Q1 Leave a Comment / By admin / January 22, 2024 1. If an owner is insured under a building and personal property coverage form, when is the property considered vacant? Please select your answer When the structure is being renovated as the result of a fire. When the insured's operation is halted due to a strike. When there is insufficient personal property present to conduct customary operations. When less that 31% of the total space is rented to others or in use by the insured. 2. If a tenant is insured under a building and personal property coverage form, when is the property considered vacant? Please select your answer When the structure is being renovated as the result of a fire. When the insured's operation is halted due to a strike. When there is insufficient personal property present to conduct customary operations. When less that 31% of the total space is rented to others or in use by the insured 3. If the vacancy permit endorsement is added to a building and personal property coverage form, the vacancy conditions under the basic policy is: Please select your answer Waived only for designated perils during the permit period. Waived during the permit period. Waived during the policy period. Waived only for designated perils during the policy period. 4. Under a building and personal property coverage form, if the insured building has been vacant for more than 60 days, what effect will this have on a property loss? Please select your answer There is no effect. The loss is excluded. The amount of the loss will be reduced by 60%. The amount of the loss will be reduced by 15%. 5. Under a building and personal property coverage form, if the insured building has been vacant for more than 60 days, what effect will this have on a vandalism loss? Please select your answer There is no effect. The loss is excluded. The amount of the loss will be reduced by 60%. The amount of the loss will be reduced by 15%. 6. Which perils may be excepted from the vacancy permit endorsement? Please select your answer Building glass breakage and attempted theft. Sprinkler leakage and building glass breakage. Vandalism and attempted theft. Vandalism and sprinkler leakage. 7. Both the commercial general liability policy and the business auto policy have definitions of the term "automobile" and "mobile equipment". These definitions: Please select your answer Are the same, showing the policy writers are not very imaginative. This has no effect on gaps or overlaps between the two policies. Are the same, thus avoiding overlaps or gaps in coverage between the two policies. Are very different, thus avoiding overlaps or gaps in coverage between the two policies. Are very different, however, this has no effect on gaps or overlaps between the two policies. 8. Both the commercial general liability policy and the business auto policy have definitions of the term "automobile" and "mobile equipment". These coverage's: Please select your answer Are the same, showing the policy writers are not very imaginative. This has no effect on gaps or overlaps between the two policies. Are the same, thus avoiding overlaps or gaps in coverage between the two policies. Are very different, thus avoiding overlaps or gaps in coverage between the two policies. Are very different, however, this has no effect on gaps or overlaps between the two policies. 9. Extra expense insurance covers: Please select your answer Increased expense of repairing property to appreciated assets The extra expense that a business incurs to continue a business while damage to the premises are being restored The loss of profit a business incurs when it is shut down after a loss by a covered peril Payroll and other overhead incurred when a business is shut down after a loss 10. A plate glass/glass coverage form is needed by some insureds. Which of the following statements about the coverage for the peril of glass breakage in commercial property for a "building and personal property" basic, broad and special causes of loss forms is true? Please select your answer There is limited glass breakage coverage in both of the broad and special forms There is limited glass breakage coverage in the basic form No policy limits apply to glass breakage coverage in the special form, all named perils There is no glass breakage coverage in the broad or special forms 11. Which of the following types of coverage would pay for losses which occurred during the policy period and are found for up to one year after policy termination? Please select your answer Occurrence Loss sustained Claims made Discovery 12. Which coverage is needed to protect physicians, surgeons, and dentists for their professional activities? Please select your answer Commercial general liability Employer's liability Malpractice coverage Errors and omissions coverage 13. Which coverage is needed to protect physicians, surgeons, and dentists for their professional activities? Please select your answer Commercial general liability Employer's liability Professional liability Errors and omissions coverage 14. The equipment dealer's coverage form covers all of the following types of property, except: Please select your answer Dealer's used stock Customer's equipment in for service Motor vehicles designed for highway use Dealer's new stock 15. A reporting form is used for property insurance Please select your answer To maintain the correct limits of coverage without over or under insuring when the value or volume of the property varies during the policy term To report losses and adjust insurance in force to conform When the insured's premises are subject to periodic safety inspections To establish a guaranteed amount of insurance based upon a report of values submitted before the beginning of the policy term 16. All of the following contribute to the rising cost of Worker's Compensation Insurance, except: Please select your answer The growing population Employers who fail to secure the payment of workers compensation as required by law Under-reported payroll by employers Fraudulent claims 17. A commercial property policy can provide coverage for all of the following, except: Please select your answer Tangible losses Indirect losses Intangible losses Direct losses 18. Which of the following types of coverage would be needed to cover a contractor's bulldozers which are used in the contractor's business but are not held for sale? Please select your answer Older truck cargo floater Contractor's equipment floater Annual transit policy Installment sales floater 19. Under a builders risk form, how much insurance is required to pay any loss without a penalty for underinsurance? Please select your answer 100% of the completed value 80% of the value at the time of the loss 100% of the value at the time of the loss 80% of the completed value 20. Under a commercial property coverage form, all of the following properties are included in the definition of "building," except: Please select your answer Permanently installed fixtures Patio Outdoor fixtures Personal property used to maintain the premises 21. Carmen is driving her own car on behalf of her employer. Carmen's negligent operation of her car injures a member of the public. The employer may be held liable because of what is called: Please select your answer Vicarious liability Gross negligence Absolute liability Contributory negligence 22. Which of the following perils is insured against in the Special form but not in the Basic form? Please select your answer Fire Internal explosion Lightning Collapse 23. Which of the following types of policies pays for bodily injury or property damage which occurs or is discovered during the policy period? Please select your answer Pollution liability policy Occurrence general liability policy Auto liability policy Claims made commercial liability policy 24. If the vacancy permit endorsement is added to a building and personal property coverage form, the vacancy conditions under the basic policy is: Please select your answer Waived only for designated perils during the permit period Waived during the permit period Waived during the policy period Waived only for designated perils during the policy period 25. You are to meet with a small furniture manufacturer and make property and liability insurance recommendations. You have insured many risks of this type in the past and have a good idea of what their needs may be. There are several popular ways of determining business loss exposures. Which of the following ways are the least professional and the least likely to correctly identify the loss exposures? You: Please select your answer Take a walk through the business to observe operations and work flow and ask their key people about the company and its operations. Get a copy of all current policies and determine what coverage they have been carrying and how much they have been paying Meet with key people and complete a loss exposure questionnaire developed for their general type of risk 26. A commercial lines program policy, common policy conditions, do not include which of the following as a condition? Please select your answer Perils insured Inspections and surveys Cancellation Examination of your books and records 27. Under an unendorsed commercial property coverage form with no optional coverages, on what basis are buildings valued? Please select your answer Guaranteed replacement cost Actual cash value Replacement cost Functional replacement cost 28. The named insured for a commercial package policy is "Jill Koslin and Edward Koslin DBA Coastline Photo Shop." Under the terms of the common policy conditions of the commercial package policy, who is responsible for the premium payments? Please select your answer Jill Edward Coastline Photo Shop Both Jill and Edward have equal responsibility 29. If an insured discovers an occurrence 75 days after the expiration of a claim-made commercial liability policy, what must the insured have in order for the loss to be covered? Please select your answer Nothing; he is covered as long as the loss occurred during the policy period Supplemental extended reporting period endorsement An umbrella policy The loss will not be covered since it was not reported during the policy period 30. Which of the following is listed on a commercial general liability declarations page as an aggregate limit? Please select your answer Property damage Bodily injury limit Products/completed operations limit Pollution liability limit 31. One example of a loss covered by business income insurance is a loss Please select your answer Of profits due to a suspension of business operations because of a premises fire Represented by the difference between the actual cash value and present replacement cost Of perishables due to a delay in transporting Due to depreciation of parts of matched sets 32. Your insured has a ten year lease on his store. He has spent $50,000 on shelving, wall-to-wall carpeting, partitions, and lighting, etc., all of which are part of the building and cannot be legally removed. He is concerned that a fire might damage these changes that he has made and wants to make sure he is protected for their value. He should purchase Please select your answer Accounts receivable coverage Coverage for legal liability $50,000 on the building Coverage for improvements and betterments 33. What clause is commonly used to require insureds to purchase insurance close to the value of the property? Please select your answer Deductible clause Co-insurance clause Valuation clause Reinsurance clause 34. Thomas Fry has insured a building under his commercial policy. The building was vacant for 75 consecutive days before a loss. The policy will not pay for the loss if caused by the perils of: Please select your answer Building glass breakage and vandalism Riot Fire Windstorm or hail 35. In an unendorsed claims-made general liability policy, how long does an insured have to report a claim which occurred during the policy period? Please select your answer Indefinitely 60 days 30 days 6 months 36. The commercial general liability (CGL) declarations page displays many different limits of insurance that apply to a policy. One limit shown is the insured's general aggregate limit. Which of the following is a correct statement about the general aggregate limit? The general aggregate limit: Please select your answer Is the total of all the other sub-limits shown on the declaration page Does not include the products — completed operations aggregate limit Is the total limit for any occurrence 37. The retro-active date of a claims-made professional liability policy is always: Please select your answer The date after which no more claims may be made under the policy The effective date for the current policy term The earliest date an event/loss may occur and still be eligible for recovery The date that the claims-made policy expires 38. Fred is a named insured on a commercial property policy insuring a commercial building. Fred burns the building down and is convicted of arson. Fred's commercial property policy conditions state that: Please select your answer The mortgagee of the insured property can recover on this loss His partner, also an insured, has the right of recovery Fred's spouse can recover on this loss None of the above have the right of recovery 39. The business income coverage form covers the actual loss of business income sustained due to necessary suspension of operations. The loss of income must: Please select your answer Be caused by one of the perils covered by the basic form regardless of which cause of loss form is attached Must result from damage to the insured premises or personal property. The cause of the loss is not limited to "insured perils." Must result from damage to the insured premises. The cause of loss is not limited to "insured perils." Be caused by an insured peril, otherwise there is no coverage 40. A commercial property causes of loss forms do not cover any losses caused by: Please select your answer Smoke damage from industrial operations Lightning Explosions Loss by removal from premises when insured perils endanger covered property 41. Which of the following coverages does an open peril policy provide? Please select your answer Ocean and sea perils Perils that would affect business continuance. *Perils other than those specifically named as being excluded. Perils stated in the policy. 42. Of the following, which is the true characteristic about insurance? Please select your answer It is considered a type of gambling. *It is considered a method of transferring risk. It is considered a way of retaining risk. It has as its basis the law of level averages. 43. How is an admitted insurer defined according to the California DOI? Please select your answer It transacts insurance business in all states It Is organized and chartered according to and under the laws of the state of California *It transacts insurance according to the laws of the state of California. It is incorporated under the laws of any other jurisdiction other than the state of California 44. The method that the California DOI uses to approve or disapprove rate filings for various types of insurance such as homeowners and automobile is known as? Please select your answer *File and use method Open competition method Mandated rates method Use and file method 45. "Risk" is one of the most important terms in the insurance industry. How is it defined? Please select your answer The certainty-of financial loss. *The uncertainty of financial loss The basis of a financial loss The predictability of a financial loss 46. The concept of "pure risk" involves the possibility or chance of which of the following? Please select your answer *A loss only Either a loss or gain A profitable distribution of risks None of the above 47. With regards to insurance applicability, the word “risk” can be best defined as which of the following? Please select your answer The uncertainty of a financial loss *The uncertainty associated with a loss occurring The cause of the loss The increase in the probability of a loss occurring 48. In the State of California, how is a domestic insurer defined according to the California DOI code? Please select your answer Marketing and selling insurance under the laws of the state of California Specializing in insurance products that are unique to the needs of California (e.g.,earthquake insurance). *Organized, chartered, or incorporated under the laws of the State of California Any insurance company that has a regional, district, or agency office in California. 49. Which of the following is the best definition of an insurer's loss reserve? Please select your answer The dollar amount an insurance company must pay to close-out a claim The dollar amount of claims paid divided by earned premiums, excluding loss adjustment expenses *The approximate dollar amount of an insurer's liability for at least one (or more) open claims The dollar amount received by an insurer for coverage provided 50. Which of the following types of businesses could utilize a business owners policy? Please select your answer Banks Service station and auto repair shops Restaurants *Office buildings 2-stories high and containing about 5,000 square feet 51. Liability exposures that result from the location of a business in addition to the activities of that business, is known as which of the following? Please select your answer The completed operations exposure *The premises and operations exposure The products and premises exposures The general liability exposure 52. Of the following choices, which one would define the "retroactive date" which is contained in the structure of a claims-made professional liability policy contract? Please select your answer The policy expiration date *A loss or event can occur and still be eligible for recovery of payment under the terms of the policy, if it occurs after this date , No further claims can be made or submitted under the policy after this date The same as the inception date of the policy. 53. Where is ocean marine liability insurance found? Please select your answer *Protection and indemnity coverage Ocean marine cargo coverage insurance Ocean marine freight liability coverage Comprehensive personal liability policies 54. Negligence under an ocean marine policy is covered by: Please select your answer Ocean marine cargo coverage insurance *Protection and indemnity coverage Ocean marine freight liability coverage Comprehensive personal liability policies 55. The statement that is true regarding medical expense coverage in a Workers' Compensation policy is. Please select your answer *It contains an unlimited amount of coverage for both time and dollar amounts It has a time limit, but no dollar limit It has a dollar limit, but no time limit None of these are true statements 56. Risk is defined as which of the following? Please select your answer Certainty of a gain Certainty of a loss Uncertainty of a gain Uncertainty of a loss 57. Which part of an insurance policy sets the rules of conduct, duties, and obligations of the insured and insurer under the terms of the contract? Please select your answer Conditions Declarations Insuring agreement Exclusions 58. A standard fire policy without attached endorsements or additional coverage forms insures against direct loss by: Please select your answer fire and lightning fire, lightning and removal fire and removal fire, lightning and internal explosion 59. A Dwelling Policy Basic form without attached endorsements or additional coverage forms insures against direct loss by: Please select your answer fire and lightning fire and removal fire, lightning and internal explosion fire, lightning and removal 60. A device which is used to minimize small claims and which helps to keep insurance premiums down is: Please select your answer a deductible arbitration a value policy coinsurance 61. Coverage A under a dwelling policy covers all of the following except: Please select your answer A storage shed connected to the dwelling by a utility line. A laundry room attached to the dwelling. Building equipment and outdoor equipment. Materials and supplies used for construction or repair of the dwelling. 62. Vehicles which may be insured by a personal auto policy (PAP) are described in the eligibility rules. Each of the following is true about vehicles eligible for PAP coverage except: Please select your answer Private passenger autos used for business may be insured. Vehicles owned by an individual or married couple may be insured. Vehicles with fewer than four wheels are not eligible. Vans used in a delivery business are eligible. 63. In property and casualty, when must insurable interest exist? Please select your answer at the time of application and at the time of the loss. at the time the loss occurs. at the time of application. at the time of application or at the time of the loss. 64. Under contract law, the actions by a party may have the effect of giving up of a known right. When this occurs, the party has created a: Please select your answer unilateral contract waiver representation warranty 65. Dave has an automobile insured by a personal auto policy. He trades in his car and purchases a new private passenger auto as a replacement vehicle. If he does not notify the insurance company, the liability coverage for his replacement vehicle will apply automatically: Please select your answer until the end of the policy period. for 10 days. for 30 days. for 60 days. 66. The purpose of the FAIR Plan (Fair Access to Insurance Requirements) is to: Please select your answer Force all insurance companies to participate in an insurance pool. Require complete disclosure of the reasons for cancellations. Give the federal government a major role in providing insurance. Make property insurance available and affordable in high-risk areas. 67. Under the dwelling property forms, personal property moved to a new principle residence will be automatically covered at the new location (subject to policy expiration) for a period of: Please select your answer 30 days. 60 days. 20 days. 10 days. 68. Which dwelling policy forms provide coverage for loss of rental value? Please select your answer Special form only. Basic, Broad and Special forms. Basic and Broad forms only. Broad and Special forms only. 69. The mobile home endorsement (MH200) may be added to which of the following forms? Please select your answer HO-2 and HO-3 HO-3 and HO-5 HO-2 only HO-4 and HO-6 70. Each of the following is true about the National Flood Insurance Program except: Please select your answer The federal government reimburses insurance companies for losses. Coverage may be written by private insurance carriers. Coverage is sold by licensed insurance agents and brokers. Eligibility requirements are set by private insurance carriers. 71. Which of the following situations would be covered by liability insurance under a personal auto policy? Please select your answer An insured damages another vehicle while driving a motorcycle. An insured causes injuries while operating a taxi cab. An auto mechanic has an accident while road testing a customer’s vehicle. An insured who rents a private garage backs in and damages the garage. 72. An insurance company has made an underwriting profit when: Please select your answer its combined ratio is less than 100% its combined ratio is greater than 100% its loss ratio is less than its expense ratio. its expense ratio is less than its loss ratio. 73. Under a personal auto policy, which of the following is not a collision loss? Please select your answer Impact between the covered auto and a deer. Impact between the covered auto and a stationary object. Impact between the covered auto and another vehicle. Upset of the covered auto, resulting in damage. 74. National flood insurance is available for: Please select your answer Residential and non-residential buildings only. Private residences and residential contents only. Private residences only. Residential and non-residential buildings and contents. 75. All of the following are requirements for ideally insurable risks, except: Please select your answer The applicant must not have a potential for gain because of the insurance. The applicant must face a personal risk of loss. The applicant must not share the interest with anyone else. The applicant must have an interest in protecting what is insured. 76. Something that increases the likelihood that a loss will occur is called a: Please select your answer Peril. Hazard. Risk. Catastrophe. 77. The most common definition of “actual cash value” in the property insurance field is: Please select your answer Replacement cost minus depreciation Original cost plus depreciation Original cost minus depreciation Replacement cost plus depreciation 78. Replacement cost coverage without the deduction for depreciation is known as: Please select your answer Replacement cost Actual cash value Market value Functional replacement cost 79. Some property insurance policies provide for payment of the full policy limit in the event of a total or partial loss by a covered peril, regardless of the actual value of the property. These policies are known as: Please select your answer Valued policies. Indemnity policies. ACV policies. Market value policies. 80. Each of the following is true about homeowners personal property coverage except: Please select your answer The basic form does not include personal property coverage. Personal property of a guest may be covered. Special sublimits apply to some type of personal property. The full limit applies to personal property any where in the world. 81. Which of the following is not an optional property coverage on homeowners policies? Please select your answer Personal property replacement cost. Inflation guard coverage. Increased limits for jewelry, watches and furs. Coverage for loss of use of the premises. 82. Under Section II of a homeowners policy, damage to the property of others will not be covered if it is caused intentionally by an insured who is at least: Please select your answer 18 years of age. 16 years of age. 13 years of age. 10 years of age. 83. Which of the following losses is not excluded under the physical damage coverage of a personal auto policy? Please select your answer Loss of custom furnishings in a customized van. Damage to a covered auto while being used as part of a car pool. Loss caused by freezing of the cooling system. Damage to equipment designed for the detection of radar. 84. If an owner is insured under a building and personal property coverage form, when is the property considered vacant? Please select your answer Loss of custom furnishings in a customized van. Damage to a covered auto while being used as part of a car pool. Loss caused by freezing of the cooling system. Damage to equipment designed for the detection of radar. 85. If coverage for towing and labor costs is included in a personal auto policy, labor costs will be covered only if the labor is performed: Please select your answer At the place of disablement. At a garage by an experienced mechanic. Within 24 hours of the disablement. Within 48 hours of the disablement. 86. Furniture which is destroyed when a building burns down is an example of what kind of loss? Please select your answer residual consequential indirect direct 87. “Special” or “all risk” coverage forms: Please select your answer Name the perils to be insured against. List the policy exclusions. Have no exclusions. Are no longer available in the general insurance market. 88. Under the building and personal property coverage form, what obligation, if any, does the insurer have to a mortgagee in the event the company wishes to cancel the policy? Please select your answer The company must give the mortgagee 10 days written notice if cancellation is for nonpayment of premium, and 30 days notice of cancellation for any other reason. The company has no obligation. The company must give the mortgagee 10 days written notice of intent to cancel in all cases. The company must notify the insured, who is then responsible for advising the mortgagee. 89. Which of the following causes of loss forms are “named peril” forms? Please select your answer Basic form Broad form All of the above Earthquake form 90. An insured has coverage under a reporting form and actual values have consistently been $60,000 during each reporting period. The insured has consistently underreported values at $30,000. A $10,000 loss occurs. The company will pay: Please select your answer The full loss. One-half of the loss. One-third of the loss. One-sixth of the loss. 91. Which of the following would be covered by the basic cause of loss form? Please select your answer Damage resulting from the airborne shockwaves of an erupting volcano. Damage resulting from the weight of snow, ice or sleet. Damage resulting from earthquake. Damage resulting from ruptured water pipes. 92. Each of the following business occupancies would be permitted in a dwelling insured under a dwelling form except: Please select your answer A small shop carrying merchandise for sale. A professional office providing services to clients. A photographic studio. A beauty shop run by the insured and her daughter. 93. Each of the following coverages is always included in Section I on a homeowners policy except: Please select your answer Personal property coverage Medical payments coverage. Coverage for loss of use. Coverage for property removed to protect it from loss. 94. Each of the following statements regarding the homeowners broad form (HO-2) are true except: Please select your answer The dwelling is covered. Other structures are covered. Coverage is provided against all risks of physical loss. Losses from vandalism and malicious mischief are covered. 95. Under a Businessowners Property Coverage form: Please select your answer Coverage is provided for flood damage. Coverage is provided for fire legal liability. Optional coverages are not available. The standard deductible is $500 per occurrence. 96. Interline endorsements apply or could apply: Please select your answer To more than one coverage part of a package policy. Only to inland marine coverage. To property and liability coverages only. Only when a broad causes of loss form is attached to a policy. 97. Coverage B of a homeowners policy will apply to which of the following losses? Please select your answer Damage to an unattached garage of an insured home. Damage to the kitchen of an insured home. Damage to construction materials which are intended for a new front porch for an insured home. Damage to living room furnishings in the insured home. 98. On the homeowners policy, coverage D is also called: Please select your answer Other structures. Loss of use. Personal property. Personal liability. 99. The coverage which automatically increases the property insurance limits on a homeowners policy is: Please select your answer Inflation guard endorsement. Replacement cost. Special limits of liability endorsement. Insurance-to-value. 100. Which of the following is part of a commercial property coverage part? Please select your answer Commercial property conditions. One or more cause of loss forms. Applicable endorsements. All of the above. 101. Which of the following is not considered a consequential loss? Please select your answer Loss of rental value. Damage to personal property. Extra expense incurred while rebuilding damaged property. Loss of business income while a building is closed for repairs. 102. The business income coverage form applies to: Please select your answer Loss of income as the result of destruction of accounts receivable. Loss of cash receipts because of burglary or robbery. Loss of revenues while operations are suspended due to property damage. Loss of money because of employee dishonesty. 103. In which part of an insurance contract would you expect to find a description of the duties and obligations of the insured? Please select your answer Conditions Declarations Insuring clause Exclusions 104. General liability policies provide coverage for damage to: Please select your answer Property owned or occupied by the insured. Property of third parties when caused by negligence of an insured. Personal property in the care, custody, or control of the insured. The insured’s products which are held for sale to others. 