Property & Casualty Practice Tests

Quizzes 1–5 · 199 questions · correct answers marked ✓

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Quiz 1 — Licensing, the Commissioner & Ethics

Scored 93.94%

Q1

Every applicant for a license to act as an agent must have filed with the Commissioner:

a notice of appointment to do business in the state.
a request for application prior to being licensed in the state.
a license number to be approved prior to receiving a license.
an application for employment with the company employed with.

Q2

For an agent or solicitor to be valid to transact insurance requires:

neither are required
an appointment
a proper license
both are required

Q3

An organization ceases to exist as an entity eligible to hold a license upon all of the following EXCEPT:

upon dissolution of a corporation.
upon dissolution of a co-partnership or upon any change in membership of a co-partnership.
upon the termination of a key employee.
upon the termination of an association.

Q4

When should a licensee notify the Commissioner of a change in address?

immediately
within the 10 day grace period
after notifying the company the licensee is employed with
within the 30 day grace period

Q5

Which of the following is NOT a valid reason for the Commissioner to deny the use of a name when filing with the Insurance Commissioner?

The name would interfere or is too similar to the name of another agency already licensed by the Commission.
The name would lead the public in the wrong direction.
The name gives the impression the licensee is authorized to conduct a type of business it cannot legally conduct.
The name is politically connected to the government.

Q6

The Commissioner can suspend a permanent license without a hearing, except:

none are exceptions
client co-signing a loan
conviction of any felony
license revoked last 5 yrs

Q7

A licensee may surrender his/her license:

after notifying the Commissioner and a mandatory 30 day waiting period.
after the termination of employment with an insurer.
after written notice to the Department and the Commissioner after the next January 1.
upon written notice to the Department of Insurance at any time.

Q8

If a license is in the possession of the insurer or the licensee's employer, the licensee may surrender his/her license:

after the termination of employment with an insurer.
after written notice is delivered to the Commissioner.
at any time.
after notifying the Commissioner and a mandatory 30 days waiting period.

Q9

Every licensee shall prominently put their license number on all of the following except:

Neighborhood advertising flyer
Business cards
Phone book listing in the white pages
Price quote

Q10

Transacting insurance via the internet with a California resident would not require:

name on license
license number
license expiration
state licensee's domicile

Q11

A Property and Casualty Agent is required to continue their education by completing:

a total of 24 hours per license term.
a total of 100 hours during the first 4 years of licensing.
a total of 25 hours during the first 2 years of licensing.
a total of 55 hours during the first 2 years of licensing.

Q12

If someone has a Life Agent Combo and a Property/Casualty license for 10 years, then how many CE hours would be required in the current license term?

30 hours
24 hours
25 hours
50 hours

Q13

To handle long term care insurance, an agent of more than four years must satisfy the continuing education requirement of:

a 4 hour course in each of the first 2 years of licensing.
a 4 hour course in each of the first 4 years of licensing.
an 8 hour course in each of the first 4 years of licensing.
8 hours of LTC training each license term.

Q14

All Property and Casualty Broker/Agents are required by law to display to the public:

The institution of education where they received their degree.
Their license to sell insurance, displayed in a place where it can be easily seen.
The types of insurance they are licensed to sell displayed in their personal office.
Their license to sell insurance displayed in their training room.

Q15

According to the qualifications of an insurer under the California Code a person can be any of the following EXCEPT:

a trust
a human being at least age 16 who is competent and not intoxicated
an estate of a deceased person
a corporation

Q16

Which of the following is not a person under the Code?

An estate of a deceased
A family
An entity
An individual

Q17

Which of the following is NOT true about the California Insurance Code and the California Code of Regulations?

The CIC is written, updated, and changed by the California State legislature.
The CIC and the CCR are a complete guide to ethical behavior.
The CIC gives the Commissioner the power to institute rules and regulations which are called the CCR.
The Department of Insurance implements, enforces and monitors the CIC.

Q18

The Commissioner may give an order that records be brought current within:

15 days of the order
60 days of the order
90 days of the order
30 days of the order

Q19

Records must be made available to the Commissioner:

upon written request
within 30 days
at all times
within 5 days

Q20

Informational records must be kept a minimum of:

12 months
indefinitely
5 years
18 months

Q21

Agents must keep good records and make them available to the DOI for a period of:

2 years
1 year
5 years
3 years

Q22

What is the difference between an admitted and a non-admitted insurer?

An admitted insurer has met all the qualifications designed by the DOI but hasn't received a Certificate of Authority because they are not licensed in the state of California, and a non-admitted insurer is licensed in the state of California.
A non-admitted insurer is a company that has met all of the qualifications designed by the DOI and has received a Certificate of Authority from the DOI to transact insurance in California, whereas an admitted insurer has not complied or been denied.
An admitted insurer is a company that has met most of the qualifications designed by the DOI and has received a Certificate of Authority from the DOI to transact insurance in California, whereas a non-admitted insurer has not applied or been denied.
An admitted insurer is a company that has met all of the qualifications designed by the DOI and has received a Certificate of Authority to transact insurance in California, whereas a non-admitted insurer has not complied or been denied.

Q23

It is against the law for an insurance licensee to offer free insurance to:

anyone as an incentive to acquire some other type of business.
anyone, regardless the reason.
family and other relatives.
those who cannot afford it.

