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Property & Casualty
California State Property & Casualty Test Review
532
Insurance
Not Applicable
11/07/2015
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Term
What are the two types of torts?
 Definition
Intentional & Unintentional
Term
Insurance is a contract whereby one undertakes to indemnify another against:
 Definition
Damage
Term
Materiality is determined by the disadvantage placed on the other party and:
 Definition
both are correct:
not by the event
the influence of the facts
Term
Type of loss exposure pertaining to land and structures attached to it is:
 Definition
property loss exposure
Term
liability loss exposure
A beautician stating that this conditioner fixes badly damaged hair is a:
 Definition
implied warranty
Term
The uncertainty or chance of a loss occurring is known as:
 Definition
risk.
Term
Which of the following is the amount of money the insured pays before the insurer pays for the rest of the claim?
 Definition
Deductible
Term
The degree of loss a person/organization faces from suits brought by a third party refers to:
 Definition
Liability Loss Exposure
Term
Which of the following elements of a contract is/are the binding force?
 Definition
Consideration
Term
Restoring the insured back to the condition he or she was in before the loss occurred is known as:
 Definition
Indemnification
Term
Which of the following describes when one party intentionally gives the other party false information in order to benefit from the unlawful gain.
 Definition
Fraud
Term
Which of the following is not a class of insurance?
 Definition
Casualty
Term
Examples of tort law include all of the following EXCEPT:
 Definition
Breach of contract
Term
Substitution of a small certain loss for a large uncertain loss is:
 Definition
insurance
Term
Which of the following is NOT a known private insurer?
 Definition
Bond Insurance Companies
Term
Punishment for twisting or misrepresentation would be:
 Definition
both are correct:
up to 1 year in jail
up to $25,000
Term
A peril is:
 Definition
the actual cause of the loss.
Term
The law of large numbers is a principal that basically says:
 Definition
the larger the amount of information gathered, the more reliable that information will be.
Term
Which of the following is an example of an adverse underwriting decision?
 Definition
All of these are examples:
Issuing with limitations
Rejecting the risk
Charging a higher rate
Term
The term loss exposure refers to:
 Definition
the possibility of a loss.
Term
Which of the following statements is true about reinsurance?
 Definition
Reinsurance is the process whereby the insurer transfers all or part of the risk to another company.
Term
Bob is thinking about obtaining insurance because he just found out he needs extensive surgery that will require several days in the hospital. This situation of waiting until the last minute to obtain insurance is known as:
 Definition
Adverse Selection
Term
Loss control refers to:
 Definition
taking the necessary precautions that will reduce the risk of a loss.
Term
A hazard that deals with a persons mental attitude, behavior and habits is an example of:
 Definition
Moral hazard
Term
Which of the following is NOT required for a risk to be ideally insurable?
 Definition
The loss must occur on the insured`s property.
Term
The state of being subject to a loss is considered:
 Definition
exposure
Term
According to the California insurance law, either party may rescind a contract for any of the following reasons EXCEPT:
 Definition
Once a contract is signed, it can never be rescinded.
Term
The process of reviewing applications for insurance and the information on the application is:
 Definition
Underwriting
Term
A hazard is best defined as:
 Definition
anything that increases the chance of loss or severity of loss due to a peril.
Term
Performance depends upon an uncertain future event is the feature:
 Definition
aleatory
Term
Any contingent or unknown event, whether past or future, which may damnify a person having an insurable interest or create a liability against him/her, may be insured against. The more unpredictable a loss becomes:
 Definition
the more insurable it becomes.
Term
Which of the following is defined as 'an agreement between two or more parties enforceable by law?'
 Definition
Contract
Term
Which of the following are the main types of risks?
 Definition
Speculative and pure
Term
When an insured rejects uninsured motorist in writing this is considered:
 Definition
a waiver
Term
When a right or privilege has been given up, a party cannot reassert that right or privilege. The process of preventing the party from reasserting that right or privilege is known as:
 Definition
Estoppel
Term
Binders can be extended how many additional days?
 Definition
60 days
Term
A person licensed as a broker/agent shall be deemed to be:
 Definition
acting as an insurance agent in the transaction of insurance placed with those for whom a notice of appointment has been filed with the Commissioner
Term
Which of the following is NOT an action a person performs when transacting insurance?
 Definition
Calling an insurer for a price quote
Term
Which of the following statements about insurance in connection with sales or loans is TRUE?
 Definition
No person involved in the business of financing the purchase of real estate may require the purchase of insurance through a specific agent as part of the requirements in the purchase.
Term
A _____________ licensee is authorized to transact ONLY the following lines of insurance: Automobile, recreational vehicles (noncommercial purposes), personal watercraft, residential property, earthquake, flood, inland marine, umbrella (excess liability).
 Definition
Personal Lines
Term
Which of the following is not true about the relationship between an agent and a solicitor?
 Definition
An agent or broker cannot transact as a solicitor, but a solicitor can transact as a broker or agent.
Term
A solicitor holds which license?
 Definition
Either P&C broker-agent or Personal lines broker-agent
Term
Which of the following actions would not be considered transacting insurance?
 Definition
Handing a prospect a business card and asking them for information.
Term
Which marketing system does the insurer not own the expiration list?
 Definition
An independent agency
Term
Errors and omissions is a type of liability insurance
 Definition
that agents use to protect themselves if they give incorrect advice or information to a client.
Term
Which of the following is a responsibility of the insured in an insurance contract?
 Definition
Give true statements and information on the application.
Term
Which of the following is NOT a type of authority given to agents?
 Definition
Customary authority
Term
In which system is the agent considered an employee?
 Definition
Direct writing system
Term
The underwriting process consists of all of the following basic steps except:
 Definition
Issue the rate
Term
The following acts are unlawful and are misdemeanors in California except when performed by a surplus lines broker EXCEPT:
 Definition
In any manner, advertising for an admitted insurer in this state.
Term
An insurer not authorized to conduct business in California would be:
 Definition
either of these:
a non-admitted insurer
an unauthorized insurer
Term
A broker can transact all of the following EXCEPT:
 Definition
Life, health, and disability insurance
Term
There are no binders issued in:
 Definition
Any of these:
life insurance
excess of 1 million
in health insurance
Term
When dealing with insurance in connection with sales or loans, violating the legal provisions specified by California law is considered a:
 Definition
misdemeanor
Term
Which of the following would not require a license?
 Definition
Insurance Adjuster
Term
If an agent gives incorrect advice or unknowingly provides incorrect information to the client, which of the following liability insurance policies for nonmedical professionals is available to pay for losses or defend lawsuits that might be filed against him?
 Definition
Errors and Omissions
Term
The application is the document that:
 Definition
states the name of the insured, the premium, and other facts that help the insurer decide whether to accept or reject it.
Term
In which of the following marketing distribution systems does the agent represent more than one insurer and more than one company?
 Definition
Independent agency
Term
Which of the following is NOT a source of information an underwriter might use to investigate an application in order to approve or reject it?
 Definition
Department of Industrial Relations
Term
In a legal relationship, which authority does a principal (company) give the agent in writing?
 Definition
Express authority
Term
Monitoring of existing risks is:
 Definition
post-selection
Term
Any person who transacts insurance without a valid license is guilty of a misdemeanor, punishable by a fine not exceeding ______.
 Definition
$50,000
Term
A lender does have the right to provide insurance or renew the insurance and charge a transaction fee if the borrower fails to deliver proof of insurance at least ____ days before the policy expires.
 Definition
30
Term
Law of agency is the relationship between:
 Definition
agent and principal
Term
After providing an opportunity for a hearing, the Commissioner may deny an application for a license based on the following reasons EXCEPT:
 Definition
the applicant is disabled
Term
the applicant lied on the application
Informational records must be kept a minimum of:
 Definition
18 months
Term
Agents must keep good records and make them available to the DOI for a period of:
 Definition
5 years
Term
If a license is in the possession of the insurer or the licensee`s employer, the licensee may surrender his/her license:
 Definition
after written notice is delivered to the Commissioner.
Term
Which of the following is NOT a valid reason for the Commissioner to deny the use of a name when filing with the Insurance Commissioner?
 Definition
The name is politically connected to the government.
Term
Every licensee shall prominently put their license number on all of the following except:
 Definition
Phone book listing in the white pages
Term
Insolvency means:
 Definition
an insurer`s inability to meet its financial obligations when they are due
Term
If someone has a Life Agent Combo and a Property/Casualty license for 10 years, then how many CE hours would be required in the current license term?
