CA ADJUSTERS LICENSE PSI
QUESTIONS & ANSWERS(RATED A+)
Other structures are excluded from coverage under the HO-3 when they are:
Smaller than 100 square feet or larger than 1,000 square feet
Smaller than 100 square feet or larger than 500 square feet
Used for storage purposes
Used for business purposes - ANSWERUsed for business purposes is correct.
EXPLANATION:
When the other structures are used for business purposes they are not covered under
the homeowner form. This structure and its contents could be covered under a
commercial property policy. An exception would be a detached structure used to store
business property of a non-flammable, non-gaseous nature.
An insurance company must give how many days notice of cancellation for a vacancy of
more than 60 days, when the government has ordered demolition, or when fixed items
are being removed and not replaced?
5
21
10
30 - ANSWER5 is correct.
EXPLANATION:
The cancellation changes endorsement is the "mandatory endorsement" referred to in
the question. In California, the endorsement must be included in every commercial
property policy. It allows cancellation by the insurer with 5 days' notice for several
reasons: vacancy or unoccupancy for 60 or more days; damages from a prior covered
loss haven't been started; the government has ordered demolition or to vacate; fixed
items are being removed and not replaced; and, utilities are shut off for 30 or more
days, or property taxes are more than one year past due.
Upon request made by the consumer, a person who procures an investigative
consumer report on the consumer must make a complete and accurate disclosure to the
consumer of the nature of the report and investigation within:
In writing and mailed to the consumer within 30 days of the request.
In writing and mailed to the consumer within 15 days of the request.
In writing and mailed to the consumer within 10 days of the request.
In writing and mailed to the consumer within 5 days of the request. - ANSWERIn writing
and mailed to the consumer within 5 days of the request..
EXPLANATION:
,This disclosure must be made in writing and mailed or otherwise delivered to the
consumer no later than five days after the date on which the request for the disclosure
was received from the consumer.
The insured has primary bodily injury and property damage liability coverage with a
$100,000 limit, and a $1 million umbrella liability policy with a $5,000 self-insured
retention limit. In which one of the following situations would the insured's umbrella
liability policy typically not provide defense coverage?
Answer Choices: Select the Correct Answer
Five people sued the insured for property damage arising out of one occurrence. One of
the cases was settled out of court for $100,000.
The insured was sued for $150,000 in personal injury damages.
The insured was sued for $10,000 in bodily injury damages.
The umbrella liability policy would provide a defense in all three cases. - ANSWERThe
correct answer is: The insured was sued for $10,000 in bodily injury damages.
EXPLANATION:
The claim would fall under the underlying coverage and not the umbrella because the
underlying coverage has sufficient limits in place.
Question 5 of 100
The BAP liability exclusion pertaining to pollution removes coverage for each of the
following, except:
Answer Choices: Select the Correct Answer
The cost of governmentally ordered clean-up of pollutants.
The escape of pollutants while being transported by a covered auto.
The escape of pollutants caused by damage to the property containing them when the
damage results from the use of a covered auto.
The escape of pollutants before they are accepted by the insured for movement onto a
covered auto. - ANSWERThe escape of pollutants caused by damage to the property
containing them when the damage results from the use of a covered auto. is correct.
EXPLANATION:
If the insured's vehicle causes an accident with another vehicle or other property
(owned by a third party) containing the pollutants, the loss is covered.
Which of the following would not be covered under the specified cause of loss physical
damage coverage under the commercial auto form?
Glass breakage
Fire
Lightning
Flood - ANSWERThe correct answer is: Glass breakage.
EXPLANATION:
The specified cause of loss form covers the following perils: fire, lighting, explosion,
theft, windstorm, hail, earthquake, flood, vandalism or mischief, transportation by a
,conveyance. The coverage does not include glass breakage, hitting a bird or animal nor
falling objects or missiles.
All of the following events are considered acts of terrorism, EXCEPT:
Acts of riot and civil commotion.
Acts considered dangerous to human life, property or infrastructure.
Acts resulting in damage within or outside the United States.
Acts at the premises of any United States mission. - ANSWERThe correct answer is:
Acts of riot and civil commotion. .
EXPLANATION:
Acts of riot and civil commotion are not covered by the Act. These are perils that are
covered by property insurance policies.
A company or staff adjuster represents the interests of:
The insurer.
The insured.
The claimant.
The public. - ANSWERThe insurer. is correct.
EXPLANATION:
Company or staff adjusters are individuals employed by a property and casualty
insurance company to settle on its behalf claims brought by insureds. They work directly
for the insurance company as year-round salaried employees. Staff adjusters evaluate
the merits of each claim and make recommendations to the insurance company.
Under the Personal Auto Policy the Supplementary Payments coverage is:
Answer Choices: Select the Correct Answer
In addition to the limit of liability.
Added by endorsement.
Included in the limit of liability.
Not available under the personal auto policy. - ANSWERIn addition to the limit of
liability. is correct.
EXPLANATION:
Supplementary Payments are in addition to the Limits of Liability.
When a first party claim is made, what must be listed on the payment draft?
Answer Choices: Select the Correct Answer
Type of coverage under which payment is made
Details of the accident
Application of the deductible
Drivers license number - ANSWERType of coverage under which payment is made is
correct.
EXPLANATION:
When a claim payment is made, an indication of the type of coverage under which the
payment is made must be stated on the draft payment.
, Under the Commercial Property Policy, the Pro-rata Liability Clause means:
Answer Choices: Select the Correct Answer
Each insurer pays its limits under the policy.
Neither Insurer Pays
Each insurer pays in accordance to the percentage of its coverage bears to the total
amount of insurance.
A Form of Coinsurance Clause - ANSWEREach insurer pays in accordance to the
percentage of its coverage bears to the total amount of insurance. is correct.
EXPLANATION:
The insurer will not be liable for a greater proportion of a loss than the amount insured
will bear to the whole insurance covering the property against the peril involved,
whether collectible or not. This is often referred to as the "Other Insurance" clause.
Which commercial property form provides the broadest coverage?
Answer Choices: Select the Correct Answer
Basic form
Broad form
Special form
Deluxe form - ANSWERSpecial form is correct.
EXPLANATION:
In commercial property insurance, the insured selects from three different "causes of
loss" forms - basic, broad, or special. There is no deluxe form. Basic and broad forms
provide named peril protection; special form is all-risk (open-perils), and is therefore the
broadest.
The authority the public believes the agent has based on the agent's actions is known
as:
Answer Choices: Select the Correct Answer
Fiduciary Authority
Expressed Authority
Apparent Authority
Implied Authority - ANSWERApparent Authority.
EXPLANATION:
Apparent authority is the authority the public believes the agent has which seems to be
apparent by the agent's actions.
In legal terms, the written explanation of how a loss occurred is called a:
Answer Choices: Select the Correct Answer
Loss notification.
Deposition.
Statement.
Proof of loss. - ANSWERStatement. is correct.
EXPLANATION:
QUESTIONS & ANSWERS(RATED A+)
Other structures are excluded from coverage under the HO-3 when they are:
Smaller than 100 square feet or larger than 1,000 square feet
Smaller than 100 square feet or larger than 500 square feet
Used for storage purposes
Used for business purposes - ANSWERUsed for business purposes is correct.
EXPLANATION:
When the other structures are used for business purposes they are not covered under
the homeowner form. This structure and its contents could be covered under a
commercial property policy. An exception would be a detached structure used to store
business property of a non-flammable, non-gaseous nature.
An insurance company must give how many days notice of cancellation for a vacancy of
more than 60 days, when the government has ordered demolition, or when fixed items
are being removed and not replaced?
5
21
10
30 - ANSWER5 is correct.
EXPLANATION:
The cancellation changes endorsement is the "mandatory endorsement" referred to in
the question. In California, the endorsement must be included in every commercial
property policy. It allows cancellation by the insurer with 5 days' notice for several
reasons: vacancy or unoccupancy for 60 or more days; damages from a prior covered
loss haven't been started; the government has ordered demolition or to vacate; fixed
items are being removed and not replaced; and, utilities are shut off for 30 or more
days, or property taxes are more than one year past due.
Upon request made by the consumer, a person who procures an investigative
consumer report on the consumer must make a complete and accurate disclosure to the
consumer of the nature of the report and investigation within:
In writing and mailed to the consumer within 30 days of the request.
In writing and mailed to the consumer within 15 days of the request.
In writing and mailed to the consumer within 10 days of the request.
In writing and mailed to the consumer within 5 days of the request. - ANSWERIn writing
and mailed to the consumer within 5 days of the request..
EXPLANATION:
,This disclosure must be made in writing and mailed or otherwise delivered to the
consumer no later than five days after the date on which the request for the disclosure
was received from the consumer.
The insured has primary bodily injury and property damage liability coverage with a
$100,000 limit, and a $1 million umbrella liability policy with a $5,000 self-insured
retention limit. In which one of the following situations would the insured's umbrella
liability policy typically not provide defense coverage?
Answer Choices: Select the Correct Answer
Five people sued the insured for property damage arising out of one occurrence. One of
the cases was settled out of court for $100,000.
The insured was sued for $150,000 in personal injury damages.
