casualty and property insurance
An individual who uses a truck type vehicle to carry his own cargo would receive auto coverage under which of the following coverage forms: A) Business Auto Coverage Form B) Garage Coverage Form C) Owners Coverage Form D) Truckers Coverage Form
A This would be a private carrier and the Business Auto Coverage Form would apply.
The Basic (DP-1) Dwelling Form does not include: A Additional Living Expenses B Fair Rental Value C Property Removed to a Newly Acquired Residence D World-Wide Coverage on Personal Property
A The Basic Dwelling Form (DP-1) provides coverage for Fair Rental Value. Coverage for Additional Living Expenses is available by endorsement.
Which of the following is true about the right of salvage? A The insurer has the right to take possession of damaged property after payment of a loss B The insured has the right to keep damaged property after payment of a loss C The insurer is required to take possession of damaged property after a loss D Damaged property must be disposed of after a loss.
A. After payment for loss, the insurer has the right to salvage damaged property.
Named Non-Owner Personal Auto Policy would be ideal for whom? A A person who does not own a vehicle but frequently drives a borrowed or rented auto B A person who owns a vehicle but allows his next-door neighbor to use on a long-term basis C An unlicensed driver who owns a vehicle D A business that owns a fleet of vehicles it allows its employees to drive on company or personal business
A. In order to satisfy state financial responsibility laws, a person who frequently drives borrowed or rented autos could have a named non-owner auto policy.
In addition to the named insured in a property policy, coverage is automatically provided for: A Persons who are legal representatives of the insured B Persons who appraise the property C The insured's employer D Persons who purchase the insured's property
A. The legal representative of the insured is also an insured under the policy.
Which of the following best describes Fiduciary Responsibilities? A The responsibility of a producer or agent to always act in the best interest of the client B Having custody of, or responsibility for any money collected or received from a person on behalf of the insurer C The responsibility of an insurer to investigate claims and determine liability for a loss D Those responsibilities of a producer or agent to comply with insurance laws and regulations
B. A Fiduciary is a person holding the funds or property of another in a position of trust, as is the case when a producer or agent collects premiums for the insurer.
The broader definition of an accident that also includes a continuous and repeated exposure, can best be defined as a(n): A Disaster B Occurrence C Exposure D Incident
B. An Occurrence is an event that results in a loss. It includes an accident, but is a broader definition because it need not be sudden; it includes continuous or repeated exposure to harmful conditions that results in property damage.
All of the following are false regarding coinsurance, except: A Coinsurance does not apply to vacant or unoccupied property B Its purpose is to encourage the insured to carry insurance to value C The minimum coinsurance percentage on commercial policies is 50% D The coinsurance clause applies only to losses exceeding the coinsurance percentage
B. Properties that are insured to value can be insured at a lower rate than underinsured properties. The coinsurance clause, encouraging insurance-to-value, provides coverage at a reduced rate.
A policy is issued for a premium of $500 per year, but a condition that would have caused the premium to be substantially more was misrepresented in the application. This information is deemed by the insurer to be: A Waived B Warrantied C Material D Non-disclosed
C. A statement is material if its disclosure or lack of disclosure would change the insurer's decision to issue a policy for the same premium.
In liability insurance, which of the following is true regarding the term negligence? A In every accident there is one or more negligent parties B An accident occurred, which resulted in bodily injury or property damage C The person claiming damages, in almost every instance, must prove the actions of the insured were the direct or proximate cause of the injury or damages D The uninjured party to an accident is presumed to be negligent
C. Accidents can occur that are the fault of no one. For one party to be able to collect damages from another, arising from an accident, the claiming party must prove negligence on the part of the other party.
Under the Dwelling Policy Forms, which losses would be covered? A Damage caused by subsidence of land the dwelling is sitting on B Collapse due to settling C Fire damage to building materials and supplies that are located on the insured premises D Damage caused by a sewer or drain backup
C. Coverage A includes materials and supplies located on or next to the Described Location used to construct, alter, or repair the dwelling on the Location.
Under the Dwelling Policy, household and personal property, including property damaged in transit between the insured's old and new residences, are covered under: A Coverage B B Coverage A C Coverage C D Coverage D
C. Coverage C is the coverage for Personal Property. 10% of the Coverage C limits apply to the Insured's Personal Property away from the premises anywhere in the world.
All of the following are true of a FAIR Plan, except: A) The FAIR Plan is a joint reinsurance association B) Every insurer in the state must participate in the program c) Agents do not have binding authority D) Coverage is available for farm, but not for auto risks
D Neither farm nor auto risks are covered by the FAIR Plan.
