Fire & Casualty - Practice Exam 3

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Practice Exam Quizzes & Trivia
Fire & Casualty California Insurance ExamPractice Paper 3

  
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  • 1. 
    What course of action does a party to a contract have if the other party is found to be in breach of that contract ?
    • A. 

      Nothing, unless the injured party can prove the damages are substantial

    • B. 

      Reasonable attorney fees and costs only

    • C. 

      Damages for breach, reasonable attorney fees and costs

    • D. 

      Damages caused by the breach only


  • 2. 
    A representation in an insurance contract qualifies as which of the following ?
    • A. 

      An amendment

    • B. 

      An express warranty

    • C. 

      A policy provision

    • D. 

      An implied warranty


  • 3. 
    What does it mean if an agen'ts license is inactive ?
    • A. 

      The agent can transact insurance business if it is done with another agents approval

    • B. 

      The agent can transact any insurance business for which the agent is licensed

    • C. 

      The agent can still transact insurance business in CA, but not in any other state until it is reactivated

    • D. 

      The agent cannot transact any insurance business for which a valid, active license is required


  • 4. 
    The ordinance or law exclusion found in property policies such as the commercial property coverage, and in the homeowner's policy have the following effect:
    • A. 

      It warrants that an insured has not knowingly violated an ordinance or law

    • B. 

      The insured may not remove or modify the effect of the exclusion

    • C. 

      It reduces the coverage on any loss if the loss was caused by the insured violating the ordinance or law

    • D. 

      It excludes that part of the loss resulting from the enforcement of a building ordinance or law


  • 5. 
    Extra expense insurance covers:
    • A. 

      Increased expense of repairing property to appreciated assets

    • B. 

      The extra expense that a business incurs to continue a business while damage to the premises are being restored

    • C. 

      The loss of profit a business incurs when it is shut down after a loss by a covered peril

    • D. 

      Payroll and other overhead incurred when a business is shut down after a loss


  • 6. 
    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 ?
    • A. 

      There is limited glass breakage coverage in both of the broad and special forms

    • B. 

      There is limited glass breakage coverage in the basic form

    • C. 

      No policy limits apply to glass breakage coverage in the special form, all named perils

    • D. 

      There is no glass breakage coverage in the broad or special forms


  • 7. 
    In the state of CA, no rate will remain in effect if it is considered to be any of the following, except:
    • A. 

      Impartial

    • B. 

      Unfairly discriminatory

    • C. 

      Excessive

    • D. 

      Inadequate


  • 8. 
    The amount paid for damage to property which is equal to the price for which it could have been sold is
    • A. 

      Actual cash value

    • B. 

      Replacement amount

    • C. 

      Stated amount

    • D. 

      Market Value


  • 9. 
    The limited Mexico endorsement applies to trips to Mexico with a duration of
    • A. 

      7 days or less

    • B. 

      10 days or less

    • C. 

      2 days or less

    • D. 

      14 days or less


  • 10. 
    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?
    • A. 

      Occurrence

    • B. 

      Loss sustained

    • C. 

      Claims made

    • D. 

      Discovery


  • 11. 
    Which coverage is needed to protect physicians, surgeons, and dentists for their professional activities
    • A. 

      Commercial general liability

    • B. 

      Malpractice coverage

    • C. 

      Employer's liability

    • D. 

      Errors and omissions coverage


  • 12. 
    What must an insurer do who accepts an application from an agent who is not specifically appointed that insurer, and then issues a policy from that application?
    • A. 

      The agent must become an employee of the company within 30 days ofpolicy issuance

    • B. 

      Name the agent to the list of the company's approved agents

    • C. 

      Send the agent an appointment approval notice within 30 days of policy issuance

    • D. 

      Forward to the commissioner a notice of appointment within 14 days of receipt of application


  • 13. 
    Under a major medical plan, coinsurance equals a percentage
    • A. 

      The employee pays after the deductible is met

    • B. 

      The plan pays after the deductible is met

    • C. 

      The employer pays after the deductible

    • D. 

      The spouses' insurance company pays after the deductible


  • 14. 
    If an insured borrows a neighbor's vehicle to run a personal errand, how do the policies respond in the event of an auto accident ?
    • A. 

      Both policies respon on a pro-rate basis

    • B. 

      Only the neighbor's policy provides coverage; there is no coverage by the driver's policy

    • C. 

      The driver's policy is primaty and the neighbor's policy is excess

    • D. 

      The neighbor's policy is primary and the driver's policy is excess


  • 15. 
    The equipment dealer's coverage form covers all of the following types of property, except:
    • A. 

      Dealer's used stock

    • B. 

      Motor vehicles designed for highway use

    • C. 

      Customer's equipment in for service

    • D. 

      Dealer's new stock


  • 16. 
    A self-insured group qualifies for stop-loss after claims:
    • A. 

      Equal the anticipated loss per month

    • B. 

      Meet the out-of-pocket expense during the policy period

    • C. 

      Exceed a specified limit in a set period of time

    • D. 

      Average the maximum amount stated on the master policy


  • 17. 
    A reporting form is used for property insurance
    • A. 

      To maintain the correct limits of coverage without over or under insuring when the value of volume of the property varies during the policy term

    • B. 

      To report losses and adjust insurance in force to conform

    • C. 

      When the insured's premises are subject to periodic safety inspections

    • D. 

      To establish a guaranteed amount of insurance based upon a report of values submitted the beginning of the policy term


  • 18. 
    All of the following contribute to the rising cost of Worker's Compensation Insurance, except:
    • A. 

      The growing population

    • B. 

      Employers who fail to secure the payment of workers compensation as required by law

    • C. 

      Under-reported payroll by employers

    • D. 

      Fraudulent claims


  • 19. 
    Which type of exposure can be best defined as a condition or situation where the exposure to finance loss is presented to an individual or family from causes such as injury, disability, death, sickness, or unemployment ?
    • A. 

      Personnel loss exposure

    • B. 

      Personal property loss exposure

    • C. 

      Personal loss exposure

    • D. 

      Liability loss exposure


  • 20. 
    All of the following would be considered benefits of Insurance, except:
    • A. 

      The source of investment funds

    • B. 

      Retention of the loss by the insured

    • C. 

      Redemption of the financial uncertainity of the insured

    • D. 

      Payment for the cost of covered losses


  • 21. 
    Which of the following is also known as a human loss exposure ?
    • A. 

      Personnel loss exposure

    • B. 

      Personal loss exposure

    • C. 

      Indirect loss exposure

    • D. 

      Liability loss exposure


  • 22. 
    If a tenant is insured under a building personal property coverage form, when is the property considered vacant ?
    • A. 

      When the structure is being renovated as the result of a fire

    • B. 

      When the Insured's operation is halted due to a strike

    • C. 

      When there is insufficient business personal property present to conduct customary operations

    • D. 

      When less that 31% of the total building space is rented to others or in use by the insured


  • 23. 
    A commercial property policy can provide coverage for all of the following, except:
    • A. 

      Tangible losses

    • B. 

      Indirect losses

    • C. 

      Intangible losses

    • D. 

      Direct losses


  • 24. 
    Which of the following types of coverage would be needed to cover a contract's bulldozers which are used in the contract's business but are not held for sale ?
    • A. 

      Older truck cargo floater

    • B. 

      Annual transit policy

    • C. 

      Contract's equipment floater

    • D. 

      Installment sales floater


  • 25. 
    It is a violation of the CA insurance Code to act as a producer for a non-admitted carrier unless:
    • A. 

      The producer is an insurance solicitor

    • B. 

      It is always a violation, no matter what type of producer

    • C. 

      The producer is dually licensed in at least two states

    • D. 

      The producer is a surplus lines broker


  • 26. 
    In California, excess and surplus lines coverage needs to be placed through:
    • A. 

      An admitted insurer

    • B. 

      An excess and surplus lines solicitor

    • C. 

      Lloyds of London

    • D. 

      A surplus lines broker


  • 27. 
    Under a scheduled personal property endorsement, loss to stamps are excluded when they are:
    • A. 

      Located in Canada

    • B. 

      Being shipped with a freight company

    • C. 

      Being shipped by registered mail

    • D. 

      While the insured is temporarily in Japan


  • 28. 
    Which of the following is most likely to be eligible for the CA Fair Plan ?
    • A. 

      An insured with a very bad driving record

    • B. 

      A poorly maintained dwelling with faulty wiring

    • C. 

      An insured who has had a drives license for less than two years

    • D. 

      A well-maintained dwelling located in a hazardous brush area


  • 29. 
    What items of personal property are included in Coverage A under a HO-3 policy ?
    • A. 

      Detached fences

    • B. 

      Lawnmower used to maintain the exterior premises

    • C. 

      Paint on the premises to be applied to the interior

    • D. 

      Decorative fountains


  • 30. 
    Mitchell's (unendorsed) personal auto policy liability coverage would pay for:
    • A. 

      Mitchell's brokern windshielf caused by a rock thrown by the tire of a passing car

    • B. 

      Mitchell's rental car expense, when his car is unusable due to a collision that was not his fault

    • C. 

      The cost of repairing the neighbor's fence that Mitchell damaged due to the negligent operation of his car

    • D. 

      Damage or injury caused intentionally by Mitchel


  • 31. 
    All Workers Compensation policies provide
    • A. 

      Major medical coverage with 20% co-payment; co-payment has an annual stop-loss of $1,500

    • B. 

      Compensation for worker related injuries without regard to fault

    • C. 

      Adequate retirement benefits

    • D. 

      24-hour on and off the job coverage for workers


  • 32. 
    All of the following are principal rating factors under Proposition 103 for personal auto policies, except;
    • A. 

      Years of driving experience

    • B. 

      Annual miles driven

    • C. 

      Driver's safety record

    • D. 

      Number of listed drivers


  • 33. 
    Under a builders risk form, how much insurance is required to pay any loss without a penalty for underinsurance?
    • A. 

      100% of the completed value

    • B. 

      100% of the value at the time of the loss

    • C. 

      80% of the value at the time of the loss

    • D. 

      80% of the completed value


  • 34. 
    Which of the following persons is not an insured under Section I of a homeowner's policy?
    • A. 

      The named insured

    • B. 

      The named insured's (resident) spouse

    • C. 

      The named insured's (resident) 25 year old nephew

    • D. 

      The named insured's (non-resident) spouse


  • 35. 
    An unbrella Policy
    • A. 

      Provides coverage for outdoor fairs and exhibitions in case of bad weather

    • B. 

      Provides excess physical damage coverage

    • C. 

      Provides broad primary coverage for most personal or commercial loss exposures

    • D. 

      Provides broad excess liability coverage over one or more primary policyes


  • 36. 
    All of the following expenses are covered in addition to the limits of liability under Coverage A of a personal auto policy, except:
    • A. 

      Pre-judment interest

    • B. 

      Premium for appeal bonds

    • C. 

      Loss of earnings to attend trials at the company's request

    • D. 

      Cost of bail bonds related to covered accident


  • 37. 
    Under a commercial property coverage form, all of the following properties are included in the definition of "building." except:
    • A. 

      Patio

    • B. 

      Outdoor fixtures

    • C. 

      Permanently installed fixtures

    • D. 

      Personal property used to maintain the premises


  • 38. 
    Carmen is driving her own car on behalf of her employer.  Carmen's negligent operation of her car injured member of the public.  The employer may be held liable because of what is called:
    • A. 

      Vicarious liability

    • B. 

      Gross negligence

    • C. 

      Absolute liability

    • D. 

      Contributory Negligence


  • 39. 
    Which of the following perils is insured against in the Special form but not in the Basic form ?
    • A. 

      Friendly fire smoke

    • B. 

      Weight of snow

    • C. 

      Plumbing system leakage

    • D. 

      Collapse


  • 40. 
    Which of the following types of policies pays for bodily injury or property damage which occurs or is discovered during the policy period ?
    • A. 

      Pollution liability policy

    • B. 

      Claims made commercial liability policy

    • C. 

      Auto liability policy

    • D. 

      Occurrence general liability policy


  • 41. 
    If an armored car carrying an insured's bank deposit is robbed, what Insurance would the insured need to be covered?
    • A. 

      Monery orders and counterfeit money

    • B. 

      Funds transfer fraud

    • C. 

      Outside the premises-theft of money and securities

    • D. 

      Employee theft


  • 42. 
    Under the liability portion of an unendorsed personal auto policy, what coverage is available fi the namedinsured is operating a company car ?
    • A. 

      The coverage of the vehicle primarily operated by the named insured

    • B. 

      The financial responsibility coverage limitations

    • C. 

      The broadest coverage of any of the autos listed in the declarations

    • D. 

      The policy excludes this usuage


  • 43. 
    A possibility of financial loss resulting from the ownership of property is knowns as:
    • A. 

      Insurable interest

    • B. 

      Valuation

    • C. 

      Indemnity

    • D. 

      Legal liability


  • 44. 
    If the vacancy permit endorsement is added to a building and personal property coverage form, the vacancy conditions under the basic policy is:
    • A. 

      Waived only for designated perils during the permit period

    • B. 

      Waived during the perimit period

    • C. 

      Waived during the policy period

    • D. 

      Waived only for designed perils during the policy period


  • 45. 
    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 populat 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:
    • A. 

      Take a walk through the business to observe operations and work flow, and ask their key people about the company and its operations

    • B. 

      Meet with key people and complete a loss exposure questionnaire developed for their general type of risk

    • C. 

      Get a copy of all current policies and determine what coverage they have been carrying and how much they have been paying


  • 46. 
    Where would an insured who is in the business of importing exotic animals from Africa most likely go to obtain insurance coverage?
    • A. 

      State Competitive Fund

    • B. 

      Foreign insurer

    • C. 

      Alien insurer

    • D. 

      Excess and surplus lines insurer


  • 47. 
    A commercial building and a personal property coverage form covers three kinds of property, one which has "your business peronal property," "Your" refers to:
    • A. 

      Only the first named insured shown in the declarations

    • B. 

      Any party who has an insurable interest in the property located at the insured address

    • C. 

      The named insured and others whose property is in the care, custody or control of the insured

    • D. 

      Only the named insured(s) shown in the declarations


  • 48. 
    Which of the following losses is not covered by either the personal auto policy collision or other than collision coverage?
    • A. 

      Sean's Car is severely damaged by a storm when a sign is blown off the roof of a building and hits his car

    • B. 

      Sean's car is washed away during a flood

    • C. 

      Sean's car is stolen when he leaves the keys in the ignition, and the doors and windows are unlocked while he runs into the grocery store.

    • D. 

      Sean leaves his personal (non-business) laptop computer in his car overnight. His car is parked in the driveway in front of his house. the computer is stolen from his car.


  • 49. 
    Self-funding of employee benefit plans cannot be used for:
    • A. 

      Short-term disability benefits

    • B. 

      Death benefits

    • C. 

      Hospital benefits

    • D. 

      Health benefits


  • 50. 
    How much additional coverage is provided under Homeowners 3 for ordinance or law ?
    • A. 

      10% of the coverage A limit

    • B. 

      25% of the coverage A limit

    • C. 

      No coverage

    • D. 

      Replacement cost of the Coverage a limit


  • 51. 
    What is the primary difference between a HO-2 and a HO-4 policy ?
    • A. 

      Perils insured against under Coverage C

    • B. 

      Inside limites of liability for specified personal property

    • C. 

      Property insured under Coverage A

    • D. 

      Description of an insured premises


  • 52. 
    A commercial lines program policy, common policy conditions, do not incude which of the following as a condition ?
    • A. 

      Perils insured

    • B. 

      Cancellation

    • C. 

      Inspections and surveys

    • D. 

      Examination of your books and records


  • 53. 
    Jack, a condo owner, wants a fire and allied lines coverage for personal property, liability coverage for himself and family members, and protection for assessments or damage for the building structure and other common areas.  Which homeowners form would you recommend ?
    • A. 

      HO-6

    • B. 

      HO-3

    • C. 

      HO-2

    • D. 

      HO-4


  • 54. 
    Which property coverage form is best suited for a structure under construction ?
    • A. 

      Standard property policy

    • B. 

      Reporting form

    • C. 

      Building and personal property coverage form

    • D. 

      Builders risk coverage form


  • 55. 
    What perils are insured against under the "additional coverages - property removed" of a homeowners policy ?
    • A. 

      All perils

    • B. 

      Broad form perils

    • C. 

      Perils of transportation

    • D. 

      Basic form perils


  • 56. 
    Which of the following is not required when electing continuation of coverage under COBRA ?
    • A. 

      An insurability statement

    • B. 

      A qualifying event

    • C. 

      A completed application

    • D. 

      Premium payment


  • 57. 
    The adult day care coverage level of a LTC policy provides for:
    • A. 

      Part-time home health care for the frail and elderly

    • B. 

      Full-time nursing at home for a convalescing elder

    • C. 

      Full-time nursing care for elders living in assisted living centers

    • D. 

      Part-time nursing at a facility for the elderly who live at home


  • 58. 
    The CA insurance code:
    • A. 

      Prohibits agents from receiving compensation for premium financing

    • B. 

      Sets the percentage of interest that may be charged in a premium finance contract

    • C. 

      Requires agents to keep records of any compensation they have received for their services involved with premium financing

    • D. 

      Requires agents to provide premium financing services


  • 59. 
    The commercial General Liability(CGL) contract contains an exclusion for liquor liability.  The purpose of this exclusion is to exclude coverage for law liability losses arising from:
    • A. 

      An insured serving alcohol at such functions as company picnics and holiday office parties

    • B. 

      The illegal manufacture, sale or possession of alcoholic beverages

    • C. 

      An insured's special loss exposures resulting from the insured paying in the alcoholic beverage business

    • D. 

      The serving of alcoholic beverages by any insured at any business function


  • 60. 
    Which of the following is commonly found in liability policies, thus creating the need for inland marine coverage ?
    • A. 

      A coinsurance clause

    • B. 

      A care, custody, control exclusion

    • C. 

      A valuation clause

    • D. 

      A debris removal coverage


  • 61. 
    The measure of loss potential which is used for pricing of insurance is knows as:
    • A. 

      An exposure unit

    • B. 

      A claim

    • C. 

      A covered losss

    • D. 

      Loss transfer


  • 62. 
    Coverage on an annual transit policy is usually provided on which of the following basis ?
    • A. 

      Theft only

    • B. 

      Extended coverage

    • C. 

      Open Peril

    • D. 

      Named peril


  • 63. 
    A newly acquired motorcycle is not automatically covered under a personal auto policy (PAP) because:
    • A. 

      Motorcycles are insured under a homeoweners policy

    • B. 

      The unendorsed policy does not cover two-wheeled vehicles

    • C. 

      Motor cycles are too dangerous to insure

    • D. 

      Motorcycles cannot be insured under the PAP


  • 64. 
    What would be the most likely action taken by the Insurance Commissioner if a licensee induces a client to co-sign a loan ?
    • A. 

      License suspension

    • B. 

      $1,000 fine

    • C. 

      Licensee to complete an approved ethics course

    • D. 

      Licensee required to repay the loan with interest


  • 65. 
    Under the "examination of your books and records" condition of a commercial polic, when may an insurer examine an insured's books and records ?
    • A. 

      At any time during the policy period and up to three years afterwards

    • B. 

      Only when authorized by the insured

    • C. 

      At any time

    • D. 

      Only upon receiving a court order allowing the inspection


  • 66. 
    Which type of loss is a business exposed to death, retirement, resignation, or disability of a key employee?
    • A. 

      Human loss exposure

    • B. 

      Personnel loss exposure

    • C. 

      Personal loss exposure

    • D. 

      Workers compensation exposure


  • 67. 
    The applicant wants a homeowners policy that has open peril coverage on his home (building structure).  Assuming he is eligible for the policy, which policy would you recommend ?
    • A. 

      HO-2

    • B. 

      HO-3

    • C. 

      HO-6

    • D. 

      HO-8


  • 68. 
    What is the limit for sound reproducing equipment under the coverage endorsement for excess sound reproducing equipment, audio, visual and data electronics, tapes, records, disks, and other media endorsement in a PAP ?
    • A. 

      $200

    • B. 

      The amount scheduled on the endorsement

    • C. 

      $500

    • D. 

      $1,000


  • 69. 
    The state law that regulates insurer practices regarding underwriting, sales, rate-making and claims handling are called:
    • A. 

      Insurer policing

    • B. 

      Ethical standards surveillance

    • C. 

      Stand regulation

    • D. 

      Market conduct regulation


  • 70. 
    Under a building and personal property coverage form, if the insured building has been vacant for more than 60 consecutive days. What effect will this have on a vandalism loss ?
    • A. 

      There is no effect

    • B. 

      The loss is excluded

    • C. 

      The amount of the loss will be reduced by 60%

    • D. 

      The amount of the loss will be reduced by 15%


  • 71. 
    Which of the following is a true statement about CAARP ?
    • A. 

      Only agents with two or more years of experience are eligible to place business with CAARP

    • B. 

      CAARP offers dwelling coverage, but not homeowners

    • C. 

      Commercial risks are not eligible for CAARP

    • D. 

      The minimum liability for CAARP policies are $15,000/$30,000/$5,000


  • 72. 
    Which exclusion in the causes of loss - special form - excludes coverage for mudflow ?
    • A. 

      Ordinance or law

    • B. 

      Utility service

    • C. 

      Water (flood)

    • D. 

      Governmental action


  • 73. 
    What additional coverage is provided in a DP3 that is not included in a DP1 ?
    • A. 

      Collapse

    • B. 

      World-wide coverage

    • C. 

      Fire department service charge

    • D. 

      Other structures


  • 74. 
    The medical expense plan designed to cover a hospital visit for hernia repair is known as:
    • A. 

      Supplemental medical

    • B. 

      Indemnity medical

    • C. 

      Basic medical

    • D. 

      Surgical medical


  • 75. 
    Why would an inured need an inland marine policy if she is shipping stock on her own trucks ?
    • A. 

      Stock is only covered if it is being shipped through an insured delivery service

    • B. 

      Stock is only covered if it is in the building or within 100ft. of the building premises

    • C. 

      An inalnd marine policy is not needed; insured stock is covered anywhere within the coverage territory

    • D. 

      Stock is never covered under a business personal property form


  • 76. 
    A dwelling fire policy's coverage is to a homeowner's policy, as a commercial property policy coverage is to a:
    • A. 

      Business auto policy

    • B. 

      Commercial general liability policy

    • C. 

      Business owner's policy

    • D. 

      Business income - extra expense policy


  • 77. 
    The amount to replace an insured's damaged property, less depreciation, is known as the
    • A. 

      Actual cash value

    • B. 

      Stated amount

    • C. 

      Replacement value

    • D. 

      Agreed amount


  • 78. 
    Which of the following types of loss would result in a claim for monetary damages due to injury to another or damage to another's property ?
    • A. 

      Real property loss

    • B. 

      Personal property loss

    • C. 

      Physical loss

    • D. 

      Liability loss


  • 79. 
    What is the different between the per accident limit in a split limits policy and the single limits ?
    • A. 

      The per accident limit applies to all claims, and the single limit applies only to bodily injuries

    • B. 

      The per accident limit applies only to bodily injuries, and the single limit applies to all claims

    • C. 

      There is no difference

    • D. 

      The per accident limit applies to property damage, and the single limit applies to all claims


  • 80. 
    Which perils may be excepted from the vacancy permit endorsement ?
    • A. 

      Building glass breakage and attempted theft

    • B. 

      Sprinkler leakage and building glass breakage

    • C. 

      Vandaism and attempted theft

    • D. 

      Vandalism and sprinkler leakage


  • 81. 
    If an insured rents an auto while on vacation, what coverage, if any, will be available for physical damage coverage under a persona auto policy ?
    • A. 

      The lease coverage on any auto shown on the declarations

    • B. 

      No coverage available

    • C. 

      The coverage of the last auto shown in the declarations

    • D. 

      The broadest coverage on any auto shown in the declarations


  • 82. 
    If an insured signs a claim form for a claim which is fraudulent, the insured may be guilty of:
    • A. 

      Nothing, if the claims is never paid

    • B. 

      Obstruction of justice

    • C. 

      Misrepresentation

    • D. 

      Perjury


  • 83. 
    When is a fire and casualty agent required to inform an insured of any conditions which may be precedent to coverage regarding a personal auto policy ?
    • A. 

      At proposal

    • B. 

      At application

    • C. 

      At renewal

    • D. 

      At policy delivery


  • 84. 
    In reference to the coverages provided in the basic form, the boat owner's policy is similar to what other policy ?
    • A. 

      A commercial inland marine policy

    • B. 

      The personal auto policy

    • C. 

      The homeowner's policy

    • D. 

      The commercial ocean marine policy


  • 85. 
    If an insured with a personal auto policy has an accident in a state with personal injury protection (PIP), how does the policy respond ?
    • A. 

      The insured may apply for the additional PIP coverage within 10 days of the accident

    • B. 

      PIP coverage is provided only for medical providers in that state

    • C. 

      Coverage automatically is broadened to provide PIP

    • D. 

      Coverage remains as written


  • 86. 
    What is the minimum discount percentage for the "good driver" discount ?
    • A. 

      5%

    • B. 

      10%

    • C. 

      25%

    • D. 

      20%


  • 87. 
    What is the primary difference between umbrella and excess liability policies ?
    • A. 

      The umbrella has fewer supplementary features and is less expensive than the excess policy

    • B. 

      The umbrella covers most liability exposures; the excess liability may cover only one line

    • C. 

      The umbrella covers intentional acts; the excess liability does not

    • D. 

      The umbrella affords defense costs; the excess liability does not


  • 88. 
    What additional coverages are available under the scheduled personal property endorsement that is not available under an unendorsed homeowner's policy ?
    • A. 

      Vandalism to artwork

    • B. 

      Theft

    • C. 

      Damage to a camera in an auto accident

    • D. 

      Breakage of glassware caused by an earthquake


  • 89. 
    The intentional relinquishment of a known right is:
    • A. 

      Warranty

    • B. 

      Waiver

    • C. 

      Concealment

    • D. 

      Estopple


  • 90. 
    The commercial property conditions include a condition called "liberalization". The effect of this condition is:
    • A. 

      To protect the insured from policy cancellation once the policy has been in effect for 90 days

    • B. 

      To require the insurer to liberally construe the other commercial property conditions in case of disagreement between the insurer and the insured

    • C. 

      Allow the insurer to set property values based upon current data as long as it does not reduce the loss payment

    • D. 

      To automatically apply broader coverage to the commercial property coverage part if a policy form revision would broaden coverage without an additional premium


  • 91. 
    What does a release bill of lading do for a common carrier ?
    • A. 

      Provides insurance coverage to the customer by the shipper

    • B. 

      Releases the customer from all responsibility

    • C. 

      Limits the carriers liability on the shipment

    • D. 

      Releases the carrier from all responsibility


  • 92. 
    What is one reason a person may purchase a dwelling form policy instead of a homeowner's policy ?
    • A. 

      The dwelling form provides greater flexibility in selecting coverage

    • B. 

      The dwelling is occupied by two families

    • C. 

      The dwelling form provides broader coverages

    • D. 

      The owner does not reside in the dwelling


  • 93. 
    An open-peril policy protects against the loss from:
    • A. 

      Perils found outside in the open

    • B. 

      Only the perils openly named in the policy

    • C. 

      Mainly, perils of the sea

    • D. 

      Any peril, other than those specifically exclude


  • 94. 
    Which of the following types of insurance was designed to cover domestic shipments, means of transportation, personal property floater risks, and commercial property floater risks ?
    • A. 

      Inland marine

    • B. 

      Business personal property

    • C. 

      Ocean marine

    • D. 

      Auto liability


  • 95. 
    What is the primary difference between an HO-3 and an HO-5 ?
    • A. 

      Coverage A and B perils

    • B. 

      Coverage C perils

    • C. 

      Coverage A property

    • D. 

      Coverage D limits


  • 96. 
    Which of the following statements is not true ? A fire & casualty managing agent:
    • A. 

      Has the power to accept or decline risks

    • B. 

      Does not have the authority to collect premiums from producing broker-agents

    • C. 

      Has the power to appoint, supervise and terminate the contracts of agents

    • D. 

      Holds a license as a fire and casualty agent


  • 97. 
    In the business of insurance, concealment is defined by all of the following statements, except:
    • A. 

      Concealment does not occur if no inquiry is made

    • B. 

      Concealment is grounds for declination by the insurer

    • C. 

      Concealment can be unintentional

    • D. 