Q24

Insolvency means:

an insurer's inability to meet the standards set by the DOI
an insurer's inability to meet its financial obligations when they are due
a company has more earned premium than claims made
a company has more claims than earned premium to pay for those claims

Q25

________ refers to the inability of the insurer to meet its financial obligations when they are due.

Actuarial
Non-Admitted
Insolvency
Paid in capital

Q26

After providing an opportunity for a hearing, the Commissioner may deny an application for a license based on the following reasons EXCEPT:

the applicant is disabled
the applicant has acted as a licensed person before the license was issued
the applicant lied on the application
the applicant was convicted of a felony

Q27

In lieu of denying an application for a license the Commissioner can:

issue a restricted license
neither of these
either of these
charge extra fees

Q28

Appointments are terminated when:

license fees paid late
by either agent resignation or insurer termination
termination of license
any of these

Q29

When can a partnership continue if a new partner joins?

After the new partner is issued a license by the department and the old license is terminated.
After all the partners file a written notice with the Commissioner within 45 days.
After the department is notified within 30 days and the changes are approved.
After the Commissioner is notified and a new license is issued.

Q30

The marketing/sales department is responsible for:

receiving claim requests, evaluating them, and paying those claims that are covered by the terms of the contract and rejecting those that are not.
advertising, promoting and distributing an insurer's products to the public.
receiving applications for insurance and then deciding if the company should approve or reject the application.
using claims history, statistics, and computer data to predict losses.

Q31

The actuarial department is responsible for:

receiving applications for insurance and then deciding if the company should approve or reject the application.
receiving claim requests, evaluating them and paying those claims that are covered by the terms of the contract and rejecting those that is not.
advertising, promoting and distributing an insurer's products to the public.
using claims history, statistics and computer data to predict losses.

Q32

All of the following are examples of fiduciaries EXCEPT:

Corporate directors
Executors
Administrators
Vendor

Q33

A subsidiary formed to insure the parent company is called a(n):

Inter-insurance exchange
Captive insurer
Fraternal
Co-op insurer

Quiz 2 — Basic Insurance Concepts & Contract Law

Scored 71.43%

Q34

The state of being subject to a loss is considered:

risk
exposure
hazard
insurance

Q35

Which of the following describes when one party intentionally gives the other party false information in order to benefit from the unlawful gain?

Theft
Fraud
Concealment
Misrepresentation

Q36

Which of the following statements is true about reinsurance?

When an insurer obtains reinsurance, it has sold the contract to another insurer, and no longer has direct responsibility for the policy.
Reinsurance is the process whereby the insurer transfers all or part of the risk to another company.
Reinsurance is when the insured allows a policy to lapse for nonpayment. Later, if the insured makes the payment, the policy is reinsured.
Property and casualty insurers use reinsurance, life insurers do not.

Q37

The law of large numbers is a principal that basically says:

the larger the possibility of a loss, the greater the exposure.
the larger the number of people in an insurance company, the more stable it is.
the more insurance you have, the more protected you are.
the larger the amount of information gathered, the more reliable that information will be.

Q38

A hazard is best defined as:

anything that increases the chance of loss or severity of loss due to a peril.
risk shifted from one to another.
a possibility of a loss.
any action from a court that increases the likelihood or size of a loss.

Q39

A peril is:

the actual cause of the loss.
a possibility of a loss.
anything that increases the chance of loss or severity of loss.
pure and speculative.

Q40

Performance depends upon an uncertain future event is the feature:

adhesion
conditional
aleatory
unilateral

Q41

Which of the following is NOT a known private insurer?

Bond Insurance Companies
Stock Insurance Companies
Mutual Insurance Companies
Reciprocal Insurance Exchanges

Q42

Which of the following are the main types of risks?

Pure and Transfer
Sharing and Transfer
Avoidance and Retention
Speculative and Pure

Q43

Which of the following is an example of an adverse underwriting decision?

Charging a higher rate
Rejecting the risk
Issuing with limitations
All of these are examples

Q44

Loss control refers to:

a combination of risk control techniques with risk financing techniques.
taking the necessary precautions that will reduce the risk of a loss.
preventing a loss from becoming catastrophic.
taking measures to prevent further damage during a loss.

Q45

According to the California insurance law, either party may rescind a contract for any of the following reasons EXCEPT:

One party intentionally or unintentionally hides material information.
Once a contract is signed, it can never be rescinded.
If a representation is false in a material point, whether affirmative or promissory, the injured party is entitled to rescind the contract.
One party intentionally omits information from the other party.

Q46

When a right or privilege has been given up, a party cannot reassert that right or privilege. The process of preventing the party from reasserting that right or privilege is known as:

Waiver
Estoppel
Pro-rata
Indemnity

Q47

A beautician stating that this hair conditioner fixes badly damaged hair is a:

representation
expressed warranty
stated fact
implied warranty

Q48

Which of the following is not a class of insurance?

Auto
Fire
Marine
Casualty

Q49

Restoring the insured back to the condition he or she was in before the loss occurred is known as:

Loss Retention
Indemnification
Insurable Interest
Restoration

Q50

Materiality is determined by the disadvantage placed on the other party and:

not by the event
the influence of the facts
both are correct
neither are correct

Q51

What are the two types of torts?

