An insured purchased new furniture for $6000.00. At the time of a fire loss, it had depreciated $2000.00. The same furniture will cost $7000.00 to replace. What is the actual cash value of the destroyed furniture?

• $4,000

• $7,000

• $6,000

• $5,000

Answer explanation

ACV= Replacement cost - depreciation

An insured purchased a new car as a graduation present for her daughter. Within how many days must she notify her insurance agent?

• 15 days

• 10 days

• 14 days

• 30 days

Answer explanation

You must already have an existing insurance policy

Dwelling policies may be used to insure all the following EXCEPT

• rental property

• farm dwellings

• four-unit dwellings

• vacation homes

Answer explanation

Farm dwellings would be coved under a farm policy

An act of terrorism

• Must be certified by the secretary of the Treasury, the Secretary of Homeland Security, and US Attorney General

• Is defined as any act causing property damage and loss of lives in a foreign country

• Triggers the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) when losses by insurers are $50 million

• In which TRIPRA responds, places a cap on federal liability not to exceed $100 million

Commingling refers to

• Violating the insurance company’s privacy protection rules

• Improperly mixing funds in the insurer’s general and separate accounts

• Violating state rules on transacting controlled business

• Improperly mixing personal funds with insurer or insured’s funds

An insurer incorporated in Canada but doing business in California would be

• An alien insurer

• A foreign insurer

• A non-admitted insurer

• A domestic insurer

Answer explanation

Alien- Out of country

Foreign- out of state

Non-admitted - an insurance carrier has not been approved by the state’s insurance department

Domestic- within your state

Which of the following is NOT covered under Part D of the personal auto policy?

• Personal property in the vehicle

• Theft of the covered auto

• Collision damage to a covered auto as a result of hitting a light pole

• Upset or overturn of a covered auto

Answer explanation

Listed in the exclusions

Which of the perils shown below is included in all the homeowner’s policy forms?

• Discharge of water or steam

• Theft of personal property

• Sudden, accidental rupture

• Freezing of plumbing and related systems

The maximum limits for flood insurance coverage under the regular program is

• $100,000

• $500,000

• $150,000

• $250,000

The requirement that legally binds an insurance company to an agent’s action is commonly referred to as?

• The law of compliance

• The agency system

• The law of agency

• The binding receipt