ADJUSTER PRO UPDATED TEST PAPER QUESTIONS AND
SOLUTIONS RATED A+
✔✔After an earthquake, Jake's home is still standing, but it is a little shaken. The
damage is not extensive but Jake wants to cash in on the situation, so he takes a
sledgehammer to some of his extra belongings and adds them to his claim. Jake has
committed: - ✔✔Property insurance fraud
✔✔Which of the following is an example of a hazard? - ✔✔Sandra's home is in an area
of Los Angeles that is often hit by earthquakes
✔✔Risk avoidance is a risk management technique that: - ✔✔Eliminates risk
✔✔An "occurrence" is defined as: - ✔✔An unexpected event that causes loss
✔✔When Sally applies for an auto policy, her agent issues her a _______ so that she
can benefit from insurance protection while he underwrites the policy. - ✔✔Binder
✔✔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? -
✔✔Wind
✔✔During a storm, lightning strikes a tree in Harry's yard and starts a fire that spreads
to his shed where he keeps all his equipment for his landscaping business. In addition
to the shed, Harry has to purchase all new equipment to stay in business. The cost to
replace the equipment would be considered: - ✔✔A direct loss
✔✔Clark is filling out an application for an insurance policy. The application asks for his
birth date, and Clark writes 1/24/67. His actual birthday is 1/24/63, but he likes to
appear younger so he uses a different date. This would be called: -
✔✔Misrepresentation
✔✔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? -
✔✔The 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.
✔✔What is a binder? - ✔✔Temporary coverage for an insurance applicant until the
policy is issued
✔✔In order to qualify for an insurance policy, Lydia's Fine Jewels must agree to have a
security guard on the premises 24/7. This is called a: - ✔✔Warranty
,✔✔Which of the following statements about the principle of estoppel is TRUE? -
✔✔Estoppel protects the insured party from an insurer who initially approves coverage,
but then later denies coverage after the insured pays for repairs.
✔✔Driving home after a 14-hour shift Sam falls asleep at the wheel and plows into
Sandra's home, causing extensive damage to the East wall and roof. As a result,
Sandra and her family must move into a hotel until the repairs are completed. The cost
of staying in a hotel is: - ✔✔An indirect loss
✔✔When Jim is involved in an accident, he immediately calls his insurer and files a
claim. When his insurer denies the claim, it is required to provide Jim with: - ✔✔A
reason for denying the claim
✔✔Sue decides to get a valued insurance policy on her antique car. She and her
insurance company agree to a value of $85,000. Three years later, the car is destroyed
when a tree falls on it in a parking lot. The car depreciates at $2,000 a year, and its
replacement cost is 100,000. Ignoring any deductible, how much can Sue expect her
insurer to indemnify her? - ✔✔$85,000
✔✔When Zach purposefully burned down Matt's restaurant, Matt's insurer paid the
claim and then went after Zach for the damages. Matt is furious about what Zach did
and wants to sue him as well. Why is it NOT possible for Matt to sue Zach? - ✔✔Matt
has already received indemnification from his insurer
✔✔Jesse's home is worth $200,000 and he has a homeowners policy with a $160,000
limit. After a covered loss, Jesse is left with a total of $10,000 in damages. Assuming
the insurer requires the standard 80% level of insurance for coinsurance purposes, and
ignoring any deductibles, how much will Jesse receive in indemnification? - ✔✔$10,000
✔✔While making a right-hand turn from the right lane, Ben is sideswiped by Roxanne,
totaling the car he bought new 12 years ago for $15,000. Roxanne is judged to be at
fault. She has an auto policy with limits of 50/100/25 and a $500 deductible on her
collision coverage. Assuming Ben's car depreciates at a rate of $1,100 a year, how
much will Roxanne have to pay out of pocket when Ben files a claim against her insurer
for the damages? - ✔✔0
✔✔Which of the following does not have an insurable interest in Big Ed's Steak House,
a local restaurant? - ✔✔Jim, who regularly eats at Big Ed's Steak House because it's
his favorite restaurant.
✔✔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? - ✔✔The insurer pays $100,000; the aggregate limits is now
$200,000; and ABC Masonry must pay $50,000
✔✔A few weeks ago Christopher's garage was destroyed by an out of control motorist.
Fortunately, the motorist had sufficient liability insurance to cover the damages.
However, the insurer insists that Christopher's garage is worth far less than the
appraisals he has received from contractors. Christopher and insurer have gone back
and forth in negotiations for weeks, making little headway. Christopher decides it's time
to: - ✔✔issue a complaint against the policyholder
✔✔Ricky was watching a baseball game at XYZ stadium, when the railing on which he
was leaning gave way and he fell two stories. As a result of his fall, Ricky broke his back
and is now paralyzed from the waist down. Ricky sued the owners of XYZ stadium and
was awarded $150,000 to cover his medical bills and $2.5 million in _______ because
of the permanent nature of his injury. - ✔✔General damages
✔✔Sam is a claimant seeking damages from XYZ insurance. The XYZ adjuster comes
to meet with Sam to hear the circumstances of her injury. The adjuster determines that
Sam played an active role in her own injuries, and therefore XYZ Insurance will pay her
nothing at all for her injuries. What defense is the adjuster using? - ✔✔Contributory
Negligence
✔✔Strict Liability - ✔✔holds a person liable for his actions regardless of how much care
he demonstrates
✔✔Which of the following best describes a Fraternal Benefit Society? - ✔✔A fraternal
benefit society is a social organization based around common interests and beliefs.
✔✔The fee paid by the insured in exchange for an insurance policy is called a: -
✔✔Premium
✔✔A captive insurance company: - ✔✔exists solely to provide insurance for its parent
company
✔✔The purpose of the principle of indemnity is: - ✔✔to prevent an insured from making
a profit on a loss
✔✔Xavier owns a small insurance company. Recently the company won a bid to insure
a new housing development in Omaha, NE. His company can handle any claims that
arise, but if a series of tornados were to tear through the area and destroy the entire
development, Xavier's company would suffer financially. Which type of insurer could
help Xavier's company protect itself the most from this potential loss? - ✔✔Re-Insurer
✔✔In a ________, only one party is legally obligated to perform - ✔✔Unilateral contract
SOLUTIONS RATED A+
✔✔After an earthquake, Jake's home is still standing, but it is a little shaken. The
damage is not extensive but Jake wants to cash in on the situation, so he takes a
sledgehammer to some of his extra belongings and adds them to his claim. Jake has
committed: - ✔✔Property insurance fraud
✔✔Which of the following is an example of a hazard? - ✔✔Sandra's home is in an area
of Los Angeles that is often hit by earthquakes
✔✔Risk avoidance is a risk management technique that: - ✔✔Eliminates risk
✔✔An "occurrence" is defined as: - ✔✔An unexpected event that causes loss
✔✔When Sally applies for an auto policy, her agent issues her a _______ so that she
can benefit from insurance protection while he underwrites the policy. - ✔✔Binder
✔✔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? -
✔✔Wind
✔✔During a storm, lightning strikes a tree in Harry's yard and starts a fire that spreads
to his shed where he keeps all his equipment for his landscaping business. In addition
to the shed, Harry has to purchase all new equipment to stay in business. The cost to
replace the equipment would be considered: - ✔✔A direct loss
✔✔Clark is filling out an application for an insurance policy. The application asks for his
birth date, and Clark writes 1/24/67. His actual birthday is 1/24/63, but he likes to
appear younger so he uses a different date. This would be called: -
✔✔Misrepresentation
✔✔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? -
✔✔The 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.
✔✔What is a binder? - ✔✔Temporary coverage for an insurance applicant until the
policy is issued
✔✔In order to qualify for an insurance policy, Lydia's Fine Jewels must agree to have a
security guard on the premises 24/7. This is called a: - ✔✔Warranty
,✔✔Which of the following statements about the principle of estoppel is TRUE? -
✔✔Estoppel protects the insured party from an insurer who initially approves coverage,
but then later denies coverage after the insured pays for repairs.
