What Do You Know About Fire And Casualty Insurance? Trivia Quiz

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  • 1/150 Questions

    What does it mean if an agen'ts license is inactive ?

    • The agent can transact insurance business if it is done with another agents approval
    • The agent can transact any insurance business for which the agent is licensed
    • The agent can still transact insurance business in CA, but not in any other state until it is reactivated
    • The agent cannot transact any insurance business for which a valid, active license is required
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About This Quiz

What do you know about Fire and Casualty Insurance and what falls under it? In case of fire, come loss of property and a lot of substantial damage and with this, comes the importance of Fire and Casualty Insurance to assist in the coverage in terms of loss of property and casualty in regards to people and human life.

What Do You Know About Fire And Casualty Insurance? Trivia Quiz - Quiz

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  • 2. 

    Which coverage is needed to protect physicians, surgeons, and dentists for their professional activities

    • Commercial general liability

    • Malpractice coverage

    • Employer's liability

    • Errors and omissions coverage

    Correct Answer
    A. Malpractice coverage
    Explanation
    Malpractice coverage is needed to protect physicians, surgeons, and dentists for their professional activities. This type of coverage specifically addresses the risks and liabilities associated with medical errors, negligence, or omissions that may result in harm to patients. It provides financial protection for professionals in the event of malpractice claims, including legal expenses and potential settlements or judgments. Commercial general liability, employer's liability, and errors and omissions coverage may offer different types of protection, but they do not specifically address the unique risks faced by healthcare professionals in their professional activities.

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  • 3. 

    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 diversity awareness course provided by the State of CA

    • A contract law course at any approved college location

    • A sales training course provided by the insurance department

    • A 12-hour course on ethics and the CA code

    Correct Answer
    A. A 12-hour course on ethics and the CA code
    Explanation
    In addition to pre-licensing classroom study, an applicant for a fire and casualty license, life agent license, or personal lines agent license must complete a 12-hour course on ethics and the CA code. This course is necessary to ensure that the applicant has a thorough understanding of ethical practices and the laws and regulations specific to the insurance industry in California. It helps to ensure that the applicant is knowledgeable and capable of conducting their business in an ethical and legal manner.

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  • 4. 

    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 ?

    • Older truck cargo floater

    • Annual transit policy

    • Contract's equipment floater

    • Installment sales floater

    Correct Answer
    A. Contract's equipment floater
    Explanation
    A contract's equipment floater would be needed to cover a contract's bulldozers which are used in the contract's business but are not held for sale. A contract's equipment floater is a type of insurance coverage specifically designed to protect equipment that is used in the course of a contract. It provides coverage for equipment that is owned, rented, or leased by the contract holder, and it typically covers a wide range of perils such as theft, damage, and vandalism. This type of coverage would be necessary to ensure that the bulldozers used in the contract's business are protected in case of any unforeseen events or accidents.

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  • 5. 

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

    • The named insured

    • The named insured's (resident) spouse

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

    • The named insured's (non-resident) spouse

    Correct Answer
    A. The named insured's (non-resident) spouse
    Explanation
    The named insured's (non-resident) spouse is not an insured under Section I of a homeowner's policy because the policy only covers residents of the insured's household. Since the spouse is a non-resident, they are not eligible for coverage under the policy.

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  • 6. 

    The personal auto policy territory limits include:

    • Tokyo, Japan

    • London, England

    • Mexico City, Mexico

    • Montreal, Canada

    Correct Answer
    A. Montreal, Canada
    Explanation
    The personal auto policy territory limits include Montreal, Canada because it is mentioned in the list of locations. The policy covers the insured's vehicle while it is being driven in Montreal, Canada.

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  • 7. 

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

    • The producer is an insurance solicitor

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

    • The producer is dually licensed in at least two states

    • The producer is a surplus lines broker

    Correct Answer
    A. The producer is a surplus lines broker
    Explanation
    According to the given information, it is a violation of the CA insurance Code to act as a producer for a non-admitted carrier unless the producer is a surplus lines broker. This means that if a producer wants to work with a non-admitted carrier, they must be specifically licensed as a surplus lines broker.