 Definition
24 hours
Term
To handle long term care insurance, an agent of more then four years must satisfy the continuing education requirement of:
 Definition
8 hours of LTC training each license term.
Term
When can a partnership continue if a new partner joins?
 Definition
After the department is notified within 30 days and the changes are approved.
Term
An agent or broker may charge an extra fee for services above and beyond what are considered normal duties. Which of the following is NOT considered an extra service?
 Definition
Application paperwork
Term
Appointments are terminated:
 Definition
any of these
Term
A subsidiary formed to insure the parent company is called a(n):
 Definition
Captive insurer
Term
A licensee may surrender his/her license:
 Definition
upon written notice to the Department of Insurance at any time.
Term
For an agent or solicitor to be valid to transact requires:
 Definition
both are required
Term
When should a licensee notify the Commissioner of a change in address?
 Definition
immediately
Term
In order to update, add or change a statute a bill must be passed by the legislature and then presented to the governor. If the statute is passed, it will go into effect:
 Definition
on the next January 1st
Term
________ refers to the inability of the insurer to meet its financial obligations when they are due.
 Definition
Insolvency
Term
cy
Which of the following is not a person under the Code?
 Definition
A family
Term
Which of the following is NOT true about the California Insurance Code and the California Code of Regulations.
 Definition
NOT TRUE:
The CIC and the CCR are a complete guide to ethical behavior.
Term
In lieu of denying an application for a license the Commissioner can:
 Definition
issue a restricted license
Term
An organization ceases to exist as an entity eligible to hold a license upon all of the following EXCEPT:
 Definition
upon the termination of a key employee.
Term
Every applicant for a license to act as an agent must have filed with the Commissioner:
 Definition
a notice of appointment to do business in the state.
Term
All Property and Casualty Broker/Agents are required by law to display to the public:
 Definition
Their license to sell insurance, displayed in a place where it can be easily seen.
Term
Records must be made available to the Commissioner:
 Definition
at all times
Term
The actuarial department is responsible for:
 Definition
using claims history, statistics and computer data to predict losses.
Term
A Property and Casualty Agent is required to continue their education by completing:
Show Hint
 Definition
a total of 24 hours per license term.
Term
Commissioner can suspend a permanent license without a hearing, except:
 Definition
client co-signing a loan
Term
All of the following are examples of fiduciaries EXCEPT:
 Definition
Vendor
Term
According to the qualifications of an insurer under the California Code a person can be any of the following EXCEPT:
 Definition
a human being at least age 16 who is competent and not intoxicated
Term
Transacting via internet with a California resident would not require:
 Definition
license expiration
Term
Commissioner may give an order that records be brought current within:
 Definition
60 days of the order
Term
It is against the law for an insurance licensee to offer free insurance to:
 Definition
anyone as an incentive to acquire some other type of business.
Term
The marketing/sales department is responsible for:
 Definition
advertising, promoting and distributing an insurer`s products to the public.
Term
What is the difference between an admitted and a non-admitted insurer?
 Definition
An admitted insurer is a company that has met all of the qualifications designed by the DOI and has received a Certificate of Authority from the DOI to transact insurance in California, whereas a non-admitted insurer has not complied or been denied.
Term
Rates shall remain in effect if they are:
 Definition
all of the following:
not discriminatory
adequate
reasonable
Term
Which is not a violation of Unfair Practice?
 Definition
Age discrimination
Term
Unless expressly otherwise provided, any personal notice required by any provision of the insurance code may be given by any of the following EXCEPT:
 Definition
a third party
Term
The State of California requires that all admitted insurers be a member of the:
 Definition
California Insurance Guaranty Association
Term
Which of the following statements about insolvency is TRUE?
 Definition
An insurer cannot escape the condition of insolvency by being able to provide for its liabilities and reinsurance of all outstanding risks.
Term
To change the California Insurance Code a bill is brought before the Assembly and the Senate. After both parties vote on the bill and it is approved, it moves on to the:
 Definition
Governor
Term
Solvency requires the insurer to have enough assets to cover:
 Definition
all of these:
reinsurance
liabilities
paid-in-capital
Term
Which of the following is NOT a purpose of the Unfair Practices Article?
 Definition
To determine the punishment for an agent found guilty of unfair practices in insurance.
Term
Insurer has up to how many days to accept or deny a claim?
 Definition
40 days
Term
According to the Code a "Notice of Claim" is a(n):
 Definition
either qualify:
oral notification
written notification
Term
All of the following are incorrect penalties for violating the Unfair Practices article EXCEPT:
 Definition
$5,000 fine for each act in violation; $10,000 fine for willful violation
Term
Which court case reversed the Paul vs. Virginia case of 1868?
 Definition
SEUA case of 1944
Term
All of the following are efforts the Department of Insurance takes to combat insurance fraud EXCEPT:
 Definition
Each company is required to submit a complete record of fraudulent claims made to the business each year.
Term
Once insured an insurer are in agreement payment must be made within:
 Definition
30 calendar days
Term
What is the significance of the SEUA case of 1944?
 Definition
The court decided the federal government should regulate insurance.
Term
Which of the following describes use and file as a type of rating law?
 Definition
An insurance company uses the rate they determine appropriate first and then file that rate with the commission.
Term
Which of the following is a penalty for violating the Insurance Information and Privacy Protection Act?
 Definition
$50,000 fine for violations committed with regularity showing they are a general business practice
Term
What is the role of the Commissioner and the Department of Insurance in relation to consumers?
 Definition
The Commissioner and the DOI are responsible for regulating the conduct of agents and insurers.
Term
Which of the following is NOT considered an unfair practice?
 Definition
Failing to display the license in a clearly visible place for the public to see.
Term
How is the Insurance Commissioner put into office?
 Definition
Elected by the citizens
Term
According to the Code, the word "person" means:
 Definition
any person, association, organization, partnership, business trust, limited liability company, or corporation.
Term
Which of the following describes prior approval as a type of rating law?
 Definition
The insurer files policy rate information with the Department of Insurance. After filing, the insurer delivers evidence that the rates proposed are reasonable and fair. Then the insurer waits (30-60 days) for approval.
Term
Penalty for violation of a summary seizure would be:
 Definition
any and/or all of these:
misdemeanor
1 yr imprisonment
$1,000
Term
Upon receiving any written or oral inquiry from the Department of Insurance concerning a claim, every licensee shall immediately, but in no event more than _______ calendar days of receipt of that inquiry, furnish the Department of Insurance with a complete written response based on the facts as then known by the licensee.
 Definition
21
Term
Every company in California is required to report its financial condition to the Commissioner every year:
 Definition
on or before March 1.
Term
Which of the following is a responsibility of the Commissioner?
 Definition
To enforce the law of insurance.
Term
Which one of the following is not one of the three principal parts to the privacy requirement of the Gramm-Leach-Bliley Act?
 Definition
Credit Reporting
Term
An example of a self-regulatory authority of the insurance industry is:
 Definition
the NAIC
Term
When the Commissioner takes over a company that is insolvent, his/her first responsibility is to:
 Definition
attempt to restore the company if possible.
Term
Which of the following is NOT a type of rating law?
 Definition
Legal Competition
Term
CIGA pertains to:
 Definition
insurer's insolvency
Term
All of the following are penalties for unfair discrimination EXCEPT:
 Definition
prison
Term
If convicted of insurance fraud:
 Definition
the fine can be up to $150,000 and up to 5 years in state prison.
Term
A subsequent violation of a cease and desist would result in:
 Definition
license suspension
Term
Who administers the California Administrative Code of Regulations?
 Definition
Commissioner
Term
Amounts paid for actual loss or injury are known as:
 Definition
Compensatory damages
Term
A broken or interrupted chain of events is
 Definition
intervening cause
Term
Insurance Services Office develops forms and lost cost rating for:
 Definition
property and casualty
Term
All of the following are categorized torts EXCEPT
 Definition
Adverse selection
Term
Loss is defined as:
 Definition
the reduction, decline, or disappearance of value of the person or property insured in a policy, by a peril insured against
Term
Loss of rent, profits, expenses necessary to keep a business running until the damage can be fixed are examples of:
 Definition
Indirect loss
Term
Which of the following is not a common law defense?
