FLORIDA ADJUSTER LICENSING ACTUAL EXAM 400
QUESTIONS AND CORRECT DETAILED ANSWERS WITH
RATIONALES (VERIFIED ANSWERS) | AGRADE
When Sally applies for an auto policy, her agent issues her a ________ so that she
can benefit from insurance protection while he underwrites the policy. - ANSWER:
Binder
When an insurer buys insurance to reduce its exposure to loss, this is called -
ANSWER: Reinsurance
Reinsurance - ANSWER: insurance for insurers; it helps reduce their exposure to
losses
Emma is found guilty of arson causing 175,000 in damages to her home, which still
has 155,000 left on her mortgage at the time of the fire. Under her mortgage clause,
Emma's mortgage lender can recoup: - ANSWER: 155,000 of insurable interests - the
amount left outstanding on the loan
An "occurrence" is defined as: - ANSWER: an unexpected event that causes loss.
Replacement Cost Value: - ANSWER: Under replacement cost valuation, insurers may
safeguard the principle of indemnity by requiring policy holders to replace insured
items before making full reparations
Cindy holds an insurance policy from Sine Nomine Insurance. This is not a publicly
traded company, and Cindy can participate in the election of the board, receiving
dividends if the company does well. Sine Nomine Insurance could be best described
as a: - ANSWER: Mutual Insurance Company
Loss of Money invested in the stock market is a - ANSWER: speculative risk
When taking recorded witness statements, the adjuster should - ANSWER: Remain
Objective
Coinsurance Policy - ANSWER: requires you to have a minimum of 80% minimum, if
you do not comply there is a penalty
Coinsurance Penalty Formula - ANSWER: dividing the amount of coverage one
should have by how much they do have.
EX: they should have 80% (96,000) , they do have (40,000). 40,000/96,000= 41.67%
then apply that to the perceived cost of indemnity before the penalty.
12,000 x 41.67% = 5,000
,They will receive 5,000 dollars
Standard Fire Policy Pays - ANSWER: Actual Cash Value
Stan built a porch for his home three years ago at a cost of $10,000. The value of the
porch has depreciated by $6,000, and it would cost $12,000 to replace it today. After
Stan's porch burnt down during a BBQ today, how much would a Standard Fire Policy
indemnify Stan for his porch? - ANSWER: 12,000 - 6,000 = 6,000
he will receive 6,000 because standard fire pays actual cash value
John moved out of his home 3 months ago and put it up for sale. While waiting for it
to sell, the pipes burst and damage the floors due to freezing.
This is not covered - ANSWER: freezing is a covered peril but is excluded if the
building is vacant and the insured has not taken responsible care to maintain heat or
shut off the water supply
DP-2 Broad Form covers what under the peril of theft? - ANSWER: Broken windows
caused by the burglar breaking in
Which of the following is covered under a DP-3
a. earthquake
b. flood
c. water backup from sewers
4. Power failure on premises - ANSWER: Power failure on-premises
In a dwelling policies, coverage D pays for - ANSWER: Lost Rental Income
If a Florida HO policy has been in effect for fewer than 90 days For nonpayment-
related cancelation the insurer must notify the policyholder at least: - ANSWER: 10
days before cancelling
If a Florida HO policy has been in effect for fewer than 90 days for any other
approved reason the policy holder must be notified at least - ANSWER: 20 days
before cancelling
The coverage for damage to personal property off-premises is limited to 10% of
coverage c's limit in a DP-2 policy. - ANSWER: coverage c is 25,000 x 10% = 2,500
2,500 would be off-premise coverage limit
HO-5 - ANSWER: Best coverage policy
A processing and servicing company would qualify for a BOP only if they have less
than - ANSWER: 3 million in annual rev
, A "Single Occurrence" on the earthquake and volcanic eruptions for involves any and
all eruptions and/or earthquakes that take place with in a: - ANSWER: Single 168-
hour Policy -7 days
The coverage limit in bob's commercial property policy goes up 2% every time the
policy renews. Which optional coverage might Bob have included as part of his
insurance package? - ANSWER: Inflation Guard
In a BOP, the General Aggregate Limit is: - ANSWER: x2 / twice the per occurrence
limit
Why has pollutant clean up and removal coverage become more popular recently? -
ANSWER: EPA fines and penalties have increased
Strict Liability - ANSWER: holds a person liable for his actions regardless of how much
care he demonstrates
Binder - ANSWER: Temporary Coverage
After a loss covered under a dwelling policy, ordinance and law, coverage pays for -
ANSWER: Increased repair cost due to laws or codes
BOP - ANSWER: offers liability protection
Under DP-1, claims for dwelling and other structures are settled at - ANSWER: ACV
BOP's general aggregate limit and completed operations limits are twice the amount
of the selected per occurrence limit - ANSWER: EX: per occurrence limit 300,000
600,000 GA 600,000 CO
Loss Avoidance Measures will pay up to - ANSWER: 1,000 dollars in indemnification
This 1,000 dollar limit can include indemnification of insureds own personal labor to
prevent loss at minimum wage rates as long as it does not collectively exceed the
limit
With respect to Inland Marine Insurance, a "block" policy (such as jewelers block
policy, or a furriers block policy) is an example of : - ANSWER: A commercial floater
Errors and Omissions Insurance covers the cost of: - ANSWER: Lawsuit
(50/100/25) - ANSWER: (each injured person/ all injuries combined/ property
damage)
A stand alone excess liability policy: - ANSWER: follows a base policy, but may have
different exclusions and limitations.