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  • 8. 

    All Workers Compensation policies provide

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

    • Compensation for worker related injuries without regard to fault

    • Adequate retirement benefits

    • 24-hour on and off the job coverage for workers

    Correct Answer
    A. Compensation for worker related injuries without regard to fault
    Explanation
    Workers Compensation policies provide compensation for worker-related injuries without regard to fault. This means that regardless of who is at fault for the injury, the policy will provide financial compensation to the injured worker. This is important because it ensures that workers are protected and taken care of in the event of an injury while on the job. It helps to cover medical expenses, lost wages, and other related costs, providing support and financial stability for the injured worker and their family.

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  • 9. 

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

    • Monery orders and counterfeit money

    • Funds transfer fraud

    • Outside the premises-theft of money and securities

    • Employee theft

    Correct Answer
    A. Outside the premises-theft of money and securities
    Explanation
    The insured would need coverage for "Outside the premises-theft of money and securities" in case the armored car carrying their bank deposit is robbed. This coverage would protect them against theft of money and securities that occurs outside their premises, such as during transportation.

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  • 10. 

    An open-peril policy protects against the loss from:

    • Perils found outside in the open

    • Only the perils openly named in the policy

    • Mainly, perils of the sea

    • Any peril, other than those specifically exclude

    Correct Answer
    A. Any peril, other than those specifically exclude
    Explanation
    An open-peril policy provides coverage for any type of loss or damage, except for those specifically excluded in the policy. This means that the policyholder is protected against a wide range of perils, including but not limited to perils found outside, perils named in the policy, and perils of the sea. The policy offers comprehensive coverage, except for the perils that are explicitly mentioned as exclusions.

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  • 11. 

    Which property coverage form is best suited for a structure under construction ?

    • Standard property policy

    • Reporting form

    • Building and personal property coverage form

    • Builders risk coverage form

    Correct Answer
    A. Builders risk coverage form
    Explanation
    The Builders risk coverage form is best suited for a structure under construction because it provides coverage for the structure, materials, and equipment during the construction process. This form specifically addresses the unique risks associated with construction projects, such as damage from fire, theft, vandalism, and natural disasters. It also typically includes coverage for temporary structures, scaffolding, and construction tools. The Builders risk coverage form is designed to protect the owner, contractor, and other parties involved in the construction project until the structure is completed and ready for occupancy.

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  • 12. 

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

    • Suspend the agent's license

    • Force the agent to pay the loan back with interest

    • Impose a $1,000 fine

    • Force the agent to attend a state ethics course

    Correct Answer
    A. Suspend the agent's license
    Explanation
    If an agent induces a client to co-sign a loan, the commissioner would likely suspend the agent's license. This is because inducing a client to co-sign a loan can be considered unethical and a violation of the agent's responsibilities. Suspending the agent's license would serve as a disciplinary action and a way to protect consumers from potential harm or fraudulent practices.

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  • 13. 

    Which of the following is most likely to be eligible for the CA Fair Plan ?

    • An insured with a very bad driving record

    • A poorly maintained dwelling with faulty wiring

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

    • A well-maintained dwelling located in a hazardous brush area

    Correct Answer
    A. A well-maintained dwelling located in a hazardous brush area
    Explanation
    A well-maintained dwelling located in a hazardous brush area is most likely to be eligible for the CA Fair Plan. The CA Fair Plan is a program that offers insurance coverage to property owners who are unable to obtain insurance through traditional means due to high-risk factors such as location. In this case, the well-maintained dwelling suggests that the property is in good condition, which may make it more insurable. However, the hazardous brush area indicates a higher risk, which aligns with the purpose of the CA Fair Plan to provide coverage in such situations.

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  • 14. 

    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:

    • Vicarious liability

    • Gross negligence

    • Absolute liability

    • Contributory Negligence

    Correct Answer
    A. Vicarious liability
    Explanation
    Vicarious liability is the legal doctrine that holds an employer responsible for the actions of their employees while they are acting within the scope of their employment. In this case, Carmen was driving her own car on behalf of her employer, which means she was acting within the scope of her employment. Therefore, if Carmen's negligent operation of her car injured a member of the public, the employer may be held liable under the principle of vicarious liability.

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  • 15. 

    Which of the following is a true statement about CAARP ?

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

    • CAARP offers dwelling coverage, but not homeowners

    • Commercial risks are not eligible for CAARP

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

    Correct Answer
    A. The minimum liability for CAARP policies are $15,000/$30,000/$5,000
    Explanation
    The given statement is true because it states that the minimum liability for CAARP policies is $15,000/$30,000/$5,000. This means that CAARP requires a minimum coverage of $15,000 for bodily injury per person, $30,000 for bodily injury per accident, and $5,000 for property damage.

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  • 16. 

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

    • Years of driving experience

    • Annual miles driven

    • Driver's safety record

    • Number of listed drivers

    Correct Answer
    A. Number of listed drivers
    Explanation
    The number of listed drivers is not a principal rating factor under Proposition 103 for personal auto policies. This means that the number of drivers listed on the policy does not directly affect the premium or cost of the policy. Factors such as years of driving experience, annual miles driven, and the driver's safety record are considered more important in determining the premium for a personal auto policy.

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  • 17. 

    What is the minimum discount percentage for the "good driver" discount ?

    • 5%

    • 10%

    • 25%

    • 20%

    Correct Answer
    A. 20%
    Explanation
    The minimum discount percentage for the "good driver" discount is 20%. This means that a good driver can receive a discount of at least 20% on their insurance premium.

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  • 18. 

    In California, excess and surplus lines coverage needs to be placed through:

    • An admitted insurer

    • An excess and surplus lines solicitor

    • Lloyds of London

    • A surplus lines broker

    Correct Answer
    A. A surplus lines broker
    Explanation
    In California, excess and surplus lines coverage needs to be placed through a surplus lines broker. A surplus lines broker is a licensed professional who specializes in placing coverage with non-admitted insurers, such as Lloyds of London. These brokers have the expertise and knowledge to navigate the complexities of the surplus lines market and ensure that clients receive the necessary coverage from reputable insurers. Therefore, a surplus lines broker is the appropriate choice for placing excess and surplus lines coverage in California.

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  • 19. 

    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 ?

    • HO-6

    • HO-3

    • HO-2

    • HO-4

    Correct Answer
    A. HO-6
    Explanation
    The correct answer is HO-6. HO-6 is a homeowners form specifically designed for condo owners. It provides coverage for personal property, liability coverage for the owner and family members, and protection for assessments or damage to the building structure and common areas. This form is tailored to meet the unique needs of condo owners and provides comprehensive coverage for their specific situation.

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  • 20. 

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

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

    • Only when authorized by the insured

    • At any time

    • Only upon receiving a court order allowing the inspection

    Correct Answer
    A. At any time during the policy period and up to three years afterwards
    Explanation
    The correct answer is "At any time during the policy period and up to three years afterwards." This means that the insurer has the right to examine the insured's books and records at any point during the policy period and for up to three years after the policy has ended. This allows the insurer to verify the accuracy of the insured's records and ensure that the policy terms are being followed. It also provides a window of time for the insurer to investigate any potential claims or discrepancies that may arise.

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  • 21. 

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

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

    • Reasonable attorney fees and costs only

    • Damages for breach, reasonable attorney fees and costs

    • Damages caused by the breach only

    Correct Answer
    A. Damages for breach, reasonable attorney fees and costs
    Explanation
    If a party to a contract is found to be in breach, the injured party has the course of action to claim damages for the breach. This means that they can seek compensation for any losses or harm suffered as a result of the breach. Additionally, they may also be entitled to reasonable attorney fees and costs incurred in pursuing legal action to enforce the contract or seek remedies for the breach.

