limit

Which statement is true concerning dwelling policies? A. Special Form automatically covers the contents against the peril of theft B. Basic Form pays for losses to the dwelling on a replacement cost basis C. Special Form insures the dwelling on an open perils basis, and insures the contents against the broad form perils D. 100% of Coverage C applies to worldwide coverage

C Special Form insures dwelling on an open perils basis, and insures contents against broad form perils; theft excluded; Basic Form settles losses to dwelling on ACV basis; up to 10% of Coverage C limit may be applied to covered property anywhere in the world

A valuation clause which states that the insured will be paid the full limit of insurance for a total loss is: A. replacement cost B. ACV C. agreed value D. stated value

C agreed value - insurer will pay for full policy amount for a total loss based on written appraisal submitted at policy inception, regardless of current value or depreciation of property

Which statement is true of Section I of a Homeowners Policy? A. it limits the coverage on utility trailers to $2,000 B. it provides property damage coverage on owned golf carts and owned snowmobiles while off premises C. $1,500 limit applies to a boat including the motor, trailer and equipment D. theft of a boat while away from the premises is covered

C applies when storied in fully enclosed building

An insured has an HO3 policy. What minimum amount must insured carry to ensure that he has Replacement Cost coverage for a partial loss to either the dwelling or other structures if the Replacement Cost is: $200,000 dwelling, $40,000 other structures? A. $200,000 on the dwelling and $40,000 on the other structures B. $200,000 on the dwelling and $20,000 on the other structures C. $160,000 on the dwelling and $32,000 on the other structures D. $80,000 on the dwelling and $16,000 on the other structures

C at least 80% of the replacement cost

A customer in a housewares store is cut while handling a broken piece of glassware. Which type of liability would apply? A. Operations B. Completed Operations C. Premises D. Products

C because product was still in insured's CCC (not sold yet), premises liability would apply

Insurance coverages that are not generally available directly through private insurers because of the risk, exposure, or some other factor can become available through various insurance programs. These special insurance pools, programs, and assigned risk plans are collectively placed through what is referred to as: A. the excess and surplus lines market B. the reinsurance market C. the residual market D. interchange market

C business (risks) the insurers does not want to write, however as a condition to be admitted they must belong to pools that provide these coverages

Under Coinsurance, all of the following are true, except: A. coinsurance results in a reduced rate B. there is no penalty when the insured suffers a total loss C. the value of the property at the time the policy was written determines the amount of insurance required at the time of loss D. if the specified percentage of insurance is not carried, the insured will share in the loss

C coinsurance clause stipulates that the value of property at the TIME OF LOSS determines the amount of insurance required at the time of loss

Auto physical damage coverage is normally written: A. stated amount basis B. valued basis C. actual cash value basis D. single limit basis

C collision coverage pays claims on ACV basis; if damage exceeds about 75% of vehicle's pre-loss ACV, then declared total loss by insurer

A person can purchase an insurance policy to cover losses from all the following, except: A. loss of assets through tort actions brought against the person B. loss of property through burglary or theft C. an operation of drug smuggling D. sudden and direct damage to property by natural causes

C contract, including insurance contact, is void if based on illegal purpose or contrary to public policy; not recognized by court or enforceable by either party

Broker-Agent who receives compensation for referring a client to a premium financing entity must do all of the following, except: A. obtain the client's written consent to enter into a premium financing arrangement B. disclose all forms of periodic payments offered by the insurer to the consumer prior to placing business with a premium financing entity C. keep records of premium financing arrangements for a minimum of 5 years D. disclose the amount of compensation received

C copies of premium financing agreements, including compensation received, must be keep for minimum of 3 year, not 5

Under the Limits of Insurance of the Building and Personal Property Coverage Form, which of the following is true? A. most the policy will pay for any one occurrence is the limit shown in the Declarations, less the deductible B. most the policy will pay for all claims during the policy year is the limit shown in the Declarations, less the deductible C. most the policy will pay for any one occurrence is the limit shown in the Declarations D. most the policy will pay for all claims during the policy year is the limit shown in the Declarations

C deductible does not affect this amount

Which statement is false regarding the National Flood Insurance Program (NFIP)? A. Emergency Program applies after a community has agreed to, but has not yet completed, the process to adopt flood control measures B. it provides coverage up to a stipulated amount to apply to the increased cost of compliance with flood plain management ordinances or laws that regulate the repair of a building damaged by flood C. it provides coverage for direct and indirect loss to covered property as the result of flooding D. Regular Program allows coverage on a single family dwelling up to $250,000 due to flooding

C does not provide any indirect financial loss coverage; ONLY DIRECT LOSS to property

Which of the following statements about the National Flood Insurance Program is false? A. deductible applies separately to the building and contents B. coverage for property moved to avoid a loss is insured for 45 days at the new location C. coverage becomes effective after a 24-hour waiting period D. mudflow is covered; mudslide is not covered

C effective after 30-day waiting period

All of the following are excluded from Commercial Crime coverage, except: A. government seizure B. theft by a partner C. employee theft D. indirect losses

