CALIFORNIA ADJUSTER UPDATED PRACTICE EXAM
QUESTIONS AND ANSWERS GRADED A+
✔✔Under Boiler and Machinery Insurance, "breakdown" means: - ✔✔Direct physical
damage to covered equipment which necessitates repair or replacement and results
from accidental failure.
✔✔Equipment Breakdown Protection protects "objects." What is an "object"? - ✔✔A
specified piece of equipment covered by the Equipment Breakdown Protection
Coverage Form. If a company has 20 baking ovens, each oven is an "object" covered
by the policy.
✔✔Under Equipment Breakdown Protection Spoilage coverage, under what conditions
must the spoliation occur and what property is covered? - ✔✔The spoliation must be
due to lack or excess of power, light, heat, steam, or refrigeration.
The insured must own or be legally liable for the spoiled property.
✔✔Is equipment buried in the ground covered under Equipment Breakdown Protection
Coverage Form? - ✔✔No.
✔✔What does Expediting Expense coverage do under Equipment Breakdown
Protection Coverage Form? - ✔✔Provides indemnification for temporary repairs and
costs associated with expediting, or speeding up, permanent repairs or replacement.
✔✔What is the period of restoration under Equipment Breakdown Coverage? - ✔✔At
the time of the breakdown or 24 hours before notification to the insured, whichever is
later.
✔✔What is the minimum limit on most Equipment Breakdown policies? - ✔✔$500,000
✔✔Errors and Omissions coverage in an Equipment Breakdown Protection policy: -
✔✔Provides coverage for damage that would not otherwise be covered because the
insured made a mistake or unintentionally omitted information required by the insurer.
✔✔What is the standard deductible on an Equipment Breakdown Protection Coverage
Form? - ✔✔$500
✔✔In an Equipment Breakdown Protection Coverage Form, how are losses paid? -
✔✔Losses are paid at replacement cost, but an insured may change this with an Actual
Cash Value endorsement.
✔✔When does Contingent Business Income and Extra Expense apply? - ✔✔When the
insured's loss results from a breakdown of covered equipment at a premise the insured
does not own or operate, such as a supplier.
, ✔✔Base Flood - ✔✔A flood that happens only once in 100 years
✔✔Base Flood Elevation - ✔✔The highest level that the water would reach during a
base flood.
✔✔Flood Insurance Rate Maps (FIRMs) - ✔✔Used to identify flood zones based on
Base Flood data and regulate new construction and premiums based on that data.
✔✔Flood - ✔✔An overflow of inland or tidal waters, rapid accumulation of surface water
or runoff, or mudflow.
✔✔NFIP Standard Flood Insurance Policy - ✔✔It is federal insurance, not subject to
state courts or state departments of insurance. NFIP is issued by the federal
government and claims are handled by the federal government.
✔✔WYO (Write Your Own) Program - ✔✔Private Insurers sell and underwrite policies
based on federal government guidelines. It is more efficient and now generates 90% of
flood policies.
✔✔NFIP Dwelling Form - ✔✔For 1 to 4 family dwellings, or 1 to 4 family condo units
and residential contents.
✔✔Flood Coverage D - Increased Cost of Compliance (ICC) - ✔✔Covers cost of
complying with floodplain management law and ordinances concerning repair of
reconstruction. Coverage D limit is $30,000. When added to Coverage A, cannot
exceed $250,000 for a dwelling or $500,000 for a commercial structure.
✔✔Standard Flood Insurance Policy (SFIP) Duties - ✔✔Immediately notify insurer of
flood loss
Organize damaged property for adjuster's examination
Put account books, records, etc. in a safe place for evaluation
Submit an NFIP Proof of Loss within 60 days of loss
✔✔SFIP Loss Payment Condition - ✔✔The insurer has 60 days from when it receives a
proof of loss to pay the claim.
✔✔What is the Special Loss Settlement under a flood policy? - ✔✔It pays the lowest of:
1) The dwelling's replacement cost
2) 1.5 times the dwelling's actual cash value
3) The policy limit
✔✔Flood insurance Coverage A covers how much for a detached garage? - ✔✔It will
pay 10% of the policy coverage limit for detached garages.
