CA Adjusters license EXAM QUESTIONS &
ANSWERS SOLUTION 2026 COMPLETE
EXAM | 100% CORRECT
Which of the following dwelling forms provides coverage for loss of rental income?
- The Basic, Broad and Special Form
- The Basic and Broad Forms only
- The Broad and Special Forms only
- The Special Form only - CORRECT ANSWERS The correct answer is: The Basic, Broad and
Special Form.
EXPLANATION:
All of the forms provide for rental value coverage. In the DP-2 and DP-3, it is 20% of the Coverage A limit
and is additional coverage. With the DP-1, the 20% coverage reduces the available Coverage A amount
on the dwelling. (Note: in North Carolina the percentage is 10%.)
Which of the following can be categorized as liability doctrines?
Vicarious
Res Ipsa Loquitur
Strict
All of the Responses are Correct - CORRECT ANSWERS The correct answer is: All of the
Responses are Correct.
EXPLANATION:
,All of these terms can be categorized a liability doctrines. Res Ipsa Loquitur means "the thing speaks for
itself."
Under an HO-3 form materials and supplies to be used in construction, alteration or repair of the
structure and kept next to the residence premises are covered:
If they have been at the location more than 30 days.
If they have been at the location less than 30 days.
Only if they are lost due to an insured peril.
Only if they are lost due to fire. - CORRECT ANSWERS The correct answer is: Only if they are
lost due to an insured peril.
The items would be covered if destroyed by an insured peril. Note that the items must either be on the
insured's residence premises or next to the residence premises such as in a neighbor's garage.
Under an Equipment Breakdown Protection policy with $500,000 in coverage, a covered "accident"
resulted in the following:
I. $500,000 worth of damage to the property.
II. $10,000 damage to the property of another in the insured's care.
III. $5,000 in legal fees to defend the insured in this case.
The policy will pay a total of:
$505,000.
$500,000.
$510,000.
,$515,000. - CORRECT ANSWERS The correct answer is: $505,000.
EXPLANATION:
The maximum that can be paid is the limit of the policy. Legal expenses are in addition to the limit of
coverage.
The insured is insured under a DP-3 dwelling form and is remodeling the dwelling. He does not have a
place to store the materials. His next door neighbor permits the insured to store the materials in his
garage. The garage is destroyed by fire and the materials are also destroyed. Which of the following
applies?
- The policy has a special limit under an extension of coverage that applies.
- Coverage is included under the building coverage and would apply since the materials are next to the
insured's premises.
- The policy would not pay the claim since the materials were off the insured's residence premises.
- The materials must be in an enclosed structure for coverage to apply. - CORRECT ANSWERS
The correct answer is: Coverage is included under the building coverage and would apply since the
materials are next to the insured's premises.
EXPLANATION:
The policy would respond to pay the loss because the policy covers building materials located on or next
to the insured premises.
All of the following are necessary for Liability coverage to apply under the PAP, except:
The insured must not have been drinking.
The person liable must be an insured person.
The insured must be legally liable for the accident.
The damage or injury must be the result of an auto accident. - CORRECT ANSWERS The
correct answer is: The insured must not have been drinking.
, It is not necessary that the insured not have been drinking alcohol at the time of the accident. Coverage
would still apply.
Under an equipment dealer's form, which of the following would not be covered?
Inventory
Serviced items
Customer's property on the insured's premises
Vehicles for highway use - CORRECT ANSWERS The correct answer is: Vehicles for highway
use.
EXPLANATION:
Inland marine forms provide coverage for the insured's goods as well as property of others, but they do
not cover automobiles.
Which of the following components MUST be included in the definition of a hostile fire:
I. Rapid oxidation accompanied by a flame or at least a glow.
II. Must be sudden and unexpected.
III. Must have been intentionally set by the insured.
IV. Must spread beyond its intended place.
I, II and IV only
I, II, III and IV
I and II only
I, III and IV only - CORRECT ANSWERS The correct answer is: I, II and IV only.