105. The named non-owner coverage endorsement is used to provide personal auto insurance for: Please select your answer Relatives of the named insured who do not live in the same household. Other members of the named insured’s family who live in the same household. Someone who does not own an automobile, but who drives borrowed or rented autos. Non-family members who use the named insured’s auto with permission. 106. Which of the following coverages would apply to a rental car used by an insured executive while on vacation? Please select your answer Coverage for nonowned autos. Truckers coverage. Garagekeepers legal liability. Drive other car coverage. 107. Automobile limits of liability expressed as $25,000/$50,000/$10,000 mean: Please select your answer $25,000 bodily injury for each person, $50,000 bodily injury each accident, $10,000 property damage each accident. $25,000 bodily injury, $50,000 property damage, $10,000 medical payments each accidents. $25,000 property damage per accident, $50,000 bodily injury per accident, $10,000 bodily injury per person. None of the above. 108. Under the business auto coverage form, which of the following is not considered to be “mobile equipment”? Please select your answer A forklift. A self-propelled snow plow. Farm machinery. A bulldozer. 109. General liability insurance does not cover liability arising out of: Please select your answer Aircraft owned by the insured. Contractual liability. Host liquor liability. Mobile equipment on construction sites. 110. An insurer that is not entitled to transact insurance business in California is known as a: Please select your answer Non-soliciting insurer. Non-admitted insurer. Non-transacting insurer. Non-certified insurer. 111. Anyone willfully engaging in an unfair method of competition may be liable for a fine of up to: Please select your answer $1,000 $2,500 $5,000 $10,000 112. The penalty for a person who violates the privacy protection laws and obtains information that they have no legitimate reason to receive is: Please select your answer A $5,000 fine. A $10,000 fine or up to one year in jail. A $5,000 fine or up to six months in jail. A $10,000 fine. 113. The penalty for a person found guilty of submitting fraudulent claims for the payment of a loss is: Please select your answer Up to two years in jail and fine of up to $10,000. Up to three years in jail and a fine of up to $20,000. Up to five years in prison and a fine of up to $150,000. Up to five years in jail and a fine of up to $25,000. 114. An employer purchases a fidelity bond to protect against potential losses by employee dishonesty. In this situation, each of the employees covered by the bond is: Please select your answer A principal A fiduciary. A guarantor. An obligee. 115. Which of the commercial property causes of loss forms provide theft coverage? Please select your answer The basic, broad and special forms. None of the forms provide theft coverage. The broad and special forms only. The special form only. 116. The commercial building and personal property coverage form provides five extensions of coverage, but only if: Please select your answer An 80% or higher coinsurance percentage is shown on the declarations. All coverages are written on a blanket basis. They are shown in the declarations and an additional premium is paid. The coverage for building is written on a replacement basis. 117. A commercial insured has a single limit of insurance for all property coverages applicable at three different locations. This type of coverage is known as: Please select your answer Extended coverage. Scheduled coverage. Specific coverage. Blanket coverage. 118. According to the commercial crime general provisions, the “discovery period” for coverages which may be included in a package policy ends: Please select your answer Three years after policy expiration. One year after policy expiration. Two years after policy expiration. Six months after policy expiration. 119. Each of the following is true about workers compensation second injury funds except: Please select your answer They help pay the additional loss resulting from combined injuries. They remove disincentives for hiring partially disabled people. They pay benefits when two or more people are injured in one accident. They relieve an employer of some of the burden for multiple injuries. 120. The term “time element coverage” is used when the amount of loss depends on: Please select your answer The time it takes to repair, rebuild or restore damaged property. The time between the date of loss and expiration date. The time between the effective date and date of loss. The time of year when a seasonal business suffers a loss. 121. When general liability “claims made” coverage is written, a “laser beam” endorsement may be used to: Please select your answer Eliminate coverage for nuclear hazards. Exclude specific accidents, products, work or locations. Provide special coverages for certain high technology risks. Add special conditions applicable to defense contractors. 122. The “Inchmaree clause” in ocean marine policies provides coverage for which of the following? Please select your answer Liability due to collision loss. Physical damage to the ship. Cargo damage due to negligence of the crew. Loss of shipping charges. 123. How does the California Insurance Commissioner get his or her title? Please select your answer Elected by the Public Appointed by the Governor Approved by the Governor None of the above 124. An insurance company’s actuarial department is responsible for which of the following? Please select your answer Assisting with service of insurance company claims. Predicting profits of an insurance company. Rating of insurance companies. Keeping an insurance company financial sound. 125. All rates in California are subject to which of the following? Please select your answer Experienced rating. Manual rates. Prior approval rules. Mandatory rates. 126. Rates in California are subject to which of the following? Please select your answer Merit rating Use and file Manual rates File and use 127. What does a broad form dwelling policy have that is not included in a basic form dwelling policy? Please select your answer Fair rental value Dwelling coverage Appurtenant structures coverage Additional living expenses 128. In a homeowners policy, the insured is required to provide proof of loss within: Please select your answer 10 days 60 days 20 days 30 days 129. All of the following are factors for rating physical damage coverage on a personal auto policy (PAP) except: Please select your answer Driving safety record. Year of the vehicle. Make of the vehicle. Model of the vehicle. 130. What is the maximum charge allowable for a SERP? Please select your answer 150% of the General liability premium. 100% of the General liability premium. 200% of the General liability premium. 131. If the limits of liability on a structure are $300,000, and the structure is worth $500,000, how much would be owed on a fire loss of $120,000 if the policy has an 80% coinsurance requirement and there is a $1,000 deductible? Please select your answer $90,000 $89,000 $112,500 $111,500 132. If the limits on a structure are $75,000, and the structure is worth $125,000, how much would be owed on a fire loss of $50,000 if the policy has an 80% coinsurance and there is a $1,000 deductible? Please select your answer $37,500 $40,000 $48,000 $36,500 133. A device which is used to minimize small claims and which helps to keep insurance premiums down is: Please select your answer a deductible arbitration a value policy coinsurance 134. Coverage A under a dwelling policy covers all of the following except: Please select your answer A laundry room attached to the dwelling A storage shed connected to the dwelling by a utility line Building equipment and outdoor equipment Materials and supplies used for construction or repair of the dwelling 135. Vehicles which may be insured by a personal auto policy (PAP) are described in the eligibility rules. Each of the following is true about vehicles eligible for PAP coverage except: Please select your answer Vehicles with fewer than four wheels are not eligible Vehicles owned by an individual or married couple may be insured Vans used in a delivery business are eligible Private passenger autos used for business may be insured 136. Dave has an automobile insured by a personal auto policy. He trades in his car and purchases a new private passenger auto as a replacement vehicle. If he does not notify the insurance company, the liability coverage for his replacement vehicle will apply automatically: Please select your answer until the end of the policy period for 10 days for 30 days for 60 days 137. Under the dwelling property forms, personal property moved to a new principle residence will be automatically covered at the new location (subject to policy expiration) for a period of: Please select your answer 10 days 20 days 60 days 30 days 138. Which dwelling policy forms provides coverage for loss of rental value? Please select your answer Broad and Special forms only Basic and Broad forms only Special form only Basic, Broad and Special forms 139. Which of the following situations would be covered by liability insurance under a personal auto policy? Please select your answer An insured damages another vehicle while driving a motorcycle An insured causes injuries while operating a taxi cab An auto mechanic has an accident while road testing a customer’s vehicle An insured who rents a private garage backs in and damages the garage 140. An insurance company has made an underwriting profit when: Please select your answer its combined ratio is greater than 100% its combined ratio is less than 100% its loss ratio is less than its expense ratio its expense ratio is less than its loss ratio 141. National flood insurance is available for: Please select your answer residential and non-residential buildings only private residences and residential contents only Residential and non-residential buildings and contents private residences only 142. Some property insurance policies provide for payment of the full policy limit in the event of a total loss by a covered peril, regardless of the actual value of the property. These policies are known as: Please select your answer Market value policies ACV policies Indemnity policies Valued policies 143. Each of the following is true about homeowners personal property coverage except: Please select your answer The basic form does not include personal property coverage Personal property of a guest may be covered Special sublimits apply to some type of personal property The full limit applies to personal property any where in the world 144. If an owner is insured under a building and personal property coverage form, when is the property considered vacant? Please select your answer The basic form does not include personal property coverage Personal property of a guest may be covered Special sublimits apply to some type of personal property The full limit applies to personal property any where in the world 145. Furniture which is destroyed when a building burns down is an example of what kind of loss? Please select your answer indirect direct consequential residual 146. An insured has coverage under a reporting form and actual values have consistently been $60,000 during each reporting period. The insured has consistently underreported values at $30,000. A $10,000 loss occurs. The company will pay: Please select your answer One-third of the loss One-half of the loss The full loss One-sixth of the loss 147. An insured has coverage under a reporting form and actual values have consistently been $60,000 during each reporting period. The insured has consistently underreported values at $30,000. A $40,000 loss occurs. The company will pay: Please select your answer $20,000 80% of the loss The full loss $30,000 148. Each of the following business occupancies would be permitted in a dwelling insured under a dwelling form except: Please select your answer A small shop carrying merchandise for sale A professional office providing services to clients A photographic studio A beauty shop run by the insured and her daughter 149. Interline endorsements apply or could apply: Please select your answer Only to inland marine coverage To property and liability coverage only Only when a broad causes of loss form is attached to a policy To more than one coverage part of a package policy 150. The business income coverage form applies to: Please select your answer Loss of money because of employee dishonesty Loss of cash receipts because of burglary or robbery Loss of income as the result of destruction of accounts receivable Loss of revenues while operations are suspended due to property damage 151. General liability insurance does not cover liability arising out of: Please select your answer Aircraft owned by the insured Contractual liability Host liquor liability Mobile equipment on construction sites 152. Anyone willfully engaging in an unfair method of competition may be liable for a fine of up to: Please select your answer $10,000 $1,000 $2,500 $5,000 153. The penalty for a person found guilty of submitting fraudulent claims for the payment of a loss is: Please select your answer Up to five years in jail and a fine of up to $25,000 Up to three years in jail and a fine of up to $20,000 Up to five years in jail and a fine of up to $150,000 Up to two years in jail and fine of up to $10,000 154. Which of the commercial property causes of loss forms provide theft coverage? Please select your answer None of the forms provide theft coverage The basic, broad and special forms The broad and special forms only The special form only 155. The term “time element coverage” is used when the amount of loss depends on: Please select your answer The time of year when a seasonal business suffers a loss The time between the effective date and date of loss The time between the date of loss and expiration date The time it takes to repair, rebuild or restore damaged property 156. When general liability “claims made” coverage is written, a “laser beam” endorsement may be used to: Please select your answer Eliminate coverage for nuclear hazards Exclude specific accidents, products, work or locations Provide special coverages for certain high technology risks Add special conditions applicable to defense contractors 157. The “Inchmaree clause” in ocean marine policies provides coverage for which of the following? Please select your answer Cargo damage due to negligence of the crew Liability due to collision loss Physical damage to the ship Loss of shipping charges 158. All of the following are factors for rating physical damage coverage on a personal auto policy (PAP) except: Please select your answer Driving safety record Year of the vehicle Make of the vehicle Model of the vehicle 159. How is insurance marketed through direct mail companies? Please select your answer Solicitors Salaried Employees Surplus Lines Brokers Independent agents 160. Which is a correct statement about insurance? Please select your answer it is a form of leveling the law of averages it is a form of retaining risk it is a form of gambling it is a form of transferring risk 161. Which of the following describes a stock insurance company? Please select your answer Owned by the insureds as policyholders The company is managed by a board of directors who are elected by shareholders who own a fixed amount of capital stock in the company Insureds receive shares of stock in proportion to premiums paid Agents of the company receive shares of stock as compensation for selling policies 162. All the following are not examples of insurable risk situations, except: Please select your answer a tenant wishes to purchase insurance coverage on improvements which he made on a building owned by the landlord a landlord wants to buy insurance on a tenant's belongings an automobile owner wants to purchase insurance on the garage in which she regularly parks her vehicle a landlord wants to purchase insurance on a tenant's automobile parked in a garage which the landlord owns 163. Which of the following refers to the method whereby an insurance company must receive an official approval from the state Dept. of Insurance before it uses new rates? Please select your answer use and file mandatory rates prior approval file and use 164. Which of the following is based on the experience of the prospective insured? Please select your answer Retrospective rating Judgment rating Merit rating Manual rating 165. A commercial property cause of loss form does not cover any losses caused by: Please select your answer Smoke damage from industrial operations (agricultural smudging) Lightning Loss by removal from premises when insured perils endanger covered property Explosions 166. To determine the actual cash value of a commercial building for coinsurance purposes, use: Please select your answer The county assessor's office figures The actual cash cost of replacing the building The price the client paid for the property, less the value of the land Fair market value 167. Which of the following is based on the experience of the underwriter? Please select your answer Judgment rating Manual rating Merit rating Retrospective rating 168. Liability losses are which of the following? Please select your answer first party claims third party claims fourth party claims second party claims 169. A one word definition for subrogation would be? Please select your answer substitution subordination salutation substandard 170. Which of the following is an example of functional replacement cost? Please select your answer Installing new skylights after a loss Replacing a pinewood deck with a redwood deck Replacing a lathe and plaster wall with sheetrock Installing a fireplace after a loss when there wasn’t one before 171. Aggregate limit is defined as which of the following: Please select your answer minimum a policy will pay during a policy period maximum a policy will pay per claim minimum a policy will pay per claim maximum a policy will pay during a policy period 172. Which of the following is correct about supplementary payments? Please select your answer It doesn’t reduce your property limits for a loss It reduces what your property policy will pay during a loss It reduces what your liability policy will pay for a loss It doesn’t reduce your liability limits for a loss 173. The following factors are used for physical damage coverage except: Please select your answer Make of the vehicle Driving safety record Year of the vehicle Model of the vehicle 174. How many major sections of the California Insurance Code are there? Please select your answer 5 3 20 30 175. How many classes of insurance may be offered to the public? Please select your answer 5 3 20 30 176. Who makes an insurance contract? Please select your answer The insurer The Insurance Commissioner The Department of Insurance The insured 177. Who enters into an insurance contract? Please select your answer The insurer The Department of Insurance The Insurance Commissioner The insured 178. Which of the following sells insurance? Please select your answer insurance agents insurance brokers both of the above neither of the above 179. Which of the following may bind coverage on behalf of an insurer? Please select your answer insurance agents insurance brokers both of the above neither of the above 180. Which of the following is covered by a building and personal property coverage form? Please select your answer Patio **Light pole Bridge Dock 181. What steps need to be taken to terminate a licensee’s license that is in the possession of the employer? Please select your answer The employer must return the license to the licensee, who then must return the license to the insurance commissioner The licensee must give written notice to the employer who then sends the license to the insurance commissioner The license cannot be terminated prior to the expiration date, it becomes inactive **The licensee needs to give written notice of intent to the insurance commissioner 182. 