California Property and Causality Practice Exam, Exams of Insurance Economics

Download California Property and Causality Practice Exam and more Exams Insurance Economics in PDF only on Docsity! California Property and Causality Practice Exam California Property and Causality Practice Exam Questions Containing 75 terms & Definitions Latest Update 2024. When can a person who sells real property require the use of a specific insurance agent, broker or solicitor? 1. As a condition precent to the sale of such real property. 2. When a buyer's credit score is below the lender's threshold. 3. A buyer is always able to choose their own insurance representative. California Property and Causality Practice Exam 4. When it is required by local municipal regulation. Unless otherwise specified in the insurance contract, all of the following are TRUE regarding return of premium EXCEPT 1. the premium is forfeited if the policy is cancelled. 2. the premium is refunded if a policy is rescinded or rejected. 3. the whole premium is returned if the insurer has not been exposed to loss. 4. any cancellation fees must be disclosed in writing within 5 days of the request to cancel. How may a license may be surrendered by the insuree, or terminated by the employer? 1. Phoning the insurance commissioner. 2. Faxing a copy of the license to the insurance commissioner. 3. Personally, delivering the license to the insurance commissioner, or by written notice from the employer. 4. California Property and Causality Practice Exam Catastrophic losses. Which of the following is a VALID reason to deny coverage or charge a higher rate or premium? 1. ancestry. 2. race, color or religion. 3. driving history or motor vehicle record. 4. sexual orientation or gender expression. All of the following are authorized activities for the Limited Lines Automobile Insurance Agent EXCEPT if the agent 1. provides all necessary disclosures. 2. charges and collects a broker's fee for service. 3. transacts insurance on behalf of the consumer. 4. sells automobile property and liability policies. Where shall an express warranty be made? California Property and Causality Practice Exam 1. in the policy itself 2. on a specimen copy in the contract 3. on an illustration provided to the policy owner 4. in a brochure of the policy that is described in detail - Answer: in the policy itself All of the following are requirements to offer earthquake insurance with residential property coverage EXCEPT 1. earthquake insurance is required to be offered with any new policy or renewal. 2. earthquake insurance may be provided through an affiliate or nonaffiliate insurer. 3. a separate policy to cover the earthquake is required, an endorsement is insufficient. 4. earthquake peril can either be offered alone, or offered in combination with other perils. - Answer: a separate policy to cover the earthquake is required, an endorsement is insufficient. Which circumstances in a pretext interview determine if the questions are permissible? California Property and Causality Practice Exam 1. When an insured is questioned prior to the application to determine the best recommendations for coverage. 2. When an insured is consulted by a person who hides his true identity on purpose when fraud for a claim is suspected. 3. When questions are asked to help underwriting decide on coverage for the insured when health problems are suspected. 4. When questions are posed by a person who refuses to identify himself or his relation to the company prior to a policy being underwritten. - Answer: Correct answer: When an insured is consulted by a person who hides his true identity on purpose when fraud for a claim is suspected. An insurance agent is a person who transacts all of the following types of insurance EXCEPT 1. annuities. 2. homeowners. 3. auto insurance. 4. life insurance. - Answer: life insurance. California Property and Causality Practice Exam It requires a separate charge or fee. 3. If offered as a guarantee of the performance of goods, it is prohibited. 4. If issued by credit unions or with newspaper subscriptions, it is limited under Statute 777.2. - Answer: Correct answer: It requires a separate charge or fee. All of the following are permissible reasons for a consumer reporting agency to furnish motor vehicle, past claims, or credit reports EXCEPT 1. information for employment purposes. 2. a response to a court order or a subpoena issued by a Federal Grand Jury. 3. a request of a national news organization for an investigative story. 4. underwriting purposes to determine a consumer's eligibility for insurance. - Answer: a request of a national news organization for an investigative story. Which is TRUE regarding a "valued" policy? 1. A market value policy is an example of a valued policy. 2. A valued policy specifies the coverage amount of the policy. 3. California Property and Causality Practice Exam A valued policy is the only type of policy that builds a cash value. 4. A valued policy generally costs more than replacement value because it has a specific amount. - Answer: A valued policy specifies the coverage amount of the policy. According to CIC Section 1711, an organization ceases to exist as an entity eligible to hold a license EXCEPT 1. upon dissolution of a corporation. 2. upon the termination of all contracts. 3. upon dissolution of a copartnership. 4. upon the termination of an association. - Answer: upon the termination of all contracts. How is the license of an agent or broker required to be displayed? 1. The license must be displayed in a minimum of 24 point font. 2. The license must be displayed in the front window of the office building. 3. The license must be displayed prominently where it can be readily inspected. California Property and Causality Practice Exam 4. The license must be carried by the agent always regardless of its current status. - Answer: The license must be displayed prominently where it can be readily inspected. How long after the expiration date may a licensee who has met all the requirements to renew a license be allowed to operate under the existing license? 1. one year 2. sixty days 3. two weeks 4. three months - Answer: sixty days When is it possible for a commercial vehicle to be eligible for coverage under the California Automobile Assigned Risk Program? 1. if the commercial vehicle is part of a large corporate fleet that moves products serving the underprivileged 2. when the commercial vehicle is used strictly for the transportation of those suffering from a terminal illness 3. California Property and Causality Practice Exam 4. solicit contracts of insurance. - Answer: Correct answer: examine contracts of insurance. Which of the following describes a contract of reinsurance? 1. Protection is purchased to insure against an insurance company's stated insolvency. 2. A first insurer issues insurance to compensate another insurer for losses on contracts issued by that second insurer. 3. A contract provides an additional coverage amount to the insured in the event of a major catastrophic event. 4. A contract is obtained by an insurer to cover unexpected fluctuations in their expressed loss ratio. - Answer: A first insurer issues insurance to compensate another insurer for losses on contracts issued by that second insurer. All of the following are TRUE regarding a warranty EXCEPT 1. a warranty can be express or implied. 2. a particular form of words is necessary to create a warranty. 3. California Property and Causality Practice Exam a warranty can refer to the past, present, future, or all of these. 4. a statement in a policy relating to the person or thing insured, or the insured risk, is a warranty. - Answer: Correct answer: a particular form of words is necessary to create a warranty. Which is an INACCURATE statement regarding the non-standard coverage provide by surplus line brokers? 1. They must prove that 3 domestic insurers have declined the risk. 2. They must show that a thorough search has been made to provide coverage with an admitted insurer. 3. They must provide notice to the commissioner within 14 days of providing non- standard coverage for a home state insured. 4. They must not place with a non admitted insurer coverage just to procure a rate lower than that provided by the lowest admitted insurer. - Answer: They must provide notice to the commissioner within 14 days of providing non-standard coverage for a home state insured. A standard fire insurance policy contains the following details EXCEPT 1. the address of the insured. California Property and Causality Practice Exam 2. the term coverage of the policy. 3. the name of the insurance company. 4. the amount of coverage and cost of premiums. - Answer: Correct answer: the address of the insured. When may a surplus line broker solicit and place insurance for a home state insured with a nonadmitted insurer? 1. If the same insurance coverage cannot be procured from an admitted insurer. 2. If the nonadmitted insurer is a domestic rather than an alien or foreign company. 3. Only when the nonadmitted insurer signs an agreement to become an admitted insurer. 4. Only when the proposed insured petitions for the right to be offered the coverage by the broker. - Answer: Correct answer: If the same insurance coverage cannot be procured from an admitted insurer. What is the coverage limit offered by the California Earthquake Authority for condominiums? 1. California Property and Causality Practice Exam 1. exempt employments. 2. to pay medical bills. 3. illegal employments. 4. non compensable injuries. - Answer: Correct answer: to pay medical bills. Except in a case where the property is being held as a carrier or depository, what is the insurable interest is measured by? 1. The size of the premium. 2. Fair market value of the property. 3. The contingent or expectant value to the insured. 4. The extent to which the insured would be damnified by loss or injury to the property. - Answer: The extent to which the insured would be damnified by loss or injury to the property. To which person or organization does a public insurance adjuster promote and represent? 1. California Property and Causality Practice Exam the insured 2. the insurance company 3. the insurance commissioner 4. the insurance agent - Answer: Correct answer: the insured When is a representation false? 1. when the statement is made under duress 2. when new information is provided to the insurer 3. when the facts are modified by the applicant or insured 4. when the facts fail to correspond with its assertions or stipulations - Answer: when the facts fail to correspond with its assertions or stipulations Materiality to be solely determined by which of the following? 1. The probability that a certain occurrence of events will result in a claim. 2. The importance of the facts to the insurer and insured in making an underwriting decision. California Property and Causality Practice Exam 3. The probable and reasonable influence of the facts upon the party to whom the communication is due. 4. The certainty that material provided to the insurer is truthful in all manners regardless of any mitigating circumstances. - Answer: Correct answer: The probable and reasonable influence of the facts upon the party to whom the communication is due. All of the following are duties of a Managing General Agent EXCEPT 1. delivering policies to the insured. 2. accepting or declining risk of applicants. 3. appointing, supervising and terminating agents within the territory. 4. collecting premiums from brokers and agents and remitting them to the insurer. - Answer: Correct answer: delivering policies to the insured. All of the following conditions must be met before a surplus lines broker may place insurance with a nonadmitted insurer EXCEPT 1. if the insurance cannot be procured from admitted companies. 2. California Property and Causality Practice Exam property taxes 2. tax return 3. residence address 4. telephone number - Answer: Correct answer: tax return In order for an insurer to contract with the State Compensation Insurance Fund it must meet all of the following criteria EXCEPT 1. the insurer has a minimum surplus of one hundred million dollars ($100,000,000). 2. the insurer has an A minus (A-) rating or better from AM Best. 3. the insurer has substantial prior experience in transacting worker's compensation business on another insurer's behalf. 4. the insurer has met all ratio requirements for risk based capital (RBC). - Answer: the insurer has met all ratio requirements for risk based capital (RBC). Which of the following is TRUE regarding continuing education requirements of an agent or broker? 1. California Property and Causality Practice Exam Any licensee shall satisfactorily complete 24 hours of instruction prior to license renewal. 2. Any licensee in good standing for 10 years may apply for exemption to the continuing education requirement if reputation has been proven. 3. An agent or broker licensed in life and health requires more continuing education hours than an agent or broker licensed in property and casualty. 4. A licensee who is 65 years or older shall be exempt from continuing education hours if reputation of agent or broker is in good standing for 25 years. - Answer: Correct answer: Any licensee shall satisfactorily complete 24 hours of instruction prior to license renewal. What does concealment, whether intentional or unintentional, entitle the injured party to? 1. Once the policy has been accepted, it may only be cancelled by the insured under very specific circumstances. 2. The insurer may rescind the contract on the basis of misrepresentation, concealment, or fraud by the insured. 3. Legal damages, not in excess of double the premiums paid. 4. California Property and Causality Practice Exam A waiver of responsibility to meet contractual obligations. - Answer: Correct answer: The insurer may rescind the contract on the basis of misrepresentation, concealment, or fraud by the insured. All of the following are PRINCIPAL rating factors in determining automobile insurance premiums EXCEPT 1. the insured's driving safety record. 2. the number of miles driven annually. 3. the zip code where the vehicle is housed. 4. the years of driving experience the insured has. - Answer: Correct answer: the zip code where the vehicle is housed. What is the main duty of an insurance adjuster? 1. To adjust the premiums to make sure coverage is priced equitably. 2. To monitor the current financial performance of the insurance company. 3. To review the costs of insurance to see when prices need to be increased in the industry. 4. California Property and Causality Practice Exam They can require a claimant to travel an unreasonable distance to obtain a repair estimate for an automobile. 3. They may require that a claimant obtain estimates for the automobile from a minimum of two different repair shops. 4. They can recommend that an automobile be repaired at a specific repair shop unless other requirements have been met. - Answer: They can recommend that an automobile be repaired at a specific repair shop unless other requirements have been met. At which point is a person licensed as a broker-agent deemed to be acting as an insurance agent? 1. when they pass their licensing test 2. when they write their first insurance application 3. when a notice of appointment is filed with the insurance commissioner 4. when they have completed 12 hours of training, and have been licensed at least one year - Answer: Correct answer: when a notice of appointment is filed with the insurance commissioner California Property and Causality Practice Exam All of the following are requirements for determining an area that qualifies for Low Cost Automobile Insurance EXCEPT 1. the number of automobile accidents that occur within the county. 2. the number or percentage of low income people within the county. 3. the number or percentage of uninsured motorists within the county. 4. the availability of affordable insurance through private insurers within the county. - Answer: Correct answer: the number of automobile accidents that occur within the county. When shall a life agent, a property broker-agent or a casualty broker-agent provide to all insureds or applicants the effective date of coverage? 1. at the time of application or receipt of premium moneys 2. at the time that the insurance company approves the application 3. at the time the insurance company verifies receipt of the application 4. at the time that the insurance company issues the policy - Answer: Correct answer: at the time of application or receipt of premium moneys California Property and Causality Practice Exam Which of the following is TRUE regarding nonadmitted insurers? 1. A felony is committed by the agent in the state of a nonadmitted insurer. 2. Acting as an agent for a nonadmitted insurer is considered a misdemeanor. 3. The agent shall pay $1,000 in addition to any fees involving the commission of a felony. 4. Specific penalties shall be determined by the Insurance Commissioner on a case by case basis. - Answer: Correct answer: Acting as an agent for a nonadmitted insurer is considered a misdemeanor. All of the following are taken into consideration for California Automobile Assigned Risk Program eligibility for applicants EXCEPT 1. the education of the applicant. 2. the driving record of the applicant. 3. the mental and physical health of the applicant. 4. any criminal history or convictions of the applicant. - Answer: Correct answer: the education of the applicant. California Property and Causality Practice Exam the coverage protect against perils from fire, and may be expanded to include vandalism, and malicious mischief. - Answer: Correct answer: the comprehensive plan covers both automobiles and risks associated with farming. An "insurance agent" means a person authorized, by and on behalf of an insurer, to transact which of the following class of insurance? 1. Annuities. 2. Disability insurance. 3. Health insurance. 4. Life Policy. - Answer: Correct answer: Annuities. What is the required rate discount under a Good Driver Discount policy? 1. 20% below the rate the insured would have been otherwise charged for the same coverage. 2. 10% below the rate the insured would have been otherwise charged for the same coverage. 3. 20% below the insurer's average premium rate. 4. California Property and Causality Practice Exam 10% below the insurer's average premium rate. - Answer: Correct answer: 20% below the rate the insured would have been otherwise charged for the same coverage. Which of the following is TRUE regarding who qualifies for coverage under the California Fair Access to Insurance Requirements plan? 1. Any person who is unable to obtain basic property insurance through normal channels. 2. Any person who qualifies will receive superior coverage to other forms of property insurance. 3. Any person who does NOT have an insurable interest in a property can participate in the FAIR plan. 4. Any person who qualifies will have the inspection automatically waived if they are a FAIR plan participant. - Answer: Correct answer: Any person who is unable to obtain basic property insurance through normal channels. ALL of the following are examples of open policies EXCEPT 1. market value. 2. agreed value. California Property and Causality Practice Exam 3. actual cash value. 4. replacement value. - Answer: Correct answer: agreed value. value. The following are valid insurance classes under California Insurance Law EXCEPT 1. life, fire, marine and title. 2. surety, disability and plate glass. 3. certainty, precious metals, and gems. 4. sprinkler, boiler and machinery, and team and vehicle. - Answer: Correct answer: certainty, precious metals, and gems. Which of the following terms refers to any evidence or documentation in the possession of the insurer that provides any evidence of a claim and that reasonably supports the magnitude or the amount of the claimant loss? 1. proof of loss 2. proof of claim 3.