California Property and Casualty

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1

An insured has a personal property replacement cost endorsement under her homeowners policy. If an expensive painting and an antique chair are stolen from the insured'd home, what will the insured receive on the claim under that endorsement?

Nothing

A personal property replacement cost endorsement excludes property such as art and antiques.

2

Which of the following is a common exclusion found in Part D: Coverage for Damage to your Auto of a PAP?

Mechanical breakdown

Damage due to wear and tear, freezing, mechanical or electrical breakdown, and road damage to tires is a common exclusion to the physical damage coverage section.

3

An insured is driving her car through a residential area when she loses control and crashes into a neighbor's front porch. The neighbor, who is sitting on the porch, is injured. The insured's liability policy has a limit of $500,000. This amount applies to the total of damages for any bodily injury and property damage resulting from one accident. Which type of limit of liability does the insured have?

Combined single

Combined single is a single dollar limit of liability applying to the total of damages for bodily injury and property damage resulting form on accident or occurrence.

4

When an umbrella policy is broader than under underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays :

The excess over the self-insured retention

Retention is the equivalent of a deductible in property insurance.

5

The insured purchased a $200.000 extra expense policy. The percentage applying to the limit of insurance is 40%, 80%, and 100%, what would be the maximum payable for a 47-day loss?

$160,000

Extra expense coverage is written with a minimum of 3 applicable percentages that apply to the limit of insurance in the declarations. When the period of restoration is 30 days or less: the first percentage applies: when it is more than 30 days and not more than 60 days, the second percentage: applies: when more than 60 days, the thirds percentage applies, In this case, the calculation should be 80% of $200,000, so $160,000.

6

A deliberate act that causes harm to another person, regardless of whether the harm is intended is called a(n)

Intentional tort

An intentional tort is a deliberate act that causes harm to another person. A tortfeasor is a person, a business, or another party who has committed a tort. Vicarious liability is legal responsibility that occurs when one party is held liable for the others actions of another party. Absolute liability is legal liability that arises from inherently dangerous activities that result in injury or harm to another person.

7

Which of the following would be considered an insured under a business auto coverage form?

Anyone while using, with permission, a covered auto owned by the name insured.

The business auto coverage form provides coverage on covered autos while used by the insured or employees of insured. Does not cover the exposure of other autos not owned, hired, or leased by the insured.

8

A business owner whose inventory changes significantly throughout the year should consider having coverage written on what type of form?

Reporting form

Reporting Form Coverage is used by those insureds whose property fluctuate in value and the insured is not able to know in advance what the value will be at any given time within the policy period. Values are reported at the times specified in the policy and the premium is adjusted based upon those reports.

9

An insured has $5,000 of medical coverage on a personal auto policy at the time of a covered accident. The insured and two passengers are injured. Medical treatment cost 7,000 for the insured, 4,000 for the first passenger, and 8,000 for the second passenger. How much will the policy pay under medical payments coverage ?

$ 14,000

The limit is not more than 5,000 per person, per accident.

10

Which of the following coverage's in dwelling and homeowners policies is for indirect losses?

Loss of use

Loss of use coverage applies only after a direct loss caused by a covered peril has occurred.

11

The claims-made trigger is based on which of the following?

The date the claim is first made against an insured for injury or damage that occurred on or after policy's retroactive date.

The claims-made trigger is based on the dare the claim is first made in writing against an insured for injury or damage that occurred on or after policy retroactive date.

12

In a personal umbrella policy, the amount paid by the insured for certain losses not covered under primary coverage is called

Self-insured retention

In casualty insurance, the portion of a claim not paid by insurance is called a retention. In property insurance, it is called deductible.

13

Which of the following best describes the amount of loss assessment coverage included under a homeowners policy liability coverage section?

Up to $1,000 per occurrence

Section II - Loss Assessment Coverage- applies to assessments against the insured by a condominium association or other cooperative body of property owners. Coverage is limited to $1,000, but an increased limit of coverage is available by endorsement.

14

The conditions of the Standard Fire Policy addressing the rules, duties and provisions of the insured are found in

The 165 line of conditions

The 165 line format of the Standard Fire Policy contain the rules, duties and provisions that the insurer and agree to follow.

15

Additional coverage's in the liability coverage, section on a homeowners policy cover all EXCEPT

Damage to a third-party property for which the insured is legally liable.

Legal liability coverage is a primary liability coverage, not an additional coverage.

16

No person within the State of California shall transact insurance property located or operations conducted within, or on the lives or persons of residents of this State with non admitted insurers, EXCEPT

Through a licensed surplus line broker.

17

Which commercial crime form would provide coverage for loss that did not necessarily happen during the policy period but was revealed during the policy period?

Discovery form

The discovery form is used for losses that are discovered during the policy period but may not have happened during the policy period. The discovery form is one of the conditions contained in the crime general provisions forms, which contain conditions and exclusions applying to all crime forms. The discovery period is normally 1 year.

18

An agent offers his clients free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of

Rebating

When producers give or promise anything of value that is not specified in the policy, they are guilty of rebating.

19

Because an insured owns a lot of expensive jewelry, her insurance agent has advised her to purchase a scheduled personal property endorsement. If the insured adds this endorsement to her homeowners policy, which of the following statements would be correct?

Coverage C limits will no longer apply to the jewelry insured by the endorsement.

When items are scheduled, they are excluded from overage C as insured items, and are covered only under the scheduled personal property endorsement.

20

Surety bonds are written for a definite limit called

The bond penalty

If the specific obligation guaranteed by the bond is not fulfilled, a sum of money, known as a penalty, becomes payable as damages.