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 apply only to larger losses C Deductibles tend to increase premiums D Deductibles help reduce the number of frivolous or small claims
D. The Deductible is the amount of each loss that the insured must bear before the policy responds to the loss. Deductibles eliminate the expense of processing small claims, resulting in reduced premiums.
Which of the following is true regarding the Yacht Policy? A It is designed for larger boats that can be towed by automobiles B It covers damage to the hull and fittings. Liability coverage may be attached by endorsement C It is written on an Inland Marine form D Each policy has navigational limits that describe the area where the yacht is allowed to operate
D. The Yacht policy is designed for larger vessels such as yachts, excursion vessels, etc. It is written on an Ocean Marine Form and includes Hull, Protection and Indemnity, Medical Payments and Jones Act coverages.
Every licensee must include the license number on all of the following, except: A)Price quotations B)Business cards C)Home address labels D)Printed advertisements
The Answer is C Every licensee shall prominently affix, type, or have printed on business cards, price quotations and printed advertisements in this state, his/her license number in type the same size as that indicated for address or telephone number.
Under Covered Property of the Building and Personal Property Coverage Form, the building or structure that is described in the Declarations includes: A)Completed additions, fixtures, including outdoor fixtures, permanently installed machinery and equipment B)Furniture, fixtures, machinery and equipment C)Property that is located in or on the building described in the Declarations or in the open (or in a vehicle) within 100 feet of the premises D)Tenant's interest in Improvements and Betterments
The answer is A: All responses constitute business personal property of the insured or others, except completed additions, fixtures, including outdoor fixtures, and permanently installed machinery and equipment, which constitute buildings or structures.
Under the Voluntary Compensation Endorsement to a Workers' Compensation Policy, when an employer desires to provide Workers' Compensation Coverage to the employees, even though the law does not require the employer to provide coverage, he/she must provide which of the following? A)The class of employees to be covered B)The number of years the business has had employees C)The benefits of the designated State's Workers' Compensation law D)The designated beneficiary
The answer is A: The same information is needed for obtaining the Voluntary Compensation Endorsement as is needed for obtaining coverage required by law.
The Businessowners Liability Coverage Form includes coverage for bodily injury, property damage, personal injury, and advertising injury to which coverage applies, plus: A)Mobile Equipment being transported on an auto owned or operated by an insured B)Liability assumed under an insured contract C)Liquor Liability D)Employers Liability
The answer is B: Business Liability covers sums for which the insured becomes legally liable to pay as damages for bodily injury, property damage, or personal injury and advertising injury, including liability assumed under an insured contract. An insured contract is a policy that describes the liability assumed by the insured and included for coverage in the policy. The 5 basic types of insured contracts are: a contract for a lease of premises, a sidetrack agreement, any easement or license agreement, an obligation to indemnify a municipality, and an elevator maintenance agreement.
who enforces The regulations found in the CCR? A) the NAIC B The California legislator C. The public via a referendum d. the insurance commissioner
The answer is D The commissioner enforces the code by writing and adopting regulations that specify the manner of enforcement of provide details that are not explicitly cited in the code.
Under Coverage B of a Homeowners Policy, all of the following are included, except: A)The insured's private garage B)The insured's garage rented to a neighbor for private garaging C)A shop building containing the insured's hobby woodworking shop D)The renting of a garage to a neighbor for a woodworking business
The answer is D: Most private structures on the Residence Premises are covered under Coverage B if they are not used for business purposes.
All of the following are true concerning the Voluntary Compensation Endorsement, except: A)The State in which coverage is to be provided must be stipulated B)The coverage is the same as in the standard Workers' Compensation Policy C)Benefits are provided for employees not required to be covered under the Workers' Compensation Law D)The law states that the employer must provide his/her federal tax ID number
The answer is D: The Voluntary Compensation Endorsement is available for employers who do not fall under the Workers' Compensation law of their state, but who wish to provide Workers' Compensation benefits for their employees.
The camera floater automatically covers newly acquired objects for how many days?
The camera floater provides automatic coverage for 30 days for newly acquired items.
An insurer authorized to transact insurance in a particular state by that state's insurance department is known as: A)An admitted insurer B)A nonadmitted insurer C)A resident insurer D)A domestic insurer
The correct answer is A: An Admitted Insurer is an insurer authorized to transact insurance in a particular state by that state's Department or Division of Insurance. An insurer who has a Certificate of Authority to transact business.