      Concealment can be intentional


  • 98. 
    All of the following are characteristics of an "ideally insurable loss exposure", except
    • A. 

      Losses that are accidental

    • B. 

      Losses that are catastrophic

    • C. 

      Losses that are definite and measurable

    • D. 

      Large number of exposure units


  • 99. 
    The liability coverage in a yacht policy is referred to as:
    • A. 

      Protection and indemnity

    • B. 

      Personal liability protection

    • C. 

      Hull coverage

    • D. 

      Inchmaree Clause


  • 100. 
    All of the following types of businesses would need a special inland marine coverage for their stock, except:
    • A. 

      Jewelers

    • B. 

      Stamp and coin collectors

    • C. 

      Furriers

    • D. 

      Grocers


  • 101. 
    What else must an applicant for a fire and casualty license, life agent license, or personal lines agent license complete in addition to pre-licensing classroom study ?
    • A. 

      A diversity awareness course provided by the State of CA

    • B. 

      A contract law course at any approved college location

    • C. 

      A sales training course provided by the insurance department

    • D. 

      A 12-hour course on ethics and the CA code


  • 102. 
    The personal auto policy territory limits include:
    • A. 

      Tokyo, Japan

    • B. 

      London, England

    • C. 

      Mexico City, Mexico

    • D. 

      Montreal, Canada


  • 103. 
    The amount to replace property with a like property of the same quality and construction is the:
    • A. 

      Actual cash value

    • B. 

      Market value

    • C. 

      Replacement cost

    • D. 

      Stated value


  • 104. 
    The collision coverage of a personal auto policy covers:
    • A. 

      A desert sand storm pitting the car windshield

    • B. 

      Damage caused by the insured by driving into a tree that had fallen during a recent storm

    • C. 

      A vandal making a deep scratch on the car with a screwdriver

    • D. 

      Collision coverage does not cover any of these losses


  • 105. 
    Which of the following perils is included in the broad form, but not in the basic form.
    • A. 

      Volcanic action

    • B. 

      Sprinkler leakage

    • C. 

      Sink hole collapse

    • D. 

      Falling objects


  • 106. 
    Which type of a crime policy will pay for a loss, which is found during the policy period, even if the loss occurred prior to the effective date of the policy ?
    • A. 

      Occurrence

    • B. 

      Claims made

    • C. 

      Loss sustained

    • D. 

      Discovery


  • 107. 
    A personal auto policy (PAP) insured's car was a total loss when the coar was stolen and wrecked.  The insured has the following coverages: liability, medical payments and "other than collision". Het PAP:
    • A. 

      "Other than collision" will pay for the loss

    • B. 

      Will not pay for this loss - no coverage

    • C. 

      Medical payments will pay for the loss

    • D. 

      Liability coverage will pay for the loss


  • 108. 
    The watercraft endorsement on a homeowner's policy extends coverage for:
    • A. 

      Physical damage and liability coverage for all owned watercraft

    • B. 

      Liability coverage for all owned watercraft

    • C. 

      Physical damage and liability coverage for watercraft listed on the schedule

    • D. 

      Liability coverage for watercraft listed on the schedule


  • 109. 
    Mary has an HO-3 policy with replacement cost coverage on the insured buildings. The cost of replacement on the dwelling is $100,000 and the other structure ( a garage) is $20,000. To be certain of replacement cost coverage on a partial loss to either structure, she must carry a minimum of:
    • A. 

      $80,000 on the dwelling; $16,000 on the garage

    • B. 

      $80,000 on the dwelling; $8,000 on the garage

    • C. 

      $100,000 on the dwelling; $20,000 on the garage

    • D. 

      $100,000 on the dwelling; $10,000 on the garage


  • 110. 
    Which of the following loss exposures is not covered by Section II of Ron's homeowner's policy?
    • A. 

      Ron's activities while rebuilding a car for fun in his garage at home. The car does not have an engine.

    • B. 

      Ron's registered/licensed personal auto while used on his own property which includes 10 acres of undeveloped land.

    • C. 

      Ron's use of a motorized golf cart, while playing golf on a golf course

    • D. 

      Ron's use of a riding lawnmower while he is mowing his lawn


  • 111. 
    The medical expense coverage in a Workers Compensation Policy
    • A. 

      Does not have a time limit, but has a maximum dollar limit

    • B. 

      Does not have a dollar limit nor a time limit

    • C. 

      Does not have a dollar limit, but has a maximum time limit

    • D. 

      Has both a maximum dollar and time limit


  • 112. 
    If an inland marine policy provides coverage for any loss unless it is specifically excluded, it would be considered which of the following ?
    • A. 

      Named peril

    • B. 

      Open perils

    • C. 

      Controlled

    • D. 

      Uncontrolled


  • 113. 
    Inland marine policies nearly always provide _____________ coverage.
    • A. 

      Broad peril

    • B. 

      Basic peril

    • C. 

      Open peril

    • D. 

      Standard peril


  • 114. 
    Both the commercial general liability policy and the business auto policy have definitions of the term "automobile" and mobile equipment.  These definitions:
    • A. 

      Are the same, showing the policy writers are not very imaginative. This has no effect on gaps or overlaps between the two policies.

    • B. 

      Are the same, thus avoiding overlaps or gaps in coverage between the two policies.

    • C. 

      Are very differnt; thus avoiding overlaps or gaps in coverage between the two polcies.

    • D. 

      Are very different; however, this has no effect on gaps or overlaps between the two policies


  • 115. 
    Kim's car is insured with a personal automobile policy. The coverage includes medical payments with $2,000 limits.  Which of the following is a true statement about the medical payment coverage for necessary medical expenses ?
    • A. 

      Kim's daughter is struck by a car while crossing the street. Kim's policy will pay nothing because Kim's daughter was not in a car at the time of the accident.

    • B. 

      Kim gives her neighbor a ride to the store in the insured car. She has an auto accident in which they each incur over $2,000 in medical expenses. The maximum amount that Kim's policy will pay is $2,000 to her and $2,000 to her neighbor.

    • C. 

      Kim is injured in an accident while riding in her neighbor's car. the neighbor's policy covers $2,000 in medical payments. The maximum amount that would be paid by both policies for Kim's injuries is a total of $2,000.

    • D. 

      Kim's daughter is struck by a car. Kim's policy will pay nothing because she was riding her bicycle in the street.


  • 116. 
    What must a life agent, travel agent, or fire & casualty insurance agent do in order to act as an agent of a particular insurer ?
    • A. 

      File proof of licensure with the state

    • B. 

      File a notice of appointment with the Commissioner

    • C. 

      Have the agent listed with the appropriate department of the insurer

    • D. 

      There are no legal requirements as long as the agent is legally licensed


  • 117. 
    Your HO-3 insured wantes to make sure he has liability protection against claims for false arrest, liable and slander.  You should:
    • A. 

      Tell him this coverage is not available under a homeowner's policy. He must buy a commercial liability coverage.

    • B. 

      Tell him he should add the personal injury endorsement

    • C. 

      Suggest he add the ordinance or law coverage

    • D. 

      Tell him not to worry; there is coverage in the policy


  • 118. 
    If the limits of liability 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 requirement (disregard any deductibles)?
    • A. 

      $37,000

    • B. 

      $40,000

    • C. 

      $50,000

    • D. 

      $32,000


  • 119. 
    If an insured's employee embezzles $10,000 from the company's bank account, which of the following coverages would need to be in force for the loss to be covered ?
    • A. 

      Inside the premises - theft of money and securities

    • B. 

      Employee theft

    • C. 

      Forgery and alteration

    • D. 

      Money orders and counterfeit paper currency


  • 120. 
    Which of the following is a valid reason for an applicant to purchase a HO-3 policy instead of a dwelling policy ?
    • A. 

      The insured desires broader coverage

    • B. 

      The insured wants to pay a lower premium

    • C. 

      The insured does not want to have personal liability coverage

    • D. 

      The property is a six-unit building with the owner occupying one of the units


  • 121. 
    What is a self-insured retention under an umbrella policy ?
    • A. 

      A deductible applicable to losses excluded by the underlying coverage and covered by the umbrella

    • B. 

      A deductible applicable to all covered losses

    • C. 

      The limits of liability of the umbrella policy

    • D. 

      The amount of the underlying limits of liability


  • 122. 
    A personal auto policy is written for Lisa providing liability coverage. Which of the following auto liability situations would not be covered unless Lisa had an endorsement attached and paid an additional premium ?
    • A. 

      Lisa traders in her car, and runs over a pedestrian while driving her car home from the dealership. She did not let her agent know of the new car at the time of the accident.

    • B. 

      Lisa's car is being repaired. She drives into a telephone pole while driving a "temporary substitute" auto.

    • C. 

      Lisa destroys a mailbox while driving a (non-owned) company car furnished for Lisa's regular use.

    • D. 

      Lisa has an accident while towing her rowboat trailer. The trailer breaks loose and damages a parked car.


  • 123. 
    Which of the following does not have a standard coverage form ?
    • A. 

      Umbrella policy

    • B. 

      Claims made commercial general liability

    • C. 

      Professional liability

    • D. 

      Homeowner's policy


  • 124. 
    An insured's business auto policy specifies that the liability coverage applies to covered autos-symbol 7. This means"
    • A. 

      Specifically described autos are covered

    • B. 

      Only owned autos, other than private passenger autos are covered

    • C. 

      All owned autos, including trucks not larger than two tons are covered

    • D. 

      Only owned, private passenger autos are covered, with the exception of those private passenger autos driven by youthful operators.


  • 125. 
    If a moto home is scheduled on a miscellaneous type vehicle endorsement, all of the following property is covered, except:
    • A. 

      Awnings

    • B. 

      Refrigeration facilities

    • C. 

      Luggage

    • D. 

      Cabanas


  • 126. 
    What is the primary medical payment coverage difference between a boat owner's policy and a HO-3 policy ?
    • A. 

      There is no difference

    • B. 

      The HO-3 excludes losses and that the boat owner's covers losses while the boat is on the water

    • C. 

      The HO-3 has a lower limit of liability

    • D. 

      The boat owners covers injuries to the insureds, and the HO-3 covers injuries to toehrs


  • 127. 
    The CA Insurance code requires property insurance policies specify all of the following, except:
    • A. 

      The insured's address

    • B. 

      The insured's risks or perils

    • C. 

      The policy period

    • D. 

      A description of the insured property


  • 128. 
    Which of the following describes an insurer who has enough financial resources only to provide for all of its liabilites and for all reinsurance of all outstanding risks:
    • A. 

      Non-participating

    • B. 

      Insolvent

    • C. 

      Guaranteed

    • D. 

      Solvent


  • 129. 
    Under a standard ISO homeowner's HO-3, real property and personal property are covered for the perils of:
    • A. 

      Broad form named perils - coverage applies to both

    • B. 

      "All risks" - coverage applies to both

    • C. 

      "All risks" coverage applies to real property. Broad form named perils coverage applies only to personal property

    • D. 

      Broad form named perils - coverage applies to personal property. There is no coverage for real property, since this is a tenant's form


  • 130. 
    Which of items or real property under HO-3 are valued on an actual cash value basis ?
    • A. 

      Wallpaper

    • B. 

      Roofing

    • C. 

      Built-in appliances

    • D. 

      Exterior paint


  • 131. 
    What is the primary difference between a HO-2 and HO-3 policy ?
    • A. 

      The liability coverage

    • B. 

      The perils insured against

    • C. 

      The property covered

    • D. 

