Fire & Casualty Practice Exam #1

148 Questions  I  By Petsya
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Fire Quizzes & Trivia
Practice exam for fire & casualty. 150 questions3 hour time limit.

  
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  • 1. 
    In an insurance policy, which page contains the rights and duties of both parties involved in the contract?
    • A. 

      Declarations

    • B. 

      Conditions

    • C. 

      Insuring Agreement

    • D. 

      Exclusions


  • 2. 
    Which of the following terms refers to how much the property (usually a home) would be bought for on the market?
    • A. 

      Replacement cost

    • B. 

      Actual Cash Value

    • C. 

      Market Value

    • D. 

      Agreed Value


  • 3. 
    The modular concept refers to:
    • A. 

      Parts of a package policy

    • B. 

      Endorsements within a package policy

    • C. 

      The declarations and conditions section of a package policy

    • D. 

      A monoline policy


  • 4. 
    Which of the following is not associated with the word insurance?
    • A. 

      Tansferring risk

    • B. 

      Indemnify

    • C. 

      Known event

    • D. 

      Written contract


  • 5. 
    Which of the following is a basis provision of all property policies for property that can't be moved, such as ahouse and sends payment to the insured as well as the lien holder in the event of a loss?
    • A. 

      Concurrent Policy Coverage

    • B. 

      Standard Mortgage Clause

    • C. 

      Special Lines Surplus Lines

    • D. 

      Uniform Insurers Rehabiliation Act


  • 6. 
    A policy of liability insurance issued to a local public entity or state agency as a named insured shall not be cancelled or have renewal declined for reasons other than nonpayment of premium unless notice is mailed to the named insured at least _____ days prior to the effective date or nonrenewal of at least _____ days prior to the effective date of cancellation.
    • A. 

      15/30

    • B. 

      30/45

    • C. 

      45/60

    • D. 

      60/90


  • 7. 
    The insurer may examine books and records of an insured:
    • A. 

      Annually

    • B. 

      Only after 30 days notice to the insured

    • C. 

      Only with the consent of the insured

    • D. 

      At any time and for up to three years after the policy expires


  • 8. 
    Which is not a reason for a company to obtain reinsurance?
    • A. 

      Protect companies form major losses

    • B. 

      Share the risk with another company

    • C. 

      Protect companies from catastrophic losses

    • D. 

      Share in the loss ration with another company


  • 9. 
    Under the standard fire policy, a fire that was intentionally started in an area such as a fireplace is known as:
    • A. 

      Intentional fire

    • B. 

      Unintentional fire

    • C. 

      Hostile fire

    • D. 

      Friendly fire


  • 10. 
    Which of the following Homeowners policies covers a home that was built 75 years ago?
    • A. 

      HO 1

    • B. 

      HO 2

    • C. 

      HO 4

    • D. 

      HO 8


  • 11. 
    The declarations page of a commercial policy will state which of the following:
    • A. 

      Premium amount and coverage limits

    • B. 

      Named insureds

    • C. 

      Covered property

    • D. 

      All of the above


  • 12. 
    Johnny told the insurace agent he thing he drives about 10,000 miles a year, but in fact it's more like 15,000 miles. What term would best describe this situation?
    • A. 

      Fraud

    • B. 

      Concealment

    • C. 

      Misrepresentation

    • D. 

      Misstated fact


  • 13. 
    What does an HO 6 cover?
    • A. 

      The tenants personal property, loss of use and liability exposures in renter's insurance.

    • B. 

      Covers perils to condominium units and the exposure of liability, as wee as loss assessment coverage.

    • C. 

      An HO 6 is coverage by the broad form perils.

    • D. 

      Covers all risks except those excluded


  • 14. 
    Which of the following Homeowner's policies have both dwelling and person property on a broad peril form?
    • A. 

      HO 2, HO 4, HO 5

    • B. 

      HO 2, HO5, HO 8

    • C. 

      HO 4, HO 5, HO 6

    • D. 

      HO 2, HO 6


  • 15. 
    On a Commerical package policy, "you" and "your" refer to:
    • A. 

      Any person with financial interest in the property

    • B. 

      The named insured and resident spouse

    • C. 

      An individual, corporation or other entity

    • D. 

      All of the above


  • 16. 
    All the following are part of the six specs of an insurance policy except:
    • A. 

      The parties between whom the contract is made

    • B. 

      Duties of an insured after a claim

    • C. 

      Statement of the premium

    • D. 

      The risks insured agains


  • 17. 
    When can insurers include an expense factor added to the premium charged for a class of policies?
    • A. 

      When the insurer is running low of reserve funds

    • B. 

      Anytime the insurer wants to

    • C. 

      When there is insufficient premium to cover the cost of issuing insurance

    • D. 

      When the claim is more than the premium within the first 6 months of issuing the policy


  • 18. 
    At the time of all appointments being terminated (after all fees paid and education requirements have been fulfilled) the agent's license:
    • A. 

      Terminates

    • B. 

      Becomes inactive

    • C. 

      Terminates after 10 days

    • D. 

      Becomes inactive after 30 days


  • 19. 
    Which of the following is not covered property under a Builders Risk form?
    • A. 

      Scaffoldings

    • B. 

      Lumber and other building supplies

    • C. 

      Temporary structures on the premises

    • D. 

      Trees, plants and shrubs


  • 20. 
    Who has the ability to legally bind insurance for the insurer?
    • A. 

      Insurance Broker

    • B. 

      Insurance Agent

    • C. 

      Insurance Solicitor

    • D. 

      Insurance Administrator


  • 21. 
    All of the following are examples of being a good agent for your client except:
    • A. 

      Stay up to date with clients and contact them periodically

    • B. 

      Go above and beyond with the service you provide for your client

    • C. 

      Make important decisions about the policy for clients without consulting and bothering them

    • D. 

      Know your job and strive to learn all there is about your job so you can be an effective agent


  • 22. 
    An insurance company that has met all the qualifications designed by the Department of Insurance and has received a Certificate of Authority from the DOI to trasact insurance in this state is known as:
    • A. 

      A domestic insurer

    • B. 

      A foreign insurer

    • C. 

      An admitted insurer

    • D. 

      A non-admitted insurer


  • 23. 
    Coverage A of the Commercial Building and Personal Property coverage form covers which of the following:
    • A. 

      Buildings and Separate Structures

    • B. 

      Personal Property

    • C. 

      A riding lawn mower

    • D. 

      Both A & C are true


  • 24. 
    Which is not a power of a Managing General Agent?
    • A. 

      Accept or decline risks

    • B. 

      Collect premium moneys for producing brokers/agents

    • C. 

      Underwrites gross direct written premium equal to or more than 10% of the policyholder surplus

    • D. 

      Appoints local agents in that territory


  • 25. 
    Which of the following describes an Alien Insurer?
    • A. 

      An insurance company that is incorporated outside the United States

    • B. 

      An insurance company thas is incorporated in California

    • C. 

      An insurance company that is incorporated in another state

    • D. 

      An insurance company that is incorporated outside of the principal city


  • 26. 
    A standard market insurer is an insurer who:
    • A. 

      Offers rates for insurance to those who can no longer afford insurance through the standard market

    • B. 

      Writes standard coverages in a state where the insurer is unlicensed

    • C. 

      Regulates the standard premium used by the standard market

    • D. 

      Will insure anyone for any reason


  • 27. 
    A Builder's Risk Policy:
    • A. 

      Must reflect a Coverage A limit of 100% of the value of the property

    • B. 

      Must reflect a Coverage A limit of 80% of the value of the property

    • C. 

      May be insured for any limit

    • D. 

      None of the above


  • 28. 
    Which of the following is a Personal Lines Licensee not allowed to transact?
    • A. 

      Stand alone Umbrella or excess liability insurance

    • B. 

      Inland marine insurance covering personal property

    • C. 

      Personal watercraft insurance

    • D. 

      Stand alone earthquake and flood insurance


  • 29. 
    The claims department is responsible for:
    • A. 

      Receiving applications for insurance and then deciding if the company should approve or reject the application.

    • B. 

      Receiving claim requests, evaluating them and paying claims that are covered by the terms of the contract and rejecting those that are not.

    • C. 

      Advertising, promoting and distributing an insurer's products to the public.

    • D. 

      Using claims history, statistics and computer data to predict losses.


  • 30. 
    The California Code simply states that to be an insurer:
    • A. 

      The person needs to be on file with the Commissioner

    • B. 

      The person needs to be licensed and approved by the DOI

    • C. 

      Ther person needs to be capable of making a contract

    • D. 

      The person has to be licensed and approved by the DOI and have 50 hours of insurance education


  • 31. 
    Under the Building and Personal Property coverage form, vacancy means:
    • A. 

      To be completely void of property

    • B. 

      Insufficient business property present to conduct customary operations

    • C. 

      100% of the building is not rented or occupied

    • D. 

      A property left unattended for more than 60 days.


  • 32. 
    Which of the following are not actions of transacting insurance?
    • A. 

      The actual execution of a contract

    • B. 

      Negotiations preliminary to the execution of a contract

    • C. 

      Solicitation of insurance

    • D. 

      Remitting or premium payments to the insurer


  • 33. 
    Which of the following terms refers to a company that fails to meet is financial obligations when they are due?
    • A. 

      Adverse selection

    • B. 

      Loss control

    • C. 

      Indemnity

    • D. 

      Insolvency


  • 34. 
    Which of the following is not a type of insurer?
    • A. 

      Lloyd's

    • B. 

      Aleatory

    • C. 

      Reciprocal

    • D. 

      Mutual


  • 35. 
    Tenant Improvements and Betterment losses are valued at:
    • A. 

      Actual Cash Value

    • B. 

      Replacement Cost

    • C. 

      Replacement Cost minus Depreciation

    • D. 

      Tenant Improvements and Betterments is not covered.


  • 36. 
    Which of the following would not be considered a binder?
    • A. 

      A temporary contract between the angent and the insured; usually 30 days.

    • B. 

      A verbal contract given an insured automobile coverage for the weekend of their new car.

    • C. 

      A temporary contract given an insured coverage for the additional truck they bought over the weekend.

    • D. 

      A verbal contract given to an insured who purchased a car in a different city.


  • 37. 
    Which of the following is true when two or more policies are covering an auto?
    • A. 

      The primary policy covers the loss

    • B. 

      The loss is shared proportionately by all the policies

    • C. 

      The policy with the most coverage covers the loss

    • D. 

      The policy with the most coverage covers the loss and then the secondary policy covers any remaining amount


  • 38. 
    Which of the following does not define an uninsured motorist?
    • A. 

      A hit and run vehile

    • B. 

      Person without insurance

    • C. 

      Person's insurer becomes insolvent

    • D. 

      Person with insurance


  • 39. 
    Which Commercial Property Causes of Loss form has the broadest coverage?
    • A. 

      Basic Causes of Loss

    • B. 

      Specified Causes of Loss

    • C. 

      Special Causes of Loss

    • D. 

      None of the above are Commercial Causes of Loss Forms


  • 40. 
    The only exceptions to the free insurance prohibition are as follows, except:
    • A. 

      Newspaper subscriptions

    • B. 

      Services of a motor club

    • C. 

      Life insurance to pay off a mortgage loan

    • D. 

      Auto insurance included in a automobile sale


  • 41. 
    If the insurer has Physical Damage Settlement Option to repair, replace, or pay for damage, what will the company use in determining how much to pay out for a claim?
    • A. 

