Study lounge e book ca P&C exam mastery system as of 7.7.16

Welcome to the study lounge portion of your INSURATEST exam preparation process, glad you are here. There are a few things you will need before we begin this final section. Cinnamon gum, yes cinnamon chewing gum, earplugs or headphones and comfortable attire. Seriously, go to the store and buy a pack of cinnamon chewing gum, along with a $.50 cent pair of earplugs and find the headphones that came with your smartphone. If you have noise cancelling one’s even better. (we will get to this in a bit). If you are not yet dressed comfortably and sitting in a relaxed setting please make that happen, then come back. Please turn off, tune out, all outside and inside distractions. This means everything; sports, reality tv, Facebook, texting, even that inner voice inside your head that keeps on buzzing. You know, the one relentlessly stressing out about the exam you’re about to ace! Let that voice take a nap. Go to a quiet environment, or visit a comforting place like your favorite coffee shop, conference room, or library. Go to where you know you will focus the best. In reality we don’t go to study, we instead move towards studying. The deeper you go towards study the more you will absorb this section’s content and retain what’s necessary to ensure you pass. While in your preferred environment, try to block out all background noises with headphones or earplugs. Yes earplugs, they are the best $.50 cents you will ever spend on studying, far better and less expensive than a $4 latte’. Using earplugs while studying lets you hear yourself think and this is paramount to your success. Earplugs prevent background noises from interfering with your ability to move deeper towards studying and supports your ability to remain in study longer. We want you to bring a pair of earplugs with you to your test site and wear them during your exam. During the three hour test we do not want you to

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be auditorily distracted by other test takers or proctors, walking, talking, coughing, sneezing or hearing sirens from the outside. Earplugs will prevent outside noises from breaking your concentration. If you prefer to listen to music, try listening exclusively to classical. Better yet, music specifically written during and closely following the baroque music era, years 1600 to 1750. Music written from this time period carries a distinct mathematically progressive time signature to its melody that has been scientifically proven to boost brain power, when listened to while studying. Listening to classical music while studying will help you focus naturally and will aid in moving you further towards study. Sorry “today’s hits” you gotta go for now. If you have a commercial free Pandora radio account try the “Classical for studying” station. Or put some Bach, Vivaldi, Chopin and Mozart on your ipod. Get your cinnamon gum ready. Why Cinnamon? Chewing cinnamon gum while studying has also been scientifically proven to boost brain power, narrow one’s focus and stimulate the brain’s natural ability to tie a fragrance to content memorization and enhance study material recollection. Just smelling cinnamon boosts cognitive function and memory. We want you to chew cinnamon gum quietly while you take your State Exam too. You will be amazed at how well it will help this course’s material circle back to you, on exam day. Livermore California’s, 2010 elementary school teacher of the year award recipient Theresa Casey, can’t give her 3rd grade students cinnamon gum to chew while learning. It would end up on the classroom floor, stuck to shoes, under desks and in some poor kids hair. So she makes cinnamon tea instead. Once it cools, she pours the cinnamon infused water into a spray bottle and spritzes her kids with it while they quietly study. Then of course, once more, right before her class takes their annual state

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assessment exams. Which by the way, THEY ALL PASS! It works for third graders and will work wonders for you, trust us! Comfortable Check Ear Plugs or Headphones & Classical Music Check Cinnamon Gum Check Worries left to rest Check

Ok Let’s begin! Hopefully by now you are relaxed, in your perfect study environment, chewing cinnamon gum, listening to Mozart and ready to dive right in. But wait we need to explain one more thing. The INSURATEST study theory. Please open your mind to this. What we are about to share with you goes against all you have been preprogrammed to accept in terms of educational principles and exam preparation methodologies. We need to permanently change the way you study and approach this exam. Practice does not make perfect, no it does not. Practice makes patterns. Practice the wrong pattern and you will find yourself having to practice approximately 85% more to achieve the same result as would have been obtained naturally by simply practicing the right pattern in the right time sequence.

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It is however, the repetitive practice of executing a perfect pattern in a perfect environment that makes perfect. Below is how you practice perfectly for your State exam. DO NOT TEST YOURSELF now. That’s right, DO NOT APPROACH THIS AS A TEST. This is not a test, but instead an exercise on repetitive factual recognition and acceptance. Accepting this is paramount, the right answers are correct, they are Bright and Bold and right in front of you. All you need to do is read them backwards and forwards, even out loud to yourself. Practicing perfectly using this section as a tool will ensure you recall only what is correct on exam day. At the Study Lounge Sessions all has been prepared for you. Here you will be set up for success with complete transparency. Simply read the question(s), then read the right answer. Then reread the right answer and then reread the question. If you want to get fancy try and make two questions out of each question in your mind by rewriting the question in your mind using the answer as part of the question and the original question as part of the answer. Here is an example of INSURATEST study theory in action. (YOUR SCREEN IS NOT BROKEN THE COLORS ARE THIS WAY BY CHOICE, soon to be explained) “Assignment” as an insurance term refers to: A. The agent assigned to an individual insured B. The insurer’s right to subrogate a claim settlement from a third party C. The transfer of an insured’s interest in a policy to another party D. The insured’s right to change issuing companies mid term without paying a short rate cancellation fee The same question rewritten in your mind

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The transfer of an insured's interest in a policy to another party refers to: A. The agent assigned to an individual insured B. The insurer’s right to subrogate a claim settlement from a third party C. Assignment D. The insured’s right to change issuing companies mid term without paying a short rate cancellation fee A little secret about “Practice Tests.” You were unfortunately set up for failure by being forced to take standardized insurance practice tests throughout your educational development, at an insurance school, online pre license training course, or in a workbook. The insurance exam simulator programs are no better. They all accomplish the same wrong thing. By taking quizzes and tests with 10, 50 even 150 questions on them, you were being forced to spend 85% of your time regardless, reading and studying wrong answers. You were being inundated with erroneous statements and “noise”. Confusing you beyond confuzzlement while essentially trying to learn a new language; the language of insurance, in only fifty two hours time. It’s not rocket science, just basic math. If you spend 85% of your time, looking at, reading to yourself, or out loud, essentially memorizing error filled statements, you’re more likely to recall what's wrong on exam day. By using the traditional practice exam study method, approximately 85% of your time would be spent counterproductive; focusing on what is incorrect. It would be 85% of your time wasted. Do you have time for that? No wonder it is the case that 61% of all Californian’s who take this exam do not pass on their first attempt. Could it be that they spent 85% of their preparation time focusing on wrong answers? Time they could have spent with family, friends, working, or doing what makes them happy. Math doesn’t lie.

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With Practice tests you read a question, read three wrong answers to a question, read a right answer, read again about two more wrong answers, possibly read the question again, hopefully eliminating two wrong answers, that is if you read the question right. Hopefully by then picking a right answer, after reading yet again, another wrong answer. Essentially spending 85% of study time focussing on the wrong thing. Did you know the answer you picked, whether right or wrong you are 90% more likely to recall on exam day? What if every answer you recalled was the correct one? What if that was all you were reprogrammed to see? After knowing this why did we ever give you practice questions and lesson quizzes? With the ABC’s of Property and Casualty insurance and the Ultimate Study Guide sections we wanted to show you what typical questions looked like, what the right answers were, but more importantly why those answers were right. We showed you a way to remember coverages and what trap answers to avoid on exam day. After all you are preparing to take a test. Would you ever have enrolled in an exam preparation program that didn’t test you? Our sectional benchmark quizzes were written strategically to teach you. They were simply written as another way to entice you to read our program’s content again and again in a more stimulating manner. You were only asked to take a test following a lesson to prove to yourself you fully absorbed each section after you learned it. Now… we want you to accept what is correct in the format presented here in the Study Lounge Sessions. You must focus 100% of your time absorbing and recognizing what is true and correct on the question format coming up. So that you will, with absolute certainty, recall only what is right and true when it matters most. While taking your California state licensing exam. Message from our founder:

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“I’ll let you in on a little secret. I did not pass this test the first time I took it. Even after attending a ten day, 52 hour insurance school class, having a great instructor and studying for 80 hours plus; not passing was my result. I was part of the 60% statistic. Having to call my Dad, a successful insurance agent for thirty years at the time, who had a desk waiting for me in his office, since I had just graduated college two weeks prior, to tell him I had failed my exam, was one of the hardest calls, I have ever had to make. (Waaaaay harder than cold calling). Even after spending a majority of my college graduation money to attend insurance school and “studying” for hours, upon hours. I was one of the 61% left wondering if this was even in the cards for me. It was an absolutely crushing disappointment. One I desire greatly to free you from. When I finally figured out “how to study,” I immediately went to work on reengineering my study material to be viewed in the Study Lounge format. I reapproached this exam with what is now the INSURATEST study philosophy and my result on test day was staggeringly different. On exam day, I was the first one finished with my exam, in a room of 30 test takers. It took me 92 minutes to finish a three hour test. The same test I had ran out of time on, two weeks prior. Taking my time, making sure every question was answered correctly, I hit the submit button with absolute certainty that I passed. (I ONLY SAW RIGHT ANSWERS ON EXAM DAY, THEY LITERALLY POPPED OUT FROM THE COMPUTER SCREEN AS IF THEY WERE IN BOLD FONT). Walking out of the exam room on that breezy San Francisco afternoon, with a smile from ear to ear, doing a little fist pump and honestly crying a few tears of joy, made for one of the best afternoons of my life. Helping you achieve this same success is our mission at INSURATEST Welcome again to the Study Lounge Sessions and thank you for choosing and trusting INSURATEST.com, “the insurance test program designed to ensure you pass.” Now let’s begin...

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FOCUS ON WHAT IS RIGHT (Hint it’s Bold Black and Yellow ;) , What is wrong is shaded lightly so you won’t focus on, or even read it. The material only looks and feels like test questions, so you’ll respect them as such. But please, do not even read what’s not yellow or italicized bold, it’s only part of the illusion.…. Now do yourself a gigantic favor. Keep reading and prove the INSURATEST study theory to yourself. Let’s start off by quickly Mastering Single, Double and Triple Negative Questions. You can read/study as many questions as you want, but if a double negative question’s phrasing habitually messes you up, you’ll unfortunately end up picking wrong answers on exam day. The question’s end direction must be determined first. Even though you know the right answer. Scoring correctly hinges upon your ability to interpret the questions true intent. This might very well be the difference maker between passing and needing to try again.

Words and phrases to look out for and what is their Mathematical/linguistic property either negative (), or positive (+).

Commit these to memory. () Except, () Not , () Not Included, () Not True, () False), () None of the following, () None of the above, are typically excluded ().

(+) Included, (+) True, (+) are part of the following, (+) which of the following, (+) out of the following, (+) of the following.

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Single Negative Question Examples. Consequential loss is considered an indirect loss (as compared to losses from the direct damage of a peril). Direct damages would be covered under different types of insurance, such as property/casualty or fire insurance. All of the following are considered (+) a consequential loss except () ?

A. loss of rental value

B. damage to personal property

C. extra expense incurred while rebuilding damaged property

D. loss of business income while a building is closed for repairs

With single negatives think of them as a U turn. Since the () negative word occurred at the end of the question the correct answer will be an untrue statement. (the exception, one that is not like the others, the one that doesn’t belong). Remember the kids TV show Sesame Street’s “Which one is not like the others, which one just doesn’t belong” song? I know it’s childish but it works. Sesame Street can help you solve single negative and double negative questions.

“Which one is not like the others, which one just doesn’t belong.” Solving single negative question is basically the same thing

It was looking like this question’s answer would be in the form of a positive phrase (+) until the last word except () came into play. Except caused the questions direction to take a U turn. The last (, or +) word is the U turn with single negative questions always.

Please be sure to read the entire question twice if need be. The word except was the most important word to catch and was hidden in the end. With single negative questions () the last word wins.

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Extra expense insurance affords coverage for all of the following (+) if coverage is in force at time of loss except ()?

A. Costs of setting up business in an alternative temporary location, during the period of restoration

B. Business income including payroll when a business is inoperable after incurring a loss (Why? This is covered by business income not Extra Expense coverage).

C. The extra expenses a business incurs to continue a business while damage to the premises are being restored

D. None of the above

Under a standard boatowners policy. Which of the following liability coverage(s) is/are typically excluded ():

A. Vicarious liability

B. Flotilla liability

C. Medical liability

D. General liability

All of the following are part of (+) the standard businessowners policy (BOP), except (): A. Tenants improvements and betterments B. Business personal property coverage C. Professional liability coverage D. Business income coverage

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Double Negative Question Examples, None of the following statements () differentiates the perils of robbery and burglary in terms of coverage trigger except ()?

A. Requires taking property directly from a person

B. Robbery is the broadest form of crime coverage

C. Burglary requires physical signs of forcible entry or exit

D. May involve use of force to cause bodily injury or instill a threat of violence

(Hint a negative () + a () = a Positive (+). This is true in both basic mathematics and testing language. Since both negative words in this question ( None) and ( Except) cancel each other out you are looking for a positive phrase like “included” or in this case a “true” phrase to answer this question. C. Burglary requires physical signs of forcible entry or exit is the distinction and true phrase.

The coverage trigger between burglary and all other crime coverages is “forcible entry or exit.” As burglary by definition “must be evidenced by physical entry or exit into a closed premises.” This is a rather easy definition question. Easy only if you navigated through the double negative mine field correctly.

All of the following do not () describe a type of loss triggering a claim for monetary damages due to an insured unwillfully causing injury to another person or damage to another's property by a negligent act, except ()?

Remember a () + a () = a positive so you are looking for the term that matches the definition stated in this questions text.

A. Real property loss

B. Physical loss

C. Personal property loss

D. Liability loss

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Commercial property theft also called “fidelity coverage” is provided by none () of the following coverage forms except ()?

A. Commercial property form

B. Building and personal property coverage form

C. Commercial Crime Insurance

D. None of the above coverage forms afford coverage for theft

All of the following are not () covered by a Commercial General Liability policy except ()? A. Damage to “Your Work” B. Damage to “Your Product” C. Contractual Liability D. Premises operations All of the following are inland marine policy exclusions (), except ():

A. Mechanical Breakdown

B. Earth movement

C. Electrical breakdown

D. Wear and tear

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Triple Negative Question Examples The liquor liability exclusion contained in a Commercial General Liability (CGL) policy excludes coverage () for none of the following () scenarios except ()?

A. Serving alcohol at a company picnic

B. Buying a round of drinks for the sales staff at a company sponsored golf tournament

C. The insured being involved in the alcoholic beverage business

D. none of the above

Don’t worry about triple negative questions if they throw a few at you on exam day. Just keep using basic math to help. excludes coverage () for none of the following () These cancel each other out so now you are left with a single negative question except () and those are easy.

CGL policies afford coverage for alcohol being served at company parties or corporate events: as long as the insured is not directly involved in selling alcohol or being in the alcohol service, or distribution business. Therefore choice (C) represents the only exclusion and is the correct answer

All of the following are not () inland marine policy exclusions (), except ():


B. Earth movement


D. Wear and tear

All of the following are not () inland marine policy exclusions (), except ():

are not () + policy exclusions () = a + which is then negated by the third negative ( except () making this in the end just another basic “except” () question.

Do not guess on single, double or even triple negative questions or succumb to their trickery Use basic math to help you solve, single, or triple negatively phrased questions designed to confuse you. The key is to know which direction you are being asked to

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answer in the end, either or +. Use your scratch paper to keep track of phrases to add, subtract, or cross out. Figure out your end direction then simply choose the correct answer, it’s that easy.

Good news Honestly most double negatively phrased questions are easier contentwise than straight forward questions. The test writers only turn the phrasing into that of a single, double or triple negative in effort to toughen up what would otherwise be average to easy question.

All of the following are covered (+) under the unendorsed ISO building and personal property coverage form except ()? A. Light pole B. Gate C. Patio D. Signs All of the following are not () an additional coverage provided by an unendorsed HO3 policy except ()?

A. Tenant legal liability

B. Lawn, trees, shrubs and other plants

C. TRIA

D. Safe Burglary

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An agent’s appointment to an insurance company is terminated and the agent has no other appointments with any other insurance company at this time. Which of the following happens to the agent’s license automatically? A. The agent’s resident license remains in force until it’s term expires B. The agent’s resident license will be terminated and they will have to sign it over to the insurance commissioner C. The agent’s resident license becomes inactive D. The agents license will simply expire upon renewal

All of the following are ()not required of a California producing brokeragent before appointing a California insurance solicitor ()except?

A. Must be an MGA

B. Must hold a permanent license

C. Must submit notice of hiring to the DOI in 4 business days or less

D. Must possess a certificate of authority

It is proven that another person's negligent actions contributed to an injury What gives an insured the right to seek compensation? A. Coinsurance B. Tort law C. Waiver of subrogation D. Reinsurance

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Consequential loss is considered an indirect loss (as compared to losses from the direct damage). Direct damages would be covered under different types of insurance, such as property/casualty or fire insurance. All of the following are considered (+) a consequential loss except ()?

A. Loss of earnings

B. Damage to personal property

C. Extra expenses incurred while demolitioning a partially burned structure

D. Extra expense incurred to move a business to a temporary location

All of the following are true (+) of an Insurance Adjuster? A. Assists in settling claims on behalf of an insurance company

B. Typically an employee of an insurance company therefore does not need a license

C. Must be licensed D. Both A and B All of the following are true (+) of a Public Insurance Adjuster? A. Assists an insured in settling claims with an insurance company

B. Typically an employee of an insurance company therefore does not need a license

C. Must be licensed

D. Both A and C

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Which of the following are (+) exclusive licenses? A. Bail B. Title C. Mortgage Guarantee D. All of the above

Special lines Surplus lines brokers: A. Transact business only with (represent )nonadmitted insurers and must post a $50,000 Bond. B. Hold a valid surplus lines insurance license C. Transact business exclusively with foreign insurers D. Specialize in large commercial accounts only All of the following insurer settlement options under a personal auto policy are not available () except ()? A. Induce the insured to purchase a replacement auto from a wholesaler B. Recommend the insured first attempt to settle with the negligent operator’s insurance as to avoid subrogation. C. Return stolen property to the first named insured at the address shown on the policy declarations page D. Demand the insured repair their vehicle at a repair shop on the insurer’s preferred provider list.

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All of the following are not () a common policy condition for a commercial package policy except ()? A. Waiver of subrogation B. Why are you reading this C. Prorata clause D. Inspections and surveys

Which of the following is true (+) of an insurance agent?

A. Represents the company and sells insurance

B. Must be appointed and may have binding authority.

C. Cannot transact life or disability insurance.

D. All of the above

Shipowners may acquire coverage against vicarious liability claims due to the negligent operation of their vessel by their employee(s) which of the following coverage forms? A. Yacht owners policy B. Protection and indemnity insurance C. Ocean Marine coverage D. Longshoreman Indemnity act Which advisory organization(s) develop forms for the standard market? A. Acord Form processing service (AFPS) B. National Association of Insurers and Financial Advisors (NAIFA) C. Insurance Services Office (ISO) D. National Association of Insurance Commissioners (NAIC)

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Under the common policy conditions, who is authorized to make changes to a commercial policy?

A. The producer

B. The first named insured (with insurer's consent)

C. Any insured named on the policy

D. The insurance company

None of the following are true () regarding the Law of Large Numbers except ()? A. The larger the number of similar risks that are combined in a group, the more predictable future expected losses will be B. Applicable use of the Law of large Numbers is a characteristic of an ideally insurable risk C. Cannot be used to predict individual losses or profits

D. All of the above The Insurance Commissioner elect uses which of the following as a means to determine whether or not an insurer’s filed rate is excessive or unjustly discriminatory? A. Whether the proposed filed rate mathematically reflects the insurance company’s investment income B. The length of time passed since an insurer’s last full examination of its books and records by the office of the insurance commissioner C. If their rates are comparable to other insurer’s with the same business model D. In accordance with the guidelines set forth by the FDIC

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In comparing the personal property coverage of a dwelling policy to that of a standard ISO homeowners policy form, diduce which of the following is not () false ()?

A. Why are you reading this

B. Homeowners policy claims are settled on an actual cash value basis while dwelling policy claims are settled on a replacement cost basis

C. There is no appreciable coverage difference

D. Homeowners off premises coverage is 10% of the total property limit, while that of a dwelling policy is 100%

All of the following perils are not covered () on the basic form except () ?

A. Terrorism B. Riot or civil commotion C. Collapse D. Vandalism Which of the following statements best defines the standard commercial property policy “concurrent causation exclusion” and the effect it has on a potential claim settlement: A. Why are you reading this B. If a loss occurs during the 90 day Binder issuance period it is excluded C. If two or more perils happenin sequence to cause a loss, then only the damage caused by the first peril is covered D. If two or more perils happen at the same time to cause a loss, there is coverage for all of the damage if any of the perils are not specifically excluded

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Brian a landscape architect is brought into a suit claiming his design is solely responsible for the damage caused by improper draining at a claimant's property. What type of insurance would protect Brain For this type of mistake even if it is determined later that the suit is groundless? A. Professional liability B. Errors and Omissions insurance C. Why are you reading this D. Fidelity Bond

How does an insureds unendorsed California personal auto policy respond in the event an auto accident occurs in Florida a no fault state that requires personal injury protection (PIP)?

A. PIP coverage is provided but the limit moves to Florida’s state minimum

B. Coverage is excluded without the intestate travel endorsement

C. Coverage automatically is broadened to provide PIP

D. The insured must purchase PIP from a licensed Florida agent within three business days of the accident if at fault 10 days if not at fault.

The named nonowner coverage endorsement form adds which of the following coverage(s)? A. Liability, medical payments, and uninsured motorist B. Other than collision, vicarious liability, and medical payment C. Bodily injury, medical indemnity and other than collision D. Property damage only

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Ariana leaves her vehicle at an auto dealer's service center overnight to complete her scheduled maintenance. The following day a mechanic employed by the dealership makes a “Grande” mistake and is involved in an auto accident while test driving Ariana’s car. What coverage if any will Ariana’s personal auto provide for this claim?

A. The personal auto policy is primary

B. The personal auto policy is excess

C. Coverage is excluded under the personal auto policy

D. Why are you reading this

All of the following are not true () except () when comparing the per accident coverage limit difference(s) between auto policies with single limits vs. split limits?

A. The per accident single limit covers to all claims, while the split limit covers medical payments exclusively

B. The per accident single limit applies only to property damage, while the split limit applies to vicarious liability exclusively

C. The per accident single limit applies to property damage, while the split limit applies to bodily injury exclusively

D. There is no difference

All of the following are not considered () special damages except ()? A. Compensation for time away from work B. Compensation for a claimant's pain and suffering C. Compensation for a claimant's loss of hearing D. Compensation for a claimant's loss of limb

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All of the following are part of (+) the standard businessowners policy (BOP), except (): A. Tenants improvements and betterments B. Business personal property coverage C. Professional liability coverage D. Business income coverage Use this chart to help illustrate the different insurer Cancellation, Renewal and Nonrenewal notices as well as the advance “days” notice they require for Personal Auto, Homeowners and Commercial insurance questions.

Personal Auto Homeowners Commercial Cancellation for Nonpayment

10 days 10 days 10 days

Notice of NonRenewal

30 days 30 days 60 days

Notice of Renewal 20 days 30 days 30 days

Now for those of you that prefer the Question & Answer format please learn by viewing the following nine questions.

An insurer decides to nonrenew a commercial auto policy how many days written notice must they provide the insured?

A. 10

B. 20

C. 30

D. 60

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An insurer decides to renew a commercial auto policy how many days written notice must they provide the insured?

A. 10

B. 20

C. 30

D. 60

An insurer decides to nonrenew a personal auto policy how many days written notice must they provide the insured?

A. 10

B. 20

C. 30

D. 60

An insurer decides to renew a personal auto policy how many days written notice must they provide the insured?

A. 10

B. 20

C. 30

D. 60

An insurer decides to nonrenew a Homeowners policy how many days written notice must they provide the insured?

