Texas Public Adjuster License Exam (3-20) | Texas
Public Insurance Adjuster Licensing Study Guide &
Exam Prep 2026/2027 | Texas 3-20 Public Adjuster
Exam Review, Property & Casualty Insurance,
Claims Investigation, Policy Interpretation, Loss
Valuation, