1. Welcome to the study lounge portion of your INSURATEST exam
preparation process, glad you are here. There are a few things you will
need before we begin this final section. Cinnamon gum, yes cinnamon
chewing gum, earplugs or headphones and comfortable attire.
Seriously, go to the store and buy a pack of cinnamon chewing gum, along
with a $.50 cent pair of earplugs and find the headphones that came with
your smartphone. If you have noise cancelling one’s even better. (we will
get to this in a bit). If you are not yet dressed comfortably and sitting in a
relaxed setting please make that happen, then come back.
Please turn off, tune out, all outside and inside distractions. This means
everything; sports, reality tv, Facebook, texting, even that inner voice inside
your head that keeps on buzzing. You know, the one relentlessly stressing
out about the exam you’re about to ace! Let that voice take a nap.
Go to a quiet environment, or visit a comforting place like your favorite
coffee shop, conference room, or library. Go to where you know you will
focus the best. In reality we don’t go to study, we instead move towards
studying. The deeper you go towards study the more you will absorb this
section’s content and retain what’s necessary to ensure you pass.
While in your preferred environment, try to block out all background noises
with headphones or earplugs. Yes earplugs, they are the best $.50 cents
you will ever spend on studying, far better and less expensive than a $4
latte’. Using earplugs while studying lets you hear yourself think and this is
paramount to your success. Earplugs prevent background noise from
interfering with your ability to move deeper towards studying and supports
your ability to remain in study longer.
We want you to bring a pair of earplugs with you to your test site and wear
them during your exam. During the three hour test we do not want you to
be auditorily distracted by other test takers or proctors, walking around,
Insuratest 2015

2. talking, coughing, sneezing or hearing sirens from the outside. Earplugs will
prevent outside noises from breaking your concentration.
If you prefer to listen to music, try listening exclusively to classical. Better
yet, music specifically written during and closely following the baroque
music era, years 1600 to 1750. Music written from this time period carries a
distinct mathematically progressive time signature to its melody that has
been scientifically proven to boost brain power when listened to while
studying. Listening to classical music while studying will help you focus
naturally and will aid you in moving further towards study.
Sorry “today’s hits” you gotta go for now. If you have a commercial free
Pandora radio account try the “Classical for studying” station. Or put some
Bach, Vivaldi, Chopin and Mozart on your ipod.
Get your cinnamon gum ready. Why Cinnamon? Chewing cinnamon gum
while studying has also been scientifically proven to boost brain power,
narrow one’s focus and stimulate the brain’s natural ability to tie a
fragrance to content memorization and enhance study material recollection.
Just smelling cinnamon boosts cognitive function and memory. We want
you to chew cinnamon gum quietly while you take your State Exam too.
You will be amazed at how well it will help this course’s material circle back
to you, on exam day.
Comfortable - Check
Earplugs or Headphones & Classical Music - Check
Cinnamon Gum - Check
Worries left to rest - Check
Insuratest 2015

3.
Ok Let’s begin!
Hopefully by now you are relaxed, in your perfect study environment,
chewing cinnamon gum, listening to Mozart and ready to dive right in. But
wait we need to explain one more thing. The INSURATEST study theory.
Please open your mind to this. What we are about to share with you goes
against all you have been pre-programmed to accept in terms of
educational principles and exam preparation methodologies. We need to
permanently change the way you study and approach this exam.
Practice does not make perfect, ​no it does not. ​Practice makes
patterns​. Practice the wrong pattern and you will find yourself having to
practice approximately 85% more to achieve the same result as would
have been obtained naturally by simply practicing the right pattern in the
right time sequence.
It is​ however, ​the repetitive practice of executing a perfect pattern in a
perfect environment that makes perfect​. Below is how you practice
perfectly for your State exam.
DO NOT TEST YOURSELF​ ​now​. That’s right, ​DO NOT APPROACH THIS
AS A TEST. ​This is not a test, but instead an exercise in repetitive factual
recognition and acceptance. Accepting this is paramount, the right answers
Insuratest 2015

4. are correct, they are​ Bright and Bold​ and right in front of you. All you need to
do is read them backwards and forwards, even out loud to yourself.
Practicing perfectly using this section as a tool will ensure you recall only
what is correct on exam day. At the Study Lounge Sessions all has been
prepared for you. Here you will be set up for success with complete
transparency.
Simply read the question(s), then read the right answer(s). Then re-read
the right answer(s) and then re-read the question(s). If you want to get
fancy try and make two questions out of each question in your mind by
rewriting the question in your mind using the answer as part of the question
and the original question as part of the answer. Here is an example of
INSURATEST study theory in action.
(YOUR SCREEN IS NOT BROKEN THE COLORS ARE THIS WAY BY
CHOICE, soon to be explained)
“ Assignment” as an insurance term refers to:
A. The agent assigned to an individual insured
B. The insurer’s right to subrogate a claim settlement from a third party
C. The transfer of an insured’s interest in a policy to another party
D. The insured’s right to change issuing company's mid term without paying a short
rate cancellation fee
The same question rewritten in your mind
The transfer of an insured's interest in a policy to another party refers to:
A. The agent assigned to an individual insured
B. The insurer’s right to subrogate a claim settlement from a third party
C. Assignment
D. The insured’s right to change issuing company's mid term without paying a short
rate cancellation fee
Insuratest 2015

5.
A little secret about “ Practice Tests.”
You were unfortunately set up for failure by being forced to take
standardized insurance practice tests throughout your educational
development, at an insurance school, online pre license training course, or
in a workbook. The insurance exam simulator programs are no better. They
all accomplish the same wrong thing.
By taking quizzes and tests with 10, 50 even 150 questions on them, you
were being forced to spend 85% of your time regardless, reading and
studying wrong answers. You were being inundated with erroneous
statements and “noise”. Confusing you beyond confuzzlement while
essentially trying to learn a new language; the language of insurance, in
only fifty two hours time.
It’s not rocket science, just basic math. If you spend 85% of your time,
looking at, reading to yourself, or out loud, essentially memorizing error
filled statements, you’re more likely to recall what's wrong on exam day. By
using the traditional practice exam study method, approximately 85% of
your time would be spent counterproductive; focusing on what is incorrect.
It would be 85% of your time wasted.​ Do you have time for that?
No wonder it is the case that 61% of all Californian’s who take this exam do
not pass on their first attempt. Could it be that they spent 85% of their
preparation time focusing on wrong answers? Time they could have spent
with family, friends, working, or doing what makes them happy. Math
doesn’t lie.
With Practice tests you read a question, read three wrong answers to a
question, read a right answer, read again about two more wrong answers,
possibly read the question again, hopefully eliminating two wrong answers,
that is if you read the question right. Hopefully by then picking a right
answer, after reading yet again, another wrong answer. Essentially
spending 85% of study time focussing on the wrong thing.
Did you know the answer you picked, whether right or wrong you are
90% more likely to recall on exam day? What if every answer you
Insuratest 2015

6. recalled was the correct one? What if that was ​all you were
re-programmed to see​?
After knowing this why did we ever give you practice questions and lesson
quizzes? With the ABC’s of Property and Casualty insurance and the
Ultimate Study Guide sections we wanted to show you what typical
questions looked like, what the right answers were, but more importantly
why those answers were right. We showed you a way to remember
coverages and what trap answers to avoid on exam day. After all, you are
preparing to take a test.
Would you ever have enrolled in an exam preparation program that didn’t
test you? Our sectional benchmark quizzes were written strategically to
teach you. They were written as another way to entice you to read our
program’s content again and again in a more stimulating manner. You were
only asked to take a test following a lesson to prove to yourself you fully
absorbed each section after you learned it.
Now… we want you to accept what is correct in the format presented here
in the Study Lounge Sessions. You must focus 100% of your time
absorbing and recognizing what is ​true​ and ​correct​ on the question format
coming up. So that you will, with absolute certainty, recall only what is right
and true when it matters most. While taking your California state licensing
exam.
Message from our founder:
“I’ll let you in on a little secret. I did not pass this test the first time I took it.
Even after attending a ten day, 52 hour insurance school class, having a
great instructor and studying for 80 hours plus; not passing was my result. I
was part of the 60% statistic.
Having to call my Dad, a successful insurance agent for thirty years at the
time, who had a desk waiting for me in his office, since I had just graduated
college two weeks prior, to tell him I had failed my exam, was one of the
hardest calls, I have ever had to make. (Waaaaay harder than cold calling).
Even after spending a majority of my college graduation money to attend
insurance school and “studying” for hours, upon hours. I was one of the
Insuratest 2015

7. 61% left wondering if this was even in the cards for me. It was an
absolutely crushing disappointment. One I desire greatly to free you from.
When I finally figured out “how to study,” I immediately went to work on
re-engineering my study material to be viewed in the Study Lounge format.
I re-approached this exam with what is now the INSURATEST study
philosophy and my result on test day was staggeringly different.
On exam day, I was the first one finished with my exam, in a room of 30
test takers. It took me 92 minutes to finish a three hour test. The same test I
had ran out of time on, two weeks prior. Taking my time, making sure every
question was answered correctly, I hit the submit button with absolute
certainty that I passed.​ ​(I ONLY SAW RIGHT ANSWERS ON EXAM DAY,
THEY LITERALLY POPPED OUT FROM THE COMPUTER SCREEN AS
IF THEY WERE IN BOLD FONT).
Walking out of the exam room on that breezy San Francisco afternoon, with
a smile from ear to ear, doing a little fist pump and honestly crying a few
tears of joy, made for one of the best afternoons of my life.
Helping you achieve this same success is our mission at INSURATEST
Welcome again to the Study Lounge Sessions and thank you for choosing
and trusting INSURATEST.com, “the insurance test program designed to
ensure you pass.”
Now let’s begin...
FOCUS ON WHAT IS RIGHT (Hint it’s ​Bold Black and Yellow​ ). What is
wrong is shaded​ lightly​ so you won’t focus on, or even read it. The material
only looks and feels like test questions, so you’ll respect them as such. But
please, do not even read what’s not yellow or italicized bold, it’s only part of
the illusion.….
Now do yourself a gigantic favor. Keep reading and prove the
INSURATEST study theory to yourself.
Let’s start off by quickly Mastering Single, Double and Triple Negative
Questions. You can read/study as many questions as you want, but if a
Insuratest 2015

8. double negative question’s phrasing habitually messes you up, you’ll
unfortunately end up picking wrong answers on exam day. The question’s
end direction must be determined first. Even though you know the right
answer. Scoring correctly hinges upon your ability to interpret the questions
true intent. This might very well be the difference maker between passing
and needing to try again.
Words and phrases to look out for and what is their
Mathematical/linguistic property either negative (-), or positive (+).
Commit these to memory.
(-) Except, (-) Not , (-) Not Included, (-) Not True, (-) False), (-) None of the
following, (-) None of the above, are typically excluded (-).
(+) Included, (+) True, (+) Are part of the following, (+) Which of the following, (+)
Out of the following, (+) Of the following.
Single Negative Question Examples.
Consequential loss is considered an indirect loss (as compared to losses
from the direct damage of a peril). Direct damages would be covered
under different types of insurance, such as property/casualty or fire
insurance​. All of the following { are considered (+) } a consequential loss {
except​ ​(-)​ }?
A. loss of rental value
B. damage to personal property
C. extra expense incurred while rebuilding damaged property
D. loss of business income while a building is closed for repairs
With single negatives think of them as a ​U​ turn. Since the (-) negative word occurred at
the end of the question the correct answer will be an untrue statement. (the exception,
one that is not like the others, the one that doesn’t belong). Remember the kids TV show
Sesame Street’s “Which one is not like the others, which one just doesn’t belong” song?
I know it’s childish but it works. Sesame Street can help you solve single negative and
double negative questions.
Insuratest 2015

9.
{“Which one is not like the others, which one just doesn’t belong.” Solving a single
negative question is basically the same thing}
It was looking like this question’s answer would be in the form of a positive phrase (+)
until the last word ​excep​t (-) came into play. ​Except​ caused the questions direction to
take a U turn. The last (-, or +) word is the U turn with single negative questions always.
Please be sure to read the entire question twice if need be. The word ​except​ was the
most important word to catch and was hidden in the end. With single negative questions
(-) the last word wins.
Extra expense insurance affords coverage for all of the following (+) if coverage
is in force at time of loss except ​(-)​?
A. Costs of setting up business in an alternative temporary location, during the
period of restoration
B. Business income including payroll when a business is inoperable after
incurring a loss​ (Why? This is covered by business income not Extra Expense
coverage).
C. The extra expenses a business incurs to continue a business while damage to the
premises are being restored
D. None of the above
Insuratest 2015

10. Under a standard boat-owners policy. Which of the following liability coverage(s)
is/are typically excluded (-):
A. Vicarious liability
B. Flotilla liability
C. Medical liability
D. General liability
All of the following are part of (+) the standard business-owners policy (BOP),
except ​(-)​:
A. Tenants improvements and betterments
B. Business personal property coverage
C. Professional liability coverage
D. Business income coverage
Double Negative Question Examples,
None of the following statements (-) differentiates the perils of robbery and
burglary in terms of coverage trigger except (-)?
A. Requires taking property directly from a person
B. Robbery is the broadest form of crime coverage
C. Burglary requires physical signs of forcible entry or exit
D. May involve use of force to cause bodily injury or instill a threat of violence
(Hint a negative (-) + a (-) = a Positive (+)​. This is true in both basic mathematics and
testing language. Since both negative words in this question (- ​None​) and (- ​Except​)
cancel each other out you are looking for a positive phrase like “included” or in this case
a “true” phrase to answer this question. ​C. Burglary requires physical signs of
forcible entry or exit ​is the distinction and true phrase.
Insuratest 2015

11. The coverage trigger between burglary and all other crime coverages is “forcible entry or
exit.” As burglary by definition “must be evidenced by physical entry or exit into a closed
premises.” This is a rather easy definition question. Easy only if you navigated through
the double negative mine field correctly.
All of the following do not (-) describe a type of loss triggering a claim for
monetary damages due to an insured un-willfully causing injury to another
person or damage to another's property by a negligent act, except (-)?
​Remember a (-) + a (-) = a positive, so you are looking for the term that matches the
definition stated in this question's text.
A. Real property loss
B. Physical loss
C. Personal property loss
D. Liability loss
Commercial property theft also called “ fidelity coverage” is provided by none (-)
of the following coverage forms except (-)?
A. Commercial property form
B. Building and personal property coverage form
C. Commercial Crime Insurance
D. None of the above coverage forms afford coverage for theft
All of the following are not (-) covered by a Commercial General Liability policy
except (-)?
A. Damage to “Your Work”
B. Damage to “Your Product”
C. Contractual Liability
D. Premises operations
Insuratest 2015

12. All of the following are inland marine policy exclusions (-), except (-):
A. Mechanical Breakdown
B. Earth movement
C. Electrical breakdown
D. Wear and tear
Triple Negative Question Examples
The liquor liability exclusion contained in a Commercial General Liability (CGL)
policy excludes coverage (-) for none of the following (-) scenarios except (-)?
A. Serving alcohol at a company picnic
B. Buying a round of drinks for the sales staff at a company sponsored golf
tournament
C. The insured being involved in the alcoholic beverage business
D. none of the above
{Don’t worry about triple negative questions if they throw a few at you on exam day. Just
keep using basic math to help. ​excludes coverage (-) for none of the following (-)​ These
cancel each other out so now you are left with a single negative question ​except (-) ​and
those are easy.
CGL policies afford coverage for alcohol being served at company parties or corporate
events: as long as the insured is not directly involved in selling alcohol or being in the
alcohol service, or distribution business. Therefore choice (C) represents the only
exclusion and is the correct answer}
All of the following are not (-) inland marine policy exclusions (-), except (-):
A. Mechanical Breakdown
B. Earth movement
C. Electrical breakdown
D. Wear and tear
Insuratest 2015

13. All of the following are not (-) inland marine policy exclusions (-), except (-):
are not (-) + policy exclusions (-) = a + which is then negated by the
third negative ( except (-) making this in the end just another basic “except” (-) question.
Do not guess on single, double or even triple negative questions or
succumb to their trickery
Use basic math to help you solve, single, or triple negatively phrased questions designed
to confuse you. The key is to know which direction you are being asked to answer in the
end, either - or +. Use your scratch paper to keep track of phrases to add, subtract, or
cross out. Figure out your end direction then simply choose the correct answer, it’s that
easy.
Good news
Honestly most double negatively phrased questions are easier content-wise than
straightforward questions. The test writers only turn the phrasing into that of a single,
double or triple negative in effort to toughen up what would otherwise be an easy to
average question.
All of the following are covered (+) under the unendorsed ISO building and
personal property coverage form except ​(-)​?
A. Light pole
B. Gate
C. Patio
D. Signs
All of the following are not (-) an additional coverage provided by an unendorsed
HO-3 policy except (-)?
A. Tenant legal liability
B. Lawn, trees, shrubs and other plants
C. TRIA
D. Safe Burglary
Insuratest 2015