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  • 22. 

    The limited Mexico endorsement applies to trips to Mexico with a duration of

    • 7 days or less

    • 10 days or less

    • 2 days or less

    • 14 days or less

    Correct Answer
    A. 10 days or less
    Explanation
    The limited Mexico endorsement applies to trips to Mexico that have a duration of 10 days or less. This means that if someone is planning to travel to Mexico for a period of 10 days or less, they can obtain this endorsement. It is likely that this endorsement provides certain benefits or coverage specifically tailored for shorter trips to Mexico, such as emergency medical coverage or travel assistance services.

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  • 23. 

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

    • The growing population

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

    • Under-reported payroll by employers

    • Fraudulent claims

    Correct Answer
    A. The growing population
    Explanation
    The growing population is not a factor that contributes to the rising cost of Worker's Compensation Insurance. The cost of insurance is typically determined by factors such as the number of claims, the severity of those claims, and the overall risk profile of the workforce. While a growing population may result in an increase in the number of workers, it does not directly impact the cost of insurance.

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  • 24. 

    An unbrella Policy

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

    • Provides excess physical damage coverage

    • Provides broad primary coverage for most personal or commercial loss exposures

    • Provides broad excess liability coverage over one or more primary policyes

    Correct Answer
    A. Provides broad excess liability coverage over one or more primary policyes
    Explanation
    An umbrella policy provides broad excess liability coverage over one or more primary policies. This means that it offers additional coverage beyond the limits of the primary policies, such as homeowners or auto insurance. It acts as a safety net, providing extra protection in case of a lawsuit or large claim that exceeds the limits of the primary policies. This coverage is typically applicable to both personal and commercial loss exposures.

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  • 25. 

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

    • License suspension

    • $1,000 fine

    • Licensee to complete an approved ethics course

    • Licensee required to repay the loan with interest

    Correct Answer
    A. License suspension
    Explanation
    If a licensee induces a client to co-sign a loan, the most likely action taken by the Insurance Commissioner would be to suspend the licensee's license. This is because inducing a client to co-sign a loan is considered unethical and may be a violation of the licensee's professional responsibilities. License suspension is a serious consequence that serves as a deterrent and ensures that the licensee is held accountable for their actions.

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  • 26. 

    Which exclusion in the causes of loss - special form - excludes coverage for mudflow ?

    • Ordinance or law

    • Utility service

    • Water (flood)

    • Governmental action

    Correct Answer
    A. Water (flood)
    Explanation
    The exclusion for "Water (flood)" in the causes of loss - special form excludes coverage for mudflow. Mudflow is a type of water damage caused by a mixture of water and soil or debris flowing rapidly down a slope or hillside. Since mudflow is a result of water, it falls under the exclusion for "Water (flood)" in the policy, which means it is not covered.

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  • 27. 

    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:

    • "Other than collision" will pay for the loss

    • Will not pay for this loss - no coverage

    • Medical payments will pay for the loss

    • Liability coverage will pay for the loss

    Correct Answer
    A. "Other than collision" will pay for the loss
    Explanation
    The insured's car was stolen and wrecked, resulting in a total loss. The insured has coverage for liability, medical payments, and "other than collision". Since the car was not damaged due to a collision but was stolen, the "other than collision" coverage will pay for the loss.

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  • 28. 

    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?

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

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

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

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

    Correct Answer
    A. Forward to the commissioner a notice of appointment within 14 days of receipt of application
    Explanation
    The insurer must forward to the commissioner a notice of appointment within 14 days of receipt of the application. This is necessary to inform the regulatory authority about the agent's acceptance and issuance of the policy on behalf of the insurer. It ensures transparency and compliance with regulatory requirements.

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  • 29. 

    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 ?