A. 10

B. 20

C. 30

D. 60

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An insurer decides to renew a Homeowner policy how many days written notice must they provide the insured?

A. 10

B. 20

C. 30

D. 60

An insurer must afford a personal auto policy owner _______ days written notice of cancellation for nonpayment of premium?

A. 10

B. 20

C. 30

D. 60

An insurer must afford a Homeowners policy owner _______ days written notice of cancellation for nonpayment of premium?

A. 10

B. 20

C. 30

D. 60

An insurer must afford a commercial policy owner _______ days written notice of cancellation for nonpayment of premium?

A. 10

B. 20

C. 30

D. 60

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Of the various types of cancellations which one occurs when the insurer keeps the earned, and returns the unearned premium?

A. Prorate/rata

B. Flat Rate

C. Rescind/Recission

D. Short Rate

Of the various types of cancellations which one occurs when the insurer keeps the earned,and returns the unearned minus a fee for admin charge or overhead expense?

A. Prorate/rata

B. Flat Rate


D. Short Rate

Of the various types of cancellations which one occurs when the insurer

voids the contract and returns all premiums?

A. Prorate/rata

B. Flat Rate


D. Both B and C

Flat Rate and Rescind/Recission mean the same thing: when the insurer

Voids the contract and returns all premiums as if the contract never existed

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An agent who redirects premium funds held in a fiduciary account to his or her personal account is guilty of? A. Fraud B. Theft C. Falsifying D. Perjury Regarding Fiduciary responsibility please note that the term Fiduciary refers to premiums held in trust. Any form of commingling or embezzling is a form of theft. Please also remember that premium refunds coming from the company must be returned within 25 days. While premium refunds coming from the agent of record must be returned within 15 days. None of the following are true () of an insurance broker except ()?

A. An Insurance Broker represents the client and secures coverage

B. Must post a $10,000 bond

C. Cannot bind coverage or transact life or disability insurance

D. All of the above

Standard commercial lines insurance policies contain Interline endorsements (such as cancellation notices or nonrenewal provisions). These apply or could apply to:

A. More than one coverage part of a package policy

B. Why are you reading this

C. To liability coverage only

D. Only to waivers of subrogation issued to certificate holders by endorsement

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All California admitted insurers are required to maintain an investigative unit to question which of the following? A. Possible nonactuarially based discrimination B. Unfair employment and hiring practices C. Possible fraudulent claims submitted by insureds D. All vicarious liability claims

Under a standard boatowners policy. Which of the following liability coverage(s) is/are typically excluded ()?



C. Medical liability

D. General liability

The vacancy permit endorsement covers which of the following perils?

A. Vandalism

B. Building glass breakage

C. Sprinkler leakage

D. All of the above

None of the following () are considered special damages except ()? A. Loss of hearing B. Mental anguish C. Lost wages D. Reassignment

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Insureds Lori and Daniel rent a convertible while vacationing in hawaii what coverage, if any, will respond to a hypothetical physical damage claim under their personal auto policy?

A. They need to purchase physical damage coverage at the car rental agency

B. Why are you reading this

C. No coverage available

D. The broadest coverage on any auto shown in the declarations of Daniel & Lori’s personal auto policy

All of the following are not () one of the principle rating factors under Proposition 103 permitted for personal auto policies except ()? A. Merit rating B. Safety driving record C. Credit report D. Using prior policy as a method of rate factoring Which of the following is the defining characteristic of a Fraternal Insurer?

A. Charitable

B. Nonparticipating policies

C. Owned by shareholders

D. Shareholders receive taxable dividend (when declared)

None of the following () are eligible for a Businessowners policy except ()?

A. An auto dealer B. A furniture store C. A casino D. A banking institution

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Which of the following is not listed () on a Commercial General Liability declarations page? A. Pollution liability limit B. General Aggregate Limit C. Rented to you sublimit D. Personal and advertising injury limit

None of the following () are forms of Professional liability insurance except ()?

A. Medical Malpractice

B. Errors and Omissions

C. Directors & officers and Employer Practices Liability

D. All of the above

Subrogation as an insurance term is summarized by which of the following statements? A. The insurance policy liability limits respond separately to each claimant B. The insurer’s right to recover payment from a responsible third party C. The insured’s right to receive PIP coverage at no extra charge while traveling across state lines D. The transfer of insurable interest in a policy to another party when a vehicle is sold Remember subrogation is basically substitution. It is the transference of an insured's claim rights of financial recovery, to a third party. Ex: an insured is rear ended. Their insurance company (insurer) settles the claim, even though the accident was proven not to be their insureds fault. After paying said claim, the nonfault driver’s insurer (insurance company) then asks their insured to sign a notice of subrogation that basically says: I have been paid (indemnified) for this claim (my loss) and I sign over my rights of subrogation (right to collect again) to my insurance company.

Insuratest 2015

This is done so that the nonfault representing insurer, who has paid out on said claim, may then be paid back through subrogation, by the atfault driver's insurer. By the insured (nonfault driver) signing over their claim rights after being indemnified by their insurer, the principle of indemnity is followed. For by signing over rights of subrogation after indemnification (being paid for a loss) prevents an insured from collecting twice on a claim. So in essence subrogation supports indemnity, the principal of insurance An insured submits a claim for stolen jewelry and signs the claim form. Later the claim is proven to be fraudulent. The insured may be guilty of_____? A. Attempted theft

B. Collusion

C. Perjury

D. An insurance related misdemeanor

All of the following statements regarding business owners policies is/are true (+) except ()? A. Insureds have the benefit of additional coverages that might otherwise be overlooked B. Combine coverage for special advantages C. Assembles the basic coverages required by a business owner in one bundle. D. All of the above _________________ are very specific as far as money in a claim settlement is concerned. Example: It is exactly known how much a car door costs to replace, including labor. A. Stated Values B. Specific Awards C. General Damages D. Special Damages

Insuratest 2015

Which of the following deals with lost wages or salary? A. Punitive Damages B. Specific Award C. General Damages D. Special Damage Nonspecific losses, with nonspecific claim settlements such as pain and suffering or mental anguish are characteristic of? A. Punitive Damages B. Specific Award C. General Damages D. Special Damage Awards using a monetary punishment to set an example to the industry? A. Punitive Damages B. Specific Award C. General Damages D. Special Damage Example: In 1992, 79yearold Stella Liebeck bought a cup of coffee at a McDonald’s drivethru in Albuquerque New Mexico and spilled it on her lap after opening it up to put cream and sugar in it. She sued McDonald’s and a jury awarded her nearly $3 million in punitive damages for the burns she suffered. Stella definitely got her groove back with that settlement. Ever notice now at the McDonalds drive through they ask if you want cream and sugar at time of order, so they may put it in for you. Risk management effectively eliminated the need for their customers to ever open their hot coffee cup lids, especially while driving.

Insuratest 2015

Which of the following items of personal property are covered by an unendorsed personal auto policy and if so up to what limit? A. Electronic items up to $500 B. Non commercial use electronic equipment up to $1500 C. All personal property left in vehicle owned by the first named insured up to $500 D. There is no coverage for personal property

The following are characteristics of a Stock Insurer (+)?

A. Nonparticipating policies

B. Owned by shareholders

C. Shareholders receive taxable dividend (when declared)

D. All of the above

Which of the following is the defining characteristic of a Reciprocal Insurer/Interinsurance Exchange?

A. Also known as participation policies

B. Owned by policyholders

C. Policyholders receive taxfree dividends (when declared)

D. Unincorporated/Attorneyinfact

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Lloyds of London is a marketplace with physical facilities where business is conducted by groups of Lloyd’s members known as ___________?

A. Captives

B. Wholesales

C. Syndicates

D. intermediaries

None of the following are true () of Mutual Insurers except ()?

A. Also known as participation policies

B. Owned by policyholders

C. Policyholders receive taxfree dividends (when declared)

D. All of the above

All of the following are inland marine policy exclusions (), except ():


B. Earth movement


D. Wear and tear

Insuratest 2015

A home’s foundation is damaged during an earthquake, minutes later a gas line ruptures causing an explosion. The home burns to the ground. Which coverage if any is afforded by the unendorsed HO3 policy form in force at the time of loss? A. There is no coverage for damage to the foundation directly caused by the earthquake, only for the damage caused by the explosion and subsequent fire B. There is no coverage for any loss directly caused by an earthquake in the unendorsed HO3 policy form C. The HO3 is a named peril policy form and does not cover earthquake or damages caused by explosion. D. The policy covers all of the damage since explosion is an insured peril

At what time during the sales process is a California fire and casualty agent required to inform a prospective insured of any conditions which may be precedent to coverage regarding a homeowners policy?

A. At quote

B. At binding

C. At application

D. At policy issuance

The insurer’s right to recover its claim settlement payment to their insured from a negligent third party is the definition of the following term: A. Subrogation B. Inherent claim rights C. Arbitration D. Reassignment

Insuratest 2015

What is the minimum discount awarded to California "good drivers" as a percentage for meeting the qualifications?

A. 10%

B. 15%

C. 20%

D. 25%

Interline endorsements such as notices of cancellation may pertain or could pertain:

A. To more than one coverage part of a package policy

B. Exclusively to ocean marine coverage

C. To general liability and advertising injury only

D. Only when required by a certificate holder

An armored vehicle transporting an insureds bank deposit is robbed at gunpoint. In order for the insureds loss to be covered what type of insurance would need to be in force at time of loss?

A. Safe burglary

B. Inland marine coverage form

C. Outside the premisestheft of money and securities

D. Robbery

Insuratest 2015

10 days prior to cancellation for nonpayment of premium a written notice is mailed to the insured by the insurer. Which of the following requirements regarding written notices by mail from an insurer to an insured is not required ()? A. Notice must be sent with return receipt required B. Notice must be mailed to the residence or principal place of business C. Postage must be prepaid D. Why are you reading this In anticipation of an upcoming vacancy period at a seasonal business location the vacancy permit endorsement is added to a building and personal property coverage form. The basic policy's vacancy conditions as an interline endorsement is/are: A. Waived during the policy period B. Waived only for designated perils during the permit period C. Waived only for general liability claims during the policy period D. Waived during the permit period but only if a security system is installed What is the primary coverage differential between umbrella and excess liability policies?

A. The umbrella has must follow form and be issued by the same character as the general liability policy

B. The umbrella covers physical damage losses only not general liability losses

C. An umbrella policy may include coverage for perils not covered by the underlying policy; subject to a self insured retention limit (SIR). While excess liability policies follow form and may offer monoline coverage.

D. The umbrella affords defense costs only if the insured wins the suit the excess liability does covers defense costs regardless

Insuratest 2015

In which of the following situations is offpremises coverage void under the business personal property coverage form? A. In a salesperson’s luggage B. While in a delivery truck C. At a convention center D. In a salesperson’s vehicle Which of the following policy forms affords an insured coverage from any loss except that of which arises from specifically excluded perils?

A. Specified cause of loss

B. Stated Value

C. Allrisk, Special Form, or open peril

D. Named Peril

The basic boat owner's policy form is similar to what other policy in terms of coverage?

A. The personal auto policy

B. A yacht owners policy

C. A dwelling policy

D. An inland marine floater policy

Please get up, walk around, come back in 1020 min to keep it fresh.

Insuratest 2015

Vito’s Pizzeria owner and first named insured Vito Corleone does not own the building his pizzeria operates out of. Any improvements and betterments he makes to the building he leases are covered under what section of his (BOP) business owners policy? A. Inland Marine B. Business personal property C. Rented to you sublimit D. “Forget about it” A loss ratio is calculated by which of the following formulas? A. Expenses divided by premiums B. Losses and expenses divided by premiums C. Losses divided by premiums D. None of the above An expense ratio is calculated by which of the following formulas? A. Expenses divided by premiums B. Losses and expenses divided by premiums C. Losses divided by premiums D. None of the above A combined ratio is calculated by which of the following formulas? A. Expenses divided by premiums B. Losses and expenses divided by premiums C. Losses divided by premiums D. None of the above

Insuratest 2015

Which of the following are reasons Insurer’s purchase reinsurance:

A. Unearned premium reserve reduction

B. To protect themselves from catastrophic losses, assisting in profit stabilization

C. Increases the insurers underwriting capacity

D. All of the above

Which if the following is true with regard to private passenger vehicle inspection requirements outlined in the California insurance code?

A. Requires a vehicle inspection only if both comprehensive and collision coverages are carried

B. The California insurance code requires a vehicle inspection for any vehicle with a gross weight exceeding 4,000 pounds

C. The California insurance code makes no mention of a vehicle inspection requirement

D. No vehicle inspection is required if coverage D is added at policy inception

What coverage if any would respond to an accident involving a named insured driving a company car who carries an unendorsed personal auto policy?

A. Coverage (B) Medical payments

B. The unendorsed policy form excludes this usage

C. Why are you reading this

D. Coverage (A) General Liability

Insuratest 2015

Claims for legal liability may stand on the basis of all of the following (+) except ()? A. Breach of contract B. Vicarious liability C. Tort law D. Negligence With regard to California admitted insurers actuarial methodologies, all of the following are not true () except ()? A. They may use race, color, religion, or national origin as a condition to apply higher rates as long as their means are actuarially sound B. They may not use race, color, religion, or national origin as a condition to apply higher rates C. They may use any actuarially sound method when rating policies as long as they can be statistically proven D. They may use any actuarially sound method when rating policies as long as they can be statistically proven and are filed with the department of insurance Which of the following statements best defines policy “assignment”: A. A transfer of legal rights under, or interest in, an insurance policy to another party. B. A transfer of legal rights under, or interest in, an insurance policy to only the first named insured C. The insurer’s right to collect damages from a third party only if a waiver of subrogation endorsement is in force D. The insured’s right to change insurance companies mid term without having to pay a new policy fee

Insuratest 2015

What effect does the building ordinance or law exclusion/limitation have on both commercial and homeowner’s property coverage policies?

A. It automatically voids replacement cost coverage for both commercial and residential structures built built before the year 1985

B. It excludes that part of the loss resulting from the enforcement of a building ordinance or law for commercial buildings and limits it’s allocated loss dollar by a percentage of total property coverage limit on homeowner’s policies.

C. It excludes that part of the loss resulting from the enforcement of a building ordinance or law or and limits it’s allocated loss dollar by a 5% of total liability coverage limit.

D. Does not include coverage to upgrade handicap access building code enforcement

While property insurance covers debris removal for a portion of property damaged by a covered peril, it doesn’t cover demolition expenses for an undamaged portion of a building that has to be removed. Which Ordinance or Law coverage part provides this coverage? A. Part A of Ordinance or Law provides this coverage. B. Part B of Ordinance or Law provides this coverage. C. Part C of Ordinance or Law provides this coverage. D. Part D of Ordinance or Law provides this coverage.

Which of the following statements differentiates the perils of robbery and burglary in terms of coverage trigger?

A. Requires taking property directly from a person

B. Robbery is the broadest form of crime coverage

C. Burglary requires physical signs of forcible entry or exit

D. May involve use of force to cause bodily injury or instill a threat of violence

Insuratest 2015

Coverage for which of the following is provided by coverage(s) A and/or B of the ISO commercial general liability (CGL) policy form?


B. Workers compensation statutory limit

C. Pollution Liability

D. Advertising injury

Which type of loss describes that of a business exposed to the death, injury or disability of employees?

A. Personal loss exposure

B. Personnel loss exposure

C. Fraternal loss

D. nolo contendere

An Ohio based companies only option available for the purchasing workers compensation insurance is through the Ohio Bureau of Workers Compensation. Which of the following statements is true of Ohio’s workers compensation:

A. Ohio has a competitive state fund

B. Ohio has a shared market fund

C. Ohio has a monopolistic state fund

D. Ohio has a guaranty fund

The act of an insurer making a false statement either written or oral with the intent to deceive to any examiner lawfully appointed to examine the insurer’s books and records is defined by which of the following? A. A barring act B. Concealment C. An unfair practice D. Fraud

Insuratest 2015

Which of the following is true of extra expenses under the business income coverage form?

A. Excluded B. Covered without limit during the period of restoration C. Payments are executed if the restoration period exceeds 6 months D. Covered up to 25% of the policy limit specified in the declarations As an insurance agent which endorsement would you recommend your insured add to their personal auto policy to obtain liability coverage for their allterrain vehicle (ATV)? A. Coverage is only available through the purchase of a recreational vehicle stand alone policy B. ATV Flotilla liability C. Miscellaneous type vehicle endorsement D. Recreational/seasonal vehicle endorsement

What legal recourse in action, in terms of claim settlement allotment does an injured party to a contract have if the other party is found to be in breach of said contract?

A. Claim rights only if a waiver of subrogation is in force prior to execution of said contract

B. Damages for breach, reasonable attorney fees and costs

C. Damages for breach, reasonable attorney fees and costs less the self insured retention limit

D. Damages for breach exclusively

Insuratest 2015

Inherently possessing the possibility of financial loss resulting from ownership of property is known as?

A. The principal of insurance

B. Forecasting

C. Insurable interest

D. Adverse selection

(All of the following (+) are representative of areas market regulation covers, except ()? Following the rule you are seeking a negatively phrased outcome (The “exception” in this case the one which does not belong : A. Employee training B. Monitoring and preserving the financial solvency of insurance companies C. Regulating and standardizing insurance policies and products D. Controlling market conduct and preventing unfair trade practices Protection and Indemnity insurance, covers all of the following (+) occurrences except ()? A. Loss of life, injury and illness of crew, passengers and other persons B. Damage to docks, buoys and other fixed and floating objects C. Mutiny and misconduct by crew D. The cost of reasonable measures an insured must take to prevent or mitigate damage at time of loss

Insuratest 2015

Which of the following occurrences would be covered if an insured purchases a scheduled personal property endorsement (i.e.: personal articles floater) from his agent to append to their already in force previously unendorsed homeowners policy form? A. Wear and tear, gradual deterioration, latent defect, insects or vermin

B. Inherent vice

C. Breakage of glassware caused by an earthquake

D. Personal property on display at a county fair

Coverage for transportation expenses in an unendorsed personal auto policy form is provided in the event __________________ losses occur and coverage is in force at time of loss? A. Theft losses only B. Other than collision losses only C. Collision and otherthancollision losses D. Transportation expenses are not available in the unendorsed policy form An implied warranty in an insurance contract qualifies as which of the following?

A. An representation

B. An Oath

C. Res Ispa Loquitur (It speaks for itself)

D. A Jurat

Remember a representation is the best of one’s knowledge or belief/promise.

Insuratest 2015

None of the following () are characteristics of a Representation except ()?

A. Representations may be either oral or written.

B. A Representation may qualify as an implied warranty.

C. A representation may be changed before the policy goes into effect and agrees with its assertions or stipulations

D. All of the above

Which of the following is/are true of a/an Estoppel?

A. An Estoppel essentially removes a real or potential liability for the other party in the agreement.

B. In a settlement between two parties, one party might, by means of an Estoppel, relinquish its right to pursue any further legal action once the settlement is finalized.

C. The Estoppel can either be in written form or some form of action. An Estoppel essentially removes a real or potential liability for the other party in the agreement.

D. A legal doctrine restraining a party from contradicting its own previous actions if those actions have been reasonably relied on by another party.

Example: An insurer that has habitually accepted late premium payments from an insured may be estopped from later canceling said policy on the grounds of nonpayment because the insured has been reasonably led to believe that late payments are acceptable.

Which one of the following is characteristic of the the loss prevention method “Risk Avoidance”? A. A homeowner decides to buy a trampoline B. A homeowner installs carbon monoxide detectors C. A new homeowner decides to fill in the backyard swimming pool D. A homeowner purchases flood insurance

Insuratest 2015

What is the coverage limit specific for tapes, records, disks, and other media in the “Coverage for excess sound producing equipment, audio, visual and data electronic equipment, and tapes, records, discs and other media endorsement” is found in a personal auto policy (PAP)?

A. $500

B. $200

C. Coverage is

D. $1,000

Insuratest 2015

Coverage in the inland marine policy form contains all of the following perils as exclusions () , except ()? A. Damage from insects, vermin or rust B. Wear and tear C. Earth movement D. Inherent vice

Which of the following is/are true of a waiver?

A. A waiver essentially removes a real or potential liability for the other party in the agreement.

B. In a settlement between two parties, one party might, by means of a waiver, relinquish its right to pursue any further legal action once the settlement is finalized.

C. The waiver can either be in written form or some form of action. A waiver essentially removes a real or potential liability for the other party in the agreement.

D. All of the above

At the most basic level a Waiver effectively gives up a right All of the following (+) will influence an entity's ability to hold a license except ()? A. Resignation by or termination of a key employee B. Cessation of a copartnership C. Cessation of an LLC D. Cessation of an association

Insuratest 2015

Which of the following best defines a claim loss reserve as it relates to the insurer? A. The total incurred amount less the total paid amount B. The total paid amount less the total paid amount C. An estimate of the value of a claim or group of claims not yet paid D. Losses in excess of policy limits less self insured retention fee Which of the following defines a case reserve as it relates to the insurer? A. an estimate of the amount for which a particular claim will ultimately be settled or adjusted or reconciled B. The total incurred amount less the total paid amount C. The total paid amount less the total paid amount D. Losses in excess of policy limits less self insured retention fee The miscellaneous type vehicle endorsement when added to a personal auto policy affords an insured which of the following? A. Liability and Medical Payments coverage exclusively B. Physical damage coverage exclusively C. Passenger Liability exclusively D. All coverage under the personal auto policy

Insuratest 2015

None () of the following define Market Conduct Regulation except ()? A. Examiners from the Market Conduct Regulation sector physically audit insurance carriers only to review their business practices as they relate to licensing, claims, tax payments, rates and form approval, advertising and sales aids, underwriting and rating, policyholder service, and complaint handling

B. Examiners from the Market Conduct Regulation sector physically audit insurance agencies, insurance companies, etc., to review their business practices as they relate to licensing, claims, tax payments, rates and form approval, advertising and sales aids, underwriting and rating, policyholder service, and complaint handling.

C. Examiners from the Market Conduct Regulation sector physically audit nonadmitted insurance companies exclusively, to review their business practices as they relate to licensing, claims, tax payments, rates and form approval, advertising and sales aids, underwriting and rating, policyholder service, and complaint handling


Which of the following best defines “liberalization clause” and is accurate in terms of it’s sectional placement in an insurance policy?

A. In umbrella liability insurance, a clause specifying that coverage will be as broad as that provided by the primary liability policies, without additional premium, found in the policies declarations section. (I.E. policy follows form)

B. In umbrella liability insurance, a clause specifying that coverage will be as broad as that provided by the primary liability policies, without additional premium, found in the policies insuring agreement section. (I.E. policy follows form)

C. In umbrella liability insurance, a clause specifying that coverage will be as broad as that provided by the primary liability policies, without additional premium, found in the policies conditions section. (I.E. policy follows form)


Insuratest 2015

How far in advance must an insurer provide written notice to an insured before it may legally cancel for nonpayment of premium? A. 4 days B. 10 days C. 25 days D. 30 days

Which of the following is true of an agent who possesses a valid inactive California insurance license?

A. The agent may review quotes with a prospect but does not have binding authority

B. The agent may not transact insurance as there is no notice of appointment on file with the department of insurance but may keep their license inactive if their licensing fees are paid and all continuing education requirements are met.

C. Why are you reading this


Jeffrey lives in San Francisco by himself, takes public transportation to his job and does not own a car. He does however frequently drive his girlfriend Joy’s car. Which of the following policies should Jeffrey purchase to protect himself legally and how would Joy’s policy respond in the event of an occurrence? A. Named nonowned coverage policy. Joy’s policy would be secondary Jeffrey’s would be primary B. Named nonowned coverage policy. Joy’s liability policy would be primary Jeffrey’s would be secondary C. Driver other car endorsement. Joy’s policy would be secondary Jeffrey’s would be primary D. Miscellaneous type vehicle endorsement. Joy’s policy would be secondary Jeffrey’s would be primary

Insuratest 2015

An endorsement to an HO policy form that provides coverage for boats one owns, rents or borrows is defined as which of the following? A. Watercraft endorsement B. Miscellaneous type vehicle endorsement C. Recreational vehicle endorsement D. Flotilla liability endorsement Which of the following HO policy forms offers open peril coverage (A Structure Coverage) for an insured's home?