 Definition
Comparative negligence
Term
Short rate cancellation is described as:
 Definition
The method used when a policy is canceled by the insured before it reaches the expiration date
Term
Which of the following is NOT an example of assumption of risk?
 Definition
The driver of a limousine service
Term
Combined ratio is defined as:
 Definition
the percentage of each premium dollar a company spends on claims and expenses
Term
A legal right of recovery can be based on which of the following?
 Definition
Any one of these: Statutes, Contracts, Torts
Term
Which of the following terms describes an estimate of the amount an insurer will pay for a claim?
 Definition
Loss Reserve
Term
Which would not be a tort?
 Definition
Any legal wrong
Term
All of the following are methods of managing risk EXCEPT:
 Definition
Rescission
Term
When someone willingly gives up the right to sue a person who was at fault, this is known as:
 Definition
Subrogation
Term
A special surplus line broker may transact Special Surplus Lines. All of the following are special surplus lines EXCEPT:
 Definition
Farm or cattle ranch
Term
Which organization is the leading source of information about property and liability risk and is the property/casualty insurance industry`s leading supplier of statistical, actuarial, underwriting, and claims data?
 Definition
The Insurance Service Office (ISO)
Term
Comparative negligence is best described as:
 Definition
part of the claim is paid for by the insured`s own insurance company; however, modification is made to the settlement amounts based on the idea of relative negligence, which assigns a percentage of carelessness to each party involved
Term
Punitive damages are:
 Definition
a form of punishment imposed by the court upon the individual
Term
In computing the loss payment for contributory negligence the claim would:
 Definition
pay nothing if the injured party didn`t meet the standard of self-protection in any form
Term
The Tyler-Star Newspaper wrote an article about Jim`s Bakery that made Jim look like a racist. This type of injury to Jim`s character is known as:
 Definition
Libel
Term
Flat rate cancellation is described as:
 Definition
A type of cancellation whereby the insured can cancel without penalty. The insured receives a 100% refund of Premium
Term
Lapse refers to:
 Definition
a policy is terminated because the premiums have not been paid.
Term
Defamation is an intentional tort that damages one's reputation that is:
 Definition
both false and either written or spoken are correct
Term
Before determining liabilty based on negligence, the following requirements must be met EXCEPT:
 Definition
gross negligence
Term
Payment for the loss of the ability to bear children or loss of limb would be:
 Definition
general damages
Term
Proximate cause refers to:
 Definition
an uninterrupted chain of events resulting from negligence causes injury or damage
Term
When two or more perils happen at the same time, in sequence, and cause a loss, this is referred to as:
 Definition
Concurrent causation
Term
Which of the following is NOT a description of what the California Worker`s Compensation Inspection Rating Bureau (WCIRB) does?
 Definition
Develops information about property and liability risk and the property/casualty insurance industry`s leading supplier of statistical, actuarial, underwriting, and claims data.
Term
Least professional method to identify loss exposure would be:
 Definition
copying previous apps.
Term
Insurance that cannot be procured through admitted insurers may, under certain circumstances, be placed with nonadmitted insurers. This is known as:
 Definition
Surplus lines
Term
If an insured is 25% at fault and the insurer settles proportionally, this is:
 Definition
comparative negligence
Term
Which method of managing risk is described as not purchasing insurance at all, or paying part of a loss when it occurs?
 Definition
Retention
Term
The Commissioner shall establish a list of all surplus line insurers who have met the recognized requirements for such title and shall issue a master list at least semiannually. This list is known as:
 Definition
LESLI
Term
When an employer is held responsible for actions of an employee this is:
 Definition
vicarious liability
Term
Homeowner form(s) that do not provide any dwelling coverage (Coverage A)?
 Definition
HO-4 only
Term
This Standard Mortgage clause states that a __________ has the right to file a claim, make premium payments, and be notified of any cancellations or non-renewals.
 Definition
Lienholder
Term
Mid-termination of a policy is known as:
 Definition
cancellation
Term
Property insurance policies contain many items EXCEPT:
 Definition
Insured`s gender
Term
When an insurer pays the full amount of a claim, based on an appraisal made at the time of the contract and the value determined before the loss occurs, this is referred to as:
 Definition
Stated Value
Term
Which HO form(s) provide open peril coverage for personal property?
 Definition
HO-5
Term
Which of the following is NOT a reason a home would be insured under a Dwelling policy rather than a Homeowners policy?
 Definition
The dwelling has only one unit.
Term
Which of the following homeowners policies covers condominium units?
 Definition
HO 6
Term
The part of the policy that contains the description of coverages provided is:
 Definition
insuring agreement
Term
In a standard mortgage clause, what happens in the event of a total loss?
 Definition
The insurer pays the lienholder first and then the insured.
Term
What is the main difference between the Standard Fire Policy (SFP) and the California Standard Form Fire Policy?
 Definition
The SFP has 165 lines of text and the California Standard Form Fire Policy has 158 lines of text.
Term
The stipulations for nonrenewing of a personal lines policy include a notice of cancellation of the policy in writing to the insured at least _________ before the effective date of cancellation.
 Definition
45 days
Term
Which of the following is NOT a difference between the Dwelling policy and Homeowners policy?
 Definition
In Dwelling forms, theft is a broad form peril, whereas in Homeowners it is not. (Because Theft is NOT a broad form peril in Dwelling forms)
Term
How are HO-8, HO-2, HO-3 and HO-5 different?
 Definition
Perils insured against
Term
What method of valuation means the company will decide the replacement cost of a lost item, then subtract depreciation from it and pay the rest?
 Definition
Actual Cash Value
Term
Two policies from different insurers otherwise identical are known as:
 Definition
concurrent coverage
Term
A fire that is intentionally set and remains within its intended limits is:
 Definition
not covered
Term
Cancellation for property and casualty policies for other than nonpayment is:
 Definition
Both 30 days except auto and 20 days for auto are correct.
Term
Policy revision that provides broader coverage, no premium or endorsement:
 Definition
liberalization

Liberalization occurs when a policy is broadened without additional premium.
Incorrect Answerrecovery
Term
Under personal lines insurance, dwelling insurance, which of the following perils is NOT covered on a standard fire policy?
 Definition
Earthquake
Term
#21
In an insurance policy, any modifications made to the regular contract are known as:
 Definition
Endorsements
Term
What is the difference between an HO 2 and an HO 4?
 Definition
An HO 2 is written on a broad form basis and covers the owner of a dwelling, whereas an HO 4 is a renter`s insurance policy.
Term
Which of the following homeowners policies covers renter`s insurance?
 Definition
HO 4
Term
What is the difference between an HO 3 and an HO 3 with an HO 15 endorsement?
 Definition
An HO 3 is a policy that covers all risks, except those excluded, on the dwelling, and personal property is covered with broad form perils, whereas an HO 3 with an HO 15 endorsement covers all perils with both dwelling and personal property.
Term
#25
When an insured holds more than one identical policy for the same property, but the policies differ in coverage amount or length of coverage period, this is known as:
 Definition
Concurrent Policy Coverage
Term
#26
What is the difference between an HO 2 and an HO 3?
 Definition
An HO 2 has dwelling and personal property coverage on a broad peril form, while an HO 3 has dwelling coverage on a special form and personal property on a broad peril form.
Term
Which of the following homeowners policies have both dwelling and personal property on a broad peril form?
 Definition
HO 2 and HO 6
Term
Property and casualty policies are made up of the following parts except:
 Definition
Additional Claim Form
Term
Property and casualty policies are made up of the following parts
 Definition
Conditions
Definitions
Declarations
Term
Policy provision that gives the insurer the right to repair or replace:
 Definition
our option
Term
In an insurance policy, which page contains information such as the insured`s name, information about risk, the date coverage begins, the premium, location of the property being insured, etc.?
 Definition
Declarations
Term
All of the following are true of a broad coverage form EXCEPT:
 Definition
No minimum amount of insurance is required for the basic form.
Term
Which is not a liability endorsement on the HO forms?
 Definition
Mobilehome
Term
Under Section 1 Condition - Loss Settlement, which of the following formulas is used to determine payment to an insured in the event of a loss?
 Definition
Insurance carried, divided by the insurance required, times the loss, minus the deductible, equals the loss payment.
Term
Coverage D, loss of use, depends on which of the following for a limit of insurance to be applied?
