Adjusters Exam D

1. $90,000
2. $89,000
3. $112,500
4. $111,500

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2. If the limits on a structure are $75,000, and the structure is worth $125,000, how much would be owed on a fire loss of $50,000 if the policy has an 80% coinsurance and there is a $1,000 deductible?

1. $36,500
2. $37,500
3. $40,000
4. $48,000

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3. A device which is used to minimize small claims and which helps to keep insurance premiums down is:

1. arbitration
2. a deductible
3. a value policy
4. coinsurance

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4. Coverage A under a dwelling policy covers all of the following except:

1. A storage shed connected to the dwelling by a utility line
2. A laundry room attached to the dwelling
3. Building equipment and outdoor equipment
4. Materials and supplies used for construction or repair of the dwelling

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5. Vehicles which may be insured by a personal auto policy (PAP) are described in the eligibility rules. Each of the following is true about vehicles eligible for PAP coverage except:

1. Vehicles with fewer than four wheels are not eligible
2. Vehicles owned by an individual or married couple may be insured
3. Private passenger autos used for business may be insured
4. Vans used in a delivery business are eligible

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6. Dave has an automobile insured by a personal auto policy. He trades in his car and purchases a new private passenger auto as a replacement vehicle. If he does not notify the insurance company, the liability coverage for his replacement vehicle will apply automatically:

1. for 10 days
2. for 30 days
3. for 60 days
4. until the end of the policy period

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7. Under the dwelling property forms, personal property moved to a new principle residence will be automatically covered at the new location (subject to policy expiration) for a period of:

1. 60 days
2. 30 days
3. 20 days
4. 10 days

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8. Which dwelling policy forms provide coverage for loss of rental value?

1. Special form only
2. Basic and Broad forms only
3. Broad and Special forms only
4. Basic, Broad and Special forms

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9. Which of the following situations would be covered by liability insurance under a personal auto policy?

1. An insured causes injuries while operating a taxi cab
2. An auto mechanic has an accident while road testing a customer’s vehicle
3. An insured damages another vehicle while driving a motorcycle
4. An insured who rents a private garage backs in and damages the garage

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10. An insurance company has made an underwriting profit when:

1. its combined ratio is greater than 100%
2. its combined ratio is less than 100%
3. its loss ratio is less than its expense ratio
4. its expense ratio is less than its loss ratio

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11. National flood insurance is available for:

1. private residences only
2. private residences and residential contents only
3. residential and non-residential buildings only
4. Residential and non-residential buildings and contents

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12. Some property insurance policies provide for payment of the full policy limit in the event of a total loss by a covered peril, regardless of the actual value of the property. These policies are known as:

1. Indemnity policies
2. ACV policies
3. Valued policies
4. Market value policies

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13. Each of the following is true about homeowners personal property coverage except:

1. The basic form does not include personal property coverage
2. Personal property of a guest may be covered
3. Special sublimits apply to some type of personal property
4. The full limit applies to personal property any where in the world

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14. Under Section II of a homeowners policy, damage to the property of others will not be covered if it is caused intentionally by an insured who is at least:

1. 18 years of age
2. 16 years of age
3. 13 years of age
4. 10 years of age

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15. Furniture which is destroyed when a building burns down is an example of what kind of loss?

1. direct
2. indirect
3. consequential
4. residual

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16. Under the building and personal property coverage form, what obligation, if any, does the insurer have to a mortgagee in the event the company wishes to cancel the policy?

1. The company has no obligation
2. The company must give the mortgagee 10 days written notice of intent to cancel in all cases
3. The company must notify the insured, who is then responsible for advising the mortgagee
4. The company must give the mortgagee 10 days written notice if cancellation is for nonpayment of premium, and 30 days notice of cancellation for any other reason

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17. An insured has coverage under a reporting form and actual values have consistently been $60,000 during each reporting period. The insured has consistently underreported values at $30,000. A $10,000 loss occurs. The company will pay:

1. The full loss
2. One-half of the loss
3. One-third of the loss
4. One-sixth of the loss

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18. Each of the following business occupancies would be permitted in a dwelling insured under a dwelling form except:

1. A small shop carrying merchandise for sale
2. A professional office providing services to clients
3. A photographic studio
4. A beauty shop run by the insured and her daughter

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19. Interline endorsements apply or could apply:

1. Only to inland marine coverage
2. To more than one coverage part of a package policy
3. To property and liability coverage only
4. Only when a broad causes of loss form is attached to a policy

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20. The business income coverage form applies to:

1. Loss of revenues while operations are suspended due to property damage
2. Loss of income as the result of destruction of accounts receivable
3. Loss of cash receipts because of burglary or robbery
4. Loss of money because of employee dishonesty

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21. General liability insurance does not cover liability arising out of:

1. Aircraft owned by the insured
2. Contractual liability
3. Host liquor liability
4. Mobile equipment on construction sites

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22. Anyone willfully engaging in an unfair method of competition may be liable for a fine of up to:

1. $1,000
2. $2,500
3. $5,000
4. $10,000

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23. The penalty for a person found guilty of submitting fraudulent claims for the payment of a loss is:

1. Up to two years in jail and fine of up to $10,000
2. Up to three years in jail and a fine of up to $20,000
3. Up to five years in jail and a fine of up to $25,000
4. Up to five years in jail and a fine of up to $150,000

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24. Which of the commercial property causes of loss forms provide theft coverage?