Legal & Non-Legal
Intentional & Unintentional
Broad & Basic
Pure & Speculative

Q52

Examples of tort law include all of the following EXCEPT:

Breach of contract
Personal injury
Libel and slander
Bodily injury

Q53

Type of loss exposure pertaining to land and structures attached to it is:

liability loss exposure
personal loss exposure
financial loss exposure
property loss exposure

Q54

Punishment for twisting or misrepresentation would be:

both are correct
up to 1 year in jail
fine up to $25,000
neither are correct

Q55

Which of the following is defined as "an agreement between two or more parties enforceable by law"?

Tort
Agreement Clause
Contract
Insurance Policy

Q56

Insurance is a contract whereby one undertakes to indemnify another against:

Uncertainty
Exposure
Damage
Physical hazard

Q57

The process of reviewing applications for insurance and the information on the application is:

the job of the agent before accepting or rejecting an application
Field Underwriting
Underwriting
Application Evaluation

Q58

Which of the following elements of a contract is/are the binding force?

Offer & Acceptance
Competent Parties
Legal Purpose
Consideration

Q59

Substitution of a small certain loss for a large uncertain loss is:

law of large numbers
a pure risk
insurance
an insurable event

Q60

Bob is thinking about obtaining insurance because he just found out he needs extensive surgery that will require several days in the hospital. This situation of waiting until the last minute to obtain insurance is known as:

Ideally Insurable Risk
Spread of Risk
Adverse Selection
Cost Effective Insurance

Q61

Any contingent or unknown event, whether past or future, which may damnify a person having an insurable interest or create a liability against him/her, may be insured against. The more unpredictable a loss becomes:

the less it becomes insurable interest.
the less insurable it becomes.
the more insurable it becomes.
the more it becomes insurable interest.

Q62

The term loss exposure refers to:

the uncertainty of a loss occurring.
the actual cause of the loss.
the increase in the possibility of a loss.
the possibility of a loss.

Q63

A hazard that deals with a person's mental attitude, behavior and habits is an example of:

Physical hazard
Moral hazard
Legal hazard
Morale hazard

Q64

The degree of loss a person/organization faces from suits brought by a third party refers to:

Property Exposure
Liability Loss Exposure
Human Personnel Loss Exposure
Loss Exposure

Q65

Which of the following is NOT required for a risk to be ideally insurable?

The loss must occur on the insured's property.
The loss must be an accident.
The loss must create economic hardship.
The loss must be definite and measurable.

Q66

Which of the following is the amount of money the insured pays before the insurer pays for the rest of the claim?

Subrogation
Coinsurance
Deductible
Premium

Q67

When an insured rejects uninsured motorist in writing this is considered:

a rescission
a waiver
an example of estoppel
a modification

Q68

The uncertainty or chance of a loss occurring is known as:

risk.
risk management.
pure risk.
speculative risk.

Q69

Which of the following is NOT a source of information an underwriter might use to investigate an application in order to approve or reject it?

Financial Reports
Department of Motor Vehicles
Department of Industrial Relations
Medical Information Bureau

Q70

An insurance agent is appointed to transact:

all lines of insurance
all lines except 24hr care
all classes of insurance
all are incorrect

Q71

Which of the following is NOT a type of authority given to agents?

Apparent authority
Express authority
Customary authority
Implied authority

Q72

A broker can transact all of the following EXCEPT:

Personal Lines
Casualty insurance
Property insurance
Life, health, and disability insurance

Q73

In which of the following marketing distribution systems does the agent represent more than one insurer and more than one company?

Direct mailing system
Exclusive agency
Independent agency
Direct writing system

Q74

An insurer not authorized to conduct business in California would be:

an unauthorized insurer
a non-admitted insurer
either of these
neither of these

Q75

There are no binders issued in:

Any of the above
Life Policies in excess of $1 million
in health insurance
life insurance

Q76

Law of agency is the relationship between:

insurer and customer
agent and principal
agent and client
agency and agent

Q77

A person licensed as a broker/agent shall be deemed to be:

involved in the business of financing the purchase of real estate
responsible for deciding if an application should be approved or rejected
acting as an insurance agent in the transaction of insurance placed with those for whom a notice of appointment has been filed with the Commissioner
acting with the same authority granted a managing general agent

Q78

Which of the following is a responsibility of the insured in an insurance contract?

Send the application to the underwriting department.
Fully explain the policy to the client.
Give true statements and information on the application.
To complete the application.

Q79

The following acts are unlawful and are misdemeanors in California except when performed by a surplus lines broker EXCEPT:

In any other manner, aiding a nonadmitted insurer to transact insurance business in this state.
In any manner, advertising for an admitted insurer in this state.
Acting as agent for a nonadmitted insurer in the transaction of insurance business in this state.
In any manner, advertising for a nonadmitted insurer in this state.

Q80

Which marketing system does the insurer not own the expiration list?

Direct writing system
A direct mail system
An independent agency
A internet

Q81

Which of the following would not require a license?

All require a license
Insurance Adjuster
Independent Adjuster
Public Adjuster

Q82

The application is the document that:

serves as a temporary contract that usually lasts 30 days.
shows proof of insurance.
states the name of the insured, the premium, and other facts that help the insurer decide whether to accept or reject it.
shows the insured has coverage currently in force.

