Term
1. Which of the following would be known as the process whereby an insurer determines appropriate charges for its policies?
A. Premium factoring
B. Rate-making
C. Underwriting
D. Marketing |
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Definition
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Term
2. All of the following would be considered benefits of insurance, except:
A. Reduction of the financial uncertainty of the insured
B. Payment for the cost of covered losses
C. They can be a source of investment funds
D. Retention of the loss by the insured |
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Definition
| D. Retention of the loss by the insured |
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Term
3. The amount paid for damaged property which is equal to the price for which it could have been sold is the:
A. Actual cash value
B. Stated amount
C. Market value
D. Replacement amount |
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Definition
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Term
4. Under an unendorsed commercial property coverage form with no optional coverage; on what basis are buildings valued?
A. Guaranteed replacement cost
B. Actual cash value
C. Replacement cost
D. Functional replacement cost |
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Definition
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Term
5. The named insured for a commercial package policy is "Jill Koslin and Edward Koslin DBA Coastline Photo Shop." Under the terms of the common policy conditions of the commercial package policy, who is responsible for the premium payments?
A. Jill
B. Edward
C. Coastline Photo Shop
D. Both Jill and Edward have equal responsibility |
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Definition
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Term
6. If an insured discovers an occurrence 75 days after the expiration of a claim-made commercial liability policy, what
must the insured have in order for the loss to be covered?
A. Nothing; he is covered as long as the loss occurred during the policy period
B. Supplemental extended reporting period endorsement
C. An umbrella policy
D. The loss will not be covered since it was not reported during the policy period |
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Definition
| B. Supplemental extended reporting period endorsement |
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Term
7. All of the following meet the definition of the insured under a HO-3 policy, except:
A. A 70-year-old grandparent residing in an adult care facility
B. An 89-year-old uncle residing in the household
C. An 18-year-old foster child residing with the insured
D. A 20-year-old son enrolled as a full-time student in another state |
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Definition
| A. A 70-year-old grandparent residing in an adult care facility |
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Term
8. The loss under a watercraft endorsement is covered if it arises out of:
A. The use of the watercraft for a business party
B. The use of the watercraft to carry property for a fee
C. The use of a sailboat in a racing competition
D. Rental of the watercraft to others |
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Definition
| A. The use of the watercraft for a business party |
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Term
9. Actual Cash Value is defined as the:
A. The amount to replace damaged property less depreciation
B. The value of the damaged property on the open market
C. The amount agreed upon by the insured and the insurer at policy inception
D. The amount to replace damaged property without a deduction for depreciation |
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Definition
| A. The amount to replace damaged property less depreciation |
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Term
10. All of the following vehicles are eligible for coverage under a personal auto policy, except:
A. An SUV owned by a 25 year old individual
B. A pickup truck leased to a husband and wife
C. A private passenger auto owned by a partnership
D. A conversion van leased to a 19 year old individual |
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Definition
| C. A private passenger auto owned by a partnership |
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Term
11. Exclusive agents:
A. Make all sales by telephone
B. Specialize exclusively in one class of business
C. Generally represent only one insurer
D. Have exclusive ownership rights to their renewals |
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Definition
| C. Generally represent only one insurer |
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Term
12. A common formula that is used to establish actual cash value is:
A. ACV = stated value — agreed value
B. ACV = stated value - depreciation
C. ACV = market value — overhead
D. ACV = replacement cost – depreciation |
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Definition
| D. ACV = replacement cost – depreciation |
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Term
13. Which of the following coverage’s is a property insurance coverage
?
A. Medical payments
B. Personal injury
C. Property damage liability
D. Other than collision |
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Definition
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Term
14. Professionals are exposed to liability for failure to properly perform their professional duties. Which of the
following would be the least likely prospect for a professional liability policy?
A. Dentist
B. Pro basketball player
C. Attorney
D. Architect |
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Definition
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Term
15. 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 the unique needs of the insured requires specialized attention
D. No, because each company wants the ability to establish their own pricing |
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Definition
| A. Yes, standardized umbrella policies are now available |
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Term
16. Which of the following is listed on a commercial general liability declaration page as an aggregate limit?
A. Property damage
B. Products/completed operations limit
C. Bodily injury limit
D. Pollution liability limit |
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Definition
| B. Products/completed operations limit |
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Term
17. All of the following are characteristics of "an ideally insurable loss exposure," except:
A. Losses that are accidental
B. Losses that are definite and measurable
C. Large number of similar exposure units
D. Losses that are catastrophic |
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Definition
| D. Losses that are catastrophic |
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Term
18. The insurance code definition of an "insurance broker" is:
A. Someone paid to transact insurance on behalf of another person, but not on behalf of the insurer
B. Someone appointed by a fire & casualty broker-agent (employer), receiving commissions from the employer,
transacting insurance with the insurers the employer represents and acting on behalf of the clients
C. Any agent that writes more difficult-to-place business with the specialty insurers who have appointed him
D. Someone appointed to transact insurance with admitted insurers and receives commissions from them, but
acts on behalf of the clients |
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Definition
| A. Someone paid to transact insurance on behalf of another person, but not on behalf of the insurer |
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Term
19. California has lower financial responsibility limits than most other states. If Randy, a California personal auto
policy insured, carrying minimum limits on coverage, has an accident in a state that requires higher limits, then:
A. The policy will automatically provide the higher required limits — at no extra charge.
B. The unendorsed policy does not cover the out-of-state operation of the automobile
C. He is breaking the law of that state unless he has added the "other-state" endorsement
D. The policy will provide the higher limits retroactively, but only when he has paid the difference in premiums. |
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Definition
| A. The policy will automatically provide the higher required limits — at no extra charge. |