✔✔Driving home after a 14-hour shift Sam falls asleep at the wheel and plows into
Sandra's home, causing extensive damage to the East wall and roof. As a result,
Sandra and her family must move into a hotel until the repairs are completed. The cost
of staying in a hotel is: - ✔✔An indirect loss
✔✔When Jim is involved in an accident, he immediately calls his insurer and files a
claim. When his insurer denies the claim, it is required to provide Jim with: - ✔✔A
reason for denying the claim
✔✔Sue decides to get a valued insurance policy on her antique car. She and her
insurance company agree to a value of $85,000. Three years later, the car is destroyed
when a tree falls on it in a parking lot. The car depreciates at $2,000 a year, and its
replacement cost is 100,000. Ignoring any deductible, how much can Sue expect her
insurer to indemnify her? - ✔✔$85,000
✔✔When Zach purposefully burned down Matt's restaurant, Matt's insurer paid the
claim and then went after Zach for the damages. Matt is furious about what Zach did
and wants to sue him as well. Why is it NOT possible for Matt to sue Zach? - ✔✔Matt
has already received indemnification from his insurer
✔✔Jesse's home is worth $200,000 and he has a homeowners policy with a $160,000
limit. After a covered loss, Jesse is left with a total of $10,000 in damages. Assuming
the insurer requires the standard 80% level of insurance for coinsurance purposes, and
ignoring any deductibles, how much will Jesse receive in indemnification? - ✔✔$10,000
✔✔While making a right-hand turn from the right lane, Ben is sideswiped by Roxanne,
totaling the car he bought new 12 years ago for $15,000. Roxanne is judged to be at
fault. She has an auto policy with limits of 50/100/25 and a $500 deductible on her
collision coverage. Assuming Ben's car depreciates at a rate of $1,100 a year, how
much will Roxanne have to pay out of pocket when Ben files a claim against her insurer
for the damages? - ✔✔0
✔✔Which of the following does not have an insurable interest in Big Ed's Steak House,
a local restaurant? - ✔✔Jim, who regularly eats at Big Ed's Steak House because it's
his favorite restaurant.
✔✔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? - ✔✔The insurer pays $100,000; the aggregate limits is now
$200,000; and ABC Masonry must pay $50,000
✔✔A few weeks ago Christopher's garage was destroyed by an out of control motorist.
Fortunately, the motorist had sufficient liability insurance to cover the damages.
However, the insurer insists that Christopher's garage is worth far less than the
appraisals he has received from contractors. Christopher and insurer have gone back
and forth in negotiations for weeks, making little headway. Christopher decides it's time
to: - ✔✔issue a complaint against the policyholder
✔✔Ricky was watching a baseball game at XYZ stadium, when the railing on which he
was leaning gave way and he fell two stories. As a result of his fall, Ricky broke his back
and is now paralyzed from the waist down. Ricky sued the owners of XYZ stadium and
was awarded $150,000 to cover his medical bills and $2.5 million in _______ because
of the permanent nature of his injury. - ✔✔General damages
✔✔Sam is a claimant seeking damages from XYZ insurance. The XYZ adjuster comes
to meet with Sam to hear the circumstances of her injury. The adjuster determines that
Sam played an active role in her own injuries, and therefore XYZ Insurance will pay her
nothing at all for her injuries. What defense is the adjuster using? - ✔✔Contributory
Negligence
✔✔Strict Liability - ✔✔holds a person liable for his actions regardless of how much care
he demonstrates
✔✔Which of the following best describes a Fraternal Benefit Society? - ✔✔A fraternal
benefit society is a social organization based around common interests and beliefs.
✔✔The fee paid by the insured in exchange for an insurance policy is called a: -
✔✔Premium
✔✔A captive insurance company: - ✔✔exists solely to provide insurance for its parent
company
✔✔The purpose of the principle of indemnity is: - ✔✔to prevent an insured from making
a profit on a loss
✔✔Xavier owns a small insurance company. Recently the company won a bid to insure
a new housing development in Omaha, NE. His company can handle any claims that
arise, but if a series of tornados were to tear through the area and destroy the entire
development, Xavier's company would suffer financially. Which type of insurer could
help Xavier's company protect itself the most from this potential loss? - ✔✔Re-Insurer
✔✔In a ________, only one party is legally obligated to perform - ✔✔Unilateral contract