      Use the amount specified in the policy

    • B. 

      Use the Kelly Blue Book value

    • C. 

      Use actual cash value

    • D. 

      Use the Kelly Blue Book value and the fair market value


  • 42. 
    What is the purpose of Miscellaneous Type Vehicle Endorsement?
    • A. 

      Is for people who don't own a vehicle but still drive (rented, public transportation, company vehicle, etc.)

    • B. 

      Allows non-owned vehicles furnished for the insured's regular use (company car)

    • C. 

      Allows the PAP to cover vehicles such as motorcycles, ATV's, dune buggies and motorhomes.

    • D. 

      Covers expenses incurred in the event of a total theft


  • 43. 
    Business Income and Extra Expense coverage would be necessary in which of the following cases?
    • A. 

      A dry cleaner has a fire and must relocate to temporary location to avoid losing customers

    • B. 

      A contractor has his tools stolen from a job site

    • C. 

      A grocery store suffers damage to stock when an earthquake collapses a shelf

    • D. 

      A restaurant owner forgets to order enough product as a result suffers a loss of business income.


  • 44. 
    You must notify the Commissioner in writing immediately if the following occur except:
    • A. 

      Residence address change

    • B. 

      Principal business address change

    • C. 

      Drivers license change

    • D. 

      Mailing address change


  • 45. 
    Which type of coverage is needed to cover how much you owe on a vehicle and how much the actual cash value is worth?
    • A. 

      Gap coverage

    • B. 

      New Auto Coverage

    • C. 

      P & I (protection and indemnity)

    • D. 

      Liability coverage


  • 46. 
    A policy that typically insures drivers who have less than favorable driving record or less driving experience than is desired is known as which of the following coverages?
    • A. 

      GAP coverage

    • B. 

      Named Non-owner coverage

    • C. 

      Other than collision coverage

    • D. 

      Non-Standard Physical Damage coverage


  • 47. 
    Aggregate limit refers to:
    • A. 

      The limit of insurance per loss

    • B. 

      The most an insurer will pay in any one policy period

    • C. 

      A per article limit

    • D. 

      Agricultural loss limit


  • 48. 
    An Application may be denied a license without the right to a hearing if any of the following conditions apply except:
    • A. 

      Applicant was convicted of a felony

    • B. 

      Applicant was convicted of a DUI misdemeanor

    • C. 

      Applicant's previous insurance license was revoked within the past 5 years

    • D. 

      Applicant was denied an insurance license last year


  • 49. 
    What type of endorsement waives the standard requirement of a "4-wheel vehicle and/or a vehicle weight of less than 10,000 pounds" limitation?
    • A. 

      Extended non-owned liability

    • B. 

      Named non-owner

    • C. 

      Excess automobile liability exposure

    • D. 

      Miscellaneous Type Vehicle.


  • 50. 
    Who is eligible for Low Cost Auto Insurance Program?
    • A. 

      Los-income California residents of San Francisco and Los Angeles counties with good driving records

    • B. 

      Los-income residents of California

    • C. 

      Los-income residents of any state in the U.S.

    • D. 

      Low-income California residents who have filed bankruptcy within the last 5 years


  • 51. 
    Coverage C of the CGL policy would cover all of the following except:
    • A. 

      Bodily Injury to a customer due to an employee's negligence.

    • B. 

      Damage to a customer's property while left in the care, custody and control of the insured.

    • C. 

      A trip and fall on the insured property, but not the fault of the insured

    • D. 

      Emergency treatment for a customer who burns themself on a hot cup of coffee


  • 52. 
    If you are acting in the best interest of the insured and handling their funds and affairs then you are acting as a:
    • A. 

      Insolvency dirctor

    • B. 

      Guarantee association

    • C. 

      Fiduciary

    • D. 

      Conservator


  • 53. 
    Which of the following is not true of the Market Conduct Bureau?
    • A. 

      Conducts examinations of California licensed insurer's claims-handling practices

    • B. 

      Provides individuals and companies assistance in buying automobile liability insurance in California

    • C. 

      Protects the public when they purchase insurance, make claims, ect. from insurance companies

    • D. 

      Consists of the Field Claims Bureau and Field Rating and Underwriting Bureau


  • 54. 
    Which of the following is not true of the Good Driver Discount according to Proposition 103?
    • A. 

      Prop. 103 states an insurer cannot refuse to write an application who qualifies for a good driver discount.

    • B. 

      A good driver discount should be a least 20% below the rate the insured would otherwise have charged for the same coverage

    • C. 

      Prop 103 requires the insured to purchase homeowner's insurance to be eligible for the good driver discount

    • D. 

      A good driver discount applies if all of the following criteria is met: licensed driver has not had one violation point during the past three years, was not the driver of a motor vehicle involved in an accident which resulted in death or in total loss of damage exceeding $500, and was not pricipally at fault.


  • 55. 
    All the following are exclusions under CGL policy except:
    • A. 

      Auto Liability coverage

    • B. 

      Liquor Liability coverage

    • C. 

      Professional liability coverage

    • D. 

      Products and Completed Operations coverage.


  • 56. 
    Who writes standard coverages in California but the insurer is unlicensed?
    • A. 

      Admitted insurer

    • B. 

      Nonadmitted insurer

    • C. 

      Standard Market Insurer

    • D. 

      Surplus Lines Insurer


  • 57. 
    According to the California Code of Insurance, insurance is a contract whereby one undertakes to indemnify another against loss, damage or liability arising from a(n):
    • A. 

      Contigent event

    • B. 

      Unknown event

    • C. 

      Contigent or unknow event

    • D. 

      Contingent and unknown event


  • 58. 
    Which of the following are ways of managing risks?
    • A. 

      Sharing, Transfer and Avoidance

    • B. 