A. HO3

B. HO4

C. HO6

D. HO8

All of the following do not () describe a type of loss triggering a claim for monetary damages due to an insured unwillfully causing injury to another person or damage to another's property by a negligent act except ()? Remember a () + a () = a positive so you are looking for the term that matches the definition stated in this questions text.

A. Real property loss

B. Physical loss

C. Personal property loss

D. Liability loss

Insuratest 2015

Which of the following are required of an insured after suffering a collision loss regardless of fault per a personal auto policies conditions section? A. Make no attempt to protect the insured property from further loss B. Allow the insurer to inspect the damaged property before it is repaired C. Notify the police if damages are in excess of $500 D. Go to the repair shop the claims adjuster recommends Similar to aircraft and boatowner’s policies which coverages are typically provided in a boatowners policy? A. Flotilla liability B. Inland Marine, hull, and protection & indemnity C. Physical damage, liability, and medical payments to driver/operator and passengers D. Professional liability, flotilla liability and medical payments to driver/operator and passengers Although different in design in terms of coverage what is similar between a California HO2, HO4, and HO6 policy? A. Cause of loss coverage A form perils B. Coverage C policy limits C. Cause of loss coverage C form perils D. None of the above

Insuratest 2015

Commercial property theft also called “fidelity coverage” is provided by none () of the following coverage forms except ()?

A. Commercial property form

B. Building and personal property coverage form

C. Commercial Crime Insurance

D. None of the above coverage forms afford coverage for theft

All of the following are not () covered by a Commercial General Liability policy except ()? A. Damage to “Your Work” B. Damage to “Your Product” C. Contractual Liability D. Premises operations Extra expense insurance affords coverage for all of the following (+) if coverage is in force at time of loss except ()?

A. Costs of setting up business in an alternative temporary location, during the period of restoration

B. Business income including payroll when a business is inoperable after incurring a loss (Why? This is covered by business income not Extra Expense coverage).

C. The extra expenses a business incurs to continue a business while damage to the premises are being restored


Insuratest 2015

Which of the following perils are covered under the ISO business income coverage form, choose the best answer? A. Those recorded on the declarations page B. Rental income C. Business Income D. Ordinary Payroll California Dreamin landscaping service owner Tom has the choice to purchase his companies workers compensation from a variety of different insurers presented by his insurance broker at time of policy renewal. He lives in a state which has _________________? A. A statutory state insurance fund B. A competitive state insurance fund C. A monopolistic state insurance fund D. A varietal insurance fund Which of the following coverages if any come standard with a DP3 policy that are not part of a DP1 policy form?

A. Fair rental value

B. Personal property

C. appurtenant structures

D. Collapse

Insuratest 2015

To terminate a license that is in the possession of an employer which of the following must occur? A. The employer need only furnish a notice of employment, automatically terminating the licensees license. B. The licensee must provide written notice of intent to the insurance commissioner C. The licensee must give written notice to the employer who must send written notice to terminate licensee’s license no later than 10 business days following termination of employment. D. The license cannot be terminated prior to the expiration date, it becomes inactive unless the licensee is charged with an insurance related misdemeanor or is convicted of a felony. To terminate a licensee’s license that is in the possession of a licensee which of the following must occur?

A. Nothing, the licensee need only wait until the license expires for non payment of licensing fees

B. Relinquish all appointments and return books and records to the commissioners office

C. Deliver the physical document along with notice of relinquishment to the Commissioner


Which of the following, if any, will cover a loss that occurs during the policy period but is discovered 75 days after the expiration date of a claimsmade commercial general liability policy form. A. Inland marine permit endorsement B. Supplemental extended reporting period endorsement C. The loss will not be covered because it was not reported during the policy period D. Value reporting form endorsement

Insuratest 2015

How would an ISO commercial building and business personal property coverage form, respond in the event a vandalism loss occurs and adjusters determine the building has been vacant in excess of 60 straight days at time of loss?

A. The loss is covered 90 consecutive days is the exclusion coverage trigger

B. The adjusted loss payment will incur a coinsurance penalty less the deductible

C. The adjusted loss payment will incur a coinsurance penalty less the deductible

D. The loss is excluded 60 consecutive days is the exclusion coverage trigger

How would an ISO commercial building and business personal property coverage form, respond in the event a property loss occurs and adjusters determine the building has been vacant in excess of 60 straight days at time of loss?

A. The loss is covered 90 consecutive days is the exclusion coverage trigger

B. The adjusted loss payment will incur a coinsurance penalty less the deductible

C. The adjusted loss payment will incur a coinsurance penalty less the deductible

D. The adjusted amount of property loss will be reduced by 15%

What is the main purpose of tort law as it pertains to insurance? A. To properly subrogate insurance claims made B. To protect an insured from fraudulent suits C. To prove negligence and determine responsibility for damages D. To increase the capacity for legal liability claims

Insuratest 2015

Which of the following statements regarding building glass coverage is accurate with regard to the 2000 ISO editions of the basic, broad, and special causes of loss forms? A. Both the basic and broad causes of loss forms provide full coverage for building glass breakage due to vandalism in the same manner and to the same extent as damage to other types of covered property

B. Both the broad and special causes of loss forms provide full coverage for building glass breakage due to vandalism in the same manner and to the same extent as damage to other types of covered property

C. There is no coverage for building glass breakage due to acts of vandalism unless the vandalism and malicious mischief endorsement is appended to the policy

D. There is no coverage for building glass breakage due to acts of vandalism available in either the basic, broad and special forms.

All of the following statements reflect an insurer's use of the inspections and surveys condition found in a commercial package policy except (): A. Recommend changes to mitigate future losses B. Guarantee safety regulation conformity C. Rate selection D. Make a decision on insurability The cost to replace an insured's damaged property, less depreciation as a means of indemnification is the formula for?

A. Stated value

B. Replacement cost value

C. Actual cash value

D. Appraised value

Insuratest 2015

An insured submits a fraudulent claim for a workplace injury. Following an adjusters investigation, with the aid of worksite camera evidence it is determined the injury never occurred “at work”. Paid to date on this claim are the following: Loss of wages $35,000, Chiropractic visits $10,000, physical therapy $15,000. What is the total fine imposed on the insured for fraudulently submitting a false claim to the insurer with the intent to deceive? Remember, payout is 2 X’s the $ amount of the fraudulent claim submitted or $150,000 whichever is greater

A. $60,000

B. $100,000

C. $120,000

D. $150,000

All of the following statements regarding CAARP coverage are untrue () except ()?

A. The minimum liability limits for CAARP policies are $10,000/$20,000/$3,000

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

C. Only California good drivers qualify for CAARP coverage

D. Drivers requiring SR22 filings are not eligible for CAARP coverage

According to the California insurance code no insurer’s rate filing may remain in effect if it is considered to be any of the following, except ():

A. Having impartiality

B. Possessing Inequitability

C. Prejudicial in nature

D. Actuarially insufficient

Insuratest 2015

Which of the following best defines “time element ” loss coverage and what are the two most common coverage form types?

A. How long it takes to repair or replace the damaged property: Business interruption and third party indemnity

B. How long it takes to repair or replace the damaged property: Seasonal indemnity and value reporting.

C. How long it takes to repair or replace the damaged property: Business interruption and Extra Expense


None of the following statements () exemplify the rationale/purpose behind a commercial package policy inspections and surveys by an insurer except ()? A. To correct any OSHA violations B. To guarantee no losses will occur C. To determine the rate to be charged D. To justify a premium increase upon renewal

The California low cost auto insurance program’s CLCA statutory coverage limits for bodily injury and property damage for individuals with good driving records that meet the program’s low household income criteria are?

A. $10,000/$20,000/$3,000

B. $10,000/$20,000/$5,000

C. $15,000/$30,000/$5,000


Insuratest 2015

_____________ damages provide a claimant with the monetary amount necessary to properly indemnify them, restoring them to the same financial condition that existed prior to suffering a loss and nothing more while ____________ damages are designed to punish the negligent party causing said loss? A. Punitive, General B. Compensatory, Punitive C. Special, General D. General, Special Damages awarded a personal injury claimant in California fall into two basic categories ______________ (also known as economic damages) and ______________ (also known as noneconomic damages). Both types of damages are known as ____________ damages or actual damages? A. Special, General, Compensatory B. Special, General, Punitive C. General, Special, Compensatory D. General, Special, Punitive A/an _________ performs certain functions normally handled exclusively by insurers. Responsibilities include binding coverage, underwriting, pricing as well as appointing agents. They may also settle claims?

A. Underwriter

B. Managing director

C. Agency principal

D. MGA (Managing General Agent)

Insuratest 2015

______________ Is defined as a person (individual or corporation) who negotiates and binds ceding reinsurance contracts on behalf of an insurer?

A. A credit insurance broker

B. MGA (managing general agent)

C. Insurance agency principal

D. An TPA (Third party administrator)

Motor carriers of goods are responsible for the cargo in their care custody and control up to a point. The extent or degree of that responsibility is established by a written contract or through a _____________. While ______________ limits a common carrier's liability subject to a dollar limitation on the value of the cargo or the dollar amount of any potential loss?

A. Cargo Policy: inland marine policies

B. Bill of lading: Release Bill of lading

C. Value reporting form: Indemnity agreement


A personal auto policy conditions “Your Duties After Loss” section states an insured must notify the police in the event of the following occurrences? A. Loss caused by theft: Hit and run accidents B. Loss caused by theft: Accidents in excess of $750 in property damage C. Loss caused by theft D. Only need to notify the insurance carrier or agent

Insuratest 2015

What coverage is/are available under the “extended nonowned” coverage endorsement when added to a personal auto policy to protect an insured who is furnished with a company car they drive off the clock for personal use as well? A. Coverage’s (A) Liability, (D) physical damage B. Coverages (A) Liability medical payments C. Coverage’s (A) Liability, (B) medical payments, (C) uninsured motorist D. Liability only Which of the following peril exclusions contained in the special form homeowner’s policy contract excludes coverage for mudflow? A. Flood

B. Earthquake

C. Landslide

D. Subsidence

A representation made by an insured during the application process may be withdrawn only__________________?

A. any time within the 90 day binder period

B. prior to insurance contract issuance

C. after the effective date

D. before a claim occurs

__________ policies are a blend of__________ and __________ coverage in one plan and afford property coverage to farm equipment?

A. Transit / standard / substandard

B. Truckers / inland marine / transit

C. Farm / residential / commercial

D. Inland marine / residential / commercial

Insuratest 2015

Which of the following coverages if in force at time of loss would respond to an insured's car being damaged by a hail storm?

A. Hail Coverage endorsement

B. Collision coverage (D)

C. Comprehensive aka other than collision coverage (D)

D. Miscellaneous type vehicle endorsement

An insured may not purchase a homeowner’s policy form or must have their current homeowner’s policy form rewritten to a dwelling form for none () of the following reasons except ()?

A. Their home is for sale and listed on the MLS

B. Their in laws move in to assist with childcare

C. Their home is being renovated

D. The owner no longer resides in the dwelling as it is rented to others

In addition to third party bodily injury and property damage coverage afforded by coverage (A) all of the following (+) are covered in addition except ()?

A. Loss of wages if required to attend a hearing at the third party’s insurers request

B. The cost to repair the third parties vehicle up to the in force coverage limit

C. Prejudgment interest supplementary payments


() remember the last word wins

Insuratest 2015

A standard fire policy affords coverage (A) Dwelling and coverage (B) Other/Appurtenant structures. While a business owners policy covers (A)____________ and ___________ which includes ____________?

A. Building / Business Personal Property / Tenants improvements and betterments

B. Building and Personal Property of Others / Care Custody and Control

C. Rental agreement / Business Personal Property / Extra Expense coverage


_______________ is something that has a tendency to selfdestruct and is not covered (i.e. fruit may spoil during shipment)?

A. Inherent Vice

B. Jettison

C. Barratry


___________ is to dump cargo overboard in attempts to save a ship from going under while __________ is/are illegal acts committed by the captain or crew without the ship owner’s knowledge?

A. Barratry / Jettison B. Jettison / Barraty C. Barratry / Embezzlement D. Jettison / Embezzlement

Insuratest 2015

Which of the following coverage is afforded (+) an insured who purchases a DP3 policy that would otherwise not be covered with the purchase of a DP1?

A. Sprinkler leakage

B. Collapse

C. Additional living expenses

D. All of the above

An insured elects to choose a $500 other than collision deductible and a $1,000 collision deductible to cover his vehicle for physical damage. He is involved in an accident in which his vehicle suffers an “upset” overturning on highway 17 during a rain storm. The vehicle suffers $8,000 in total damage. How much will the insurer pay for the loss?

A. $7,500

B. $7,000

C. $500

D. $1,000

An insured elects to choose a $500 other than collision deductible and a $1,000 collision deductible to cover his vehicle. He is involved in an accident in which his vehicle suffers an “upset” overturning on highway 17. The vehicle suffers $8,000 in total damage. How much will the insured pay for the loss?

A. $7,500

B. $7,000

C. $500

D. $1,000

Insuratest 2015

Openperil(cause of loss) also referred to as special form policies protect an insured against losses arising from?

A. Perils contained in the exclusions section

B. Perils involving open vacant land

C. All perils, except for those which are specifically excluded (Typically Earthquake and Flood)

D. Perils specifically named in the policy


Which of the following loss settlement options best describes an option the insurer may use to indemnity their insureds for property losses based on what the property in question could have been sold for at the time of loss?

A. Actual cash value

B. Stated value

C. Market value

D. Replacement value

The “examination of commercial books and records” condition found in a commercial policy states the insurance company possesses the inherent right to audit an insured's books and records as they relate to their policy during the policy period or any time within three years after the policy periods end. None of the following reasons () are valid in terms of purpose to exercise this condition except ()? A. To ensure the insureds business practice’s are not unethical B. To validate the proper amount of premium is charged for the risk C. To ensure OSHA regulations are not being violated D. To ensure no material warrants were violated post contract binding

Insuratest 2015

___________ coverage is designed to cover property in transit over land, certain types of movable property (whether or not ever moved) as well as all risk coverage for endorsed personal articles such as a wedding rings and precious medallions?

A. Ocean marine


C. Inland marine

D. Miscellaneous cargo in transit coverage

An insurance policy may not be transferred to another without:

A. Written consent of the agent

B. Written consent of the insurer

C. Oral consent of the agent

D. Oral consent of the insurer

The “Mexico coverage endorsement” will afford a California insured temporary automobile coverage while visiting Mexico; barring they are in Mexico for no longer than a maximum of ________ days or less?

A. 7

B. 10

C. 14 days or less

D. 25 days or less

Insuratest 2015

A loss sustained policy form will pay for losses which occurred_________ the policy period yet are ___________ up to one year after policy _________.

A. during, discovered, renewal

B. prior to, discovered, renewal

C. during, discovered, termination

D. prior to, discovered, termination

Why would an insured Dry cleaning business owner/operator need an inland marine policy form to cover his clients garments in his possession while being loaded into owned delivery vans on premises for scheduled delivery?

A. Clients garments in his care custody and control are only covered in the insureds building location or within 250 ft. from the insured premises

B. Clients garments in his care custody and control are only covered in the insureds building location or within 100 ft. from the insured premises

C. An insured dry cleaner will need only pollution liability inland marine insurance is covered automatically by this policy form

D. Nne of the above

What two subcoverage lines are listed on a Commercial General liability policies declarations page (D.I.C.E)?

A. Premises and operations and Products and completed operations

B. Rented to you sub limit and professional liability coverage

C. Medical payments to others and rented to you sub limit

D. Products and completed operations and Medical payments to others

Insuratest 2015

Which of the following best describes Premises and operations one of the subcoverages on a Commercial General liability policies declarations page (D.I.C.E)?

A. Covers damage caused by “your work” exclusively

B. Covers losses at the location of the business

C. Cover losses that occur away from the business


Which of the following best describes Products Completed operations one of the subcoverages on a Commercial General liability policies declarations page (D.I.C.E)?

A. Cover losses that occur away from the business

B. Covers losses at the location of the business

C. Covers damage caused by “your work” exclusively


Which of the following is/are not covered () by a Commercial General liability policy?

A. Aircrafts

B. Alcoholic Business

C. Host liquor liability

D. Both A and B

Insuratest 2015

Which of the following is/are (+) covered by a Commercial General liability policy?

A. Aircrafts

B. Alcoholic Business

C. Host liquor liability

D. Professional liability

Truckers/motor carrier’s coverage minimum standard liability limits are?

A. $ 750,000

B. $ 1,000,000

C. $ 3,000,000

D. $ 5,000,000

Truckers/motor carrier’s coverage minimum certain hazardous materials liability limits are?

A. $ 750,000

B. $ 1,000,000

C. $ 3,000,000

D. $ 5,000,000

Insuratest 2015

Truckers/motor carrier’s coverage minimum explosive materials liability limits are?

A. $ 750,000

B. $ 1,000,000

C. $ 3,000,000

D. $ 5,000,000

None of the following () coverages represent the principal difference between an HO3 and an HO5 policy except ()?

A. Coverage A and B causes of loss (perils)

B. Coverage C policy limits

C. Coverage C causes of loss (perils)

D. Coverage D policy limits

None of the following () coverages will protect physicians, surgeons, and dentists for their professional activities except ()?

A. Commercial general liability

B. Medical Malpractice coverage

C. Professional liability

D. Errors and omissions coverage

Which of the following terms names the process through which a mutual insurer becomes a stock insurer sometimes called stocking or privatization?

A. Mutualization

B. Reorganization

C. Stock Split

D. Demutualization

Insuratest 2015

The “Mexico coverage endorsement” will afford a California insured temporary automobile coverage while visiting Mexico; barring they are in Mexico for no longer than a maximum of 10 days or less and do not drive more than ________ miles past the Mexico/U.S. border?

A. 25

B. 50

C. 75

D. 100

An agent submits an application to an insurer he is not yet appointed with on behalf of an insured. The insurer accepts the application and issues the policy. What must the insurer now provide the insurance commissioner and in what time frame?

A. An agent by no means may submit an application to a carrier not yet appointed with

B. Send to the Insurance Commissioner a written notice of agent’s appointment within 10 days of receipt of said application

C. Send to the Insurance Commissioner a written notice of agent’s appointment within 14 days of receipt of said application

D. Send to the Insurance Commissioner a written notice of agent’s appointment within 30 days of receipt of said application

Gurevich and Batstone agency represents Infinity Insurance Corporation. They may “express” the relationship between the two entities in all of the following (+) ways except ()?

A. Gurevich and Batstone agency underwriting for Infinity Insurance Corporation

B. Gurevich and Batstone agency proudly representing Infinity Insurance Corporation

C. Gurevich and Batstone agency dedicated sales associates for Infinity Insurance Corporation


Insuratest 2015

Common policy conditions (D.I.C.E) include none of the following (), except ()?

A. Cancellation provisions/notices and who may make policy changes B. Examination of the insureds books and records and Insurer inspections and surveys C. Premiums charged for risk transference (insurance) as well as transfer of rights/assignment D. All of the above Which of the following perday transportation expense i.e. rental car coverage limits are afforded an insured who has an unendorsed personal auto policy in force at time of loss? A. $20 B. $25 C. $35 D. None Of an MGA (Managing General Agent) all of the following are true (+) except ()?

A. Has the power to appoint, supervise and terminate agentbroker appointment contracts

B. Has the express capability to either accept or decline risks based on actuarial principles

C. Possesses a valid California fire and casualty agentbroker’s license

D. May not assist with the claims handling process

Insuratest 2015

Part 1 of a Workers Compensation Policy protects against statutory claims and it’s benefits include (+)?

A. Medical with no time limit and no dollar limit as well as rehabilitation benefits

B. Disability Income at 66 ⅔% of a worker’s salary

C. Death benefits in California: lump sum of up to $5,000 and income to the surviving spouse

D. All of the above

Part 2 of a Worker’s Compensation Policy protects against Common Law Claims and it’s benefits include (+)?

A. Covers people with claims outside the scope of workers compensation part 1, with an unlimited lawsuit potential

B. Subsequent/Second Injury Fund

C. Pays the increase in compensation from a previous injury and or a secondary or subsequent injury

D. All of the above

Of the following loss exposures which one encompasses losses that of which may occur on an insureds land or in“real property” built on said land?

A. Liability loss exposure

B. Personnel loss exposure

C. Farm liability

D. Real property liability endorsement

Insuratest 2015

OK here comes three sneaky questions…

California driver Xavier is involved in a parking lot accident with Yoenis. Xavier’s vehicle suffers $6,000 in damage but adjusters determine that Xavier is 50% responsible for the accident. Xavier has a $1,000 collision and a $500 other than collision deductible How much would Xavier receive under comparative negligence rules?

A. $ 0

B. $ 2,000

C. $ 4,500

D. $ 5,000

California driver Xavier is involved in a parking lot accident with Yoenis. Xavier’s vehicle suffers $6,000 in damage but adjusters determine that Xavier is 49% responsible for the accident. Xavier has a $1,000 collision and a $500 other than collision deductible How much would Xavier receive under contributory negligence rules?

A. $ 0

B. $ 2,000

C. $ 4,500

D. $ 5,000

California driver Xavier is involved in a parking lot accident with Yoenis. Xavier’s vehicle suffers $6,000 in damage but adjusters determine that Xavier is 51% responsible for the accident. Xavier has a $1,000 collision and a $500 other than collision deductible How much would Xavier receive under contributory negligence rules?

A. $ 0

B. $ 2,000

C. $ 4,500

D. $ 5,000

Insuratest 2015

A flatbed truck with a gross vehicle weight of 9,500 lbs used to haul hay on Schweig ranch may be eligible for a personal policy because it is used in the business of:

A. Commercial transport

B. Hauling cargo for a fee

C. Farming or ranching

D. Hauling agricultural goods for a fee

Which of the following is true (+) of a Surplus lines broker?

A. An Surplus lines broker represents nonadmitted companies

B. Must post a $50,000 bond

C. Must be appointed and may have binding authority.

D. Both A and B

All of the following statements regarding the term “concealment” with respects to an insured's application are true (+) except ()?

A. Concealment of material relevant to the formulation of a contract once discovered are grounds for automatic declination by an insurer

B. Concealment does not occur if the insured was not asked about a particular subject. i.e. no inquiry was made as to the fact that their building is located next to an explosives factory

C. Concealment may be both intentional unintentional


Remember concealment is the intentional withholding of material information by an insured during the formulation of a contract. Although concealment is relevant to property and casualty insurance, it is most often associated with Life insurance contracts. If misrepresentation is discovered at any time during the policy period it may give the insurer grounds to rescind/flat rate cancel a policy as though it never existed.

Insuratest 2015

Example: an insured conceals the fact that he is a part time skydiving instructor on weekends and dies in a skydiving accident six months into a life insurance policy contract. The insurance company would most likely rescind the life insurance policy purchased and return the premiums paid to the insured's beneficiary and not pay the death benefit on the grounds of concealment.

An insured owns a commercial warehouse building insured by an unendorsed commercial package policy. The building was vacant for a period of 75 consecutive days before a loss occurred. The policy will cover a property loss if caused by all of the perils listed below except ():

A. Vandalism and plate glass breakage

B. Fire

C. Windstorm

D. Lightning

Which of the following types of in force policies will pay for either a bodily injury or property damage loss that occurs, or is discovered during the policy period?

A. Pollution liability policy

B. Auto liability policy

C. Claims made commercial liability policy

D. Occurrence general liability policy

What is the cutoff time period regarding claims submitted by an insured during the policy period under the unendorsed claimsmade commercial general liability policy coverage form?

A. 30 days

B. 60 days

C. 90 days

D. 6 months

Insuratest 2015

An insured borrows his neighbors truck to pick up a Christmas Tree how do the insureds and neighbors policies respond in the event an auto accident takes place?

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

B. The neighbor's policy is secondary and the driver's policy is primary. Primary coverage follows the driver

C. The neighbor's policy is primary and the driver's policy is excess. Primary coverage follows the car

D. Not enough information regarding accident and or proof of negligence

The following loss descriptions are all indicative of "ideally insurable loss exposure," except ():

A. Losses that are accidental

B. Losses that are definite and measurable

C. Large number of exposure units

D. Losses that are catastrophic

Vacancy conditions under a basic commercial property policy are waived for specified perils during the vacancy permit period barring the ___________ is added to a building and personal property coverage form at time of loss.

A. Special form perils endorsement

B. Extended form perils endorsement

C. Vacancy permit endorsement

D. Vandalism acts indemnity clause

Insuratest 2015

The commercial building and personal property coverage affords coverage for “your business personal property.” “Your” as a coverage definition references none () of the following except ()?

A. Only the first named insured listed in the policy declarations page

B. Only the named insured(s) shown in the declarations

C. Owners of property in the care custody and control of the first named insured

D. none of the above

The process whereby insurers evaluate risks, decide which customers to insure, and what coverage(s) to offer; all while determining the risk transference rate to charge, based on sound actuarial principles is called?

A. The law of large numbers

B. Underwriting

C. Rate Factoring

D. Adverse Selection

The liability coverage specific to a yacht owners policy is called?

A. Slip liability

B. Personal injury protection

C. Protection and indemnity

D. Professional liability

Insuratest 2015

An insured is in the business of pyrotechnic entertainment and is required to furnish proof of liability coverage prior to being booked for the State Fair’s 4th of july fireworks display. Since this risk is out of the ordinary and inherently dangerous in nature. Where would the insured go in order to obtain this type of liability coverage? Choose the best answer:

A. Pyrotechnician’s labor union

B. From an excess and or surplus lines broker

C. From a nonadmitted insurer

D. From an alien insurer

Coverage afforded by the commercial equipment dealer’s property coverage form would include all of the the following (+), except ()?

A. Customer’s equipment in insured's care custody and control while in for service

B. New equipment for sale

C. Motorized vehicles CHP approved for use on California highways

D. Lease returned equipment for resale

Of the following loss scenarios which of the following is not covered () by coverage (D) collision and other than collision coverage of an insured's personal auto policy?

A. Tree limb falls in a severe storm damaging an insured vehicle’s hood

B. Christmas presents left in the backseat of a vehicle overnight in a parking garage are stolen

C. Vehicle suffers front end damage during an earthquake

D. Vehicle suffers water damage during a severe rain storm

What is the formula for net income?

A. Total net loss minus expenses

B. Total net gain less taxes and fees

C. Total revenue minus total expenses

D. Total revenue plus total payroll

Insuratest 2015

A standard ISO HO3 coverage form also known as the “special form” policy affords coverage to an insureds real property on a/an __________ basis while it’s personal property is covered on a/an ____________ basis.

A. All risk, broad form

B. All risk, open peril

C. All risk, special form

D. Special form, open peril

Cargo coverage extends to none of the following () except ()?

A. Products being shipped

B. covers the freight and reimburses the shipping charges in the event of a covered loss

C. Inherent Vice

D. Both A and B

All of the following types of businesses are eligible for their business personal property aka “stock” to be covered under an inland marine commercial property coverage form except ()?

A. Stringed instrument repair shop

B. Grocery Store

C. Dry cleaners

D. Jewelry store

Insuratest 2015

After running an annual DMV check and finding two major violations on the Cargo coverage extends to none of the following () except ()?



C. Inherent Vice

D. Both A and B

Cargo coverage extends to none of the following () except ()?



C. Inherent Vice

D. Both A and B

An insured purchases a new vehicle and contacts his agent the next day to add the vehicle to his existing auto policy contract. What temporary coverage is extended from his existing auto policy during the time it takes to bind coverage?

A. No coverage available must purchases temporary liability coverage from the dealer before driving off the lot

B. The lowest coverage limits for any scheduled on his declarations page in force at the time he took ownership of the new vehicle.

C. The broadest coverage for any scheduled on his declarations page in force at the time he took ownership of the new vehicle.

D. Temporary coverage for liability only is afforded by his in force policy’s insuring agreement

Insuratest 2015

Which of the following homeowners coverage forms is most appropriate for a custom home with high end furniture and a state of the art soundentertainment system inside? A. HO3 B. HO4 C. HO5 D. HO8 In addition to the mandatory online or classroom prelicense training program what else must an applicant complete whether it is for a life agent license, personal lines agent license or a fire and casualty license prior to applying for an actual state license?

A. A course on ethical marketing and sales techniques

B. A four hour course on ethical presentation standards

C. None of the above

D. A 12 hour course on the California insurance code and ethics

When determining the value of a commercial property to estimate the 80% minimum coinsurance limit which of the following cost measures is implemented by the insurer?

A. Replacement cost value

B. Fair market value using comps as a value estimator

C. The actual dollar amount to replace said commercial property at today’s construction labor rates & material costs

D. The cost to replace said property less depreciation and a coinsurance trigger surcharge

You may see both variations of this question on your exam, both answers are correct as a “Tort is a legal wrong other than a crime or a breach of contract”

Insuratest 2015

On the basis of tort law one may be held legally liable for a claim if any of the following are proven except ()?

A. Negligence

B. Legal wrong

C. Absolute liability

D. Breach of contract

On the basis of tort law one may be held legally liable for a claim if any of the following are proven except ()?

A. Negligence

B. Crime

C. Legal wrong

D. Absolute liability

Alvin is involved an accident with Bernice. Alvins vehicle incurs $20,000 in physical damage. Adjusters determine Alvin is 25% responsible for the accident. How much would Alvin receive under comparative negligence rules?

A. $ 0

B. $ 10,000

C. $ 15,00

D. $ 20,000

__________ is defined as the process an insurer undertakes to calculate an insured's risk transference premium based on sound actuarial principles?

A. Ratemaking

B. Premium calculating

C. Underwriting

D. Loss assessment

Insuratest 2015

The unendorsed California personal auto policy territory limits include none of the following () except (): Remember! () + () = + “What’s included”

A. Cayman Islands

B. Toronto, Canada

C. Tijuana, Mexico

D. Cuba

Which of the following losses caused by the negligent actions of an insured would result in a third party claim award for physical injury and/or property damage? A. Physical property loss

B. Personnel property loss

C. Liability loss

D. Arbitration loss

Which of the following is true about the (CGL) Commercial General Liability coverage limit referenced on the declarations page?

A. The CGL limit includes the products completed operations aggregate limit and advertising injury limit

B. The CGL limit is a separate limit from the products completed operations aggregate limit and advertising injury limit

C. The CGL limit is another name for per occurrence limit.

D. The CGL limit is another name for the aggregate limit

Insuratest 2015

According to the California insurance code Section 730 article b active agents and brokers must have their books and records made available to the commissioner’s office for examination ______________?

A. Once every two years on the month of the agent or broker's license renewal

B. Once a year on the month of the agent or broker's license renewal

C. Within ten days after receiving a certified letter from the commissioners office requesting said examination

D. At all times and as often as the commissioner in his or her discretion deems appropriate

How often may the insurance commissioners office conduct an examination of the books and records of an California active agent or broker per section 730 article b of the California Insurance code?

A. Not less frequently than once every five years

B. Reviews must be done annually

C. Only in the event of a consumer complaint as often as necessary

D. Once every three years

Which of the following terms best describes the claim settlement option whereby an insured will replace an insureds lost, damaged or stolen property with that of the same like kind, quality, make and or construction?

A. Replacement cost

B. Stated value

C. Actual cash value

D. Market value

Insuratest 2015

An insured suffers a devastating fire loss in their home built in the year 1985. The home’s current replacement cost is valued at $400,000 and is insured for 100% of total value. In order to meet building code upgrade standards to the present day the county assessor mandates reconstruction plans afford full fire sprinklers, earthquake bracing and the foundation be reengineered (These upgrades will bring this home “Back to the Future”). The additional requirements will cost $80,000. Which limitation is found in an unendorsed HO3 policy for this coverage, what is the % of total coverage (A) afforded in this situation and will the insured be out of pocket any amount to cover the rebuild. If so what amount? A. Building code upgrade coverage, 5% of coverage A, yes: out of pocket $60,000 B. Building code upgrade coverage, 20% of coverage A, no: out of pocket $0 C. Ordinance or law coverage, 15% of coverage A, yes: out of pocket $20,000 D. Ordinance or law coverage, 10% of coverage A, yes: out of pocket $40,000 Future agent tip. For homes built before 1990 please endorse additional ordinance or law coverage to 20% of coverage A. It is relatively inexpensive to increase Building Ordinance or Law coverage to 20% and that would have saved the day! Think of how many referrals that would have landed you… Aaron’s negligent action of running a stop sign was the proximate cause which lead to a physical damage loss to both his vehicle a third party’s vehicle. Aaron’s coverage (D) Physical damage deductibles are as follows. $1,000 Collision and $500 other than collision aka comprehensive aka noncollision. Adjusters determine Aaron’s vehicle will take $10,000 to fix. How much will the insurer pay?

A. $0, since Aaron was found negligent

B. $9,000

C. $9,500

D. $10,000

Insuratest 2015

Ryan an insurance broker specializing in commercial workers compensation insurance is scheduled to meet with a prospect ErgoSetting: an office furniture manufacturer specializing in cutting edge ergonomic designs. The prospects current experience mod rate is 125. Ryan has insured similar risks before and has a pretty good idea of what this prospects current needs are and how to acquire this account. Which of the following approaches to writing this business’s risk/loss exposure is the least professional of Ryan?

A. Meet with the prospect at their facility do a walk through of their premises and earn the business by planning a loss control strategy with the prospect in effort to attempt to mitigate future claims and lower their future experience mod.

B. Develop a marketing plan to acquire quotes from companies with the best claims handling reputation and loss control teams in effort to lower MounTek’s mod in the future.

C. Before the meeting acquire copies of all current policies set to expire, loss runs for the last five years and determine what coverage they have been carrying and how much they have been paying. Then finding a market with a better rate meeting them for lunch at a restaurant and selling based completely on price.

D. Why are you reading this ;)

Race Car Beds LLC a furniture manufacturer specializing in kids bedroom furniture is being sued for damages resulting from a child being injured while testing their stock car slumber bunk bed model under parental supervision on their showroom floor. What part of Race Car Beds LLC’s commercial package policy would afford defense coverage for this law suit?

A. Advertising Injury limit

B. Commercial general liability insurance

C. Products completed operations insurance

D. Disability insurance

Insuratest 2015

OK here comes two sneaky questions…

The ___________coverage of a personal auto policy would cover damage caused by an insured driving into a tree limb that had fallen on a public roadway during a recent heavy rain storm?

A. Comprehensive

B. Other than Collision

C. Collision

D. Non collision

The ___________ coverage of a personal auto policy covers Damage caused by a tree limb falling on an insured's vehicle while parked on a public roadway during a heavy rain storm?

A. Comprehensive

B. Collision

C. Other than Collision

D. Non collision

Which of the following best defines an insurer's loss reserve for a claim that appears on their workers compensation loss run in the “Total Reserve” column?

A. Dollar amount estimated for the total amount an insurer expects to pay for a specific claim less what has been paid out already as long as it falls below the aggregate limit.

B. Dollar amount estimated for the total amount an insurer expects to pay for a specific claim less what has been paid out already on said claim.

C. Dollar amount estimated for the total amount an insurer expects to pay for a specific claims medical costs only

D. Dollar amount estimated for the total amount an insurer expects to pay for a specific claims lost wages only

Insuratest 2015

Where are admitted California insurers required to file their policy forms?

A. The Insurance Services Office (ISO)

B. The California Accord Form Bureau (CAFB)

C. California Department of Insurance (DOI)

D. The State Legislature’s office

DP2 policies inherently include additional coverages to their form as compared to that of a DP1. Which of the following occurrences is covered with a DP2 but not covered in a DP1? A. Tenant improvements betterments, additions and alterations B. Personal liability C. Post occurrence debris removal D. Additional living expenses Which of the following perils is included in (+) the DP2 policy form, but not in the DP1 policy form ()?

A. Volcanic action/eruption

B. Lightning

C. Falling objects

D. Personal liability

Which of the following is not () a feature benefit of an insurance policy/contractual agreement between an insurer and insured?

A. Risk transference

B. Risk retention

C. Risk avoidance

D. Both B and C

Insuratest 2015

Lori and Daniel newlyweds decided to elope and spend their wedding dream fund on a down payment for a home with an attached garden apartment in San Francisco’s sunset district, instead of a traditional wedding. They have acquired dwelling coverage with an unendorsed H03 policy, reside in the home and rent out the garden apartment beneath. What endorsement should they add to their HO3 policy to cover the risk associated with being landlords? A. Rented to others endorsement

B. DP3 policy instead of an HO3 with the tenant legal liability endorsement appended

C. Landlord protectors policy

D. Already covered by their HO3’s General Liability coverage

Name the commercial crime coverage form that will cover a property loss found during the policy period yet occurred prior to the effective date of the policy?

A. Occurrence form

B. Discovery type

C. Loss sustained form

D. Claims made form

An ________________ is the cumulative total, or maximum limit a policy will pay for all claims during a policy period. While a ___________ is a limit imposed on a specific type of loss within the policy maximum.

A. Aggregate limit / Sublimit

B. Sublimit / Aggregate limit

C. Policy limit / payments to others


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Master Surgeon Doctor Gracia’s Ferrari 308 GTS was found damaged and inoperable after it was stolen from the Sausalito marina parking lot and driven into a guardrail during a police chase. Which specific part of his personal auto policy’s physical damage section will cover the damages, towing surcharges and restore his car?

A. Coverage (D) Other than collision

B. Coverage (D) Comprehensive

C. Coverage (D) Collision

D. Both A and B

Don’t worry the Ferrari is ok now ;)

In insurance law the insured must have pure interest in the subject matter of his or her policy (i.e their car, house or boat). With a chance for loss of property only and no chance for gain. Or said insurance policy contract would be void as it is speculative in nature. Speculative risks are essentially like gambling and not insurable. What do insurer’s call this type of pure interest? Please choose the best answer.

A. Inherent value

B. Pure risk


D. indemnity rights

The Unfair Practices Act bars all of the following () insurer practices except ()?

A. Demanding an insured fix their vehicle at a specific repair shop

B. California insurers charging a different premium rate for males than females of the same age with the same risk profile for their auto insurance based solely on actuarial principles

C. Placing an insurance risk with a particular carrier charging a higher rate as to seek higher commission

D. An insurer using the word “underwriting for” in print or media advertising

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An insured buys a used fishing boat and does not wish to purchase physical damage coverage. He only wants liability coverage. Which endorsement should his agent add to his existing HO3 policy that will extend liability coverage for his watercraft once it is schedule on the policy declarations page?

A. Longshoremans liability endorsement

B. Miscellaneous type vehicle endorsement

C. Flotilla liability endorsement

D. Watercraft endorsement

A standard ISO HO3 policy would cover none of the following () occurrences except ()? A. Dry rot on an attached balcony

B. Collapse caused by the weight of contents animals or people

C. Termite damage

D. Fence collapse due to aging and rotted support posts

_________________encompass insurers’ agents’ and market practices that involve both interactions and transactions between consumers or insureds and insurers. The following regulation activities fall within this state laws scope: Marketing, advertising and product representations, sales, underwriting, ratemaking, claims handling and policy issuance.

A. Ethical Enforcement Unit (EEU)

B. Marketplace Policy Enforcement Division (MPED)

C. National Association of insurance commissioners (NAIC)

D. Market conduct regulation

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Which of the following activities fall within the scope of California Market Conduct Regulation law?

A. Sales

B. Ratemaking

C. Underwriting

D. All of the above

A/An ________________ policy would both protect and ease the mind of an insured who is engaged in the business of selling and delivering televisions; specifically concerned about damage to televisions while in transit on owned delivery trucks?

A. Inland marine

B. Motor truck cargo liability

C. Commercial auto liability symbol 4 coverage

D. Commercial auto liability symbol 7 coverage

Which of the following businesses and building descriptions are eligible for coverage under a Business Owner’s Policy by design?

A. Threeunit, twostory residential/commercial mixed building with a hair salon in unit A, apartment in unit B and an Insurance office in unit C, less than $4,000 square feet in total area

B. 6story, 70 unit apartment less than 20,000 square feet in total area.

C. 4story, 60 unit apartment less than 15,000 square feet in total area.

D. Both A and C

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An ISO homeowners policy Section II coverage extends comprehensive personal liability coverage to the following? A. Activities and actions of the named insured(s) only for premises liability at insured location and for all premises liability B. Premises liability at insured location and for the personal activities of the insureds on or off of the premises C. Premises liability at insured location coverage only D. Trick question Section II of an ISO HO policy coverage form is for property coverage only La Bella hair Salon business owners Jennifer and Irma do not own the building their salon is located in. Any improvements and betterments they make to their rented location is covered by the _______________ section of their Business Owner’s Policy BOP? A. Business personal property

B. HO4 tenant improvement

C. Tenant Legal Liability policy

D. Business pursuits endorsements

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Vitos Pizzeria owner Vito Corleone wants to start offering delivery service but does not own any company vehicles. He plans to pay his delivery drivers hourly and reimburse them for mileage for use of their personal vehicles for his business. Vito will need protection for the vicarious liability exposure associated with his employees delivering pizzas with their own vehicles. As his agent which coverage would you recommend Vito purchase?

A. Only hire drivers who have furnished their own personal auto policy and provide a certificate of insurance naming Vitos Pizzeria and Vito Corleone as additional insureds.

B. A personal auto policy with symbol 1 coverage and a vicarious liability endorsement

C. A commercial auto policy with symbol 9 nonowned auto coverage

D. A commercial auto policy with symbol 7 nonowned auto coverage

MounTek hands free cell phone accessory manufacturer suffered a fire loss to key machinery in its manufacturing process. Although operations were interrupted for less than three weeks, the company suffered more than $1.5 million in lost earnings and extra expenses. Thankfully MounTek’s in force commercial package policy included ________________ insurance to cover the loss?

A. Inland Marine

B. Business income

C. Products completed operations

D. Commercial property

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Which specific commercial crime insurance form would cover an insured who suffers a theft loss resulting from a burglars use of a pry bar to break open the side access door of his sporting goods store and steal merchandise while his store was closed?

A. Employee Dishonesty

B. Theft

C. Burglary

D. Robbery

The insurer claims settlement option awarded an insuredclaimant as a means of indemnification for a covered loss by paying the dollar amount to replace their damaged property without a deduction for depreciation is known as ______________?


B. Market Value

C. Reciprocal value

D. Replacement Cost

An insured purchases a home for $500,000. The replacement cost estimator in their appraisal at close of escrow values the dwelling (Coverage A) at 400,000 and the separate structures (Coverage B) for 40,000. In order to avoid a coinsurance penalty in the event the insured suffers a partial loss what are the lowest limits they may insure their residence for with a standard ISO HO3 policy?

A. $320,000 (Coverage A) Dwelling; $32,000 (Coverage B) Separate Structures

B. $360,000 (Coverage A) Dwelling; $36,000 (Coverage B) Separate Structures

C. $400,000 (Coverage A) Dwelling; $40,000 (Coverage B) Separate Structures

D. $500,000 (Coverage A) Dwelling; $50,000 (Coverage B) Separate Structures

If you had to think hard on this one to ensure you knew why this answer was correct please visit the coinsurance revealed document again in this course. Don’t let the sale price fool you. Remember we do not insure land other than for liability. The key here is to recognize this is a straightforward coinsurance question. With these questions you need to remember that 80% of coverages A and B will satisfy the coinsurance

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requirement. Then simply choose the answer that is 4 out of 5 of, or 80% of coverages A and B.

Which of the following coverages if in force at time of loss would protect an insured who runs a nonprofit finance fund to help pay for cancer treatments costs for low income qualifying families whose employee embezzles $20,000?

A. General liability insurance

B. Commercial Crime insurance

C. Fiduciary liability insurance

D. Theft of money and securities insurance

A California insureds family travels to Disney World by airplane. When arriving in Florida the insured rents a minivan for the week. Which coverage if any will respond from his California personal auto policy?

A. Third party bodily injury and property damage liability only will respond from the California policy. The insured must purchase rental car coverage from the rental agency.

B. Florida has a State Guarantee Fund and the insured must purchase rental car coverage from the rental agency.

C. The liability coverages from his personal auto policy (PAP) will carry over to the rental car but not for physical damage.

D. The coverages from his personal auto policy (PAP) will all carry over to the rental car along with the deductibles for (coverage D) physical damage.

When renting a car in the USA all coverages from the current inforce auto policy follows the driver who rents a vehicle. This includes the deductible. Policies from rental agencies are on average $12 a day and waive both personal automobile policies (PAP) comprehensive and collision deductibles. This makes purchasing rental car coverage attractive even for drivers who carry comprehensive and collision coverage on their primary vehicles. Paying a $500$1000 collision deductible because an unknown third party driver backs into your rental car while parked at Disneyland’s parking garage and doesn’t leave a note for example is a sure fire way to lose the magic. For many insured vacationers the $12 a day is worth the peace of mind.

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The valuation method to indemnify an insured based on what the lost or damaged property could have been sold for prior to experiencing or suffering a loss is known as?

A. Replacement cost

B. Market value

C. Stated value

D. Actual cash value

Section II (Liability) of an ISO HO5 policy purchased to cover John’s home built on a 15 acre parcel covers all of the following insured activities (+) except ()?

A. John driving his California registered personal vehicle (truck) on his own property.

B. John invites his friends over for a superbowl party and a slip and fall injury takes place on the front porch.

C. Johns wife gets him a new John Deere riding lawnmower for christmas and he uses it to mow his lawn.

D. Johns use of a golf cart on his own property to drive to and from his mailbox that is a ½ mile from his home.

Remember: Section II liability on an HO policy form voids coverage for an insured while they are driving their personal licensed/registered vehicle(s) even on their own land because they are covered under their personal auto policies (section A liability) coverage for liability and (section B medical payments) whenever they are in their car.

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Which of the following coverage forms would cover the cost to defend a suit brought on by a commercial insureds competitor whether groundless or not. Seeking damages resulting from an advertising campaign launched by the insured they believe relays false and misleading information to the public and is responsible for their 30% quarterly loss of revenue?

A. Commercial Crime Coverage

B. Commercial general liability

C. Vicarious liability

D. Products completed operations liability

“We”as referred to in a commercial package policy is the _____________?

A. named insureds

B. loss control team

C. insured purchasing the coverage

D. insurer providing the coverage


Of the following choices which best describes the intended benefit of Ordinance or Law coverage as part of an ISO HO3 policy forms extension of coverage A?

A. Automatic ADA compliance retrofit if endorsed on a commercial property policy prior to city or county mandate

B. Affords increased coverage as a % of coverage A to cover the increased expense to repair or rebuild a dwelling according to building code specifications.

C. Guaranteed replacement cost coverage A including full city ordinance requirements as means of indemnification following a covered loss

D. None of the above are covered.

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None of the following are true () of the medical expense coverage benefit in a workers compensation policy except ()?

A. Work related injuries are subject to a general aggregate limit

B. Work related injuries do not have a dollar but do have a time limit

C. Work related injuries do not have a dollar or time limit

D. Work related injuries have a dollar and time limit

Which of the following statements best defines the “retroactive date” of a claimsmade professional liability policy?

A. Exactly one year after the effective date

B. A date which falls exactly 90 days prior to the effective date

C. The expiration date of a claims made

D. The earliest date unknown events that may have occurred prior to the policy effective date are covered by a professional liability policy ie (effective date 1/1/2015 , retroactive date 1/1/2014).

With a commercial property value reporting form endorsement in force what is the maximum coverage limit for recovery by an insured for a covered loss if no business property (inventory) valuation report was submitted to the insurer by the insured prior to suffering a loss?