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Term
20. What is a self-insured retention under an umbrella policy?
A. A deductible applicable to losses excluded by underlying coverage and covered by the umbrella
B. The limits of liability of the umbrella policy
C. The amount of the underlying limits of liability
D. A deductible applicable to all covered losses |
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Definition
| A. A deductible applicable to losses excluded by underlying coverage and covered by the umbrella |
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Term
21. One example of a loss covered by business income insurance is a loss:
A. Of profits due to a suspension of business operations because of a premises fire
B. Represented by the difference between the actual cash value and present replacement cost
C. Of perishables due to a delay in transporting
D. Due to depreciation of parts of matched sets |
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Definition
| A. Of profits due to a suspension of business operations because of a premises fire |
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Term
22. Your insured has a ten year lease on his store. He has spent $50,000 on shelving, wall-to-wall carpeting,
partitions, and lighting, etc., all of which are part of the building and cannot be legally removed. He is concerned that
a fire might damage these changes that he has made and wants to make sure he is protected for their value. He
should purchase:
A. Coverage for improvements and betterments
B. Accounts receivable coverage
C. Coverage for legal liability
D. $50,000 on the building |
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Definition
| A. Coverage for improvements and betterments |
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Term
23. What clause is commonly used to require insured's to purchase insurance close to the value of the property?
A. Deductible clause
B. Co-insurance clause
C. Valuation clause
D. Reinsurance clause |
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Definition
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Term
24. In the state of California a rate will not remain in effect if it is considered to be any of the following, except:
A. Excessive
B. Unfairly discriminatory
C. Inadequate
D. Impartial |
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Definition
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Term
25. Which of the following insurance professionals would be employed to aid an insurance broker?
A. Managing general agent
B. Underwriter
C. Insurance solicitor
D. Insurance adjustor |
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Definition
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Term
26. If a building is damaged during an attempted burglary where money was stolen from a vault, which of the
following coverage would cover the loss of the money as well as the damage to the building?
A. Inside the premises — robbery or safe burglary of other property coverage
B. Inside the premises — theft of money and securities
C. Business personal property form
D. Outside the premises — theft of money and securities |
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Definition
| B. Inside the premises — theft of money and securities |
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Term
27. Which is not a part of transacting insurance?
A. Establishing a list of clients
B. Solicitation
C. Negotiation
D. Execution of a contract |
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Definition
| A. Establishing a list of clients |
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Term
28. A pickup or van with a gross vehicle weight of 9,500 lbs. may be eligible for a personal policy if it was used in the
business of:
A. Floral delivery
B. Claims adjusting
C. Farming or ranching
D. Hauling property for a fee |
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Definition
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Term
29. Thomas Fry has insured a building under his commercial policy. The building was vacant for 75 consecutive days
before a loss. The policy will not pay for the loss if caused by the perils of:
A. Building glass breakage and vandalism
B. Riot
C. Fire
D. Windstorm or hail |
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Definition
| A. Building glass breakage and vandalism |
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Term
30. A car is insured using a personal auto policy. The car is damaged by hail. The loss is:
A. Covered as other than collision loss
B. Excluded because of the uninsurable catastrophic potential damage by hail
C. Covered as a collision loss
D. Covered only if the car was in a garage or shelter at the time of the hail |
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Definition
| A. Covered as other than collision loss |
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Term
31. Any person who makes a loan of money using real property as security:
A. Shall be allowed to make available the information contained in a fire or casualty insurance policy for the
purpose of soliciting either fire or casualty insurance only
B. Shall not make available the information contained in a borrower's fire or casualty policy if the borrower has
filed a statement with the lender that they do not want the lender to disclose this information
C. There are no current laws regarding lenders disclosing borrower's information in the state of California
D. Can give out any borrower information to a solicitor if the lender discloses its practices to the borrower at the
time the loan is made. |
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Definition
| B. Shall not make available the information contained in a borrower's fire or casualty policy if the borrower has |
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Term
32. The process whereby a mutual insurer becomes a stock insurer is known as:
A. Stock split
B. Reorganization
C. Stock buy-out
D. Demutualization |
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Definition
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Term
33. In an unendorsed claims-made general liability policy, how long does an insured have to report a claim which
occurred during the policy period?
A. Indefinitely
B. 60 days
C. 30 days
D. 6 months |
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Definition
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Term
34. Under a standard (ISO) homeowner's HO-3, real property and personal property are covered for the perils of:
A. Broad form named perils — coverage applies to personal property. There is no coverage for real property since
this is a tenant's form
B. "All risks" — coverage applies to real property, broad form named perils coverage applies to personal
property.
C. "All risks" — coverage applies to both
D. Broad form named perils — coverage applies to both |
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Definition
B. "All risks" — coverage applies to real property, broad form named perils coverage applies to personal
property. |
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Term
35. To determine the actual cash value of a commercial building for coinsurance purposes, use:
A. Fair market value
B. The actual cash cost of replacing the building
C. The price the client paid for the property, less the value of the land
D. The county assessor's office figures |
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Definition
| B. The actual cash cost of replacing the building |
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Term
36. Which of the following types of loss would result in a claim for monetary damages due to injury to another or
damage to another's property?
A. Real property loss
B. Personal property loss
C. Liability loss
D. Physical loss |
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Definition
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Term
37. Jevon has a personal auto policy with $250 deductible collision coverage and $100 deductible other than collision
coverage. He runs a stop sign and hits another car. There is $1,300 worth of damage to his (the insured's) car. How
much would the insurer pay for the damage to the Jevon's car?