Generally, a licensed person who maintains claims files as required by law must do all of the following, except: A)Make required files available for inspection by the Commissioner at all times B)Discard by cross-cut shredding or incineration all claim files which are more than 3 years old C)Document the date a claim was received, and the date a claim was paid, denied, or closed without payment. D)Keep copies of all documents, notes and work papers, and correspondence reasonably relevant to the claim
The correct answer is B Claims files must be available for the current year and, at a minimum, the 4 preceding full years.
The provision that establishes the method by which coverage will be applied if other insurance applies to the loss, is sometimes called: A)The Claim Settlement provision B)The Other Insurance provision C)The Subrogation provision D)The Limit of Liability provision
The correct answer is B The Other Insurance provision is sometimes known as the pro rata liability provision because it provides for claim settlement to be proportioned to the amount of other insurance.
All of the following are considered part of the consideration of an insurance contract, except: A)The insurer's promise to indemnify in the event of loss B)Issuance of the policy C)Payment of the initial premium D)The payment of a claim for the insured
The correct answer is B The issuance of a policy is not part of the consideration of an insurance contract. It is part of the agreement (acceptance).
Under the Common Policy Conditions, the Insurer may examine the insured's books and records under which of the following circumstances? A) Only upon permission by the insured B)At any time during the policy period and up to 3 years afterward C)Any time during the policy period D)At any time during the policy period and during the insured's fiscal year immediately following policy expiration
The correct answer is B Many times the policy premium is based upon information contained in the insured's records, such as payroll, sales, admissions, etc. Often it is necessary to obtain this information after the policy expiration to be sure that the estimates upon which the premium was based were correct.
Under the Building and Personal Property Coverage Form, which of the following is true regarding Property Off Premises? A)It is offered as an Additional Coverage B) There is a coverage limit of $5,000 on Property Off Premises C )Property in a motor vehicle or in the care, custody, and control of a salesperson is not covered D )Property Off Premises is covered only for 30 days after its removal from the premises
The correct answer is C $10,000 Coverage is available for property that is away from the premises if it is temporarily at a location the insured does not own, lease or operate. It is a coverage extension, not an additional coverage.
All of the following are true, except: A A Homeowners Policy will not cover theft of a boat away from premises B A private school would be permitted under a Homeowners Policy C Coverage D of a Homeowners Policy includes loss of income from an incidental business D Coverage D of a Homeowners Policy covers additional living expenses
The correct answer is C Coverage D includes lost rental value (such as for a room rented to a boarder), but does not cover loss of income from an incidental business.
All of the following perils are included under the Dwelling Broad Form, except: A Smoke damage from industrial operations B Falling Objects C Volcanic Eruption D Burglary Damage
The correct answer was A. Smoke damage is a covered peril of the Dwelling Broad Form; however, the description of the peril specifically excludes smoke from agricultural smudging or industrial operations.
In California, after a Personal Auto Policy has been in effect for 60 days, an insurer may cancel for all of the following reasons, except: A Accidents resulting in payments of $300,000 or more under bodily injury liability coverage B A substantial increase in hazard C Nonpayment of premium D Obtaining the policy through fraud or misrepresentation
The correct answer was A. An insurer may only cancel coverage for suspension or revocation of the insured's license, nonpayment of premium, a substantial increase in hazard, or if the policy was obtained through fraud or misrepresentation, if the policy has been in effect 60 days of more.
All of the following are eligible for a Businessowners Policy, except: A An eligible service risk that has a total of 45,000 square feet B An office building that has no more than 100,000 square feet C A residential condominium association D A mercantile risk that has no more than 25,000 square feet
The correct answer was A. Businesses that occupy more than 35,000 square feet of space are ineligible.
All of the following are true of Earthquake Coverage in California, except: A For those who desire earthquake insurance, policies may only be purchased through the California Earthquake Authority B All California Earthquake Authority policies are marketed and serviced by a participating insurer who is compensated for the claims and services they provide on behalf of the authority C No residential insurance policy may be issued or delivered unless the insured is offered coverage for loss or damage caused by the peril of earthquake D The California Earthquake Authority has no authority to sell anything other than earthquake coverage
The correct answer was A. Coverage is available through the Authority and likely would be purchased there, but might be secured by endorsement or coverage form at a given insurer's discretion, other than through an Authority policy.
