Adjusters Exam E


  1. Risk is defined as which of the following?

 

  1. Certainty of a gain
  2. Certainty of a loss
  3. Uncertainty of a loss
  4. Uncertainty of a gain

 

  1. Which part of an insurance policy sets the rules of conduct, duties, and obligations of the insured and insurer under the terms of the contract?
  1. Declarations
  2. Insuring agreement
  3. Conditions
  4. Exclusions

 

  1. A standard fire policy without attached endorsements or additional coverage forms insures against direct loss by:
  1. fire and lightning
  2. fire and removal
  3. fire, lightning and removal
  4. fire, lightning and internal explosion

 

  1. A Dwelling Policy Basic form without attached endorsements or additional coverage forms insures against direct loss by:
  1. fire and lightning
  2. fire and removal
  3. fire, lightning and removal
  4. fire, lightning and internal explosion

 

  1. 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

 

  1. 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.

 

  1. 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.

 

  1. In property and casualty, when must insurable interest exist?
  1. at the time the loss occurs.
  2. at the time of application.
  3. at the time of application or at the time of the loss.
  4. at the time of application and at the time of the loss.

 

  1. Under contract law, the actions by a party may have the effect of giving up of a known right.  When this occurs, the party has created a:
  1. unilateral contract
  2. representation
  3. waiver
  4. warranty

 

  1. 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.

 

  1. The purpose of the FAIR Plan (Fair Access to Insurance Requirements) is to:
  1. Give the federal government a major role in providing insurance.
  2. Make property insurance available and affordable in high-risk areas.
  3. Require complete disclosure of the reasons for cancellations.
  4. Force all insurance companies to participate in an insurance pool.

 

  1. 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.

 

  1. 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.

 

  1. The mobile home endorsement (MH200) may be added to which of the following forms?
  1. HO-2 and HO-3
  2. HO-3 and HO-5
  3. HO-2 only
  4. HO-4 and HO-6

 

  1. Each of the following is true about the National Flood Insurance Program except:
  1. Coverage is sold by licensed insurance agents and brokers.
  2. Coverage may be written by private insurance carriers.
  3. Eligibility requirements are set by private insurance carriers.
  4. The federal government reimburses insurance companies for losses.

 

  1. 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.

 

  1. 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.

 

  1. Under a personal auto policy, which of the following is not a collision loss?
  1. Impact between the covered auto and a deer.
  2. Impact between the covered auto and a stationary object.
  3. Impact between the covered auto and another vehicle.
  4. Upset of the covered auto, resulting in damage.

 

  1. 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.

 

  1. All of the following are requirements for ideally insurable risks, except:
  1. The applicant must have an interest in protecting what is insured.
  2. The applicant must face a personal risk of loss.
  3. The applicant must not share the interest with anyone else.
  4. The applicant must not have a potential for gain because of the insurance.

 

  1. Something that increases the likelihood that a loss will occur is called a:
  1. Peril.
  2. Risk.
  3. Hazard.
  4. Catastrophe.

 

  1. The most common definition of  “actual cash value”  in the property insurance field is:
  1. Original cost plus depreciation
  2. Original cost minus depreciation
  3. Replacement cost plus depreciation
  4. Replacement cost minus depreciation

 

  1. 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.

 

  1. 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.

 

  1. Which of the following is not an optional property coverage on homeowners policies?
  1. Personal property replacement cost.
  2. Inflation guard coverage.
  3. Increased limits for jewelry, watches and furs.
  4. Coverage for loss of use of the premises.

 

  1. 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.

 

  1. Which of the following losses is not excluded under the physical damage coverage of a personal auto policy?
  1. Loss of custom furnishings in a customized van.
  2. Loss caused by freezing of the cooling system.
  3. Damage to equipment designed for the detection of radar.
  4. Damage to a covered auto while being used as part of a car pool.

 

  1. If coverage for towing and labor costs is included in a personal auto policy, labor costs will be covered only if the labor is performed:
  1. At a garage by an experienced mechanic.
  2. At the place of disablement.
  3. Within 24 hours of the disablement.
  4. Within 48 hours of the disablement.

 

  1. 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

 

  1. “Special” or “all risk” coverage forms:
  1. Name the perils to be insured against.
  2. List the policy exclusions.
  3. Have no exclusions.
  4. Are no longer available in the general insurance market.

 

  1. 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.

 

  1. Which of the following causes of loss forms are “named peril” forms?
  1. Basic form
  2. Broad form
  3. Earthquake form
  4. All of the above

 

  1. 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.

 

  1. 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 $40,000 loss occurs.  The company will pay:
  1. $40,000
  2. $20,000
  3. $15,000
  4. $30,000

 

  1. Which of the following would be covered by the basic cause of loss form?
  1. Damage resulting from earthquake.
  2. Damage resulting from ruptured water pipes.
  3. Damage resulting from the weight of snow, ice or sleet.
  4. Damage resulting from the airborne shockwaves of an erupting volcano.

 

  1. 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.

 

  1. Each of the following coverages is always included in Section I on a homeowners policy except:
  1. Personal property coverage
  2. Coverage for loss of use.
  3. Medical payments coverage.
  4. Coverage for property removed to protect it from loss.

