Welcome to your Fire Exam 5

1. 

Risk is defined as which of the following?

Please select your answer Uncertainty of a loss Certainty of a gain Certainty of a loss Uncertainty of a gain

2. 

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

3. 

A standard fire policy 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 removal fire, lightning and internal explosion

4. 

A Dwelling Policy Basic form without attached endorsements or additional coverage forms insures against direct loss by:

Please select your answer fire, lightning and internal explosion fire and lightning fire and removal fire, lightning and removal

5. 

A device which is used to minimize small claims and which helps to keep insurance premiums down is:

Please select your answer arbitration a value policy coinsurance a deductible

6. 

Coverage A under a dwelling policy covers all of the following except:

Please select your answer A laundry room attached to the dwelling. Building equipment and outdoor equipment. A storage shed connected to the dwelling by a utility line. Materials and supplies used for construction or repair of the dwelling.

7. 

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. Vans used in a delivery business are eligible. Vehicles owned by an individual or married couple may be insured. Private passenger autos used for business may be insured.

8. 

In property and casualty, when must insurable interest exist?

Please select your answer at the time of application or at the time of the loss. at the time of application. at the time the loss occurs. at the time of application and at the time of the loss.

9. 

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

10. 

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 for 60 days. for 30 days. for 10 days. until the end of the policy period.

11. 

The purpose of the FAIR Plan (Fair Access to Insurance Requirements) is to:

Please select your answer Make property insurance available and affordable in high-risk areas. Give the federal government a major role in providing insurance. Require complete disclosure of the reasons for cancellations. Force all insurance companies to participate in an insurance pool.

12. 

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 60 days. 20 days. 30 days. 10 days.

13. 

Which dwelling policy forms provide coverage for loss of rental value?

Please select your answer Basic, Broad and Special forms. Special form only. Basic and Broad forms only. Broad and Special forms only.

14. 

The mobile home endorsement (MH200) may be added to which of the following forms?

Please select your answer HO-4 and HO-6 HO-2 only HO-3 and HO-5 HO-2 and HO-3

15. 

Each of the following is true about the National Flood Insurance Program except:

Please select your answer Coverage is sold by licensed insurance agents and brokers. Coverage may be written by private insurance carriers. Eligibility requirements are set by private insurance carriers. The federal government reimburses insurance companies for losses.

16. 

Which of the following situations would be covered by liability insurance under a personal auto policy?

Please select your answer An insured who rents a private garage backs in and damages the garage. An auto mechanic has an accident while road testing a customer’s vehicle. An insured causes injuries while operating a taxi cab. An insured damages another vehicle while driving a motorcycle.

17. 

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.

18. 

Under a personal auto policy, which of the following is not a collision loss?

Please select your answer Impact between the covered auto and another vehicle. Impact between the covered auto and a stationary object. Impact between the covered auto and a deer. Upset of the covered auto, resulting in damage.

19. 

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.

20. 

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 have an interest in protecting what is insured. The applicant must not share the interest with anyone else.

21. 

Something that increases the likelihood that a loss will occur is called a:

Please select your answer Hazard. Peril. Risk. Catastrophe.

22. 

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

23. 

Replacement cost coverage without the deduction for depreciation is known as:

Please select your answer Actual cash value Replacement cost Market value Functional replacement cost

24. 

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.

25. 

Each of the following is true about homeowners personal property coverage except:

Please select your answer 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. The basic form does not include personal property coverage.

26. 

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. 13 years of age. 16 years of age. 10 years of age.

27. 

Which of the following losses is not excluded under the physical damage coverage of a personal auto policy?

Please select your answer Damage to equipment designed for the detection of radar. Loss caused by freezing of the cooling system. Loss of custom furnishings in a customized van. Damage to a covered auto while being used as part of a car pool.

28. 

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 Within 48 hours of the disablement. Within 24 hours of the disablement. At the place of disablement. At a garage by an experienced mechanic.

29. 

Furniture which is destroyed when a building burns down is an example of what kind of loss?

Please select your answer direct indirect consequential residual

30. 

“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.

31. 

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.

32. 

Which of the following causes of loss forms are “named peril” forms?

Please select your answer All of the above Basic form Broad form Earthquake form

33. 

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-half of the loss. The full loss. One-third of the loss. One-sixth of the loss.

34. 

Which of the following would be covered by the basic cause of loss form?

Please select your answer Damage resulting from ruptured water pipes. Damage resulting from earthquake. Damage resulting from the weight of snow, ice or sleet. Damage resulting from the airborne shockwaves of an erupting volcano.

35. 

Each of the following business occupancies would be permitted in a dwelling insured under a dwelling form except:

Please select your answer A professional office providing services to clients. A photographic studio. A small shop carrying merchandise for sale. A beauty shop run by the insured and her daughter.

36. 

Each of the following coverages is always included in Section I on a homeowners policy except:

Please select your answer Medical payments coverage. Personal property coverage Coverage for loss of use. Coverage for property removed to protect it from loss.

37. 

Each of the following statements regarding the homeowners broad form (HO-2) are true except:

Please select your answer Coverage is provided against all risks of physical loss. The dwelling is covered. Other structures are covered. Losses from vandalism and malicious mischief are covered.

38. 