    • HO-2

    • HO-3

    • HO-6

    • HO-8

    Correct Answer
    A. HO-3
    Explanation
    The HO-3 policy would be recommended because it provides open peril coverage on the applicant's home (building structure). This means that the policy covers all risks unless they are specifically excluded in the policy. The HO-2 policy provides named peril coverage, which only covers specific risks that are listed in the policy. The HO-6 policy is for condominium owners and the HO-8 policy is for older homes, so neither of these policies would be suitable for the applicant's needs.

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  • 30. 

    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 ?

    • Inland marine

    • Business personal property

    • Ocean marine

    • Auto liability

    Correct Answer
    A. Inland marine
    Explanation
    Inland marine insurance is designed to cover domestic shipments, means of transportation, personal property floater risks, and commercial property floater risks. This type of insurance provides coverage for goods in transit, such as those being shipped by truck, train, or airplane. It also covers movable property that is not tied to a specific location, such as tools and equipment. Additionally, inland marine insurance can provide coverage for property that is temporarily away from its normal location, such as when it is being transported or stored off-site.

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  • 31. 

    The collision coverage of a personal auto policy covers:

    • A desert sand storm pitting the car windshield

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

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

    • Collision coverage does not cover any of these losses

    Correct Answer
    A. Damage caused by the insured by driving into a tree that had fallen during a recent storm
    Explanation
    Collision coverage of a personal auto policy covers damage caused by the insured by driving into a tree that had fallen during a recent storm. This means that if the insured drives into a fallen tree during a storm and causes damage to their car, the collision coverage will provide coverage for the repairs. It is important to note that collision coverage does not cover damage caused by other events such as a desert sand storm or vandalism with a screwdriver.

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  • 32. 

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

    • Dealer's used stock

    • Motor vehicles designed for highway use

    • Customer's equipment in for service

    • Dealer's new stock

    Correct Answer
    A. Motor vehicles designed for highway use
    Explanation
    The equipment dealer's coverage form provides coverage for all types of property, including the dealer's used stock, customer's equipment in for service, and the dealer's new stock. However, it does not cover motor vehicles designed for highway use. This means that if any motor vehicles designed for highway use are damaged or stolen, the coverage form will not provide any compensation or coverage for those vehicles.

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  • 33. 

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

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

    • PIP coverage is provided only for medical providers in that state

    • Coverage automatically is broadened to provide PIP

    • Coverage remains as written

    Correct Answer
    A. Coverage automatically is broadened to provide PIP
    Explanation
    The correct answer is that the coverage automatically broadens to provide Personal Injury Protection (PIP). This means that if the insured has an accident in a state with PIP, their personal auto policy will automatically provide the necessary coverage for medical expenses and other benefits provided by PIP. They do not need to apply for additional PIP coverage or make any changes to their policy. The policy responds by expanding its coverage to include PIP benefits in the state where the accident occurred.

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  • 34. 

    What is the primary difference between umbrella and excess liability policies ?

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

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

    • The umbrella covers intentional acts; the excess liability does not

    • The umbrella affords defense costs; the excess liability does not

    Correct Answer
    A. The umbrella covers most liability exposures; the excess liability may cover only one line
    Explanation
    The primary difference between umbrella and excess liability policies is that the umbrella policy covers most liability exposures, while the excess liability policy may only cover one line. This means that the umbrella policy provides broader coverage for a wider range of liability risks, while the excess liability policy is more limited in scope and may only provide coverage for a specific line of liability.

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  • 35. 

    Extra expense insurance covers:

    • Increased expense of repairing property to appreciated assets

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

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

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

    Correct Answer
    A. The extra expense that a business incurs to continue a business while damage to the premises are being restored
    Explanation
    Extra expense insurance covers the additional costs that a business incurs to continue operations while the premises are being restored after damage. This can include expenses such as renting temporary facilities, purchasing equipment, or hiring additional staff. It is designed to help businesses minimize the financial impact of a loss and ensure that they can continue operating during the restoration process.