 

  1. Each of the following statements regarding the homeowners broad form (HO-2) are true except:
  1. The dwelling is covered.
  2. Coverage is provided against all risks of physical loss.
  3. Other structures are covered.
  4. Losses from vandalism and malicious mischief are covered.

 

  1. Under a Businessowners Property Coverage form:
  1. Optional coverages are not available.
  2. Coverage is provided for fire legal liability.
  3. The standard deductible is $500 per occurrence.
  4. Coverage is provided for flood damage.

 

  1. 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 coverages only.
  4. Only when a broad causes of loss form is attached to a policy.

 

  1. Coverage B of a homeowners policy will apply to which of the following losses?
  1. Damage to an unattached garage of an insured home.
  2. Damage to the kitchen of an insured home.
  3. Damage to construction materials which are intended for a new front porch for an insured home.
  4. Damage to living room furnishings in the insured home.

 

  1. On the homeowners policy, coverage D is also called:
  1. Other structures.
  2. Personal property.
  3. Loss of use.
  4. Personal liability.

 

  1. The coverage which automatically increases the property insurance limits on a homeowners policy is:
  1. Replacement cost.
  2. Special limits of liability endorsement.
  3. Inflation guard endorsement.
  4. Insurance-to-value.

 

  1. Which of the following is part of a commercial property coverage part?
  1. One or more cause of loss forms.
  2. Applicable endorsements.
  3. Commercial property conditions.
  4. All of the above.

 

  1. Which of the following is not considered a consequential loss?
  1. Loss of rental value.
  2. Damage to personal property.
  3. Extra expense incurred while rebuilding damaged property.
  4. Loss of business income while a building is closed for repairs.

 

  1. 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.

 

  1. In which part of an insurance contract would you expect to find a description of the duties and obligations of the insured?
  1. Declarations
  2. Insuring clause
  3. Exclusions
  4. Conditions

 

  1. General liability policies provide coverage for damage to:
  1. Property owned or occupied by the insured.
  2. Personal property in the care, custody, or control of the insured.
  3. The insured’s products which are held for sale to others.
  4. Property of third parties when caused by negligence of an insured.

 

  1. The named non-owner coverage endorsement is used to provide personal auto insurance for:
  1. Relatives of the named insured who do not live in the same household.
  2. Someone who does not own an automobile, but who drives borrowed or rented autos.
  3. Other members of the named insured’s family who live in the same household.
  4. Non-family members who use the named insured’s auto with permission.

 

  1. Which of the following coverages would apply to a rental car used by an insured executive while on vacation?
  1. Garagekeepers legal liability.
  2. Truckers coverage.
  3. Drive other car coverage.
  4. Coverage for nonowned autos.

 

  1. Automobile limits of liability expressed as $25,000/$50,000/$10,000 mean:
  1. $25,000 bodily injury, $50,000 property damage, $10,000 medical payments each accidents.
  2. $25,000 bodily injury for each person, $50,000 bodily injury each accident, $10,000 property damage each accident.
  3. $25,000 property damage per accident, $50,000 bodily injury per accident, $10,000 bodily injury per person.
  4. None of the above.

 

  1. Under the business auto coverage form, which of the following is not considered to be “mobile equipment”?
  1. A forklift.
  2. Farm machinery.
  3. A self-propelled snow plow.
  4. A bulldozer.

 

  1. 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.

 

  1. An insurer that is not entitled to transact insurance business in California is known as a:
  1. Non-soliciting insurer.
  2. Non-admitted insurer.
  3. Non-certified insurer.
  4. Non-transacting insurer.

 

  1. 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

 

  1. The penalty for a person who violates the privacy protection laws and obtains information that they have no legitimate reason to receive is:
  1. A $5,000 fine.
  2. A $5,000 fine or up to six months in jail.
  3. A $10,000 fine.
  4. A $10,000 fine or up to one year in jail.

 

  1. 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 prison and a fine of up to $150,000.

 

  1. An employer purchases a fidelity bond to protect against potential losses by employee dishonesty.  In this situation, each of the employees covered by the bond is:
  1. A fiduciary.
  2. A guarantor.
  3. A principal
  4. An obligee.

 

  1. 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.

 

  1. The commercial building and personal property coverage form provides five extensions of coverage, but only if:
  1. The coverage for building is written on a replacement basis.
  2. All coverages are written on a blanket basis.
  3. They are shown in the declarations and an additional premium is paid.
  4. An 80% or higher coinsurance percentage is shown on the declarations.

 

  1. A commercial insured has a single limit of insurance for all property coverages applicable at three different locations.  This type of coverage is known as:
  1. Scheduled coverage.
  2. Specific coverage.
  3. Blanket coverage.
  4. Extended coverage.

 

  1. According to the commercial crime general provisions, the “discovery period” for coverages which may be included in a package policy ends:
  1. Three years after policy expiration.
  2. Two years after policy expiration.
  3. One year after policy expiration.
  4. Six months after policy expiration.