QUESTIONS AND CORRECT DETAILED ANSWERS WITH
RATIONALES (VERIFIED ANSWERS) | AGRADE
When Sally applies for an auto policy, her agent issues her a ________ so that she
can benefit from insurance protection while he underwrites the policy. - ANSWER:
Binder
When an insurer buys insurance to reduce its exposure to loss, this is called -
ANSWER: Reinsurance
Reinsurance - ANSWER: insurance for insurers; it helps reduce their exposure to
losses
Emma is found guilty of arson causing 175,000 in damages to her home, which still
has 155,000 left on her mortgage at the time of the fire. Under her mortgage clause,
Emma's mortgage lender can recoup: - ANSWER: 155,000 of insurable interests - the
amount left outstanding on the loan
An "occurrence" is defined as: - ANSWER: an unexpected event that causes loss.
Replacement Cost Value: - ANSWER: Under replacement cost valuation, insurers may
safeguard the principle of indemnity by requiring policy holders to replace insured
items before making full reparations
Cindy holds an insurance policy from Sine Nomine Insurance. This is not a publicly
traded company, and Cindy can participate in the election of the board, receiving
dividends if the company does well. Sine Nomine Insurance could be best described
as a: - ANSWER: Mutual Insurance Company
Loss of Money invested in the stock market is a - ANSWER: speculative risk
When taking recorded witness statements, the adjuster should - ANSWER: Remain
Objective
Coinsurance Policy - ANSWER: requires you to have a minimum of 80% minimum, if
you do not comply there is a penalty
Coinsurance Penalty Formula - ANSWER: dividing the amount of coverage one
should have by how much they do have.
EX: they should have 80% (96,000) , they do have (40,000). 40,000/96,000= 41.67%
then apply that to the perceived cost of indemnity before the penalty.
12,000 x 41.67% = 5,000
,They will receive 5,000 dollars
Standard Fire Policy Pays - ANSWER: Actual Cash Value
Stan built a porch for his home three years ago at a cost of $10,000. The value of the
porch has depreciated by $6,000, and it would cost $12,000 to replace it today. After
Stan's porch burnt down during a BBQ today, how much would a Standard Fire Policy
indemnify Stan for his porch? - ANSWER: 12,000 - 6,000 = 6,000
he will receive 6,000 because standard fire pays actual cash value
John moved out of his home 3 months ago and put it up for sale. While waiting for it
to sell, the pipes burst and damage the floors due to freezing.
This is not covered - ANSWER: freezing is a covered peril but is excluded if the
building is vacant and the insured has not taken responsible care to maintain heat or
shut off the water supply
DP-2 Broad Form covers what under the peril of theft? - ANSWER: Broken windows
caused by the burglar breaking in
Which of the following is covered under a DP-3
a. earthquake
b. flood
c. water backup from sewers
4. Power failure on premises - ANSWER: Power failure on-premises
In a dwelling policies, coverage D pays for - ANSWER: Lost Rental Income
If a Florida HO policy has been in effect for fewer than 90 days For nonpayment-
related cancelation the insurer must notify the policyholder at least: - ANSWER: 10
days before cancelling
If a Florida HO policy has been in effect for fewer than 90 days for any other
approved reason the policy holder must be notified at least - ANSWER: 20 days
before cancelling
The coverage for damage to personal property off-premises is limited to 10% of
coverage c's limit in a DP-2 policy. - ANSWER: coverage c is 25,000 x 10% = 2,500
2,500 would be off-premise coverage limit
HO-5 - ANSWER: Best coverage policy
A processing and servicing company would qualify for a BOP only if they have less
than - ANSWER: 3 million in annual rev
, A "Single Occurrence" on the earthquake and volcanic eruptions for involves any and
all eruptions and/or earthquakes that take place with in a: - ANSWER: Single 168-
hour Policy -7 days
The coverage limit in bob's commercial property policy goes up 2% every time the
policy renews. Which optional coverage might Bob have included as part of his
insurance package? - ANSWER: Inflation Guard
In a BOP, the General Aggregate Limit is: - ANSWER: x2 / twice the per occurrence
limit
Why has pollutant clean up and removal coverage become more popular recently? -
ANSWER: EPA fines and penalties have increased
Strict Liability - ANSWER: holds a person liable for his actions regardless of how much
care he demonstrates
Binder - ANSWER: Temporary Coverage
After a loss covered under a dwelling policy, ordinance and law, coverage pays for -
ANSWER: Increased repair cost due to laws or codes
BOP - ANSWER: offers liability protection
Under DP-1, claims for dwelling and other structures are settled at - ANSWER: ACV
BOP's general aggregate limit and completed operations limits are twice the amount
of the selected per occurrence limit - ANSWER: EX: per occurrence limit 300,000
600,000 GA 600,000 CO
Loss Avoidance Measures will pay up to - ANSWER: 1,000 dollars in indemnification
This 1,000 dollar limit can include indemnification of insureds own personal labor to
prevent loss at minimum wage rates as long as it does not collectively exceed the
limit
With respect to Inland Marine Insurance, a "block" policy (such as jewelers block
policy, or a furriers block policy) is an example of : - ANSWER: A commercial floater
Errors and Omissions Insurance covers the cost of: - ANSWER: Lawsuit
(50/100/25) - ANSWER: (each injured person/ all injuries combined/ property
damage)
A stand alone excess liability policy: - ANSWER: follows a base policy, but may have
different exclusions and limitations.