21

In equipment breakdown coverage, all accidents would be considered a single accident if they occur

At a single location at the same time from the same cause.

If an accident causes other accidents, all related accidents will be treated as one accident. All accidents occurring at a single location at the same time having the same cause will be considered one accident.

22

All of the following are true of Coverage B - Other Structures EXCEPT

It must be added by endorsement to a homeowners policy.

Homeowners policies automatically provide amount of insurance in Coverage B that is equal to 10% of the amount written as Coverage A. This amount may be increased by endorsement.

23

The coinsurance requirement on a Builder's Risk Form is what percentage of the completed vlaue?

100%

The coinsurance requirement on a Builder's Risk Form is 100% of the completed value.

24

Which of the following property coverage's would provide protection to contents damaged by fire?

Coverage C

Coverage C - Personal property provides coverage for the contents of an insured dwelling.

25

If a person is using an auto with belief that he is entitled to do so, subrogation rights under a personal auto policy would apply to all coverage's EXCEPT

Physical damage

Subrogation rights do not apply to physical damage coverage if the damage is caused by a person using auto with a reasonable belief that they were entitled to do so.

26

If the insured owns a watch valued at $10,000, full coverage can be provided on a homeowners policy by purchasing the

Scheduled personal property endorsement.

Scheduled personal property endorsement would provide all-risk coverage without the limitations for theft that are found in Coverage C. The amount of coverage purchased is usually based upon a recent appraisal, or the purchase prices if newly purchased.

27

All of the following are TRUE statements regarding the agents responsibilities in connection with the completion of the application EXCEPT

It is the insurer's responsibility to make certain that the application is filled out completely, correctly and to the best of their knowledge.

It is the agent's responsibility to make certain that the application is filled out completely , correctly and to the best of their knowledge.

28

What are the consequences of a failure to comply with the Commissioner's office while it is executing a seizure order?

It is a misdemeanor punishable by a fine of $1,000, one year imprisonment, or both.

29

Rental Reimbursement is only available if the policy includes which coverage?

Other Than Collision Coverage

Other Than Collision Coverage is an endorsement added that will reimburse insured for rental charges incurred because the covered auto is out of use because of a covered loss.

30

All of the following statements regarding a Boatowners policy are true EXCEPT

Automatic coverage is provided on replacements for the boats listed on the declarations provided the insured notifies the insurer within 60 days of purchase and pays any additional premium required.

Insured should notify the insurer within 45 days of purchase

31

In order for a Protection and Indemnity policy to cover a loss which if the following must be TRUE?

The insured must be legally liable for the loss.

For the P&I policy to cover a loss, the insured must be legally liable for the loss.

32

Expenses that an organization would not have incurred if business interruption had not existed are known as

Extra Expenses

Extra expenses are expenses that an organization would not have incurred if the business interruption had not occured.

33

What type of bond guarantees that a construction contractor will enter into a contract at a set price?

Bid Bond

Bid bond promises that the contract is awarded the contract, the contractor actually will accept the contract.

34

The process of "post-selection" refers to which of the following?

An insurer is investigating the client's risk profile.

After considering all of the information legally available, the underwriters will evaluate and rate the risks.

35

According to the California code, all of the following are TRUE regarding binding authority for excess and surplus lines insurance EXCEPT

If more than one person is assuming the obligation, the risk will always be equally shared.

The policy itself will identify the proportion of sharing for that particular policy.

36

All of the following are classes of inland marine risks EXCEPT

Common carrier cargo liability

Four classes of inland marine risks are the following; domestic shipments and transportation risks; bridges, tunnels, and other instrumentalities of transportation and communication: commercial property floater risks; and personal property floater risks.

37

Which of the following dwelling coverage for,s would pay replacement cost for the dwelling?

DP-2 and DP-3

DP-2 and DP-3 pay replacement cost as long as the house is insured for at least 80& of its value on the date of loss.

38

Under the examinations of books and records condition, the insurance company has the right to examine and audit the insured's books and records related to the policy

During he policy period and for up to 3 years after the termination of the policy

39

What list contains the names of all eligible surplus lines insurers?

LESLI ( List of Eligible Surplus Lines Insurers )

40

A form of insurance between insurance companies is Known as

Reinsurance

Reinsurance is a type of insurance between insurers. It occurs when an insurer (the reinsurer) agrees to accept all of a portion of a risk covered by another insurer ( the ceding company)

41

The HO-3 homeowners policy provides

Open peril coverage on the dwelling and broad form coverage on a personal property.

42

Which of the following homeowners forms is designed to provide named peril coverage for personal property to individuals who rent an apartment?

HO-4

An HO-4 does not provide insurance under Coverages A and B because the insured does not have an insurable interest in the structure.

43

An insured files a fraudulent claim for $100,000. The maximum fine that the insured could be ordered to pay if convicted of insurance fraud is

$200,000

A person who commits insurance fraud may be punished by imprisonment and/or fine. The fine could be either the double value of the fraud (in this case $200,000), or up to $150,000 - whichever is greater.

44

When property has been removed to protect, how many days will coverages applies for

30 days

45

When an insurer cancels an automobile insurance policy for a reason other than nonpayment of premium, the insurer must meet all of the following requirements EXCEPT

Offer the insured to renew the policy at a different rate

46

Who would participate in a Write Your Own (WYO) flood insurance program ?

Private insurers thats wish to write and service National Flood Insurance policies on a non-risk bearing basis

47

The limited theft endorsement is intended for which type of property ?

An apartment building in which the owner does not reside

48

The BOP contains a seasonal increase provision that automatically increases the limit of insurance for business personal property by

25 %