A. 66⅔% of the limit

B. 75% of the limit

C. 80% of the limit

D. 100% of the limit

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An absolute liability claims outcome hinges upon whether or not _____________ may be proven by the injured party or if the actions of the defendant go against _____________? A. intention, public welfare/good B. guilt, prudence C. None of the above D. Negligence, public welfare/good

A scheduled personal property endorsement on an HO3 policy form is most like which inland marine floater by design?

A. Jewelry floater

B. Valuable items floater

C. Personal articles floater

D. Personal property floater

A boat owner's policies medical payments coverage is similar to that of coverage (B) in a personal auto policy which affords coverage to ___________ in the event of an occurrence without regard to fault.

A. The named insured, insureds family as well as permissive occupants while on the insured's boat

B. Passengers on insureds boat that paid for wakeboarding lessons from the named insured boat owner

C. Third party boat passengers injured when their boat was struck by the named insured's boat

D. Passengers the named insured boat owner is transporting to the other side of a lake for a fee

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Inland Marine Policy contracts are written on a/an _____________ basis, therefore coverage exists for any cause of loss (peril) except for those which are specifically excluded in the exclusion (D.I.C.E) part of a policy.

A. Named peril

B. Open perils

C. All Risk

D. Both B and C

The California insurance code would be violated by a producing broker agent who places business with a nonadmitted carrier unless the following has/have occurred prior to binding:

A. The insured has agreed to purchase insurance at a lower price through a non admitted carrier and the producing broker agent has passed the surplus lines exam.

B. Only MGA’s have the expressed authority to place business with nonadmitted carriers.

C. The producer has a resident and nonresident license in WA and AZ and has received four declinations in the primary marketplace for said placement on file prior to binding.

D. The producer is a surplus lines broker and has three declinations from carriers in the primary marketplace for said placement on file prior to binding

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What is the purpose of a commercial value reporting form endorsement with regards to on premises business personal property values (i.e. inventory volume) for an insureds business with seasonal fluctuating inventory needs (i.e. sporting goods store)?

A. To receive a lower premium rate for off peak months

B. To offset the price for commercial crime coverage with the value reporting form 20% California good business owner discount

C. To establish accurate limits of coverage neither over or under insuring business personal property (inventory) values; that naturally fluctuate due to the insured business’s inherent nature through periodic value reporting to the insurer by insured throughout the policy term.

D. To avoid a workers compensation audit and meet the requirements necessary to acquire a peak season endorsement at a discounted rate

Biff a commercial property building owner and first named insured intentionally sets fire to “Biff Tannen's Pleasure Paradise Casino & Hotel” building in attempt to collect on insurance. Investigators later convict Biff of arson. Which of the following is stated in his commercial property policy conditions section?

A. A named mortgagee, loss payee or lienholder may be entitled to receive payment for this loss

B. Biffs spouse as long as the building was secured prior to the loss with a Protected Trust

C. Biffs Business partner and named insured Griff who was exonerated by a jury

D. None of the above have claimant rights per policy conditions

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Which of the following coverages are on a standard California namednon owneroperator automobile insurance policy form? A. (A) Bodily injury liability and third party property damage only B. (A) Bodily injury liability, (B) medical payments, and (C) uninsured motorist C. Bodily injury liability and uninsured motorist coverage only D. Bodily injury liability, medical payments, uninsured motorist, collision and non collision

What underlying coverages are typically required of an insured to have in force prior to purchasing an ISO personal umbrella liability policy from an insurer?

A. Personal liability policy exclusively

B. Personal liability, personal automobile liability and fiduciary liability

C. Both Personal liability and personal automobile liability

D. Eligible to purchase as a stand alone policy. No underlying policy requirements

Inland marine policies afford coverage to an insured on which of the following bases?

A. All risk

B. Special form

C. Open peril

D. All of the above

Inland marine policies afford coverage to an insured on none of the following () bases except ()?

A. Named peril

B. Broad form

C. Open peril

D. All of the above

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Remember a () + a () = a (+) Positive: (“afford coverage” is a positive phrase

The insurer claims settlement option awarded an insuredclaimant as a means of indemnification for a covered loss by paying the dollar amount comparable to what the damaged property could have been sold for prior to loss.


B. Market Value

C. Reciprocal value

D. Replacement Cost

Which of the following losses is covered under Kalebs Personal auto policies other than collision section?

A. Kaleb suffered an upset when he rolled his truck on an icy curve in the Sierra’s

B. Kalebs’ window is shattered by a thief who broke into his car to steal his GPS while parked overnight at a hotel.

C. Kaleb hits a parked car while attempting to text while driving

D. Kaleb locks his keys in the car and kicks in the window to unlock it

A representation as a matter of collateral information relevant to the formulation of a contract is considered which of the following?

A. A Promise

B. Statutory in nature

C. Adequate

D. indemnifiable

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Derek’s personal auto policy covers both liability and physical damage. He borrows his neighbor Hansel’s truck: insured for bodily injury only, to pick up a new dining room set and is involved in an accident. Derek’s negligent act of failing to yield while making a left turn is the proximate cause of an injury accident resulting in damage to Hansel’s truck and another vehicle. Paramedics treat minor injury to the third party driver. Derek’s personal auto policy affords:

A. Collision coverage on a primary basis and liability on a primary basis

B. Liability coverage in excess of Hansel’s liability coverage. Derek's collision coverage does not apply because he was driving Hansel’s vehicle.

C. Liability coverage that is excess of his neighbor's liability coverage; the collision coverage does not apply.

D. Liability coverage in excess of Hansel’s liability coverage. Derek's collision coverage applies, on a primary basis.

“Sorry about your truck bro, you know I have trouble turning left. Whatever dude... whatever.”

Remember primary coverage follows the vehicle not the driver with regards to questions involving a borrowed personal auto. It gets tricky when the vehicle owner of said borrowed auto does not carry physical damage coverage D (comp & collision) and the driver borrowing the car does on their personal auto policy. In this case the only physical damage coverage D available is by the borrowing drivers personal auto policy and will respond as primary. While the liability coverage A is secondary by the borrowed driver’s policy and the owner of the vehicle’s liability coverage A is primary.

Which of the following activities are not a part of transacting insurance and may be performed by a nonlicensed employee?

A. Phone solicitation offering products and services

B. Negotiate price options and fee structure

C. Establish a list of potential clients

D. Execute a contract

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The rising cost of Worker’s Compensation insurance in California is attributed to all of the following () except ()?

A. Employees submitting fraudulent claims

B. Population increase

C. Medical care inflation

D. Employers not reporting payroll accurately

Of the following coverages, which one(s) does a DP2 policy have that is/are not included with a DP1?

A. Collapse

B. Additional living expenses

C. Personal liability

D. Both A and B

Coinsurance a form of risk sharing also known as percentage participation is primarily designed into the commercial property policy form in order to:

A. Essentially reinsure risks between multiple insurers

B. Encourage insured’s to secure coverage near their property replacement cost value as to avoid a coinsurance penalty

C. Save insureds money as total commercial property losses are rare

D. So insurers may collect money from insureds for both copayments and deductibles

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Which of the following coverages may an insured acquire with the purchase of an extended nonowner policy to protect themselves from a potential coverage gap when driving for personal use on personal time a company car they are furnished with by their employer? Choose the best answer. A. Coverage (A) BI/PD Liability B. Coverage’s (A) BI/PD Liability and (D) collision and non collision C. Coverage’s (A) BIPD Liability, (B) medical payments, and (C) uninsured motorist (UM) D. Coverage’s (A) BIPD Liability, (B) medical payments, (C) uninsured motorist (UM), and (D) collision and other than collision

Per the insuring agreement (I in D.I.C.E) of a personal auto policy none of the following () are covered except ()?

A. Vehicle is damaged by engine ceasing in a severe snow storm

B. Wear and tear

C. Theft of an aftermarket GPS device


Harold’s residence, insured by an unendorsed HO3 policy, is destroyed by a fire that started after an earthquake ruptured a gas line in his home. How does his policy respond?

A. Coverage is void because earthquake damage was not endorsed on his HO3 policy.

B. An HO3 named peril contract excludes earthquake damage but will provide coverage for loss of property attributed to the fire damage only.

C. An HO3 open peril contract excludes earthquake damage but will provide coverage for loss of property attributed to the fire damage only.

D. Due to the concurrent causation exclusion of an HO3 policy coverage is void because an earthquake started the fire.

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A California licensed insurance agent persuades an insured to cosign a loan. How would the California Insurance commissioner respond if aware of said agents actions?

A. Bar the agent from profiting from any insurance related endeavor for a period of no less than five years

B. The Commissioner would suspend the agent's license

C. Require the agent to pay a $150,000 fine


Strict liability is characterized by which of the following? A. The ability to compensate without regard to fault or negligence. An example would be workers compensation. It means to hold the employer strictly liable for all injuries to their workers regardless of fault. B. Typically deals with products. Even though you bought a toy from the store, the manufacturer may be held strictly liable for their defective product C. A situation where you know the risks involved yet you still want to engage in the high risk activity Example: You know you could die while skydiving, yet you still want to do it D. Total disregard for authority that causes someone injury or death Absolute liability is best described by which of the following (+)? A. The ability to compensate without regard to fault or negligence. An example would be workers compensation. It means to hold the employer strictly liable for all injuries to their workers regardless of fault. B. Typically deals with products. Even though you bought a toy from the store, the manufacturer may be held strictly liable for their defective product C. A situation where you know the risks involved yet you still want to engage in the high risk activity Example: You know you could die while skydiving, yet you still want to do it D. Total disregard for authority that causes someone injury or death Insuratest 2015

Assumption of risk is characterized by none of the following () except ()? A. The ability to compensate without regard to fault or negligence. An example would be workers compensation. It means to hold the employer strictly liable for all injuries to their workers regardless of fault. B. Typically deals with products. Even though you bought a toy from the store, the manufacturer may be held strictly liable for their defective product C. A situation where one knows the risks involved yet still wants to engage in a high risk activity. Example: An insured being well aware that a skydiving accident would most likely result in death yet still wants to do it D. Total disregard for authority that causes someone injury or death Gross Negligence is defined by none of the following () except ()? A. The ability to compensate without regard to fault or negligence. B. Typically deals with products. Example: even though you bought a toy from the store, the manufacturer may be held grossly negligent for their defective product C. A situation where one knows the risks involved yet they still want to engage in the high risk activity like skydiving. D. Total disregard for authority that causes someone injury or death. Example driving in excess of 100 MPH on a State Highway or driving while under the influence of drugs or alcohol and causing an injury accident.

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West Coast Bank’s building is damaged when burglarized on Christmas Eve. The unknown assailants shattered the front door, broke the door frame and damaged the vault with torches, drills and minor explosives. They made off with $500,000 in cash. Which of the following commercial crime insurance forms would cover the loss of currency as well as damage to the building? A. Inside the premises — robbery or safe burglary of other property coverage

B. Outside the premises — robbery or safe burglary of other property coverage

C. Inside the premises — theft of money and securities

D. Outside premises — theft of money and securities

The California Insurance Code Section 770.3 states which of the following?

A. No agency shall require the placing of insurance through particular agents, brokers, or companies

B. The expressed authority the Commissioner has to enforce the code on agents and brokers who have committed infractions.

C. The free choice of insurance agent or broker by any borrower or purchaser at any time

D. Prohibits the use of redlining by insurance carriers

Standard Yacht policies cover the following?

A. Harbor liability, ocean marine and longshoreman medical

B. General liability, Physical damage and medical payments for permissive occupants

C. The hull and protection & indemnity

D. The hull and ocean marine liability

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In order to trigger coverage under the business income form, designed to indemnify an insured for loss of income resulting from a halt in business operations, which of the following must occur?

A. Extra expense coverage must be purchased by endorsement in conjunction

B. Be the result of a covered peril, otherwise coverage is not afforded the insured business owner/claimant

C. Be for an interruption period of ten days or more


Which of the following statements is true regarding insured driver Mallory’s medical payments claim when carrying $3,000 coverage (B) medical payments limit on her personal auto policy (PAP)?

A. Mallory picks up her brother Alex from debate team practice after school her vehicle is rear ended at a stop light. Alex’s injuries are $2,000 Mallory’s are $3,000. Her policy coverage B pays $3,000

B. Mallory picks up her brother Alex from debate team practice after school. her vehicle is rear ended at a stop light. Alex’s injuries are $2,000 Mallory’s are $3,000. Her policy coverage B pays $,3000 less her collision deductible.

C. Mallory picks up her brother Alex from debate team practice after school her vehicle is rear ended at a stop light. Alex’s injuries are $2,000 Mallory’s are $3,000. Her policy coverage B pays $5,000 less her collision deductible.

D. Mallory picks up her brother Alex from debate team practice after school her vehicle is rear ended at a stop light. Alex’s injuries are $2,000 Mallory’s are $3,000. Her policy pays $5,000

The primary difference between HO2 and HO3 policies is/are the _____________.

A. territory limits for off premises liability

B. perils covered by form

C. policy form exclusions

D. cost of basic coverage

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_____________ supports indemnity “the principle of insurance.”

A. Adverse selection

B. The Law of large numbers


D. Deprivation

California driver Xavier is involved in a parking lot accident with Yoenis. Xavier’s vehicle suffers $6,000 in damage but adjusters determine that Xavier is 25% responsible for the accident. Xavier has a $1,000 collision and a $500 other than collision deductible How much would Xavier receive under comparative negligence rules?

A. $ 3,500

B. $ 0

C. $ 4,500

D. $ 5,000

Remember with Comparative negligence damages are awarded proportionally Example: If you contribute 30%, you collect 70%. If you contribute 20%, you collect 80%. The three main types of insurable losses are represented by all of the following (+) except ()?

A. Loss of Property

B. Personnel or human loss

C. loss of money or decrease in financial value (financial loss)

D. Liability loss

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An insured acquires a permit to burn small piles of pine needles at his vacation home property covered by a DP3 as part of his mandated homeowner’s wildfire mitigation requirements. The fire gets out of control and smoke clouds cause damage to the neighboring cabin. This loss is covered by the insureds?

A. Intentional fires permitted or not are not covered

B. Pollution liability endorsement

C. Not covered DP3’s have a concurrent causation exclusion

D. General liability policy

Don’t worry the vacation home is ok and the neighbors are still friends. They’re just going to limit smoke to BBQ’s only from now on.

The towing and labor endorsement available for a California personal auto policy (PAP covers none of the following (), if in force at time of loss except ()?

A. The expense of towing an inoperable vehicle to the nearest service station

B. The cost of labor performed at the site of mechanical breakdown (i.e. change a battery)

C. Up to five tows a year as part of a membership program

D. Both A and B\

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California driver Xavier is involved in a parking lot accident with Yoenis. Xavier’s vehicle suffers $6,000 in damage but adjusters determine that Xavier is 60% responsible for the accident. Xavier has a $1,000 collision and a $500 other than collision deductible. How much would Xavier receive under contributory negligence rules?

A. $ 0

B. $ 3,500

C. $ 4,500

D. $ 5,000

Remember with Contributory negligence If you contribute, you collect nothing. Example: If you contribute 25%, you collect 0. If you contribute 10%, you collect 0 What must a California licensed Property & Casualty broker/agent holding a valid inactive license file before they are allowed to legally transact insurance on behalf of an insurer and activate their license?

A. File a notice of appointment with the California Insurance Commissioner’s office

B. File a broker/agent bond with a $10,000 limit

C. File receipt of payment of initiation dues to the NAIC

D. No legal action is required as long as licensing fees are paid to date and C.E. requirements are met

Which of the following insurable loss types, involves financial loss to an insured or insured individual’s family resulting from perils such as injury, disability, death, sickness, or unemployment?

A. Liability loss

B. Individual loss

C. Personnel loss

D. Personal loss

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None of the following () items of property are valuated on an actual cash value settlement basis, in the event of a real property loss to an insured's home; insured with an HO3 policy form except () ?

A. Permanently installed awnings

B. Inbuilt appliances

C. Light fixtures

D. Exterior wood siding

Which of the following coverages are not listed on the declarations (D in D.I.C.E) page of a standard commercial general liability policy?

A. Damage to premises rented to you limit

B. Personal & Advertising injury limit

C. Pollution liability limit

D. Products/Completed Operations Aggregate limit

The primary difference between HO2 and HO4 policies is/are the _____________?

A. coverage A property

B. territory limits for off premises liability

C. policy form exclusions

D. cost of basic coverage

Why? H04 policies are for renters who do not insure coverage A. HO4 policies only offer coverages C,D and E

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A dwelling is insured for $75,000, and is valued at/worth $125,000, how much would the insurer pay on a fire loss of $50,000 if the policy has an 80% coinsurance requirement and a $1,000 deductible?

A. $37,500

B. $36,500

C. $14,500

D. $13,500

A dwelling is insured for $75,000, and is valued at/worth $125,000, how much would the insured pay on a fire loss of $50,000 if the policy has an 80% coinsurance requirement and a $1,000 deductible?

A. $37,500

B. $36,500

C. $14,500

D. $13,500

Under the builders risk coverage form, what is the minimum insurance coverage limit required to be maintained by an insured to avoid the underinsurance penalty enforced by an insured underpaying a potential claim and fully covering a potential loss arising from a contingent or unknown event (i.e what is the coinsurance requirement on a builders risk policy)?

A. 80% of the completed value

B. 100% of the completed value

C. 80% of the market value

D. 100% of the replacement cost value

Insuratest 2015

Which of the following insurable loss types, involves financial loss to an insured’s business resulting from perils such as injury, disability, death, or sickness of a key employee?

A. Liability loss

B. Individual loss

C. Personnel loss

D. Personal loss

Which of the following endorsements if added to an ISO HO3 policy would afford an insured liability protection for claims arising from false arrest, imprisonment, libel, slander, wrongful eviction, and invasion of privacy?

A. Professional liability endorsement

B. Personal injury endorsement

C. Errors and omissions endorsement

D. Social media protective endorsement

Angela and Joey purchase a new singlefamily home that comes fully furnished with highend designer furniture and appliances. Which of the following HO policy forms would you recommend they purchase to best protect their assets? A. HO3

B. HO4

C. HO5

D. HO6

Insuratest 2015

A dwelling is insured for $300,000, and is valued at/worth $400,000, how much would the insurer pay on a fire loss of $120,000 if the policy has an 80% coinsurance requirement and a $1,000 deductible?

A. $31,000

B. $32,000

C. $80,000

D. $89,000

A dwelling is insured for $300,000, and is valued at/worth $400,000, how much would the insured pay on a fire loss of $120,000 if the policy has an 80% coinsurance requirement and a $1,000 deductible?

A. $31,000

B. $32,000

C. $80,000

D. $89,000

An insured’s dwelling limit is $75,000, and is valued at/worth $125,000, how much would the insurer pay on a fire loss of $50,000 if the policy has an 80% coinsurance requirement (disregard any deductibles)?

A. $35,000

B. $36,500

C. $37,500

D. $50,000

Insuratest 2015

A duplex is worth $400,000. The owner insures it with a DP3 for $300,000; the policy has an 80% coinsurance clause. There insured suffers a $200,000 fire loss. (disregard any deductibles). The insurer will pay:

A. $49,000

B. $50,000

C. $150,000

D. $200,000

A duplex is worth $400,000. The owner insures it with a DP3 for $300,000; the policy has an 80% coinsurance clause. There insured suffers a $200,000 fire loss. (disregard any deductibles). The insured will pay:

A. $49,000

B. $50,000

C. $150,000

D. $200,000

The _______________________qualify as insureds under an in force personal auto policy?

A. named insured, resident relatives, and all other individuals reasonably responsible for use of said auto

B. Named insured and resident spouse only

C. Named insured nonresident spouse and immediate family

D. First named insured, named insureds, resident relatives, and passengers

All of the following are part of (+) the conditions section (C in D.I.C.E) of a commercial package policy except ()?

A. Inspections and surveys

B. Cancellation

C. Covered perils

D. Transfer of your Rights and Duties recovery

Insuratest 2015

Chris and unmarried condo owner lives in the city and does not own a car. He is planning a trip to the Oregon coast and will be renting a car. He also drives his friends cars often. As Chris’s agent which auto policy endorsement would you recommend he acquire to protect his liability and assets?

A. Miscellaneous type vehicle endorsement

B. Drive other car endorsement

C. Extended nonowner coverage endorsement

D. Named nonowner coverage endorsement

Insuratest 2015

Which of the following would not be () a feature benefit of purchasing an insurance contract?

A. Peace of mind knowing you are protected from loss

B Payment to indemnify for a covered loss

C. Retention of risk/loss

D. Transference of risk

How are settlements paid out following a covered loss to an insured with an unendorsed commercial property coverage form?

A. Actual Cash Value (ACV)

B. Fair market value (FMV)

C. Replacement cost (RC)

D. Why are you reading this ;)

What is the California State minimum per occurrence/accident limit a driver must carry in order meet financial responsibility requirements and keep their vehicle registration current?

A. $5,000 B. $15,000 C. $20,000 D. $30,000 What is the California State minimum per person limit a driver must carry in order meet financial responsibility requirements and keep their vehicle registration current?

A. $5,000 B. $15,000 C. $20,000 D. $30,000 Insuratest 2015

What is the California State minimum third party property damage limit a driver must carry in order meet financial responsibility requirements and keep their vehicle registration current?

A. $5,000 B. $15,000 C. $20,000 D. $30,000 What is the California State minimum per occurrence/accident limit a driver enrolled in the Low Cost Auto Program (LCAP) must carry in order meet financial responsibility requirements and keep their vehicle registration current?

A. $3,000 B. $10,000 C. $20,000 D. $30,000 What is the California State minimum per person limit a driver enrolled in the Low Cost Auto Program (LCAP) must carry in order meet financial responsibility requirements and keep their vehicle registration current?

A. $3,000 B. $10,000 C. $20,000 D. $30,000

Insuratest 2015

What is the California State minimum third party property damage limit a driver enrolled in the Low Cost Auto Program (LCAP) must carry in order meet financial responsibility requirements and keep their vehicle registration current?

A. $3,000 B. $5,000 C. $20,000 D. $30,000 None of the following are true () of a/an personal lines licensee except ()? A. Is limited to personal lines sales only.

B. Must hold a valid California personal lines brokeragents license

C. Once licensed, must complete 10 hours of continuing education each calendar year

D. All of the above

Which of the following defines the the negotiation of a policy the “N” in the (T.E.NS.) of transacting? A. Signing an application B. Issuing a change request endorsement C. Emailing a prospect three deductible quote options and influencing them to choose a higher deductible they can afford to retain to save premium D. Processing a payment over the phone

Insuratest 2015

A false or misleading statement, material to the formulation of a contract made or withheld intentionally by an insured at time of application may allow the insurer legal course to void or rescind said insurance contract is known as __________________? A. omission B. sanction C. depravity D. misrepresentation The insurer claims settlement option awarded an insuredclaimant as a means of indemnification for a covered loss by paying the dollar amount equivalent to their insurable interest is known as?

A. Market value

B. Stated value

C. Guaranteed replacement cost

D. Replacement Cost

Of the following losses which is not covered by an ISO commercial property policy form?

A. Lightning causes a fire

B. Explosion causes a fire

C. Removal of business personal property to prevent further damage following a loss

D. Smoke damage resulting from industrial factory operations

Insuratest 2015

Which part of a policy (D.I.C.E) establishes limits set upon the insurer? A. Declarations B. Insuring agreements C. Conditions D. Exclusions

A human loss exposure is also referred to as a/an __________ loss exposure?

A. personnel loss exposure

B. personal loss exposure

C. physical loss exposure

D. consequential loss exposure

In order for an insured's uninsured motorist property damage coverage (C) of their personal auto policy (PAP) to trigger coverage in the event of a loss which of the following (+) is required to be sent to the insurer by the insured? A. Notarized testimony from an eyewitness B. Police report confirming driver has no insurance in force at time of loss C. Hit and run vehicle’s license number D. Photos of the damage

Insuratest 2015

Commercial insurance producer Brad has had a great year and decides to replace his used car with a new car. His current car is insured by his inforce personal auto policy (PAP) for both collision and liability “full coverage” Under his policy conditions section (D.I.C.E) how many days does the insured (Brad) have to request collision coverage on his newly acquired auto?