 Definition
How much coverage is placed on the dwelling?
Term
Which is not an exclusion under Coverage A on an HO-3?
 Definition
Damage by a deer
Term
Which of the following is true regarding vehicles covered and not covered under Section II?
 Definition
All the insured`s vehicles and trailers towed by the insured are excluded from coverage.
Term
The following properties are included as an insured location and/or residence premises for Liability and Medical except:
 Definition
Insured's relative cemetery plot
Term
Under Section II - Additional Coverages, which of the following is NOT included?
 Definition
Medical Payments to Others
Term
Under Section II of the Homeowners form, what does coverage E (personal liability) cover?
 Definition
This coverage will take affect if a claim is made against the insured for damages due to bodily injury or damage to the property caused by the insured`s negligent acts.
Term
Which of the following properties are NOT included in insured locations and residence premises under Section II of the Homeowner`s policy?
 Definition
Insured`s work office space
Term
Under HO property additional coverages, what is covered for removal?
 Definition
Property removed from the insured`s premises to protect it from damage due to a covered loss.
Term
Under HO property additional coverages, what is covered for debris removal expense?
 Definition
Reasonable cost to remove debris after a covered loss.
Term
Which DP policies insure Coverage C for broad form perils?
 Definition
Both DP-2 and DP-3
Term
Liability and Medical Payments are the two major coverages provided in:
 Definition
Section II of the Homeowners form
Term
Jewelry valued at $30,000 is destroyed in a hotel fire in Paris, the HO would:
 Definition
cover up to Coverage C limit
Term
All of the following are major differences between the broad form and the special form EXCEPT:
 Definition
The broad form doesn`t require the 80% coinsurance and the special form does.
Term
All of the following are general exclusions to the HO 3 policy except:
 Definition
Loss Assessment
Term
In the event of a loss, the insured has the responsibility to do all of the following EXCEPT:
 Definition
Provide a copy of the police report to the insurer.
Term
Under HO property coverage earth movement is a general exclusion. Which homeowners policy has done away with the exclusion for concurrent causation regarding this peril?
 Definition
HO 3
Term
Which of the following is NOT an option of the California Residential Property Insurance Disclosure Statement?
 Definition
Fair Market Value Cost Coverage
Term
Volcanic eruption excludes:
 Definition
none are excluded:
dust and ash
lava
airborne shockwaves
Term
Difference between DP-2 Broad form and the DP-3 Special form is:
 Definition
plumbing water damage
Term
The correct statement regarding landlord furnishings would be:
 Definition
Both covered up to $2500 and excludes the peril of theft are correct
Term
Which is not an "other coverage" in the dwelling forms?
 Definition
Volcanic eruption
Term
In property coverage, what is specifically covered under coverage B?
 Definition
other structures/ separate structures at the same location, such as garages, sheds and birdhouses on the described location that are separated from the dwelling by a clear space or connected only by a fence or utility line.
Term
Coverage not provided without endorsement on a DP-1/Basic is:
 Definition
Coverage E
Term
Which is excluded under Section I and covered under Section II?
 Definition
Animals, birds, or fish
Term
According to the ordinance or law exclusion, which of the following does NOT apply?
 Definition
This coverage is required by state law.
Term
Which HO endorsement covers loss due to personal injury (false arrest, libel, slander, defamation of character, and invasion of privacy?
 Definition
Personal Injury endorsement
Term
All of the following are considered an "insured" under Section 1 of the HO 3 EXCEPT:
 Definition
Relatives who share the same last name as the insured.
Term
Under property coverage, which of the following is covered under coverage A?
 Definition
Dwelling
Term
Under Section 1 Condition - Loss Settlement on an HO3, which of the following situations shows the insured is covered adequately in the event of a loss?
 Definition
The insured has $80,000 coverage on property worth $100,000.
Term
According to Section II of the Homeowners policy (selected homeowners endorsements), which of the following is true of the mobile home endorsement?
 Definition
The mobile home is considered the dwelling being insured when it is endorsed on the policy.
Term
The Homeowners Watercraft Endorsement under Section II includes all the following EXCEPT:
 Definition
Use of a boat in a racing competition.
Term
Which of the following would NOT be covered under Section II of Medical Payment to Others?
 Definition
The insured`s pets that are injured on the insured`s property.
Term
Which organization was created to help create earthquake coverage?
 Definition
CEA
Term
The Earthquake stand alone policy typically has a deductible of ______.
 Definition
15%
Term
Why is mobility a common characteristic of many types of property insured under Inland Marine contracts?
 Definition
Mobility covers moveable property, whether or not it is actually moved.
Term
Which licensee can sell flood and earthquake coverage?
 Definition
Any broker-agent
Term
All of the following are disadvantages of using the earthquake endorsement, EXCEPT:
 Definition
The deductible may be lower
Term
Which of the following provides coverage for injured crewmembers? This coverage is also known as Jones Act coverage.
 Definition
P & I (protection and indemnity)
Term
ype of policy or policies that do not normally exclude catastrophic losses:
 Definition
both personal auto and marine policies
Term
A yacht policy provides this protection but the boatowner policy does not:
 Definition
workers' compensation
Term
With regard to the Unscheduled Personal Property endorsement, each of the following items has only a limited amount of coverage and requires an endorsement to have full coverage EXCEPT:
 Definition
DVD collection
Term
In regard to personal watercraft, to receive coverage for physical damage payments the insured would need which of the following policies?
 Definition
Boat owners
Term
What is the difference between the NFIP Emergency Program limits and the NFIP Regular Program limits?
 Definition
The Emergency Program limits cover less for building and contents than the Regular Program limits.
Term
In an Inland Marine policy, what is the difference between the Personal Articles Floater (PAF) and the Homeowners Scheduled Personal Property Endorsement?
 Definition
The PAF must have an appraisal and the Scheduled may not.
Term
In an Inland Marine policy, which of the following is NOT an advantage to filed lines?
 Definition
They include Electronic Data Processing and Contractors Equipment floaters.
Term
Which one of the following is not true with regards to the CEA policy provisions:
 Definition
$10,000 in additional living expense
Term
what are the CEA policy provisions?
 Definition
The California Earthquake Authority (CEA) , offers the following provisions: $1,500 additional living expense. No coverage on pools, fences, driveways, landscaping, or other structures. Dwelling coverage with a 15% deductible. $5,000 personal property coverage. Optional coverage: $10,000 building code upgrade.
Term
$0 in coverage for fences
#15
Uninsured loss exposures on HO forms are due to:
 Definition
Any one of these:
items difficult to value
susceptibility to loss
uniqueness
Term
Which of the following is NOT a provision provided by the California Earthquake Authority?
 Definition
$2500 coverage on pools, fences, driveways, landscaping, and other structures
Term
Marine policies that are not regulated are known as:
 Definition
non-filed forms
Term
In an Inland Marine policy, an annual transit policy is usually provided:
 Definition
on a named peril basis.
Term
Agents may bind flood insurance coverage after receiving what?
 Definition
Agents do NOT have binding authority
Term
In a boat owner`s policy, which of the following is NOT considered typical coverage?
 Definition
Hull
Term
Inland Marine policies are generally written on an open peril basis. All of the following are the most common exclusions EXCEPT:
 Definition
collision
Term
Insures watercraft over 50 horsepower that can be towed behind a car:
 Definition
boatowner policy
Term
The following coverages are provide under the Yacht policy except:
 Definition
E & O
Term
The inland marine form known as Personal Articles is similar to:
 Definition
SPP endorsement in HO's
Term
Which of the following statements with regards to the NFIP is incorrect?
 Definition
Standard Homeowners policies cover losses as a result of flooding.
Term
"Mobile in nature" or "goods in transit" refer to which type of policies?
 Definition
Both Ocean Marine and Inland Marine
Term
Must be offered with every residential property policy in California:
 Definition
earthquake insurance
Term
Broker fees can be charged for which type of policy or policies?
 Definition
HO's or DP's
Term
The Watercraft endorsement provides __________ coverage for Liability and Medical Payments to Others for scheduled boats.
 Definition
moderate limits of
Term
Which of the following is not covered under a yacht policy?
 Definition
Liability
Term
In an auto policy, coverage A, B, and C respectively represent:
 Definition
Liability, Medical, and Uninsured Motorist
Term
What is California`s minimum requirement for coverages A, B, C (Liability, Medical, Uninsured Motorist) in an auto policy?