Q83

If an agent gives incorrect advice or unknowingly provides incorrect information to the client, which of the following liability insurance policies for nonmedical professionals is available to pay for losses or defend lawsuits that might be filed against him?

Medical Insurance
Liability insurance
Nonadmitted
Errors and Omissions

Q84

A ________ licensee is authorized to transact ONLY the following lines of insurance: Automobile, recreational vehicles (noncommercial purposes), personal watercraft, residential property, earthquake, flood, inland marine, umbrella (excess liability).

Limited Lines Automobile
Personal Lines
Fire and Casualty
Life Only

Q85

The underwriting process consists of all of the following basic steps except:

Monitor the decision
Implement the decision
Issue the rate
Gather necessary information

Q86

Which of the following is NOT an action a person performs when transacting insurance?

The actual execution of a contract
Any transactions that later result from the operation of the contract
Calling an insurer for a price quote
Solicitation of insurance

Q87

Monitoring of existing risks is:

a code requirement
conditional underwriting
post-selection
pre-selection

Q88

In a legal relationship, which authority does a principal (company) give the agent in writing?

Express authority
Implied authority
Customary authority
Apparent authority

Q89

Which of the following actions would not be considered transacting insurance?

Emailing a prospect a auto quote.
Giving a price quote over the phone.
Handing a prospect a business card and asking them for information.
Collecting premium for a policy.

Q90

In which system is the agent considered an employee?

None of these
Exclusive agency system
Direct writing system
A direct response system

Q91

A solicitor holds which license?

P&C broker-agent
Personal lines broker-agent
A solicitor's license
Either P&C broker-agent or Personal lines broker-agent

Q92

Which of the following is not true about the relationship between an agent and a solicitor?

A solicitor cannot be employed by more than one fire and casualty broker/agent at the same time.
An agent or broker cannot transact as a solicitor, but a solicitor can transact as a broker or agent.
An agent represents the company, whereas the solicitor is an assistant to an agent and has no binding authority.
A solicitor may give premium quotes over the phone, just like an agent.

Q93

When dealing with insurance in connection with sales or loans, violating the legal provisions specified by California law is considered a:

fine
felony
misdemeanor
penalty

Q94

Errors and omissions is a type of liability insurance:

that indemnifies a client.
that agents use to protect themselves if they give incorrect advice or do not do something that a client requested. (omission)
for protection against misrepresentation when filing a declaration page.
for insured's to use to protect themselves against a claim loss.

Q95

Any person who transacts insurance without a valid license is guilty of a misdemeanor, punishable by a fine not exceeding ______.

$10,000
$20,000
$50,000
$25,000

Q96

Binders can be extended how many additional days?

60 days
150 days
30 days
90 days

Quiz 3 — Regulation, the Commissioner & Unfair Practices

Field underwriting / regulation section

Q97

Upon receiving any written or oral inquiry from the Department of Insurance concerning a claim, every licensee shall immediately, but in no event more than ______ calendar days of receipt of that inquiry, furnish the Department of Insurance with a complete written response based on the facts as then known by the licensee.

30
21
14
7

Q98

What is the role of the Commissioner and the Department of Insurance in relation to consumers?

The Commissioner and the DOI are responsible for regulating the conduct of agents and insurers.
The Commissioner and the DOI are responsible for making sure companies bring in more income than claims being paid out.
The Commissioner and the DOI are responsible for advertising to the public the roles and responsibilities of insurance.
The Commissioner and the DOI are responsible for making sure the public is given the opportunity to purchase insurance.

Q99

The State of California requires that all admitted insurers be a member of the:

California Insurance Guaranty Association
California Code and Ethics Board
Privacy Protection Committee
Insurance Board Council

Q100

To change the California Insurance Code a bill is brought before the Assembly and the Senate. After both parties vote on the bill and it is approved, it moves on to the:

Commissioner
State Senate
Congress
Governor

Q101

Once the insured and insurer are in agreement on a claim, the payment must be made within:

15 calendar days
30 calendar days
30 business days
15 business days

Q102

Which of the following is a penalty for violating the Insurance Information and Privacy Protection Act?

$20,000 fine for violations committed with regularity showing they are a general business practice
$5,000 fine for violations committed with regularity showing they are a general business practice
$50,000 fine for violations committed with regularity showing they are a general business practice
$100,000 fine for violations committed with regularity showing they are a general business practice

Q103

Penalty for violation of a summary seizure would be:

$1,000
1 yr imprisonment
misdemeanor
any and/or all of these

Q104

Which court case reversed the Paul vs. Virginia case of 1868?

Public Law 15
SEUA case of 1944
McCarren-Ferguson Act of 1945
Houghton-Mifflin case of 1938

Q105

Solvency requires the insurer to have enough assets to cover:

paid-in-capital
liabilities
reinsurance
all of these

Q106

A subsequent violation of a cease and desist would result in:

license suspension
a fine up to $55,000
imprisonment up to 5 yrs
a minimum fine of $5000

Q107

Which of the following describes prior approval as a type of rating law?