QUESTIONS AND ANSWERS GRADED A+
✔✔Under Boiler and Machinery Insurance, "breakdown" means: - ✔✔Direct physical
damage to covered equipment which necessitates repair or replacement and results
from accidental failure.
✔✔Equipment Breakdown Protection protects "objects." What is an "object"? - ✔✔A
specified piece of equipment covered by the Equipment Breakdown Protection
Coverage Form. If a company has 20 baking ovens, each oven is an "object" covered
by the policy.
✔✔Under Equipment Breakdown Protection Spoilage coverage, under what conditions
must the spoliation occur and what property is covered? - ✔✔The spoliation must be
due to lack or excess of power, light, heat, steam, or refrigeration.
The insured must own or be legally liable for the spoiled property.
✔✔Is equipment buried in the ground covered under Equipment Breakdown Protection
Coverage Form? - ✔✔No.
✔✔What does Expediting Expense coverage do under Equipment Breakdown
Protection Coverage Form? - ✔✔Provides indemnification for temporary repairs and
costs associated with expediting, or speeding up, permanent repairs or replacement.
✔✔What is the period of restoration under Equipment Breakdown Coverage? - ✔✔At
the time of the breakdown or 24 hours before notification to the insured, whichever is
later.
✔✔What is the minimum limit on most Equipment Breakdown policies? - ✔✔$500,000
✔✔Errors and Omissions coverage in an Equipment Breakdown Protection policy: -
✔✔Provides coverage for damage that would not otherwise be covered because the
insured made a mistake or unintentionally omitted information required by the insurer.
✔✔What is the standard deductible on an Equipment Breakdown Protection Coverage
Form? - ✔✔$500
✔✔In an Equipment Breakdown Protection Coverage Form, how are losses paid? -
✔✔Losses are paid at replacement cost, but an insured may change this with an Actual
Cash Value endorsement.
✔✔When does Contingent Business Income and Extra Expense apply? - ✔✔When the
insured's loss results from a breakdown of covered equipment at a premise the insured
does not own or operate, such as a supplier.
, ✔✔Base Flood - ✔✔A flood that happens only once in 100 years
✔✔Base Flood Elevation - ✔✔The highest level that the water would reach during a
base flood.
✔✔Flood Insurance Rate Maps (FIRMs) - ✔✔Used to identify flood zones based on
Base Flood data and regulate new construction and premiums based on that data.
✔✔Flood - ✔✔An overflow of inland or tidal waters, rapid accumulation of surface water
or runoff, or mudflow.
✔✔NFIP Standard Flood Insurance Policy - ✔✔It is federal insurance, not subject to
state courts or state departments of insurance. NFIP is issued by the federal
government and claims are handled by the federal government.
✔✔WYO (Write Your Own) Program - ✔✔Private Insurers sell and underwrite policies
based on federal government guidelines. It is more efficient and now generates 90% of
flood policies.
✔✔NFIP Dwelling Form - ✔✔For 1 to 4 family dwellings, or 1 to 4 family condo units
and residential contents.
✔✔Flood Coverage D - Increased Cost of Compliance (ICC) - ✔✔Covers cost of
complying with floodplain management law and ordinances concerning repair of
reconstruction. Coverage D limit is $30,000. When added to Coverage A, cannot
exceed $250,000 for a dwelling or $500,000 for a commercial structure.
✔✔Standard Flood Insurance Policy (SFIP) Duties - ✔✔Immediately notify insurer of
flood loss
Organize damaged property for adjuster's examination
Put account books, records, etc. in a safe place for evaluation
Submit an NFIP Proof of Loss within 60 days of loss
✔✔SFIP Loss Payment Condition - ✔✔The insurer has 60 days from when it receives a
proof of loss to pay the claim.
✔✔What is the Special Loss Settlement under a flood policy? - ✔✔It pays the lowest of:
1) The dwelling's replacement cost
2) 1.5 times the dwelling's actual cash value
3) The policy limit
✔✔Flood insurance Coverage A covers how much for a detached garage? - ✔✔It will
pay 10% of the policy coverage limit for detached garages.