Which statement is false regarding a Homeowners Policy? A Damages to Property of Others excludes intentional damage by a 12-year-old B First aid expenses are included as an additional coverage C Payments under Damage to Property of Others are limited to $1,000 D The insurer will reimburse the insured for time off work to testify at a trial covered by the policy
The correct answer was A. Damage to Property of Others will not pay for intentional damages done by an insured who is 13 years or older.
Assignment in the Conditions of a property policy is best described as: A The insured may not transfer ownership of the policy without the insurer's written permission B The naming of parties other than the insured on loss payment checks C The insured's responsibility to give prompt loss notice to the company D The requirements placed upon the insured regarding legal action
The correct answer was A. If the insured wishes to assign the policy to another party, such as a new owner of the property, written permission of the company is necessary. This permission is in the form of an endorsement to the policy.
What is the main difference between the Occurrence Form and the Claims-Made Form of the Commercial General Liability Coverage Part to the Commercial Package Part to the Commercial Package Policy? A The coverage trigger B The Occurrence Form covers occurrences and the Claims-Made Form covers accidents C The Claims-Made Form contains a deductible on both bodily injury and property damage coverages D The Occurrence Form contains a deductible on both bodily injury and property damage coverages
The correct answer was A. In Liability Insurance, the trigger is the event that brings coverage into play. It may be an occurrence either of bodily injury or property damage; or, in a form with a Claims-Made trigger, the formal making of a claim.
All of the following are true of Part D automobile physical damage, except: A It covers damage to the insured auto and to another auto with which it collided B Damage to the insured auto that is caused by colliding with an animal would be covered under Other Than Collision coverage C It covers damage to the insured auto regardless of liability D Collision coverage usually is written with a deductible
The correct answer was A. Part D Coverage applies only to the insured vehicle (and vehicles driven by an insured with permission). Part A coverage pays for damage to third party vehicles.
An agent would be guilty of 'pretexting' or conducting a 'pretext interview' in which of the following situations? A Pretends to be someone or something other than an insurance producer in order to obtain personal non-public information about someone in connection with an insurance transaction B Sends unsolicited text messages to persons who are not existing client C Pretending to be an employee of a local utility company when attempting to obtain information in the investigation of an insurance claim D Advises a client to lapse, forfeit, or surrender any insurance contract on the basis of misrepresentation or fraud
The correct answer was A. Pretending to be someone other than an agent or broker when transacting insurance is prohibited, and may be a state or federal crime under specific circumstances. Pretending to be someone else during the investigation of an insurance claim is not prohibited and is a common practice by insurance company and law enforcement investigators working undercover.
California Proposition 103 legislation addressed which of the following? A Good Driver Discount Policy B Boiler and Machinery Equipment Breakdown Coverage Form C Homeowners Comprehensive Form (HO-5) D Commercial Package Policy - Earthquake Cause of Loss Form
The correct answer was A. Proposition 103 addressed the Good Driver Discount Policy.
Which of the following is true regarding the Electronic Data Processing Floater? A The value of covered property is based on actual cash value, unless replacement cost is indicated on the Declarations B It includes loss due to faulty programming C It covers the computer, printer, and associated hardware devices only D It does not include Time Element coverages
The correct answer was A. The Electronic Data Processing Floater covers computer and word processing hardware and software on an Open Perils basis.
Which form is designed for the unit-owner of a condominium? A HO-6 B HO-2 C HO-8 D HO-4
The correct answer was A. The HO-6 Form, with limited Property Coverage A, is designed for the owner-occupant of a condominium unit.
When a proper entry is made on the Declarations Page of a BOP, outdoor signs would be: A Covered on an open perils basis B Covered for named perils only C Covered on and away from premises D Covered only if attached to the building
The correct answer was A. The Outdoor Signs Optional Coverage provides coverage on an open peril basis, for all outdoor signs at the described premises.
The Accounts Receivable Coverage Form will cover loss of records that results from: A The collapse of a building damaged by fire B Inherent vice C War D Normal wear and tear
The correct answer was A. The collapse of a building damaged by fire would be considered a direct loss by fire.
The fine arts floater automatically covers newly acquired objects for how many days? A 90 B 60 C 30 D 10
The correct answer was A. The fine arts floater provides automatic coverage for 90 days for newly acquired items.
All of the following are true of the Claims-Made Form, except: A) A claim occurring less than 60 days prior to the retroactive date would be covered B) The mini tail allows up to 60 days after the end of the policy period for reporting a claim C)For coverage to apply, the injury or damage must have occurred after the retroactive date or during the policy period D)Supplemental payments are automatically included
The correct answer was A. The retroactive date is the earliest day a claim will be covered by the current policy.