A. $1,050
B. $1,200
C. $950
D. Nothing, since it was Jevon's fault |
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Definition
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Term
38. Which of the following situations suggest the need for an attachment of the additional residence rented to others
endorsement to an insured's homeowner's policy? The homeowner's insured also owns a two-family dwelling and
rents it out to two families. The insured:
A. Is concerned that the person she is renting the dwelling to will move out without paying the rent.
B. Wants to have medical payments coverage to pay for injuries to renters that require medical attention
C. Is concerned that she might be liable to the renter for injuries that might occur in connection with the rental
D. Wants protection of $50,000 for her own personal property in the furnished rental dwelling. |
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Definition
| C. Is concerned that she might be liable to the renter for injuries that might occur in connection with the rental |
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Term
39. If a named insured is not the owner of the building, improvements and betterments are covered under the:
A. Business personal property
B. Building
C. Agreed value
D. Newly constructed property |
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Definition
| A. Business personal property |
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Term
40. Under a value reporting form, if the insured has made no reports as required, what is the most that will be paid in
the event of a loss?
A. 80% of the limit
B. 75% of the limit
C. 90% of the limit
D. 100% of the limit |
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Definition
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Term
41. It is a violation of the CA Insurance Code to act as a producer for a non-admitted carrier unless:
A. The producer is an insurance solicitor
B. It is always a violation, no matter what type of producer
C. The producer is duly licensed in at least two states
D. The producer is a surplus lines broker |
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Definition
| D. The producer is a surplus lines broker |
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Term
42. What additional coverage does a DP-2 have compared to a DP-1?
A. Debris removal
B. Improvements, alterations and additions
C. Personal liability
D. Additional living expenses |
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Definition
| D. Additional living expenses |
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Term
43. Which of the following may be covered under the physical damage insuring agreement of a Personal Auto Policy?
A. Damage to the vehicle caused by an engine failure
B. Loss of a CD player installed in the vehicle dashboard
C. Theft of a CB radio
D. All are covered |
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Definition
| A. Damage to the vehicle caused by an engine failure |
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Term
44. A representation as to the future is considered to which of the following?
A. Liability
B. Provision
C. Promise
D. Description |
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Definition
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Term
45. The commercial general liability (CGL) declarations page displays many different limits of insurance that apply to
a policy. One limit shown is the insured's general aggregate limit. Which of the following is a correct statement about
the general aggregate limit? The general aggregate limit:
A. Is the total of all the other sub-limits shown on the declaration page
B. Does not include the products — completed operations aggregate limit
C. Is the total limit for any occurrence
D. Is the total limit for any one accident |
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Definition
| B. Does not include the products — completed operations aggregate limit |
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Term
46. Under a personal auto policy, who qualifies as an insured while using a covered auto?
A. Only the named insured and resident relatives
B. Any person
C. Only the named insured, resident relatives, and other entities responsible for the use of the auto
D. Only the named insured, resident relatives, and passengers |
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Definition
| C. Only the named insured, resident relatives, and other entities responsible for the use of the auto |
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Term
47. The retro-active date of a claims-made professional liability policy is always:
A. The date after which no more claims may be made under the policy
B. The effective date for the current policy term
C. The earliest date an event/loss may occur and still be eligible for recovery
D. The date that the claims-made policy expires |
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Definition
| C. The earliest date an event/loss may occur and still be eligible for recovery |
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Term
48. Fred is a named insured on a commercial property policy insuring a commercial building. Fred burns the building
down and is convicted of arson. Fred's commercial property policy conditions state that:
A. The mortgagee of the insured property can recover on this loss
B. His partner, also an insured, has the right of recovery
C. Fred's spouse can recover on this loss
D. None of the above have the right of recovery |
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Definition
| A. The mortgagee of the insured property can recover on this loss |
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Term
49. Under the financial responsibility law requirements in California, what is the minimum limit for several people
injured in one accident?
A. $15,000
B. $25,000
C. $30,000
D. $10,000 |
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Definition
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Term
50. A home is damaged minutes after an earthquake, first by fire, and then by fuel pipes bursting and causing an
explosion. Under a 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 due to the fact that HO-3 covers only named perils
C. The policy covers all of the damage since explosion is an insured peril
D. There is no coverage unless the insured has made an earthquake endorsement as part of his policy |
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Definition
| A. There is coverage, but only for the damage caused by the ensuing fire and explosion |
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Term
51. The possibility of financial loss resulting from the ownership of property is known as:
A. Indemnity
B. Valuation
C. Legal liability
D. Insurable interest |
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Definition
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Term
52. The state laws that regulate insurer practices regarding underwriting, sales, rate-making, and claims handling are
called:
A. Ethical standards surveillance
B. Standard regulation
C. Market conduct regulation
D. Insurer policing |
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Definition
| C. Market conduct regulation |
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Term
53. What is the primary reason for co-insurance clauses in property policies?
A. To establish a method for evaluating the value of the property
B. To require the insured to always pay a portion of every loss
C. To create a means of sharing the risk with another company
D. To encourage insured’s to purchase coverage near the value of the property |
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Definition
| D. To encourage insured’s to purchase coverage near the value of the property |
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Term
54. The business income coverage form covers the actual loss of business income sustained due to necessary
suspension of operations. The loss of income must:
A. Be caused by one of the perils covered by the basic form regardless of which cause of loss form is attached
B. Must result from damage to the insured premises or personal property. The cause of the loss is not limited
to "insured perils."