A. Can’t drive off the lot without it

B. 4 days

C. 7 days

D. 14 days

Commercial insurance producer Brad has had a great year and decides to replace his older used car with a new car. His current car is insured by his inforce liability only personal auto policy (PAP). Under his policy conditions section (D.I.C.E) how many days does the insured (Brad) have to request collision coverage on his newly acquired auto?

A. Can’t drive off the lot without it

B. 4 days

C. 7 days

D. 14 days

(Don’t let this A7 confuse you it’s 4 days if no prior collision coverage is in force.)

Insuratest 2015

Wheat Thins Inc. has filed suit against Thin Wheats LLC for $5,000,000, claiming advertising injury. What part of Thin Wheats LLC’s commercial package policy will pay to defend suit brought against them by Wheat Thins Inc. whether said suit is deemed groundless or not?

A. Commercial General Liability

B. Extra Expense

C. Products Liability

D. Professional Liability

Valuable papers and records such as abstracts, maps, deeds and mortgages are covered under which of the following policy forms?

A. Inland marine coverage

B. Extra Expense coverage

C. Commercial General Liability coverage

D. Flotilla liability coverage

Under the terms of the commercial package policy common conditions (D.I.C.E) section for "Hal Liski and Carly Liski DBA El Sol Winery & Accessories." who is the “named insured” responsible for the premium payments?

A. Hal Liski

B. Carly Liski

C. Both Hal Liski and Carly Liski are equally responsible

D. El Sol Winery and Accessories

Insuratest 2015

This is an easy question. The first named insured or “named insured” in this case Hal Liski is responsible for the premium payments

The standard ISO HO3 form covers real property coverage (A) on a/an ________________ basis while personal property coverage (C) is covered on a/an ________________basis?

A. Coverage (A) Named peril / Coverage (C) Open peril

B. Coverage (A) Special form / Coverage (C) All risk

C. Coverage (A) All Risk / Coverage (C) Named peril

D. Coverage (A) Named peril / Coverage (C) Special form

A loss of covered property owned by an insured due to someone unlawfully taking it from their possession by using force or threat of violence to cause bodily harm is defined as?

A. Burglary

B. Robbery

C. Commercial crime

D. Theft

Insuratest 2015

The water damage exclusion in the causes of loss — special form HO3 applies to all of the following (+) perils, except ()?

A. Flood or mud flow

B. Tsunami or Tidal Wave

C. Indoor sprinkler or plumbing leakage

D. Sewer Backup

Damage to improvements in a leased building both residential and commercial is the responsibility of who/whom? A. Tenant B. Building owner C. Both tenant and building owner D. Improvements to a leased building are covered by the insurer under a BOP

None of the following () occurrences would bar an insured california driver from receiving the good driver discount except ()?

A. Insured receives a ticket for talking on a cell phone while driving

B. Insured hits a parked while pulling into a spot in a parking lot and causes minor property damage

C. Insured's negligent actions cause an at fault accident with minor third party bodily injury inflicted

D. Insureds passenger is severely injured by an airbag deployment in a nonfault rear end accident while stopped at a traffic light

Insuratest 2015

What is the most prominent similarity between an HO3 and HO5 policy form in terms of perils covered?

A. Coverage (A) Dwelling “real property” is covered on an open peril/special form/all risk basis with both the HO3 and HO5

B. Coverage (A) Dwelling “real property” is covered on a named peril with both the HO3 and HO5.

C. Coverage (C) Contents “personal property” is covered on an open peril/special form/all risk basis with both the HO3 and HO5.

D. Coverage (C) Contents “personal property” is covered on a named peril basis with both the HO3 and HO5.

In order for a loss to be covered under a claimsmade commercial liability policy form that is discovered 75 days after the policy expiration date the insured needs to have purchased which of the following endorsements?

A. Post policy liability reporting period endorsement

B. Flotilla liability extended endorsement

C. Supplemental extended reporting period endorsement

D. Coverage not available by endorsement automatically covered by renewal policy

A/an ____________ or __________ insurance company must file its rates with the California Department of Insurance and is required to participate in the ________________? A. Non admitted / surplus lines / Federal Deposit Insurance Corporation (FDIC) B. Admitted / Licensed / California Insurance Guarantee Association (CIGA) C. Foreign / alien / Transunion reporting bureau (TRB) D. None of the above

Insuratest 2015

This type of commercial crime coverage form is specifically designed to afford an insured coverage for losses that occurred during a policy period regardless of when they are discovered. A. Loss sustained form

B. Discovery form type

C. Inside premises robbery or safe burglary of other property form

D. Inside premises theft of money and securities form

Of the following insurance programs which one is State specific? A. National Flood Insurance Program (NFIP) B. Federal Deposit Insurance Corporation (FDIC) C. Federal Crop Insurance Corporation (FCIC) D. Workers Compensation Hull coverage by definition affords coverage to the following? A. Protection and indemnity B. The ship itself, motor/engine and gasoline/fuel C. Reimbursement for freight charges if shipment is lost D. Flotilla liability

Insuratest 2015

(Boat, motor and gasoline. Sounds like the Hull enchilada to me;) Please get up, walk around, come back in 1020 min to keep it fresh. An HO3 Section 1 Property conditions (D.I.C.E) states that an insured is supposed to make reasonable efforts to mitigate loss and protect their property from further damage in event a peril causes a loss. All of the following(+) are correct (+) examples of this condition, except ()?

A. An earthquake causes a fire. Since earthquakes are not covered by an HO3 no further action is needed.

B. A fire sprinkler is accidentally broken by insureds while trying to move a king sized mattress. Upon discovering the leak they quickly grab a garbage can and place it under the sprinkler and call a plumber. The insurer pays the plumbing bill.

C. A fire sprinkler is accidentally broken by insureds while trying to move a king sized mattress. Upon discovering the leak they quickly grab a garbage can and place it under the sprinkler and call a plumber. The insured pays the plumbing bill.


S.T.A.R.R is an acronym for the 5____________________ Share, Transfer, Avoid, Reduce, and Retain.

A. methods of risk management

B. ways to mitigate loss

C. types of insurance forms

D. duties after a loss

Insuratest 2015

Quick recap: 5 Methods of Risk Management

S – Sharing (coinsurance/reinsurance)

T – Transfer (buy insurance)

A – Avoid (don’t build a swimming pool or fill an existing pool in)

R – Reduce (retrofit your house add a burglar/smoke alarm)

R – Retain (selfinsure, don’t buy insurance)

Which of the following represents the complete elements of negligence? A. Duty, Breach of Duty B. Duty, Breach of Duty, Cause in Fact C. Duty, Breach of Duty, Cause in Fact, Proximate Cause D. Duty, Breach of Duty, Cause in Fact, Proximate Cause, and Damages Quick recap of negligence: Negligence is defined as the Failure to do what a reasonable and prudent person would do in a given situation. Four things must exist in order for someone to be held liable on the basis of negligence. There was a duty to act or not to act There was a breach of that duty Losses were suffered, bodily injury or property damage Negligence was the proximate cause of the damage Proximate cause is defined as the following? A. An uninterrupted chain of events from negligence causes the bodily injury or property damage B. An interrupted chain of events from negligence causes the bodily injury or property damage C. The basis of accusation D. None of the above

Insuratest 2015

In order for legal liability to be imposed on the basis of negligence all of the following elements must be present (+) except () A. Legal duty to act or not to act B. Breach of said duty C. Damages suffered D. Gross negligence In order for legal liability to be imposed on the basis of negligence none of the following () elements must be present except () ? A. Legal duty to act or not to act and breach of said duty B. Unbroken chain of events C. Damages suffered resulting from negligence being the proximate cause D. All of the above Which of the following best defines a Tort Feasor A. One found guilty of committing a fraudulent act B. Someone who commits a tort, someone who is negligent C. Someone responsible for a loss D. Someone held intrinsically liable Quick definition recap: A Tort is defined as A legal wrong other than a crime or a breach of contract. Crime is covered under Criminal law. Breach of contract is covered under Contract law. Negligence makes up the biggest area of tort law.

Insuratest 2015

Condo unit owners Pat and Leigh need insurance for their personal property, personal liability coverage, along with financial protection against potential assessments and damage to the building’s structure and common areas. As their agent which of the following policies would you recommend they acquire.

A. HO3

B. HO4

C. HO5

D. HO6

None of the following () are covered in accordance with the insuring agreement provisions of coverage (D) physical damage (other than collision) section in a personal auto policy (PAP) except ()? A. Christmas presents left in back seat of an insured’s car stolen while parked at a grocery store B. Theft of a CD player permanently installed in an insured’s vehicle C. Theft of portable GPS device from an insured’s vehicle while temporarily mounted to the center console D. All are covered

Insuratest 2015

Unlike bonds which are threeparty contracts insurance policies are twoparty contracts. Who are the two said parties to an insurance contract and who is considered the “first party?”

A. Insurer and Insured / Insured

B. Insurer and Insured / Insurer

C. Agent and Insured / Insured

D. Agent and Insured / Insurer

Section 1 coverages (A), (B) and (C) of an ISO HO3 policy form are defined as follows:

A. (A) Dwelling, (B) Rental reimbursement and (C) Separate structures

B. (A) Appurtenant structures, (B) Personal property and (C) Extra expenses

C. (A) Dwelling, (B) Separate structures, and (C) Personal property

D. (A) Personal property, (B) Separate structures (C) Dwelling

All of the following (+) scenarios between an insured involved in an occurrence with an uninsured motorist vehicle trigger coverage (C) uninsured motorist, in a personal auto policy (PAP) except ()?

A. A driver with a suspended license carrying no insurance causes an injury accident and a police report is filed.

B. A hit and run vehicle’s license plate only is identified

C. A driver with lapsed coverage rear ends an insured

D. A self insured vehicle owned and operated by an agent of the state of California causes an accident to an insured motorist

Insuratest 2015

__________________ is the process through which a memberowned company becomes a shareholderowned “stock company.” A. Mutualization B. Demutualization C. Merger D. Stock Split

All of the following is/are private insurers except ()?

A. Stock Company

B. Reciprocal insurance exchange

C. Mutual Company

D. Bond Company

Remember bonds are not insurance policies they are instead financial guarantees

Admitted insurer rates will be barred from filing by the commissioners office if they are found to be any of the following (+) except ()?

A. Fairly discriminatory based on sound actuarial principles

B. Unfairly discriminatory

C. Impartial

D. Both A and C

The following is/are true (+) of Misrepresentation/twisting?

A. It occurs when an agent is lying to an insured or prospect

B. Misrepresentation/twisting is a Misdemeanor offense

C. Punishment for being issued a verdict of Nolo Contendere (GUILTY) is a $10,000 Fine and/or up to 1 year in jail

D. All of the above

Insuratest 2015

To protect an insured business owner concerned about the potentiality of a financial loss caused by one of their employees embezzling money from their operating account; which specific coverage of a commercial crime policy would you describe the benefits of, and as their agent recommend they acquire as a precaution?

A. Employee dishonesty

B. Inside the premises — theft of money and securities

C. Inside the premises — theft of money and securities

D. Forgery and alteration

Mandated by the California insurance code section 1861.01 the minimum discount afforded a qualified California good driver is? A. 10% B. 15% C. 20% D. 30%

The Supplemental extended reporting period endorsement available in a commercial general liability policy is designed to?

A. extends the reporting period to file a potential claim by 90 days

B. extends the reporting period to file a potential claim by 120 days

C. extends the reporting period to file a potential claim by 180 days

D. Continuously extends the reporting period to file a potential claim

Insuratest 2015

All of the following statements are false () regarding an HO3 special form policy payout regarding a landslide that’s proximate cause is determined by adjusters to be the result of excess water flow caused by improper grading during the course of construction except ()?

A. This loss is excluded as the special form affords no coverage for mudflow regardless of inherent cause

B. This loss is excluded under the concurrent causation exclusion

C. This loss is covered by the special form’s concurrent causation inclusionary endorsement


An agent should recommend an HO3 policy form be purchased by an insured vs. a comparable dwelling form for none of the following () reasons except ()?

A. The insured requests broader dwelling coverage to protect their investment

B. The insured’ dwelling is rented to others

C. The insured uses the dwelling as a vacation rental

D. The insured’s dwelling is a duplex with the insured occupying unit A and renting out unit B

An insureds vehicle is physically damaged while parked in a garage by debris falling during an earthquake. Which specific coverage part of the insureds inforce personal auto policy (PAP) if any, would cover this loss?

A. No coverage is extended for physical damage resulting from an earthquake in a personal auto policy (PAP)

B. Coverage (D) Other than Collision will cover this loss less policy deductible

C. Coverage (C) Other than Collision will cover this loss deductible is waived

D. Not covered by a personal auto policy (PAP) only covered under the insureds HO policy form if an earthquake endorsement is in effect at time of loss

Insuratest 2015

A commercial package policies inland marine coverage form is generally used to cover items of property that may be moved from one location to another and is designed to cover all of the following (+) except ()?

A. Customers dry cleaning items while out for delivery

B. Jewelry and watches in the insured's care custody and control while in for repair at their repair shop

C. Customer automobiles while valet parked in a commercial parking garage owned by the insured

D. A photographer’s audio visual equipment while filming a wedding

An HO3 policy automatically affords $________ coverage for landlord’s furnishings?

A. $0 No coverage available

B. $1,000

C. $1,500

D. $2,500

A townhome building under the course of construction is best insured with a ______________________ form and has a _____% of _________ value coinsurance requirement?

A. HO5 coverage, 80 , fair market

B. DP3 coverage, 80 , reconstruction

C. Builders risk coverage, 100 , completed

D. Builders risk coverage, 80, completed

Insuratest 2015

A California HO3 policy by design considers all of the following (+) to be defined as insureds except ()?

A. An 85 year old aunt living in the insured's residence

B. An 85 year old parent of the insured living in an adult care facility

C. A 16yearold foster child living in the insured’s residence

D. A 20yearold daughter of the insured attending college in New York

The ____________ extended reporting period of a claimsmade commercial general liability policy starts immediately following a policy coverage period’s expiration date and is triggered by either a cancellation or nonrenewal?

A. Broad

B. Basic

C. Special

D. Supplemental extended reporting period

Insuratest 2015

While grading a lot for a custom home the insured contractor’s excavating machine overturns on a steep slope spilling 15 gallons of diesel fuel in the process. Would this pollution loss be covered by his inforce commercial package policy and if so which part?

A. Commercial Auto

B. Professional liability

C. Commercial general liability

D. Inland Marine

The use of an insured’s vehicle as a “Livery Conveyance” is prohibited under the personal auto policy (PAP)’s conditions section (D.I.C.E). All of the following (+) are examples of a “livery conveyance” except ()?

A. Vehicle used to transport people for a fee

B. Vehicle for hire to pick up and deliver lab specimens

C. Hybrid car used as a vehicle for green cab taxi service

D. Carpooling to work and being reimbursed for gas and toll expenses

Think.. Making a living by “deliverying” delivering goods or people” Carpooling is covered by a (PAP)

Insuratest 2015

Which of the following is not part of transacting insurance (T.E.N.S) and may be performed by a nonlicensed employee or future agent while attending pre licensing school? A. Executing a contract B. Soliciting C. Create a list of prospects and or potential clients D. Negotiating

The following are automatic commercial property coverage extensions if if 80% coinsurance is maintained?

A. Newly acquired or constructed building up to ($250,000) and Personal property at a newly acquired location up to ($100,000)

B. Valuable papers and records

C. Property offpremises up to ($10,000) and Outdoor property/sign up to ($2,500)

D. All of the above

Type of risk characterized by inherently possessing a chance of loss only with no chance of gain?

A. Diversified risk

B. Intrinsic risk

C. Pure risk

D. Speculative risk

Insuratest 2015

Don’t let this picture fool you. Speculative risks are not insurable. Well maybe only in a casino ;) Government insurance programs such as the National Flood Insurance Program (NFIP) and the Federal Crop Insurance Corporation (FCIC) were founded and continue to operate in effort to?

A. Use their large financial resources to protect the public by insuring catastrophic losses

B. Provide insurance for a farmers' produce, compensation for crops, even if they were not sustained in a season due to perils such as drought or frost

C. Provide alternative to disaster assistance by covering the rising costs of restoring damaged buildings and replacing insured’s contents destroyed by natural disasters such as floods and earthquakes with insurance

D. All of the above

Which part of an insurance policy (D.I.C.E) states the “insurer promises to make payment to or on behalf of the insured?”

A. Declarations

B. Insuring agreement

C. Conditions

D. Exclusions

(D.I.C.E) Insuring agreement = Insurer Promises

Insuratest 2015

http://en.wikipedia.org/wiki/Flood

With regard to the insurance contractual process when may an insureds representation be altered or withdrawn? A. A representation may be altered or withdrawn only during the 90 day binder period B. A representation may never be be altered or withdrawn C. A representation may be altered or withdrawn only after the insurance is in effect D. A representation may be altered or withdrawn only before the insurance is in effect With regard to the insurance contractual process a representation made by an insured during the formulation of a contract pertaining to future events, or actions (Like stating they will not go skydiving) is considered to be a/an? A. Promise B. Warranty C. Implied warranty D. Verification losses excluded by the underlying policies but still covered under an umbrella policy are subject to a deductible called a/an ___________________ limit?

A. umbrella activation

B. selfinsured retention (SIR)

C. surplus lines

D. umbrella liability policies are never subject to a deductible

Insuratest 2015

Under the terms of the commercial package policy common conditions (D.I.C.E) section for "Hal Liski and Carly Liski DBA El Sol Winery & Accessories." If the insurer cancels the policy, they are required to mail or deliver notice of cancellation in writing to:

A. Either Hal or Carly Liski

B. Hal Liski only

C. Both Hal Liski and Carly Liski as they are equally responsible

D. El Sol Winery and Accessories

With regard to the insurance contractual process a representation made by an insured during the formulation of a contract pertaining to the past, present or future events, is considered to be a/an: A. Verified promise B. Warranty C. Implied warranty D. Verification The chance or uncertainty of an injury or financial loss occurring is known as ___________ ? A. Insurance B. Risk C. Valuation D. Predictability

Insuratest 2015

All of the following scenarios are covered (+) by an unendorsed personal auto policy (PAP) except ()?

A. An insured rents a car while on vacation and causes a bodily injury accident

B. A police officer commandeers an insureds vehicle and totals it in a police chase

C. An insured destroys a one way sign in a solo collision accident while driving a (nonowned) company car on personal time

D. All of the following are covered by an unendorsed personal auto policy (PAP)

Licensed California insurance Agents and Brokers must make their books and records available to the insurance commissioner _______________? A. At all times B. Within 10 days of receipt of a written notice of request issued by the commissioner C. Within 30 days of receipt of a written notice of request issued by the commissioner D. Annually on the month the Agent or Broker received his or her insurance license During the period of removal how is personal property coverage (C) covered in an unendorsed HO3 policy under the (additional coverages property removed) section?

A. Coverage C is covered for the broad form perils only during the period of removal

B. Coverage C is covered for the basic form perils only during the period of removal

C. Coverage C is covered for all perils during the period of removal

D. Coverage C is covered for named perils only during the period of removal

Insuratest 2015

Of the following policy choices all of them have a standard coverage form except ()? A. Condo owners policy

B. Commercial General Liability Policy (CGL)

C. Umbrella policy

D. Business Owner's policy (BOP)

Brosnan and Craig agency represents 007 Insurance Corporation. They may “express” the relationship between the two entities in all of the following ways (+) except ()?

A. Brosnan and Craig agency underwriting for 007 Insurance Corporation

B. Brosnan and Craig agency proudly representing 007 Insurance Corporation

C. Brosnan and Craig agency dedicated sales associates for 007 Insurance Corporation


A method of risk sharing in the form of a clause that is commonly used by insurer’s to require insured's to purchase insurance close to the replacement cost value of their real property is?

A. Santa Clause

B. Coinsurance clause

C. Dependent property clause

D. Actuarial clause

An insurer who no longer has the funds necessary to meet all of the financial obligations it is contracted to secure is said to be? A. NonAdmitted B. Solvent C. Insolvent D. Unsecured

Insuratest 2015

Choose the peril (cause of loss) that is covered in the broad form dwelling DP2 policy that is not covered in the basic form DP1 policy?

A. Fire

B. Falling objects

C. Lightning

D. Internal explosion

Choose the peril (cause of loss) that is covered in the broad form dwelling DP2 policy that is not covered in the basic form DP1 policy?

A. Fire

B. Collapse

C. Lightning


The execution of a contract the “E” (T.E.N.S) in transacting insurance is represented by none of the following () except ()? A. Signing a temporary insurance contract “Binder” B. Convincing an insured to choose a higher deductible they can afford in effort to lower their premium C. Filling out a supplemental application with an insured D. Reviewing quotes with a prospect over the phone Recap of T.E.N.S. T Transaction of matters after the sale E Execution N Negotiating S Solicitation Cannot transact insurance without a license. The penalty is a $10,000 fine and/or up to 1 year in jail

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None of the advantages () of purchasing a commercial package policy as opposed to a monoline policy are referenced below except ()?

A. Monoline policies are only written on an occurrence form basis

B. Multiple coverages are available to an insured for purchase on one policy form (i.e. Commercial General Liability, Commercial Auto liability, and Commercial Umbrella liability)

C. Potential for gaps in coverage are minimized

D. Both B and C

A/an ____________is a written document attached to an insurance policy that modifies the policy by changing the coverage afforded under the policy?

A. trust

B. subjectivity

C. endorsement

D. article

A/an _____________ can add coverage for acts or things that are not covered as a part of the original policy contract and may be added at policy inception or later during the policy term?

A. trust

B. endorsement

C. subjectivity

D. article

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When would an insureds owned commercial office building be considered vacant?

A. If less than 31% of the total building’s rentable space is currently being leased to tenants or occupied by the insured

B. If an adequate amount of business personal property necessary to conduct customary business operations is not present in insured building

C. If less than 51% of the total building’s rentable space is currently being leased to tenants or occupied by the insured

D. None of the above are correct

When would an insured tenant's leased commercial office building be considered vacant?

A. If less than 51% of the total building’s rentable space is currently being leased to tenants or occupied by the insured

B. If less than 31% of the total building’s rentable space is currently being leased to tenants or occupied by the insured

C. If an adequate amount of business personal property necessary to conduct customary business operations is not present in insured building

D. None of the above are correct

Under terms of the commercial package policy common conditions (D.I.C.E) section of Brad Rudick and Adam Rudick dba Rudickulous Browery “where the bros drink brews” who may cancel the policy in writing, is authorized to make insurer consented policy changes and is responsible for premium payments?

A. Either Brad or Adam Rudick

B. Brad Rudick only the first named insured

C. Both Brad Rudick and Adam Rudick as they are equally responsible

D. Rudickulous Browery

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Ken insures his Jeep Wrangler with the following coverage D limits:$1,000 collision and $500 other than collision. His vehicle overturns on an icy curve causing $5,000 in damage to his Jeep no other vehicles were involved. How much will the insurer pay for Ken’s loss? A. $0 B. $4,000 C. $4,500 D. $5,000 Barbie insures her corvette with the following coverage D limits:$1,000 collision and $500 other than collision. Her vehicle is vandalized outside of a Malibu night club resulting $2,000 in damage to her corvette’s pink paint job. No other vehicles were involved. How much will the insurer pay for Barbies loss? A. $0 B. $1,000 C. $1,500 D. $2,000 Fidelity bonds are three party contracts between the principal, guarantor and obligee. Which party is/are the employee(s) in a bond agreement and are not responsible for premium payments?

A. The principal

B. The guarantor

C. The obligee

D. The fiduciary

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Unlike personal auto policies that use coverage letters (i.e. A.B.C.D) commercial auto policies use symbols. What specific coverage is/are represented by symbol 7?

