Fire & Casualty Practice Exam #1

148 Questions
Fire Quizzes & Trivia

Practice exam for fire & casualty. 150 questions3 hour time limit.

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Questions and Answers
  • 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. 
    • A. 

      Concurrent Policy Coverage

    • B. 

      Standard Mortgage Clause

    • C. 

      Special Lines Surplus Lines

    • D. 

      Uniform Insurers Rehabiliation Act

  • 6. 
    • 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. 
    • 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. 
    • 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. 
    • 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. 

      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. 

      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. 
    • 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. 
    • 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. 
    • 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. 
    • 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. 

      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. 

      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. 

      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. 
    • 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. 
    • 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. 
    • 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. 
    • 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. 
    • 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. 
    • 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. 
    • 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. 
    • 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. 
    • 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. 
    • 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. 
    • 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.