      Avoidance, Shifting and Collecting

    • C. 

      Minimizing, Retaining and Exposure

    • D. 

      Containing, Collecting and Avoidance


  • 59. 
    Professional Liability coverage is designed to cover:
    • A. 

      Errors on a contract drawn by a Real Estate agent for a client

    • B. 

      Criminal acts of a Financial Advisor

    • C. 

      Injuries from an auto accident when a Doctor runs a red light

    • D. 

      A general contractor installs faulty wiring in a home


  • 60. 
    The following are responsibilities of the Commissioner of Insurance except:
    • A. 

      Issue regulations that establish how the DOI intends to interpret and enforce the law

    • B. 

      Oversee the DOI, directing all its affairs and staff in compliance with the code

    • C. 

      Appoint people to negotiate settlements with agents or insurers who have violated the code

    • D. 

      Authority to change the code, but may not write new laws.


  • 61. 
    What are the four types of hazards?
    • A. 

      Avoidance, Shifting, Collecting and Transfer

    • B. 

      Legal, Moral, Morale and Physical

    • C. 

      Transfer, Retain, Legal and Moral

    • D. 

      Physical, Morale, Pure and Speculative


  • 62. 
    According to the definition of an ideally insurable risk, all the following are required except:
    • A. 

      Loss must be the result of a catastrophic event

    • B. 

      Loss must be measurable in monetary value

    • C. 

      Loss exposure must be part of a similar group of exposures

    • D. 

      Loss must be accidental


  • 63. 
    Errors & Ommissions insurance would be needed for which of the following:
    • A. 

      A volunteer at a church picnic who forgets to bring pickles

    • B. 

      An attorney who provides legal advice online for a fee

    • C. 

      An accountant's assistant who makes an error

    • D. 

      A real estate agent who provides services free of charge


  • 64. 
    Incurred loss + loss adjusting expense/earned premium =
    • A. 

      Loss ratio

    • B. 

      Loss exposure

    • C. 

      Liability Loss exposure

    • D. 

      Property exposure


  • 65. 
    When a company works to pay claims and other expenses and still makes a profit, the degree or range of risk is known as:
    • A. 

      Risk Retention

    • B. 

      Adverse Seletion

    • C. 

      Spread of Risk

    • D. 

      Measurable Risk


  • 66. 
    The process whereby an insurer has an agreement with other insurers to share amounts of insurance over established limits is known as:
    • A. 

      Over insurance

    • B. 

      Excess insurance

    • C. 

      Reinsurance

    • D. 

      Coinsurance


  • 67. 
    A church has a boilerin the basement of the church that explodes one day, but no one was hurt. Which class of insurance covers this boiler?
    • A. 

      Liability

    • B. 

      Workers Compensation

    • C. 

      Boiler & Machinery

    • D. 

      Insolvency


  • 68. 
    A Claims Made reporting form states that:
    • A. 

      Any covered loss reported withing the policy period is covered

    • B. 

      Any claims that occur within the policy period are covered, regardless of when they are reported

    • C. 

      Claims made within the policy period must be reported and occur within the policy period to be covered

    • D. 

      Covered claims are those reported within the policy period and occur no later than the retroactive date


  • 69. 
    Which of the following is not an element of a contract to be enforced by the law?
    • A. 

      Competent parties

    • B. 

      Tort Law

    • C. 

      Offer and Acceptance

    • D. 

      Legal purpose


  • 70. 
    To have a contract, there must be an offer made by the insurer and then an acceptance made by the insured. This is known as the:
    • A. 

      Agreement

    • B. 

      Legal Purpose

    • C. 

      Consideration

    • D. 

      Competent Parties


  • 71. 
    Commercial Excess Liability policies are unlike Personal Umbrella in that:
    • A. 

      The cover commercial business risks

    • B. 

      Their deductibles are typically much higher

    • C. 

      There may not be an underlying policy that pays primary

    • D. 

      All of the above


  • 72. 
    Which of the following terms is mandatory as used in the Code?
    • A. 

      'may'

    • B. 

      'shall'

    • C. 

      Both 'may' and 'shall'

    • D. 

      Neither 'may' or 'shall'


  • 73. 
    According to the Code, the word 'person' means:
    • A. 

      The client seeking insurance

    • B. 

      The insurer is an insurance contract

    • C. 

      Any person, association, organization, partnership, business trust, limited liability company or corporation

    • D. 

      Any person capable of binding an insurance contract


  • 74. 
    Under the Commercial Crime insurance policy, 'occurrence' is defined as:
    • A. 

      An incident in which a person, other than the insured, commits a crime involving money

    • B. 

      An act or series of acts that may not involve people

    • C. 

      An act which causes bodily injury or property damage to the insured

    • D. 

      A confrontation in which roberry or burglary is involved.


  • 75. 
    A person within California shall not conduct any insurance on property located or operations conducted within, or on the lives or persons of residents of California with nonadmitted insurers except by:
    • A. 

      An agent

    • B. 

      An agent licensed with the state of California

    • C. 

      A licensed surplus line broker

    • D. 

      A licensed special surplus line broker


  • 76. 
    General damages are:
    • A. 

      A form of punishment imposed by the court upon the individual responsilbe for the loss

    • B. 

      Amounts paid for actual loss or injury sustained

    • C. 

      Losses of property or injuries

    • D. 

      Losses that are not easily measured in dollar amounts


  • 77. 
    Which of the following is not a common exclusion on the Boiler & Machinery policy?
    • A. 

      Leaking of valves, joints or fittings

    • B. 

      Breakdown of refrigeration units

    • C. 

      Loss due to safety devices not functioning properly

    • D. 

      Property of others not in the insured's care


  • 78. 
    The client was found to be 20% at fault in a $10,000 claim and would pay out $2,000. This is an example of:
    • A. 