Insurers compete with one another by quickly changing rates without review by the state regulators.
An insurance company uses the rate they determine appropriate first and then file that rate with the commission.
An insurance company must file the rates with the commission, but can then use those rates until they hear back from the commission.
The insurer files policy rate information with the Department of Insurance. After filing, the insurer delivers evidence that the rates proposed are reasonable and fair. Then the insurer waits (30-60 days) for approval.

Q108

Which of the following is a responsibility of the Commissioner?

To change the law of insurance.
To form and appoint a council that will regulate the code.
To write the laws of insurance.
To enforce the laws of insurance.

Q109

Rates shall remain in effect if they are:

all of the following
not discriminatory
adequate
reasonable

Q110

According to the Code a "Notice of Claim" is a(n):

neither qualify
either qualify
oral notification
written notification

Q111

CIGA pertains to:

insurer's fraud unit
insurer's rating
insurer's forms
insurer's insolvency

Q112

In order to update, add or change a statute, a bill must be passed by the legislature and then presented to the governor. If the statute is passed, it will go into effect:

on the next January 1st
on the next August 1st
on the next fiscal year
immediately

Q113

When the Commissioner takes over a company that is insolvent, his/her first responsibility is to:

attempt to restore the company if possible.
liquidate the company and appoint new officers.
shut down the company's operations and start a full investigation.
sell all the company assets and pay any open claims.

Q114

Unless expressly otherwise provided, any personal notice required by any provision of the insurance code may be given by any of the following EXCEPT:

notification at his residence or principal place of business
postage prepaid
a third party
mailing notice

Q115

Which of the following is NOT a type of rating law?

Use and file
Prior approval
Legal Competition
File and use

Q116

Which of the following describes file and use as a type of rating law?

An insurance company must file rates with the commission, but can then use those rates until they hear back from the commission.
The insurer files policy rate information with the Department of Insurance. After filing, the insurer delivers evidence that the rates proposed are reasonable and fair. Then the insurer waits (30-60 days) for approval.
Insurers compete with one another by quickly changing rates without review by the state regulators.
An insurance company uses the rate they determine appropriate first and then file that rate with the commission, without getting prior approval.

Q117

An Insurer has up to how many days to accept or deny a claim?

15 days
21 days
30 days
40 days

Q118

According to the Code, the word "person" means:

any person, association, organization, partnership, business trust, limited liability company, or corporation.
the insurer in an insurance contract.
the client seeking insurance.
any person capable of binding an insurance contract.

Q119

Which of the following statements about insolvency is TRUE?

An insurer cannot escape the condition of insolvency except by permission from the Commissioner.
An insurer can escape the condition of insolvency by meeting its financial obligations when they are due.
An insurer can escape the condition of insolvency by being able to provide for its liabilities and reinsurance of all outstanding risks.

Q120

How is the Insurance Commissioner put into office?

Appointed by the governor
Appointed by the previous commissioner
Elected by the citizens
Elected by the council

Q121

Every company in California is required to report its financial condition to the Commissioner every year:

on or before March 1.
on or before April 15.
on or before January 1.
on or before December 31.

Q122

Who administers the California Administrative Code of Regulations?

Governor
Congress
Commissioner
State Senate

Q123

Which of the following is NOT a purpose of the Unfair Practices Article?

To protect the public from agents who practice bad methods of selling insurance.
To regulate trade practices in the insurance business.
To determine the punishment for an agent found guilty of unfair practices in insurance.
To keep agents honest when selling insurance.

Q124

What is the significance of the SEUA (South East Underwriters Association) case of 1944?

The court exempted the insurance industry from the federal regulation required for most interstate commerce industries.
The court decided the federal government should regulate insurance.
The court established the right of the states, instead of the federal government, to regulate insurance.
The court gave authority to the federal government to apply antitrust laws to the insurance business that was not being regulated by the state level.

Q125

All of the following are incorrect penalties for violating the Unfair Practices article EXCEPT:

$5,000 fine for each act in violation; $10,000 fine for willful violation
$5,000 fine for each act in violation; $15,000 fine for willful violation
$15,000 fine for the first offense; Minimum of 3 years in prison
$10,000 fine for each act in violation; $50,000 fine for willful violation

Q126

Which is not a violation of Unfair Practice?

Delaying an investigation
Age discrimination
Misrepresentation
Defamation of an insurer

Q127

All of the following are penalties for unfair discrimination EXCEPT:

prison
$15,000-$100,000 for frequent violations
$2,500 for first violation
$5,000 for subsequent violations

Q128

All of the following are efforts the Department of Insurance takes to combat insurance fraud EXCEPT:

Each company is required to submit a complete record of fraudulent claims made to the business each year.
Every automobile insured is assessed about $1 per year to fund automobile insurance fraud task force activities.
Every insurer pays an annual fee to fund the fraud detection units
Each company is required to have a fraud detection unit.

Q129

Which of the following is NOT considered an unfair practice?

Filing false financial documents.
Making false statements that mislead the public.
Unfairly discriminating against classes of insured's.
Failing to display the license in a clearly visible place for the public to see.

Q130

If convicted of insurance fraud:

the fine can be up to $10,000.
the fine can be up to $150,000 and up to 5 years in state prison.
the fine can be up to $50,000.
the fine can be up to $10,000 and up to 5 years in state prison.