 Definition
15/30/5
Term
What is the difference between "share-the-expense car pools" and "for-hire" situations?
 Definition
''Share-the-expense car pools'' are covered in a personal auto policy and ''for-hire'' are not.
Term
To be eligible to receive the Low Cost Auto Insurance Program, a driver must meet all of the following, EXCEPT:
 Definition
Be at least 16 years of age.

(must be at least 19 years of age)
Term
Which of the following would be considered a named insured?
 Definition
Resident spouse
Term
All are true, except which of the following concerning Part B of a PAP?
 Definition
Applies to pedestrians
Term
Which of the following is NOT a supplementary payment under coverage A of a Personal Auto Policy?
 Definition
$500 a month loss of income
Term
Which would not qualify as a covered trailer when being towed by an auto?
 Definition
All are covered trailers:
U-Haul trailer
Farm wagon or implement
Sailboat
Term
All of the following are true about Uninsured Motorists coverage, EXCEPT:
 Definition
The other driver does not have to be liable for the injuries or damage to property.
Term
When are personal effects that are transported in the vehicle covered?
 Definition
They are not covered.
Term
How many days advance notice of cancellation due to non-renewal does an insurer need to give an insured?
 Definition
30 days
Term
Collision would pay for damages to the insured vehicle in which situation?
 Definition
Running over branches
Term
Which of the following coverages would be useful if you bought a new car, and a month later you lose control of the car and total it?
 Definition
GAP Coverage
Term
Which of the following is NOT a benefit of having an Umbrella or Excess policy?
 Definition
An Umbrella policy will cover all perils and medical payments in an auto accident.
(does not cover 'all perils')
Term
The incorrect statement concerning qualification for the low cost program is:
 Definition
licensed 2 years

(required to be licensed for 3 years)
Term
How many days advance notice must be given to an insured for mid term-cancellation due to any reason other than nonpayment or non-renewal?
 Definition
20 days
Term
All of the following are exclusions that apply to liability coverage under a personal auto policy EXCEPT:
 Definition
Bodily injury or property damage caused accidentally by the insured.
Term
Which of the following organizations provides auto insurance for motorists who are unable to obtain coverage in the conventional market due to their driving records or extraordinary circumstances?
 Definition
CAARP
Term
Which of the following is NOT true of a policy with Non-standard Physical Damage coverage?
 Definition
This coverage is for people who have an excellent driving record.
Term
How many days does an insured have to request collision coverage when a newly acquired auto replaces a covered auto that has liability coverage only?
 Definition
4 days
Term
Which of the following is NOT true of the Market Conduct Bureau?
 Definition
Correct AnswerThe Bureau provides individuals and companies assistance in buying automobile liability insurance in the state.
Term
Which of the following is NOT a determining factor for eligibility for the Good Driver Discount?
 Definition
At least 30 years of age.
Term
Which of the following is NOT a difference between a Personal Auto Policy and a Motorcycle endorsement?
 Definition
Medical coverage
Term
Insured has an accident in a modified no-fault state the policy responds by:
 Definition
adding PIP at no charge
Term
All of the following are ways to show financial responsibility according to the Financial Responsibility Law EXCEPT:
 Definition
Purchase a surety bond for $89,000 from a California licensed insurer.
Term
Which of the following is NOT covered under collision coverage?
 Definition
Impact with an animal.
Term
What is the purpose of Named Non-owner Coverage?
 Definition
This endorsement is for people who don`t own a vehicle but still drive (rented, public transportation, company vehicle, etc.)
Term
The split limit of 15/30/5, the 5 refers to which of the following?
 Definition
Property damage
Term
Under Coverage B - Medical Payments in a Personal Auto Policy, if the Medical Payments coverage limit is $8,000 and 4 people are injured, what is the maximum that may be paid to each person?
 Definition
$8,000 to each person.
Term
Coverage(s) that follow the insured and family members into any auto:
 Definition
would be Part B or Part C
Term
Under a Personal Auto policy, if the deductible for collision is $500 and $250 for Other Than Collision, what would the insurer pay if he had a covered collision totaling $3,000 in which glass was also broken?
 Definition
$2,500
Term
Which of the following is NOT a requirement for CAARP?
 Definition
Certified Producer in any state in the U.S.
Term
The incorrect statement concerning transportation expense is:
 Definition
must be endorsed
Term
Coverage that could apply to a hit and run accident?
 Definition
UMBI
Term
Which of the following is NOT an ISO eligibility requirement for a Personal Auto Policy (PAP)?
 Definition
Any commercial vehicle used during business hours.
Term
Inventory more than 100 feet off premise is:
 Definition
Excluded
Term
All of the following may be written on a monoline basis, EXCEPT:
 Definition
Ocean Marine
Term
Which of the following would be considered a "module"?
 Definition
Business Auto
Term
Which of the following is NOT considered subrogation?
 Definition
The insured collects damages from the responsible party.

(subrogation = transfer)
Term
How much would you receive if you carried $40K, the requirement was $30K, the loss was $10K, and the deductible was $1K?
 Definition
$9,000
Term
Coverage C of the Commercial Building and Personal Property coverage form does NOT cover:
 Definition
Property being transported in a vehicle.
Term
Which of the following is a disadvantage of having a coinsurance clause on a commercial policy?
 Definition
Keeping up with property replacement values.
Term
In a commercial property policy, concealment, misrepresentation or fraud could cause a policy to:
 Definition
Be voided, denied or cancelled.
Term
All of the following are true about the cancellation of a commercial policy, EXCEPT:
 Definition
The insurer must be able to prove the delivery of a notice of cancellation.
Term
The HO form that does not provide coverage for real property is:
 Definition
HO-4
Term
The incorrect statement concerning coinsurance is it:
 Definition
None of these false:
100% of loss paid if met
applies to partial losses
results in better premium
Term
When a covered loss occurs and two policies are in force for the same property, with the same terms and conditions, how will the loss be settled?
 Definition
Each company will pay their share of the loss on a pro rata basis.
Term
Two perils that can be excluded from the vacancy permit are:
 Definition
vandalism and sprinkler
Term
On a commercial package policy, "You" and "Your" refers to:
 Definition
The named insured and resident spouse.
Term
The modular concept refers to:
 Definition
Parts of a package policy.
Term
The normal vacancy condition under a commercial lines policy can be waived by:
 Definition
Adding a Vacancy Permit endorsement.
Term
Tenant Improvements and Betterment Losses are valued at:
 Definition
Actual Cash Value
Term
Which of the following is a coverage extension on the Commercial Building and Personal property coverage form?
 Definition
Debris Removal
Term
Which of the following describes a person eligible for insurance through the FAIR plan?
 Definition
Any person who has insurable interest in real or tangible personal property who, after diligent effort, has been unable to obtain basic property insurance through normal channels from an admitted insurer or licensed surplus lines broker.
Term
Coverage A of the Commercial Building and Personal Property coverage form covers which of the following:
 Definition
Buildings and sparate structures and a riding lawn mower are both correct answers.
Term
The loss condition states the insurer must pay the claim within:
 Definition
30 days
Term
Which of the residential policies are basic perils?
 Definition
DP-1 and HO-8
Term
#23
All of the following are major differences between DPs and HOs, except:
 Definition
none are exceptions:
theft coverage
worldwide coverage
occupancy requirements
Term
If a building has been vacant for 90 consecutive days prior to a loss, which of the following is false?
 Definition
All of these are true:
If the loss is due to a fire, it will be covered but payment is reduced by 15%.
The loss will not be covered if due to vandalism.
The loss will not be covered if due to theft or attempted theft.
Term
Coverage C perils are broad form on all HO policies except:
 Definition
HO-8 & HO-5
Term
The declarations page of a commercial policy will state which of the following:
 Definition
All of these:
Covered property.
Named insureds.
Premium amount and coverage limits.
Term
Under the Building and Personal Property coverage form, vacancy means:
 Definition
Insufficient business property present to conduct customary operations.
Term
Coverage B of the Commercial Building and Personal Property coverage form covers all of the following EXCEPT:
 Definition
Property off the premises
Term
What is the formula for calculating the coinsurance penalty?
 Definition
Amount carried, divided by required amount, multiplied by loss, minus deductible
Term
An apartment building is insured for $300,000 with an 80% coinsurance clause. The property is valued at $500,000. A covered loss occurs in the amount of $200,000. How much will the insurance company pay?