The insured was sued for $10,000 in bodily injury damages.
The umbrella liability policy would provide a defense in all three cases. - ANSWERThe
correct answer is: The insured was sued for $10,000 in bodily injury damages.
EXPLANATION:
The claim would fall under the underlying coverage and not the umbrella because the
underlying coverage has sufficient limits in place.
Question 5 of 100
The BAP liability exclusion pertaining to pollution removes coverage for each of the
following, except:
Answer Choices: Select the Correct Answer
The cost of governmentally ordered clean-up of pollutants.
The escape of pollutants while being transported by a covered auto.
The escape of pollutants caused by damage to the property containing them when the
damage results from the use of a covered auto.
The escape of pollutants before they are accepted by the insured for movement onto a
covered auto. - ANSWERThe escape of pollutants caused by damage to the property
containing them when the damage results from the use of a covered auto. is correct.
EXPLANATION:
If the insured's vehicle causes an accident with another vehicle or other property
(owned by a third party) containing the pollutants, the loss is covered.
Which of the following would not be covered under the specified cause of loss physical
damage coverage under the commercial auto form?
Glass breakage
Fire
Lightning
Flood - ANSWERThe correct answer is: Glass breakage.
EXPLANATION:
The specified cause of loss form covers the following perils: fire, lighting, explosion,
theft, windstorm, hail, earthquake, flood, vandalism or mischief, transportation by a
,conveyance. The coverage does not include glass breakage, hitting a bird or animal nor
falling objects or missiles.
All of the following events are considered acts of terrorism, EXCEPT:
Acts of riot and civil commotion.
Acts considered dangerous to human life, property or infrastructure.
Acts resulting in damage within or outside the United States.
Acts at the premises of any United States mission. - ANSWERThe correct answer is:
Acts of riot and civil commotion. .
EXPLANATION:
Acts of riot and civil commotion are not covered by the Act. These are perils that are
covered by property insurance policies.
A company or staff adjuster represents the interests of:
The insurer.
The insured.
The claimant.
The public. - ANSWERThe insurer. is correct.
EXPLANATION:
Company or staff adjusters are individuals employed by a property and casualty
insurance company to settle on its behalf claims brought by insureds. They work directly
for the insurance company as year-round salaried employees. Staff adjusters evaluate
the merits of each claim and make recommendations to the insurance company.
Under the Personal Auto Policy the Supplementary Payments coverage is:
Answer Choices: Select the Correct Answer
In addition to the limit of liability.
Added by endorsement.
Included in the limit of liability.
Not available under the personal auto policy. - ANSWERIn addition to the limit of
liability. is correct.
EXPLANATION:
Supplementary Payments are in addition to the Limits of Liability.
When a first party claim is made, what must be listed on the payment draft?
Answer Choices: Select the Correct Answer
Type of coverage under which payment is made
Details of the accident
Application of the deductible
Drivers license number - ANSWERType of coverage under which payment is made is
correct.
EXPLANATION:
When a claim payment is made, an indication of the type of coverage under which the
payment is made must be stated on the draft payment.
, Under the Commercial Property Policy, the Pro-rata Liability Clause means:
Answer Choices: Select the Correct Answer
Each insurer pays its limits under the policy.
Neither Insurer Pays
Each insurer pays in accordance to the percentage of its coverage bears to the total
amount of insurance.
A Form of Coinsurance Clause - ANSWEREach insurer pays in accordance to the
percentage of its coverage bears to the total amount of insurance. is correct.
EXPLANATION:
The insurer will not be liable for a greater proportion of a loss than the amount insured
will bear to the whole insurance covering the property against the peril involved,
whether collectible or not. This is often referred to as the "Other Insurance" clause.
Which commercial property form provides the broadest coverage?
Answer Choices: Select the Correct Answer
Basic form
Broad form
Special form
Deluxe form - ANSWERSpecial form is correct.
EXPLANATION:
In commercial property insurance, the insured selects from three different "causes of
loss" forms - basic, broad, or special. There is no deluxe form. Basic and broad forms
provide named peril protection; special form is all-risk (open-perils), and is therefore the
broadest.
The authority the public believes the agent has based on the agent's actions is known
as:
Answer Choices: Select the Correct Answer
Fiduciary Authority
Expressed Authority
Apparent Authority
Implied Authority - ANSWERApparent Authority.
EXPLANATION:
Apparent authority is the authority the public believes the agent has which seems to be
apparent by the agent's actions.
In legal terms, the written explanation of how a loss occurred is called a:
Answer Choices: Select the Correct Answer
Loss notification.
Deposition.
Statement.
Proof of loss. - ANSWERStatement. is correct.
EXPLANATION:
