CA ADJUSTERS LICENSE QUESTIONS
AND ANSWERS
Which-of-the-following-dwelling-forms-provides-coverage-for-loss-of-rental-income?
--The-Basic,-Broad-and-Special-Form-
--The-Basic-and-Broad-Forms-only-
--The-Broad-and-Special-Forms-only-
--The-Special-Form-only---ans-✔✔The-correct-answer-is:-The-Basic,-Broad-and-Special-
Form.
EXPLANATION:
All-of-the-forms-provide-for-rental-value-coverage.-In-the-DP-2-and-DP-3,-it-is-20%-of-the-
Coverage-A-limit-and-is-additional-coverage.-With-the-DP-1,-the-20%-coverage-reduces-
the-available-Coverage-A-amount-on-the-dwelling.-(Note:-in-North-Carolina-the-
percentage-is-10%.)
Which-of-the-following-can-be-categorized-as-liability-doctrines?
Vicarious-
Res-Ipsa-Loquitur-
Strict-
All-of-the-Responses-are-Correct---ans-✔✔The-correct-answer-is:-All-of-the-Responses-
are-Correct.
EXPLANATION:
All-of-these-terms-can-be-categorized-a-liability-doctrines.-Res-Ipsa-Loquitur-means-"the-
thing-speaks-for-itself."
Under-an-HO-3-form-materials-and-supplies-to-be-used-in-construction,-alteration-or-
repair-of-the-structure-and-kept-next-to-the-residence-premises-are-covered:
If-they-have-been-at-the-location-more-than-30-days.-
If-they-have-been-at-the-location-less-than-30-days.-
Only-if-they-are-lost-due-to-an-insured-peril.-
Only-if-they-are-lost-due-to-fire.---ans-✔✔The-correct-answer-is:-Only-if-they-are-lost-due-to-
an-insured-peril.
The-items-would-be-covered-if-destroyed-by-an-insured-peril.-Note-that-the-items-must-
either-be-on-the-insured's-residence-premises-or-next-to-the-residence-premises-such-as-
in-a-neighbor's-garage.
,Under-an-Equipment-Breakdown-Protection-policy-with-$500,000-in-coverage,-a-
covered-"accident"-resulted-in-the-following:
I.-$500,000-worth-of-damage-to-the-property.
II.-$10,000-damage-to-the-property-of-another-in-the-insured's-care.
III.-$5,000-in-legal-fees-to-defend-the-insured-in-this-case.
The-policy-will-pay-a-total-of:
$505,000.-
$500,000.-
$510,000.-
$515,000.---ans-✔✔The-correct-answer-is:-$505,000.
EXPLANATION:
The-maximum-that-can-be-paid-is-the-limit-of-the-policy.-Legal-expenses-are-in-addition-to-
the-limit-of-coverage.
The-insured-is-insured-under-a-DP-3-dwelling-form-and-is-remodeling-the-dwelling.-He-
does-not-have-a-place-to-store-the-materials.-His-next-door-neighbor-permits-the-insured-
to-store-the-materials-in-his-garage.-The-garage-is-destroyed-by-fire-and-the-materials-are-
also-destroyed.-Which-of-the-following-applies?
--The-policy-has-a-special-limit-under-an-extension-of-coverage-that-applies.-
--Coverage-is-included-under-the-building-coverage-and-would-apply-since-the-materials-
are-next-to-the-insured's-premises.-
--The-policy-would-not-pay-the-claim-since-the-materials-were-off-the-insured's-residence-
premises.-
--The-materials-must-be-in-an-enclosed-structure-for-coverage-to-apply.---ans-✔✔The-
correct-answer-is:-Coverage-is-included-under-the-building-coverage-and-would-apply-
since-the-materials-are-next-to-the-insured's-premises.
EXPLANATION:
The-policy-would-respond-to-pay-the-loss-because-the-policy-covers-building-materials-
located-on-or-next-to-the-insured-premises.
All-of-the-following-are-necessary-for-Liability-coverage-to-apply-under-the-PAP,-except:
The-insured-must-not-have-been-drinking.-
The-person-liable-must-be-an-insured-person.-
The-insured-must-be-legally-liable-for-the-accident.-
The-damage-or-injury-must-be-the-result-of-an-auto-accident.---ans-✔✔The-correct-
answer-is:-The-insured-must-not-have-been-drinking.
It-is-not-necessary-that-the-insured-not-have-been-drinking-alcohol-at-the-time-of-the-
accident.-Coverage-would-still-apply.
,Under-an-equipment-dealer's-form,-which-of-the-following-would-not-be-covered?
Inventory-
Serviced-items-
Customer's-property-on-the-insured's-premises-
Vehicles-for-highway-use---ans-✔✔The-correct-answer-is:-Vehicles-for-highway-use.
EXPLANATION:
Inland-marine-forms-provide-coverage-for-the-insured's-goods-as-well-as-property-of-
others,-but-they-do-not-cover-automobiles.
Which-of-the-following-components-MUST-be-included-in-the-definition-of-a-hostile-fire:
I.-Rapid-oxidation-accompanied-by-a-flame-or-at-least-a-glow.
II.-Must-be-sudden-and-unexpected.
III.-Must-have-been-intentionally-set-by-the-insured.
IV.-Must-spread-beyond-its-intended-place.
I,-II-and-IV-only-
I,-II,-III-and-IV-
I-and-II-only-
I,-III-and-IV-only---ans-✔✔The-correct-answer-is:-I,-II-and-IV-only.
EXPLANATION:
This-definition-must-include-three-of-the-four-components-expressed-here.-In-addition,-a-
hostile-fire-is-one-that-is-spread-beyond-its-intended-place-or-a-place-not-intended-for-it.
For-how-long-must-an-adjusting-firm-maintain-its-claim-files?
For-as-long-as-any-statute-of-limitations-
For-the-current-year-and-10-prior-years-
For-the-current-year-and-4-prior-years-
For-the-current-year-only---ans-✔✔The-correct-answer-is:-For-the-current-year-and-4-prior-
years.
EXPLANATION:
Per-the-California-DOI,-adjusting-firms-must-maintain-files-for-the-current-policy-year-and-
the-preceding-four-years,-at-the-company's-principal-place-of-business.
An-adjuster,-acting-as-a-fiduciary-agent,-should-do-which-of-the-following?
--Not-represent-interests-which-are-adverse-to-those-of-the-principal-
--All-of-the-responses-are-correct-
--Not-seek-profit-from-an-outside-source-as-a-consequence-of-actions-for-and-behalf-of-the-
principal-
, --Act-with-a-high-degree-of-fidelity-and-loyalty-to-the-interests-of-the-principal---ans-✔✔The-
correct-answer-is:-All-of-the-responses-are-correct-.
EXPLANATION:
A-fiduciary-agent-represents-a-principal,-and-therefore-must-place-the-principal's-financial-
interests-above-any-other-and-act-with-the-utmost-degree-of-care-to-protect-the-principal's-
financial-interests.
Which-of-the-following-situations-would-be-covered-under-bodily-injury-(BI)-liability-
coverage?
Physical-Impairment-
False-Arrest-
Libel-
Suicide---ans-✔✔The-correct-answer-is:-Physical-Impairment
EXPLANATION:
Libel,-slander,-and-suicide-are-not-covered-within-the-definition-of-bodily-injury.-Physical-
impairment-is-a-form-of-bodily-injury.-Libel-and-slander-are-forms-of-"personal-injury"-
coverage.
Which-of-the-following-is-a-valid-reason-to-deny-coverage-or-charge-a-higher-premium-for-
an-automobile-policy?
Race-or-religion-
Adverse-driving-history-or-motor-vehicle-record-
Sexual-orientation-
Ancestry---ans-✔✔The-correct-answer-is:-Adverse-driving-history-or-motor-vehicle-record
EXPLANATION:
Adverse-driving-history-or-motor-vehicle-record-is-the-only-valid-reason-of-those-listed-to-
deny-coverage-or-charge-a-higher-premium.
Cars-driven-by-Sue-Trent-and-Jim-Higgins-were-involved-in-an-automobile-accident.-Ms.-
Trent's-car-was-a-total-loss,-and-she-obtained-a-settlement-of-$25,000-for-her-injuries.-
Scott-Finley,-Ms.-Trent's-passenger,-was-injured-and-incurred-$6,000-in-medical-
expenses.-Mr.-Higgins,-the-responsible-party,-carries-Bodily-Injury-coverage-with-limits-of-
$15,000-per-person-and-$30,000-per-accident,-and-Property-Damage-coverage-of-
$5,000.-His-policy-will-pay-a-maximum-of:
$26,000-
$29,000-
$35,000-
$39,000---ans-✔✔The-correct-answer-is:-$26,000
EXPLANATION:
AND ANSWERS
Which-of-the-following-dwelling-forms-provides-coverage-for-loss-of-rental-income?