14.
An agent’s appointment to an insurance company is terminated and the agent
has no other appointments with any other insurance company at this time.
Which of the following happens to the agent’s license automatically?
A. The agent’s resident license remains in force until it’s term expires
B. The agent’s resident license will be terminated and they will have to sign it over to
the insurance commissioner
C. The agent’s resident license becomes inactive
D. The agents license will simply expire upon renewal
All of the following are (-)​not​ required of a producing broker-agent before
appointing an insurance solicitor (-)​except​?
A. Must be an MGA
B. Must hold a permanent license
C. Must submit notice of hiring to the DOI in 4 business days or less
D. Must possess a certificate of authority
It is proven that another person's ​negligent​ actions contributed to an injury
What gives an insured the right to seek compensation?
A. Coinsurance
B. Tort law
C. Waiver of subrogation
D. Reinsurance
Insuratest 2015

15. Consequential loss is considered an indirect loss (as compared to losses
from the direct damage). Direct damages would be covered under different
types of insurance, such as property/casualty or fire insurance​. All of the
following are considered (+) a consequential loss except ​(-)​?
A. Loss of earnings
B. Damage to personal property
C. Extra expenses incurred while demolitioning a partially burned structure
D. Extra expense incurred to move a business to a temporary location
All of the following are true (+) of an ​Insurance Adjuster​?
A. Assists in settling claims on behalf of an insurance company
B. Typically an employee of an insurance company therefore does not need a
license
C. Must be licensed
D. Both A and B
All of the following are true (+) of a ​Public Insurance Adjuster​?
A. Assists an insured in settling claims with an insurance company
B. Typically an employee of an insurance company therefore does not need a
license
C. Must be licensed
D. Both A and C
Insuratest 2015

16. Which of the following are (+) exclusive licenses?
A. Bail
B. Title
C. Mortgage Guarantee
D. All of the above
Special lines Surplus lines brokers:
A. Transact business only with (​represent​ )​non-admitted insurers​ and ​must
post a $50,000 Bond​.
B. Hold a valid surplus lines insurance license
C. Transact business exclusively with foreign insurers
D. Specialize in large commercial accounts only
All of the following insurer settlement options under a personal auto policy are
not available (-) except (-)?
A. Induce the insured to purchase a replacement auto from a wholesaler
B. Recommend the insured first attempt to settle with the negligent operator’s
insurance as to avoid subrogation.
C. Return stolen property to the first named insured at the address shown on
the policy declarations page
D. Demand the insured repair their vehicle at a repair shop on the insurer’s
preferred provider list.
Insuratest 2015

17. All of the following are not (-) a common policy condition for a commercial
package policy except (-)?
A. Waiver of subrogation
B. Why are you reading this
C. Pro-rata clause
D. Inspections and surveys
Which of the following is true (+) of an insurance agent?
A. Represents the company and sells insurance
B. Must be appointed and may have binding authority.
C. Cannot transact life or disability insurance.
D. All of the above
Shipowners may acquire coverage against vicarious liability claims due to the
negligent operation of their vessel by their employee(s) which of the following
coverage forms?
A. Yacht owners policy
B. Protection and indemnity insurance
C. Ocean Marine coverage
D. Longshoreman Indemnity act
Which advisory organization(s) develop forms for the standard market?
A. Acord Form processing service (AFPS)
B. National Association of Insurers and Financial Advisors (NAIFA)
C. Insurance Services Office (ISO)
D. National Association of Insurance Commissioners (NAIC)
Insuratest 2015

18.
Under the common policy conditions, who is authorized to make changes to a
commercial policy?
A. The producer
B. The first named insured (with insurer's consent)
C. Any insured named on the policy
D. The insurance company
None of the following are true (-) regarding the Law of Large Numbers except
(-)?
A. The larger the number of similar risks that are combined in a group, the
more predictable future expected losses will be
B. Applicable use of the Law of large Numbers is a characteristic of an ideally
insurable risk
C. Cannot be used to predict individual losses or profits
D. All of the above
The Insurance Commissioner elect uses which of the following as a means to
determine whether or not an insurer’s filed rate is excessive or unjustly
discriminatory?
A. Whether the proposed filed rate mathematically reflects the insurance
company’s investment income
B. The length of time passed since an insurer’s last full examination of its books and
records by the office of the insurance commissioner
C. If their rates are comparable to other insurer’s with the same business model
D. In accordance with the guidelines set forth by the FDIC
Insuratest 2015

19. In comparing the personal property coverage of a dwelling policy to that of a
standard ISO homeowners policy form, diduce which of the following is not (-)
false (-)?
A. Why are you reading this
B. Homeowners policy claims are settled on an actual cash value basis while
dwelling policy claims are settled on a replacement cost basis
C. There is no appreciable coverage difference
D. Homeowners off premises coverage is 10% of the total property limit, while that
of a dwelling policy is 100%
All of the following perils are not covered (-) on the basic form except (-) ?
A. Terrorism
B. Riot or civil commotion
C. Collapse
D. Vandalism
Which of the following statements best defines the standard commercial
property policy “ concurrent causation exclusion” and the effect it has on a
potential claim settlement:
A. Why are you reading this
B. If a loss occurs during the 90 day Binder issuance period it is excluded
C. If two or more perils happenin sequence to cause a loss, then only the damage
caused by the first peril is covered
D. If two or more perils happen at the same time to cause a loss, there is
coverage for all of the damage if any of the perils are not specifically excluded
Insuratest 2015

20. Brian a landscape architect is brought into a suit claiming his design is solely
responsible for the damage caused by improper draining at a claimant's
property. What type of insurance would protect Brain For this type of mistake
even if it is determined later that the suit is groundless?
A. Professional liability
B. Errors and Omissions insurance
C. Why are you reading this
D. Fidelity Bond
How does an insured's unendorsed personal auto policy respond in the event an
auto accident occurs in Florida a no fault state that requires personal injury
protection (PIP)?
A. PIP coverage is provided but the limit moves to Florida’s state minimum
B. Coverage is excluded without the intestate travel endorsement
C. Coverage automatically is broadened to provide PIP
D. The insured must purchase PIP from a licensed Florida agent within three
business days of the accident if at fault 10 days if not at fault.
The named non-owner coverage endorsement form adds which of the following
coverage(s)?
A. Liability, medical payments, and uninsured motorist
B. Other than collision, vicarious liability, and medical payment
C. Bodily injury, medical indemnity and other than collision
D. Property damage only
Insuratest 2015

21. Ariana leaves her vehicle at an auto dealer's service center overnight to
complete her scheduled maintenance. The following day a mechanic employed
by the dealership makes a “ Grande” mistake and is involved in an auto accident
while test driving Ariana’s car. What coverage if any will Ariana’s personal auto
provide for this claim?
A. The personal auto policy is primary
B. The personal auto policy is excess
C. Coverage is excluded under the personal auto policy
D. Why are you reading this
All of the following are not true (-) except (-) when comparing the per accident
coverage limit difference(s) between auto policies with single limits vs. split
limits?
A. The per accident single limit covers to all claims, while the split limit covers
medical payments exclusively
B. The per accident single limit applies only to property damage, while the split limit
applies to vicarious liability exclusively
C. The per accident single limit applies to property damage, while the split limit
applies to bodily injury exclusively
D. There is no difference
All of the following are not considered (-) special damages except (-)?
A. Compensation for time away from work
B. Compensation for a claimant's pain and suffering
C. Compensation for a claimant's loss of hearing
D. Compensation for a claimant's loss of limb
Insuratest 2015

22. All of the following are part of (+) the standard business-owners policy (BOP),
except ​(-)​:
A. Tenants improvements and betterments
B. Business personal property coverage
C. Professional liability coverage
D. Business income coverage
Use this chart to help illustrate the different insurer ​Cancellation​, ​Renewal​ and
Nonrenewal​ notices as well as the advance “ days” notice they require for
Personal Auto, Homeowners and Commercial insurance questions. Test your
recollection with the following questions.
Personal Auto Homeowners Commercial
Cancellation for
Non-payment
10 days 10 days 10 days
Notice of
Non-Renewal
30 days 30 days 60 days
Notice of Renewal 20 days 30 days 30 days
An insurer decides to ​non-renew​ a ​commercial​ ​auto​ policy how many days written notice
must they provide the insured?
A. 10
B. 20
C. 30
D. 60
Insuratest 2015

23. An insurer decides to ​renew​ a ​commercial​ ​auto​ policy how many days written notice must
they provide the insured?
A. 10
B. 20
C. 30
D. 60
An insurer decides to ​non-renew​ a ​personal​ ​auto​ policy how many days written notice
must they provide the insured?
A. 10
B. 20
C. 30
D. 60
An insurer decides to ​renew​ a ​personal​ ​auto​ policy how many days written notice must
they provide the insured?
A. 10
B. 20
C. 30
D. 60
An insurer decides to ​non-renew​ a ​Homeowners​ policy how many days written notice
must they provide the insured?
A. 10
B. 20
C. 30
D. 60
Insuratest 2015

24. An insurer decides to ​renew​ a ​Homeowner​ policy how many days written notice must they
provide the insured?
A. 10
B. 20
C. 30
D. 60
An insurer must afford a ​personal​ ​auto​ policy owner _______ days written notice of
cancellation for non-payment​ of premium?
A. 10
B. 20
C. 30
D. 60
An insurer must afford a ​Homeowners​ policy owner _______ days written notice of
cancellation for non-payment​ of premium?
A. 10
B. 20
C. 30
D. 60
An insurer must afford a ​commercial​ policy owner _______ days written notice of
cancellation for non-payment​ of premium?
A. 10
B. 20
C. 30
D. 60
Insuratest 2015

25. Of the various types of cancellations which one occurs when the ​insurer​ ​keeps
the ​earned​, and ​returns​ the ​unearned​ premium?
A. Pro-rate/rata
B. Flat Rate
C. Rescind/Recission
D. Short Rate
Of the various types of cancellations which one occurs when the ​insurer​ ​keeps
the ​earned​,and ​returns​ the ​unearned​ ​minus​ a ​fee​ for admin charge or overhead
expense?
A. Pro-rate/rata
B. Flat Rate
C. Rescind/Recission
D. Short Rate
Of the various types of cancellations which one occurs when the ​insurer
voids​ the ​contract​ and ​returns​ ​all​ ​premiums​?
A. Pro-rate/rata
B. Flat Rate
C. Rescind/Recission
D. Both B and C
{Flat Rate and Rescind/Recission mean the same thing: when the insurer
Voids the contract and returns all premiums as if the contract never existed}
Insuratest 2015

26. An agent who redirects premium funds held in a fiduciary account to his or her
personal account is guilty of?
A. Fraud
B. Theft
C. Falsifying
D. Perjury
{Regarding Fiduciary responsibility please note that the term ​Fiduciary​ refers to
premiums held in trust​. Any form of ​commingling​ or embezzling ​is​ a form of ​theft​.
Please also remember that ​premium​ ​refunds​ coming ​from​ the ​company​ must be
returned​ ​within 25 days​. While ​premium​ ​refunds​ coming ​from​ the ​agent​ of record must
be ​returned​ ​within 15 days​.
None of the following are true (-) of an insurance broker except (-)?
A. An Insurance Broker represents the client and secures coverage
B. Must post a $10,000 bond
C. Cannot bind coverage or transact life or disability insurance
D. All of the above
Standard commercial lines insurance policies contain Interline endorsements
(such as cancellation notices or nonrenewal provisions). These apply or could
apply to:
A. More than one coverage part of a package policy
B. Why are you reading this
C. To liability coverage only
D. Only to waivers of subrogation issued to certificate holders by endorsement
Insuratest 2015

27. All admitted insurers are required to maintain an investigative unit to question
which of the following?
A. Possible non-actuarially based discrimination
B. Unfair employment and hiring practices
C. Possible fraudulent claims submitted by insureds
D. All vicarious liability claims
Under a standard boat-owners policy. Which of the following liability coverage(s)
is/are typically excluded (-)?
A. Vicarious liability
B. Flotilla liability
C. Medical liability
D. General liability
The vacancy permit endorsement covers which of the following perils?
A. Vandalism
B. Building glass breakage
C. Sprinkler leakage
D. All of the above
None of the following (-) are considered special damages except (-)?
A. Loss of hearing
B. Mental anguish
C. Lost wages
D. Reassignment
Insuratest 2015

28. Insureds Lori and Daniel rent a convertible while vacationing in hawaii what
coverage, if any, will respond to a hypothetical physical damage claim under
their personal auto policy?
A. They need to purchase physical damage coverage at the car rental agency
B. Why are you reading this
C. No coverage available
D. The broadest coverage on any auto shown in the declarations of Daniel &
Lori’s personal auto policy
All of the following are not (-) one of the principal rating factors under
Proposition 103 permitted for personal auto policies except (-)?
A. Merit rating
B. Safety driving record
C. Credit report
D. Using prior policy as a method of rate factoring
Which of the following is the defining characteristic of a Fraternal Insurer?
A. Charitable
B. Non-participating policies
C. Owned by shareholders
D. Shareholders receive taxable dividend (when declared)
None of the following (-) are eligible for a Businessowners policy except (-)?
A. An auto dealer
B. A furniture store
C. A casino
D. A banking institution
Insuratest 2015

29. Which of the following is not listed (-) on a Commercial General Liability
declarations page?
A. Pollution liability limit
B. General Aggregate Limit
C. Rented to you sub-limit
D. Personal and advertising injury limit
None of the following (-) are forms of Professional liability insurance​ ​except (-)?
A. Medical Malpractice
B. Errors and Omissions
C. Directors & officers and Employer Practices Liability
D. All of the above
Subrogation as an insurance term is summarized by which of the following
statements?
A. The insurance policy liability limits respond separately to each claimant
B. The insurer’s right to recover payment from a responsible third party
C. The insured’s right to receive PIP coverage at no extra charge while traveling
across state lines
D. The transfer of insurable interest in a policy to another party when a vehicle is
sold
{Remember subrogation is basically substitution. It is the transference of an insured's
claim rights of financial recovery, to a third party. Ex: an insured is rear ended. Their
insurance company (insurer) settles the claim, even though the accident was proven not
to be their insureds fault. After paying said claim, the non-fault driver’s insurer
(insurance company) then asks their insured to sign a notice of subrogation that
basically says: “I have been paid (indemnified) for this claim (my loss) and I sign over my
rights of subrogation (right to collect again) to my insurance company.”
This is done so that the non-fault representing insurer, who has paid out on said claim,
may then be paid back through subrogation, by the at-fault driver's insurer.
Insuratest 2015

30. By the insured (non-fault driver) signing over their claim rights after being indemnified by
their insurer, the principle of indemnity is followed. For by signing over rights of
subrogation after indemnification (being paid for a loss) prevents an insured from
collecting twice on a claim. So in essence subrogation supports indemnity, the principle
of insurance}
An insured submits a claim for stolen jewelry and signs the claim form. Later the
claim is proven to be fraudulent. The insured may be guilty of_____?
A. Attempted theft
B. Collusion
C. Perjury
D. An insurance related misdemeanor
All of the following statements regarding business owners policies is/are true (+)
except ​(-)​?
A. Insureds have the benefit of additional coverages that might otherwise be
overlooked
B. Combine coverage for special advantages
C. Assembles the basic coverages required by a business owner in one bundle.
D. All of the above
_________________ are very specific as far as money in a claim settlement is
concerned. Example: It is exactly known how much a car door costs to replace,
including labor.
A. Stated Values
B. Specific Awards
C. General Damages
D. Special Damages
Insuratest 2015

31.
Which of the following deals with lost wages or salary?
A. Punitive Damages
B. Specific Award
C. General Damages
D. Special Damage
Non-specific losses, with non-specific claim settlements such as pain and
suffering or mental anguish are characteristic of?
A. Punitive Damages
B. Specific Award
C. General Damages
D. Special Damage
Awards using a monetary punishment to set an example to the industry?
A. Punitive Damages
B. Specific Award
C. General Damages
D. Special Damage
{Example: In 1992, ​79-year-old Stella Liebeck bought a cup of coffee at a McDonald’s
drive-thru in Albuquerque ​New Mexico ​and spilled it on her lap after opening it up to put
cream and sugar in it. She sued McDonald’s and a jury awarded her nearly $3 million in
punitive damages for the burns she suffered.​ Stella definitely got her groove back with
that settlement! Ever notice now at the McDonalds drive through they ask if you want
cream and sugar at time of order, so they may put it in for you. Risk management
effectively eliminated the need for their customers to ever open their hot coffee cup lids,
especially while driving.}
Insuratest 2015

32. Which of the following items of personal property are covered by an unendorsed
personal auto policy and if so up to what limit?
A. Electronic items up to $500
B. Non commercial use electronic equipment up to $1500
C. All personal property left in vehicle owned by the first named insured up to $500
D. There is no coverage for personal property
The following are characteristics of a Stock Insurer (+)?
A. Non-participating policies
B. Owned by shareholders
C. Shareholders receive taxable dividend (when declared)
D. All of the above
Which of the following is the defining characteristic of a Reciprocal
Insurer/Inter-insurance Exchange?
A. Also known as participation policies
B. Owned by policyholders
C. Policyholders receive tax-free dividends (when declared)
D. Unincorporated/Attorney-in-fact
Lloyds of London is a marketplace with physical facilities where business is
conducted by groups of Lloyd’s members known as ___________?
A. Captives
B. Wholesales
C. Syndicates
D. intermediaries
Insuratest 2015

33.
None of the following are true (-) of Mutual Insurers except (-)?
A. Also known as participation policies
B. Owned by policyholders
C. Policyholders receive tax-free dividends (when declared)
D. All of the above
All of the following are inland marine policy exclusions (-), except (-):
A. Mechanical Breakdown
B. Earth movement
C. Electrical breakdown
D. Wear and tear
A home’s foundation is damaged during an earthquake, minutes later a gas line
ruptures causing an explosion. The home burns to the ground. Which coverage
if any is afforded by the unendorsed HO-3 policy form in force at the time of
loss?
A. There is no coverage for damage to the foundation directly caused by the
earthquake, only for the damage caused by the explosion and subsequent fire
B. There is no coverage for any loss directly caused by an earthquake in the
unendorsed HO-3 policy form
C. The HO-3 is a named peril policy form and does not cover earthquake or
damages caused by explosion.
D. The policy covers all of the damage since explosion is an insured peril
Insuratest 2015

34. At what time during the sales process is a fire and casualty agent required to
inform a prospective insured of any conditions which may be precedent to
coverage regarding a homeowners policy?
A. At quote
B. At binding
C. At application
D. At policy issuance
The insurer’s right to recover its claim settlement payment to their insured from
a negligent third party is the definition of the following term:
A. Subrogation
B. Inherent claim rights
C. Arbitration
D. Reassignment
What is the minimum discount awarded to "good drivers" as a percentage for
meeting the qualifications?
A. 10%
B. 15%
C. 20%
D. 25%
Interline endorsements such as notices of cancellation may pertain or could
pertain:
A. To more than one coverage part of a package policy
B. Exclusively to ocean marine coverage
C. To general liability and advertising injury only
D. Only when required by a certificate holder
Insuratest 2015

35. An armored vehicle transporting an insured's bank deposit is robbed at
gunpoint. In order for the insured's loss to be covered what type of insurance
would need to be in force at time of loss?
A. Safe burglary
B. Inland marine coverage form
C. Outside the premises-theft of money and securities
D. Robbery
10 days prior to cancellation for non-payment of premium a written notice is
mailed to the insured by the insurer. Which of the following requirements
regarding written notices by mail from an insurer to an insured is not required
(-)?
A. Notice must be sent with return receipt required
B. Notice must be mailed to the residence or principal place of business
C. Postage must be prepaid
D. Why are you reading this
In anticipation of an upcoming vacancy period at a seasonal business location
the vacancy permit endorsement is added to a building and personal property
coverage form. The basic policy's vacancy conditions as an interline
endorsement is/are:
A. Waived during the policy period
B. Waived only for designated perils during the permit period
C. Waived only for general liability claims during the policy period
D. Waived during the permit period but only if a security system is installed
Insuratest 2015

36.
What is the primary coverage differential between umbrella and excess liability
policies?
A. The umbrella has must follow form and be issued by the same character as the
general liability policy
B. The umbrella covers physical damage losses only not general liability losses
C. An umbrella policy may include coverage for perils not covered by the
underlying policy; subject to a self insured retention limit (SIR). While excess
liability policies follow form and may offer monoline coverage.
D. The umbrella affords defense costs only if the insured wins the suit the excess
liability does covers defense costs regardless
In which of the following situations is off-premises coverage void under the
business personal property coverage form?
A. In a salesperson’s luggage
B. While in a delivery truck
C. At a convention center
D. In a salesperson’s vehicle
Which of the following policy forms affords an insured coverage from any loss
except that of which arises from specifically excluded perils?
A. Specified cause of loss
B. Stated Value
C. All-risk, Special Form, or open peril
D. Named Peril
Insuratest 2015

37. The basic boat owner's policy form is similar to what other policy in terms of
coverage?
A. The personal auto policy
B. A yacht owners policy
C. A dwelling policy
D. An inland marine floater policy
Please get up, walk around, come back in 10-20 min to keep it fresh.
Insuratest 2015

38. Vito’s Pizzeria owner and first named insured Vito Corleone does not own the
building his pizzeria operates out of. Any improvements and betterments he
makes to the building he leases are covered under what section of his (BOP)
business owner's policy?
A. Inland Marine
B. Business personal property
C. Rented to you sublimit
D. “Forget about it”
A​ loss ratio​ is calculated by which of the following formulas?
A. Expenses divided by premiums
B. Losses and expenses divided by premiums
C. Losses divided by premiums
D. None of the above
An ​expense ratio​ is calculated by which of the following formulas?
A. Expenses divided by premiums
B. Losses and expenses divided by premiums
C. Losses divided by premiums
D. None of the above
A ​combined ratio​ is calculated by which of the following formulas?
A. Expenses divided by premiums
B. Losses and expenses divided by premiums
C. Losses divided by premiums
D. None of the above
Insuratest 2015

39.
Which of the following are reasons Insurer’s purchase reinsurance:
A. Unearned premium reserve reduction
B. To protect themselves from catastrophic losses, assisting in profit
stabilization
C. Increases the insurer's underwriting capacity
D. All of the above
Which if the following is true with regard to private passenger vehicle inspection
requirements outlined in the insurance code?
A. Requires a vehicle inspection only if both comprehensive and collision coverages
are carried
B. The insurance code requires a vehicle inspection for any vehicle with a gross
weight exceeding 4,000 pounds
C. The insurance code makes no mention of a vehicle inspection requirement
D. No vehicle inspection is required if coverage D is added at policy inception
What coverage if any would respond to an accident involving a named insured
driving a company car who carries an unendorsed personal auto policy?
A. Coverage (B) Medical payments
B. The unendorsed policy form excludes this usage
C. Why are you reading this
D. Coverage (A) General Liability
Claims for legal liability may stand on the basis of all of the following (+) except
(-)​?
A. Breach of contract
B. Vicarious liability
C. Tort law
D. Negligence
Insuratest 2015

40.
With regard to admitted insurers actuarial methodologies, all of the following are
not true (-) except (-)?
A. They may use race, color, religion, or national origin as a condition to apply
higher rates as long as their means are actuarially sound
B. They may not use race, color, religion, or national origin as a condition to
apply higher rates
C. They may use any actuarially sound method when rating policies as long as they
can be statistically proven
D. They may use any actuarially sound method when rating policies as long as they
can be statistically proven and are filed with the department of insurance
Which of the following statements best defines policy “ assignment” :
A. A transfer of legal rights under, or interest in, an insurance policy to
another party.
B. A transfer of legal rights under, or interest in, an insurance policy to only the first
named insured
C. The insurer’s right to collect damages from a third party only if a waiver of
subrogation endorsement is in force
D. The insured’s right to change insurance companies mid term without having to
pay a new policy fee
Insuratest 2015

41. What effect does the building ordinance or law exclusion/limitation have on both
commercial and homeowner’s property coverage policies?
A. It automatically voids replacement cost coverage for both commercial and
residential structures built built before the year 1985
B. It excludes that part of the loss resulting from the enforcement of a
building ordinance or law for commercial buildings and limits it’s allocated loss
dollar by a percentage of total property coverage limit on homeowner’s policies.
C. It excludes that part of the loss resulting from the enforcement of a building
ordinance or law or and limits it’s allocated loss dollar by a 5% of total liability coverage
limit.
D. Does not include coverage to upgrade handicap access building code
enforcement
While property insurance covers debris removal for a portion of property
damaged by a covered peril, it doesn’t cover demolition expenses for an
undamaged portion of a building that has to be removed. Which Ordinance or
Law coverage part provides this coverage?
A. Part A of Ordinance or Law provides this coverage.
B. Part B of Ordinance or Law provides this coverage.
C. Part C of Ordinance or Law provides this coverage.
D. Part D of Ordinance or Law provides this coverage.
Which of the following statements differentiates the perils of robbery and
burglary in terms of coverage trigger?
A. Requires taking property directly from a person
B. Robbery is the broadest form of crime coverage
C. Burglary requires physical signs of forcible entry or exit
D. May involve use of force to cause bodily injury or instill a threat of violence
Insuratest 2015

42. Coverage for which of the following is provided by coverage(s) A and/or B of the
ISO commercial general liability (CGL) policy form?
A. Vicarious liability
B. Workers compensation statutory limit
C. Pollution Liability
D. Advertising injury
Which type of loss describes that of a ​business​ exposed to the death, injury or
disability of employees?
A. Personal loss exposure
B. Perso​nn​el loss exposure
C. Fraternal loss
D. nolo contendere
An Ohio based companies ​only​ option available for the purchasing workers
compensation insurance is through the Ohio Bureau of Workers Compensation.
Which of the following statements is true of Ohio’s workers compensation:
A. Ohio has a competitive state fund
B. Ohio has a shared market fund
C. Ohio has a ​mono​polistic state fund
D. Ohio has a guaranty fund
The act of an ​insurer​ making a false statement either written or oral ​with the
intent to deceive​ to any examiner lawfully appointed to examine the insurer’s
books and records is defined by which of the following?
A. A barring act
B. Concealment
C. An unfair practice
D. Fraud
Insuratest 2015