      Contributory negligence

    • B. 

      Comparative negligence

    • C. 

      Absolute liability

    • D. 

      Strict Liability


  • 79. 
    Which of the following terms is a legal defense used when a person has placed him/herself in a dangerous situation?
    • A. 

      Recission

    • B. 

      Estoppel

    • C. 

      Fraud

    • D. 

      Assumption of Risk


  • 80. 
    Which of the following would be used to cover property of others left in a camera shop for repairs?
    • A. 

      A Camera & Musical Instrument Dealers/Commercial Articles coverage form

    • B. 

      A Business Personal Property Coverage form

    • C. 

      An Equipment Dealers form

    • D. 

      A Commercial General Liability (CGL) form


  • 81. 
    A person not wanting to be killed from a plane crash would choose to never fly in an airplane. This method of managing a risk is know as:
    • A. 

      Avoidance

    • B. 

      Retention

    • C. 

      Reduce

    • D. 

      Transfer


  • 82. 
    Which of the following refers to any reduction of quatity, quality or value of the insured property?
    • A. 

      Indirect loss

    • B. 

      Direct loss

    • C. 

      Loss exposure

    • D. 

      Named perils


  • 83. 
    A 'bailee' is defined in the insurance industry as:
    • A. 

      One who receives the funds of another for the purpose of posting bail

    • B. 

      One who assists another in 'bailing' water from a vessel to avoid sinking

    • C. 

      One who is entrusted with the property of others

    • D. 

      None of the above


  • 84. 
    Indirect loss refers to:
    • A. 

      Any reduction of quantity, quality or value of the insured property

    • B. 

      The percentage of each premium dollar a company spends on claims and expenses

    • C. 

      The amount of money the insurer pays out on a claim

    • D. 

      A monetary loss as a result of a direct loss


  • 85. 
    Expense is defined as:
    • A. 

      The reduction, decline or disappearance of value of the person or property insured in a policy, by a peril insured agains

    • B. 

      The company's cost of operations including overhead marketing and commissions

    • C. 

      The percentage of each premium dollar a company spends on claims and expenses

    • D. 

      The amount of money an insurer pays out for operation of the business


  • 86. 
    Mayberry Construction has a Business Auto Policy covering a 1995 pickup truck for liability and physical damage coverage. At the time of an accident, the driver of the pickup truck was pulling a trailer carrying a bulldozer. If the bulldozer slips off and causes bodily injury to another party, this is coverage under which of the following policies?
    • A. 

      The Business Auto Policy

    • B. 

      A Mobile Equipment Floater

    • C. 

      The Commercial General Liability Policy

    • D. 

      There is no coverage for mobile equipment


  • 87. 
    All the following are ways insurance agencies market their business except:
    • A. 

      Phone marketing systems

    • B. 

      Direct mailing system

    • C. 

      Exclusive agencies

    • D. 

      Independent agencies


  • 88. 
    In a legal relationship, what authority does a pricipal (company) give the agent in writing?
    • A. 

      Express authority

    • B. 

      Implied authority

    • C. 

      Customary authority

    • D. 

      Apparent authority


  • 89. 
    Which of the following is not a Specified Cause of Loss?
    • A. 

      Fire

    • B. 

      Flood

    • C. 

      Aircraft

    • D. 

      Explosion


  • 90. 
    Which of the following is not an action a person performs when transacting insurance?
    • A. 

      Calling an insurer for a price quote

    • B. 

      Solicitation of insurance

    • C. 

      The actual execution of a contract

    • D. 

      Any transactions that later result from the operation of the contract


  • 91. 
    The system that monitors and tracks clients transactions and communiccation for an agent is know as:
    • A. 

      Binder system

    • B. 

      Medical information bureau

    • C. 

      Insurance information system

    • D. 

      Suspense/diary system


  • 92. 
    One of the major differences between a Business Auto Policy and a Personal Auto Policy are the endorsments. Which coverage listed below is considered an endorsement on the Business Auto Policy?
    • A. 

      Liability coverage

    • B. 

      Uninsured motorist and medical coverage

    • C. 

      Comprehensive & collision coverage

    • D. 

      Cost of legal defense


  • 93. 
    The following acts are unlawful and are misdemeanors in California except when perfomed by a surplus line broker except?
    • A. 

      In any manner advertising a nonadmitted insurer in the state

    • B. 

      In any manner advertising an admitted insurer in the state

    • C. 

      In any other manner aiding a nonadmitted insurer to transact insurance business in this state

    • D. 

      Acting as agent for a nonadmitted insurer in the trasaction of insurance business in this state


  • 94. 
    In dealing with insurance in connection with sales or loans, the lender does have the right to provide the insurance or to renew the insurance, and to charge a transaction fee, if:
    • A. 

      The borrower gives faulty information in the process of the loan

    • B. 

      The borrower fails to deliver proof of insurance at least 60 days prior to the expiration of the policy

    • C. 

      The borrower fails to deliver proof of insurance at least 30 days prior the the expiration of the policy

    • D. 

      The borrower fails to deliver proof of insurance at least 90 days prior to the expiration of the policy


  • 95. 
    An owner of an auto repair business would be best covered under which of the following?
    • A. 

      A Commercial General Liability form

    • B. 

      A Business Auto Policy with Non-Owned Autos as a specified symbol

    • C. 

      A Garage Liability Coverage form

    • D. 

      A Commercial Property Coverage form


  • 96. 
    It is against the law for an insurance licensee to offer free insurance to:
    • A. 

      Anyone, regardless the reason

    • B. 

      Those who cannot afford it

    • C. 

      Family and other relatives

    • D. 

      Anyone, as an incentive to acquire some other type of business


  • 97. 
    Which of the following is not an exception to the free insurance prohibition?
    • A. 