C employee theft is an insuring agreement

The Homeowners Policy provides coverage for all of the following, except: A. motorized wheelchair B. ATV on the insured's premises C. motorized golf car being driven on a public beach D. riding lawn mower pulling a two-wheel garden trailer

C for coverage to apply, motorized golf car must be used on golfing facility or within private residential community for approved purposes

A ramp collapses after being built and injures a pedestrian. Which type of liability would apply? A. premises B. products C. completed operations D. operations

C if ramp collapsed while being built, then Operations would apply; but collapsed after completion, so Completed Operations applies

Which of the following is not a coverage extension under the Building and Personal Property Coverage Form? A. newly acquired or constructed property B. outdoor property C. inflation guard D. personal effects and property of others

C inflation guard is an optional coverage

What coverage form is designed for an individual who uses a pickup truck to transport his own tools and equipment to a job site? A. Owners B. Garage C. Business Auto D. Truckers

C insured using his own vehicle and equipment

The Watercraft endorsement added to Homeowners Policy extends coverage for: A. liability coverage for all owned watercraft B. physical damage and liability coverage for all owned watercraft C. liability coverage for watercraft listed on schedule D. physical damage and liability coverage for watercraft listed on schedule

C liability ONLY

What is it called when a producer, agent, or broker makes a false statement about an insurer's financial condition? A. defamation B. rebating C. misrepresentation D. twisting

C misrepresentation includes making any statement misrepresenting the terms of any policy, using any name or title misrepresenting the true nature of any policy, misrepresenting financial condition of any insurer, or making any misrepresentation to a policyholder insured by any company for the purpose of inducing policyholder to lapse, forfeit, or surrender a policy

The named insured on a commercial insurance policy is "Sally Stern and Dale Stevens, DBA S&S Bar and Grill". If insurer cancels the policy, to whom are they required to mail and deliver written notice? A. Dale only B. Sally Stern and Dale Stevens, DBA S&S Bar and Grill C. Sally Stern only D. Notice can be delivered to any of the above

C must be sent to first named insured

All of the following are true, except: A. medical payments under a CGL Policy do not cover injuries resulting from liquor liability B. if the named insured cancels a policy, the refund will be sent to the first named insured C. under Section II (Who is an Insured) of the Commercial General Liability Coverage Forms, newly acquired organizations are automatically included for a maximum of 30 days or until expiration of the policy, whichever comes first D. medical payments under a CGL Policy include funeral expenses

C newly acquired orgs automatically covered for 90 days

What is NOT included in all dwelling forms? A. fire department service charges B. debris removal C. trees, shrubs, and other plants D. reasonable repairs

C only available for DP-2 and DP-3

Of the following liability situations, which would not covered under a Personal Auto Policy unless the insured had purchased an additional endorsement and paid a higher premium? A. insured runs down a pedestrian on her way home from dealership after purchasing a new car. she has not yet had a chance to notify her agent of the change of vehicles B. insured's boat trailer rips loose from his car while being towed and causes severe damage to a parked mini-van C. insured demolishes neighbor's mailbox and surrounding gardens while driving a vehicle furnished by her company, which she does not own, but uses regulary D. insured causes significant damage to utility pole while diving a "temporary substitute auto" provided while his car is in the dealership for repair

C only covered if insured adds Extended Nonowned Liability endorsement that deletes the PAP exclusion for driving nonowned autos on a REGULAR basis

Who is not an insured for liability under the business auto policy? A. anyone liable for the conduct of the insured B. the named insured in any covered auto C. the owner of a car the insured borrows D. anyone using a covered auto with permission

C owners of the vehicles insured borrows, rents, hires, would not be insured; BUT owner of a trailer insured borrow would be an insured

Which of the following is true regarding Completed Operations Coverage? A. if faulty work, negligently performed, causes damage to other property of the claimant, then coverage extends to include the faulty work B. Bodily injury arising from negligent or faulty work of the insured is not covered if it occurs after the work is completed and turned over to its owner C. coverage will pay for bodily injury and/or property damage caused by negligent or faulty work by the insured, but will not pay for the cost of replacing the work that caused the loss D. coverage applies only during the period that the insured has custody and control of the work deemed faulty or inadequately performed

C pays for BI or PD arising OUT OF fault work; does not pay for work itself that was faultily performed

All of the following are incorrect of the Musical Instrument Floater, except: A. coverage is limited to a specific named location B. claims are settled on a replacement cost basis C. when playing for hire, additional premium must be paid D. it may not be included in the scheduled personal property endorsement

C playing for pay requires an endorsement and additional premium

Under the CGL coverage part as it relates to products liability coverage, which of the following would apply? A. products are covered while being manufactured anywhere in the world B. must be consumed or used within the United States and Canada for coverage to apply C. worldwide coverage is provided as long as the product is manufactured in the covered territory and the claim is brought within the coverage territory D. products made in the USA if a suite is brought in a foreign country

C products must be manufactured within the coverage territory (US, its possessions, Canada, and Puerto Rico); suit must be brought within coverage territory