43.
Which of the following is true of extra expenses under the business income
coverage form?
A. Excluded
B. Covered without limit during the period of restoration
C. Payments are executed if the restoration period exceeds 6 months
D. Covered up to 25% of the policy limit specified in the declarations
As an insurance agent which endorsement would you recommend your
insured add to their personal auto policy to obtain liability coverage for their
all-terrain vehicle (ATV)?
A. Coverage is only available through the purchase of a recreational vehicle stand
alone policy
B. ATV Flotilla liability
C. Miscellaneous type vehicle endorsement
D. Recreational/seasonal vehicle endorsement
What legal recourse in action, in terms of claim settlement allotment does an
injured party to a contract have if the other party is ​found to be in breach of said
contract?
A. Claim rights only if a waiver of subrogation is in force prior to execution of said
contract
B. Damages for breach, reasonable attorney fees and costs
C. Damages for breach, reasonable attorney fees and costs less the self insured
retention limit
D. Damages for breach exclusively
Insuratest 2015

44. Inherently possessing the possibility of financial loss resulting from ownership
of property is known as?
A. The principal of insurance
B. Forecasting
C. Insurable interest
D. Adverse selection
(All of the following (+) are representative of areas market regulation covers,
except ​(-)​?
Following the rule you are seeking a negatively phrased outcome (The “exception” in
this case the one which does not belong :
A. Employee training
B. Monitoring and preserving the financial solvency of insurance companies
C. Regulating and standardizing insurance policies and products
D. Controlling market conduct and preventing unfair trade practices
Protection and Indemnity insurance, covers all of the following (+) occurrences
except ​(-)​?
A. Loss of life, injury and illness of crew, passengers and other persons
B. Damage to docks, buoys and other fixed and floating objects
C. Mutiny and misconduct by crew
D. The cost of reasonable measures an insured must take to prevent or
mitigate damage at time of loss
Insuratest 2015

45. Which of the following occurrences would be covered if an insured purchases a
scheduled personal property endorsement (i.e.: personal articles floater) from
his agent to append to their already in force previously un-endorsed
homeowners policy form?
A. Wear and tear, gradual deterioration, latent defect, insects or vermin
B. Inherent vice
C. Breakage of glassware caused by an earthquake
D. Personal property on display at a county fair
Coverage for transportation expenses in an unendorsed personal auto policy
form is provided in the event __________________ losses occur and coverage is
in force at time of loss?
A. Theft losses only
B. Other than collision losses only
C. Collision and other-than-collision losses
D. Transportation expenses are not available in the unendorsed policy form
An implied warranty in an insurance contract qualifies as which of the following?
A. An representation
B. An Oath
C. Res Ispa Loquitur (It speaks for itself)
D. A Jurat
{Remember a representation is the best of one’s knowledge or belief/promise.}
None of the following (-) are characteristics of a ​Representation​ except (-)?
A. Representations may be either oral or written.
B. A Representation may qualify as an implied warranty.
C. A representation may be changed before the policy goes into effect and
agrees with its assertions or stipulations
D. All of the above
Insuratest 2015

46.
Which of the following is/are ​true of a/an Estoppel​?
A. An Estoppel essentially removes a real or potential liability for the other party in
the agreement.
B. In a settlement between two parties, one party might, by means of an Estoppel,
relinquish its right to pursue any further legal action once the settlement is finalized.
C. The Estoppel can either be in written form or some form of action. An Estoppel
essentially removes a real or potential liability for the other party in the agreement.
D. A legal doctrine restraining a party from contradicting its own previous
actions if those actions have been reasonably relied on by another party.
{Example: An insurer that has habitually accepted late premium payments from an
insured may be estopped from later canceling said policy on the grounds of nonpayment
because the insured has been reasonably led to believe that late payments are
acceptable.}
Which one of the following is characteristic of the the loss prevention method
“ Risk Avoidance” ?
A. A homeowner decides to buy a trampoline
B. A homeowner installs carbon monoxide detectors
C. A new homeowner decides to fill in the backyard swimming pool
D. A homeowner purchases flood insurance
What is the coverage limit specific for tapes, records, disks, and other media in
the “ Coverage for excess sound producing equipment, audio, visual and data
electronic equipment, and tapes, records, discs and other media endorsement”
is found in a personal auto policy (PAP)?
A. $500
B. $200
C. Coverage is
D. $1,000
Insuratest 2015

47.
Coverage in the inland marine policy form contains all of the following perils as
exclusions (-) , except (-)?
A. Damage from insects, vermin or rust
B. Wear and tear
C. Earth movement
D. Inherent vice
Insuratest 2015

48. Which of the following is/are ​true of a waiver​?
A. A waiver essentially removes a real or potential liability for the other party
in the agreement.
B. In a settlement between two parties, one party might, by means of a
waiver, relinquish its right to pursue any further legal action once the settlement
is finalized.
C. The waiver can either be in written form or some form of action. A waiver
essentially removes a real or potential liability for the other party in the
agreement.
D. All of the above
{ At the most basic level a Waiver effectively gives up a right}
All of the following (+) will influence an entity's ability to hold a license except
(-)​?
A. Resignation by or termination of a key employee
B. Cessation of a co-partnership
C. Cessation of an LLC
D. Cessation of an association
Which of the following best ​defines a claim loss reserve ​as it relates to the
insurer?
A. The total incurred amount less the total paid amount
B. The total paid amount less the total paid amount
C. An estimate of the value of a claim or group of claims not yet paid
D. Losses in excess of policy limits less self insured retention fee
Which of the following defines a case reserve as it relates to the insurer?
Insuratest 2015

49. A. An estimate of the amount for which a particular claim will ultimately be
settled or adjusted or reconciled
B. The total incurred amount less the total paid amount
C. The total paid amount less the total paid amount
D. Losses in excess of policy limits less self insured retention fee
The miscellaneous type vehicle endorsement when added to a personal auto
policy affords an insured which of the following?
A. Liability and Medical Payments coverage exclusively
B. Physical damage coverage exclusively
C. Passenger Liability exclusively
D. All coverage under the personal auto policy
None (-) of the following define ​Market Conduct Regulation​ except (-)?
A. Examiners from the Market Conduct Regulation sector physically audit insurance
carriers only to review their business practices as they relate to licensing, claims, tax
payments, rates and form approval, advertising and sales aids, underwriting and rating,
policyholder service, and complaint handling
B. Examiners from the Market Conduct Regulation sector physically audit
insurance agencies, insurance companies, etc., to review their business
practices as they relate to licensing, claims, tax payments, rates and form
approval, advertising and sales aids, underwriting and rating, policyholder
service, and complaint handling.
C. Examiners from the Market Conduct Regulation sector physically audit
non-admitted insurance companies exclusively, to review their business practices as
they relate to licensing, claims, tax payments, rates and form approval, advertising and
sales aids, underwriting and rating, policyholder service, and complaint handling
D. None of the above
Insuratest 2015

50. Which of the following best defines “ liberalization clause” and is accurate in
terms of it’s sectional placement in an insurance policy?
A. In umbrella liability insurance, a clause specifying that coverage will be as broad
as that provided by the primary liability policies, without additional premium, found
in the policies declarations section. (I.E. policy follows form)
B. In umbrella liability insurance, a clause specifying that coverage will be as broad
as that provided by the primary liability policies, without additional premium, found
in the policies insuring agreement section. (I.E. policy follows form)
C. In umbrella liability insurance, a clause specifying that coverage will be as
broad​ as that provided by the primary liability policies, ​without additional
premium​, found in the policies ​conditions​ section. (I.E. policy follows form)
D. None of the above
How far in advance must an insurer provide written notice to an insured before it
may legally cancel for non-payment of premium?
A. 4 days
B. 10 days
C. 25 days
D. 30 days
Which of the following is true of an agent who possesses a valid ​inactive
California insurance license?
A. The agent may review quotes with a prospect but does not have binding authority
B. The agent ​may not transact insurance​ as there is no notice of appointment
on file with the department of insurance but ​may keep​ their ​license inactive if
their licensing fees are paid and all continuing education requirements are met.
C. Why are you reading this
D. None of the above
Insuratest 2015