Q131

An example of a self-regulatory authority of the insurance industry is:

the State legislature
the NAIC
the ISO
the Commissioner

Quiz 4 — Property Policies, Fire & Homeowners Forms

Policy structure / HO forms section

Q132

What is the difference between an HO 2 and an HO 4?

An HO 2 is written on a Basic form, while an HO 4 is the Special or open peril form.
An HO 4 is for condominium owners and an HO 2 is for tenants of the condominium.
For an HO 2, the applicant must be the homeowner and all perils are covered unless they are excluded, whereas in an HO 4 the insured must be the owner or also be insured.
An HO 2 is written on a broad form basis and covers the owner of a dwelling, whereas an HO 4 is a renter's insurance policy.

Q133

Property and casualty policies are made up of the following parts except:

Definitions
Declarations
Additional Claim Form
Conditions

Q134

What method of valuation means the company will decide the replacement cost of a lost item, then subtract depreciation from it and pay the rest?

Market Value
Agreed Value
Actual Cash Value
Replacement Cost

Q135

This Standard Mortgage clause states that a ________ has the right to file a claim, make premium payments, and be notified of any cancellations or non-renewals.

Lienholder
Insurance company
Policy Owner
Mortgage broker

Q136

The stipulations for nonrenewing of a personal lines policy include a notice of cancellation of the policy in writing to the insured at least ________ before the effective date of cancellation.

60 days
20 days
45 days
10 days

Q137

In a standard mortgage clause, what happens in the event of a total loss?

The insurer pays the insured the full amount and the insured is expected to pay the lienholder.
The insurer pays the lien holder the full amount and the lienholder pays the insured the remaining amount.
The insurer pays the lienholder first and then the insured.
The insurer pays the insured first and then the lien holder.

Q138

Which of the following homeowners policies covers renter's insurance?

HO 1
HO 2
HO 4
HO 8

Q139

Under personal lines insurance, dwelling insurance, which of the following perils is NOT covered on a standard fire policy?

Lightening
Removal
Earthquake
Fire

Q140

What is the main difference between the Standard Fire Policy (SFP) and the California Standard Form Fire Policy?

The SFP has 165 lines of text and the California Standard Form Fire Policy has 158 lines of text.
The SFP is under federal law, whereas the California Standard Form Fire Policy is under California state law.
The SFP is standard for all companies in the U.S.
The SFP is standard for all companies in the U.S. except California.

Q141

Cancellation for property and casualty policies for other than nonpayment is:

Both 30 days except auto and 20 days for auto are correct.
20 days for auto
50 days except auto
30 days except auto

Q142

The part of the policy that contains the description of coverages provided is:

additional coverages
conditions
insuring agreement
declarations page

Q143

When an insurer pays the full amount of a claim, based on an appraisal made at the time of the contract and the value determined before the loss occurs, this is referred to as:

Market Value
Actual Cash Value
Stated Value
Replacement Cost

Q144

When an insured holds more than one identical policy for the same property, but the policies differ in coverage amount or length of coverage period, this is known as:

Standard Mortgage Clause
Standard Policy Coverage
Special Lines Surplus Lines
Concurrent Policy Coverage

Q145

In an insurance policy, any modifications made to the regular contract are known as:

Additional coverages
Exclusions
Conditions
Endorsements

Q146

Policy provision that gives the insurer the right to repair or replace:

loss payment
loss settlement
our option
none of these

Q147

Policy revision that provides broader coverage, no premium or endorsement:

liberalization
recovery
extension of coverage
severability

Q148

A fire that is intentionally set and remains within its intended limits is:

the definition of a fire
not covered
a hostile fire
covered by fire insurance

Q149

In an insurance policy, which page contains information such as the insured's name, information about risk, the date coverage begins, the premium, location of the property being insured?

Insuring Agreement
Declarations
Conditions
Exclusions

Q150

Property insurance policies contain many items EXCEPT:

The date the policy is effective
Insured's gender
Perils insured against
Name of the insurer

Q151

Two policies from different insurers otherwise identical are known as:

fraud
concurrent coverage
nonconcurrent coverage
concurrent causation

Q152

Mid-termination of a policy is known as:

policy termination
cancellation
rescission
none of these

Quiz 5 — Homeowners & Dwelling Policy Deep Dive

HO/DP coverages, sections & endorsements

Q153

Which is not a liability endorsement on the HO forms?

Watercraft
Business pursuits
Mobilehome
Personal injury

Q154

Under Section II of the Homeowners form, what does coverage E (personal liability) cover?

This coverage will take affect if a claim is made against the insured for damages due to bodily injury or damage to the property caused by the insured's negligent acts.
This coverage will take affect if the insured is hurt at work and needs medical attention.
This coverage will take affect if the insured is injured and needs medical attention.
This coverage will take affect if the insured's business is sued.

Q155

How are HO-8, HO-2, HO-3 and HO-5 different?

Perils insured against
Coverage A, B, and C
Liability coverages
All of these

Q156

Which DP policies insure Coverage C for broad form perils?

DP-1, DP-2 and DP-3
DP-3
Both DP-2 and DP-3
DP-2

Q157

The Homeowners Watercraft Endorsement under Section II includes all the following EXCEPT:

Use of a boat in a racing competition.
Coverage for liability exposure on scheduled boats.
Property damage for the boat itself is not covered.