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  • 36. 

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

    • Insurable interest

    • Valuation

    • Indemnity

    • Legal liability

    Correct Answer
    A. Insurable interest
    Explanation
    Insurable interest refers to the financial stake or potential loss that an individual has in a property. It is the basis for purchasing insurance, as it ensures that the policyholder will suffer a financial loss if the property is damaged or destroyed. Insurable interest is necessary for a valid insurance contract, as it demonstrates the relationship between the insured and the property being insured. Valuation refers to determining the monetary worth of a property, indemnity refers to compensation for a loss or damage, and legal liability refers to the responsibility to pay for damages or injuries caused to others.

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  • 37. 

    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:

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

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

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

    Correct Answer
    A. Get a copy of all current policies and determine what coverage they have been carrying and how much they have been paying
    Explanation
    Getting a copy of all current policies and determining what coverage they have been carrying and how much they have been paying is the least professional and least likely to correctly identify the loss exposures. This approach does not involve directly observing the business operations or gathering information from key people. It solely relies on the information provided in the policies, which may not accurately reflect the actual risks and exposures faced by the business.

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  • 38. 

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

    • State Competitive Fund

    • Foreign insurer

    • Alien insurer

    • Excess and surplus lines insurer

    Correct Answer
    A. Excess and surplus lines insurer
    Explanation
    An insured who is in the business of importing exotic animals from Africa would most likely go to an excess and surplus lines insurer to obtain insurance coverage. Excess and surplus lines insurers specialize in providing coverage for unique or high-risk exposures that traditional insurance companies may not cover. Importing exotic animals from Africa would be considered a high-risk activity, and therefore, an insured would need to seek coverage from a specialized insurer like an excess and surplus lines insurer.

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  • 39. 

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

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

    • Sean's car is washed away during a flood

    • 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.

    • 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.

    Correct Answer
    A. 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.
    Explanation
    The loss of Sean's personal laptop computer is not covered by either the personal auto policy collision or other than collision coverage.

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  • 40. 

    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:

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

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

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

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

    Correct Answer
    A. $80,000 on the dwelling; $16,000 on the garage
    Explanation
    To be certain of replacement cost coverage on a partial loss to either structure, Mary must carry a minimum of $80,000 on the dwelling and $16,000 on the garage. This is because replacement cost coverage ensures that the insurance will pay for the full cost of replacing the damaged property. Therefore, Mary needs to have coverage equal to or greater than the replacement cost of each structure in order to be fully protected in the event of a partial loss.

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  • 41. 

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

    • Tangible losses

    • Indirect losses

    • Intangible losses

    • Direct losses

    Correct Answer
    A. Intangible losses
    Explanation
    A commercial property policy is designed to provide coverage for physical damage or loss to a business's property, such as buildings, equipment, and inventory. Tangible losses refer to physical losses that can be seen or touched, and a commercial property policy would cover these types of losses. Indirect losses are losses that result from the physical damage or loss, such as loss of income or additional expenses, and a commercial property policy would typically cover these as well. However, intangible losses are losses that do not involve physical damage or loss, such as reputation damage or loss of customer goodwill, and a commercial property policy would not typically provide coverage for these types of losses. Therefore, the correct answer is intangible losses.

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  • 42. 

    Mitchell's (unendorsed) personal auto policy liability coverage would pay for:

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

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

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

    • Damage or injury caused intentionally by Mitchel

    Correct Answer
    A. The cost of repairing the neighbor's fence that Mitchell damaged due to the negligent operation of his car
    Explanation
    Mitchell's personal auto policy liability coverage would pay for the cost of repairing the neighbor's fence that Mitchell damaged due to the negligent operation of his car. This is because liability coverage typically covers damages caused by the insured's negligent actions, such as damaging someone else's property.

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  • 43. 

    The CA insurance code:

    • Prohibits agents from receiving compensation for premium financing

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

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

    • Requires agents to provide premium financing services

    Correct Answer
    A. Requires agents to keep records of any compensation they have received for their services involved with premium financing
    Explanation
    The correct answer is "Requires agents to keep records of any compensation they have received for their services involved with premium financing." This answer is supported by the information provided in the given CA insurance code. The code states that agents are required to keep records of any compensation they have received for their services involved with premium financing. This indicates that agents are obligated to maintain a record of any payments or benefits they receive in relation to their involvement in premium financing activities.

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  • 44. 

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

    • Motorcycles are insured under a homeoweners policy

    • The unendorsed policy does not cover two-wheeled vehicles

    • Motor cycles are too dangerous to insure

    • Motorcycles cannot be insured under the PAP

    Correct Answer
    A. The unendorsed policy does not cover two-wheeled vehicles
  • 45. 

    All of the following are characteristics of an "ideally insurable loss exposure", except

    • Losses that are accidental

    • Losses that are catastrophic

    • Losses that are definite and measurable

    • Large number of exposure units

    Correct Answer
    A. Losses that are catastrophic
    Explanation
    An "ideally insurable loss exposure" should have losses that are accidental, definite and measurable, and a large number of exposure units. However, losses that are catastrophic are not considered ideal for insurance because they involve widespread and severe damage, making it difficult for insurance companies to manage and cover the costs. Catastrophic losses often result in high claims payouts, which can lead to financial instability for insurance companies. Therefore, losses that are catastrophic do not meet the criteria of an "ideally insurable loss exposure".

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  • 46. 

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

    • Actual cash value

    • Market value

    • Replacement cost

    • Stated value

    Correct Answer
    A. Replacement cost
    Explanation
    The correct answer is "Replacement cost" because it refers to the amount of money needed to replace a property with a similar one of the same quality and construction. This value takes into account the current market prices and ensures that the insured property can be fully restored in case of damage or loss. Actual cash value, on the other hand, considers depreciation and deducts it from the replacement cost. Market value represents the price at which a property could be sold in the current market, while stated value is a predetermined value agreed upon by the insurer and insured.

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  • 47. 

    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 ?

    • Both policies respon on a pro-rate basis

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

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

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

    Correct Answer
    A. The neighbor's policy is primary and the driver's policy is excess
    Explanation
    When an insured borrows a neighbor's vehicle to run a personal errand and gets into an auto accident, the neighbor's policy is considered primary and provides coverage for the accident. The driver's policy is considered excess, meaning it only provides coverage if the neighbor's policy limits are exhausted. This means that the neighbor's policy will be the first to respond and pay for damages, while the driver's policy will only come into play if the neighbor's policy is not sufficient to cover all the expenses.

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  • 48. 

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

    • Detached fences

    • Lawnmower used to maintain the exterior premises

    • Paint on the premises to be applied to the interior

    • Decorative fountains

    Correct Answer
    A. Paint on the premises to be applied to the interior
    Explanation
    Coverage A under a HO-3 policy typically includes personal property that is permanently attached or built in to the structure of the insured premises. This includes items like built-in appliances, fixtures, and permanently installed carpeting. However, paint on the premises to be applied to the interior is not considered personal property that is permanently attached or built in, as it is a temporary item that can be easily removed or replaced. Therefore, it is not included in Coverage A under a HO-3 policy.

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  • 49. 

    What additional coverage is provided in a DP3 that is not included in a DP1 ?

    • Collapse

    • World-wide coverage

    • Fire department service charge

    • Other structures

    Correct Answer
    A. Collapse
    Explanation
    A DP3 policy provides coverage for collapse, which is not included in a DP1 policy. Collapse refers to the sudden and substantial falling down or caving in of a building or a part of it. This coverage protects the insured against the costs of repairing or rebuilding the damaged structure due to collapse.

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Quiz Review Timeline (Updated): Mar 22, 2023 +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Mar 22, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Nov 15, 2009
    Quiz Created by
    Pchinna
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