FL Adjuster practice test Questions with Verified Answers (Graded A)

What requirements must Wholesalers and Distributors meet in order to be eligible for a BOP? - Answer- 25% or less of floor space is available to the general public, and less than 25% of gross income may come from retail sales. The first step in the claim process is to - Answer- Determining time and cost of repairs In Florida, an insurer has ___ days to pay or deny a claim. - Answer- 90 Jerome was shopping at ABC Imports when a light fixture fell from the ceiling and hit him on the head. Jerome's injuries resulted in an extended hospital stay, so he sued ABC Imports and was awarded $400,000. Assuming ABC Imports carries a CGL with a General Aggregate of $750,000 and a per occurrence limit of $250,000, what is the maximum that ABC's insurer will pay for Jerome's injuries? - Answer- $250,000 Which of the following best describes inland marine insurance? - Answer- Insurance designed to protect property being transported on land and property related to transportation A plane was damaged while being towed by another vehicle. By policy definition, this damage is considered to have occurred while the aircraft was: - Answer- not in motion Citizens Insurance - Answer- is available to certain people who are not residents of Florida. This provision in Ocean Marine insurance obligates insurers of various interests to share the cost of losses associated with a captain's decision to voluntarily sacrifice a part of the ship or its cargo. - Answer- General Average Walter works for a shipping company, delivering packages and picking up orders. He lives very close to work and the grocery store is only a few blocks away, so he can live conveniently without owning a car. However, he would like to have some Personal Injury Protection, just in case he ever gets injured in an accident. Which BAP endorsement could his employer use to give him this coverage? - Answer- Named Individuals Broadened PIP Which of the following is NOT a rating factor for a personal auto liability policy? - Answer- The condition of the vehicle Phil heads over to visit his friend Josh, who is sick with the flu. While at the house, Josh fails to cover his mouth when he coughs and Phil ends up contacting the flu. Phil files a claim with Josh's insurer for medical expenses and lost income while Phil is out sick from work. The insurer denies the claim because - Answer- disease transmitted from the insured to a third party is excluded. Jerrod owns two planes and has liability insurance with the following limits: Bodily Injury Excluding Passengers: $250,000/person; $500,000/occurrence Passenger Bodily Injury: $250,000/person; $750,000/occurrence Property Damage: $500,000/occurrence. When Jerrod crashes into a car while landing his plane, he injures the two people in the car and completely wrecks the car. The first person in the car suffers $200,000 in injuries, and the second person suffers $300,000 in injuries. Replacing the car costs $45,000. Without taking deductibles into account, how much will Jerrod have to pay out of his own pocket? - Answer- 50,000 Which of the following endorsements is mandatory for all Florida residential property policies? - Answer- Catastrophic ground collapse Maria was in the hospital for five days, recovering from a stroke. The bill she received for her hospital stay broke down the charges for room, lab fees, meals, and nursing care. However, her insurer paid a flat daily rate and she was left responsible for paying the remaining charges. What type of insurance does Maria have? - Answer- Hospital Indemnity insurance ABC Roofing has two CGL policies that cover the same losses. Both policies are occurrence forms, thus pay out on a pro rata basis. The first policy is through KLM Insurance and has a limit of $300,000. The second is through XYZ Mutual, with a limit of $600,000. One day, ABC Roofing suffers an occurrence resulting in a $150,000 covered loss. How will this loss be indemnified? - Answer- KLM Insurance will pay $50,000; XYZ Mutual will pay $100,000 Florida Insurance Code states the qualifications required to become a licensed insurance adjuster in the state of Florida. Which of the following is NOT one of the requirements for applicants? - Answer- Spend 20 hours in the field working with a licensed insurance adjuster Which of the following automobile components is NOT covered by a Mechanical Breakdown Insurance policy? - Answer- Tires Dr. Smith has a claims-made malpractice insurance policy with a policy period from June 30, 2006 to June 30, 2007. Which claim would trigger this policy? - Answer- A claims-made policy covers claims initiated during the policy period. In this situation, that would include claims filed between June 30, 2006 and 30, 2007. Lemon Insurance Co. decides not to renew Hugh's Personal Auto policy, which is set to expire on May 31. Which of the following statements is TRUE? - Answer- Lemon Insurance must notify Hugh at least 45 days before the policy expires. Which of these statements is true? - Answer- Flood insurance is always backed by the National Flood Insurance Program. Which of the following is TRUE about workers' compensation insurance? - Answer- It benefits both the employee and the employer. Martin works as an accountant for Smith Manufacturing. Smith Manufacturing has tasked Martin with finding an insurance provider to meet the company's needs, so Martin interviews several insurers. At the end of one