Q158

Under HO property additional coverages, what is covered for debris removal expense?

All cost to remove debris after a covered loss, unless excluded in the policy.
All costs, after the 10% share cost fee, to remove debris after a covered loss.
Reasonable cost to remove debris after a covered loss.
80% cost to remove debris after a covered loss.

Q159

Which HO form(s) provide open peril coverage for personal property?

Requires endorsement
Both HO-3 and HO-5
HO-5
HO-3

Q160

What is the difference between an HO 3 and an HO 3 with an HO 15 endorsement?

An HO 3 is a policy that covers all risks, except those excluded, on the dwelling, and personal property is covered with broad form perils, whereas an HO 3 with an HO 15 endorsement covers all property on all risk basis.
An HO 3 covers the building under renter's insurance, while an HO 3 with an HO 15 endorsement covers the building and all the property inside the building under renter's insurance.
An HO 3 covers only broad form perils on a broad form, whereas the HO 3 with an HO 15 endorsement covers all perils.
An HO 3 is a policy that covers all risks, except those excluded, on both dwelling and personal property, whereas an HO 3 with an HO 15 endorsement is a policy that covers all risks on the dwelling.

Q161

Under HO property coverage, earth movement is a general exclusion. Which homeowners' policy has done away with the exclusion for concurrent causation regarding this peril?

HO 6
HO 3
HO 4
HO 2

Q162

Coverage C (contents) perils are broad form on all HO policies except:

HO-4 & HO-6
HO-3 & HO-5
HO-8
HO-8 & HO-5

Q163

Which HO endorsement covers loss due to personal injury (false arrest, libel, slander, defamation of character, and invasion of privacy)?

Guaranteed and Extended Replacement Cost Options
Personal Injury endorsement
Personal Property - Replacement Cost endorsement
Scheduled Personal Property endorsement

Q164

All of the following are considered an "insured" under Section 1 of the HO 3 EXCEPT:

Family members who live with the insured.
Named insured and his or her spouse.
Relatives who share the same last name as the insured.
Guests and employees of the house (optional upon request).

Q165

Coverage not provided without endorsement on a DP-1/Basic is:

Coverage E
Both Coverage D and E
Coverage C
Coverage D

Q166

Which is excluded under Section I and covered under Section II?

Animals, birds, or fish
Ride on lawn mower
Hobby aircraft
Firearms

Q167

Homeowner form(s) that do not provide any dwelling coverage (Coverage A)?

HO-2
Both HO-4 and HO-6
HO-4 only
HO-6 only

Q168

The HO form that does not provide coverage for real property is:

HO-6
All HO cover real property
HO-8
HO-4

Q169

Under Section 1 Condition - Loss Settlement, which of the following formulas is used to determine payment to an insured in the event of a loss?

Insurance carried, divided by the loss, times the insurance required, equals the loss payment.
Insurance required, divided by the loss, times the insurance carried, minus the deductible, equals the loss payment.
Insurance required, divided by the insurance carried, times the loss, minus the deductible, equals the loss payment.
Insurance carried, divided by the insurance required, times the loss, minus the deductible, equals the loss payment.

Q170

The following properties are included as an insured location and/or residence premises for Liability and Medical except:

Insured's relative cemetery plot
Vacant Land
Borrowed beach home
Apartment

Q171

Which of the residential policies are basic perils?

DP-2 and HO-2
All the DP policies
DP-1 and HO-8
DP-1, HO-8 and HO-2

Q172

Volcanic eruption excludes:

dust and ash
lava
airborne shockwaves
none are excluded

Q173

Liability and Medical Payments are the two major coverages provided in:

Section I of the Commercial form
Section II of the Commercial form
Section II of the Homeowners form
Section I of the Homeowners form

Q174

According to the ordinance or law exclusion, which of the following does NOT apply?

This exclusion also applies to the California requirement to provide restroom facilities compliant with the American Disability Act (ADA).
This coverage is required by state law.
The coverage applies to upgrades to a property due to building code changes by the city.
This coverage can be added by endorsement.

Q175

Which of the following homeowners policies covers condominium units?

HO 8
HO 6
HO 2
HO 4

Q176

What is the difference between an HO 2 and an HO 3?

An HO 2 has dwelling and personal property coverage on a broad peril form, while an HO 3 has dwelling coverage on a special form and personal property on a broad peril form.
Both an HO 2 and an HO 3 have dwelling and personal property on a broad peril form.
An HO 2 has dwelling coverage on a special form and personal property on a broad form, while an HO 3 has coverage for both dwelling and personal property on a broad form.
An HO 2 has both dwelling and personal property on a special peril form, while an HO 3 has dwelling and personal property on a broad form.

Q177

Which of the following is true regarding vehicles covered and not covered under Section II?

All the insured's vehicles are excluded, except trailers being towed by the vehicles.
All the insured's vehicles are covered.
All the insured's vehicles and trailers towed by the insured are excluded from coverage.
All the insured's vehicles are excluded, except the primary vehicles listed on the policy.

Q178

Jewelry valued at $30,000 is destroyed in a hotel fire in Paris, the HO would:

limit the loss to $1500
exclude the loss
cover up to Coverage C limit
all are incorrect

Q179

Coverage D, loss of use, depends on which of the following for a limit of insurance to be applied?