Which of the following are true about the Theft Inside The Premises insuring agreement? A It covers loss to safes on the premises B It covers money and securities outside the premises, when in the custody of a messenger C It does not cover damage to the exterior of the premises D It covers money and securities outside the premises, while in the custody of an armored vehicle company
The correct answer was A. Theft Inside the Premises covers money and securities only inside the premises; and it does cover damage to the exterior of the premises. The only correct answer is that it covers loss to safes on the premises.
All of the following are true of a Yacht Policy, except: A Includes both property and liability coverage B A yacht is covered regardless of its location C Includes coverage for fuel spills and commercial towing D Lay up warranties are permitted
The correct answer was B. A yacht is not covered if it is navigated outside the territory.
All of the following statements regarding a warranty are correct, except: A A warranty is either expressed or implied B An implied warranty is stipulated in the contract and is considered a fact C A warranty may relate to past, present, or future D Failure to comply with a warranty breaches a contract
The correct answer was B. An expressed warranty is a statement stipulated in the policy relating to the insured risk that is a fact.
All of the following are true of a Homeowners Policy, except: A Under Coverage F, coverage does not apply to injuries of the named insured or any regular resident of the insured's household B Under Coverage F, payments apply to necessary medical expenses incurred within a maximum of 1 year C Under Coverage F, coverage applies to persons that are on the insured location with permission D Under Coverage F, a covered accident must occur during the policy period
The correct answer was B. Coverage F will pay for expenses incurred up to 3 years after the accident.
What type of funds received from a client must be maintained in a trust account at a bank or depository in California? A Cash B Fiduciary C Foreign D Securities
The correct answer was B. Fiduciary funds received must be maintained in a trust account at a bank or depository in California.
Which of the following is not covered by Supplementary payments under a BOP? A Insurer expenses B First aid C Loss of earnings D Bail bonds
The correct answer was B. First aid expenses are included in Medical Expenses coverage.
Which of the following is true regarding HO-4 and HO-6 forms? A They provide Open Perils coverage on the personal property B They are used to insure the personal property and personal liability of the insured, but do not include the structure itself C The amount of insurance on the dwelling or condominium containing the personal property is 10% of the Coverage C amount of insurance D Losses are paid on a Replacement Cost basis
The correct answer was B. Since the insured under the HO-4 and HO-6 forms does not own the structure, the coverage on the structure is limited.
Supplementary payments cover bail bonds up to what amount? A $1,000 B $2,000 C $250 D $500
The correct answer was B. Supplementary Payments will pay the cost of bail bonds up to $2,000.
Which of the following is not a type of insured contract? A Elevator maintenance B Employment contract C Lease of premises D Sidetrack agreement
The correct answer was B. The 5 types of insured contracts are: lease of premises, sidetrack agreement, easement or license agreement, municipality indemnification, and elevator maintenance agreements.
Which of the following is correct concerning the Special Causes of Loss Form? A Coverage is included for loss of Business Income B Coverage is provided on an open perils basis, except as specifically limited or excluded C The coverage is identical to that of Broad Form D Coverage is included for the peril of Earthquake
The correct answer was B. The coverage contained in the Special Cause of Loss is referred to as Open Perils coverage. It provides coverage for perils beyond the Broad Form Causes of Loss and, in addition, provides some additional coverage extensions.
A direct loss is best described as: A Specific Coverage B Bursting of a water pipe that causes water damage C Loss of rents from a dwelling made uninhabitable because of fire D A Proximate Cause
The correct answer was B. The direct loss to the property is the damage to the property caused by an insured peril.
Which statement is false about a Homeowners Policy? A The personal property replacement cost endorsement may be added to cover the contents on a replacement cost basis B Money is covered up to $500 per occurrence C The scheduled personal property endorsement provides open peril coverage D Theft of silverware is covered up to $2,500
The correct answer was B. The limit on money is $200.
All of the following are true, except: A 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 B 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 C Section III of the Commercial General Liability Coverage Forms describes the limits of insurance D 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
The correct answer was B. The limits stated in the policy apply separately to each consecutive annual period. An aggregate limit is the amount payable for all claims in a single policy period.
In the Dwelling Policy, the fact that earth movement, landslide, mine substance, or mudflow are not covered is stated where? A Other Coverages B General Exclusions C Endorsements D Insuring Agreement
The correct answer was B. The perils of earth movement, landslide, mine substance, and mudflow are perils that, because of their geographic nature, are insured under Earthquake or Flood insurance policies designed specifically for these perils.
When the coverage in a Personal Umbrella Policy is broader than the underlying policy, the umbrella will drop down and cover the entire loss, less a ________. A Deductible B Retention C Copayment D Penalty
The correct answer was B. The retention amount is essentially the same as a deductible and is the amount not paid by the insurer.
Which statement is false regarding the National Flood Insurance Program? A For contents to be covered, they must be inside a fully enclosed building B It provides unlimited coverage for qualified property owners C It will not provide coverage on buildings that are in, on, or over water D It is administered by the Federal Insurance Administration under FEMA
The correct answer was B. There are maximum limits for both the Regular and Emergency programs.
Which statement is false concerning a Homeowners Policy? A The HO-3 covers the contents for the broad form perils B The HO-4 covers the dwelling for the broad form perils C The HO-4 is sometimes called a Tenants Form D The HO-3 covers the dwelling on an open peril basis
The correct answer was B. There is no coverage for the dwelling under an HO-4, only contents coverage.
Which statement is true of Section I of a Homeowners Policy? A It provides property damage coverage on owned golf carts and owned snowmobiles while off premises B It limits the coverage on utility trailers to $2,000 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
The correct answer was C. A limit of $1,500 applies to a boat, its trailer, motor, and equipment when stored in a fully enclosed building.
The Building and Personal Property Coverage Form pays for covered losses on an actual cash value (ACV), except: A A loss to awnings and floor coverings B A loss to appliances, whether attached or not C A loss of $2,500 or less to a building and the coinsurance requirement is met D A loss to outdoor equipment or furniture
The correct answer was C. A loss to the building of $2,500 or less would be paid at replacement cost, all others mentioned are always at actual cash value.
An icy sidewalk is which type of hazard? A A morale hazard B A natural hazard C A physical hazard D A moral hazard
The correct answer was C. A physical hazard is a physical condition that increases the probability of loss, such as an icy sidewalk, which increases the chance of bodily injury.
Comprehensive Coverage under Physical Damage Coverage of the Business Auto Coverage Form, includes all of the following, except: A Glass Breakage B Fire and Lightning C Wear and tear, mechanical breakdown or blowouts D Theft Oops! The correct a
The correct answer was C. Comprehensive Coverage under the Business Auto Coverage Form, as Other than Collision Coverage under the Personal Auto Policy, is a broad open perils coverage that covers damage from perils not excluded.
First Aid Expenses under the Homeowners Policy would cover: A Nonfamily residents of the household while on the premises B Members of the insured's family while on or off the premises C A neighbor who gets injured while helping the insured install a carpet D The Named Insured while on or off the premises
The correct answer was C. First Aid Expenses coverage applies to first aid to others caused by Bodily Injury covered under the policy, but does not pay for first aid to an insured.
Ocean Marine Insurance written at full value may become void if which of the following happens? A The vessel changes course for any reason B The vessel is decommissioned while at sea C If implied warranties are violated D The Inchmaree Clause is violated
The correct answer was C. Implied warranties are not written warranties. They are derived by implication or inference from the nature of the transaction or the relative circumstances of the parties to the contract and are just as binding as express warranties.
A consumer who is insured by a nonadmitted insurer does not have which of the following protections? A A contract that identifies the risk insured and any exclusions from coverage B To have a claim paid in a timely manner once liability has been determined C Coverage for claims of an insolvent insurer D The right to sue in civil court for a breach of contract
The correct answer was C. In most cases, consumers who are insured by nonadmitted insurers do not have the protection offered by the California Insurance Guarantee Association for claims covered by contracts issued by insolvent insurers.
Claims charging misappropriation of advertising ideas or style of doing business, infringement of copyright, title or slogan and written material that violates a person's right to privacy, may be insured under which of the following coverages? A Personal Injury Liability B Property Damage Liability C Advertising Injury Liability D Bodily Injury Liability
The correct answer was C. Like Personal Injury Coverage, Advertising Injury Coverage does not require physical injury to the third party. Rather, it is coverage for harm caused by certain unfair business and advertising practices.
California's Unfair Trade Practices Act does which of the following? A Enables the Commissioner to initiate criminal or civil action against persons who commit violations of the Act B Gives individual consumers the right to private enforcement of the Act C Applies to all licensed persons under the Insurance Code, as well as unlicensed persons who would otherwise be regulated under the Code D Identifies all possible unfair acts or practices
The correct answer was C. Most violations of the Act are civil, not criminal, but the Act does not provide for 'private attorney general' actions by consumers. The Commissioner may take direct administrative action against any person who violates the Act, including persons who may or may not be licensed. The Act provides that the Commissioner may conduct hearings to determine whether unspecified acts are unfair or deceptive.