      Insurance provided in connection with medical companies

    • B. 

      Insurance provided in connection with newspaper subscriptions

    • C. 

      The services of a motor club in regard to towing, emergency roadside service, bail bond service, etc., which are not defined as transaction insurance

    • D. 

      Insurance to guarantee performance of a product and reimburse a customer for losses resulting from such product's failure


  • 98. 
    What unique exposure is present in a farming business?
    • A. 

      The need for coverage on agricultural equipment

    • B. 

      Risks involving livestock

    • C. 

      The risk of injury to employees

    • D. 

      The need for Commercial and Residential coverage on the same property


  • 99. 
    Good records must be kept by the agent and be made available to the DOI for a period of:
    • A. 

      1 year

    • B. 

      2 years

    • C. 

      3 years

    • D. 

      5 years


  • 100. 
    Every resident insurance fire and casualty broker/agent shall maintain:
    • A. 

      A principal office in each city where business is transacted

    • B. 

      A principal office in California for the transaction of business done in California

    • C. 

      A principal office in each state where business in transacted

    • D. 

      A principal office in one specified city of business


  • 101. 
    All of the following are covered perils on a Crop Insurance policy, except:
    • A. 

      Insect infestation

    • B. 

      Drought

    • C. 

      Tornado

    • D. 

      Inherent vice


  • 102. 
    The Homeowners Watercraft Endorsement under Section II includes all the following except:
    • A. 

      The use of a boat in a racing competition

    • B. 

      Coverage for liability exposure on a scheduled boat

    • C. 

      Coverage for medical payments exposure on scheduled boats

    • D. 

      Property damage coverage for the boat itself


  • 103. 
    Which of the following is true of Worker's Compensation?
    • A. 

      Worker's Compensation is an endorsement in a commercial policy.

    • B. 

      This endorsement is required in California

    • C. 

      This covers loss due to personal injury (false arrest, libel, lander, defamation of character and invasion of Privacy)

    • D. 

      If a residence employee is injured on the job, state law requires the employer pay 90% and the employee to pay 10% of the loss.


  • 104. 
    The FCIC is an agency that sells Flood insurance policies:
    • A. 

      Through a select number of agents

    • B. 

      On an All Risk basis

    • C. 

      As a representative of the U.S. Department of Safety

    • D. 

      None of the above


  • 105. 
    Which HO endorsement covers breakage of glassware caused by an earthquake?
    • A. 

      Scheduled Personal Property Endorsement

    • B. 

      Guaranteed and Extended Replacement Cost Options

    • C. 

      Inflation Guard Endorsement

    • D. 

      Personal Property - Replacement Cost Endorsement


  • 106. 
    Under the Ordinance of Law Coverage endorsement; which of the following is not provided?
    • A. 

      Increased expense to the insurer to fix or rebuild property

    • B. 

      Residual property value of a home that must be demolished

    • C. 

      The cost of demolition and debris removal of undamaged property

    • D. 

      Extended liability coverage to a rental dwelling owned by the insured


  • 107. 
    The Business owners Policy (BOP) is a package policy combining what types of coverages?
    • A. 

      Liability and Property coverage

    • B. 

      Liability, Property, Business Income & Extra Expense and Property of Others coverage

    • C. 

      Liability, Property and Workers Compensation coverage

    • D. 

      Liability, Property and Professional Liability coverage


  • 108. 
    In a Boat owner's policy, liability coverage includes all the following except:
    • A. 

      Operations liability

    • B. 

      Passenger liability

    • C. 

      Medical liability

    • D. 

      Flotilla liability


  • 109. 
    According to Personal Lines - Earthquake Coverage, which of the following is not true?
    • A. 

      Earthquake coverage is part of of the policy and the deductible is determined by the location of the property.

    • B. 

      Earthquake coverage can be brought as a separate policy or by an endorsement

    • C. 

      The California Earthquake Authority (CEA) was created to help make this type of coverage

    • D. 

      Instead of using dollar amount, the deductibles are stated as a percentage.


  • 110. 
    Which of the following is false about the characteristics of a BOP policy?
    • A. 

      It typically has no coinsurance clause

    • B. 

      Losses are valued at replacement cost

    • C. 

      The standard deductible is $500

    • D. 

      Loss of income is coverage for up to 12 months


  • 111. 
    All of the following are advantages of using the Earthquake endorsement except:
    • A. 

      The deductible may be lower

    • B. 

      Earthquake is an extra covered peril for each separate coverage

    • C. 

      The coverage usually costs more than a separate policy

    • D. 

      Extended replacement cost, personal property replacement cost and ordinance and law endorsements apply to earthquake claims


  • 112. 
    What is the purpose of the Fair plan?
    • A. 

      To see that each member is provided with insolvency insurance and to provide indemnity toward claims of policyholders of that insolvent company

    • B. 

      The FAIR plan is designed to refulate laws that define insurance and make sure the people are fairly represented

    • C. 

      The FAIR plan shall establish a list of all surplus line insurers meeting the recognized requirements for such title and shall issue a master list at least semiannually

    • D. 

      The FAIR plan is a collection of risks to provide fire and extended coverage insurance to individuals who cannot get coverage through regular channels because of environmental hazards


  • 113. 
    Transportation coverage on the BOP would apply to which of the following?
    • A. 

      Property of the insured while being transported by vehicle to a business location, is involved in an accident damaging the insured's property

    • B. 

      Property of a customer is damaged while being transported by vessel

    • C. 

      A vehicle owned by the insured is damaged when a bridge collapses

    • D. 

      A vessel is stranded while trasporting property of others to the insured's business location


  • 114. 
    How does the association provide assistance for people who wish to apply for insurance through the FAIR plan?
    • A. 

      The association provides a local office in every county

    • B. 

      The association provides a toll free "800" number that provides assistance

    • C. 