A. Specifically described autos only

B. Owned private passenger “autos” only

C. Owned autos, other than private passenger autos

D. Nonowned autos only



B. Owned private passenger “autos” only





B. Any auto



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B. Any auto

C. Owned autos, other than private passenger “autos” only




B. Any auto

C. Owned autos, other than private passenger “autos” only

D. Hired autos only

None of the following () are considered intentional torts, except ()?

A. Slander

B. Libel

C. Assault

D. All of the above

None of the following () are considered unintentional torts, except ()?

A. Slander

B. Libel

C. Assault

D. Negligence

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The peril of windstorm is covered by which of the following commercial property coverage forms? Choose the best answer. A. Basic, broad, and special

B. Basic and Broad

C. Broad and special

D. Special form only

Under tort law a manufacturer may be subject to a claim for legal liability without regard to fault negating the need to prove fault in court on the basis of:

A. Imputed negligence

B. Absolute liability (aka Strict Liability)

C. No fault state laws

D. Vicarious Liability

A patron leaves the shiny times sport bar and grill after being served drinks and causes an alcohol related injury accident while rear ending another vehicle stopped at a railroad crossing. To protect themselves both legally and financially Shiny Times sports bar and grill owner needs to have a/an _________________ policy in force prior to this occurrence to cover its liability. A. commercial general liability B. host liquor liability C. liquor liability D. absolute liability

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Business income coverage covers the actual loss sustained by an insured as a result of direct physical loss or damage to (personal and real property) of the insured’s business consequently halting operations by a peril not otherwise excluded from the policy. Business income includes net income, which is defined as the following:

A. Net profit or loss before income taxes

B. Net profit or loss after income taxes

C. Ordinary income before income taxes

D. Ordinary income after income taxes

Of the following scenarios which one would be covered under an HO3 policy endorsed with a waterdraft endorsement?

A. An insured business owner takes the top three performing members of his sales team wakeboarding at Lake Don Padro for the day on his personal watercraft

B. An insured business owner rents his personal watercraft out when not in use to supplement the cost of ownership

C. An insured transports fellow boat owners from the sausalito marina dock to their sailboats that are tied to mooring buoys for a fee


All of the following items would be covered (+) on a motorhome endorsed to a personal auto policy (PAP) with a miscellaneous type vehicle endorsement per the insuring agreement (D.I.C.E) except () ?

A. Cooking, dining, plumbing or refrigeration facilities

B. Luggage

C. Awnings or cabanas

D. Any other facilities or equipment designed to be used with a motor home

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Medical payments coverage in a personal auto policy (coverage B “for band aid”) is very similar to medical payments coverage in a boat owners policy. However, medical payments coverage in an HO policy form is radically different. How?

A. Trick question, there is no appreciable coverage difference

B. A boat owner’s policy is only available by endorsement to an HO policy therefore medical payments coverage is identical as it is merely a policy extension

C. A boat owners policy form just like a personal auto policy (PAP) covers the boat owner, owner’s family and permissive occupants (i.e. injuries to the insureds) while an HO policy form covers permissive occupants “guests” only (i.e. Injury to others)

D. An HO policy form covers the home owner, owner’s family and permissive occupants (i.e. injuries to the insureds) while a boat owners policy form just like a personal auto policy (PAP)covers permissive occupants “guests” only (i.e. Injury to others)

Equipment Breakdown coverage aka Boiler and Machinery insurance is available as a monoline policy, in a business owner’s policy (BOP) or part of a commercial package policy. It is designed to cover all of the following (+) except ()?

A. Wear and tear: rust or other corrosion, decay. And latent or hidden defects resulting in damage or destruction of covered property

B. Equipment that generates, transmits or utilizes energy, including electronic communications and data processing equipment

C. Equipment which, during normal usage, operates under vacuum or pressure

D. None of the above None of the following terms is the part of () an insurance company responsible for keeping it financially stable or sound except ()?

A. Actuarial

B. Claims

C. Marketing/Sales

D. Underwriting

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If an insurer decides to nonrenew an insureds policy after running their Motor Vehicle Report (MVR) at renewal time and determining their driving record no longer meet underwriting standards how many days written notice must the insurer afford the insured? A. 10 days B. 25 days C. 30 days D. 90 days Which of the following is the part of (+) an insurance Company responsible for risk selection?

A. Actuarial

B. Claims

C. Marketing/Sales

D. Underwriting

Underwriting profits are achieved by an insurance company (insurer) when it’s combined ratio (calculated by taking the sum of total incurred losses and total operating expenses and then dividing them by earned premium) is:

A. Profit margin exceeds its expense ratio

B. Profit margin is less than its loss ratio

C. Combined ratio is greater than 100%

D. Combined ratio is less than 100%

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Insurance is the ____________ of risk and the two main types of risks are pure risk and speculative risk. Insurers will only write ___________ ;one’s that exist with the possibility for loss only with no chance for gain. Insurer’s will not write ___________ which have the possibility/chance of loss or gain (i.e. gambling)?

A. transference, pure risk, speculative risk

B. absolvement, pure risk, speculative risk

C. elimination, speculative risk, pure risk

D. transference, speculative risk, pure risk

Dog Dynasty LLC owner Debbie has spent $100,000 of her own money converting what once was a 3,000 square foot commercial call center into a doggie daycare and grooming facility at the commercial building she leases. In order to protect Debbie’s business operations what policy would you recommend she purchase (1) and what feature benefit of said policy would you assure her affords coverage for her improvements (2)?

A. (1) Commercial Package Policy (CPP)) / (2) Coverage (A) Business personal property including tenants improvements and betterments

B. (1) Business owners policy (BOP)/ (2) Coverage (B) Business personal property including tenants improvements and betterments

C. (1) Commercial General Liability Policy (CGL) / (2) Coverage (C) Business personal property including tenants improvements and betterments

D. (1) Inland Marine Coverage form / (2) Section II Coverage Business personal property including tenants improvements and betterments

Motorcycles may be insured by a motorcycle policy or in same cases endorsed on a personal auto policy (PAP) with a ____________________________?

A. Two wheel vehicle endorsement

B. No endorsement is available to broaden a PAP to cover motorcycles

C. Drive other vehicle endorsement

D. Miscellaneous type vehicle endorsement

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An ISO HO3 policy will not afford coverage for third party property damage claims caused by the intentional acts of minors at least __________ years of age under section II property coverage exclusions (D.I.C.E).

A. 13 years of age

B. 14 years of age

C. 16 years of age

D. 18 years of age

Equipment Breakdown coverage aka Boiler and Machinery insurance is available as a monoline policy, in a business owner’s policy (BOP) or part of a commercial package policy. It is designed to cover all of the following (+) except ()?

A. Wear and tear: rust or other corrosion, decay. And latent or hidden defects resulting in damage or destruction of covered property

B. Equipment that generates, transmits or utilizes energy, including electronic communications and data processing equipment

C. Tools, belts and instruments inherently subject to annual replacement

D. Both A and C

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Biff a commercial property building owner and first named insured intentionally sets fire to “Biff Tannen's Pleasure Paradise Casino & Hotel” building in attempt to collect on insurance. Investigators later convict Biff of arson. What effect will Biffs action have on his mortgage holder's claims for damages as stated in his commercial property policy conditions section (D.I.C.E)?

A. The mortgage holder is entitled to 66 and 2/3% indemnification of said loss

B. The mortgage holder is entitled to receive 75% indemnification of said loss

C. Policy conditions state mortgagee is entitled to 100%; the full amount of said loss payment as means of indemnification regardless of the fraudulent actions of their insureds

D. The mortgage holder's claim is excluded as illegal acts caused said loss

An Orthodontist purchases a commercial office building to convert into his Dental practice location and purchases a commercial package policy from his agent to protect his interests. The policy contains a coinsurance provision designed to:

A. Require the insured to insure the “real property” at an 80% replacement cost value as to avoid a coinsurance penalty (i.e. the insured underpaying the claim)

B. Require the insured to insure the “real property” at an 100% replacement cost value as to avoid a coinsurance penalty (i.e. the insured underpaying the claim)

C. Require the insured to insure the “personal property” at an 80% replacement cost value as to avoid a coinsurance penalty (i.e. the insured underpaying the claim)

D. Require the insured to insure the “personal property” at an 100% replacement cost value as to avoid a coinsurance penalty (i.e. the insured underpaying the claim)

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In accordance with the California Insurance code all of the following items are required (+) to be stated on the policy declarations page (D.I.C.E) except ()?

A. The policy period including effective date and expiration date if applicable

B. The name of the individual covered or named insured(s) with insurable interest in said property insured

C. The insured's address

D. Policy number

Which property is excluded () under an HO3 policy?

A. Firearms

B. Pets, other animals and pests

C. Fire Safe

D. Jewelry

None of the following are true () of a Warranty except ()?

A. A Warranty is a statement of fact

B May be expressed – in writing

C. May be implied – not in writing

D. All of the above

Property abstracts, title documents, deeds, architectural blueprint drawings and mortgage documents are best insured with the following inland marine coverage form? A. Intrinsic Value


C. Valuable papers and records

D. Document destruction insurance

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Surety bonds are different than insurance policies for none of the following () reasons except ()? A. Surety bonds are not insurance contracts they are instead financial guarantees B. The principal is responsible for making premium payments C. The obligee is responsible to the guarantor if a loss was to occur as surety bonds guarantee certain obligations will be met D. All of the above

Remember a () + a () = a positive with double negative questions. Therefore the above are all true as to differences between Surety bonds and insurance contracts

All of the following loss types would be covered by a commercial property policy except ()?

A. Intangible loss

B. Direct loss

C. Indirect loss

D. Consequential loss

Of the following which represents a feature benefit of a DP2 policy that is not included () in a DP1 policy? A. Coverage for damage to lawns, trees and shrubs B. Coverage for internal and external explosion C. Coverage for fire, lightning and smoke damage D. Physical damage coverage for losses caused by vehicles

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007 insurance company (insurer) is in a financial state that affords only enough capital to cover all of its liabilities and reinsure any outstanding risks. 007 is said to be?

A. Solvent

B. Insolvent

C. Nonadmitted

D. Compulsory

Damages incurred by the principal party to a surety bond agreement are paid for by the _____________? A. Principal B. Surety C. Guarantor D. Both (B) and (C) Damages incurred by the obligee (employer) in a fidelity bond agreement resulting from the dishonest acts of the principal (employee) are paid for by the _____________? A. Principal B. Surety C. Guarantor D. Both (B) and (C)

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Insurance policies are two party contracts while bonds are three party contracts all of the following are (+) parties to a surety bond contract, except ()?

A. Principal

B. Guarantor/Surety

C. Obligee

D. Bondsman

None of the following are true () of an umbrella policy’s prebinding subjectivity requirements except ()?

A. Underlying coverage subjectivity requirements only apply to automobile liability and require an insured to furnish 250.500/100 limits prior to the execution of an umbrella policy contract

B. Insurer may require both personal automobile liability and general liability underlying limits be secured at minimum levels that are higher than the state minimum for california drivers owning or renting property (i.e. Auto limits of 250/500/100 and General Liability limits of 300,000 are subjectivity requirements prior to the execution of an $1,000,000 umbrella contract)

C. Insurer may require both personal automobile liability and general liability be insured with the same carrier

D. None of the above are an umbrella policy’s prebinding subjectivity requirements

In relation to a claims settlement for “your covered auto” the California personal auto policy (PAP) coverage “D” insuring agreement (D.I.C.E) states: the insurers limit of liability is the lesser of the amount required to restore or replace said covered auto with an equivalent auto or provide the insured a/an_____________________ settlement of the damaged or stolen automobile.

A. Replacement cost

B. Replacement cost less depreciation

C. Actual cash value of the stolen or damaged property

D. Both (B) and (C)

Remember the formula for actual cash value, ACV = RCDEP making choice B and C both correct

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Professional liability policies are written on a claimsmade basis for none of the following () reasons except ()?

A. Occurrence policies do not provide coverage for prior acts B. By including a "retroactive" or "prior acts" date on the policy declarations page (D.I.C.E) coverage could be extended as far back as services rendered that could potentially give rise to a claim C. They afford medical professionals an opportunity to insure their outstanding risks resulting from patient services performed in the past under their present insurance policy contract. D. All of the above are reasons

Coverage for ____________________ a type of insurance that insures the property owner for goods in transit;; covering all domestic shipments made during the year through various modes of transportation indicated in the insuring agreement (D.I.C.E) be it rail, air, waterborne etc. are usually written a _________ peril basis.

A. (1) Annual transit policies (2) Named

B. (1) Annual transit policies (2) Open

C. (1) Cargo (2) Named

D. (1) Cargo (2) Open

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A majority of the premium charged for boiler and machinery insurance is used for _________________? A. Potential Claim reserves B. Broker commissions C. Inspections and nondestructive testing services as a method of mitigating occurrences D. None of the above All of the following are true (+) of Boiler and Machinery policies except ()? A. Replacement cost is the insurer valuation in an unendorsed Boiler and Machinery policy form B. Only owned real property is available for Boiler and Machinery coverage C. Coverage may be acquired by an insured through the purchase of a monoline policy or as part of a commercial package policy D. A majority of the Boiler and Machinery premium payments are allocated towards Inspections and nondestructive testing services as a method of mitigating occurrences Ocean marine hull insurance for tug boats, ferries and commercial fishing boats affords coverage for which of the following? A. Insured vessel B. Cargo or freight in transit C. Damage to machinery and other equipment permanently installed on the vessel D. Both A and C

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Ocean marine hull insurance for tug boats, ferries and commercial fishing boats affords coverage for all of the following (+) except ()? A. Insured vessel B. Cargo or freight in transit C. Damage to machinery and other equipment permanently installed on the vessel D. Both A and C An insured contractor is grading multiple lots on a ten acre parcel of land for a residential development project. What type of coverage would you as his broker recommend the purchase of to cover his excavators while being used in his business operations moving from lot to lot?

A. Commercial auto policy

B. Flotilla liability policy

C. Annual Transit Policy

D. Contractor's equipment floater

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Acting as a producer for a nonadmitted carrier is violation of the California insurance code (CIC) unless the producing brokeragent is a __________________ ?

A. Member of the NAIC

B. Nonresident agents dually licensed in a home states other than California

C. An agency principal of a Captive

D. Surplus lines broker

A California Property BrokerAgent and/or Casualty BrokerAgent, licensees must complete a total of ________ hours of continuing education, every license renewal term. While a Limited Lines Automobile Insurance Agent only licensees must complete only ________ hours of continuing education every license renewal term. Both licenses have _______ year terms?

A. 10 / 20 / 3

B. 20 / 15 / 3

C. 24 / 20 / 2

D. 30 / 20 / 5

A California Property BrokerAgent and/or Casualty BrokerAgent, licensees must complete a total of _________ hours of continuing education, with ________ hours of ethics training being _________________________ the continuing education renewal requirement for every _____ year license renewal term? .

A. 20 / 15 / being part of, not in addition to / 3

B. 22 / 5 / in addition to, not part of / 2

C. 24 / 3 / being part of, not in addition to / 2

D. 30 / 5 / in addition to, not part of / 5

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A California Property BrokerAgent and/or Casualty BrokerAgent, licensees must complete a total of ________ hours of continuing education, every year. While a Limited Lines Automobile Insurance Agent only licensees must complete only ________ hours of continuing education every year. Both licenses have _______ year terms?

A. 12 / 10 / 2

B. 20 / 15 / 3

C. 24 / 20 / 2

D. 30 / 20 / 3

In accordance with the California Insurance Code excess and surplus lines coverage In California, must to be placed through?

A. An alien insurer

B. An actively licensed surplus lines broker

C. A syndicate

D. A fraternal organization

With regard to premium financing the CA Insurance Code requires the following of agents receiving compensation for arranging premium financing?

A. Agents are not allowed to receive compensation for premium financing

B. Requires records by agents and brokers be kept and made available for review by the insurance commissioner at all times regarding any and all compensations received by agents and brokers from premium finance transactions or arrangements made with their clients.

C. Requires records by agents and brokers be kept and made available for review by the insurance commissioner within thirty days of being served a written notice regarding any and all compensations received by agents and brokers from premium finance transactions or arrangements made with their clients.


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After adjusters confirm loss of property is covered under an inland marine policy form the insurer may use any of the following (+) valuation methods to indemnify the insured for their loss, except ()? A. Offer a settlement based on the market value of said property B. Offer a settlement based on the actual cash value of said item of property C. Replacing said item of property with one of like kind and quality D. Restoring said property Protection and indemnity coverage (P&I) as part of a yacht owner’s policy is designed to cover none of the following () except ()? A. Freight or cargo B. The Hull C. The boat’s motor or engine D. Liability

Protection and indemnity coverage (P&I) as part of a yacht owner’s policy is designed to cover the following?

A. Inherent vice

B. Liability loss occurring when a crew member’s hand is injured while attempting to tie off the vessel in choppy water

C. Liability loss occurring when a crew member slips on the lido deck

D. Both B and C

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How many classes of insurance are there in California? A. 10 B. 20 C. 30 D. 40

Business income insurance is designed to cover the following?

A. Replace lost net income

B. Pay for continuing expenses, such as commercial rent or mortgage, advertising contracts, taxes and payroll

C. Civil Authority Ingress / Egress (Governmentmandated closure of business premises that directly cause loss of revenue)

D. All of the above

Section 1 coverage of an ISO HO3 policy is extend to all of the following (+) individuals except ()?

A. The named insured's (resident) spouse

B. The named insured's (nonresident) spouse

C. The named insured

D. The named insured's 17 year old (resident) foster child

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A fire and casualty broker/agents license becomes inactive when? A. An employee with a fire and casualty broker/agents license is on sabbatical, sick leave or maternity leave B. The fire and casualty broker/agent licensee is not currently appointed by an insurer, but has met all continuing education requirements and paid all license renewal fees C. An employee with a fire and casualty broker/agents license changes companies D. All of the above A scheduled personal property endorsement (i.e. personal articles floater) if appended to a homeowner’s policy will cover collections of postage “stamps” or rare and current coins unless they are? A. Shipped by mail other than registered mail

B. Being shipped by registered mail

C. Shipped by a freight company

D. Both (A) and (C)

The formula for Actual Cash Value is?

A. ACV = RCDEP The amount to replace lost, stolen or damaged property less depreciation

B. ACV = RC + DEP The amount to replace lost, stolen or damaged property plus depreciation

C. ACV = RCDED The amount to replace lost, stolen or damaged property less policy deductible

D. ACV = MVDEP The Market Value of lost, stolen or damaged property less depreciation

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The unit measure of loss potential used by insurer actuarial professionals to determine premium base pricing by calculation is a/an?

A. A loss cost factor unit

B. A market segment unit

C. An exposure unit

D. valuation unit

Calculate the actual cash value settlement for the following loss scenario: Original price of new industrial equipment purchased by the insured three years ago is $18,000. The current replacement cost of said equipment is $25,000 Depreciation rate is $2,000 per year. The business personal property deductible is $1,000? A. $25,000 B. $19,000 C. $18,000 D. $16,000

Umbrella policies provide excess ____________________ over one or more ________________ policies. Losses not covered by the underlying policy but are covered under the umbrella policy are subject to a deductible called a ________________?

A. (1) liability coverage, (2) primary underlying, (3) Self insured retention limit (SIR)

B. (1) property damage coverage, (2) primary underlying, (3) Coinsurance provision

C. (1) physical damage coverage, (2) primary underlying, (3) Self insured retention limit (SIR)

D. (1) liability coverage, (2) primary underlying, (3) premium allocation fund

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The primary difference between agents and brokers is representation as:

A. Agents transact insurance on behalf of another person while representing the client not on behalf of the insurer as do brokers

B. Brokers transact insurance on behalf of another person while representing the client not on behalf of the insurer as do agents

C. Agents can only offer services from companies that they are appointed with and are paid directly by those companies

D. Both B and C

California’s minimum financial responsibility limits of 15/3/5 are lower than many other states minimum limits. What happens when a california insured driver is driving in Washington who has a state minimum limit of 25/50/10 while carrying California’s minimum limits?

A. The insured’s personal auto policy (PAP) will automatically increase coverage to meet washington’s minimum financial responsibility limits of 25/50/10 but they must drive no further than 25 miles past the state line without purchasing the “other states endorsement”

B. The insured’s personal auto policy (PAP) will automatically increase coverage to meet washington’s minimum financial responsibility limits of 25/50/10

C. The insured’s California limits of 15/30/5 will apply and a $1,000 penalty will be enforced for not meeting Washington's minimum requirements

D. Prior to driving to washington the California insured driver needed to have purchase the “other states” endorsement.

From an underwriting perspective ideally insurance risks include all of the following (+) elements except ()?

A. The loss must be due to chance

B. The loss exposure must be large as to avoid adverse selection

C. The loss must be definite and measurable

D. The loss cannot be catastrophic in nature

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All of the following are covered (+) as part of a commercial property coverage form policy’s building aka real property coverage except ()?

A. Permanently installed shade awnings

B. Patio

C. Exterior parking lot lights

D Storage garage attached to a commercial office building

None of the following are true () of the California Insurance Guarantee Association (CIGA) except ()?

A. Protects policyholders in the event their insurance company goes insolvent

B. Minimum claim $100,

C. Maximum obligation is $500,000

D. All of the above

Desiree uses her own vehicle during work hours to pick up printer toner from a nearby office supply store. Desiree is texting while driving and rear ends a vehicle stopped at a traffic light and causes bodily injury. Her employer may be held______________ liable for her accident.

A. Vicariously

B. Absolutely

C Strictly

D. Intrinsically

Definition recap. Vicarious Liability = Someone is responsible for the actions of another. Parents are responsible for the actions of their children. Employers are responsible for the actions of their employees while under their employment.

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Ordinance or law coverage is designed to supplement the additional costs associated with restoring a commercial building’s “real property” either damaged or destroyed by a covered peril and bringing it to current building code specifications mandated by city ordinance or law. Of the following choices which is/are an ordinance or law coverage exclusion ()?

A. Cost to install mandated fire sprinkler installation

B. Costs to remove asbestos

C. Costs to redesign and reconstruct walkways, access ramps and bathrooms to meet current ADA compliance requirements

D. Both B and C

The California fair plan is designed to afford access to insurance coverage for none of the following () except ()?

A. Dwelling coverage for homes in the course of construction

B. Automobile coverage for high risk drivers with restricted licenses

C. Dwelling coverage for a well maintained home located in a high fire hazard area that is 20 miles from the nearest fire station

D. Automobile coverage for unlicensed drivers who own and register vehicles

Which of the following is a a/an fundamental characteristic of a Unilateral Contract?

A. Onesided, only the insurer must live up to their end of the agreement

B. Any ambiguity in the contract will be determined in favor of the insured

C. Take it or leave it contract

D. Based on an uncertain event, unequal results

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All of the following are not true () of a contract of adhesion except ()?

A. Any ambiguity in the contract will be determined in favor of the insured

B. Take it or leave it contract

C. Onesided, only the insurer must live up to their end of the agreement

D. Both A and B

Which of the following is a fundamental quality of a/an Aleatory Contract?

A. Take it or leave it contract

B. Any ambiguity in the contract will be determined in favor of the insured

C. Onesided, only the insurer must live up to their end of the agreement

D. Based on an uncertain event, unequal results

All of the following are not true () of a Doctrine of Utmost good faith except ()?

A. Take it or leave it Doctrine

B. Any ambiguity in the Doctrine will be determined in favor of the insured

C. Rely on the representations of either party without any attempts to conceal or deceive

D. Onesided, only the insurer must live up to their end of the agreement

A California personal auto policy (PAP) will cover all of the following (+) vehicles except ()?

A. A two seater pickup truck used in a pool cleaning business

B. A private passenger electric automobile owned by a corporation

C. A private passenger van converted for a driver with special needs

D. Both A and B

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Umbrella policies have a deductible, what is it called (1) and when is it applied to a loss settlement (2)?

A. (1) Selfinsured retention limit (SIR) (2) applies to losses excluded by the underlying policy that are covered under the umbrella

B. Selfinsured retention limit (SIR) (2) applies to losses covered by the underlying policy that are not covered by the umbrella

C. Excess liability deductible (ELD) (2) applies to losses excluded by the underlying policy that are still coverage still covered under the umbrella

D. Excess liability deductible (ELD) (2) applies to losses covered by the underlying policy that are not covered by the umbrella

None of the following is/are true () of the medical coverage expense limits of a California workers compensation policy, except ()?

A. Medical expense coverage has both a time and dollar limit

B. Medical expense coverage limits do not have a time limit or a dollar limit

C. Medical expense coverage limits do not have a time limit but have a dollar limit

D. Medical expense coverage limits have a time limit but not a dollar limit

An insureds vehicle is physically damaged while driving into a large tree limb that fell during a severe windstorm. Which specific coverage part of the insureds inforce personal auto policy (PAP) if any, would cover this loss?

A. No coverage is extended for physical damage resulting from acts of nature in a personal auto policy (PAP)


C. Coverage (D) Collision will cover this loss less the policy deductible

D. Coverage (C) Other than Collision will cover this loss deductible is waived

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An insureds vehicle is physically damaged while driving by a large tree limb falling on it during a severe windstorm. Which specific coverage part of the insureds inforce personal auto policy (PAP) if any, would cover this loss?

A. No coverage is extended for physical damage resulting from acts of nature in a personal auto policy (PAP)


C. Coverage (D) Collision will cover this loss deductible is waived

D. Coverage (C) Other than Collision will cover this loss deductible is waived

Coverage A under an ISO HO3 policy affords coverage to which of the following?

A. Interior paint applied to walls damaged by smoke caused by a kitchen fire

B. An insureds fence damaged in a wind storm

C. Gardening maintenance tools kept in an attached garage stolen when the insured left the garage door open overnight by accident

D. Engagement ring lost on a honeymoon

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None of the following are true () of an exclusive agent except ()?

A. Exclusive agents sell one line of coverage only (life insurance)

B. Exclusive agents sell one class of insurance only (personal lines)

C. Exclusive agents sell one class of insurance only (commercial lines)

D. Exclusive agents represent one insurance company (one insurer), by selling only their products per contractual appointment agreement (i.e. Farmers agent, State Farm agent, Allstate, AAA agent, Geico agent etc.)

The special form dwelling coverage contract affords more coverage than the basic form (i.e. DP3 vs DP1) . Of the following perils which is covered in the special form that is not covered in the basic form?

A. Fire

B. Lightning

C. Collapse


The special form dwelling coverage contract affords more coverage than the basic form (i.e. DP3 vs DP1) . Of the following perils which is covered (+) in the special form that is not () covered in the basic form?

A. Fire

B. Lightning

C. Additional living expenses


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A standard commercial general liability policy declarations page (D.I.C.E) lists none of the following () aggregate limits (cumulative total of all claims paid during a policy period) except ()?

A. General aggregate limit

B. Products/completed operations limit

C. Medical expense aggregate limit

D. Both A and B

Commercial General Liability (CGL) policies exclude coverage for losses to the personal property of others while in the care custody and control of the named insured thus creating a need for commercial insureds in the business of servicing the property of others (i.e. watch, jewelry, instrument repair or dry cleaners) to purchase which additional policy coverage form?

A. Extra expense

B. Intrinsic Liability

C. Inland Marine


At the most basic level insurance is the _________________ of the _______________________ a loss occurring. A. (1) Transference (2) Uncertainty or chance of B. (1) Transference (2) Certainty of a loss C. (1) Avoidance (2) Uncertainty or chance of D. (1) Forfeiture (2) probability

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Insurance is the transference of __________ which is defined as __________________________. A. (1) Loss (2) chance or uncertainty of an injury or financial loss occurring B. (1) Risk (2) chance or certainty of an injury or financial loss occurring

C. (1) Risk (2) chance or uncertainty of an injury or financial loss occurring D. (1) Responsibility (2) managing assets or risk to provide for the needs to tomorrow An earthquake causes a gas line to rupture inside an insureds detached garage. Following the earthquake an explosion occurs and destroys the insureds garage and vehicle parked inside. The following policycoverages are in place at the time of loss: an unendorsed HO3 policy with coverages A.B.C.D.E and F. And a personal auto policy (PAP) with coverage’s A. B. C. and D (both comprehensive and collision). What is covered in this loss (1) and what specific coverages of each policy if any will respond (2)? A. (1) Detached garage coverage A (2) Auto coverage D collision B. (1) Detached garage coverage B (2) Auto coverage D comprehensive C. (2) Auto only, coverage D comprehensive D. (1) Detached garage only, coverage B An unendorsed personal auto policy (PAP) affords coverage in which of the following instances?

A. An insured driver destroys a neighbor's picket fence while adjusting its vehicle’s GPS settings and negligently backing up without looking

B. Rock falls off of a gravel truck and shatters an insureds windshield

C. Insured intentionally breaks the truck lock to access the keys locked in it while parked at a ski resort

D. The cost to rent a car while their vehicle’s collision damage is being repaired in a shop

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The following is/are true (+) of exclusive and captive agents:

A. They sell one class of insurance (life insurance) exclusively

B. They represent the insurer not the insured

C. They exclusively represent one insurer

D. Both B and C

Under terms of a commercial package policy common conditions (D.I.C.E) section which party(s) to a contract is/are allowed to (+) legally cancel the policy

A. Insurer only B. Insurer and either the first or second named insured in the policy C. Insurer and first named insured by mutual consent D. Insurer and either the first named insured in the policy Binders may be used as a means of securing temporary insurance coverage for all of the following lines (+) of insurance except ()?

A. Auto insurance

B. Life insurance

C. Homeowner’s insurance

D. Commercial property

Why? Life insurance has its own type of “binder” and it is called a covering note instead. This is merely a definition question) Which of the following is true (+) of a Covering note/conditional receipt? A. Covering note/conditional receipt’s are Conditional B. Good for 90 days/usually 4560 C. May be extended 60 days/total 150 days D. All of the above

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Binders may be used as a means of securing temporary insurance coverage and are good for how many days?

A. 10

B. 25

C. 60

D. 90

Do you remember “Trapper Keeper Notebook Binders” from the 1990’s weren’t those AWESOME!! Binder = 90 days. Binders are Unconditional, good for 90 days/ usually 4560, only agents may bind coverage, Never used in life/disability

None of the following represent () the broadest category of crime coverage except ()? A. Robbery B. Burglary C. Theft D. Commercial Crime

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Standard commercial package policies afford coverage for all of the following (+) except () A. Dwelling reconstruction B. Advertising injury C. Boiler and Machinery D. General liability

Which of the following accurately represents the formula for actual cash value often used by adjusters to determine a loss settlement?

A. ACV = (RC) Replacement cost — (MV) Market value

B. ACV = (RC) Replacement cost – (DEP) Depreciation

C. ACV = (SV) Stated value (DEP) Depreciation

D. ACV = (SV) Stated value (MV) Market value

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The ISO has standardized the following policy forms:

A. Motorcycle policy

B. Personal auto policy (PAP)

C. personal umbrella liability policy

D. All of the above

The ISO (Insurance Service Office) first released its standardized personal umbrella liability policy form in 1998. Then in 2013 an ISO umbrella liability form became available as part of the ISO’s Personal Limes Specialty Programs, which includes personal liability, umbrella liability, motorcycle liability and watercraft liability.

All California employers must provide statutory workers compensation coverage to their employees that afford the following:

A. Work related injury payout without a maximum time or dollar pay out limit

B. Compensation for work related injuries without regard to fault

C. 24hour coverage

D. Both A and B

All of the following are true (+) of reinsurance: the sharing of risk between insurers?

A. Retention Limit is the maximum risk an insurer may handle

B. To insure in excess of its retention limit and insurer must reinsure

C. The original insurer is known as the ceding company and the agreement between the ceding company and the reinsurance companies is known as a reinsurance agreement or treaty

D. All of the above

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In compliance with the "examination of your books and records" condition as part of a commercial general liability policy contract’s conditions (D.I.C.E) section between the insurer and insured. Which of the following is/are true (+)?

A. The insurer may audit the insureds books and records at any time during the policy period and up to three years afterwards

B. The insurer may audit the insureds books and records at any time during the policy period only

C. The insurer may audit the insureds books and records only when authorized by the insured

D. Only California workers compensation policies are auditable not general liability

In accordance with proposition _____ which requires “prior approval” of automobile insurance rates by the California Department of Insurance; all of the following are used (+) as principal rating factors by insurer actuaries except ()?

A. (1) 45 (2) Years of driving experience

B. (1) 47 (2) Driving record

C. (1) 103 (2) Number of annual miles driven

D. (1) 103 (2) Number of drivers listed on the policy Declarations page (D.I.C.E)

The peril of glass breakage is covered by (+) which of the following commercial property policy forms? A. Basic form and broad form B. Basic form and special form C. Broad form and special form D. Special form only by adding the “plate glass coverage” endorsement

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Medieval Times dining entertainment Inc’s commercial general liability policy (CGL) includes medical payments coverage. Medical payment coverage applies to none of the following () individuals with regard to Medieval Times’s business operations except ()? A. The knights while playing in a company sponsored softball tournament vs. the rival Pirates Dinner adventure team B. The insured’s customers (Dinner guests) while in the process of transacting business (dining) on the insured’s (Castle grounds) premises C. The serving staff while serving the dragons wing chicken D. The insured’s hired electrician who is fixing an outdoor neon sign that was damaged in a severe storm

Which of the following is/are covered (+) by commercial insured Paul Vans dba Tri City Sporting Goods employee dishonesty coverage form? A. Cash deposit lost by an employee while en route to the bank B. Armed robbery of an employee while operating a cash register C. Theft of stock (merchandise) from (Tri City Sporting Goods) the business, owned by the insured policy holder (Paul Vans), proven to be taken by an employee D. Theft of stock (merchandise) from (Tri City Sporting Goods) the business, owned by the insured policy holder (Paul Vans), proven to be taken by a customer

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Of the following coverage’s below which one is/are specifically for (+) real property?

A. Property damage liability

B. Comprehensive aka non collision

C. Other than collision

D. Both B and C

Christian a single San Francisco resident does not own or lease a car but occasionally drives a roommate's car as a designated driver and to pick up specialty items not conducive to public transportation. When traveling to Arizona to see the Grand Canyon and renting a car at the Flagstaff airport which endorsement should Christian purchase prior to renting said car to adequately cover his personal liability? A. Named nonowner coverage endorsement B. Miscellaneous type vehicle endorsement C. Transportation extension endorsement D. Drive other car endorsement

Which of the following business operations are suitable (+) for coverage under a Business Owner’s Policy (BOP) coverage form?

A. An auto body shop

B. A threestory, 15 unit apartment building, approximately 25,000 square feet in total dwelling area

C. A brewery restaurant

D. An athletic club occupying a 150,000 square foot space

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An orthopaedic surgeon is being sued for operating on the wrong knee of a patient under his care. What type of insurance would protect the surgeon for both his liabilities as a practicing surgeon and this particular mistake?


B. Commercial umbrella liability

C. Professional liability

D. Errors and omissions

An oral surgeon is being sued for removing the wrong tooth from a patient under his care. What type of insurance would protect the surgeon for both his liabilities as a practicing surgeon and this particular mistake? Please choose the best answer.


B. Professional liability

C. Medical malpractice

D. Errors and omissions

Both answers B and C are correct as medical malpractice coverage is a specific type of professional liability insurance. However for this question the best answer is choice C.

As a licensed fire and casualty broker/agent, you are meeting with a prospective client who's in the process of buying a condominium. The prospect called your office asking for a policy to secure the following coverages required to satisfy his pending loan requirements: Interior walls in coverage (in an amount no less than $35,000), personal liability insurance (minimum $100,000), and loss assessments coverage for common areas including the pool, cabana, gym, elevator, walkways and parking structure (in an amount no less than $5,000). Which policy form would you recommend the prospect purchase? A. An HO3 policy form B. An HO4 policy form C. An HO4 policy form D. An HO6 policy form Insuratest 2015

In terms of coverage comprehensive personal liability policies are similar to Homeowners section II as both were designed to afford the insured coverage for: A. All legal on premises and off premises activities

B. Both legal on premises and off premises activities less any occurrence resulting from an insured driving a licensed personal automobile on private land owned or on public and private roadways

C. Both legal on premises and off premises activities including any occurrence resulting from an insured driving a licensed personal automobile on private land owned or on public and private roadways

D. Comprehensive personal liability policies only provide coverage for off premises activities unlike Homeowners section II which affords coverage for both on and off site liability exposures

Insureds Brian and Brianne are vacationing in Vegas. While swimming at the hotel pool their hotel room key is swiped from their towel bag. A thief has made off with their cell phones, watches, and luggage. The replacement cost of each is as follows: Cell phones ($600) Watches ($1000) Luggage ($1400). Their apartments unendorsed H04 policy includes a $25,000 coverage C limit and a $500 deductible. Assuming depreciation of 20% what will the insurer pay for their loss? A. $1,800 B. $1,900 C. $2,100 D. $2,500

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Remember the unendorsed H04 policy settlement valuation is Actual Cash Value and the formula for Actual Cash Value is: ACV = RCDEP. So for Brian and Brianne their ACV settlement = $600+$1,000+$1,400 ($3,000) DEP “DEPreciation” of 20% ($600). Therefore their loss payout is $2,400 less their deductible of $500 giving the correct answer of $1,900. *As a future insurance professional and likely policy owner please note that the replacement cost endorsement on an H04 policy is usually less than 10% of the total annual premium. If Brian and Brianne had the replacement cost endorsement at time of loss they would have been indemnified approximately $470 more as H04 premiums are generally $300 and under annually.

Unlike the purchase of a replacement or secondary automobile the personal auto policy (PAP) in its unendorsed form does not automatically extend temporary liability and physical damage coverage to an acquired motorcycle or motor scooter because?

A. Motorcycles and motorscooters must be insured by either the miscellaneous type vehicle endorsement appended to a personal auto policy (PAP) or with a stand alone motorcycle policy prior to driving on public roadways

B. In its unendorsed form the personal auto policy (PAP) does not cover twowheeled vehicles.

C. Motorcycles and motorscooters cannot be insured under the PAP

D. Both A and B

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Physical damage to an insured's vehicle caused by a severe hailstorm is covered (+) under the following portion of a personal auto policy (PAP)? A. Coverage (C) as an other than collision loss B. Coverage (D) as a collision loss as ice particles collided with the car C. Coverage (D) non collision aka comprehensive loss D. No coverage as acts of nature are a physical damage exclusion under the personal auto policy (PAP) coverage form To protect a dog and residential property renter, who lives in a high density condo complex, with multiple neighboring families, that have small children, against the liability exposure of a potential accidental dog bite claim. Which policy form would your recommend?

A. H03 with minimum $100,000 coverage C limit

B. H04 with minimum $100,000 coverage E limit

C. H06 with minimum $100,000 coverage E limit

D. H08 with minimum $100,000 coverage F limit

Cute puppy and trick question. Remember even when renting a condo or a home the insured renter may only purchase an H04 policy form which affords coverages C (Personal Property), E (Personal Liability) and F (Medical payment to others. Don’t forget no coverage A Dwelling is provided by and H04.

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Which type of property loss causes immediate damage to covered property resulting in a reduction of value?

A. Additional living expense

B. Coincidental

C. Consequential loss

D. Direct loss

Which type of property loss causes secondary damage to covered property resulting in a reduction of value (i.e. Fire resulting from a gas line rupturing in an earthquake)?

A. Direct loss

B. Indirect loss

C. Consequential loss

D. Both B and C

Remember!

Loss = Reduction in the quantity, quality or value of an asset.

Direct Loss = Direct physical loss, damage or destruction to property

Indirect Loss/Consequential Loss = Expenses that becomes apparent after a direct loss Such as business income, extra expenses, rental car, additional living expenses

Professional liability policy forms are designed to protect professional service providers while practicing their professions. Of the following individual professionals, who is not eligible () for professional liability coverage?

A. Divorce Attorney

B. Professional soccer player

C. Professional Actor

D. Both B and C

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(Party on off Wayne, sorry professional liability coverage is not available for professional actors or athletes)

A method of risk management that eliminates a loss exposure and reduces its chances of occurring to 0% (i.e. filling in a swimming pool in an insureds backyard as to avoid drowning) is known as?

A. Risk avoidance

B. Risk transference

C. Loss reduction

D. Loss mitigation

Boiler and machinery insurance available to an insured as part of a business owner’s policy (BOP) or as part of a commercial package policy (CPP) is designed to cover all of the following (+) except ()?

A. A/C and refrigeration systems

B. Equipment operating under a vacuum

C. Office computer equipment

D. production equipment/machinery including circuitry

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The insurance commissioner , a/an ____________ official whose job is to ___________ the California Insurance Code (CIC) defined as: _________________________.

A. (1) Publically elected (2) enforce but not change (3) State laws regulating insurance

B. (1) Publically elected (2) enforce and change (3) State laws regulating insurance

C. (1) Appointed (2) enforce (3) Federal laws regulating insurance

D. (1) Appointed (2) enforce and change (3) Federal laws regulating insurance

Remember the Insurance Commissioner is elected/selected by the voting public. The insurance commissioner elect enforces but cannot change the laws. Any change to the California Insurance Code (law) may only be changed at the State Legislative level by the State Legislature

If the Commissioner resigns, dies or is disabled, the interim commissioner is appointed by the?

A. NAIC

B. Governor

C. State Legislature

D. President

Which of the following court cases decided Insurance would be regulated by the Feds, at the Federal level?

A. Paul versus Virginia

B. Southeastern Underwriters Decision

C. McCarron – Ferguson Act

D. Sherman Act

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Which of the following court cases ultimately decided Insurance would be regulated by the States, at the state level?




D. Sherman Act

Which of the following court cases overturned Paul versus Virginia and decided Insurance insurance could be regulated by the United States Congress under the Commerce Clause?

A. Southeastern Underwriters Decision

B. Sherman Act



Which of the following ultimately decided Insurance would be regulated by both State and Feds though primarily at state level?




D. Sherman Act

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Insurance is a contract whereby one undertakes to indemnify another against? A. Risk

B. Loss

C. Damage

D. Both B and C

Remember. insurance is a contract whereby one undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event. Insurance is the transference of risk not the indemnification of risk

The uncertainty or chance of a loss occurring is?

A. Peril

B. Risk

C. Indemnity

D. hazard

A/an ___________ increases the chances of loss or severity of loss occurring as the result of a peril.

A. Risk

B. Exposure

C. Hazard

D. Tort

A/an ___________ is the actual cause of a loss. Examples include fire, wind, lightning.

A. Risk

B. Exposure

C. Hazard

D. Peril

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Type of hazard that deals with a person’s mental attitude, behavior and habits, careless.

A. Moral

B. Morale

C. Legal

D. Physical

Type of hazard caused by reckless as opposed to careless action?

A. Moral

B. Morale

C. Legal

D. Physical

None of the following () represent types of authority given to agents except ()?

A. Apparent

B. Expressed

C. Implied

D. Complete

There is no such thing as complete authority just remember Apparent, Expressed and Implied are the different types of authority that may be given to agents by insurers.

Type of authority given to agents by an insured in writing?

A. Apparent

B. Expressed

C. Implied

D. Complete

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None of the following statements () regarding securing an insurance contract as part of a property loan requirement are true except ()?

A. Allowing the client to secure insurance coverage independently so long as the loan requirements are met by said insurance contract

B. Requiring the purchase of insurance through a specific company as part of the requirements in the purchase is not legal.

C. Requiring the purchase of insurance through a specific agent as part of the requirements in the purchase is not legal.

D. Both B and C

Example: an insured purchases a new condo. Their loan officer may recommend their friend who is an insurance agent/broker because they offer prompt service and they frequently refer one another but in no way may they declare the prospective client (insured) must purchase insurance through a particular agent or company. That is illegal and a violation of the California Insurance Code CIC. This direct violation would result in an insurance related misdemeanor

In order for coverage C (medical expense) claims to be paid under both a Commercial General Liability (CGL) and Business owner policy (BOB) all medical expense claims must be:

A. Must be reported within the policy period

B. Reported up to 90 days after the policy expiration date

C. Reported within one year of the recorded incident/accident date

D. Reported within one year of the policies expiration date

Type of professional liability insurance for nonmedical professionals designed to pay for losses or the defence of lawsuits that may be filed against them whether deemed groundless or not?

A. Errors and Omissions insurance

B. Defense liability insurance

C. Legal Liability insurance

D. Absolute Liability insurance

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The following are provided by Worker’s Compensation policies

A. Coverage for fork related injuries without regard to fault

B. Coverage for work related injuries without the need to prove negligence

C. 24 hour care coverage

D. Both A and B

Which of the following is/are not considered () a physical damage coverage under an ISO commercial auto coverage form.

A. Supplementary payments

B. Comprehensive


D. Collision

Which of the following is/are considered (+) a physical damage coverage under an ISO commercial auto coverage form.

A. Supplementary payments

B. Comprehensive


D. Collision

When is the aggregate limit of a Commercial General Liability (CGL) policy restored following a paid claim?

A. Policy renewal date

B. Policy Anniversary date

C. 90 days after the covered loss is paid in full

D. Losses are charged against the total aggregate limit for a period of no less than three years

This is a tough question. Choice A is a good choice and choice B is a better choice. Why? Renewal dates may be longer than every year. Example: a policy with a two year term. Since the aggregate limit will always be restored on the annual anniversary date

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of a policies effective date (the anniversary date) choice B is the best and correct answer

Which of the following endorsements may be used by an insurer to exclude coverage for potential commercial general liability claims arising from specific operations at designated project locations?

A. Completed operations exclusion endorsement

B. Claims made claimant exclusion endorsement

C. Tail coverage exclusion endorsement

D. Specified cause of loss exclusion endorsement

Ideally insurable risks have all of the following characteristics except ()?

A. Loss must be definite and measurable

B. Loss must occur in or on an insured's property

C. Must be definite and measurable

D. Law of large numbers applies

Remember. Liability losses (casualty losses) may occur away from an insured's property/premises. Ex: an insured injuring someone on the ski slopes by losing control while skiing downhill and causing a body injury accident. This liability loss would be covered under section II of an HO or DP contract form.

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Personal property (Coverage C) under the National Flood Insurance emergency Program (NFIP) may be insured for the following amount

A. $10,000

B. $25,0000

C. $50,000

D. $100,000

Which of the following licenses are required in order to sell policies for the California Fair Plan to secure coverage for insureds who own homes located in high fire hazard areas?

A. Broker/Agent, or a Fire & Casualty Broker/Agent license only

B. Personal Lines Broker/Agent, or a Fire & Casualty Broker/Agent after completing a California Fair Plan approved C.E course

C. Surplus license only

D. Personal Lines Broker/Agent, or a Fire & Casualty Broker/Agent

All of the following represent (+) surplus lines insurance placements that may only be placed by a surplus lines broker, except ()?

A. Aircraft insurance

B. Farm or ranching

C. Railroad insurance

D. Sports Franchise

Farm risks are not considered special or surplus lines placements and may be placed with admitted carriers by any appointed California agent or broker

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Congratulations on completing The Study Lounge Sessions. We encourage you to revisit; incrementally increasing effort as you push toward your exam date. Think of the State exam as running a mile. Let the Study Lounge Sessions be your many 440 yard practice runs.

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Our students greatest gift to us is their referral. If this course has helped you please tell your coworkers, friends and managers about us. We want to help as many people with the first step in their insurance careers as we can. It all starts with a passing score.

Also if you see any new questions that were puzzling on your exam, not referenced here and would like to help those ahead of you, please let us know. We would love to include a tutorial version in the Study Lounge Sessions with your help.

Lastly please send us a selfie of you holding up your license after you pass your exam! We would love to share in your success, and see your well earned smile on our community selfie wall.

Insuratest 2015

Date post:	08-Apr-2017
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