--The-Basic,-Broad-and-Special-Form-
--The-Basic-and-Broad-Forms-only-
--The-Broad-and-Special-Forms-only-
--The-Special-Form-only---ans-✔✔The-correct-answer-is:-The-Basic,-Broad-and-Special-
Form.
EXPLANATION:
All-of-the-forms-provide-for-rental-value-coverage.-In-the-DP-2-and-DP-3,-it-is-20%-of-the-
Coverage-A-limit-and-is-additional-coverage.-With-the-DP-1,-the-20%-coverage-reduces-
the-available-Coverage-A-amount-on-the-dwelling.-(Note:-in-North-Carolina-the-
percentage-is-10%.)
Which-of-the-following-can-be-categorized-as-liability-doctrines?
Vicarious-
Res-Ipsa-Loquitur-
Strict-
All-of-the-Responses-are-Correct---ans-✔✔The-correct-answer-is:-All-of-the-Responses-
are-Correct.
EXPLANATION:
All-of-these-terms-can-be-categorized-a-liability-doctrines.-Res-Ipsa-Loquitur-means-"the-
thing-speaks-for-itself."
Under-an-HO-3-form-materials-and-supplies-to-be-used-in-construction,-alteration-or-
repair-of-the-structure-and-kept-next-to-the-residence-premises-are-covered:
If-they-have-been-at-the-location-more-than-30-days.-
If-they-have-been-at-the-location-less-than-30-days.-
Only-if-they-are-lost-due-to-an-insured-peril.-
Only-if-they-are-lost-due-to-fire.---ans-✔✔The-correct-answer-is:-Only-if-they-are-lost-due-to-
an-insured-peril.
The-items-would-be-covered-if-destroyed-by-an-insured-peril.-Note-that-the-items-must-
either-be-on-the-insured's-residence-premises-or-next-to-the-residence-premises-such-as-
in-a-neighbor's-garage.
,Under-an-Equipment-Breakdown-Protection-policy-with-$500,000-in-coverage,-a-
covered-"accident"-resulted-in-the-following:
I.-$500,000-worth-of-damage-to-the-property.
II.-$10,000-damage-to-the-property-of-another-in-the-insured's-care.
III.-$5,000-in-legal-fees-to-defend-the-insured-in-this-case.
The-policy-will-pay-a-total-of:
$505,000.-
$500,000.-
$510,000.-
$515,000.---ans-✔✔The-correct-answer-is:-$505,000.
EXPLANATION:
The-maximum-that-can-be-paid-is-the-limit-of-the-policy.-Legal-expenses-are-in-addition-to-
the-limit-of-coverage.
The-insured-is-insured-under-a-DP-3-dwelling-form-and-is-remodeling-the-dwelling.-He-
does-not-have-a-place-to-store-the-materials.-His-next-door-neighbor-permits-the-insured-
to-store-the-materials-in-his-garage.-The-garage-is-destroyed-by-fire-and-the-materials-are-
also-destroyed.-Which-of-the-following-applies?
--The-policy-has-a-special-limit-under-an-extension-of-coverage-that-applies.-
--Coverage-is-included-under-the-building-coverage-and-would-apply-since-the-materials-
are-next-to-the-insured's-premises.-
--The-policy-would-not-pay-the-claim-since-the-materials-were-off-the-insured's-residence-
premises.-
--The-materials-must-be-in-an-enclosed-structure-for-coverage-to-apply.---ans-✔✔The-
correct-answer-is:-Coverage-is-included-under-the-building-coverage-and-would-apply-
since-the-materials-are-next-to-the-insured's-premises.
EXPLANATION:
The-policy-would-respond-to-pay-the-loss-because-the-policy-covers-building-materials-
located-on-or-next-to-the-insured-premises.
All-of-the-following-are-necessary-for-Liability-coverage-to-apply-under-the-PAP,-except:
The-insured-must-not-have-been-drinking.-
The-person-liable-must-be-an-insured-person.-
The-insured-must-be-legally-liable-for-the-accident.-
The-damage-or-injury-must-be-the-result-of-an-auto-accident.---ans-✔✔The-correct-
answer-is:-The-insured-must-not-have-been-drinking.
It-is-not-necessary-that-the-insured-not-have-been-drinking-alcohol-at-the-time-of-the-
accident.-Coverage-would-still-apply.