      The association provideds a website that allows people to apply online

    • D. 

      The association provided paper materials that are mailed out


  • 115. 
    Which of the following would not be covered by flood insurance through the National Flood Insurance Program (NFIP)?
    • A. 

      Flood

    • B. 

      Mudslide

    • C. 

      Sewer backup

    • D. 

      Inland or tidal wave


  • 116. 
    The four (4) components of the Section II Business Liability coverage are:
    • A. 

      Building, Personal Property, Liability, Medical

    • B. 

      Building, Separate Structures, Personal Property, Liability

    • C. 

      Bodily Injury, Property Damage, Professional Liability, Medical

    • D. 

      Bodily Injury, Property Damage, Personal and Advertising Injury


  • 117. 
    What is the significance of the SEUA case of 1944?
    • A. 

      The court decided the government should regulate insurance

    • B. 

      The court exempted the insurance industry from federal regulations required for most interstate commerce industries

    • C. 

      The court gave the federal government authority to apply antitrust laws to the insurance business that was not being regulated at the state level

    • D. 

      The court established the right of the states, instead of the federal governement to regulate insurance.


  • 118. 
    If an insurer's legal reserve funds are less than the minimum required by law, the company is impaired in its ability to pay claims and it technically:
    • A. 

      Bankrupt

    • B. 

      Insolvent

    • C. 

      Recission

    • D. 

      Estoppel


  • 119. 
    The oldest type of insurance in the world is:
    • A. 

      Shipowners liability insurance

    • B. 

      Product liability insurance

    • C. 

      Ocean marine insurance

    • D. 

      Automobile liability insurance


  • 120. 
    Which of the following describes Fair Discrimination?
    • A. 

      When an insurer's underwriting department denies coverage because the clients age will increase the risk of covering that person

    • B. 

      When an insurer's underwriting department denies coverage because the clients geographic location will increase the risk of covering that persone

    • C. 

      When an insurer's underwriting department denies coverage because of information found that indicates an increas or risk that can be verified through actual proof

    • D. 

      When an insurer's underwriting department denies coverage because information about the clients tobacco use will increase the risk of covering that person


  • 121. 
    Which of the following statements about the requirements for rates in not true?
    • A. 

      No rate shall be approved or remain in effect which is excessive

    • B. 

      No rate shall be approved or remain in effect which is inadequate

    • C. 

      No rate shall be approved or remain in effect which is in violation of the Code

    • D. 

      No rate shall be approved or ramain in effect which is adequate


  • 122. 
    If a ship owner who purchases an Ocean Marine policy on an All Risk form runs into a dock whole transporting cargo for a customer, the policy would pay for:
    • A. 

      Damages to the ship, dock and cargo

    • B. 

      Damages to the ship, dock, cargo and any resulting bodily injury

    • C. 

      Damages to the ship, dock, cargo and any resulting bodily injury; including that of injured employees

    • D. 

      There is no Collision coverage on an Ocean Marine policy


  • 123. 
    Barratry is defined as:
    • A. 

      Intentional misconduct of a master or crew withouth the knowledge of the ship owner, resulting in damage or injury

    • B. 

      Intentional wrongful acts of a ship owner

    • C. 

      Damage or injury to a third party caused by intoxication of the master or crew

    • D. 

      And of the above could be true


  • 124. 
    Which of the following terms is mandatory as used in the code?
    • A. 

      May

    • B. 

      Shall

    • C. 

      Both may and shall

    • D. 

      Neither may or shall


  • 125. 
    According to the Code, the word 'person' means:
    • A. 

      The client seeking insurance

    • B. 

      The insurer in an insurance contract

    • C. 

      Any person, association, organization, partnership, business trust, limited liability company or corporation

    • D. 

      Any person cabable of binding an insurance contract


  • 126. 
    The three (3) parties to a Surety Bond contract are:
    • A. 

      Principal, surety and obligee

    • B. 

      Insured, insurer and principal

    • C. 

      Olibor, oligee and insurer

    • D. 

      None of the above, as there are only two (2) parties to a surety bond contract


  • 127. 
    A special surplus line broker may trasact 'special surplus lines.' All of the following are special surplus lines except
    • A. 

      Insurance on property or operations of railroads engaged in interstate commerce

    • B. 

      Reinsurance of the liability of an admitted insurer

    • C. 

      Farm or cattle ranch

    • D. 

      Aircraft insurance


  • 128. 
    A person within California shall not conduct any insurance on property located or operations conducted within, or on the lives or persons of residents of California, with nonadmitted insurers except by:
    • A. 

      An agent

    • B. 

      An agent licensed with the state of california

    • C. 

      A licensed surplus line borker

    • D. 

      A licensed special surplus line broker


  • 129. 
    Which of the following was not a responsibility of an employer under common law obligation for workers compensation in the early 1900's?
    • A. 

      Providing a safe workplace

    • B. 

      Assuring the risk

    • C. 

      Enforcing safety rules

    • D. 

      Providing safe equipment


  • 130. 
    For Coverage A, how is property valued in the event of a loss under the HO 3?
    • A. 

      Actual cash value, unless endorsed with replacement cost

    • B. 

      Replacement cost, if 80% insured to value

    • C. 

      Fair market value, if 80% insured to value

    • D. 

      Fair market value at the time of purchase


  • 131. 
    Which of the following is not excluded property under the HO 3?
    • A. 

      Animals

    • B. 

      Land

    • C. 

      Aricraft

    • D. 

      Garage


  • 132. 
    Which of the following is not an exempt category under Workers Compensation insurance?
    • A. 

      Volunteers for a non-profit organization

    • B. 

      A domestic employee who has earned on ly $90 total

    • C. 

      A student who is a pitcher for the school's baseball team

    • D. 

      A small business with only one employee


  • 133. 
    Under coverage D, loss of use, if the home owner occupied the home, this coverage pays for:
    • A. 

      Everything lost at fair market value and any expenses while the home is being repaired

    • B. 

      The portion of the porperty that was damaged as a result from the covered loss

    • C. 

      Living expenses that the insured incures while the dwelling is being repaired

    • D. 

      80% of the property lost and lodging expenses while the dwelling is being repaired


  • 134. 
    Under HO policy coverage, earth movement is a general exclusion, which homeowner's policy has done away with the exclusion for concurrent caustion regarding this peril?
    • A. 

      HO 2

    • B. 

      HO 3

    • C. 

      HO 4

    • D. 

      HO 6


  • 135. 
    The percentage of a deceased worker's weekly wages payable to the spouse and dependent children is:
    • A. 

      33 1/3

    • B. 

      66 2/3

    • C. 

      50

    • D. 

      100


  • 136. 
    In the event of a loss, the insured has the responsibility to do all the following except:
    • A. 

      Provide a copy of the police report to the insurer

    • B. 

      Notify the police if the loss is a result of theft

    • C. 

      Prepare an inventory of damaged property

    • D. 

      Report the loss within 60 days


  • 137. 
    What is the purpose of the California Residential Property Insurance Disclosure Statement?
    • A. 

      It describes the principal forms of insurance coverage in California for residential dwelling and the forms of dwelling coverage purchases

    • B. 

      It informs the agent of his or her rights and responsibilities in the insurance business

    • C. 

      It describes specific coverages of the residential policy

    • D. 

      It informs the insurer of different types of coverages avalible for purchase in the state of California


  • 138. 
    Which of the following is not true regarding the Voluntary Workers Compensation endorsement?
    • A. 

      It can be added upon request by the insured at any time during the policy period

    • B. 

      It applied only to volunteers who are working for the business named on the Workers compensation policy

    • C. 

      It protects a business owner from lawsuits that may arise, even from thos who by law are exempt from coverage

    • D. 

      It provides Workers Compensation coverage when a regular employee of a business also volunteers to work at business-sponsored events.


  • 139. 
    What are the two types of major coverages in Section II of the Homeowners forms?
    • A. 

      Liability and Long Term Care

    • B. 

      Long Term Care and Medical Payments

    • C. 

      Liability and Property

    • D. 

      Liability and Medical Payments


  • 140. 
    Under Section II of the Homeowners form, what does coverage E (personal liability) cover?
    • A. 

      This coverage will take effect if the insured is injured and needs medical attention

    • B. 

      This coverage will take effect if the insured is sued for slander

    • C. 

      This coverage will take effect if a claim is made against the insured for damages due to bodily injury or damage to the property caused by an occurrence.

    • D. 

      This coverage will take effect if the insured is hurt at work and needs medical attention.


  • 141. 
    An insured who takes necessary precautions to reduce Workers Compensation claims or severity of losses, could receive a discount throught a(an):
    • A. 

      Reporting Modification

    • B. 

      Experience Modification

    • C. 

      Risk Manager

    • D. 

      "No Losses" modification


  • 142. 
    Which of the following properties are not included in insured locations and residence premises under Section II of the Homeowner's Policy?
    • A. 

      Newly acquired residence

    • B. 

      Non-owned temporary residence

    • C. 

      Premises that is rented by the insured for business purpose

    • D. 

      Vacant Land


  • 143. 
    Which of the following is not covered in the homeowners watercraft endorsement under section II?
    • A. 

      The insured takes his/her boat out on the lake for a leisurely ride and it is damaged

    • B. 

      Ths insured takes his/her boat to the river and it is damaged due to collision with a large rock

    • C. 

      The insured enter his/her boat in a weekend boat race and the boat is damaged in the race.

    • D. 

      The insured is towing his/her boat to the lake for the weekend and the boat is damaged.


  • 144. 
    According the a new legal development, AB996 Chapter 647, regarding Hate Crimes against Reproductive Health Facilities, all of the following are true except:
    • A. 

      This Bill states that all hate crimes claims must also be reported to the commissioner

    • B. 

      This bill helps guarantee the availability of insurance to these types of facilities

    • C. 

      An Insurer may cancel or non-renew a policy due to excessive hate crime claims with written notice to the insured no less than 45 days prior to the cancellation or non-renewal.

    • D. 

      Insurers may not charge excessive or unfair premiums due to prior hate crime losses.


  • 145. 
    The probability of accident or sickness within a given group of people is known as:
    • A. 

      Mortality

    • B. 

      Law of Large Numbers

    • C. 

      Morbidity

    • D. 

      Indemnity


  • 146. 
    When coverage is terminated under a group plan, the coverage for a totally disables employee who submits a claim prior to the termination of the policy will:
    • A. 

      Not have coverage beyond the termination date for any reason

    • B. 

      Be covered only for Life Insurance

    • C. 

      Be covered under a lifetime provision

    • D. 

      Be covered under the Extension of Benefits, for a specified period of time


  • 147. 
    A policy is known as 'non-cancelable' when:
    • A. 

      The insurer can never cancel the policy

    • B. 

      The insured can never cancel the policy

    • C. 

      The insurer can only cancal the policy for non-payment and raise rates for all persons in that given classification. This only valid until age 65.

    • D. 

      The insurer can only cancel the policy for non-payment and cannot raise rates for any reason.


  • 148. 
    All of the following are true about COBRA except:
    • A. 

      It requires that all employees with 20 or more employees offer this coverage to qualified employees

    • B. 

      It grants 18-36 months of group plan coverage for terminated employees who qualify

    • C. 

      It allows for an extension of Life insurance under the group plan, until such time as new coverage can be arranged by the terminated/qualified employee

    • D. 

      It restircts the increase in premium to no more than 2% of the normal group rate.


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