ANSWERS SOLUTION 2026 COMPLETE
EXAM | 100% CORRECT
Which of the following dwelling forms provides coverage for loss of rental income?
- The Basic, Broad and Special Form
- The Basic and Broad Forms only
- The Broad and Special Forms only
- The Special Form only - CORRECT ANSWERS The correct answer is: The Basic, Broad and
Special Form.
EXPLANATION:
All of the forms provide for rental value coverage. In the DP-2 and DP-3, it is 20% of the Coverage A limit
and is additional coverage. With the DP-1, the 20% coverage reduces the available Coverage A amount
on the dwelling. (Note: in North Carolina the percentage is 10%.)
Which of the following can be categorized as liability doctrines?
Vicarious
Res Ipsa Loquitur
Strict
All of the Responses are Correct - CORRECT ANSWERS The correct answer is: All of the
Responses are Correct.
EXPLANATION:
,All of these terms can be categorized a liability doctrines. Res Ipsa Loquitur means "the thing speaks for
itself."
Under an HO-3 form materials and supplies to be used in construction, alteration or repair of the
structure and kept next to the residence premises are covered:
If they have been at the location more than 30 days.
If they have been at the location less than 30 days.
Only if they are lost due to an insured peril.
Only if they are lost due to fire. - CORRECT ANSWERS The correct answer is: Only if they are
lost due to an insured peril.
The items would be covered if destroyed by an insured peril. Note that the items must either be on the
insured's residence premises or next to the residence premises such as in a neighbor's garage.
Under an Equipment Breakdown Protection policy with $500,000 in coverage, a covered "accident"
resulted in the following:
I. $500,000 worth of damage to the property.
II. $10,000 damage to the property of another in the insured's care.
III. $5,000 in legal fees to defend the insured in this case.
The policy will pay a total of:
$505,000.
$500,000.
$510,000.
,$515,000. - CORRECT ANSWERS The correct answer is: $505,000.
EXPLANATION:
The maximum that can be paid is the limit of the policy. Legal expenses are in addition to the limit of
coverage.
The insured is insured under a DP-3 dwelling form and is remodeling the dwelling. He does not have a
place to store the materials. His next door neighbor permits the insured to store the materials in his
garage. The garage is destroyed by fire and the materials are also destroyed. Which of the following
applies?
- The policy has a special limit under an extension of coverage that applies.
- Coverage is included under the building coverage and would apply since the materials are next to the
insured's premises.
- The policy would not pay the claim since the materials were off the insured's residence premises.
- The materials must be in an enclosed structure for coverage to apply. - CORRECT ANSWERS
The correct answer is: Coverage is included under the building coverage and would apply since the
materials are next to the insured's premises.
EXPLANATION:
The policy would respond to pay the loss because the policy covers building materials located on or next
to the insured premises.
All of the following are necessary for Liability coverage to apply under the PAP, except:
The insured must not have been drinking.
The person liable must be an insured person.
The insured must be legally liable for the accident.
The damage or injury must be the result of an auto accident. - CORRECT ANSWERS The
correct answer is: The insured must not have been drinking.
, It is not necessary that the insured not have been drinking alcohol at the time of the accident. Coverage
would still apply.
Under an equipment dealer's form, which of the following would not be covered?
Inventory
Serviced items
Customer's property on the insured's premises
Vehicles for highway use - CORRECT ANSWERS The correct answer is: Vehicles for highway
use.
EXPLANATION:
Inland marine forms provide coverage for the insured's goods as well as property of others, but they do
not cover automobiles.
Which of the following components MUST be included in the definition of a hostile fire:
I. Rapid oxidation accompanied by a flame or at least a glow.
II. Must be sudden and unexpected.
III. Must have been intentionally set by the insured.
IV. Must spread beyond its intended place.
I, II and IV only
I, II, III and IV
I and II only
I, III and IV only - CORRECT ANSWERS The correct answer is: I, II and IV only.