Kevin owns several buildings at several locations. He has them insured each on a separate policy and with separate amounts. Kevin has them insured on which of the following methods of writing insurance? A. agreed value B. scheduled C. specific D. blanket

C provides separate policy for each property

All of the following statements are true of a Homeowners Policy, except: A. a nanny or a gardener could be a residence employee B. insured location could be vacant land, other than farm land, owned by or rented to an insured C. dwellings under construction that will be the primary residence of the named insured are ineligible for coverage D. a business is a trade, profession, or occupation engaged in on a full-time, part-time, or occasional basis, and may be excluded from coverage under certain circumstances

C residence under construction intended to be occupied upon completion by insured may be covered

All of the following are true about liability insurance except: A. when determining negligence, prudent person standard applies B. normally, the burden of proof is on the injured party to prove that the other party was negligent C. split limits identify the percentage of one injured person's loss payable by the insurance company when more than one person is injured D. the amount of insurance available per person may be limited by the per occurrence or aggregate limits stated in a liability policy

C split limits describe the per person and per occurrence limits of insurance available in one loss event

A commercial insurance coverage which is designed to supplement other coverages and fill insurance gaps is: A. special causes of loss coverage B. consequential loss coverage C. difference in conditions coverage D. blanket insurance coverage

C this type of property policy (DIC) is used to fill in the gaps and provide the perils not normally covered by the property policies. May cover earthquake, flood, insect and vermin

A trucker shipping its own goods using unowned trucks would use which form? A. truckers form B. owners form C. shippers form D. annual transit form

C trucker's - coverage for transportation of cargo of others shipper's - covers shipper's OWN goods owner's - coverage for owned trucks used in shipping own goods

Under the California insurance code an application for insurance used in determining the insurability of the applicant can require the applicant's: A. sexual orientation B. national origin and ancestry C. age and gender D. race and color

C under the CIC, no application for insurance used in determining the insurability of the applicant can require the applicant's race, color, national origin, ancestry or sexual orientation

To affect the contract, both representations and concealment must be "material" to the facts. How is the term "materiality" best defined? A. based on the influence of the facts on the parties involved in forming an opinion as to the advantages of the proposed policy B. only affected by the existence of warranty C. based on the influence of the facts on the parties involved in forming an opinion as to the disadvantages of the proposed policy D. no connection to the influence of facts on the parties when they make their decisions to buy insurance

C whether or not information is "material" depends on extent to which it informs the parties involved about the potential "down-sides" of entering into a contract

Which is true regarding dwelling policies? A. Coverage D is considered a direct loss coverage B. Coverage C includes property of tenants and boarders C. property of guests and servants is covered under Coverage C D. Coverage B includes the insured's use of a garage as an office

C Coverage C extends to property of guests and servants; NOT property of tenants and boarders

Outdoor property under Coverage Extensions of the BOP will pay which of the following? A. up to $5,000 for outdoor fences and radio antennas B. up to $2,500 on signs attached to buildings C. up to $2,500, but no more than $500 for any one tree, shrub or plant D. up to $2,500, but no more than $250 for any one tree, shrub, or plant

C limited coverage for damage to outdoor property such as fences, radio or television antennas, signs not attached to buildings and trees, plants, and shrubs

All of the following would be considered benefits of insurance, EXCEPT: A. reduction of financial uncertainty of the insured B. they can be source of investment funds C. payment for the cost of covered losses D. retention of the loss by insured

D

An Administrator who collects any charges or premium from or adjusts claims on California residents in connection with life, health, or annuity insurance meet all of the following requirements, except: A. hold a Certificate of Registration issued by the Commissioner B. keep a copy of a written agreement for 5 years after the agreement has ended C. have a written agreement with an insurer D. hold a Certificate of Authority issued by the Commissioner

D

An agent's license may be renewed or reactivated at any time prior to its expiration by filing the following except: A. new appointment B. a new bond C. a new action notice D. a new company contract

D

An insurance company receives an application with some information missing and issues the policy anyway. What is this called? A. Estoppel B. Subrogation C. Aleatory D. Waiver

D

Employee Dishonesty Optional Coverage under the BOP, when activated with an entry on the Declarations Page, will cover which of the following? A. dishonest acts of employees directed toward customers, such as giving incorrect change B. burglary of the insured's premises by employees C. misrepresentations of the insured's products or services made by employees D. damage or loss to business or personal property, including money and securities, resulting from dishonest acts of employees

D

If an insured has more than one auto policy that provides Uninsured Motorists coverage, which of the following statements about the recovery of benefits is correct? A. benefits are limited to the requirements established by the Financial Responsibility Act B. benefits are paid only by the policy with the highest limits C. total recovery is restricted to the average limits of those coverages D. total recovery is restricted to the highest limit of policies involved

D

If an insured under a personal auto policy leaves a covered auto at an auto dealer for repairs, and the auto is involved in an accident while being test driven by an employee of the dealer, how will the personal auto policy respond to liability claims? A. the personal auto policy is primary B. there is no coverage under the personal auto policy C. the personal auto policy will share with the dealer's policy on a pro-rate basis D. the personal auto policy is excess

D

Jan drives Larry's car. Jan and Larry each have a Personal Auto Policy (PAP). If Jan causes an accident, which of the following is true? A. Jan's policy only will pay for any damage B. Larry's policy only will pay for the any damage C. Jan's policy is primary and Larry's is excess D. Larry's policy is primary and Jan's is excess

D

Money and Securities Optional Coverage (when activated by an entry on the Declarations Page) of the BOP will cover which of the following? A. Business Personal Property, as well as Money and Securities, against theft or destruction B. Accounts receivable records, which are necessary to prove amounts owed the insured C. Loss of Money or Securities resulting from dishonest acts of employees D. Money and securities against theft, disappearance or destruction

D

The broad and special dwelling forms (DP-2 & DP-3) provide three extensions of coverage not found on the basic form DP-1. Which is the correct grouping of these extensions? A. debris removal; fire department service charge; reasonable repairs B. removal coverage; other structures coverage; loss of rental value C. worldwide coverage; improvements, alterations and additions; and debris removal D. building collapse; lawn, plants, trees, shrubs loss; glass breakage

D

The condition known as our option is when the: A. insurer may elect to give the insured notice that the property will be repaired, or replaced in lieu of cash B. the insured is not obligated to pay cash for any insured loss C. the insurer not the insured determines how the claim will be settled D. these are all part of the our option condition

D

Under a business auto policy, which of the following types of physical damage loss is not covered? A. flood B. earthquake C. transportation expenses for a private passenger vehicle damaged in a hit and run D. loss to a CB radio which is permanently attached

D

Under a commercial building and personal property form (BPP) define the word "your" as it pertains to business personal property: A. the first named insured as shown in the policy's declaration B. any one that has an insurable or financial interest of any property located at the insured's address including employees C. the named insured as well as others who have property in the care, custody, or control of the insured D. named insured(s) as specified on the declaration page

D

Under the Broad Cause of Loss Form, how long is vacancy allowed before the peril of vandalism coverage is suspended? A. 120 days B. 90 days C. 30 days D. 60 days

D

Under the National Flood Insurance Program, all of the following are incorrect, except: A. coverage is available for above ground buildings, wharves, piers, and docks B. coverage on trees, shrubs, and plants is limited to $500 for any one tree, shrub, or plant C. for dwelling structures, coverage includes direct and indirect loss D. property removed to protect it from flood is covered for 45 days at other locations

D

Under the commercial inland marine forms, if an insureds loss damages only a part of a set the insurer may choose to adjust the loss by: A. replacing the set B. paying the difference between the value of the set before the loss and after the loss C. paying for the value of the lost part D. the insurer may choose any of these ways to settle the loss under the pair and set clause

D

Under tort law, a corporation can be subject to claim for legal liability on the basis of: A. no-fault auto law B. breach of warranty C. contract liability D. absolute liability

D

What additional coverage does a DP2 have compared to a DP1? A. Debris removal B. Personal Liability C. Improvements alterations and additions D. Additional living expenses

D

What additional coverage is available under the Scheduled Personal Property endorsement that is not available under an unendorsed Homeowners policy? A. theft of postage stamps B. vandalism to artwork C. damage to camera in auto accident D. breakage of glassware caused by earthquake

D

What statement concerning the Dwelling Property Special Form (DP-3) is NOT true? A. an extension of 10% of the contents limit is provided while property is off the premises B. the insured may apply 10% of the ""Coverage A"" amount for a detached garage C. the insured may apply 20% of the ""Coverage A"" amount for rental income D. the insured may apply 10% of the ""Coverage A"" amount for farm property

D

When a homeowner allows wet leaves to remain on his/her sidewalk, this might be considered which of the following? A. a natural hazard B. a morale hazard C. a moral hazard D. a physical hazard

D

Which is not a difference between Dwelling policies and Homeowners as it pertains to Coverage C (personal property)? A. in Dwelling policies personal property is optional in homeowners its included automatically B. in homeowners policies theft of personal property is covered and in Dwelling policies it is not covered C. in dwelling policies personal property is limited to 10% worldwide (away from premises) and homeowners is covered worldwide 100% D. in both dwelling policies and homeowners policies personal property settles the lesser of the cost to repair, replace or actual cash value

D

Which is true of Coverage C of the Dwelling Policy? A. Coverage C provides coverage for passports, tickets, and deeds B. Coverage C provides coverage for coins and currency C. Coverage C provides coverage for grave markers D. Coverage C excludes coverage for animals, birds, fish, motor vehicles not used to service the premises or assist the handicapped, and property of boarders, roomers or tenants

D

Which of the following acts is not prohibited? A. a lender may provide their own insurance to a borrower whether or not the borrower agrees B. a lender may require the borrower to purchase insurance from a certain agent C. a lender may require the borrower to purchase insurance from a certain insurance company but not a certain agent D. a lender may provide the insurance for the borrower if borrower doesn't deliver proof of insurance

D

Which of the following categories of property and/or liability insurance are included under the Special Lines Surplus Lines sub-line? A. railroad operations B. marine builders and aircraft risks C. exported or imported materials or merchandise D. all of these are included