51. Jeffrey lives in San Francisco by himself, takes public transportation to his job
and does not own a car. He does however frequently drive his girlfriend Joy’s
car. Which of the following policies should Jeffrey purchase to protect himself
legally and how would Joy’s policy respond in the event of an occurrence?
A. Named non-owned coverage policy. Joy’s policy would be secondary Jeffrey’s
would be primary
B. Named non-owned coverage policy. Joy’s liability policy would be primary
Jeffrey’s would be secondary
C​. Driver other car endorsement. Joy’s policy would be secondary Jeffrey’s would be
primary
D. Miscellaneous type vehicle endorsement. Joy’s policy would be secondary
Jeffrey’s would be primary
An endorsement to an HO policy form that provides coverage for boats one
owns, rents or borrows is defined as which of the following?
A. Watercraft endorsement
B. Miscellaneous type vehicle endorsement
C. Recreational vehicle endorsement
D. Flotilla liability endorsement
Which of the following HO policy forms offers open peril coverage (A Structure
Coverage) for an insured's home?
A. HO-3
B. HO-4
C. HO-6
D. HO-8
Insuratest 2015

52. All of the following do not (-) describe a type of loss triggering a claim for
monetary damages due to an insured un-willfully causing injury to another
person or damage to another's property by a negligent act except (-)? ​Remember
a (-) + a (-) = a positive so you are looking for the term that matches the definition stated
in this question's text.
A. Real property loss
B. Physical loss
C. Personal property loss
D. Liability loss
Which of the following are required of an insured after suffering a collision loss
regardless of fault per a personal auto policies conditions section?
A. Make no attempt to protect the insured property from further loss
B. Allow the insurer to inspect the damaged property before it is repaired
C. Notify the police if damages are in excess of $500
D. Go to the repair shop the claims adjuster recommends
Similar to aircraft and boatowner’s policies which coverages are typically
provided in a boat owner's policy?
A. Flotilla liability
B. Inland Marine, hull, and protection & indemnity
C. Physical damage, liability, and medical payments to driver/operator and
passengers
D. Professional liability, flotilla liability and medical payments to driver/operator and
passengers
Insuratest 2015

53. Although different in design in terms of coverage what is similar between a
California HO-2, HO-4, and HO-6 policy?
A. Cause of loss coverage A form perils
B. Coverage C policy limits
C. Cause of loss coverage C form perils
D. None of the above
Commercial property theft also called “ fidelity coverage” is provided by none (-)
of the following coverage forms except (-)?
A. Commercial property form
B. Building and personal property coverage form
C. Commercial Crime Insurance
D. None of the above coverage forms afford coverage for theft
All of the following are not (-) covered by a Commercial General Liability policy
except (-)?
A. Damage to “Your Work”
B. Damage to “Your Product”
C. Contractual Liability
D. Premises operations
Insuratest 2015

54. Extra expense insurance affords coverage for all of the following (+) if coverage
is in force at time of loss except ​(-)​?
A. Costs of setting up business in an alternative temporary location, during the
period of restoration
B. Business income including payroll when a business is inoperable after
incurring a loss​ (Why? This is covered by business income not Extra Expense
coverage).
C. The extra expenses a business incurs to continue a business while damage to the
premises are being restored
D. None of the above
Which of the following perils are covered under the ISO business income
coverage form, choose the best answer?
A. Those recorded on the declarations page
B. Rental income
C. Business Income
D. Ordinary Payroll
California Dreamin landscaping service owner Tom has the choice to purchase
his company's workers compensation from a variety of different insurers
presented by his insurance broker at time of policy renewal. He lives in a state
which has _________________?
A. A statutory state insurance fund
B. A competitive state insurance fund
C. A monopolistic state insurance fund
D. A varietal insurance fund
Insuratest 2015

55. Which of the following coverages if any come standard with a DP-3 policy that
are not part of a DP-1 policy form?
A. Fair rental value
B. Personal property
C. appurtenant structures
D. Collapse
To terminate a license that is ​in the possession of an employer​ which of the
following must occur?
A. The employer need only furnish a notice of employment, automatically
terminating the licensee's license.
B. The licensee must provide written notice of intent to the insurance
commissioner
C. The licensee must give written notice to the employer who must send written
notice to terminate licensee’s license no later than 10 business days following
termination of employment.
D. The license cannot be terminated prior to the expiration date, it becomes inactive
unless the licensee is charged with an insurance related misdemeanor or is convicted of
a felony.
To terminate a licensee’s license that is ​in the possession of a licensee​ which of
the following must occur?
A. Nothing, the licensee need only wait until the license expires for non payment of
licensing fees
B. Relinquish all appointments and return books and records to the commissioners
office
C. Deliver the physical document along with notice of relinquishment to the
Commissioner
D. None of the above
Insuratest 2015

56. Which of the following, if any, will cover a loss that occurs during the policy
period but is discovered 75 days after the expiration date of a claims-made
commercial general liability policy form.
A. Inland marine permit endorsement
B. Supplemental extended reporting period endorsement
C. The loss will not be covered because it was not reported during the policy period
D. Value reporting form endorsement
How would an ISO commercial building and business personal property
coverage form, respond in the event a ​vandalism loss​ occurs and adjusters
determine the building has been ​vacant​ in excess of ​60​ straight ​days at time of
loss​?
A. The loss is covered 90 consecutive days is the exclusion coverage trigger
B. The adjusted loss payment will incur a coinsurance penalty less the deductible
C. The adjusted loss payment will incur a coinsurance penalty less the deductible
D. The loss is ​excluded 60 consecutive days​ is the exclusion coverage
trigger
How would an ISO commercial building and business personal property
coverage form, respond in the event a ​property loss​ occurs and adjusters
determine the building has been ​vacant​ in excess of ​60​ straight ​days at time of
loss​?
A. The loss is covered 90 consecutive days is the exclusion coverage trigger
B. The adjusted loss payment will incur a coinsurance penalty less the deductible
C. The adjusted loss payment will incur a coinsurance penalty less the deductible
D. The adjusted amount of property loss will be reduced by 15%
Insuratest 2015

57. What is the main purpose of tort law as it pertains to insurance?
A. To properly subrogate insurance claims made
B. To protect an insured from fraudulent suits
C. To prove negligence and determine responsibility for damages
D. To increase the capacity for legal liability claims
Which of the following statements regarding building glass coverage is accurate
with regard to the 2000 ISO editions of the basic, broad, and special causes of
loss forms?
A. Both the basic and broad causes of loss forms provide full coverage for
building glass breakage due to vandalism in the same manner and to the same
extent as damage to other types of covered property
B. Both the broad and special causes of loss forms provide full coverage for building
glass breakage due to vandalism in the same manner and to the same extent as
damage to other types of covered property
C. There is no coverage for building glass breakage due to acts of vandalism unless
the vandalism and malicious mischief endorsement is appended to the policy
D. There is no coverage for building glass breakage due to acts of vandalism
available in either the basic, broad and special forms.
All of the following statements reflect an insurer's use of the inspections and
surveys condition found in a commercial package policy ​except (-)​:
A. Recommend changes to mitigate future losses
B. Guarantee ​safety regulation conformity
C. Rate selection
D. Make a decision on insurability
Insuratest 2015

58. The cost to replace an insured's damaged property, less depreciation as a
means of indemnification is the formula for?
A. Stated value
B. Replacement cost value
C. Actual cash value
D. Appraised value
An insured submits a fraudulent claim for a workplace injury. Following an
adjuster's investigation, with the aid of worksite camera evidence it is
determined the injury never occurred “ at work” . Paid to date on this claim are
the following: Loss of wages $35,000, Chiropractic visits $10,000, physical
therapy $15,000. What is the total fine imposed on the insured for fraudulently
submitting a false claim to the insurer with the intent to deceive? ​{Remember,
payout is 2 X’s the $ amount of the fraudulent claim submitted or $150,000 whichever is
greater}
A. $60,000
B. $100,000
C. $120,000
D. $150,000
According to the insurance code no insurer’s rate filing may remain in effect if it
is considered to be any of the following, except (-):
A. Having ​impartial​ity
B. Possessing Inequitability
C. Prejudicial in nature
D. Actuarially insufficient
Insuratest 2015

59. Which of the following best defines “ time element ” loss coverage and what are
the two most common coverage form types?
A. How long it takes to repair or replace the damaged property: Business
interruption and third party indemnity
B. How long it takes to repair or replace the damaged property: Seasonal indemnity
and value reporting.
C. How long it takes to repair or replace the damaged property: Business
interruption and Extra Expense
D. Why are you reading this
None of the following statements (-) exemplify the rationale/purpose behind a
commercial package policy inspections and surveys by an insurer except (-)?
A. To correct any OSHA violations
B. To guarantee no losses will occur
C. To determine the rate to be charged
D. To justify a premium increase upon renewal
_____________ damages provide a claimant with the monetary amount
necessary to properly indemnify them, restoring them to the same financial
condition that existed prior to suffering a loss and nothing more while
____________ damages are designed to ​punish​ the negligent party causing said
loss?
A. Punitive, General
B. Compensatory, Punitive
C. Special, General
D. General, Special
Insuratest 2015