 Definition
$150,000

Apply the coinsurance formula: 80% of the value of the home ($500,000) is $400,000, which is what they should have carried. Divide the limit they carried ($300,000) by what they should have carried ($400,000). Multiply that figure by the loss amount. When there is no known deductible, figure it as zero.
Term
The FAIR plan does all of the following, EXCEPT:
 Definition
Establish a list of all surplus line insurers that have met the recognized requirements for such title and shall issue a master list at least semiannually.
Term
Any licensed agent or broker may submit risks to the FAIR plan:
 Definition
but there is no binding authority.
Term
The CPP Common Condition that relates to establishing premium is:
 Definition
Inspections & Surveys
Term
Coverage A of a Building and Personal Property form would exclude all but:
 Definition
vacuum and floor waxer
Term
The insurer may examine books and records of an insured:
 Definition
At any time and for up to three years after the policy expires.
Term
Coverage B of the CGL includes coverage for:
 Definition
Personal and Advertising Injury
Term
An unendorsed claims made CGL includes:
 Definition
BERP
Term
What must happen in order for coverage to be available is the purpose of:
 Definition
The Cause of Loss Forms
Term
The product and completed operations hazard claims are subject to a:
 Definition
Per occurrence limit
Term
Which of the following is NOT a covered peril under the Specified Causes of Loss form?
 Definition
Leaking from fire extinguishers and equipment
Term
In which of the following events would coverage be provided under the CGL?
 Definition
Mobile Equipment being transported to a job site falls off and hits a vehicle on the highway.
Term
#7
Coverage C of the CGL policy would cover all of the following EXCEPT:
 Definition
Damage to a customer`s property while left in the care, custody and control of the insured.
Term
The Ordinance or Law endorsement can be added to allow for:
 Definition
Coverage in the event of a building ordinance upgrade requirement.
Term
Aggregate limit refers to:
 Definition
The most an insurer will pay in any one policy period.
Term
The Glass Coverage form pays:
 Definition
Actual Cash Value without limitation per plate or pane, unless stated as replacement cost on the policy.
Term
Which of the following is NOT an excluded loss under the Commercial property forms?
 Definition
Volcanic Action
Term
A cause of loss form that doesn't list the covered losses is named all the following except:
 Definition
Broad Form
Term
A cause of loss form that doesn't list the covered losses is named all the following:
 Definition
Open peril
Special
All Risk
Term
Coverage A of the CGL policy covers:
 Definition
Bodily Injury and Property Damage the insured is legally obligated to pay due to a covered loss.
Term
All of the following are exclusions on the Commercial Causes of Loss Special form policy EXCEPT:
 Definition
Sinkhole collapse refill
Term
Willful and malicious damage to property, including burglars entering or exiting is called ___________.
 Definition
Vandalism
Term
Which form would you buy if you wanted to buy a Contingent Business Interruption form?
 Definition
Business Income from Dependent Properties Form
Term
Supplementary payments apply to which of the following coverages?
 Definition
Coverage A and B only
Term
Which one of the following is not a time limit for an insurer to notify a lender by written notice?
 Definition
20 days before the effective date for any other reason other than non-payment or non-renewal
Term
In a Commercial General Liability policy, Supplementary Payments covers which of the following?
 Definition
Loss of earnings for up to $100 per day.
Term
Which of the following statements are true regarding Blanket Insurance?
 Definition
There is a single limit of insurance for property at various locations or several types of property at one location.
Term
All of the following are exclusions under the CGL policy EXCEPT:
 Definition
Products and Completed Operations coverage.
Term
An exclusion section that limits the application of covered perils is found in:
 Definition
All cause of loss forms
Term
This form covers risk of direct physical loss subject to exclusions pertains to:
 Definition
Special form
Term
The Commercial Broad Form Causes of Loss include all of the following EXCEPT:
 Definition
Ordinance or Law
Term
Which of the following forms is NOT considered a Named Perils form?
 Definition
Special form
Term
What is the limit for glass coverage under the Glass Coverage Form/endorsement?
 Definition
Coverage provided without limitation and settled on an ACV basis.
Term
In the Definitions Section of a Commercial General Liability policy, "occurrence" means:
 Definition
All of these:
A one time event.
An event that is not discovered until years later.
An accident involving continuous or repeated exposure to the same general harmful conditions.
Term
Business Income and Extra Expense coverage would be necessary in which of the following cases?
 Definition
A dry cleaners has a fire and must relocate temporarily to avoid losing customers.
Term
What form would cover tenants for financial loss resulting from the cancellation of a lease due to property damage?
 Definition
Leasehold Interest Coverage Form
Term
Which Commercial Property Causes of Loss form has the broadest coverage?
 Definition
Special Causes of Loss
Term
Business Income from Dependent Properties covers:
 Definition
a loss that occurs at a property the insured does not own, but depends upon to run their business.
Term
The Commercial General Liability policy "territory" includes:
 Definition
The United States, its territories and possessions, Puerto Rico and Canada.
Term
Personal Injury means:
 Definition
Slander, libel, defamation of character.
Term
Revenue minus expenses describes:
 Definition
Net income
Term
Medical expense coverage on a CGL is provided by which coverage?
 Definition
Coverage C
Term
A Builders Risk policy:
 Definition
Must reflect a Coverage A limit of 100% of the value of the property.
Term
Which of the following perils are NOT covered under the Glass Coverage form?
 Definition
Fire Damage
Term
The perils that trigger coverage under the business income form are found:
 Definition
On the Declaration page
Term
Glass Breakage under a Broad Form Causes of Loss is covered for up to:
 Definition
$500 per occurrence
Term
Not subject to the per occurrence limit on a CGL would be:
 Definition
Personal & Advertising
Term
The Insured shall mean the following except:
 Definition
Governmental agency employees
Term
An employee adds an extra zero to their paycheck. This is covered under:
 Definition
employee dishonesty
Term
Commercial Excess Liability policies are unlike Personal Umbrellas in that:
 Definition
All of these:
Their deductibles are typically much higher.
There may not be an underlying policy that pays primary.
They cover commercial business risks.
Term
Negotiable and non-negotiable instruments are known as:
 Definition
securities
Term
_________is what the insured must pay before the Umbrella policy will respond if there is no coverage on the underlying policy or if the underlying insurance lapsed or was cancelled for some reason.
 Definition
Self-insured retention
Term
In crime coverages the discovery period applies to which policy form?
 Definition
Loss sustained form
Term
Directors and Officers coverage does not protect directors and officers of a corporation for:
 Definition
Punitive damages, fines and penalties against a director or officer.
Term
Professional liability policies are normally written on which form(s):
 Definition
claims made form
Term
__________ insurance is a type of coverage that protects businesses from the financial consequences associated with a variety of employment-related lawsuits.
 Definition
Employment Practices Liability
Term
In crime coverages the phrase theft, destruction, disappearance applies to:
 Definition
money & securities
Term
Key difference(s) between CGL and professional liability is/are:
 Definition
all of these are correct:
use of deductibles (SIR)
consent to settle
reporting periods
Term
Who would be covered under a commercial crime policy?
 Definition
Insured
Term
Professional Liability coverage is designed to cover:
 Definition
Errors on a contract drawn by of a real estate agent for a client.
Term
The primary types of Professional Liability insurance are all the following except:
 Definition
P & I
Term
Professional liability policies provide coverage for:
 Definition
both defense and damages
Term
Management liability insurance would include which of the following?
 Definition
All are included:
Employment Practices
Employee benefits
Director & Officers
Term
The main function of what policy is to provide higher limits of liability insurance in excess amounts over the underlying policy?
 Definition
Umbrella
Term
Crime policy form that is similar to CGL claims made in activating coverage?
 Definition
Discovery form
Term
Which of the following is false about the Supplemental Extended Reporting Period (SERP):
 Definition
There is no additional charge for this coverage.
Term
Under the Commercial Crime insurance policy, "occurrence" is defined as:
 Definition
An act or series of acts that may not involve people.
Term
Inside premises is which frequently used crime form?
 Definition
Form C
Term
The CEO of ABC corporation might need what type of Professional Liability insurance?
 Definition
Directors and Officers
Term
Errors & Omissions insurance would be needed for which of the following:
 Definition
An attorney who provides legal advice online for a fee.
Term
Which one of the following common insuring agreements would not be found within a Directors and Officers policy?
 Definition
Pending Litigation Coverage
Term
Theft on the Commercial Crime coverage form includes all of the following EXCEPT:
 Definition
Theft of stock or inventory
Term
After the policy has expired, the one year to discover a loss is called the:
 Definition
discovery period
Term
Which of the following is NOT a common advantage of the Claims Made form?
 Definition
Eliminates the possibility of a loss due to the insured`s negligence.
Term
A Claims Made reporting form states that:
 Definition
Covered claims are those reported within the policy period and occur no earlier than the retroactive date.
Term
Claims-made and reported policies are unfavorable from the ________ standpoint.
 Definition
Insured's
Term
________ requires a confrontation with another person.
 Definition
Robbery
Term
The Commercial Articles Coverage Form is provided on an:
 Definition
All-risk basis
Term
Mayberry Construction has a Business Auto policy covering a 1995 pickup truck for liability and physical damage coverage. At the time of an accident, the driver of the pickup truck was pulling a trailer carrying a bulldozer. If the bulldozer slips off and causes bodily injury to another party, there is coverage under which of the following policies?
 Definition
The Business Auto Policy
Term
Which of the following is NOT a common exclusion on the Boiler & Machinery policy?
 Definition
Breakdown of refrigeration units
Term
Which are excluded under the BPP but covered under the EDP?
 Definition
All of these:
Electrical surges
Change in temperature
Dropping the computer
Term
Which of the following would be used to cover property of others left in a camera shop for repair?
 Definition
A Camera & Musical Instrument Dealers/Commercial Articles coverage form
Term
When a claim is settled on an ACV basis, B & M equipment must be repaired or replaced within how many months?
 Definition
18 months
Term
The courts do not recognize the carrier as liable for a loss to another`s property by any of the following acts except:
 Definition
Acts of faulty construction
Term
The definition of _________ for the Boiler and Machinery form is sudden and accidental (not intentional) breakdown of an object.
 Definition
accident
Term
A carrier of cargo is NOT liable for damage in all of the following situations, EXCEPT:
 Definition
A collision due to a mechanical malfunction.
Term
What coverage form has the sole purpose of insuring most types of industrial risks for direct damage by an accident?
 Definition
Boiler and Machinery Coverage Form
Term
What form would be used to cover a business that owns several laptop computers used by employees off premises?
 Definition
Electronic Data Processing Equipment Coverage form
Term
Which of the following would purchase the Motor Truck Cargo form?
 Definition
A grocery store that owns trucks and ships its own goods to its various owned locations.
Term
Which of the following is a filed commercial inland marine form?
 Definition
Mail coverage form
Term
With Boiler and Machinery, insurance carriers place great emphasis on:
 Definition
Loss control and inspections
Term
Medical books in a Doctors library at home would be best insured under:
 Definition
Physician & Surgeons
Term
Coverage that can be provided for goods shipped by several different carriers during a transport until they reach their ultimate destination is called ___________.
 Definition
Trip Transit Coverage
Term
The Signs Coverage form is necessary when:
 Definition
An insured has more than a $1000 value in signs or has any detached signs.
Term
A policy designed to fill in the gaps of a property policy would be?
 Definition
Difference in Conditions
Term
The 2 types of Inland Marine policy forms are Filed and Non-filed. All of the following are true about the advantages of a Filed form, EXCEPT:
 Definition
The rates are cheaper than non-filed forms.
Term
A Released Bill of Lading assures:
 Definition
That the carrier of goods will not be responsible for any more than the stated value on the contract.
Term
If a boiler in a church building were to blow up and cause property damage and injury, which coverage would be necessary to cover this loss?
 Definition
Equipment Breakdown (Boiler & Machinery) coverage
Term
The two types of transit coverage are:
 Definition
Annual and Trip Transit coverage
Term
Which of the following is issued under the Motor Truck Cargo Form?
 Definition
All of these:
Trucker's form
Owner's form
Shipper's Form
Term
The valuation clause on an Inland Marine forms states all of the following except:
 Definition
The values will be established base on the higher of the above
Term
The commercial inland marine "signs" form would not insure:
 Definition
Billboards
Term
Which of the following applies to Commercial Inland Marine Coverage Part?
 Definition
All of these are true:
Open Perils
Class rated
Filed forms
Term
A Bailee is defined in the insurance industry as:
 Definition
One who is entrusted with the property of others.
Term
Non-filed commercial inland marine forms are also known as:
 Definition
Both uncontrolled and unregulated
Term
Boiler and Machinery is now known as:
 Definition
Equipment Breakdown
Term
All of the following are excluded on an equipment breakdown form, except:
 Definition
Steam boilers
Term
Which one of the following would be insured under a Business Auto Policy?
 Definition
Customer who borrowed a company car with permission
Term
Drive other car endorsement on a Business auto may be used to cover:
 Definition
non-business exposures
Term
Which of the following is NOT a Specified Cause of Loss?
 Definition
Aircraft
Term
Which is not included in a Business Auto physical damage coverage?
 Definition
Property damage liability
Term
Trailer interchange coverage applies to which commercial auto form(s)?
 Definition
Both truckers form and moter carrier form
Term
The four major exposures to an auto-related business owner that are covered on a Garage plan are:
 Definition
Premises Operations, Completed Operations, Product, and Auto Liability
Term
Physical Damage cover applies to all the symbols, except:
 Definition
Both Symbol #1 and #9
Term
Within a BAP, which auto symbol applies to mobile equipment?
 Definition
19
Term
Which is incorrect concerning the truckers form?
 Definition
All are incorrect:
Similar to the BAP
Covers big rigs
Must haul for hire
Term
Garage Operations refers to:
 Definition
Ownership, maintenance, or use of a garage premises and autos in the insured`s care.
Term
Garage liability is broader than business auto liability because:
 Definition
It covers CGL and auto
Term
An owner of an auto repair business would be best covered under which of the following?
 Definition
A Garage Liability Coverage form.
Term
Coverage not included in a business auto policy would be:
 Definition
UMBI
Term
What would be needed if a business owner had no personally owned vehicles, but wanted insurance on a rental car he personally rented on vacation?
 Definition
A Drive Other Car Endorsement
Term
A business auto is defined as all of the following except:
 Definition
Golf cart used for business owned by the named insured
Term
One of the major differences between a business auto policy and a personal auto policy are the endorsements. Which coverage listed below is considered an endorsement on the business auto policy?
 Definition
Uninsured Motorist and Medical coverage
Term
All of the following are considered a Specified Cause of Loss under the Business Auto Policy EXCEPT:
 Definition
Mechanical Breakdown
Term
Newly acquired vehicles are not automatically covered under which symbol?
 Definition
Seven
Term
Under Truckers Coverage the definition for a trucker is:
 Definition
is someone in the business of transporting the property of others by vehicle (auto or truck) for a fee.
Term
Which one of the following is not a major exposure to a business owner of an auto related facility?
 Definition
Professional liability
Term
The Motor Carrier Act of 1980 states that a trucker must file proof of financial responsibility in order to meet the bodily injury and property damage minimum requirements for third party claims. Which of the following requirement is false?
 Definition
$5 million for oil an other hazardous wastes
Term
Which symbol(s) covers the exposure of employer's non-ownership liability?
 Definition
Symbols #8 and #9
Term
This coverage applies only when the insured is found legally liable for the damage to a customer's vehicle:
 Definition
Garagekeepers Legal Liability
Term
Which of the following statements is FALSE about the Motor Carrier Act of 1980?
 Definition
This act makes purchasing an insurance policy a requirement for anyone transporting hazardous materials.
Incorrect Answer
Term
A parking garage would be BEST insured under which form(s):
 Definition
Garagekeepers Direct Coverage (Primary)
Term
The Truckers Coverage form is most similar to what other form of coverage?
 Definition
The Non-Owner Personal Auto Policy
Term
Mobile Equipment subject to financial responsibility would be symbol:
 Definition
Nineteen
Term
Which of the following symbols used on a business auto policy offers the broadest coverage?
 Definition
Symbol 1
Term
This coverage form that extends liability and physical damage to vehicles and trailers on a primary basis is named ___________.
 Definition
Trailer Interchange coverage
Term
All of the following are common exclusions on the BAP, EXCEPT:
 Definition
Trailers the insured leases for business use.