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? Please select your answer **The agent’s permanent license becomes inactive The agent’s permanent license remains fully active until expiration 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 The agent’s permanent license will be terminated simultaneously 183. How long can you leave your license on inactive status? Please select your answer 1 year 2 year 3 year **Indefinitely 184. What gives an insured the right to seek compensation if it is proven that another person with negligence contributed to the injury? Please select your answer Statutory code **Tort law Criminal code Case law 185. Surplus lines brokers Please select your answer Are always employees of insurance companies **Transact business only with non-admitted insurers Transact business only with admitted insurers Specialize in marine insurance 186. Which of the following is an insurer’s option when making a settlement with the insured under a personal auto policy? Please select your answer **Return stolen property to the address shown in the policy Have the insured purchase the auto at an auto auction Demand that the insured first attempt to settle with the responsible party Instruct the insured to repair the vehicle at a designated repair shop 187. Which of the following is a common policy condition for a commercial package policy? Please select your answer Cause of loss Pro-rata clause **Inspections and surveys Duty to defend 188. Insurance which covers ship owners against vicarious liability claims due to operating the insured vessel is: Please select your answer **Protection and indemnity insurance A voyage policy Hull insurance The sue and labor laws 189. Which advisory organization(s) develop forms for the standard market? Please select your answer National Association of Insurance Commissioners and the American Association of Insurance Services **Insurance Services Office National Association of Insurance Commissioners and the Insurance Office Insurance Services Office and the American Association of Managing General Agents 190. What is one of the main factors that the Insurance Commissioner uses while determining whether a rate is excessive or unfairly discriminatory? Please select your answer **Whether the rate mathematically reflects the insurance company’s investment income How long the insurer has been admitted to do business in the state Complaint history of the insurer by insureds The degree of competitition 191. Which of the following perils is covered by a “cause of loss – basic form?” Please select your answer **Riot or civil commotion Governmental action War Ordinance or law 192. Which of the following is not an example of an extended coverage peril? Please select your answer Windstorm Aircraft **Earthquake Smoke 193. The commercial property policy part “cause of loss – broad form” includes an exclusion for “concurrent causation.” The effect of this exclusion is: Please select your answer 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 **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 If a loss occurs concurrently with the expiration date of the policy, it is not covered 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 194. A physician may have misdiagnosed a patient for terminal cancer. What type of insurance would protect the physician for this type of mistake? Please select your answer Personal liability **Professional liability Health insurance Allied lines insurance 195. A physician may have misdiagnosed a patient for terminal cancer. What type of insurance would protect the physician for this type of mistake? Please select your answer Personal liability **Malpractice insurance Health insurance Allied lines insurance 196. What coverage is available under the named non-owner coverage endorsement? Please select your answer Physical damage and uninsured motorist Liability and physical damage **Liability, medical payments, and uninsured motorist Liability only 197. What coverage is available under the extended non-owner coverage endorsement? Please select your answer Physical damage and uninsured motorist Liability and physical damage **Liability, medical payments, and uninsured motorist Liability only 198. Which is the following is considered special damages? Please select your answer Compensation for a person’s emotional suffering **Compensation for time away from work Compensation for loss of a foot Compensation for a scar 199. All of the following are mandatory coverages of a business-owners policy, except: Please select your answer Extra expense coverage **Professional liability coverage Building coverage Business income coverage 200. An agent who diverts premium dollars for the agent’s own use is guilty of: Please select your answer **Theft Fraud Forgery Misrepresentation 201. Every admitted insurer in the state of California is required to maintain a unit or division to investigate which of the following: Please select your answer Possible non-justifiable discrimination **Possible fraudulent claims made by insureds Possible non-compliance with CA rate laws Possible arson claims 202. Which of the following would be considered special damages? Please select your answer Scarring Loss of an index finger **Lost wages Pain and suffering 203. What is one of the principle rating factors under Proposition 103 (Unruh Act) allowed for personal auto policies? Please select your answer Credit record Year of the auto **Safety driving record Make of the auto 204. What is the most important rating factor under Proposition 103 (Unruh Act) allowed for personal auto policies? Please select your answer Number of miles driven annually **Safety driving record Years of driving experience Other factors related to the risk 205. Which of the following is eligible for a Businessowners policy? Please select your answer An auto repair shop A credit union A sports bar **A furniture store 206. All of the following are listed on a Commercial General Liability declarations page, except: Please select your answer Medical expense limit Rented to you limit Personal advertising injury limit **Pollution liability limit 207. The term “subrogation” refers to: Please select your answer The insured’s right to receive broadened coverage at no extra charge The insurance policy applies separately to each insured **The insurer’s right to recover payment from a responsible third party The transfer of the insured’s interest in a policy to another party 208. All of the following statements concerning business owner’s policies are true, except: Please select your answer It allows insurers to individually underwrite the smaller low-premium policies It contains simpler reading which owner handling costs for insurers **Insureds have the benefit of additional coverages that might otherwise be overlooked Insureds have the convenience to one policy that meets most of their needs at a reduced premium 209. Under an unendorsed personal auto policy, what coverage is available for personal effects? Please select your answer **None Luggage and clothing up to $500 Luggage up to $200 All personal property in the auto up to $500 210. 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: Please select your answer There is no coverage unless the homeowner has made an earthquake coverage endorsement a part of the policy The policy covers all of the damage since explosion is an insured peril **There is no coverage, but only for the damage caused by the fire and explosion The policy does not cover the damage since the HO-3 provides only named peril coverage 211. The insurer’s right to recover its claim payment to an insured from a negligent third party is known as: Please select your answer Liberalization Arbitration **Subrogation Assignment 212. All of the following are requirements for a notice by mail to an insured by an insurer, except: Please select your answer Notice must be mailed to the residence or principal place of business **Notice must be sent with return receipt required Notice must be addressed to the person being notified Postage must be prepaid 213. If the vacancy permit endorsement is added to a building and personal property coverage form, the vacancy condition under the basic policy is: Please select your answer Waived after the policy period Waived only for designated perils during the policy period **Waived only for designated perils during the permit period Waived during the permit period. 214. Under the commercial building and personal property coverage extensions, property off-premises is not covered while the property is located: Please select your answer **In a delivery truck In the building the named insured has leased for five years At a trade fair At a salesperson’s home 215. If the named insured is not the owner of the building, improvements and betterments are covered under the: Please select your answer Agreed value Newly constructed property **Business personal property Building 216. A person can base his/her claim for legal liability on the basis of all of the following except: Please select your answer Absolute liability **Breach of contract Intentional tort Negligence 217. All the following are related to tort law, except: Please select your answer Absolute liability **Breach of contract Intentional tort Negligence 218. Which of the following statements is true regarding insurers with admitted status in California? Please select your answer They may use race, color, religion, or national origin as a condition to use higher rates They may use any rating methods that are actuarially sound in rating the policy **They may not use race, color, religion, or national origin as a condition to use higher rates 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 219. The term “assignment” refers to: Please select your answer The insurance policy applying to each insured **The transfer of the insured’s interest in a policy to another party The insurer’s right to collect damages from a third party The insured’s right to receive broad new coverage from the insurer at no charge 220. 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? Please select your answer An aleatory act An error or omission An exclusionary act **An unfair practice 221. Under the business income coverage form, extra expenses are: Please select your answer Covered without limit during the period of restoration **Excluded Covered up to the amount they reduce the business income loss Covered up to the monthly limit specified in the declarations 222. if an insured purchases an all-terrain vehicle (ATV), what endorsement can be added to the personal auto policy to insure the vehicle? Please select your answer ATV endorsement Recreational vehicle endorsement There is no endorsement for this exposure **Miscellaneous type vehicle endorsement 223. All of the following are areas that market regulation covers, except: Please select your answer **Employee training Underwriting Sales Rate-making 224. All of the following are covered by Protection and Indemnity insurance, except: Please select your answer Injury to persons on other ships Injured passengers on the ship **The cost of reasonable measures that the insured must take to prevent damage at the time of loss Damage to piers 225. Under an unendorsed personal auto policy, transportation expense coverage applies to: Please select your answer Theft losses only **Collision and other-than-collision losses Other-than-collision losses only None. There is no coverage 226. Which of the following is an example of loss prevention? Please select your answer A homeowner decides not to restore water damage to basement A homeowner installs a home sprinkler system **A homeowner decides not to install a pool in the backyard A homeowner installs a home security system 227. *The question is focusing on loss prevention, answers 3 and 4 are loss reduction. Please select your answer All of the following are typical exclusions in an inland marine policy, except: Insects or vermin **Earth movement Wear and tear Electrical breakdown 228. An organization will cease to exist as an entity eligible to hold a license for all of the following reasons, except: Please select your answer **Termination of a key employee Dissolution of a co-partnership Dissolution of a corporation Termination of an association 229. An insurer’s loss reserve for a claim is: Please select your answer The exact amount the insurer will have to pay to close the claim **An estimate of the amount the insurer will pay The maximum amount the insurer will have to pay close to the claim Equal to claims paid divided by earned premium reserve, not including loss of adjustment expense 230. What coverage is available under the miscellaneous type vehicle endorsement? Please select your answer **All coverage under the personal auto policy Physical damage only Liability and physical damage only Liability only 231. 