Under a Businessowners Property Coverage form:

Please select your answer Optional coverages are not available. Coverage is provided for fire legal liability. Coverage is provided for flood damage. The standard deductible is $500 per occurrence.

39. 

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 living room furnishings in the insured home. Damage to construction materials which are intended for a new front porch for an insured home.

40. 

On the homeowners policy, coverage D is also called:

Please select your answer Other structures. Personal property. Personal liability. Loss of use.

41. 

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.

42. 

Which of the following is part of a commercial property coverage part?

Please select your answer Applicable endorsements. One or more cause of loss forms. All of the above.

43. 

Which of the following is not considered a consequential loss?

Please select your answer Damage to personal property. Loss of rental value. Extra expense incurred while rebuilding damaged property. Loss of business income while a building is closed for repairs.

44. 

The business income coverage form applies to:

Please select your answer Loss of revenues while operations are suspended due to property damage. Loss of income as the result of destruction of accounts receivable. Loss of cash receipts because of burglary or robbery. Loss of money because of employee dishonesty.

45. 

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 Declarations Conditions Insuring clause Exclusions

46. 

General liability policies provide coverage for damage to:

Please select your answer The insured’s products which are held for sale to others. Personal property in the care, custody, or control of the insured. Property of third parties when caused by negligence of an insured. Property owned or occupied by the insured.

47. 

The named non-owner coverage endorsement is used to provide personal auto insurance for:

Please select your answer Non-family members who use the named insured’s auto with permission. Other members of the named insured’s family who live in the same household. Relatives of the named insured who do not live in the same household. Someone who does not own an automobile, but who drives borrowed or rented autos.

48. 

Which of the following coverages would apply to a rental car used by an insured executive while on vacation?

Please select your answer Drive other car coverage. Garagekeepers legal liability. Truckers coverage. Coverage for nonowned autos.

49. 

Automobile limits of liability expressed as $25,000/$50,000/$10,000 mean:

Please select your answer None of the above. $25,000 property damage per accident, $50,000 bodily injury per accident, $10,000 bodily injury per person. $25,000 bodily injury, $50,000 property damage, $10,000 medical payments each accidents. $25,000 bodily injury for each person, $50,000 bodily injury each accident, $10,000 property damage each accident.

50. 

Under the business auto coverage form, which of the following is not considered to be “mobile equipment”?

Please select your answer A self-propelled snow plow. A forklift. Farm machinery. A bulldozer.

51. 

General liability insurance does not cover liability arising out of:

Please select your answer Mobile equipment on construction sites. Host liquor liability. Contractual liability. Aircraft owned by the insured.

52. 

An insurer that is not entitled to transact insurance business in California is known as a:

Please select your answer Non-admitted insurer. Non-soliciting insurer. Non-certified insurer. Non-transacting insurer.

53. 

Anyone willfully engaging in an unfair method of competition may be liable for a fine of up to:

Please select your answer $1,000 $10,000 $2,500 $5,000

54. 

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 $10,000 fine or up to one year in jail. A $5,000 fine. A $5,000 fine or up to six months in jail. A $10,000 fine.

55. 

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 two years in jail and fine of up to $10,000. Up to five years in prison and a fine of up to $150,000.

56. 

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 fiduciary. A principal A guarantor. An obligee.

57. 

Which of the commercial property causes of loss forms provide theft coverage?

Please select your answer The basic, broad and special forms. The broad and special forms only. The special form only. None of the forms provide theft coverage.

58. 

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. The coverage for building is written on a replacement basis. All coverages are written on a blanket basis. They are shown in the declarations and an additional premium is paid.

59. 

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 Blanket coverage. Scheduled coverage. Specific coverage. Extended coverage.

60. 

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. Two years after policy expiration. Six months after policy expiration. One year after policy expiration.

61. 

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 pay benefits when two or more people are injured in one accident. They remove disincentives for hiring partially disabled people. They relieve an employer of some of the burden for multiple injuries.

62. 

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.

63. 

When general liability “claims made” coverage is written, a “laser beam” endorsement may be used to:

Please select your answer Add special conditions applicable to defense contractors. Provide special coverages for certain high technology risks. Eliminate coverage for nuclear hazards. Exclude specific accidents, products, work or locations.

64. 

The “Inchmaree clause” in ocean marine policies provides coverage for which of the following?

Please select your answer Loss of shipping charges. Physical damage to the ship. Cargo damage due to negligence of the crew. Liability due to collision loss.

65. 

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

66. 

An insurance company’s actuarial department is responsible for which of the following?

Please select your answer Rating of insurance companies. Keeping an insurance company financial sound. Predicting profits of an insurance company. Assisting with service of insurance company claims.

67. 

All rates in California are subject to which of the following?

Please select your answer Prior approval rules. Mandatory rates. Manual rates. Experienced rating.

68. 

Rates in California are subject to which of the following?

Please select your answer Manual rates Use and file File and use Merit rating

69. 

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

70. 

In a homeowners policy, the insured is required to provide proof of loss within:

Please select your answer 30 days 20 days 10 days 60 days

71. 

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.

72. 

What is the maximum charge allowable for a SERP?

Please select your answer 200% of the General liability premium. 100% of the General liability premium. 150% of the General liability premium.

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