60. Damages awarded a personal injury claimant fall into two basic categories
______________ (also known as economic damages) and ______________ (also
known as non-economic damages). Both types of damages are known as
____________ damages or actual damages?
A. Special, General, Compensatory
B. Special, General, Punitive
C. General, Special, Compensatory
D. General, Special, Punitive
A/an _________ performs certain functions normally handled exclusively by
insurers. Responsibilities include binding coverage, underwriting, pricing as
well as appointing agents. They may also settle claims?
A. Underwriter
B. Managing director
C. Agency principal
D. MGA (Managing General Agent)
______________ Is defined as a person (individual or corporation) who
negotiates and binds ceding reinsurance contracts on behalf of an insurer?
A. A credit insurance broker
B. MGA (managing general agent)
C. Insurance agency principal
D. An TPA (Third party administrator)
Insuratest 2015

61. Motor carriers of goods are responsible for the cargo in their care custody and
control up to a point. The extent or degree of that responsibility is established
by a written contract or through a _____________. While ______________ ​limits a
common carrier's liability​ subject to a dollar limitation on the value of the cargo
or the dollar amount of any potential loss?
A. Cargo Policy: inland marine policies
B. Bill of lading: ​Release Bill of lading
C. Value reporting form: Indemnity agreement
D. Why are you reading this
A personal auto policy conditions “ Your Duties After Loss” section states an
insured must notify the police in the event of the following occurrences?
A. Loss caused by theft: Hit and run accidents
B. Loss caused by theft: Accidents in excess of $750 in property damage
C. Loss caused by theft
D. Only need to notify the insurance carrier or agent
What coverage is/are available under the “ extended non-owned” coverage
endorsement when added to a personal auto policy to protect an insured who is
furnished with a company car they drive off the clock for personal use as well?
A. Coverage’s (A) Liability, (D) physical damage
B. Coverages (A) Liability medical payments
C. Coverage’s (A) Liability, (B) medical payments, (C) uninsured motorist
D. Liability only
Insuratest 2015

62. Which of the following peril exclusions contained in the ​special form
homeowner’s policy contract ​excludes​ coverage for ​mudflow?
A. Flood
B. Earthquake
C. Landslide
D. Subsidence
A representation made by an insured during the application process may be
withdrawn only__________________?
A. any time within the 90 day binder period
B. prior to insurance contract issuance
C. after the effective date
D. before a claim occurs
__________ policies are a blend of__________ and __________ coverage in one
plan and afford property coverage to farm equipment?
A. Transit / standard / substandard
B. Truckers / inland marine / transit
C. Farm / residential / commercial
D. Inland marine / residential / commercial
Which of the following coverages if in force at time of loss would respond to an
insured's car being damaged by a hail storm?
A. Hail Coverage endorsement
B. Collision coverage (D)
C. Comprehensive aka other than collision coverage (D)
D. Miscellaneous type vehicle endorsement
Insuratest 2015

63. An insured may not purchase a homeowner’s policy form or must have their
current homeowner’s policy form rewritten to a dwelling form for none (-) of the
following reasons except (-)?
A. Their home is for sale and listed on the MLS
B. Their in laws move in to assist with childcare
C. Their home is being renovated
D. The owner no longer resides in the dwelling as it is rented to others
In addition to third party bodily injury and property damage coverage afforded
by coverage (A) all of the following (+) are covered in addition except ​(-)​?
A. Loss of wages if required to attend a hearing at the third party’s insurers request
B. The cost to repair the third parties vehicle up to the in force coverage limit
C. Prejudgment interest​ supplementary payments
D. Why are you reading this
{ ​(-)​ remember the last word wins}
A standard fire policy affords coverage (A) Dwelling and coverage (B)
Other/Appurtenant structures. While a business owners policy covers
(A)____________ and ___________ which includes ____________?
A. Building / Business Personal Property / Tenants improvements and
betterments
B. Building and Personal Property of Others / Care Custody and Control
C. Rental agreement / Business Personal Property / Extra Expense coverage
D. None of the above
Insuratest 2015

64. _______________ is something that has a tendency to self-destruct and is not
covered (i.e. fruit may spoil during shipment)?
A. Inherent Vice
B. Jettison
C. Barratry
D. None of the above
___________ is to dump cargo overboard in attempts to save a ship from going
under while __________ is/are illegal acts committed by the captain or crew
without the ship owner’s knowledge?
A. Barratry / Jettison
B. Jettison / Barraty
C. Barratry / Embezzlement
D. Jettison / Embezzlement
Which of the following coverage is afforded (+) an insured who purchases a DP3
policy that would otherwise not be covered with the purchase of a DP1?
A. Sprinkler leakage
B. Collapse
C. Additional living expenses
D. All of the above
Insuratest 2015

65. An insured elects to choose a $500 other than collision deductible and a $1,000
collision​ deductible to cover his vehicle for physical damage. He is involved in
an accident in which his vehicle suffers an ​“ upset” overturn​ing on highway 17
during a rainstorm. The vehicle suffers $8,000 in total damage. How much will
the ​insurer​ pay for the loss?
A. $7,500
B. $7,000
C. $500
D. $1,000
An insured elects to choose a $500 other than collision deductible and a $1,000
collision​ deductible to cover his vehicle. He is involved in an accident in which
his vehicle suffers an ​“ upset” overturn​ing on highway 17. The vehicle suffers
$8,000 in total damage. How much will the ​insured​ pay for the loss?
A. $7,500
B. $7,000
C. $500
D. $1,000
Insuratest 2015

66.
Please get up, walk around, come back in 10-20 min to keep it fresh.
Open-peril(cause of loss) also referred to as special form policies protect an
insured against losses arising from?
A. Perils contained in the exclusions section
B. Perils involving open vacant land
C. All perils, except for those which are specifically excluded (Typically
Earthquake and Flood)
D. Perils specifically named in the policy
Insuratest 2015

67. Which of the following loss settlement options best describes an option the
insurer may use to indemnity their insureds for property losses based on what
the property in question ​could have been sold for at the time of loss​?
A. Actual cash value
B. Stated value
C. Market value
D. Replacement value
The “ examination of commercial books and records” condition found in a
commercial policy states the insurance company possesses the inherent right to
audit an insured's books and records as they relate to their policy during the
policy period or any time within three years after the policy periods end. None of
the following reasons (-) are valid in terms of purpose to exercise this condition
except (-)?
A. To ensure the insureds business practice’s are not unethical
B. To validate the proper amount of premium is charged for the risk
C. To ensure OSHA regulations are not being violated
D. To ensure no material warrants were violated post contract binding
___________ coverage is designed to cover property in transit over land, certain
types of movable property (whether or not ever moved) as well as all risk
coverage for endorsed personal articles such as a wedding rings and precious
medallions?
A. Ocean marine
B. Flotilla liability
C. Inland marine
D. Miscellaneous cargo in transit coverage
Insuratest 2015

68. An insurance policy may not be transferred to another without:
A. Written consent of the agent
B. Written consent of the insurer
C. Oral consent of the agent
D. Oral consent of the insurer
The “ Mexico coverage endorsement” will afford an insured temporary
automobile coverage while visiting Mexico; barring they are in Mexico for no
longer than a maximum of ________ days or less?
A. 7
B. 10
C. 14 days or less
D. 25 days or less
A loss sustained policy form will pay for losses which occurred_________ the
policy period yet are ___________ up to one year after policy _________.
A. during, discovered, renewal
B. prior to, discovered, renewal
C. during, discovered, termination
D. prior to, discovered, termination
Insuratest 2015

69. Why would an insured Dry cleaning business owner/operator need an inland
marine policy form to cover his clients garments in his possession while being
loaded into owned delivery vans on premises for scheduled delivery?
A. Clients garments in his care custody and control are only covered in the insured's
building location or within 250 ft. from the insured premises
B. Clients garments in his care custody and control are only covered in the
insured's building location or within 100 ft. from the insured premises
C. An insured dry cleaner will need only pollution liability inland marine insurance is
covered automatically by this policy form
D. Nne of the above
What two sub-coverage lines are listed on a Commercial General liability policies
declarations page (​D​.I.C.E)?
A. Premises and operations and Products and completed operations
B. Rented to you sub limit and professional liability coverage
C. Medical payments to others and rented to you sub limit
D. Products and completed operations and Medical payments to others
Which of the following best describes ​Premises and operations​ one of the
sub-coverages on a Commercial General liability policy's declarations page
(​D​.I.C.E)?
A. Covers damage caused by “your work” exclusively
B. Covers ​l​osses​ ​at​ the ​location​ of the business
C. Cover losses that occur away from the business
D. None of the above
Insuratest 2015