1. The basic, broad and special forms
2. The broad and special forms only
3. The special form only
4. None of the forms provide theft coverage

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25. The term “time element coverage” is used when the amount of loss depends on:

1. The time between the date of loss and expiration date
2. The time between the effective date and date of loss
3. The time of year when a seasonal business suffers a loss
4. The time it takes to repair, rebuild or restore damaged property

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26. When general liability “claims made” coverage is written, a “laser beam” endorsement may be used to:

1. Eliminate coverage for nuclear hazards
2. Provide special coverages for certain high technology risks
3. Exclude specific accidents, products, work or locations
4. Add special conditions applicable to defense contractors

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27. The “Inchmaree clause” in ocean marine policies provides coverage for which of the following?

1. Liability due to collision loss
2. Physical damage to the ship
3. Cargo damage due to negligence of the crew
4. Loss of shipping charges

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28. All of the following are factors for rating physical damage coverage on a personal auto policy (PAP) except:

1. Year of the vehicle
2. Make of the vehicle
3. Driving safety record
4. Model of the vehicle

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29. Which of the following describes a stock insurance company?

A. Insureds receive shares of stock in proportion to premiums paid
B. Owned by the insureds as policyholders
C. The company is managed by a board of directors who are elected by shareholders who own afixed amount of capital stock in the company
D. Agents of the company receive shares of stock as compensation for selling policies

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30. All the following are not examples of insurable risk situations, except:

A. a landlord wants to buy insurance on a tenant’s belongings
B.a tenant wishes to purchase insurance coverage on improvements which he made on a building owned by the landlord
C. an automobile owner wants to purchase insurance on the garage in which she regularly parks her vehicle
D. a landlord wants to purchase insurance on a tenant’s automobile parked in a garage which the landlordowns

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31. How is insurance marketed through direct mail companies?

A. Solicitors
B.Salaried Employees
C. Surplus Lines Brokers
D. Independent agents

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32. Which is a correct statement about insurance?

A. it is a form of gambling
B. it is a form of retaining risk
C.it is a form of transferring risk
D. it is a form of leveling the law of averages

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33. Which of the following refers to the method whereby an insurance company must receive an officialapproval from the state Dept. of Insurance before it uses new rates?

A. file and use

B. mandatory rates

C.prior approval

D. use and file

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34.Which of the following is based on the experience of the prospective insured?

1. Manual rating
2. Merit rating
3. Judgment rating
4. Retrospective rating

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35. A commercial property cause of loss form does not cover any losses caused by:

1. Lightning

2. Smoke damage from industrial operations (agricultural smudging)

3. Explosions

37. To determine the actual cash value of a commercial building for coinsurance purposes, use:

3. The price the client paid for the property, less the value of the land

1. Which of the following is based on the experience of the underwriter?

1. Manual rating
2. Merit rating
3. Judgment rating
4. Retrospective rating

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2. Liability losses are which of the following?

1. first party claims
2. second party claims
3. third party claims
4. fourth party claims

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3. A one word definition for subrogation would be?

1. subordination
2. substitution
3. salutation
4. substandard

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4. Which of the following is an example of functional replacement cost?

1. Installing new skylights after a loss
2. Replacing a pinewood deck with a redwood deck
3. Replacing a lathe and plaster wall with sheetrock
4. Installing a fireplace after a loss when there wasn’t one before

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5. Aggregate limit is defined as which of the following:

1. minimum a policy will pay per claim
2. maximum a policy will pay per claim
3. minimum a policy will pay during a policy period
4. maximum a policy will pay during a policy period

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6. Which of the following is correct about supplementary payments?

1. It reduces what your liability policy will pay for a loss
2. It reduces what your property policy will pay during a loss
3. It doesn’t reduce your liability limits for a loss
4. It doesn’t reduce your property limits for a loss

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7. The following factors are used for physical damage coverage except:

1. Make of the vehicle
2. Year of the vehicle
3. Driving safety record
4. Model of the vehicle

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8. How many major sections of the California Insurance Code are there?

1. 3
2. 5
3. 20
4. 30

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9. How many classes of insurance may be offered to the public?

1. 3
2. 5
3. 20
4. 30

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11. Who makes an insurance contract?

1. The Insurance Commissioner
2. The Department of Insurance
3. The insured
4. The insurer

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12. Who enters into an insurance contract?

1. The Insurance Commissioner
2. The Department of Insurance
3. The insured
4. The insurer

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13. Which of the following sells insurance?

1. insurance agents
2. insurance brokers
3. both of the above
4. neither of the above

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14. Which of the following may bind coverage on behalf of an insurer?

1. insurance agents
2. insurance brokers
3. both of the above
4. neither of the above