D

Which of the following characteristics must exist in order for someone to be considered negligent? A. another person was injured or property was damaged as a result of this breach B. the individual breached a legal duty to act or not to act C. there was a direct or proximate cause between the breach of the legal duty and the property damage or personal injury D. all of these characteristics are required

D

Which of the following does the Personal Auto Policy require the insured to do after a collision loss? A. press charges against other party B. promptly notify police of accident C. submit written notice of loss to company D. allow company to inspect the damaged property before it is repaired

D

Which of the following is defined as 'the cost to replace damaged property with less expensive and more modern construction and equipment? A. Market Value B. Actual Cash Value C. Replacement Cost D. Functional Replacement Cost

D

Which of the following is not covered by a Business Auto Policy covering the named insured's small business? A. director of Sales who often rents vehicles B. a Manager's wife driving her husband's company car C. the named insured leases a car to be used for sales calls D. a fellow employee injured while driving a covered auto

D

Which of the following is not covered under a Businessowners Policy without coverage being activated on the Declarations page? A. Money Order and Counterfeit Paper Money Coverage B. exterior building glass C. Fire Department Service Charge D. employee dishonesty

D

Which of the following is true concerning the Home Day Care Coverage Endorsement to the Homeowners Policy? A. endorsement covers injury to an employee, as well as attendees, arising out of day care operations B. provides Commercial General Liability coverage for the day care operation C. covers injury to attendees while loading or unloading them from draft or saddle animals D. extends Section II coverages to the insured's home day care business

D

Which of the following is true regarding the Supplemental Extended Reporting Period? A. cancellation by the insurer requires 90 days notice of cancellation B. it covers claims that take place after the policy term, during the Supplemental Extended Reporting Period C. the charge for the Supplemental Extended Reporting Period shall not exceed the premium of the expiring policy D. the premium is a one-time charge

D

Which statement is accurate concerning Coverage D - Additional Living Expense of the Homeowners Policy? A. the coverage will pay for all the insured's living expenses until the property is restored B. the coverage will pay until the property is restored, plus 30 days relocation expense C. if the insured must relocate permanently, payment will be made for 365 days, regardless of the time it takes the insured to settle at the new location D. the coverage will pay for any increase in living expenses required to maintain the insured's normal standard of living

D

Which statement is correct? A. loss of profits resulting from a fire is a direct loss B. most property policies include inherent vice as a covered peril C. blanket coverage is commonly written when insuring property at a single location D. a spark that jumps from a fireplace and ignites a nearby rug would be deemed a hostile fire

D

Which statement is true of a Special Form (DP-3) Dwelling Policy? A. losses caused by power failure off the premises or enforcement of any ordinance or law are covered B. coverage is not provided for collapse of a building C. coverage is provided for structures used for commercial, manufacturing, or farming purposes D. subject to coinsurance, coverage for the structure is provided on a replacement cost basis

D

Which peril on the HO-8 is NOT an exclusion? A. landslide B. war C. flood D. theft

D ALL HO FORMS COVER THEFT of personal property

The definition of Business Personal Property under the Building and Personal Property Coverage Form includes: A. Business Personal Property of others rented to, or leased by, the insured B. stock on consignment held for sale by the insured C. accounts, bills, and currency of others on the premises in the insured's trust D. furniture, fixtures, machinery and equipment, stock held for sale (including raw material) and other personal property owned by the insured

D BPP covers ONLY personal property owned by insured, PLUS the insured's interest in improvements and betterments insured has made to rented real property

Which statement is false? A. personal property of a guest or servant is covered while located on the described location B. Dwelling Broad Form will cover trees, shrubs and plants up to $500 each C. Special Dwelling Form will cover damage to the building from a vehicle D. under a Dwelling Basic Form without Extended Coverage, if an insured were to accidentally hit a fence in the backyard with his car, the damage to the fence would be covered

D Basic Form does not cover damage to property done by insured's owned or operated auto

Which of the following statements is true in California? A. medical payments coverage of $5,000 per person is required under the California Automobile Insurance Plan, and applies on a primary basis B. only carriers writing 10% or more of the automobile insurance business in the State of California are required to participate in the California Automobile Insurance Plan C. California Automobile Assigned Risk Plan is available only to residents of Los Angeles and San Diego counties D. GAP Insurance insures for the difference between what the insured owes on a vehicle, and what the insurer says the vehicle's actual cash value or worth is, in the event of a total loss

D CAARP is statewide; all admitted auto liability carriers in the state are required to participate; and medical payments coverage is optional, is limited to $1,000, and applies on an excess basis

In determining the actual cash value of a commercial building for coinsurance purposes which would be used? A. purchase price less the value of the land B. value established by the county property tax assessors office C. the actual cash value of replacing the building D. fair market value

D CP policies settle BPP and PPO on ACV, however use of fair market for the building itself

The Commercial Auto policy definition of auto contains all of the following except A. land motor vehicle B. trailer or semi-trailer C. designed for public roads D. having four wheels

D Commercial Auto can cover big rigs (more than 4 wheels) Personal Auto requires auto to have 4 wheels