interview with PRO Insurance, the insurance representative hands Martin an envelope containing $5,000 in cash, on the condition that Smith Manufacturing selects PRO Insurance as its insurance provider. What would we call the $5,000 in cash? - Answer- A kickback In a declaratory judgment action: - Answer- the court decides the legal rights of both parties. When discussing farm insurance, which of the following most accurately describes "scheduled property"? - Answer- Itemized property According to the "Definitions" section of a Personal Auto Policy, which of the following is NOT "occupying" her vehicle? - Answer- Rachel leaves her cat in her car, with the windows cracked, while she goes into the drugstore to fill a prescription Which characteristic would prohibit a convenience store/gas station from purchasing a BOP? - Answer- The operation of a car wash A ___________ is a law set forth by a governing body such as a state or city. - Answer- statutory law Ron's truck experiences a mechanical breakdown and he has it towed to an auto repair facility. Upon further examination of Ron's claim, his Mechanical Breakdown Insurance provider denies coverage. Which of the following would be a valid reason for this denial? - Answer- Ron had been hauling a large boat, which overloaded the vehicle and caused the breakdown. Greta's Ski Supply is covered under the Building and Personal Property Coverage Form with limits of $50,000 for business personal property and $100,000 for the building. The policy also has a $500 deductible. When a tornado tears through the vicinity, the store suffered $10,000 in damage to the building and $20,000 in losses to the contents. In addition, Greta has to fork out an extra $1,000 for debris removal. How much will Greta receive from her insurer? - Answer- 30,500 Which of the following is NOT excluded from coverage under a Mechanical Breakdown Insurance policy? - Answer- Breakdown due to the cracking of an engine block Sam suffers $6,000 in injuries when Nicole runs a red light and crashes her uninsured car into Sam's. Sam's own insurance company, ABC Insurance, immediately pays him $5,000 for his injuries. Sam then ponders whether to file a $6,000 lawsuit against Nicole. Why can't Sam sue Nicole for the full amount of his injuries? - Answer- By accepting payment from ABC Insurance, Sam subrogated a portion of his rights against Nicole to ABC Insurance. A fidelity bond covers: - Answer- an insured business for loss resulting from any dishonest acts committed by its bonded employees. Which of the following incidents would a liability insurance policy cover? - Answer- A man slips inside a grocery store and injures himself. When Louise goes online and fills out phony applications with XYZ Auto Insurance in order to print the temporary insurance cards and sell them for a profit on the black market, she is: - Answer- ? When Jane rear-ends Frank, she causes minor damage to Frank's car, but Frank is not hurt. However, when Jane's insurer asks him about the accident, Frank claims that his back and neck have been hurting a lot because of the collision, even though he is actually fine. Frank is guilty of: - Answer- soft fraud. Who sets the critical production dates and assigns commodity market prices for MPCI policies? - Answer- The risk management agency Melanie owns a set of 3 antique crystal vases that is worth $2,800, but during her most recent move, one of the vases was broken. Melanie and her insurer have been unable to find a replacement vase to complete the set and bring it back to its original value. Without the broken vase, the remainder of the set is only worth $1,000. What should Melanie receive from the insurer under the Pair and Set provision of her Personal Articles Floater? - Answer- $1,800 While Andrea was grocery shopping in BB Mart, the large Dairy sign fell off the wall and landed on her. Because of her extensive injuries, Andrea sued BB Mart and was awarded $375,000 in damages. BB Mart's Commercial General Liability policy has a general aggregate limit of $1,000,000 and a per occurrence limit of $300,000. What is the per occurrence limit after this claim is settled? - Answer- $300,000 Alan owns a commercial landscaping business and does most of his work during the summer months. One day, he arrives at work to find an enormous hole in the middle of the yard where he stored his lawn mowers. Under which Causes of Loss form(s) would the mowers, which were consumed by the sinkhole, be covered by his commercial property policy? - Answer- Basic, Broad, and Special Forms When an adjuster is engaging in salvage misappropriation, he is: - Answer- taking possession of salvaged property for his own use or benefit. Surestep Insurance Co. calculates that it needs to charge Elwood a higher premium for his auto policy. Which of the following statements is TRUE? - Answer- Once Elwood receives notice of this change from his insurer, he may keep his policy in force by paying the extra premium within 10 days. After her water heater leaked and damaged her hardwood floors, Clarice filed a claim with her insurer, KLM Insurance, who sent their adjuster, Bob, to inspect the loss. Clarice also hired a public adjuster, Jose, to represent her in her claim. Bob has the responsibility to report to which principal? - Answer- KLM Insurance Sam, who has a typical HO-3 policy, is forced to evacuate his home by civil authorities due to rising flood waters in his neighborhood. It takes a month before Sam is allowed to come back to his home. During this time, he has spent $3,000 in hotel expenses, on top of his monthly mortgage payment of $850. When he files a claim, how much will Sam receive under Coverage D - Loss of Use? - Answer- 0 Which of the following professionals would be most likely to purchase malpractice insurance? - Answer- Lawyer Bob's home was severely damaged by a thunderstorm and he claims it will cost $74,000 to repair. His insurer has investigated the claim, found the repairs could be done for $49,000, and has offered Bob this amount of indemnification. Negotiation between Bob and his insurer seems to be failing. Due to the unpredictability of the result, which of the following options should be avoided by the insurer if possible? - Answer- Litigation Which of the following is NOT considered an "out-of-pocket expense" in health insurance? - Answer- Policy premiums What is the most common type of Time Element Insurance? - Answer- Business Interruption Insurance Which of the following is NOT one of the differences between a BAP and a truckers policy? - Answer- A BAP uses coverage symbols to designate covered autos. Which of the following states takes a "monopolistic" approach to workers' compensation insurance? - Answer- Ohio, Washington, Wyoming, and North Dakota. When Emma's house was burglarized, the thieves stole several pieces from her art collection. Although the pieces were only prints, Emma files a claim stating that they were originals, and therefore worth a good deal more than they really are. What has Emma committed? - Answer- soft fraud Melanie's $300,000 home suffers $90,000 in damage from a fire. The adjuster finds the home's value since 2008 has depreciated 25%, making the ACV loss $67,500. Although Melanie's policy covers repairs at their replacement cost, she receives $67,500 at the time of loss. Repairs to her home end up totaling $79,500. How much, if any, further indemnification may Melanie receive from the loss? - Answer- $12,000 Which of the following is TRUE concerning a Business Owners Policy? - Answer- A business owners policy offers liability protection Participation in the Florida Automobile Joint Underwriting Association is mandatory for - Answer- all insurers who can sell auto insurance in Florida. The insuring agreement for Part A-Liability in a personal auto policy states that - Answer- the insurer has the right to settle liability cases out of court. Which of the following statements about insurable interest is FALSE? - Answer- Maintaining property values allows your neighbor to have an insurable interest in your house A large corporation owns a small hunting cabin in the woods, that it uses for occasional weekend getaways. The corporation can insure the cabin against property damage with a: - Answer- dwelling policy. Assuming Ernie holds a BOP with a Selected Per Occurrence limit of $300,000, what would Ernie's Completed Operations and General Aggregate limits equal? - Answer- Completed Operations: $600,000; General Aggregate: $600,000 John moved out of his house and put it up for sale three months ago. While he was waiting for the house to sell, John's plumbing pipes froze and burst in the icy temperatures, which eventually led to water damaging the cabinetry and hardwood floors. Which of the following statements would most likely be TRUE? - Answer- although John's house was still covered under an HO-3, the damage would not be covered because he didn't shut off the water supply Which of the following statements regarding scheduled fidelity bonds is FALSE? - Answer- All employees are bonded for the same aggregate amount. An employee receiving income benefits under Workers' Compensation insurance cannot receive more than - Answer- 66 2/3% of the State Average Weekly Wage. Jimmy owns a pawn shop which brings with it a certain amount of risk. He decides to hire a security guard, and install a surveillance system and an alarm system to reduce his monthly premiums on his commercial property policy through the - Answer- Protective Safeguard endorsement. The Insurance Guaranty Association is a mechanism that covers claims in the event of - Answer- an insurer's insolvency. In which of the following cases would Mechanical Breakdown Insurance NOT apply? - Answer- A rock strikes and shatters Horace's windshield. DEC Construction was hired to completely renovate Randall's department store . DEC Construction is in charge of the project, but hires Mac Electric (an independent contractor) to complete the electrical portion, and requires Mac to have Owners & Contractors Protective Liability coverage for the job. Who is responsible for paying the premiums for this policy? - Answer- Mac Electric In 1945 Congress passed the McCarran-Ferguson Act. What does that act do? - Answer- Gives the states the authority to regulate the insurance industry Which of the following is NOT true of Personal Injury Protection? - Answer- PIP is usually secondary coverage During a routine tooth extraction, Dr. Dentem administers too much laughing gas and causes brain damage to his client. The family sues Dr. Dentem for failing to follow procedure. Which kind of insurance would cover the cost of the lawsuit? - Answer- Malpractice Insurance An insurance adjuster is obliged to inform claimants of their rights under the insurance contract in which of the following situations? - Answer- Every claim the adjuster handles Norris borrows Arnold's truck to pick up some lu