Fire & Casualty Exam 1b

118 Questions | Total Attempts: 1097

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Fire & Casualty Exam 1b - Quiz

California Fire & Casualty Practice Exam 1B 150 questions, 3 hours. 70% to pass


Questions and Answers
  • 1. 
    The one basic characteristic of any type of insurance is that the insured is returned to the same (or close to the same) status that existed prior to the loss, but without a chance for gain or profit.
    • A. 

      This is true

    • B. 

      This is false

  • 2. 
    Which of the following coverages does an open peril policy provide?
    • A. 

      Ocean and sea perils

    • B. 

      Perils that would affect business continuance

    • C. 

      Perils other than those specifically named as being excluded

    • D. 

      Perils stated in the policy

  • 3. 
    Determine the actual cash value in the following situation:Original price of office equipment when purchased (8 years ago)--$9,000Depreciated amount at time of fire--$5,000Current replacement cost--$12,000
    • A. 

      $4,000

    • B. 

      $5,000

    • C. 

      $6,000

    • D. 

      $7,000

  • 4. 
    The continuing education requirements that a fire-casualty broker/agent must fulfill as required by the DOI are which of the following?
    • A. 

      10 hours during each year of the first four years that the licensee is licensed

    • B. 

      20 hours during each year of the first four years that the licensee is licensed

    • C. 

      25 hours during each year of the first four years that the licensee is licensed

    • D. 

      36 hours during each year of the first four years that the licensee is licensed

  • 5. 
    An individual who lives nest to a Nuclear Power Plant is exposed to which of the following types of hazards?
    • A. 

      Physical

    • B. 

      Moral

    • C. 

      Morale

    • D. 

      Legal

  • 6. 
    Of the following, which is the true characteristic about insurance?
    • A. 

      It is considered a type of gambling

    • B. 

      It is considered a way of retaining risk

    • C. 

      It is considered a method of transferring risk

    • D. 

      It is incorprated under the laws of any other jurisdication other that the state of california

  • 7. 
    How is an admitted insured defined according to the California DOI?
    • A. 

      It transacts insurance business in all states

    • B. 

      It is organized and chartered according to the laws of the state of California

    • C. 

      It transacts insurance according to the laws of the state of California

    • D. 

      It is incorporated under the laws of any other jurisdiction other than the state of California

  • 8. 
    Which of these is defined as "exclusive agent"?
    • A. 

      Sells health insurance only

    • B. 

      Sells one line of insurance only

    • C. 

      Sells one insurance company's products only

    • D. 

      Sells all policies by telephone only

  • 9. 
    The method that the California DOI uses to approve or disapprove rate filings for various types of insurance such as homeowners and automobile is know as?
    • A. 

      File and use method

    • B. 

      Open competition method

    • C. 

      Mandated rates method

    • D. 

      Prior approval method

  • 10. 
    "Risk" is one of the most important terms in the insurance industry. How is it defined?
    • A. 

      The certainty of financial loss

    • B. 

      The uncertainty of financial loss

    • C. 

      The basis of a financial loss

    • D. 

      The predictability of a financial loss

  • 11. 
    An employee is operating their own car for their employer. The individual injures a person in an area as a result of negligent driving. The reason why the employer would be held liable is because of which of the following?
    • A. 

      Contributory negligence

    • B. 

      Comparative liability

    • C. 

      Gross negligence

    • D. 

      Vicarious liability

  • 12. 
    Which of the following is a reason why someone would not purchase a dwelling policy insteat of an HO-3?
    • A. 

      Personal liability is not desired

    • B. 

      The home is being leased to a tenant

    • C. 

      Broader coverage is desired

    • D. 

      The dwelling does not meet all the standards for a homeowners policy, but meets dwelling requirements

  • 13. 
    The concept of "pure risk" involves the possibility or chance of which of the following?
    • A. 

      A loss only

    • B. 

      Either a loss or a gain

    • C. 