 

  1. Each of the following is true about workers compensation second injury funds except:
  1. They pay benefits when two or more people are injured in one accident.
  2. They help pay the additional loss resulting from combined injuries.
  3. They remove disincentives for hiring partially disabled people.
  4. They relieve an employer of some of the burden for multiple injuries.

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. How does the California Insurance Commissioner get his or her title?
  1. Appointed by the Governor
  2. Approved by the Governor
  3. Elected by the Public
  4. None of the above

 

  1. An insurance company’s actuarial department is responsible for which of the following?
  1. Rating of insurance companies.
  2. Predicting profits of an insurance company.
  3. Keeping an insurance company financial sound.
  4. Assisting with service of insurance company claims.

 

  1. All rates in California are subject to which of the following?
  1. Mandatory rates.
  2. Manual rates.
  3. Prior approval rules.
  4. Experienced rating.

 

  1. What does a broad form dwelling policy have that is not included in a basic form dwelling policy?
  1. Appurtenant structures coverage
  2. Dwelling coverage
  3. Additional living expenses
  4. Fair rental value

 

  1. In a homeowners policy, the insured is required to provide proof of loss within:
  1. 10 days
  2. 20 days
  3. 30 days
  4. 60 days

 

  1. 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.

 

  1. What is the maximum charge allowable for a SERP?
  1. 100% of the General liability premium.
  2. 150% of the General liability premium.
  3. 200% of the General liability premium.
  4. 250% of the General liability premium

 

  1. An employee injured on the job must show proof that his/her employer was negligent when filing a claim against a Workers’ Compensation policy.

 

a) True

b) False

 

  1. Barry owns a printing shop. He has 7 employees, all covered by a Worker’s Compensation policy. He asks that the premiums be contributed by his workers. This is:

 

a) A common practice since the policy benefits the employees

b) Illegal, the premiums must be paid by the employer

c) Allowable as long as the employer and employee share the costs according to ERISA laws.

 

  1. All of the below are benefits paid from Worker’s Compensation plans, except:

 

a) Income benefits

b) Rehabilitation benefits

c) Death benefits

d) Personal property damage

 

  1. Worker’s Compensation does not normally protect against all risk exposures, such as a common lawsuit. Which of the following can be found in most WC policies to provide protection for this concern?

 

a) Employer’s liability

b) Second injury fund

c) The State Compensation Fund

 

78.  Which of the following is not a Worker’s Compensation benefit?

 

a) Disability income

b) Burial

c) Rehabilitation

d) Automatic payment of life insurance premiums

 

  1. All except one of the following are required to be communicated to an insurance client when the client pays the agent for financing premiums. Which one is it?

 

a) Why it is being financed.

b) Who is financing the premium.

c) How much the agent is being paid for such financing.

d) How much the cost would be without financing.

 

80.  When Workers Compensation laws became mandatory, it meant:

 

  1. HMOs were required to provide medical services to all employees.
  2. Employers could use common law defenses more to their advantage.
  3. Employers were financially responsible for employees on-the-job injuries, regardless of fault.
  4. Employees were required to prove employers fault to file legal action.

 

81.  Who pays the premiums for a Workers Compensation policy for a retail store?

 

  1. Equally divided between the employees and the store owner.
  2. Because of the occupation classification, it is paid entirely by the employees.
  3. It is always paid entirely by the employer.
  4. Retail stores are excluded from statutory workers compensation laws.

 

82.  Mike drives a truck for a delivery company. In the course of making a delivery he is involved in a serious accident, and is taken to the hospital. The hospital and doctors bills will be paid by:

 

  1. The company workers compensation policy.
  2. Medi-Cal, assuming he qualifies for coverage.
  3. Mike’s private auto insurance policy.
  4. None of the above.

 

83.  Benefits will be paid from a Worker’s Compensation Subsequent Injury Fund only if both the first and second injury are the result of an on-the-job accident.

 

  1. True
  2. False

 

84.  The Worker’s Compensation portion (Part I) of the Worker’s Compensation policy covers payments the employer (insured) must pay:

 

  1. Under Worker’s Compensation law.
  2. To bring the work environment up to state safety codes.
  3. To cover common law exposures.
  4. To coordinate with HMO coverage.

 

85.  A safe place to work, safe equipment, reasonably competent fellow workers, and enforcement of safety laws all apply to:

 

a) Defenses against negligence

b) Common law defenses

c) Common law obligations

 

  1. When Worker’s Compensation laws first took effect in the early 1900’s they were elective. This means that the employer was not required to adopt them.

 

a) True

b) False

 

87.  Worker’s Compensation is not provided for:

 

a) A worker getting a common cold, an illness regularly suffered by the public

b) Injuries arising from working in a factory

c) A salesperson traveling to an appointment

 

88.  The death benefits required by Workers’ Compensation contain a $5,000 maximum for burial expenses.

 

a) True

b) False

 

89.  he passage of worker’s compensation legislation meant:

 

  1. Employees no longer had any legal means of obtaining reimbursement for work injuries
  2. Employees would have to sue their employers to obtain reimbursement for work injuries
  3. Employers would be held responsible for the cost of their employee’s work injuries regardless of fault
  4. Employers were no longer responsible for work injuries to employees