,Under-an-equipment-dealer's-form,-which-of-the-following-would-not-be-covered?
Inventory-
Serviced-items-
Customer's-property-on-the-insured's-premises-
Vehicles-for-highway-use---ans-✔✔The-correct-answer-is:-Vehicles-for-highway-use.
EXPLANATION:
Inland-marine-forms-provide-coverage-for-the-insured's-goods-as-well-as-property-of-
others,-but-they-do-not-cover-automobiles.
Which-of-the-following-components-MUST-be-included-in-the-definition-of-a-hostile-fire:
I.-Rapid-oxidation-accompanied-by-a-flame-or-at-least-a-glow.
II.-Must-be-sudden-and-unexpected.
III.-Must-have-been-intentionally-set-by-the-insured.
IV.-Must-spread-beyond-its-intended-place.
I,-II-and-IV-only-
I,-II,-III-and-IV-
I-and-II-only-
I,-III-and-IV-only---ans-✔✔The-correct-answer-is:-I,-II-and-IV-only.
EXPLANATION:
This-definition-must-include-three-of-the-four-components-expressed-here.-In-addition,-a-
hostile-fire-is-one-that-is-spread-beyond-its-intended-place-or-a-place-not-intended-for-it.
For-how-long-must-an-adjusting-firm-maintain-its-claim-files?
For-as-long-as-any-statute-of-limitations-
For-the-current-year-and-10-prior-years-
For-the-current-year-and-4-prior-years-
For-the-current-year-only---ans-✔✔The-correct-answer-is:-For-the-current-year-and-4-prior-
years.
EXPLANATION:
Per-the-California-DOI,-adjusting-firms-must-maintain-files-for-the-current-policy-year-and-
the-preceding-four-years,-at-the-company's-principal-place-of-business.
An-adjuster,-acting-as-a-fiduciary-agent,-should-do-which-of-the-following?
--Not-represent-interests-which-are-adverse-to-those-of-the-principal-
--All-of-the-responses-are-correct-
--Not-seek-profit-from-an-outside-source-as-a-consequence-of-actions-for-and-behalf-of-the-
principal-
, --Act-with-a-high-degree-of-fidelity-and-loyalty-to-the-interests-of-the-principal---ans-✔✔The-
correct-answer-is:-All-of-the-responses-are-correct-.
EXPLANATION:
A-fiduciary-agent-represents-a-principal,-and-therefore-must-place-the-principal's-financial-
interests-above-any-other-and-act-with-the-utmost-degree-of-care-to-protect-the-principal's-
financial-interests.
Which-of-the-following-situations-would-be-covered-under-bodily-injury-(BI)-liability-
coverage?
Physical-Impairment-
False-Arrest-
Libel-
Suicide---ans-✔✔The-correct-answer-is:-Physical-Impairment
EXPLANATION:
Libel,-slander,-and-suicide-are-not-covered-within-the-definition-of-bodily-injury.-Physical-
impairment-is-a-form-of-bodily-injury.-Libel-and-slander-are-forms-of-"personal-injury"-
coverage.
Which-of-the-following-is-a-valid-reason-to-deny-coverage-or-charge-a-higher-premium-for-
an-automobile-policy?
Race-or-religion-
Adverse-driving-history-or-motor-vehicle-record-
Sexual-orientation-
Ancestry---ans-✔✔The-correct-answer-is:-Adverse-driving-history-or-motor-vehicle-record
EXPLANATION:
Adverse-driving-history-or-motor-vehicle-record-is-the-only-valid-reason-of-those-listed-to-
deny-coverage-or-charge-a-higher-premium.
Cars-driven-by-Sue-Trent-and-Jim-Higgins-were-involved-in-an-automobile-accident.-Ms.-
Trent's-car-was-a-total-loss,-and-she-obtained-a-settlement-of-$25,000-for-her-injuries.-
Scott-Finley,-Ms.-Trent's-passenger,-was-injured-and-incurred-$6,000-in-medical-
expenses.-Mr.-Higgins,-the-responsible-party,-carries-Bodily-Injury-coverage-with-limits-of-
$15,000-per-person-and-$30,000-per-accident,-and-Property-Damage-coverage-of-
$5,000.-His-policy-will-pay-a-maximum-of:
$26,000-
$29,000-
$35,000-
$39,000---ans-✔✔The-correct-answer-is:-$26,000
EXPLANATION:
