Term
1. Which of the following is covered by a building and personal property coverage form?
A. Patio
B. Light pole
C. Bridge
D. Dock |
|
Definition
|
|
Term
2. What steps need to be taken to terminate a licensee’s license that is in the possession of the employer?
A. The employer must return the license to the licensee, who then must return the license to the insurance
commissioner
B. The licensee must give written notice to the employer who then sends the license to the insurance
commissioner
C. The license cannot be terminated prior to the expiration date, it becomes inactive
D. The licensee needs to give written notice of intent to the insurance commissioner |
|
Definition
| D. The licensee needs to give written notice of intent to the insurance commissioner |
|
|
Term
3a. What will happen when an agent’s appointment to an insurance company is terminated and the agent
has no other appointments with any other insurance company?
A. The agent’s permanent license becomes inactive
B. The agent’s permanent license remains fully active until expiration
C. The agent’s permanent license remains in force for only 60 more days unless the agent becomes reappointed or receives a new appointment letter from another insurer
D. The agent’s permanent license will be terminated simultaneously |
|
Definition
|
|
Term
3b. How long can you leave your license on inactive status?
A. 1 year
B. 2 years
C. 3 years
D. Indefinitely |
|
Definition
|
|
Term
4. What gives an insured the right to seek compensation if it is proven that another person with negligence
contributed to the injury?
A. Statutory code
B. Tort law
C. Criminal code
D. Case law |
|
Definition
|
|
Term
5. Surplus lines brokers
A. Are always employees of insurance companies
B. Transact business only with admitted insurers
C. Specialize in marine insurance
D. Transact business only with non-admitted insurers |
|
Definition
| D. Transact business only with non-admitted insurers |
|
|
Term
6. Which of the following is an insurer’s option when making a settlement with the insured under a personal
auto policy?
A. Return stolen property to the address shown in the policy
B. Have the insured purchase the auto at an auto auction
C. Demand that the insured first attempt to settle with the responsible party
D. Instruct the insured to repair the vehicle at a designated repair shop |
|
Definition
| A. Return stolen property to the address shown in the policy |
|
|
Term
7. Which of the following is a common policy condition for a commercial package policy?
A. Cause of loss
B. Duty to defend
C. Pro-rata clause
D. Inspections and surveys |
|
Definition
| D. Inspections and surveys |
|
|
Term
8. Insurance which covers ship owners against vicarious liability claims due to operating the insured vessel
is:
A. A voyage policy
B. Hull insurance
C. The sue and labor laws
D. Protection and indemnity insurance |
|
Definition
| D. Protection and indemnity insurance |
|
|
Term
9. Which advisory organization(s) develop forms for the standard market?
A. National Association of Insurance Commissioners and the American Association of Insurance Services
B. Insurance Services Office
C. National Association of Insurance Commissioners and the Insurance Office
D. Insurance Services Office and the American Association of Managing General Agents |
|
Definition
| B. Insurance Services Office |
|
|
Term
10. What is one of the main factors that the Insurance Commissioner uses while determining whether a
rate is excessive or unfairly discriminatory?
A. Whether the rate mathematically reflects the insurance company’s investment income
B. How long the insurer has been admitted to do business in the state
C. Complaint history of the insurer by insureds
D. The degree of competitition |
|
Definition
| A. Whether the rate mathematically reflects the insurance company’s investment income |
|
|
Term
11a. Which of the following perils is covered by a “cause of loss – basic form?”
A. Governmental action
B. War
C. Riot or civil commotion
D. Ordinance or law |
|
Definition
| C. Riot or civil commotion |
|
|
Term
11b. Which of the following is not an example of an extended coverage peril?
A. Windstorm
B. Aircraft
C. Earthquake
D. Smoke |
|
Definition
|
|
Term
12. The commercial property policy part “cause of loss – broad form” includes an exclusion for “concurrent
causation.” The effect of this exclusion is:
A. If two or more perils happen at the same time to cause a loss, there is no coverage if any of the perils are
excluded
B. If two or more perils happen at the same time to cause a loss, there is coverage for all of the damage if any
of the perils are not specifically excluded
C. If a loss occurs concurrently with the expiration date of the policy, it is not covered
D. If two or more perils happen at the same time to cause a loss, then only the damage caused by one of the
perils is covered |
|
Definition
B. If two or more perils happen at the same time to cause a loss, there is coverage for all of the damage if any
of the perils are not specifically excluded |
|
|
Term
13a. A physician may have misdiagnosed a patient for terminal cancer. What type of insurance would
protect the physician for this type of mistake?
A. Personal liability
B. Professional liability
C. Health insurance
D. Allied lines insurance |
|
Definition
| B. Professional liability |
|
|
Term
13b. A physician may have misdiagnosed a patient for terminal cancer. What type of insurance would
protect the physician for this type of mistake?
A. Personal liability
B. Malpractice insurance
C. Health insurance
D. Allied lines insurance |
|
Definition
|
|
Term
14a. What coverage is available under the named non-owner coverage endorsement?
A. Physical damage and uninsured motorist
B. Liability, medical payments, and uninsured motorist
C. Liability and physical damage
D. Liability only |
|
Definition
| B. Liability, medical payments, and uninsured motorist |
|
|
Term
14b. What coverage is available under the extended non-owner coverage endorsement?
A. Physical damage and uninsured motorist
B. Liability, medical payments, and uninsured motorist
C. Liability and physical damage
D. Liability only |
|
Definition
| B. Liability, medical payments, and uninsured motorist |
|
|
Term
15. Which is the following is considered special damages?
A. Compensation for a person’s emotional suffering
B. Compensation for time away from work
C. Compensation for loss of a foot
D. Compensation for a scar |
|
Definition
| B. Compensation for time away from work |
|
|
Term
16. All of the following are mandatory coverages of a business-owners policy, except:
A. Extra expense coverage
B. Professional liability coverage
C. Building coverage
D. Business income coverage |
|
Definition
| B. Professional liability coverage |
|
|
Term
17. An agent who diverts premium dollars for the agent’s own use is guilty of:
A. Theft
B. Fraud
C. Forgery
D. Misrepresentation |
|
Definition
|
|
Term
18. Every admitted insurer in the state of California is required to maintain a unit or division to investigate
which of the following:
A. Possible non-justifiable discrimination
B. Possible fraudulent claims made by insureds
C. Possible non-compliance with CA rate laws
D. Possible arson claims |
|
Definition
| B. Possible fraudulent claims made by insureds |
|
|
Term
19. Which of the following would be considered special damages?
A. Scarring
B. Loss of an index finger
C. Lost wages
D. Pain and suffering |
|
Definition
|
|
Term
20a. What is one of the principle rating factors under Proposition 103 (Unruh Act) allowed for personal auto
policies?
A. Credit record
B. Year of the auto
C. Safety driving record
D. Make of the auto |
|
Definition
|
|
Term
20b. What is the most important rating factor under Proposition 103 (Unruh Act) allowed for personal auto
policies?
A. Number of miles driven annually
B. Years of driving experience
C. Safety driving record
D. Other factors related to the risk |
|
Definition
|
|
Term
21. Which of the following is eligible for a Businessowners policy?
A. An auto repair shop
B. A credit union
C. A furniture store
D. A sports bar |
|
Definition
|
|
Term
22. All of the following are listed on a Commercial General Liability declarations page, except:
A. Medical expense limit
B. Rented to you limit
C. Personal advertising injury limit
D. Pollution liability limit |
|
Definition
| D. Pollution liability limit |
|
|
Term
23. The term “subrogation” refers to:
A. The insured’s right to receive broadened coverage at no extra charge
B. The insurance policy applies separately to each insured
C. The insurer’s right to recover payment from a responsible third party
D. The transfer of the insured’s interest in a policy to another party |
|
Definition
| C. The insurer’s right to recover payment from a responsible third party |
|
|
Term
24. All of the following statements concerning business owner’s policies are true, except:
A. It allows insurers to individually underwrite the smaller low-premium policies
B. It contains simpler reading which owner handling costs for insurers
C. Insureds have the benefit of additional coverages that might otherwise be overlooked
D. Insureds have the convenience to one policy that meets most of their needs at a reduced premium |
|
Definition
| C. Insureds have the benefit of additional coverages that might otherwise be overlooked |
|
|
Term
25. Under an unendorsed personal auto policy, what coverage is available for personal effects?
A. None
B. Luggage and clothing up to $500
C. Luggage up to $200
D. All personal property in the auto up to $500 |
|
Definition
|
|
Term
26. A home is damaged minutes after an earthquake, first by fire, then by fuel pipes bursting and causing
an explosion. Under an HO-3 form:
A. There is no coverage unless the homeowner has made an earthquake coverage endorsement a part of the
policy
B. The policy covers all of the damage since explosion is an insured peril
C. There is no coverage, but only for the damage caused by the fire and explosion
D. The policy does not cover the damage since the HO-3 provides only named peril coverage |
|
Definition
| C. There is no coverage, but only for the damage caused by the fire and explosion |
|
|
Term
27. The insurer’s right to recover its claim payment to an insured from a negligent third party is known as:
A. Liberalization
B. Arbitration
C. Subrogation
D. Assignment |
|
Definition
|
|
Term
28. All of the following are requirements for a notice by mail to an insured by an insurer, except:
A. Notice must be mailed to the residence or principal place of business
B. Notice must be sent with return receipt required
C. Notice must be addressed to the person being notified
D. Postage must be prepaid |
|
Definition
| B. Notice must be sent with return receipt required |
|
|
Term
29. If the vacancy permit endorsement is added to a building and personal property coverage form, the
vacancy condition under the basic policy is:
A. Waived after the policy period
B. Waived only for designated perils during the policy period
C. Waived only for designated perils during the permit period
D. Waived during the permit period. |
|
Definition
| C. Waived only for designated perils during the permit period |
|
|
Term
30. Under the commercial building and personal property coverage extensions, property off-premises is not
covered while the property is located:
A. In the building the named insured has leased for five years
B. At a trade fair
C. In a delivery truck
D. At a salesperson’s home |
|
Definition
|
|
Term
31. If the named insured is not the owner of the building, improvements and betterments are covered
under the:
A. Agreed value
B. Newly constructed property
C. Business personal property
D. Building |
|
Definition
| C. Business personal property |
|
|
Term
32a. A person can base his/her claim for legal liability on the basis of all of the following except:
A. Absolute liability
B. Breach of contract
C. Intentional tort
D. Negligence |
|
Definition
|
|
Term
32b. All the following are related to tort law, except:
A. Absolute liability
B. Breach of contract
C. Intentional tort
D. Negligence |
|
Definition
|
|
Term
33. Which of the following statements is true regarding insurers with admitted status in California?
A. They may use race, color, religion, or national origin as a condition to use higher rates
B. They may use any rating methods that are actuarially sound in rating the policy
C. They may not use race, color, religion, or national origin as a condition to use higher rates
D. They must file for an exemption with the insurance commissioner if they wish to use race, color, religion, or
national origin as a rating condition |
|
Definition
| C. They may not use race, color, religion, or national origin as a condition to use higher rates |
|
|
Term
34. The term “assignment” refers to:
A. The insurance policy applying to each insured
B. The insurer’s right to collect damages from a third party
C. The transfer of the insured’s interest in a policy to another party
D. The insured’s right to receive broad new coverage from the insurer at no charge |
|
Definition
| C. The transfer of the insured’s interest in a policy to another party |
|
|
Term
35. Which of the following describes the act of making a false entry in any book, statement or report of any
insurer with the intent to deceive any examiner lawfully appointed to examine the insurer’s affairs?
A. An aleatory act
B. An error or omission
C. An exclusionary act
D. An unfair practice |
|
Definition
|
|
Term
36. Under the business income coverage form, extra expenses are:
A. Covered without limit during the period of restoration
B. Excluded
C. Covered up to the amount they reduce the business income loss
D. Covered up to the monthly limit specified in the declarations |
|
Definition
|
|
Term
37. If an insured purchases an all-terrain vehicle (ATV), what endorsement can be added to the personal
auto policy to insure the vehicle?
A. ATV endorsement
B. Recreational vehicle endorsement
C. There is no endorsement for this exposure
D. Miscellaneous type vehicle endorsement |
|
Definition
| D. Miscellaneous type vehicle endorsement |
|
|
Term
38. All of the following are areas that market regulation covers, except:
A. Employee training
B. Underwriting
C. Sales
D. Rate-making |
|
Definition
|
|
Term
39. All of the following are covered by Protection and Indemnity insurance, except:
A. Injury to persons on other ships
B. Injured passengers on the ship
C. The cost of reasonable measures that the insured must take to prevent damage at the time of loss
D. Damage to piers |
|
Definition
| C. The cost of reasonable measures that the insured must take to prevent damage at the time of loss |
|
|
Term
40. Under an unendorsed personal auto policy, transportation expense coverage applies to:
A. Theft losses only
B. Collision and other-than-collision losses
C. Other-than-collision losses only
D. None. There is no coverage |
|
Definition
| B. Collision and other-than-collision losses |
|
|
Term
41. Which of the following is an example of loss prevention?
A. A homeowner decides not to restore water damage to basement
B. A homeowner decides not to install a pool in the backyard
C. A homeowner installs a home sprinkler system
D. A homeowner installs a home security system |
|
Definition
B. A homeowner decides not to install a pool in the backyard
*The question is focusing on loss prevention, answers C and D are loss reduction. |
|
|
Term
42. All of the following are typical exclusions in an inland marine policy, except:
A. Insects or vermin
B. Earth movement
C. Wear and tear
D. Electrical breakdown |
|
Definition
|
|
Term
43. An organization will cease to exist as an entity eligible to hold a license for all of the following reasons,
except:
A. Termination of a key employee
B. Dissolution of a co-partnership
C. Dissolution of a corporation
D. Termination of an association |
|
Definition
| A. Termination of a key employee |
|
|
Term
44. An insurer’s loss reserve for a claim is:
A. The exact amount the insurer will have to pay to close the claim
B. An estimate of the amount the insurer will pay
C. The maximum amount the insurer will have to pay close to the claim
D. Equal to claims paid divided by earned premium reserve, not including loss of adjustment expense |
|
Definition
| B. An estimate of the amount the insurer will pay |
|
|
Term
45. What coverage is available under the miscellaneous type vehicle endorsement?
A. Physical damage only
B. All coverage under the personal auto policy
C. Liability and physical damage only
D. Liability only |
|
Definition
| B. All coverage under the personal auto policy |
|
|
Term
46. If an insured has a personal auto policy, but does not pay the initial insurance premium when it is
due. The insurer cancels the policy for non-payment. How many days of advance notice must the insurer
give?
A. 5 days
B. 10 days
C. 15 days
D. 20 days |
|
Definition
|
|
Term
47. If an individual does not own an auto, nor have regular use of an auto, what endorsement to a personal
auto policy could be used to properly protect that individual?
A. Named non-owned coverage endorsement
B. No coverage available
C. Extended non-owned liability coverage endorsement
D. Miscellaneous type vehicle endorsement |
|
Definition
| A. Named non-owned coverage endorsement |
|
|
Term
48. The watercraft endorsement on a homeowners policy extends coverage for:
A. Liability for all owned watercraft
B. Physical damage and liability for all owned watercraft
C. Liability coverage for watercraft listed on the schedule
D. Physical damage and liability coverage for watercraft listed on the schedule |
|
Definition
| C. Liability coverage for watercraft listed on the schedule |
|
|
Term
49. After a collision loss, the personal auto policy requires the insured to:
A. Submit a written notice of the loss to the company
B. Promptly notify the police of the accident
C. Press charges against the other party
D. Allow the company to inspect the damaged property before it is repaired |
|
Definition
| D. Allow the company to inspect the damaged property before it is repaired |
|
|
Term
50. Which coverages are typically provided in a boatowners policy?
A. Hull and collision
B. Hull, running down, and protection and indemnity
C. Property, liability, and medical payments
D. Physical damage, liability, and medical payments |
|
Definition
| D. Physical damage, liability, and medical payments |
|
|
Term
51. What is one way in which the HO-2, HO-4, and HO-6 similar?
A. Perils insured against under coverage A
B. The limits provided under coverage B
C. Perils insured against under coverage D
D. The limits provided for under coverage C |
|
Definition
| D. The limits provided for under coverage C |
|
|
Term
52. A commercial general liability (CGL) policy is quite broad in scope. However, there are a substantial
number of exclusions. Three of the four following loss exposures are excluded. Identify the loss exposure
that is covered by an unendorsed CGL – property damage or liability arising out of:
A. The ownership of an airplane
B. An employee being injured while working on the insured’s premises
C. An accident while driving an owned automobile on a public highway
D. An employee accidentally injures a customer while working at the customer’s home |
|
Definition
| D. An employee accidentally injures a customer while working at the customer’s home |
|
|
Term
53. What causes of loss is/are covered under the business income coverage form?
A. Those shown on the declarations
B. All perils
C. Those included in the business income form
D. Broad form perils only |
|
Definition
| A. Those shown on the declarations |
|
|
Term
54. When an employer has a choice to purchase workers compensation insurance from a state fund or a
private carrier, the state fund would be called?
A. A residual fund
B. A monopolistic fund
C. A competitive state fund
D. A private fund |
|
Definition
| C. A competitive state fund |
|
|
Term
55. If an insured discovers an occurrence 75 days after the expiration of a claims-made commercial general
liability policy, what must the insured have in order for the loss to be covered?
A. A supplemental extended reporting period endorsement
B. Umbrella policy
C. The loss will not be covered because it was not reported during the policy period
D. Nothing; as long as the loss occurred during the policy period |
|
Definition
| A. A supplemental extended reporting period endorsement |
|
|
Term
56. What is the main purpose of tort law?
A. To minimize the amount of insurance claims made
B. To determine responsibility for damages
C. To prosecute the responsible party
D. To assign punitive damages to the responsible party |
|
Definition
| B. To determine responsibility for damages |
|
|
Term
57. The inspections and surveys condition of a commercial package policy is important to the insurer for all
of the following reasons, except:
A. Make loss control recommendations
B. Guarantee that the insured is in compliance with safety regulations
C. To set proper insurance rates
D. To determine the insurability of the insured’s operations |
|
Definition
| B. Guarantee that the insured is in compliance with safety regulations |
|
|
Term
58. Which of the following is not considered an intentional tort?
A. Auto accident
B. Blasting operations
C. Unauthorized release of confidential information
D. Ownership of a pet rattlesnake |
|
Definition
|
|
Term
59. What is the purpose of the inspections and surveys condition of the commercial package policy?
A. To determine if the premises comply with ADA requirements
B. To ascertain if the premises has maintained the required building codes
C. To determine the rate to be charged
D. To specify if the premises comply with OSHA requirements |
|
Definition
| C. To determine the rate to be charged |
|
|
Term
60. Which of the following statements is true regarding compensatory damages?
A. General damages have specific economic value
B. Punitive damages are awarded to a person for actual pain and suffering
C. Special damages do not have a specific economic value
D. There is usually no direct correlation between the amount of general and special damages awarded to the
victim |
|
Definition
D. There is usually no direct correlation between the amount of general and special damages awarded to the
victim |
|
|
Term
61. When does a personal auto policy require the insured to notify the police?
A. For thefts only
B. There is no requirement to notify the police
C. For hit and run accidents and thefts
D. For all accidents and thefts |
|
Definition
| C. For hit and run accidents and thefts |
|
|
Term
62. What coverage is available under the extended non-owned liability coverage?
A. Liability, medical payments, and uninsured motorist
B. Liability and physical damage
C. Liability and medical payments
D. Liability only |
|
Definition
| A. Liability, medical payments, and uninsured motorist |
|
|
Term
63. Why is the examination of books and records condition important in a commercial policy?
A. To ensure that the insurance business is profitable
B. To ensure that the insurer is using generally accepted accounting principles
C. To ensure that the proper amount of premium is charged
D. To ensure that the insurance business is solvent |
|
Definition
| C. To ensure that the proper amount of premium is charged |
|
|
Term
64. What is the limit per day for transportation expenses in an unendorsed personal auto policy?
A. $10
B. $15
C. $20
D. None |
|
Definition
|
|
Term
65. Which homeowners form is best for use on a brand-new family dwelling?
A. HO-4
B. HO-5
C. HO-6
D. HO-8 |
|
Definition
|
|
Term
66. The ordinance or law limitation in a homeowners policy may cause a gap in coverage in which of the
following situations?
A. A law requires all swimming pools on a residential property to be fenced and to have self-closing gates. The
insured’s gate is not self-closing, and the neighbor’s child goes through the gate and is severely injured when
he falls into the insured’s pool
B. The insured has a business occupancy that is permitted by homeowner’s rules and does not affect his
coverage. However, local community laws prohibit the occupancy unless certain approvals are obtained and
fees paid. The insured has not obtained approvals nor paid fees prior to windstorm damage to his home
C. The insured’s home is damaged by fire and must be rebuilt to meet present building codes. The additional
cost of complying with the codes is 50%
D. A community ordinance requires dogs to be on a leash. The insured’s dog, running free in a park, bites a child |
|
Definition
C. The insured’s home is damaged by fire and must be rebuilt to meet present building codes. The additional
cost of complying with the codes is 50% |
|
|
Term
67. What additional coverages does a DP-2 have as compared to a DP-1?
A. Additional living expenses
B. Improvements, alterations, and additions
C. Personal liability
D. Debris removal |
|
Definition
| A. Additional living expenses |
|
|
Term
68. Which of the following collapse losses would be covered under an HO-3?
A. Known insect damage
B. Weight of contents
C. Defective workmanship completed two years ago
D. Earth movement from a volcanic eruption |
|
Definition
|
|
Term
69. Coverage under a comprehensive personal liability policy (CPL) or a homeowners section II extends:
A. Only to the premises described in the policy
B. To the premises described and to the personal activities of the insureds on or off of the premises
C. Only to the personal activities of the insureds
D. To the premises described and to al personal and business activities of the insureds on or off the described
premises |
|
Definition
| B. To the premises described and to the personal activities of the insureds on or off of the premises |
|
|
Term
70. Absolute risk or liability is imposed:
A. When the injured party assumes the risk
B. When there is negligence whether proven or not
C. When there is intent to cause injury
D. None of the above |
|
Definition
| B. When there is negligence whether proven or not |
|
|
Term
71. Which of the following coverages may you buy with a named operator policy? (Choose the most
complete answer)
A. Liability only
B. Liability and uninsured motorist
C. Liability, medical payments, and uninsured motorist
D. Liability, medical payments, uninsured motorist, collision and other than collision |
|
Definition
| C. Liability, medical payments, and uninsured motorist |
|
|
Term
72. Which of the following coverages may you buy with an extended non-owner policy? (Choose the most
compete answer)
A. Liability only
B. Liability and uninsured motorist
C. Liability, medical payments, and uninsured motorist
D. Liability, medical payments, uninsured motorist, collision and other than collision |
|
Definition
| C. Liability, medical payments, and uninsured motorist |
|
|
Term
73. A is in an accident with B. A suffers $10,000 of damage, but it is determined that A is 25% responsible
for the accident. How much would A receive under comparative negligence rules?
A. $0
B. $2,500
C. $7,500
D. $10,000 |
|
Definition
|
|
Term
74. X is in an accident with Y. X suffers $5,000 of damage but it is determined that X is 60% responsible for
the accident. How much would X receive under contributory negligence rules?
A. $0
B. $2,000
C. $3,000
D. $5,000 |
|
Definition
|
|
Term
75. Under California law, if there are several people injured in one accident, what is the minimum amount
of financial responsibility required?
A. $5,000
B. $10,000
C. $15,000
D. $30,000 |
|
Definition
|
|
Term
76. The negotiation of a policy involves which of the following?
A. Signing an application form
B. Adding an endorsement to the policy
C. Sending the prospect an email suggesting that they buy a certain type of policy
D. Making a premium payment |
|
Definition
| C. Sending the prospect an email suggesting that they buy a certain type of policy |
|
|
Term
77. An applicant for insurance does not reveal information that the insurer would rely upon to issue the
policy, this is a/an:
A. Misrepresentation
B. Intimidation
C. Boycott
D. Coercion |
|
Definition
|
|
Term
78. The provision in a property policy which states that the insured has been paid up to their insurable
interest is:
A. Valuation clause
B. Actual cash value
C. Guaranteed replacement
D. Stated value |
|
Definition
|
|
Term
79. The part of the policy that establishes limits upon the insurer is:
A. Insuring agreements
B. Exclusions
C. Conditions
D. Declarations |
|
Definition
|
|
Term
80. To be covered for a hit and run accident under the uninsured motorist property damage coverage of a
PAP, what is required to be provided to the insurer?
A. Photographs identifying the hit and run vehicle
B. License number of the hit and run vehicle
C. Testimony of an eyewitness to the accident
D. Legal affidavit describing the accident |
|
Definition
| B. License number of the hit and run vehicle |
|
|
Term
81. Who is responsible for damage to improvements in a leased building?
A. Both the tenant and the building owner
B. Tenant
C. Building owner
D. Improvements to a leased building are not covered |
|
Definition
|
|
Term
82. An insurer licensed to transact insurance in California is:
A. Authorized
B. Admitted
C. Allowed
D. Approved |
|
Definition
|
|
Term
83. Which of the following is not a federal program?
A. National Flood Insurance Program
B. Workers Compensation
C. Federal Crop Insurance Corporation
D. Federal Deposit Insurance Corporation |
|
Definition
|
|
Term
84. Hull coverage in an Ocean Marine Policy covers which of the following?
A. The ship owner’s liability
B. The vessel itself, including engines and fuel
C. The freight charged for the transportation of the cargo
D. Cargo being transported on the ship |
|
Definition
| B. The vessel itself, including engines and fuel |
|
|
Term
85. What are the characteristics of negligence?
A. Duty and breach of duty
B. Breach of duty and damages caused
C. Breach and proximate cause
D. Duty, breach, proximate cause, and damages |
|
Definition
| D. Duty, breach, proximate cause, and damages |
|
|
Term
86. Which of the following may be covered under the physical damage insuring agreement of a personal
auto policy (PAP)?
A. Damage to the vehicle caused by an engine failure
B. Loss of a CD player installed in the vehicle
C. Theft of a CB radio
D. All are covered |
|
Definition
| B. Loss of a CD player installed in the vehicle |
|
|
Term
87. The process whereby a mutual insurer becomes a stock company is known as:
A. Reorganization
B. Stock split
C. Demutualization
D. Stock buyout |
|
Definition
|
|
Term
88. The minimum discount provided for good drivers is:
A. 5%
B. 10%
C. 15%
D. 20% |
|
Definition
|
|
Term
89. Which is not part of transacting insurance?
A. Solicitation
B. Negotiation
C. Establishing a list of clients
D. Execution of a contract |
|
Definition
| C. Establishing a list of clients |
|
|
Term
90. A representation as to the future is considered to be a:
A. Provision
B. Promise
C. Liability
D. Description |
|
Definition
|
|
Term
91. When may a representation be withdrawn?
A. Only before the insurance is in effect
B. At any time as long as both parties agree
C. It can never be withdrawn
D. Only after the policy is in effect |
|
Definition
| A. Only before the insurance is in effect |
|
|
Term
92. A representation as to the past, present or future is a/an:
A. Warranty
B. Misrepresentation
C. Unverified fact
D. Verified promise |
|
Definition
|
|
Term
93. When must insurance records for insurance agents and 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
94. 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
95. Which of the following describes an insurer who has enough financial resources only to provide for all
its liabilities and for all reinsurance of all outstanding risks?
A. Guaranteed
B. Insolvent
C. Solvent
D. Non-participating |
|
Definition
|
|
Term
96. The execution of a policy involves which of the following?
A. Filling out an application
B. Discussing policy limits with the client
C. Signing a covering note
D. Cancelling a policy |
|
Definition
| C. Signing a covering note |
|
|
Term
97. The PAP collision deductible is $1,000 and the other than collision deductible if $500. How much would
the insurer pay for an accident involving the overturn of one vehicle resulting in $2,000 of damage?
A. $1,000
B. $1,500
C. $0
D. $2,000 |
|
Definition
|
|
Term
98. The PAP collision deductible is $1,000 and the other than collision deductible if $500. How much would
the insurer pay for an accident involving vandalism of one vehicle resulting in $2,000 of damage?
A. $1,000
B. $1,500
C. $0
D. $2,000 |
|
Definition
|
|
Term
99. If a bartender allows a patron to leave the bar, and the patron is involved in a drunk driving accident,
what would the bar owner need to cover their liability?
A. Liquor liability
B. Commercial general liability
C. Host liquor liability
D. Professional liability |
|
Definition
|
|
Term
100. The insurer decides not to renew an insured’s personal auto policy. How much notice must the insurer
provide to the insured?
A. 10 days
B. 20 days
C. 30 days
D. 5 days |
|
Definition
|
|
Term
101. Equipment breakdown insurance covers all of the following, except:
A. Tools subject to regular replacement
B. Communication equipment
C. Mechanical equipment used to produce energy
D. Equipment powered by internal pressure |
|
Definition
| A. Tools subject to regular replacement |
|
|
Term
102. All are differences between surety bonds and insurance except:
A. 3-party contract
B. Reserves are not established
C. The surety should not suffer a loss
D. The obligee is responsible to the guarantor in the case of a loss |
|
Definition
| D. The obligee is responsible to the guarantor in the case of a loss |
|
|
Term
103. Which is an additional benefit that is included in a DP-2 that is not included in a DP-1?
A. Lawns, trees and shrubs
B. Fire department services
C. Reasonable repairs
D. Debris removal |
|
Definition
| A. Lawns, trees and shrubs |
|
|
Term
104. In reference to surety bonds, who is responsible for paying the damages incurred by the principal?
A. Obligee
B. Surety
C. Bondsman
D. Principal |
|
Definition
|
|
Term
105. Which of the following are reasons why a professional liability policy is written on a claims-made
basis?
A. Minimize the effects of inflation
B. Minimize the time between when a loss occurs and a claim is filed and paid
C. Minimize the problem of stacking limits
D. All of the above are reasons |
|
Definition
| D. All of the above are reasons |
|
|
Term
106. A major part of the premium charged for boiler and machinery insurance is used for liability inspection
services.
A. True
B. False |
|
Definition
|
|
Term
107. Which of the following statements is false with regards to boiler and machinery coverage?
A. Coverage can be written as a mono-line or as part of a commercial policy
B. Property is insured on a replacement cost basis unless it is changed to ACV by endorsement
C. Coverage applies only to property the insured owns
D. Supplementary payments are provided in addition to the policy limit |
|
Definition
| C. Coverage applies only to property the insured owns |
|
|
Term
108. Ocean marine hull insurance provides for which of the following?
A. Cargo
B. Freight
C. Vessel
D. All of these are covered by hull insurance |
|
Definition
|
|
Term
109. Protection and Indemnity (P&I) coverage provides coverage for which of these?
A. Hull
B. Cargo
C. Freight
D. Liability |
|
Definition
|
|
Term
110. Each of the following is/are methods of cost valuation in an inland marine policy except:
A. Replacing the damaged property with almost identical property
B. Restoring the damaged property
C. Utilizing the market value of the damaged property
D. Calculating the actual cash value of the damaged property |
|
Definition
| C. Utilizing the market value of the damaged property |
|
|
Term
111-A. Approximately how many classes of insurance may be offered to the public?
A. 3
B. 5
C. 20
D. 30 |
|
Definition
|
|
Term
111-B. How many major sections are there in the California Insurance Code?
A. 3
B. 5
C. 20
D. 30 |
|
Definition
|
|
Term
112. When does the license of a fire and casualty broker/agent become inactive?
A. When the agent is not transacting with the general public
B. When the agent is not currently appointed by an insurer, but the renewal fees are paid and continuing
education requirements have been met
C. When the appointment agreement time period expires
D. When the licensee passes the renewal date |
|
Definition
B. When the agent is not currently appointed by an insurer, but the renewal fees are paid and continuing
education requirements have been met |
|
|
Term
113. Determine the actual cash value in the following situation:
Original price of office equipment when purchased: $9,000
Current replacement cost: $12,000
Depreciated amount at the time of the fire: $5,000
A. $4,000
B. $5,000
C. $6,000
D. $7,000 |
|
Definition
|
|
Term
114. Which of these is defined as an exclusive agent?
A. Sells health insurance only
B. Sells one line of insurance only
C. Sells one insurance company’s products only
D. Sell all policies by telephone only |
|
Definition
| C. Sells one insurance company’s products only |
|
|
Term
115. “Risk” is one of the most important terms in the insurance industry. How is it defined?
A. Certainty of a financial loss
B. Basis of a financial loss
C. Uncertainty of a financial loss
D. Predictability of a financial loss |
|
Definition
| C. Uncertainty of a financial loss |
|
|
Term
116. An insured has a personal auto policy with liability coverage only and an unendorsed HO-3
homeowners policy. The insured’s auto is parked in the garage when an earthquake strikes. The car and
garage are not damaged, but as a result of a broken gas line in the house which has been totally destroyed,
a fire results which destroys the car and the garage. The policies would pay for damage to which of the
following:
A. Auto only
B. House and garage only
C. Garage only
D. All three are covered |
|
Definition
|
|
Term
117. Which party is allowed to cancel a commercial policy (assuming all legal requirements are met)?
A. Insurance company only
B. Insurance company and/or any insured named in the policy
C. Insurance company and/or the first named insured in the policy
D. Insurance company and/or the first named insured, only concurrently |
|
Definition
| C. Insurance company and/or the first named insured in the policy |
|
|
Term
118. Which of the following crime coverages has the broadest definition?
A. Robbery
B. Safe burglary
C. Theft
D. Burglary |
|
Definition
|
|
Term
119. Which of the following coverage parts is not found in a standard commercial package policy?
A. Crime coverage part
B. Property coverage part
C. Dwelling coverage part
D. Boiler and machinery part |
|
Definition
| C. Dwelling coverage part |
|
|
Term
120. In a commercial property policy, which cause of loss form includes coverage for the peril of glass
breakage?
A. Basic and broad
B. Broad and special
C. Basic and special
D. Special only |
|
Definition
|
|
Term
121. The medical coverage found in a commercial general liability policy applies to which of the following
categories of individuals?
A. The insured’s employees while engaged only in a sports event that is employer sponsored
B. The insured’s employees while participating in any activities that are employer sponsored
C. The insured’s customers who are in the process of transacting business on the insured’s premises
D. The insured’s hired repair person who is fixing windows damaged by a peril insured by the policy |
|
Definition
| C. The insured’s customers who are in the process of transacting business on the insured’s premises |
|
|
Term
122. Which are covered by the employee dishonesty coverage form?
A. Robbery of an employee
B. Theft of stock from the business, owned by the policyholder, by an employee
C. Cash that is lost by an employee who is driving to the bank
D. Merchandise shortages that are discovered only after an inventory of the store |
|
Definition
| B. Theft of stock from the business, owned by the policyholder, by an employee |
|
|
Term
123. The symbol “4” on a business auto policy indicates coverage for which of the following categories of
vehicles?
A. Described autos only
B. All drivers and autos are covered, except for those driven by drivers under age 25
C. Vehicles of 2 tons or less, that are used for business purposes
D. Owned autos other than private passenger autos |
|
Definition
| D. Owned autos other than private passenger autos |
|
|
Term
124. A business owner, who is insured with a commercial auto policy, is interested in purchasing the
necessary liability coverage for any losses and subsequent claims that result from an employee’ use of their
own vehicles. What would be the best way to do this?
A. Require all employees to include the employer as a listed additional insured in their personal auto policies
B. Buy employer’s non-ownership liability in the commercial auto policy
C. Include uninsured motorist coverage in the commercial auto policy contract
D. This type of exposure cannot be covered |
|
Definition
| B. Buy employer’s non-ownership liability in the commercial auto policy |
|
|
Term
125. A single person does not own or lease an automobile. She occasionally drives her housemate’s vehicle
on an emergency basis. She is going on vacation and will have to rent a car. To obtain adequate
automobile insurance coverage when this occurs, what should she purchase?
A. The miscellaneous vehicle endorsement
B. The transportation extension endorsement
C. The extended non-owned coverage endorsement
D. The named non-owner coverage endorsement |
|
Definition
| D. The named non-owner coverage endorsement |
|
|
Term
126. You, as a licensed fire and casualty broker/agent, are suggesting coverages for a prospective client
who owns a condominium in a rural farm area in your territory. The following coverages are needed:
Fire and all extended coverage for his personal property
Liability coverage for himself and his wife and children
Coverage for any assessments that result from damage to any common areas
The correct recommendation would be:
A. An HO-2 contract
B. An HO-3 contract
C. An HO-4 contract
D. An HO-6 contract |
|
Definition
|
|
Term
127. The coverage found under both the Homeowners section II and a comprehensive personal liability
policy extends to which of the following?
A. Just the personal activities of the insured
B. Just the personal premises of the insured
C. Both personal and premises of the insured on a professional and personal exposure level
D. Both personal activities and premises of the insured as well as any activities of the insured that occur off the
named premises |
|
Definition
D. Both personal activities and premises of the insured as well as any activities of the insured that occur off the
named premises |
|
|
Term
128. The limit for personal property coverage under an HO-4 is $60,000 with no deductible. The insured is
vacationing in Europe when the bed and breakfast inn they are staying at burns. This is the loss to the
insured individual resulting from the fire:
Clothing and luggage - $20,000 (replacement cost)
Jewelry - $20,000 (replacement cost)
The calculated depreciation is 20%
What will the insurer pay under this policy?
A. $18,000
B. $24,000
C. $28,000
D. $32,000 |
|
Definition
|
|
Term
129. The limit for personal property coverage under an HO-4 is $60,000 with no deductible. The insured is
vacationing in Europe when the bed and breakfast inn they are staying at is burglarized. This is the loss to
the insured individual resulting from the theft:
Clothing and luggage - $20,000 (replacement cost)
Jewelry - $20,000 (replacement cost)
The calculated depreciation is 20%
What will the insurer pay under this policy?
A. $0
B. $17,500
C. $24,000
D. $32,000 |
|
Definition
|
|
Term
130. Damage which is the result of a hailstorm is covered under which of the following ways on a personal
auto policy?
A. Excluded as a catastrophic event
B. Covered as an other than collision loss
C. Covered as a collision loss
D. Covered only if the vehicle was under some type of covering at the time of the damaging storm |
|
Definition
| B. Covered as an other than collision loss |
|
|
Term
131. Which of the following is not covered under section II of a homeowners policy?
A. The insured being liable for the loss of use of property that is owned by another
B. Property damage to another’s owned property
C. Any personal liability of the insured
D. The insured being liable for a bodily injury to someone in the insured’s immediate resident family |
|
Definition
| D. The insured being liable for a bodily injury to someone in the insured’s immediate resident family |
|
|