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? Please select your answer 5 days **10 days 15 days 20 days 232. 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? Please select your answer **Named non-owned coverage endorsement No coverage available Extended non-owned liability coverage endorsement miscellaneous type vehicle endorsement 233. The watercraft endorsement on a homeowners policy extends coverage for: Please select your answer Liability for all owned watercraft Physical damage and liability for all owned watercraft **Liability coverage for watercraft listed on the schedule Physical damage and liability coverage for watercraft listed on the schedule 234. After a collision loss, the personal auto policy requires the insured to: Please select your answer Submit a written notice of the loss to the company Promptly notify the police of the accident Press charges against the other party **Allow the company to inspect the damaged property before it is repaired 235. Which coverages are typically provided in a boatowners policy? Please select your answer Hull and collision Hull, running down, and protection and indemnity Property, liability, and medical payments **Physical damage, liability, and medical payments 236. What is one way in which the HO-2, HO-4, and HO-6 similar? Please select your answer Perils insured against under coverage A The limits provided under coverage B Perils insured against under coverage D **The limits provided for under coverage C 237. 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: Please select your answer The ownership of an airplane An employee being injured while working on the insured’s premises **An employee accidentally injures a customer while working at the customer’s home An accident while driving an owned automobile on a public highway 238. What causes of loss is/are covered under the business income coverage form? Please select your answer **Those shown on the declarations All perils Those included in the business income form Broad form perils only 239. 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? Please select your answer A residual fund A monopolistic fund **A competitive state fund A private fund 240. 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? Please select your answer **A supplemental extended reporting period endorsement Umbrella policy The loss will not be covered because it was not reported during the policy period Nothing; as long as the loss occurred during the policy period 241. What is the main purpose of tort law? Please select your answer To minimize the amount of insurance claims made **To determine responsibility for damages To prosecute the responsible party To assign punitive damages to the responsible party 242. The inspections and surveys condition of a commercial package policy is important to the insurer for all of the following reasons, except: Please select your answer Make loss control recommendations **Guarantee that the insured is in compliance with safety regulations To set proper insurance rates To determine the insurability of the insured’s operations 243. Which of the following is not considered an intentional tort? Please select your answer **Auto accident Blasting operations Unauthorized release of confidential information Ownership of a pet rattlesnake 244. What is the purpose of the inspections and surveys condition of the commercial package policy? Please select your answer To determine if the premises comply with ADA requirements To ascertain if the premises has maintained the required building codes **To determine the rate to be charged To specify if the premises comply with OSHA requirements 245. Which of the following statements is true regarding compensatory damages? Please select your answer General damages have specific economic value Punitive damages are awarded to a person for actual pain and suffering Special damages do not have a specific economic value **There is usually no direct correlation between the amount of general and special damages awarded to the victim 246. When does a personal auto policy require the insured to notify the police? Please select your answer For thefts only There is no requirement to notify the police **For hit and run accidents and thefts For all accidents and thefts 247. What coverage is available under the extended non-owned liability coverage? Please select your answer **Liability, medical payments, and uninsured motorist Liability and physical damage Liability and medical payments Liability only 248. Why is the examination of books and records condition important in a commercial policy? Please select your answer To ensure that the insurance business is profitable To ensure that the insurer is using generally accepted accounting principles **To ensure that the proper amount of premium is charged To ensure that the insurance business is solvent 249. What is the limit per day for transportation expenses in an unendorsed personal auto policy? Please select your answer **$20 $15 $10 None 250. If an owner is insured under a building and personal property coverage form, when is the property considered vacant? Please select your answer **$20 $15 $10 None 251. Which homeowners form is best for use on a brand-new family dwelling? Please select your answer HO-4 **HO-5 HO-6 HO-8 252. The ordinance or law limitation in a homeowners policy may cause a gap in coverage in which of the following situations? Please select your answer 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 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 **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% A community ordinance requires dogs to be on a leash. The insured’s dog, running free in a park, bites a child 253. What additional coverages does a DP-2 have as compared to a DP-1? Please select your answer **Additional living expenses Improvements, alterations, and additions Personal liability Debris removal 254. Coverage under a comprehensive personal liability policy (CPL) or a homeowners section II extends: Please select your answer Only to the premises described in the policy Only to the personal activities of the insureds To the premises described and to al personal and business activities of the insureds on or off the described premises **To the premises described and to the personal activities of the insureds on or off of the premises 255. 00. Absolute risk or liability is imposed: Please select your answer None of the above When there is intent to cause injury **When there is negligence whether proven or not When the injured party assumes the risk 256. Which of the following coverages may you buy with a named operator policy? (Choose the most complete answer) Please select your answer Liability only Liability and uninsured motorist **Liability, medical payments, and uninsured motorist Liability, medical payments, uninsured motorist, collision and other than collision 257. Which of the following coverages may you buy with an extended non-owner policy? (Choose the most compete answer) Please select your answer Liability only Liability and uninsured motorist **Liability, medical payments, and uninsured motorist Liability, medical payments, uninsured motorist, collision and other than collision 258. 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? Please select your answer $0 **$7,500 $10,000 $2,500 259. 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? Please select your answer **$0 $2,000 $3,000 $5,000 260. Under California law, if there are several people injured in one accident, what is the minimum amount of financial responsibility required? Please select your answer $5,000 $10,000 $15,000 **$30,000 261. The negotiation of a policy involves which of the following? Please select your answer Signing an application form Adding an endorsement to the policy **Sending the prospect an email suggesting that they buy a certain type of policy Making a premium payment 262. An applicant for insurance does not reveal information that the insurer would rely upon to issue the policy, this is a/an: Please select your answer **Misrepresentation Intimidation Boycott Coercion 263. The provision in a property policy which states that the insured has been paid up to their insurable interest is: Please select your answer Valuation clause Actual cash value Guaranteed replacement **Stated value 264. The part of the policy that establishes limits upon the insurer is: Please select your answer Insuring agreements Exclusions **Conditions Declarations 265. 