Adjuster license practice test Questions
& Answers
The purpose of the principle of indemnity is - ANSWERSto 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 - ANSWERSspecial damages
Which of the following best describes a Fraternal Benefit Society - ANSWERSA
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: - ANSWERSa 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 - ANSWERSplaintiff
A captive insurance company - ANSWERSexists solely to provide insurance for its
parent company.
Which of the following is NOT a qualification of an insurable risk - ANSWERSAn
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? - ANSWERSYes; suits for Medical
Malpractice are allowed until the child is eight years old
Which of the following statements about a moral hazard is FALSE? - ANSWERSIt is the
result of an unconscious behavior.
An individual has ________________ to file a lawsuit for False Arrest in Florida. -
ANSWERSfour 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? - ANSWERS$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? - ANSWERSReplacement 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: - ANSWERSa legal
hazard
Which of the following best defines premium? - ANSWERSThe 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? - ANSWERSStatutory
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. - ANSWERSKevin'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 - ANSWERS90
Which of the following statements best describes the Law of Large Numbers? -
ANSWERSThe 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? - ANSWERSIndemnification
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? -
ANSWERS$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. -
ANSWERSRisk 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. - ANSWERSMaintaining
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: - ANSWERStortfeasor.
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? -
ANSWERSThe 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? - ANSWERSConditions
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? - ANSWERSThe 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? - ANSWERSA
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: - ANSWERSRes Ipsa Loquitur
, When an applicant for a homeowners insurance policy lists the address, size, and
description of his home, he is providing: - ANSWERSrepresentations.
What is a reserve, in insurance terms? - ANSWERSA pool of collected premiums that
the insurer sets aside to pay claims
Jason's auto policy states that the insurer may cancel coverage if a premium is more
than 30 days late. However, Jason is currently more than 30 days late, and has been so
five times in the last year, and his insurer has done nothing about it. When Jason gets
into an accident and files a claim, which of the following is most likely to happen? -
ANSWERSThe insurer will pay the claim because of the implied waiver they have made
by not canceling Jason's policy the previous times he was late with his payments.
Which of the following best describes the insurance concept of "exposure"? -
ANSWERSThe possibility of damage or loss
Which of the following describes a contract in which only one party makes a promise to
perform? - ANSWERSUnilateral Contract
Strict liability - ANSWERSholds a person liable for his actions regardless of how much
care he demonstrates.
Which of the following statements about the principle of estoppel is TRUE? -
ANSWERSEstoppel protects the insured party from an insurer who initially approves
coverage, but then later denies coverage after the insured pays for repairs.
Sovereign immunity restricts an individual's ability to file a lawsuit against: -
ANSWERSthe government
Which of the following activities is considered a speculative risk? - ANSWERSBuying a
lottery ticket
The conditions page in an insurance contract may allow a lender all of the following
provisions EXCEPT: - ANSWERSallowing the lender to cancel the insurance policy at
any time.
When would a default judgment occur? - ANSWERSWhen a defendant does not
answer a complaint
Charlotte's son just turned 16 and got his driver's license. She wants him to be covered,
so she adds him to her auto insurance policy. Where would this addition be found in
Charlotte's policy? - ANSWERSEndorsements
When Zach intentionally burned down Matt's restaurant, Matt's insurer paid the claim
and then pursued subrogation. Matt is furious about the incident and wants to sue Zach.