All of the following are true, except: A Medical payments under a CGL Policy include funeral expenses 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 do not cover injuries resulting from liquor liability
The correct answer was C. Newly acquired organizations are automatically covered for 90 days.
Which cause of loss form is used by the Commercial Crime policy? A Basic B Special C None of the above D Broad
The correct answer was C. No cause of loss form is needed for crime insurance, which insures against the peril of dishonesty only.
Which statement is false? A Insurer investigation expenses are in addition to the limits stated in Coverage E B Obligations of an insurer end when it pays damages equal to the policy limit for any one occurrence C Coverage F limits are subject to a deductible D Total liability coverage resulting from any one occurrence may not exceed the Coverage E limit that is stated in the policy
The correct answer was C. Section II coverages are not subject to a deductible.
All of the following are true of Supplementary Payments under the Commercial General Liability Coverage Forms, except: A They do not reduce the Limit of Liability B Insurer's claim-related expenses are included C Supplementary Payments apply to all Section I coverage D The cost of bail bonds is included up to $250
The correct answer was C. Supplementary Payments only apply to Coverages A and B; not C.
The occurrence form provides for the defense and payment of claims for damages that occur: A During the extended reporting period B After the policy period C During the policy period D Before the policy period
The correct answer was C. The occurrence form provides for the defense and payment of claims for damages that occur during the policy period, regardless of when a claim is made. The occurrence form does not include an extended reporting period.
Under a surety bond, the person whose responsibility it is to fulfill the obligation is the: A Obligee B Insurance company C Principal D Surety
The correct answer was C. The principal's obligations are covered by a surety bond.
In insurance, to determine acceptable risks is the primary responsibility of the: A Auditor B Adjuster C Underwriter D Producer
The correct answer was C. The selection of risk is the primary responsibility of the underwriter, who protects the insurer by selecting risks that fall into the normal range of expected losses.
Which of the following is not part of the definition of an employee?v A Someone the insured has a right to direct B Someone compensated by the insured C Someone in the insured's service D Someone on contract with the insured
The correct answer was D. An employment contract is not a necessary part of the definition.
Which is true regarding dwelling policies? A Coverage B includes the insured's use of a garage as an office B Coverage C includes property of tenants and boarders C Coverage D is considered a direct loss coverage D Property of guests and servants is covered under Coverage C
The correct answer was D. Coverage C extends to property of guests and servants. Property of tenants and boarders is not covered.
An insurer who has an impairment in its paid-in capital is subject to all of the following actions, except: A Liquidation B Conservation C Seizure of property, books and records, and capital accounts D Expulsion
The correct answer was D. Expulsion is not one of the identified actions the Commissioner may take against an insolvent insurer.
Which of the following is true regarding the Musical Instrument Floater? A It provides blanket coverage on musical instruments owned by the insured B It is not available to anyone playing for hire C The insured must report newly acquired items immediately D None of the instruments will be played for remuneration during the policy term
The correct answer was D. If coverage is desired for musical instruments played for hire, the policy must be endorsed for such usage and an additional premium paid.
Which of the following would NOT be excluded from Coverage A of the CGL? A Workers' Compensation B Product recall C Contractual liability D Premises liability
The correct answer was D. Premises liability is one of the four main exposure of the CGL. The other answer choice are each excluded form the policy.
Under the National Flood Insurance Program, all of the following are incorrect, except: A For dwelling structures, coverage includes direct and indirect loss B Coverage is available for aboveground buildings, wharves, piers, and docks C Coverage on trees, shrubs, and plants is limited to $500 for any one tree, shrub, or plant D Property removed to protect it from flood is covered for 45 days at other locations
The correct answer was D. Property removed to protect it from flood is covered at other locations, but only for the peril of flood.
All of the following are true of Protection and Indemnity, except: A It covers injuries caused by negligence B It covers damage to fixed objects C It covers cargo if lost or damaged through negligence D It does not cover injuries to seamen
The correct answer was D. Protection and Indemnity covers injuries to seamen, as well as, the other items.
An oral or written statement made at the time of application or before issuance of the policy that is believed to be true to the best of the knowledge of the applicant is called a(n): A Implied warranty B Disclosure C Absolute warranty D Representation
The correct answer was D. Representations are an oral or written statement made at the time of application or before issuance of the policy that is believed to be true to the best of the knowledge of the applicant.
