AdjusterPro - Practice Exam Questions With
Correct Answers
Stephen's insurer denied his claim because the peril was not covered. But, according to Stephen's
understanding of the policy, his loss should be covered, so he filed a dispute. During the trial, the
jury agreed that the policy language was open to interpretation, so they decided in favor of
Stephen. This is because:
A. insurance policies are contracts of adhesion.
B. insurance policies are conditional contracts.
C. insurance policies are contracts of utmost good faith.
D. insurance policies are personal contracts. - answer✔A. insurance policies are contracts of
adhesion.
"We will provide the insurance described in this policy in return for the premium and compliance
with all applicable provisions of this policy." In which section of the insurance policy would this
statement be found?
A. Definitions
B. Declarations
C. Insuring Agreement
D. Endorsements - answer✔C. Insuring Agreement
Melinda's home sustained $6,500 in damage when Jared ran into it with his truck. Melinda
received $6,500 from her insurance company, and Jared also paid her $5,000. Melinda has now
profited from this loss and is in violation of:
A. the principle of subrogation.
B. federal law.
C. the principle of indemnity.
D. state law. - answer✔C. the principle of indemnity.
Sandra rear-ended Randy's car when he stopped quickly for a yellow light that she was sure they
were both going to make. The damage was minor, but Sandra was worried her premiums would
increase if the accident was reported, so she gave Randy $500 in an effort to keep it just between
the two of them. However, Randy filed the claim with his insurance company and received a
settlement check for $750. What has Randy violated?
A. The principle of insurable interest
B. The principle of subrogation
C. The principle of indemnity
D. The principle of loss minimization - answer✔C. The principle of indemnity
Darnell is applying for auto insurance with his agent. Currently, he only wants to get a minimal
amount of coverage to keep his premiums as low as possible, so he decides not to include
uninsured motorist coverage on his policy. His agent has him sign a document giving up his right
to this coverage. What is this called?
A. A warranty
B. An express waiver
C. A binder
D. An implied waiver - answer✔B. An express waiver
An insurance policy's declarations page contains all of the following, EXCEPT:
A. the deductible.
B. the dates of the policy term.
C. the perils insured against.
D. the coverage limit. - answer✔C. the perils insured against.
An economic device used to protect against the risk of realizing unforeseen and extraordinary
financial loss is called:
A. risk avoidance.
B. insurance.
C. indemnification.
D. subrogation. - answer✔B. insurance.
Which of the following does NOT constitute a legal termination of a contract offer?
A. Rejection by offeree
B. Request for more information
C. Termination by operation of law
D. Revocation by offeror - answer✔B. Request for more information
The Principle of Indemnity is designed to prevent:
A. having multiple payees on a policy.
B. an insured from making a profit.
C. insurers from making a profit.
D. subrogation. - answer✔B. an insured from making a profit.
Jason's auto policy states that the insurer may cancel coverage if Jason pays a premium 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 would be true?
A. The principle of utmost good faith prevents the insurer from denying coverage in this case.
B. The principle of utmost good faith allows the insurer to deny coverage in this case.
C. The principle of estoppel prevents the insurer from denying coverage in this case.
D. The principle of estoppel allows the insurer to deny coverage in this case. - answer✔C. The
principle of estoppel prevents the insurer from denying coverage in this case.
Lee, the owner of Antonia's Bakery, wants to expand operations and start catering. He hires
Geoffrey to manage the new catering department and quickly realizes that he might have made a
mistake. Geoffrey makes inappropriate comments to other employees, seems to be dishonest in
his dealings with money, and is a reckless driver. How would Lee effectively practice risk
avoidance in this case?
A. Fire Geoffrey
B. Have a company-wide meeting about appropriate language in the workplace
C. Purchase employee theft coverage
D. Hire another new employee to be Geoffrey's supervisor - answer✔A. Fire Geoffrey
Natalie's brakes have been squealing for several months. Every time she drives her car, she's
reminded that she needs to have them replaced, but she forgets all about it as soon as she gets out
of the car. Natalie's actions can be considered a:
A. physical hazard.
B. peril.
C. morale hazard.
D. risk. - answer✔C. morale hazard.
The law of large numbers states that:
A. insuring a greater number of units increases the likelihood of loss for the insurer.
B. insuring a greater number of units increases the accuracy of the insurer's loss predictions.
C. insuring a greater number of units increases the effect of statistical outliers on loss
predictions.
D. insuring a greater number of units makes the insurer's losses less predictable. - answer✔B.
insuring a greater number of units increases the accuracy of the insurer's loss predictions.
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