C. Must result from damage to the insured premises. The cause of loss is not limited to "insured perils."
D. Be caused by an insured peril, otherwise there is no coverage |
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Definition
B. Must result from damage to the insured premises or personal property. The cause of the loss is not limited
to "insured perils. |
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Term
55. A commercial property causes of loss forms do not cover any losses caused by:
A. Lightning
B. Smoke damage from industrial operations
C. Explosions
D. Loss by removal from premises when insured perils endanger covered property |
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Definition
| B. Smoke damage from industrial operations |
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Term
56. Which type of exposure can best be defined as a condition or situation for any exposure or financial loss is
presented to an individual or family by such causes as injury, disability, death, or sickness?
A. Personal property loss exposure
B. Personal loss exposure
C. Liability loss exposure
D. Personnel loss exposure |
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Definition
| B. Personal loss exposure |
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Term
57. An apartment house is worth $500,000. The owner insures it for $300,000; the policy has an 80% co-insurance
clause. There is a $200,000 loss. The insurer will pay:
A. $240,000
B. Nothing
C. $150,000
D. $120,000 |
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Definition
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Term
58. Which of the following is best defined as "the taking of property from a person by someone who has caused or
who has threatened to cause that person bodily harm?"
A. Burglary
B. Theft
C. Robbery
D. Extortion |
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Definition
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Term
59. An insured's duties after a loss are described in the homeowner's section I conditions. Which of the following is
NOT a correct statement about these duties? The insured must:
A. Submit to questions under oath while not in the presence of any other insured
B. Make all necessary repairs to protect the property from further damage. The expense is paid by the insured.
C. Prepare an inventory of the damaged personal property showing the quantity, description, ACV, and the
amount of loss.
D. Notify the police if it is a theft loss |
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Definition
| B. Make all necessary repairs to protect the property from further damage. The expense is paid by the insured. |
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Term
60. Which of the following is not an uninsured motor vehicle as defined by personal auto policies uninsured motorist
coverage?
A. A vehicle not covered by an automobile liability policy or bond
B. A hit-and-run vehicle whose owner or operator cannot be identified
C. A vehicle which is covered by an automobile liability policy or bond, but the insuring or bonding company is
insolvent
D. A vehicle owned by a state agency which self-insures its autos |
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Definition
| D. A vehicle owned by a state agency which self-insures its autos |
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Term
61. What does a supplemental extended reporting period endorsement provide?
A. Extends the filing reporting period indefinitely
B. Extension of claims reporting period to 120 days
C. Extends claims coverage to 120 days
D. Extends expiration of policy indefinitely |
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Definition
| A. Extends the filing reporting period indefinitely |
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Term
62. How much coverage, if any, is available under HO-3 for landlord's furnishings?
A. $2,000
B. $1,000
C. No coverage available
D. $2,500 |
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Definition
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Term
63. In a claims-made commercial general liability policy, which of the following begins when the policy period ends,
and is activated when the policy is cancelled or not renewed?
A. Policy period
B. Basic extended reporting period
C. Supplemental extended reporting period
D. Retroactive date |
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Definition
| B. Basic extended reporting period |
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Term
64. What is one of the main reasons the federal government insurance programs exist?
A. Strict federal regulations discourage private insurers from writing certain types of business
B. The large amount of resources needed for some catastrophic losses
C. Companies lack of authorization to write business in some states
D. Too much competition in some markets discourages new insurers from writing some types of business |
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Definition
| B. The large amount of resources needed for some catastrophic losses |
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Term
65. The named insured on a commercial insurance policy is "Sam Stone and Dan Sullivan, DBA S&S Bar and Grill.” If
the insurer cancels the policy, they are required to mail or deliver written notice to:
A. Only Dan Sullivan
B. Only Sam Stone
C. Sam Stone and Dan Sullivan, DBA S&S Bar and Grill
D. Any of the above are OK |
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Definition
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Term
66. What is one peril included in a DP-2 that is not included in a DP-1?
A. Explosion
B. Falling objects
C. Lightning
D. Fire |
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Definition
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Term
67. One of the major advantages to insured's of a commercial lines package program over purchasing coverage on a
mono-line basis is:
A. The package policy has fewer exclusions
B. The convenience of having all coverage in one policy
C. The package policies are written on an occurrence basis
D. The broader coverage offered by the package policies |
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Definition
| B. The convenience of having all coverage in one policy |
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Term
68. Under the commercial property coverage program, which causes of loss form(s) include coverage for the peril of
windstorm?
A. Broad and special only
B. Special only
C. Broad only
D. Basic, broad, and special |
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Definition
| D. Basic, broad, and special |
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Term
69. What endorsement can be used to insure a motorcycle under a personal auto policy?
A. Named non-owner coverage endorsement
B. Miscellaneous type vehicle endorsement
C. No endorsement is available to broaden a PAP to cover motorcycles
D. No endorsement is needed; the unendorsed PAP covers motorcycles |
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Definition
| B. Miscellaneous type vehicle endorsement |
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Term
70. In a commercial property, the insurance claim is denied because of the insured's actions. The mortgage holder
will in most cases:
A. Still have the right to receive the full amount of the loss payments
B. Not receive any compensation for the loss
C. Receive a partial payment for the loss
D. Receive compensation if the mortgage holder endorsement has been added and the additional premium is
paid. |
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Definition
| A. Still have the right to receive the full amount of the loss payments |
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Term
71. Which property is excluded under an HO-3 policy?
A. Jewelry
B. Guard dog
C. Firearms
D. Securities |
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Definition
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Term
72. Which of the following coverages is best suited to insure maps, drawings, abstracts and mortgages?
A. Accounts receivable
B. Valuable papers and records
C. Business personal property
D. Scheduled property |
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Definition
| B. Valuable papers and records |
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Term
73. A client purchased a commercial policy on an owned building. The policy contains a coinsurance provision. The
co-insurance clause:
A. Applies to all losses regardless of size
B. Makes carrying insurance of a percentage of the building value advisable to avoid a possible penalty
C. Requires the insured to pay part of every loss (a co-payment)
D. Discourages over-insuring properties |
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Definition
| B. Makes carrying insurance of a percentage of the building value advisable to avoid a possible penalty |
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Term
74. If a property owner is insured under a building and personal property insurance form, when is the property
considered vacant?
A. When the insured operations are halted due to a strike
B. When the structure is being renovated as a result of a fire
C. When less than 31% of the building space is rented to others or in use by the insured
D. When there is insufficient business personal property present to conduct customary operations |
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Definition
| C. When less than 31% of the building space is rented to others or in use by the insured |
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Term
75. An applicant would like to buy a personal umbrella policy:
A. There is no requirement for underlying policies
B. Your insurer may require he maintain underlying liability coverage by carrying automobile liability coverage.
Underlying personal liability coverage is not required
C. Your insurer may require that he maintain underlying liability coverage by carrying auto and personal
liability coverage.
D. Your insurer may require that he maintain personal liability coverage. Underlying auto liability coverage is not
required. |
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Definition
C. Your insurer may require that he maintain underlying liability coverage by carrying auto and personal
liability coverage. |
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Term
76. Which of the following is not a type of property commonly insured by using a commercial package policy inland
marine coverage part:
A. Automobiles while kept for the owner in a commercial parking garage
B. Neon signs
C. Accounts receivable from customers
D. Jewelry and watches |
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Definition
| A. Automobiles while kept for the owner in a commercial parking garage |
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Term
77. 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, but does have a maximum dollar limit
C. Does not have a time limit nor a dollar limit
D. Has both a maximum dollar limit and a maximum time limit |
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Definition
| C. Does not have a time limit nor a dollar limit |
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Term
78. Which of the following losses would be excluded by the ordinance or law exclusion?
A. Confiscation of property as a result of criminal activity
B. Special assessments levied by the taxing authorities
C. Fines levied by OSHA
D. Additional costs necessary to make a restroom ADA compliant |
|
Definition
| D. Additional costs necessary to make a restroom ADA compliant |
|
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Term
79. A written provision that modifies the provisions of the original contract is known as:
A. An insuring agreement
B. An endorsement
C. A condition
D. A miscellaneous provision |
|
Definition
|
|
Term
80. Who is considered the first party to an insurance contract?
A The agent
B. The insured
C. The claimant
D. The insurance company |
|
Definition
|
|
Term
81. The water damage exclusion in the causes of loss — special form applies to all of the following, except:
A. Tidal waves
B. Sewer backup
C. Flood
D. Plumbing system leakage |
|
Definition
| D. Plumbing system leakage |
|
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Term
82. All of the following are listed on a commercial liability declarations page, except:
A. Rented to you limit
B. Personal and advertising injury limit
C. Medical expense limit
D. Pollution liability limit |
|
Definition
| D. Pollution liability limit |
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Term
83. JAE Computer Company is being sued by Stack Computer Company for an advertising campaign Stack Computer
feels is false and misleading. JAE Computer Company would find coverage for losses which could result from this
lawsuit under which category of insurance?
A. Allied lines insurance
B. Commercial general liability
C. Professional liability
D. Crime insurance |
|
Definition
| B. Commercial general liability |
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Term
84. The Mexico coverage endorsement may be attached to personal auto policies, and...
A. Provides excess liability coverage for accidents in Mexico within 25 miles of the U.S. border
B. Must be attached to U.S. policies for citizens of Mexico
C. Will provide primary liability coverage for insureds driving anywhere in Mexico
D. Must be added to the policy of an insured who lives within 25 miles of the Mexican border |
|
Definition
| A. Provides excess liability coverage for accidents in Mexico within 25 miles of the U.S. border |
|
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Term
85. What additional coverage is provided in a DP-3 that is not provided in a DP-1?
A. Collapse
B. Fire Department service charge
C. Worldwide coverage
D. Other structures |
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Definition
|
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Term
86. What is required of a broker-agent before appointing an insurance solicitor?
A. Must be a domestic insurer
B. Must hold a notice of appointment
C. Must hold a permanent license
D. Must hold a certificate of insurance |
|
Definition
| C. Must hold a permanent license |
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Term
87. What type of policy protects against loss from any type of peril except those that are specifically excluded?
A. Specified peril
B. All-risk or open peril
C. Named peril
D. Stated value |
|
Definition
| B. All-risk or open peril |
|
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Term
88. Insurers may purchase reinsurance for a variety of reasons. Which of the following is not a good example of the
use of reinsurance? Insurer purchases reinsurance:
A. Only on the below average business submitted to them, keeping the good business for themselves
B. To avoid capacity problems by reducing the amount of unearned premium
C. To more safely insure an exceptionally large account
D. For protection from catastrophe exposures such as hurricanes or earthquakes |
|
Definition
| A. Only on the below average business submitted to them, keeping the good business for themselves |
|
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Term
89. Under the liability portion of an unendorsed personal auto policy, what coverage is available if the named insured
is operating a company car?