The insureds have an HO-3 policy valued at $150,000. They have a detached garage that was destroyed by a covered peril. It will take $17,000 to replace the garage. Their homeowners policy will pay A. $150,000 B. 80% of the loss because of the co-insurance requirement C. $17,000 D. $15,000

D Coverage B - 10% of Coverage A (HO, same for DP)

Which statement is true concerning Homeowners policies? A. coverage is provided to property of boarders not related to the insured B. coverage is not provided to a garage rented for private garage purposes C. dwellings under construction are covered for theft D. damage to borrowed property caused by an insured is covered

D Coverage C covers property owned or used by the insured, including property owned by others

Which statement is false regarding a Homeowners Policy? A. the insurer will reimburse the insured for time off work to testify at a trial covered by the policy B. payments under Damage to Property of Others are limited to $1,000 C. first aid expenses are included as an additional coverage D. damages to Property of Others excludes intentional damage by a 12-year-old

D Damage to Property of Others will NOT pay for intentional damages done by an insured who is 13 years or older

A person can purchase extended coverage and V&MM on a DP-1 by: A. endorsement only and an additional premium B. can purchase V & MM only (Vandalism and Malicious Mischief) C. must purchase both EC & V&MM ( extended coverage , vandalism and malicious mischief D. additional EC and VMM perils are printed on the basic form, but insurance is not provided unless a premium for EC, or EC and VMM is shown in the declaration

D EC and VMM already written into contract and are considered optional coverage; activated when entry on declaration page and additional premium; can purchase EC without VMM but VMM cannot be purchased without EC

Which of the following may be insured under the building and personal property coverage part? A. personal property while airborne B. underground pipes and drains C. vehicles D. hay and crops inside building

D INSIDE

In property insurance, the practice that damaged property, which has been paid for by the insurance company, belongs to the insurer is known as: A. surplus property B. indemnity C. residual property D. salvage

D Property insurance policies give insurer the option to take all or any part of property at agreed or appraised value

All of the following are true concerning Commercial and Personal Umbrellas except: A. they have no standard form B. they are uneven at the top C. they are written for excess amounts D. the self-insured retention must be paid on every umbrella claim

D SIR ONLY imposed if insured DOES NOT have appropriate underlying coverage; umbrella must DROP down

Which of the following is a permissible activity of a Property or Casualty Broker-Agent? A. Advertising the availability of products from a nonadmitted insurer B. Aiding a nonadmitted insurer to transact insurance in California C. Transacting insurance with a nonadmitted insurer D. Referring a client to a Surplus Line Broker

D appropriate for a licensed producer to refer business to a Surplus Line Broker that producer unable to place with an admitted insurer

When a producer makes an agreement that unreasonably restrains the potential insured, he/she may have violated regulations against: A. rebating B. defamation C. unfair discrimination D. boycott, coercion, and intimidation

D boycott, coercion, and intimidation are methods to restrain the choices of an insured

Under the Commercial Building and Personal Property Coverage Form, the building is considered vacant, unless: A. at least 61% or more of the square footage is rented or is used to conduct operations B. at least 41% or more of the square footage is rented or is used to conduct operations C. at least 51% or more of the square footage is rented or is used to conduct operations D. at least 31% or more of the square footage is rented or is used to conduct operations

D buildings under construction are not considered vacant. A building is considered vacant unless at least 31% or more of the total square footage is rented or is used to conduct operations

Employers Liability Insurance will not pay which claim? A. Susan was injured by a defective machine and after paying benefits to Susan, her boss filed a claim against the machine manufacturer B. Susan's daughter is claiming mental anguish because she is so upset about her mother's injury caused by a defective machine C. Susan must hire transportation to take her daughter to school since she can't drive due to her injury D. Susan is injured while attending a company picnic at a nearby park

D company picnic not qualified as covered employment

Which of the following vehicles could be insured under the business auto coverage part? A. a big rig used to transport the insureds cargo B. a dump truck C. a private passenger auto D. all of these would qualify

D covered autos - owned by or used by a business including owned, leased, hired, rented, or borrowed, private passenger autos, trucks, trailers, semitrailers

Theft' on the Commercial Crime coverage form includes all of the following EXCEPT: A. burglary B. robbery C. hold-up of an armored car D. theft of stock or inventory

D covered under CP

Which of the following is true regarding the Electronic Data Processing Floater? A. does not include Time Element coverages B. includes loss due to faulty programming C. covers the computer, printer, and associated hardware devices only D. value of covered property is based on actual cash value, unless replacement cost is indicated on the Declarations

D covers computer and word processing hardware and software on OPEN PERIL basis

A Boiler and Machinery Policy can cover damage to: A. Objects only B. Business personal property only C. Buildings and objects D. Buildings, business personal property and objects

D covers same type of property as CP policy, but adds perils of explosion of a boiler, sudden mechanical breakdown, and arching

Under the Dwelling policies, which is correct regarding coverage of trees, shrubs or plants? A. Limit of Liability is $1,000 for any tree, shrub, or plant B. theft of shrubs and plants is covered C. all vehicle damage to trees, shrubs, or plants is covered D. damage by wind, hail, weight of ice, snow or sleet is not covered

