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Adjuster License Practice Test: Questions & Answers
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Adjuster License Practice Test:Questions & Answers
The purpose of the principle of indemnity is Correct Ans - to prevent
an insured from making a profit on a loss.
Jerrod is awarded $4000 in a court case after Ollie accidentally starts a fire
and burns down his detached garage. This award is an example of Correct
Ans - special damages
Which of the following best describes a Fraternal Benefit Society Correct
Ans - A fraternal benefit society is a social organization based around
common interests and beliefs.
SureTrust Insurance was founded and operates in Texas. In Texas, SureTrust
is considered: Correct Ans - a domestic insurer.
Jackie files a lawsuit against Ginger after Ginger's three-year-old daughter
ruins Jackie's laptop during a flight. When they go to court, Jackie is the
Correct Ans - plaintiff
A captive insurance company Correct Ans - exists solely to provide
insurance for its parent company.
Which of the following is NOT a qualification of an insurable risk Correct
Ans - An insurable risk must have guaranteed protection from damage
Five years ago, when Rosamund was one year old, she had an expensive
procedure done to remove what a doctor said was a cancerous tumor behind
her knee. Her parents have recently discovered, upon the return of her
condition, that the growth was merely a harmless cyst and not a dangerous
tumor. Will the Statute of Limitations allow her parents to file a suit against
the doctor? Correct Ans - Yes; suits for Medical Malpractice are
allowed until the child is eight years old
Which of the following statements about a moral hazard is FALSE? Correct
Ans - It is the result of an unconscious behavior.
,An individual has ________________ to file a lawsuit for False Arrest in Florida.
Correct Ans - four years
John has purchased a homeowners insurance policy with a percentage
deductible based on the total limit of insurance for his home. John insures his
home for $600,000, and the policy includes a 3% deductible. A huge
thunderstorm passes through one night and blows the roof off his house. The
insurance company estimates that covered damage totals $80,000. How much
indemnification should John expect for the losses to his roof? Correct Ans
- $62,000
(First, calculate John's deductible, which is 3% of $600,000. This comes to
$18,000. Then subtract the deductible from the covered damages to get John's
indemnification. $80,000 minus $18,000 equals $62,000.)
What is the formula for actual cash value? Correct Ans - Replacement
cost minus total depreciation
Last month, an elderly man slipped and fell on a cracked, uneven icy sidewalk
on Mulberry Street. He sued the homeowner and was awarded $60,000. The
insurers of other properties on Mulberry Street would consider this award to
be: Correct Ans - a legal hazard
Which of the following best defines premium? Correct Ans - The fee
paid by the insured in exchange for an insurance policy
The city of Hillsdale passed a law dictating that all dogs must wear collars
with tags. This is an example of what kind of law? Correct Ans -
Statutory
Which of the following is true?
A. Kevin's auto insurance policy protects his car from damage.
B. Kevin's auto insurance policy now covers Bill, who bought Kevin's truck.
C. When Kevin sold his truck to Bill, he lost his auto insurance coverage.
D. Kevin's insurance policy covers him for losses to his new car, even though
he sold his truck, which was previously covered under his policy, to Bill.
Correct Ans - Kevin's insurance policy covers him for losses to his new car,
,even though he sold his truck, which was previously covered under his policy,
to Bill.
In Florida, an insurer has ___ days to pay or deny a claim Correct Ans -
90
Which of the following statements best describes the Law of Large Numbers?
Correct Ans - The larger the number of units insured, the more accurately
the insurer can predict the number of claims from that group.
Which of the following refers to being restored to the financial condition you
were in before a loss? Correct Ans - Indemnification
To meet the 80% level of co-insurance required by his lender, Tom discovers
he must insure his home for at least $320,000. What is the value of Tom's
home? Correct Ans - $400,000
(400,000 - 80% = 320,000)
Which of the following statements about risk retention groups is FALSE?
A. Risk retention groups are subject to state laws regarding Unfair Claims
Settlement practices.
B. Risk retention groups are a form of self-insurance.
C. Risk retention groups can provide commercial liability insurance.
D. Risk retention groups must be licensed in every state in which they operate.
Correct Ans - Risk retention groups must be licensed in every state in
which they operate.
Which of the following statements about insurable interest is FALSE?
A. Maintaining property values allows your neighbor to have an insurable
interest in your house.
B. When a renter leases your house, your insurable interest in the home
remains.
C. Purchasing an insurance policy on your home helps protect your insurable
interest in the home.
D. A wife can have an insurable interest in her husband's life. Correct Ans
- Maintaining property values allows your neighbor to have an insurable
interest in your house.
, Ginger, under the mistaken impression that Jackie made a lewd gesture at her,
attacks and injures Jackie after a soccer game. When Jackie takes Ginger to
court, Ginger is the: Correct Ans - tortfeasor.
Jane's shed burns to the ground during a tornado, when the high winds break
a wall of the shed, knocking over a lantern inside. What is the proximate cause
of the loss? Correct Ans - The tornado
Josephine's gas station suffered severe damage when one of the fuel tanks
caught fire and exploded. After completing his inspection, the adjuster
determines that Josephine's claim is not covered because she did not have
automatic shut-offs for the fuel tanks. If this safety measure was in fact
required in order for coverage to apply, where might Josephine find it in the
policy? Correct Ans - Conditions
ABC Masonry, Inc. has an aggregate liability policy with limits of
100,000/300,000. One day, an accident at a construction site leads to
$150,000 in damage to public property. Assuming the cause of loss is covered
under ABC Masonry's liability policy, how will this claim be paid? Correct
Ans - The insurer pays $100,000; the aggregate limit is now $200,000; and
ABC Masonry must pay $50,000.
(Since the per-occurrence limit is only $100,000, that's all the insurer will pay.
This payment reduces the aggregate to $200,000 and leaves $50,000 that ABC
Masonry is responsible for paying.)
Which of the following incidents would a liability insurance policy cover?
Correct Ans - A man slips inside a grocery store and injures himself.
A passenger on a commercial airline flight was injured when the plane
crashed due to a mechanical problem. In court, the injured passenger's lawyer
could invoke the doctrine of: Correct Ans - Res Ipsa Loquitur
When an applicant for a homeowners insurance policy lists the address, size,
and description of his home, he is providing: Correct Ans -
representations.
What is a reserve, in insurance terms? Correct Ans - A pool of collected
premiums that the insurer sets aside to pay claims
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