A BAP covering only Mobile Equipment would include which Symbol? A Symbol 17 B Symbol 18 C Symbol 16 D Symbol 19
The correct answer was D. Symbol 19 covers Mobile Equipment Subject to Compulsory or Financial Responsibility or Other Vehicle Insurance Law. The coverage triggers protection for 'mobile equipment' required to be licensed and registered to be operated on public roadways. This symbol is necessary since mobile equipment is excluded from the definition of 'auto' under the Business Auto Policy.
Under the Basic Dwelling Form, is damage caused by vandalism automatically included? A It is included in the Extended Coverage Perils B It is included as Basic Peril C It is not available in the Basic Dwelling Policy D No, it must be added by endorsement
The correct answer was D. The Basic Dwelling Form is designed to provide coverage at a minimum cost. If the insured desires vandalism coverage, attaching a Vandalism Coverage endorsement and charging a premium for the endorsement provides it.
Common carriers need to purchase Common Carrier Cargo Liability because: A In case of an inherent flaw in property that manifests itself while in the shipper's possession B In case goods in their custody are damaged by an act of God C In case goods improperly packaged by the shipper are damaged in shipment D They can be held legally liable for loss or damage to property in their custody
The correct answer was D. The Common Carrier's legal liability for damage to goods in its custody exists regardless of negligence on the part of the Common Carrier, except for five stipulated causes.
Which of the following covers direct damage caused by bursting of boilers aboard a vessel? A Running Down Clause B Mechanical Failure Clause C Boiler & Machinery Clause D Inchmaree Clause
The correct answer was D. The Inchmaree also covers direct damage caused by breaking of propeller shafts, or loss due to faults or errors in navigation by the crew, and it broadens the hull coverage.
Which of the following is responsible for premium payments, and will receive any return of premium that the insurer pays? A The Insured B The Additional Insured C The Named Insured D The First Named Insured
The correct answer was D. The newer form of property insurance defines a First Named Insured. When there is more than one Named Insured, the insurer deals with the first of the Named Insureds.
The premium amount or method of determination if premium can only be calculated at the end of the policy period for a CPP is located in the: A Consideration part B Supplementary part C Statements of coverage part D Cover Page
The correct answer was D. The statement of premiums or their method of determination is contained in the Declarations.
All of the following are true, except: A Under the supplemental tail, the insured must request coverage within 60 days after the end of the policy B The extended reporting period does not increase the policy limits C Under the mini tail, the insurer must be notified of a claim within 60 days after the end of the policy period D The supplemental tail must be purchased at the beginning of the policy period
The correct answer was D. The supplemental tail can be purchased up to 60 days after the end of the policy term.
What are the territorial limits of the Contractor's Equipment Coverage Floater? A United States, Canada, and Mexico B United States, Puerto Rico, and Mexico C The United States and its Territories, Canada, and Mexico D United States, Canada, and Puerto Rico
The correct answer was D. The usual territory is the United States, Canada, and Puerto Rico, but this territory may be expanded by agreement between the insurer and the insured.
In an insurance transaction, a(n) ______ represents the insurance company. A Broker B Administrator C Solicitor D Agent
The correct answer was D. Under the California Insurance Code, in an insurance transaction, an agent represents the insurance company.
which of the following are true about the theft inside the premises insuring agreement? A) it covers loss to safes on the premises B) It covers money and securities outside the premises. when in the custody of a messenger. C)it does not cover damage to the exterior of the premises. D) it covers money and securities outside the premises, while in the custody of an armored vehicle company.
correct answer is A. theft inside the premises covers money and securities only inside the premises, and it does cover damages to the exterior of the premises. the only correct answer is that it covers loss to safes on the premises.
Homeowners policies: A)Include water damage by flood, sewer backup and underground seepage B)Cover theft of furs and jewelry up to $1,500 C)Cover theft of guns up to $3,000 D)Cover money up to $500
the answer is B: The limit for loss by theft of jewelry and furs is $1,500.
Under the Workers' Compensation Policy, all of the following are true, except: A ) An accident occurring after the policy period expiration date would be covered B ) Coverage applies to bodily injury due to disease, as well as to injury due to accident C) The bodily injury must be caused by the conditions of employment D) The policy covers litigation costs taxed against the insured
the correct answer is A The accident causing the bodily injury must occur during the policy period.