D damage to outdoor plants by forces of nature OTHER THAN lighting are so common that such damage is considered uninsurable; coverage for certain other perils is provided, with limit of $500 for any one tree, shrub, or plant

A bulldozer an insured is using to level a property for a customer overturns causing fuel to leak and pollute the ground. Damage caused by the pollution would be covered: A. inland marine B. not covered as pollution liability is excluded C. auto liability D. commercial general liability

D exception to pollution exclusion: okay if from an auto part designed by its manufacture to hold, store, receive, or dispose of pollutants

All of the following are true of negligence, except: A. it does not include breach of contract B. it is the failure to use ordinary care C. it is a type of tort D. it does not require a duty to be owed

D for act to be negligent, injured party must prove the alleged wrongdoer owed duty to injured party or to the public

If an insured requests cancellation of a policy which is in force, the insurer A. no refund applies B. processes the cancellation and refunds all premiums to the insured C. determines an amount of refund after a cancellation fee D. applies the short rate basis

D if insured cancels, then short rate if insurer cancels, then pro rate

Under Loss Conditions of the Commercial Property Coverage Part, which of the following is not a correct statement? A. the insured must sign a sworn statement of loss within 60 days after the insurer's request B. the insurer will pay for the covered loss within 30 days after they receive the sworn statement of loss C. each party will pay its chosen appraiser and bear the umpire expenses equally D. if the property is vacant for more than 60 consecutive days, the insurer will not cover any loss

D if property has been vacant for more than 60 days, coverage is suspended for CERTAIN perils (vandalism)

Which of the following is NOT a difference between the Dwelling policy and Homeowners policy? A. in Dwelling forms, personal property coverage is optional, whereas in Homeowners it is included B. in Dwelling forms, only 10% of the Coverage C limit is available for personal property away from the residence premises, whereas in Homeowners it is covered worldwide C. in Dwelling forms, the liability coverage is available only by endorsement, whereas in Homeowners it is always included D. in Dwelling forms, theft is a broad form peril, whereas in Homeowners it is not

D in DP - theft is NOT a broad form peril

Under the Dwelling Policy coverage extension of Debris Removal, which of the following is correct? A. limit for Debris Removal is an additional amount of insurance B. limit for Debris Removal is 5% of the Coverage A Limit of Insurance C. limit for Debris Removal is 10% of the Coverage A Limit of Insurance D. extension does not increase the amount of insurance under the policy

D included in limits (INSIDE THE LIMITS)

What is NOT true regarding the "inflation guard" endorsement? A. the endorsement is available for DP-1, DP-2, or DP-3 B. policy limits are increased pro rata throughout the year C. it is an optional endorsement and not automatically included by insurer D. insured chooses percentage by which amount limits will be increased

D insured does not choose the %; it's based on inflation rates in the area and set by INSURER

Which of the following is not an element of an ideally insurable risk? A. loss must be accidental B. loss must be quantifiable C. risks must include a large number of homogenous units D. loss must be catastrophic

D insurers want to avoid catastrophic perils

A bailees customers policy: A. is purchased by individual customers to protect their property while in the care, custody and control of the bailee B. protects an insured from liability for injury to customers C. covers damage to the insureds property only if the insured is legally liable D. covers damage to customers property whether or not the insured is liable

D it only requires that the damage be from insured peril

Which of the following is automatically covered under the Businessowners Policy? A. off-premises power failure B. mechanical breakdown of pressure systems and air conditioners C. preservation of property up to 60 days D. signs attached to the building

D limit up to $1,000

The following are all correct, except: A. a moral hazard includes dishonesty B. a physical hazard includes location C. flammable material near a furnace would be considered a physical hazard D. a physical hazard includes an attitude of indifference to loss

D morale hazard is attitude of indifference to loss

All of the following are true of the financial requirements for Motor Carriers except: A. if the insurer is required to pay an excluded loss, it may seek reimbursement from the insured B. insurer's liability is considered absolute C. common carriers carry a higher degree of care to their passengers than other operators of motor vehicles do to their passengers D. most common approach to satisfying financial requirements is bonds

D most common approach is insurance

In regards to the Contractors Equipment Floater the incorrect statement would be: A. it would cover cranes, earth movers, bulldozers, hand tools, mobile asphalt plants, scaffolding, and portable offices B. it is not limited to contractors equipment and can be used to insure road repair equipment and mobile equipment used in mining and lumbering operations C. the form frequently includes rental reimbursement coverage, which pays for the cost of renting substitute equipment when covered property/equipment has been put out of service by a covered cause of loss D. contractor equipment either as a filed class or a non-filed class

D non-filed

If the Vacancy Permit endorsement is added to a Building and Personal Property Policy, the Vacancy Condition under the basic policy is: A. waived after the policy period B. waived during the permit period C. waived only for designated perils during the policy period D. waived only for designated perils during the permit period

D permit reinstates perils of Vandalism and Sprinkler Leakage during the permit period specified; not for the entire remaining policy period

All of the following are incorrect of the Musical Instrument Floater, except: A. coverage is limited to a specific named location B. it may not be included in the scheduled personal property endorsement C. claims are settled on a replacement cost basis D. when playing for hire, additional premium must be paid

D playing for pay requires an endorsement AND additional premium

A customer in a housewares store is cut while handling a broken piece of glassware. Which type of liability would apply? A. Completed Operations B. Products C. Operations D. Premises

D product still in insured's CCC - premises liability

Which of the following statements is NOT correct regarding Workers Compensation Insurance? A. Part Two covers the employer's defense for alleged negligence B. Part One covers employee, job-related, injury or illness with medical benefits, disability, death and/or rehabilitation costs C. Part Three provides coverage in other states where employees are based, reside, or occupied for long periods D. Workers' Compensation contracts consist of 3 parts

D six parts (part 4 is duties after loss, part 5 is premium rules, and part 6 is general conditions

The Western Metal Decorating claims-made CGL basic extended reporting period provides coverage for occurrences reported to the insurer within 60 days of the policy expiration date and claimed against the insured. A. indefinitely B. within two years of the policys expiration date C. within four years of the policys expiration date D. within five years of the policy expiration date

D standard claims-made form includes basic extended reporting period which allows insured to report to its insurer any incident or matter which the insured feels may result in liability claim being made against them (MINI); if third part brings liability claim against the insured for one of those reported incidents within 5 years of policy expiration, then insurer will cover claim (MIDI)

In insurance, the insurer's promise to pay a covered loss and defend the insured in a lawsuit and the insured's payment of the first premium, are all examples of: A. Acceptance B. Offer C. Legal Purpose D. Consideration

D term used to describe rights, money, promises or property exchanged between parties as part of contract transaction

The commercial auto coverage form/policy/module known as the garage coverage form would provide liability for all of the following except: A. The insureds business premises B. The insureds business autos C. The insureds products and work performed D. The insureds damage to the customer car while road tested

D this is NOT covered by Garage - Liability; CCC excluded covered under Garagekeepers

What type of policy only establishes the value of a insured object after a loss occurs? A. flexible B. latent C. valued D. open

D valued - specify insured property will be valued at specified sum open - do not specify value up-front

Which of the following relationships most closely resembles the insurer/insured relationship? A. Principal/Surety B. Obligee/Principal C. Obligor/Principal D. Surety/Obligee

D when comparing insurance contract to bond, insurer/insured relationship in insurance is similar to the surety/obligee relationship in bond

The Additional/Supplemental Coverages part of a property insurance policy provides: A. insured to request coverage to supplement the deductible B. insured to request that extra coverage be provided by endorsement C. company to voluntarily waive the deductible D. coverage that is beyond, and supplements, the Coverages set forth as basic Coverages

D Additional and Supplementary coverages are coverages for incidental expenses that often accompany the losses insured against

State financial oversight of admitted insurance companies does not include which of the following? A. regulations concerning investment of policy reserves B. quarterly and annual financial reports submitted by the insurance companies C. on-site financial examinations by state employees at least every 5 years D. requiring investment of reserves in California-issued financial instruments

D although state laws and regulations impose certain requirements on insurers' invested reserves, not required to invest in California-issued financial instruments

A Personal Auto Policy is designed to cover: A. personal and commercial autos that are owned by an individual or family B. only the non-business use of a personal automobile C. the use, by an individual and/or spouse only, of a personal automobile D. an individual's or family's personal use of an auto

D designed for insuring individuals and families; private passenger automobile used for business purposes eligible, but commercial automobiles NOT eligible

Section II of a Homeowners Policy provides coverage for all of the following, except: A. liability arising from an insured's use of a sailboat that is less than 26 feet in length B. liability arising from an insured's use of an owned golf cart while golfing C. liability arising from an insured's use of an owned 25 horsepower outboard motorboat D. liability arising from an insured's use of a rented boat with a 75 horsepower inboard motor

D excluded: liability arising from use of any inboard motorboat OWNED by insured; 50 hp limitation applies to inboard motorboat NOT OWNED by insured

In Business and Personal Property Policy, which causes of loss form(s) include coverage for peril of windstorm? A. broad only B. special only C. broad and special only D. basic, broad, and special

D unlike DP and HO, which include windstorm on Broad and Special forms, but NOT Basic form, damage to building exteriors due to windstorm covered in all CP peril forms

Hugo First would not be covered for which of the following under Section II on his homeowner's policy? A. his use of his golf cart while playing golf on a golf course B. his motorized chair while shopping at Costco C. damage done by his all terrain vehicle while on his undeveloped land D. his personal auto used on his own property

D vehicles registered and used mostly on public roads are NOT covered by HO

Named Non-Owner Personal Auto Policy would be ideal for whom? A. person who does not own a vehicle but frequently drives a borrowed or rented auto B. person who owns a vehicle but allows his next-door neighbor to use on a long-term basis C. unlicensed driver who owns a vehicle D. business that owns a fleet of vehicles it allows its employees to drive on company or personal business

S to satisfy state financial responsibility law; for person who frequently drives borrowed or rented autos