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? Please select your answer **License number of the hit and run vehicle Photographs identifying the hit and run vehicle Testimony of an eyewitness to the accident Legal affidavit describing the accident 266. Who is responsible for damage to improvements in a leased building? Please select your answer Both the tenant and the building owner Tenant **Building owner Improvements to a leased building are not covered 267. An insurer licensed to transact insurance in California is: Please select your answer Authorized **Admitted Allowed Approved 268. Which of the following is not a federal program? Please select your answer National Flood Insurance Program **Workers Compensation Federal Crop Insurance Corporation Federal Deposit Insurance Corporation 269. Hull coverage in an Ocean Marine Policy covers which of the following? Please select your answer The ship owner’s liability The freight charged for the transportation of the cargo **The vessel itself, including engines and fuel Cargo being transported on the ship 270. What are the characteristics of negligence? Please select your answer Duty and breach of duty Breach of duty and damages caused Breach and proximate cause **Duty, breach, proximate cause, and damages 271. Which of the following may be covered under the physical damage insuring agreement of a personal auto policy (PAP)? Please select your answer Damage to the vehicle caused by an engine failure **Loss of a CD player installed in the vehicle All are covered Theft of a CB radio 272. The process whereby a mutual insurer becomes a stock company is known as: Please select your answer Reorganization Stock split **Demutualization Stock buyout 273. The minimum discount provided for good drivers is: Please select your answer **20% 5% 10% 15% 274. Which is not part of transacting insurance? Please select your answer Solicitation Negotiation **Establishing a list of clients Execution of a contract 275. A representation as to the future is considered to be a: Please select your answer Description Liability **Promise Provision 276. When may a representation be withdrawn? Please select your answer **Only before the insurance is in effect At any time as long as both parties agree It can never be withdrawn Only after the policy is in effect 277. A representation as to the past, present or future is a/an: Please select your answer Warranty Misrepresentation Unverified fact **Verified promise 278. When must insurance records for insurance agents and brokers be made available to the insurance commissioner? Please select your answer One month after policy issuance **At all times Within 30 days of a written request by the commissioner Annually, and submitted with the proper paperwork 279. 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: Please select your answer RW and Associates representing BLG Insurance Corporation RW and Associates placing business through BLG Insurance Corporation **RW and Associates underwriting for BLG Insurance Corporation RW and Associates using the services of BLG Insurance Corporation 280. 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? Please select your answer Guaranteed **Insolvent Solvent Non-participating 281. The execution of a policy involves which of the following? Please select your answer Filling out an application Discussing policy limits with the client **Signing a covering note Cancelling a policy 282. 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? Please select your answer **$1,000 $1,500 $0 $2,000 283. 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? Please select your answer **$1,500 $1,000 $0 $2,000 284. 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? Please select your answer **Liquor liability Commercial general liability Host liquor liability Professional liability 285. The insurer decides not to renew an insured’s personal auto policy. How much notice must the insurer provide to the insured? Please select your answer 10 days 20 days **30 days 5 days 286. Equipment breakdown insurance covers all of the following, except: Please select your answer **Tools subject to regular replacement Communication equipment Mechanical equipment used to produce energy Equipment powered by internal pressure 287. All are differences between surety bonds and insurance except: Please select your answer 3-party contract Reserves are not established The surety should not suffer a loss **The obligee is responsible to the guarantor in the case of a loss 288. Which is an additional benefit that is included in a DP-2 that is not included in a DP-1? Please select your answer **Lawns, trees and shrubs Fire department services Reasonable repairs Debris removal 289. In reference to surety bonds, who is responsible for paying the damages incurred by the principal? Please select your answer Obligee **Surety Bondsman Principal 290. Which of the following are reasons why a professional liability policy is written on a claims-made basis? Please select your answer Minimize the effects of inflation Minimize the time between when a loss occurs and a claim is filed and paid Minimize the problem of stacking limits **All of the above are reasons 291. A major part of the premium charged for boiler and machinery insurance is used for liability inspection services. Please select your answer **True False XXX XXXX 292. Which of the following statements is false with regards to boiler and machinery coverage? Please select your answer Coverage can be written as a mono-line or as part of a commercial policy Property is insured on a replacement cost basis unless it is changed to ACV by endorsement **Coverage applies only to property the insured owns Supplementary payments are provided in addition to the policy limit 293. Ocean marine hull insurance provides for which of the following? Please select your answer Cargo Freight All of these are covered by hull insurance **Vessel 294. Protection and Indemnity (P&I) coverage provides coverage for which of these? Please select your answer Hull Cargo Freight **Liability 295. Each of the following is/are methods of cost valuation in an inland marine policy except: Please select your answer Replacing the damaged property with almost identical property Restoring the damaged property **Utilizing the market value of the damaged property Calculating the actual cash value of the damaged property 296. Approximately how many classes of insurance may be offered to the public? Please select your answer 3 5 30 **20 297. How many major sections are there in the California Insurance Code? Please select your answer 3 **5 20 30 298. When does the license of a fire and casualty broker/agent become inactive? Please select your answer When the agent is not transacting with the general public When the licensee passes the renewal date When the appointment agreement time period expires **When the agent is not currently appointed by an insurer, but the renewal fees are paid and continuing education requirements have been met 299. Depreciated amount at the time of the fire: $5,000 Please select your answer $4,000 $5,000 $6,000 **$7,000 300. Which of these is defined as an exclusive agent? Please select your answer Sells health insurance only Sells one line of insurance only **Sells one insurance company’s products only Sell all policies by telephone only 301. “Risk” is one of the most important terms in the insurance industry. How is it defined? Please select your answer Certainty of a financial loss Basis of a financial loss **Uncertainty of a financial loss Predictability of a financial loss 302. 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: Please select your answer All three are covered **Garage only House and garage only Auto only 303. Which party is allowed to cancel a commercial policy (assuming all legal requirements are met)? Please select your answer Insurance company only Insurance company and/or any insured named in the policy Insurance company and/or the first named insured, only concurrently **Insurance company and/or the first named insured in the policy 304. Which of the following crime coverages has the broadest definition? Please select your answer **Theft Robbery Safe burglary Burglary 305. Which of the following coverage parts is not found in a standard commercial package policy? Please select your answer Crime coverage part Property coverage part **Dwelling coverage part Boiler and machinery part 306. In a commercial property policy, which cause of loss form includes coverage for the peril of glass breakage? Please select your answer Basic and broad **Broad and special Basic and special Special only 307. The medical coverage found in a commercial general liability policy applies to which of the following categories of individuals? Please select your answer The insured’s employees while engaged only in a sports event that is employer sponsored The insured’s employees while participating in any activities that are employer sponsored **The insured’s customers who are in the process of transacting business on the insured’s premises The insured’s hired repair person who is fixing windows damaged by a peril insured by the policy 308. Which are covered by the employee dishonesty coverage form? Please select your answer **Theft of stock from the business, owned by the policyholder, by an employee Robbery of an employee Cash that is lost by an employee who is driving to the bank Merchandise shortages that are discovered only after an inventory of the store 309. The symbol “4” on a business auto policy indicates coverage for which of the following categories of vehicles? Please select your answer Described autos only All drivers and autos are covered, except for those driven by drivers under age 25 Vehicles of 2 tons or less, that are used for business purposes **Owned autos other than private passenger autos 310. 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? Please select your answer Require all employees to include the employer as a listed additional insured in their personal auto policies **Buy employer’s non-ownership liability in the commercial auto policy Include uninsured motorist coverage in the commercial auto policy contract This type of exposure cannot be covered 311. 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? Please select your answer The miscellaneous vehicle endorsement The transportation extension endorsement The extended non-owned coverage endorsement **The named non-owner coverage endorsement 312. The correct recommendation would be: Please select your answer An HO-2 contract An HO-3 contract **An HO-6 contract An HO-4 contract 313. The coverage found under both the Homeowners section II and a comprehensive personal liability policy extends to which of the following? Please select your answer Just the personal activities of the insured Just the personal premises of the insured Both personal and premises of the insured on a professional and personal exposure level **Both personal activities and premises of the insured as well as any activities of the insured that occur off the named premises 314. What will the insurer pay under this policy? Please select your answer $18,000 $24,000 $28,000 **$32,000 315. Damage which is the result of a hailstorm is covered under which of the following ways on a personal auto policy? Please select your answer Excluded as a catastrophic event **Covered as an other than collision loss Covered as a collision loss Covered only if the vehicle was under some type of covering at the time of the damaging storm 316. Which of the following is not covered under section II of a homeowners policy? Please select your answer The insured being liable for the loss of use of property that is owned by another Property damage to another’s owned property Any personal liability of the insured **The insured being liable for a bodily injury to someone in the insured’s immediate resident family 1 out of 316 Name Email Business Phone