A. The financial responsibility limits
B. The broadest coverage of any autos listed in the declarations
C. The coverage primarily operated by the named insured
D. The policy excludes this usage |
|
Definition
| D. The policy excludes this usage |
|
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Term
90. One difference between a robbery peril and a burglary peril is that the burglary peril:
A. Requires physical signs of forcible entry or exit
B. Requires taking property directly from a person
C. May occur only when the premises are open for business
D. May involve force or violence |
|
Definition
| A. Requires physical signs of forcible entry or exit |
|
|
Term
91. Coverages A and/or B of the commercial general liability (CGL) contract contain coverage for:
A. Professional liability
B. Advertising injury
C. Losses arising from the ownership, maintenance or use of automobiles
D. Workers Compensation |
|
Definition
|
|
Term
92. What must a licensee do in order to surrender for cancellation a license in their possession?
A. Give the Commissioner at least 60 days written notice prior to the effective date of termination
B. Destroy the original, and advise the State of California
C. Notify any insurer the agent has transacted business with in writing at least 60 days prior to the effective date
of termination
D. Deliver the document itself to the Commissioner |
|
Definition
| D. Deliver the document itself to the Commissioner |
|
|
Term
93. If an insurer pays an insured $25,000 in lost wages, $45,000 for physicians visits and hospital costs, and $15,000
for physical therapy treatments, and later finds out that the claim was fraudulent, the insured may be fined as much
as:
A. $25,000
B. $60,000
C. $85,000
D. $170,000 |
|
Definition
|
|
Term
94. A company that negotiates and binds ceding reinsurance on behalf of an insurer is considered:
A. A third-party administrator
B. An insurance solicitor
C. A managing general agent
D. An insurance specialist |
|
Definition
| C. A managing general agent |
|
|
Term
95. When may a representation be withdrawn?
A. At any time as long as both parties agree
B. Only before the insurance is in effect
C. It can never be withdrawn
D. Only after the policy is in effect |
|
Definition
| B. Only before the insurance is in effect |
|
|
Term
96. Which of the following does not have a standard coverage form?
A. Claims made commercial liability
B. Homeowner's policy
C. Umbrella policy
D. Professional liability |
|
Definition
|
|
Term
97. What is the type of loss exposure that would include land and property attached to it?
A. Attachable property loss exposure
B. Real property loss exposure
C. Liability loss exposure
D. Personal property loss exposure |
|
Definition
| C. Liability loss exposure |
|
|
Term
98. All of the following causes of loss are covered by equipment breakdown insurance, except:
A. Steam boiler explosion
B. Electrical breakdown
C. Mechanical failure caused by centrifugal force
D. Inherent defect |
|
Definition
|
|
Term
99. All of the following expenses are covered in addition to the limits of liability under Coverage A of a personal auto policy, except:
A. Cost of bail bonds relating to a covered accident
B. Premium for appeal bonds
C. Pre-judgment interest
D. Loss of earnings to attend trial at the company's request |
|
Definition
|
|
Term
100. A policy may not be transferred to another without:
A. Oral consent of the insured
B. Written consent of the insured
C. Oral consent of the insurer
D. Written consent of the insurer |
|
Definition
| D. Written consent of the insurer |
|
|
Term
101. RW and Associates is an agency which represents BLG Insurance Corporation. RW and Associates may leave
the name BLG Insurance Corporation in its advertisements by clearly stating the relationship between the two businesses in any of the following ways, except:
A. RW and Associates representing BLG Insurance Corporation
B. RW and Associates underwriting for BLG Insurance Corporation
C. RW and Associates placing business through BLG Insurance Corporation
D. RW and Associates using the services of BLG Insurance Corporation |
|
Definition
| B. RW and Associates underwriting for BLG Insurance Corporation |
|
|
Term
102. What do we call the process whereby insurers decide which customers to insure, and what coverage to offer?
A. Adverse selection
B. Rate making
C. Marketing
D. Underwriting |
|
Definition
|
|
Term
103. A wrongful act other than a crime or breach of contract is a:
A. Tort
B. Proximate cause
C. Liability
D. Hazard |
|
Definition
|
|
Term
104. What is revenue minus expense?
A. Net loss
B. Net income
C. Gross income
D. Net profit |
|
Definition
|
|
Term
105. If an insured timely requests coverage for a newly acquired auto under an existing personal auto policy, what coverage is provided before the request is made?
A. Broadest coverage for any vehicle shown on the declarations
B. Statutory minimum required coverages
C. Average coverage for all vehicles shown on the declarations
D. Lowest coverage for any vehicle shown on the declarations |
|
Definition
| A. Broadest coverage for any vehicle shown on the declarations |
|
|
Term
106. Under tort law, a person can face a claim for legal liability on the basis of all of the following, except:
A. Absolute liability
B. Intentional torts
C. Negligence
D. Breach of contract |
|
Definition
|
|
Term
107. When must insurance records for insurance agents and insurance brokers be made available to the insurance
commissioner?
A. One month after policy issuance
B. At all times
C. Within 30 days of a written request by the Commissioner
D. Annually, and submitted with the proper paperwork |
|
Definition
|
|
Term
108. An insurer's loss reserve for a claim is:
A. Equal to claims paid divided by earned premium reserve, not including loss adjustment expense
B. The maximum amount the insurer will have to pay to close the claim
C. The exact amount the insurer will have to pay to close the claim
D. An estimate of the amount that the insurer will pay |
|
Definition
| D. An estimate of the amount that the insurer will pay |
|
|
Term
109. Diamond Toy Company is being sued for a death caused by a child choking on a piece from one of its
transformers. Where would Diamond find coverage for the defense of this law suit?