Term
Which of the following coverage is added by endorsement to the BOP policy?
 Definition
Earthquake
Term
BOP liability must include which of the following:
 Definition
All must be included:
Medical expense
BI & PD
PI & AI
Term
In order to sell Flood insurance the producer must be:
 Definition
Complete 3 hour course
Term
The oldest type of insurance in the world is:
 Definition
Ocean Marine insurance
Term
The Businessowners Policy (BOP) is a package policy combining what types of coverages?
 Definition
Liability, Property, Business Income & Extra Expense and Property of Others coverage
Term
The bond is written for the benefit of the:
 Definition
Obligee
Term
A Named Peril policy in Ocean Marine insurance refers to "perils on the sea" and "perils of the sea". These perils do NOT include:
 Definition
Explosion
Term
The Broad form includes perils for livestock for a farm risk which include:
 Definition
All of these are included:
Accidental shooting
Drowning
Electrocution
Term
The difference in perils covered on the Commercial Property policy and the Standard form Businessowners policy is:
 Definition
The peril of Transportation.
Term
Which of the following is NOT a common exclusion in the Flood Insurance program?
 Definition
Contents
Term
Which of the following is FALSE about the characteristics of a BOP policy?
 Definition
Loss of income is coverage up to stated limit.
Term
The amount the bond is issued for is known as the:
 Definition
Penalty
Term
If a shipowner who purchases an Ocean Marine policy on an All Risk form runs into a dock while transporting cargo for a customer, the policy would pay for:
 Definition
Damages to the ship, dock, cargo and any resulting bodily injury; including that of injured employees.
Term
BOP's provide coverage for property of others under:
 Definition
Personal property
Term
Protection & Indemnity coverage includes all of the following claims EXCEPT:
 Definition
Shipping Costs that must be paid a second time.
Term
The FCIC is an agency that sells flood insurance policies:
 Definition
None of the above.
Term
In order to place flood insurance through the NFIP, licensed agents must also complete ______________.
 Definition
3 hours of continuing education before submitting the application.
Term
All of the following are NOT eligible businesses under the BOP program, EXCEPT:
 Definition
A 4 story apartment building with 60 total units.
Term
Transportation coverage on the BOP would apply to which of the following?
 Definition
Property of the insured, while being transported by vehicle to a business location, is involved in an accident damaging the insured's property.
Term
The three (3) parties to a Surety Bond contract are:
 Definition
The Principal, Surety and Obligee.
Term
BOP's benefit the insured by providing all of the following, except:
 Definition
Simplified reading
Term
The implied warranties understood by the ocean marine contract include all of the following, EXCEPT?
 Definition
All crew members are experienced seamen.
Term
All of the following are differences between a Bond and Insurance EXCEPT:
 Definition
A Bond is identical in nature to an Insurance contract.
Term
Under farm liability, which coverage is optional?
 Definition
All are mandatory
Term
BOP's property section cannot be written on which form?
 Definition
Broad form
Term
All of the following are covered perils on a crop insurance policy, EXCEPT:
 Definition
Inherent Vice
Term
Jettison is defined as:
 Definition
Throwing cargo overboard to lighten a ship.
Term
What unique exposure is present in a farming business?
 Definition
The need for Commercial and Residential coverage on the same property.
Term
The purpose of the Businessowners Program is designed for the owner of _______________.
 Definition
apartment buildings.
Term
Which of the following would be covered by a crop insurance policy?
 Definition
Loss of crops due to hail damage.
Term
Barratry is defined as:
 Definition
Intentional misconduct of a master or crew without the knowledge of the shipowner, resulting in damage or injury.
Term
The four (4) components of the Section II, Business Liability coverage are:
 Definition
Bodily Injury, Property Damage, Personal and Advertising Injury
Term
Ocean Marine liability is known as:
 Definition
P & I

Protection & Indemnity is ocean marine liability.
Term
Which of the following is NOT true regarding the National Flood Insurance Program?
 Definition
Anyone desiring flood insurance pay purchase it through the NFIP directly.

(You must be located in a flood zone to purchase flood insurance.)
Term
All of the following major perils are commonly insured under a crop insurance policy except:
 Definition
Chemical disease
Term
All of the following are true about the State Fund, EXCEPT:
 Definition
The State Fund may be used only as a last resort.
Term
Workers Compensation claims settle based on:
 Definition
statutory benefits
Term
According to a new legal development, AB996 Chapter 647, regarding hate crimes against reproductive health facilities, all of the following are true, EXCEPT:
 Definition
An insurer may cancel or non-renew a policy due to excessive hate crime claims with written notice to the insured no less than 45 days prior to the cancellation or non-renewal.
Term
Workers Compensation statutory benefits means:
 Definition
Minimum and maximum benefits, waiting periods, etc. are established by state law and all Workers Compensation policies sold in this state must meet these requirements.
Term
Which of the following was NOT a responsibility of an employer under common law obligations for Workers Compensation in the early 1900s?
 Definition
Assuming risk
Term
Which of the following is NOT true regarding the voluntary workers compensation endorsement?
 Definition
It provides workers compensation coverage when a regular employee of a business ALSO volunteers to work at business-sponsored events.
Term
OSHA was established to do all of the following, EXCEPT:
 Definition
Organize American employees in support of an Occupational Safety Union.
Term
When an employer has the choice of purchasing Workers Compensation insurance from either the State Compensation Fund or from any authorized private insurer, the Workers Compensation system is considered to be:
 Definition
competitive.
Term
Under the Workers Compensation policy, disability income benefits are payable to a partially disabled worker when:
 Definition
The injured worker can return to work, but is unable to earn the income once received.
Term
Statutory benefits are covered under what part of the WC insurance policy?
 Definition
Part I
Term
This defense states that the employee knew in advance the risks associated with the job and was paid a salary to assume those risks.
 Definition
Assumption of Risk
Term
In regards to workers compensation volunteer workers are considered to be:
 Definition
Both exempted workers and covered by endorsement are correct
Term
A workers compensation insurance policy provides:
 Definition
both statutory benefits and employer's liability are correct
Term
An insured who takes necessary precautions to reduce Workers Compensation claims or severity of losses, could receive a discount through:
 Definition
Experience Modification
Term
A state that does not allow private insurers to offer workers compensation:
 Definition
is a monopolistic state
Term
24 Hour coverage is defined as:
 Definition
Providing around-the-clock coverage through a Workers Compensation, Medical, and Group Disability policy.
Term
Which of the following is NOT an exempt category under Workers Compensation insurance?
 Definition
A small business with only one employee.
Term
The Second Injury Fund is:
 Definition
A Fund issued by the state, which assists in claims payments for totally disabled individuals who had a permanent pre-existing disability with their prior employment.
Term
According to a new legal development, AB984 Chapter 439, if an automobile service contract is considered an insurance policy:
 Definition
It must be pre-approved by the Insurance Commissioner and the seller must be licensed.
Term
The workers compensation policy was developed by:
 Definition
NCCI
Term
The California State Compensation Insurance fund is considered to be:
 Definition
both competitive fund and direct writer are correct
Term
For an employee's illness or injury to be covered it must:
 Definition
be work related
Term
The California Insurance Code defines 24-Hour Coverage as jointly issuing a Workers Compensation policy with a ________.
 Definition
Health care policy
Term
WC now limits chiropractic and physical therapy to:
 Definition
24 visits per injury
Term
Other States Insurance is Part Three (3) of the Workers Compensation policy and covers:
 Definition
Employees who travel out of state on work assignments and provides the statutory limits of the state in which they are working.
Term
The establishment of Workers Compensation laws:
 Definition
Was foundational to building a relationship between the employer and employee
Term
Employer's liability coverage covers what type of claims?
 Definition
Common law claims
Term
The percentage of a deceased worker`s weekly wages payable to the spouse and dependent children is:
 Definition
66 2/3 percent
Term
According to a new development, AB 227 Chapter 635 regarding Workers Compensation and the California Insurance Guaranty Association, which of the following is NOT true?
 Definition
Fines for filing fraudulent Workers Compensation claims were increased to a minimum of $5,000.00
Term
In 1995, the "open rating system" gave companies a competitive edge in that:
 Definition
Workers Compensation insurance companies no longer had to file their rates and wait for approval from the Department of Insurance and no minimum rates were mandated.
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