Where the dwelling is located.
How long the dwelling has been occupied.
Who is occupying the dwelling
How much coverage is placed on the dwelling?

Q180

Which of the following homeowners policies have both dwelling and personal property on a broad peril form?

HO 2, HO 4, HO 5
HO 4, HO 5, HO 6
HO 2 and HO 6
HO 2, HO 5, HO 8

Q181

Which of the following is NOT an option of the California Residential Property Insurance Disclosure Statement?

Extended Replacement Cost Coverage
Guaranteed Replacement Coverage
Fair Market Value Cost Coverage
Actual Cash Value

Q182

Which is not an "other coverage" in the dwelling forms?

Volcanic eruption
Collapse
Tenant improvements
Breakage of glass

Q183

In property coverage, what is specifically covered under coverage B?

personal property commonly found in homes owned by the insured or other family members living with the insured.
the dwelling unit and all personal property located inside the premises.
all attached structures and outdoor personal property or equipment used to maintain or service the premises.
other structures/ separate structures at the same location, such as garages, sheds and birdhouses on the described location that are separated from the dwelling by a clear space or connected only by a fence

Q184

Under Section 1 Condition - Loss Settlement on an HO3, which of the following situations shows the insured is covered adequately in the event of a loss?

The insured has $170,000 coverage on property worth $300,000.
The insured has $800,000 coverage on property with replacement cost of $1,000,000.
The insured has $700,000 coverage on property with a replacement cost of $1,000,000.
The insured has $400,000 coverage with replacement cost of $900,000.

Q185

Which of the following is NOT a difference between the Dwelling policy and Homeowners policy?

In Dwelling forms, personal property coverage is optional, whereas in Homeowners it is included.
In Dwelling forms, only 10% of the Coverage C limit is available for personal property away from the residence premises, whereas in Homeowners it is covered worldwide.
In Dwelling forms, theft is a broad form peril, whereas in Homeowners it is not.
In Dwelling forms, the liability coverage is available only by endorsement, whereas in Homeowners it is always included.

Q186

Which of the following would NOT be covered under Section II of Medical Payment to Others?

Someone who trips over a water hose on the insured's property.
The insured's pets that are injured on the insured's property.
The insured's family member not living on the property with the insured and not a named insured.
A person injured on the insured's property who was granted permission to be there by the insured.

Q187

Under HO property additional coverages, what is covered for removal?

Debris removed after a covered loss to property.
Property removed from the insured's premises to protect it from further damage due to a covered loss.
Earth removal after total loss of a dwelling due to an earthquake or landslide.
Any and all removal from loss due to a covered peril.

Q188

According to Section II of the Homeowners policy (selected homeowners endorsements), which of the following is true of the mobile home endorsement?

The mobile home is considered the dwelling being insured when it is endorsed on the policy.
The mobile home is a moveable structure and therefore cannot be covered as a dwelling.
The mobile home is covered under the separate structure endorsement.
The mobile home is a moveable structure and is covered under the commercial policy.

Q189

Under property coverage, which of the following is covered under coverage A?

Dwelling
Garage
Other structures
Personal property

Q190

All of the following are major differences between the broad form and the special form EXCEPT:

Theft of property that is a part of the dwelling or other structure is covered in the special form.
The broad form doesn't require the 80% coinsurance and the special form does.
There is no exclusion for antennas, outdoor equipment, fences, or awnings from the peril of falling objects in the special form.
Coverage for accidental discharge or overflow of water or steam that occurs off the insured premises is covered on the special form.

Q191

Difference between DP-2 Broad form and the DP-3 Special form is:

plumbing water damage
windstorm
friendly fire
Collapse

Q192

Under Section II - Additional Coverages, which of the following is NOT included?

Loss Assessment Coverage
Medical Payments to Others
Damage to the Property of Others
First Aid to Others

Q193

Which of the following is NOT a reason a home would be insured under a Dwelling policy rather than a Homeowners policy?

The dwelling is a rental property.
The dwelling has only one unit.
The insured doesn't want theft or liability coverage.
The dwelling is a seasonal dwelling and not used all the time.

Q194

All of the following are true of a broad coverage form EXCEPT:

Coverage must equal at least 80% of the dwelling replacement cost.
Seven extra perils are insured in a broad form.
No minimum amount of insurance is required for the basic form.
The broad coverage form covers more perils than a basic coverage form.

Q195

Which is not an exclusion under Coverage A on an HO-3?

Damage by insured's dog
Damage by a deer
Damage by insects
Damage by vermin

Q196

All of the following are general exclusions to the HO 3 policy except:

Flood
Building Ordinance
Loss Assessment
Earth Movement

Q197

The correct statement regarding landlord furnishings would be:

Covered up to $2500 and excludes the peril of theft
covered up to $2500
not covered in HO forms
excludes the peril of theft

Q198

In the event of a loss, the insured has the responsibility to do all of the following EXCEPT:

Report the loss as soon as possible.
Provide a copy of the police report to the insurer.
Protect the property from further damage.
Notify the police if the loss is the result of theft.

Q199

Which of the following properties are NOT included in insured locations and residence premises under Section II of the Homeowner's policy?

Land on which a residence is being constructed
Insured's work office space
Insured's cemetery plot
Vacant land