      A profitable distribution of risks

    • D. 

      None of the above

  • 14. 
    What type of insurance company has owners who are stockholders in the company who share in the profits of the company?
    • A. 

      Assessment insurance companies

    • B. 

      Reciprocal insurance companies

    • C. 

      Mutual insurance companies

    • D. 

      Stock insurance companies

  • 15. 
    An insured has a personal auto policy with liability coverage only, and an undendorsed HO-3 homeowners policy. The insured's auto is parked in the garage when an earthquake strikes. The car and garage are not damaged, but as a result of a broken gas line in the house which has been totally destroyed, a fire results which destroys the car and the garage. The policies would pay for damage to what?
    • A. 

      Auto only

    • B. 

      House and Garage only

    • C. 

      All three insured items

    • D. 

      Garage only

  • 16. 
    What would be the result of a lower ($250) deductible vs the selection of a higher deductible ($1,000)?
    • A. 

      Reduction in the premiums paid for the policy

    • B. 

      Greater number of smaller claims sent to the insurer

    • C. 

      Increase in the accuracy of risk distribution

    • D. 

      Any or all of these could resuld

  • 17. 
    For any type of risk exposure to be considered an 'ideally insurable risk', which of the following characteristics does not have to exist?
    • A. 

      The risk has to be part of a group of risks that have the same or very similar characteristics

    • B. 

      The value of a loss must be able to be measured financially

    • C. 

      The event that causes the loss has to be accidental

    • D. 

      There is very little, if any chance a loss happening during the policy period

  • 18. 
    Which of the following is the best definition of an insurer's loss reserve?
    • A. 

      The dollar amount an insurance company must pay to close-out a claim

    • B. 

      The dollar amount of claims paid divided by earned premiums, exluding loss adjustment expenses

    • C. 

      The approximate dollar amount of an insurer's liability for a least one (or more) open claims

    • D. 

      The dollar amount received by an insurer for coverage provided

  • 19. 
    Which party is allowed to cancel a commercial policy (assuming all legal requirements are met)?
    • A. 

      Insurance company only

    • B. 

      Insurance company and/or any insured named in the policy

    • C. 

      Insurance company and/or the first named insured in the policy

    • D. 

      Insurance company and/or the first named insured, only concurrently

  • 20. 
    Which of the following types of crime coverage is the broadest in terms of coverage?
    • A. 

      Robbery

    • B. 

      Safe burglary

    • C. 

      Theft

    • D. 

      Burglary

  • 21. 
    Under the terms and conditions of a commercial package policy, who is responsible to make all premium payments, if there are four individuals named as insureds. who are all operating a business under a "DBA" and are unincorporated?
    • A. 

      Any of the four named individuals

    • B. 

      All four of the named individuals insureds have an equal responsibility

    • C. 

      The business itself, because it is unincorporated

    • D. 

      The first named insured.

  • 22. 
    Which of the following coverage parts is not found in a standard commercial package policy?
    • A. 

      Commercial crive coverage part

    • B. 

      Commercial property coverage part

    • C. 

      Boiler and machinery part

    • D. 

      Dwelling property coverage part

  • 23. 
    Identify which of the following is always included in a commercial package policy?
    • A. 

      Common policy declarations and conditions

    • B. 

      Personal auto coverage (for non-owned commercial vehicle)

    • C. 

      Commercial auto coverage part

    • D. 

      There are no coverage parts of components that are required in commercial package policies

  • 24. 
    In a commercial property policy, which cause of loss form includes coverage for the peril of glass breakage?
    • A. 

      Basic and broad

    • B. 

      Broad and special

    • C. 

      Basic and special

    • D. 

      Special only

  • 25. 
    A commercial package policy contains a coinsurance clause which is a method used by insurance companies to encourage their insureds to purchase amounts of insurance coveage that are close to the dollar value of the insured property
    • A. 

      True

    • B. 

      False

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