      The policy territory


  • 132. 
    What factor supports the principle of indemnity ?
    • A. 

      Utmost good faith

    • B. 

      Insurance interest

    • C. 

      Reasonable expectations

    • D. 

      Contract of ideation


  • 133. 
    Yacht policies typically provide for:
    • A. 

      Property, liability, and contingent medical payments

    • B. 

      Hull protection, and indemnity

    • C. 

      Physical damage, liability, and contingent medical payments

    • D. 

      Hull and collision


  • 134. 
    Max's personal auto policy (PAP) has liability and collision coverage.  His neighbor's car has liability coverage only.  Max borrows his neighbor's car to go to the store and has an accident that is his fault. He damages his neighbor's car and another car.  Max's PAP provides:
    • A. 

      Collision coverage because the neighbor does not have this coverage. Liability coverage does not apply.

    • B. 

      Liability coverage that is excess of his neighbor's liability coverage. His liability coverage also applies, but on a primary basis.

    • C. 

      Collision and liability coverages on a primary basis

    • D. 

      Liability coverage that is excess of his neighbor's liability coverage; the collision coverage does not apply.


  • 135. 
    Medical payment coverage in a boat owner's policy covers injuries to:
    • A. 

      Permissive occupants of the insured's boat

    • B. 

      Fare-paying passengers on the insured's boat

    • C. 

      Passengers on another boat struck by the insured's boat

    • D. 

      Employee's of the insured


  • 136. 
    Under a personal umbrella policy, what underlying coverages must an insured typically maintain
    • A. 

      Auto and personal liability only

    • B. 

      Auto, personal liability, and professional liability

    • C. 

      Personal liability only

    • D. 

      Auto only


  • 137. 
    Section 770 of the Insurance code refers to which of the following ?
    • A. 

      An entity cannot demand that insurance be placed with a particular agency

    • B. 

      The penalties for misrepresentation of policies

    • C. 

      The restrictions on the activities of incorporated insurers

    • D. 

      A travel insurance agent cannot refer business to unincorporated insurers


  • 138. 
    A person with a commercial policy is burning leaves. The fire gets out of control causing smoke damage to a neighboring property.  The loss is covered by:
    • A. 

      Pollution liability

    • B. 

      Not covered as it is not a direct loss

    • C. 

      Building and Personal Property form

    • D. 

      Commercial General liability


  • 139. 
    What would the commissioner likely do if an agent induces a client to co-sign a loan ?
    • A. 

      Suspend the agent's license

    • B. 

      Force the agent to pay the loan back with interest

    • C. 

      Impose a $1,000 fine

    • D. 

      Force the agent to attend a state ethics course


  • 140. 
    Which of the following is NOT one of the three main types of loss ?
    • A. 

      Property loss

    • B. 

      Human and Personnel loss

    • C. 

      Liability loss

    • D. 

      Financial loss


  • 141. 
    Which of the following would be used for a new single-family dwelling ?
    • A. 

      HO-8

    • B. 

      HO-6

    • C. 

      HO-5

    • D. 

      HO-4


  • 142. 
    Abstracts, maps and mortgages are covered under which of the following ?
    • A. 

      Inland marine

    • B. 

      Business owner's policy

    • C. 

      Commercial General Liability

    • D. 

      Builder's risk policy


  • 143. 
    What type of crime form covers losses that occur during thepolicy period regardless of when the loss is discovered ?
    • A. 

      Discovery form

    • B. 

      Loss sustained form

    • C. 

      Commercial crime form

    • D. 

      Robbery and safe burglary form


  • 144. 
    What do the initials S.T.A.R.R. stand for ?
    • A. 

      Types of standard policies

    • B. 

      Methods of risk management

    • C. 

      A government program designating outstanding insurance companies

    • D. 

      Types of coverage forms


  • 145. 
    Under a special form cause of loss, if a landslide is caused by an unnatural flow or water due to improper grading, the loss is
    • A. 

      Excluded under the governmental action exclusion

    • B. 

      Covered; there are no exclusions for this type of loss

    • C. 

      Excluded under the utility service exclusion

    • D. 

      Excluded under the concurrent causation exclusion


  • 146. 
    A bulldozer an insured is using to level a property for a customer overturns causing fuel to leak and pollute the ground.  Where would this pollution loss be covered ?
    • A. 

      Inaland marine

    • B. 

      Professional liability

    • C. 

      Auto liability

    • D. 

      Commercial general liability


  • 147. 
    Grace has a homeowner's policy that includes Section 1 coverages A, B and C.  A. B and C provide coverage for:
    • A. 

      Dwelling, additional living expenses and loss of use

    • B. 

      Dwelling, personal property and loss of use

    • C. 

      Medical payments, personal liability, and damage to property of others

    • D. 

      Dwelling, other structures, and personal property


  • 148. 
    How are the HO-3 and HO-5 similar ?
    • A. 

      Both provide open peril coverage for the dwelling

    • B. 

      Both are designed to cover condominiums

    • C. 

      Both provide named peril coverage for personal property

    • D. 

      Both provide replacement cost coverage for contents


  • 149. 
    The personal auto policy towing and labor endorsement pays for:
    • A. 

      The expense of towing a disabled car to a garage nearest the insured's home

    • B. 

      The cost of labor only if the labor is performed at the place of disablement

    • C. 

      Towing and labor charges up to $1000 per year

    • D. 

      The cost of towing the disabled car to the garage, and up to two hours of labor expenses at the garage


  • 150. 
    Which of the following losses would be covered under Dick's personal auto policy other than collision coverage ?
    • A. 

      Dick's suitcase is stolen from his car while the car is parked at the airport

    • B. 

      Someone shoots Dick's car rear window while the car is parked on the street overnight

    • C. 

      The sides and top of Dick's car is damaged when it rolls over on an icy curve

    • D. 

      Dick locks his keys in the car, and then breaks a window to gain quick access


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