A. Crime insurance
B. Professional liability insurance
C. Commercial General Liability Insurance
D. Life insurance |
|
Definition
| C. Commercial General Liability Insurance |
|
|
Term
110. Where do most states require insurers to file policy forms?
A. The Insurance Services Office
B. The Independent Insurance Association of America
C. The Federal Government Insurance Regulatory Committee
D. The Insurance Department |
|
Definition
| D. The Insurance Department |
|
|
Term
111. All of the following acts or practices are prohibited by the Unfair Practices Act, except:
A. Advising claimants not to engage attorneys
B. An agent of an insurance association advising members not to place business with an insurer that is introducing
a product sold directly to the public
C. Advising clients that an insurer is protected from insolvency by the California Insurance Guarantee Association
D. Charging a different rate for males and females for life or annuity policies based on data in mortality tables
that is segregated by sex |
|
Definition
D. Charging a different rate for males and females for life or annuity policies based on data in mortality tables
that is segregated by sex |
|
|
Term
112. Where would an insured find insurance coverage to protect against damage to a shipment of televisions
shipped on a semi-truck for the insured's business?
A. Inland marine
B. Commercial general liability
C. Commercial auto liability
D. Fire and allied lines |
|
Definition
|
|
Term
113. Your commercial auto policy insured needs coverage for his liability arising out of his employees using their own cars in his business. The best way to be sure your insured is covered is to:
A. Require all employees have your insured named as an additional insured on their personal auto policies
B. Include employers non-ownership liability coverage in the employer's commercial auto policy
C. Instruct all employees not to use their cars in your insured's business
D. Include uninsured motorist and also hired car coverage in your insured's commercial policy |
|
Definition
| B. Include employers non-ownership liability coverage in the employer's commercial auto policy |
|
|
Term
114. The amount to replace property with like property of the same quality and construction is the:
A. Replacement cost
B. Actual cash value
C. Market value
D. Stated value |
|
Definition
|
|
Term
115. Which of the following would best be described as using forcible entry to steal property when a business is closed?
A. Extortion
B. Theft
C. Robbery
D. Burglary |
|
Definition
|
|
Term
116. Which of the following lines of insurance would cover the loss of net income a business incurs
due to a fire?
A. Fire and allied lines insurance
B. Commercial general liability insurance
C. Business income insurance
D. Commercial property insurance |
|
Definition
| C. Business income insurance |
|
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Term
117. An item’s replacement cost is defined as the:
A. Amount agreed between the insured and insurer at policy inception
B. Amount equal to the value of damaged property on the market
C. Amount to replace the damaged property, less depreciation
D. Amount to replace the damaged property without a deduction for depreciation |
|
Definition
| D. Amount to replace the damaged property without a deduction for depreciation |
|
|
Term
118. If an employee embezzles $10,000 from an insurance company, which type of insurance would the employer need to be covered for this type of loss:
A. General liability insurance
B. Business income insurance
C. Allied lines insurance
D. Crime insurance |
|
Definition
|
|
Term
119. If an insured rents a vehicle while on two week vacation in the U.S., what coverage is provided under the personal auto policy?
A. Liability coverage only
B. No coverage available because the vehicle is not a "covered auto."
C. All coverage is in force in the personal auto policy
D. Liability, medical and uninsured motorist coverage only |
|
Definition
| C. All coverage is in force in the personal auto policy |
|
|
Term
120. In a commercial property policy, the company providing the insurance is referred to as:
A. A surety
B. "You"
C. NIRR
D. "We" |
|
Definition
|
|
Term
121. Which inland marine floater is most similar to the scheduled personal property endorsement on a homeowner's policy?
A. Personal insurance floater
B. Personal effects floater
C. Personal property floater
D. Personal articles floater |
|
Definition
| D. Personal articles floater |
|
|
Term
122. Liability coverage under boat-owners policies typically includes:
A. Passenger liability
B. Flotilla liability
C. Contractual liability
D. Operations liability |
|
Definition
|
|
Term
123. Under the common policy conditions, who is authorized to make changes to a commercial policy?
A. The producer
B. The first named insured (with insurer's consent)
C. Any insured named on the policy
D. The insurance company |
|
Definition
| B. The first named insured (with insurer's consent) |
|
|
Term
124. 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-rata basis
D. The personal auto policy is excess |
|
Definition
| D. The personal auto policy is excess |
|
|
Term
125. All of the following are exclusions in an inland marine policy, except:
A. Earth movement
B. Wear and tear
C. Electrical breakdown
D. Insects or vermin |
|
Definition
|
|
Term
126. A private passenger vehicle is added to an insurance policy. The CA Insurance Code:
A. Requires a vehicle inspection only if both comprehensive and collision coverages are carried
B. Requires a vehicle inspection for all additional cars
C. Makes no mention of a vehicle inspection requirement
D. No vehicle inspection is required if both comprehensive and collision coverages are carried |
|
Definition
| C. Makes no mention of a vehicle inspection requirement |
|
|
Term
127. When a state program is a company's only option available for the purchasing of workers compensation insurance, it is called:
A. A competitive state fund
B. A monopolistic state fund
C. A shared market fund
D. A guaranty fund |
|
Definition
| B. A monopolistic state fund |
|
|
Term
128. All of the following equipment would be covered under the equipment breakdown policy, except:
A. Electronic equipment used in the transmission of energy
B. Equipment operating under a vacuum
C. Aircraft
D. Computer equipment |
|
Definition
|
|
Term
129. A physician is being sued by a patient for misdiagnosing terminal cancer. What type of insurance would protect the physician against this type of mistake?
A. Professional liability
B. Allied lines insurance
C. Health insurance
D. Personal liability |
|
Definition
| A. Professional liability |
|
|
Term
130. A reduction in the value of property that results immediately from damage to the property is known as:
A. Additional living expense
B. Extra expense
C. Consequential loss
D. Direct loss |
|
Definition
|
|
Term
131. A risk management technique that eliminates a loss exposure and reduces the chance of loss to zero is:
A. Loss prevention
B. Retention
C. Loss reduction
D. Avoidance |
|
Definition
|
|
Term
132. All of the following are parties to a surety bond, except:
A. Obligee
B. Bondsman
C. Surety
D. Principal |
|
Definition
|
|
Term
133. Which of the following risks are eligible for a business-owners policy?
A. A restaurant
B. An auto repair shop
C. A three-story, 12 dwelling unit building
D. An amusement park |
|
Definition
| C. A three-story, 12 dwelling unit building |
|
|
Term
134. According to the CA Insurance Code, a binder is deemed a valid insurance policy for the purpose of providing that the insured has the insurance coverage specified in the binder for each of the following types of insurance, except:
A. Life insurance
B. Auto insurance
C. Marine insurance
D. Fire insurance |
|
Definition
|
|
Term
135. A situation in which there is only the possibility of loss or no loss is considered a/an:
A. Pure risk
B. Fundamental risk
C. Particular risk
D. Speculative risk |
|
Definition
|
|
Term
136. Which part of the insurance contract summarizes the major promises of the insurer?
A. Definitions
B. Conditions
C. Insuring agreement
D. Declarations |
|
Definition
|
|
Term
137. Which commercial property form contains most of the exclusions that apply to a commercial property policy?
A. Common policy declarations
B. Common policy conditions
C. Causes of loss forms
D. Commercial property conditions |
|
Definition
|
|
Term
138. All of the following are considered intentional torts, except:
A. Slander
B. Ownership of a wild animal
C. Libel
D. Assault |
|
Definition
|
|
Term
139. Under tort law, a corporation can be subject to a claim for legal liability on the basis of:
A. No-fault auto law
B. Breach of warranty
C. Contract liability
D. Absolute liability |
|
Definition
|
|
Term
140. Which of the following best characterizes a speculative risk?
A. A person who is careless and/or irresponsible
B. Insuring a life with a policy that provides double indemnity for accidental death
C. A situation that offers the possibility for a loss or a gain
D. Transferring the risk of loss to another party |
|
Definition
| C. A situation that offers the possibility for a loss or a gain |
|
|
Term
141. If the named insured has been charged with arson in reference to a total fire loss to the insured's building, what effect will the insured's action have on the mortgage holder's claims for damages?
A. The mortgage holder is entitled to 50% of their loss
B. The mortgage holder's claim is excluded
C. The mortgage holder is entitled to receive 80% of their loss
D. The mortgage holder is entitled to receive 100% of their loss |
|
Definition
| D. The mortgage holder is entitled to receive 100% of their loss |
|
|
Term
142. The personal auto policy "coverage for damage to your own automobile" states that the limit of liability is the lesser of the amount necessary to repair or replace the property or the:
A. Guaranteed replacement cost
B. Actual cash value of the stolen or damaged property
C. Replacement cost of the stolen or damaged property
D. Replacement cost of the stolen or damaged property if the insured has purchased an amount of coverage that
is at least 80% of the replacement cost |
|
Definition
| B. Actual cash value of the stolen or damaged property |
|
|
Term
143. Under a yacht policy, protection and indemnity provides coverage for:
A. The insured's vessel if it is damaged in a sudden squall
B. The extra expense to move the vessel out of a storm watch area
C. Liability if the insured vessel strikes a marina and injures a dock worker
D. The cost to salvage the insured vessel |
|
Definition
| C. Liability if the insured vessel strikes a marina and injures a dock worker |
|
|
Term
144. Livery conveyance is best described as a:
A. Vehicle for hire to transport people
B. Vehicle for hire to transport property
C. Commercial vehicle with more than 4 wheels
D. Share-the-expense carpool |
|
Definition
| A. Vehicle for hire to transport people |
|
|
Term
145. Under a personal auto policy, if a newly acquired auto is to replace the covered auto with liability coverage only, how long does the insured have to request collision coverage?
A. Immediately
B. 4 days
C. 14 days
D. 30 days |
|
Definition
|
|
Term
146. Ian, your unmarried homeowner's insured does not own a car. He is planning a vacation trip to Florida and will be renting a car. He also drives cars belonging to friends occasionally. To protect Ian in these situations, you
would recommend a personal auto policy with a:
A. Extended transportation endorsement
B. Miscellaneous vehicle endorsement
C. Extended non-owned coverage endorsement
D. Named non-owner coverage endorsement |
|
Definition
| D. Named non-owner coverage endorsement |
|
|
Term
147. Which of the following events within the last three years would disqualify an individual from receiving a good driver discount?
A. A moving violation while driving a company car during business hours
B. An at-fault accident involving only property damage
C. An at-fault accident involving minor bodily injury
D. A not-at-fault accident resulting in the death of a passenger |
|
Definition
| C. An at-fault accident involving minor bodily injury |
|
|
Term
148. Damage done by an earthquake to an insured auto is covered by the personal auto policy:
A. If the earth movement endorsement is purchased
B. If the other than collision coverage is purchased
C. Only if the car was in the insured's garage
D. Under no circumstances. Earth movement losses are not covered |
|
Definition
| B. If the other than collision coverage is purchased |
|
|
Term
149. What is one difference between a homeowners policy and a dwelling program for personal
property coverage?
A. There is no appreciable difference
B. Homeowners policy's coverage limit is higher than the dwelling form for jewelry
C. Homeowners policies value property at replacement cost; the dwelling policy values property at actual cash
value
D. Homeowners coverage is worldwide while the dwelling forms limit coverage while on the described premises. |
|
Definition
| A. There is no appreciable difference |
|
|
Term
150. What is an additional coverage provided by an HO-3 policy?
A. Defective planning
B. Money and securities
C. Trees, shrubs and other plants
D. Governmental action |
|
Definition
| C. Trees, shrubs and other plants |
|
|
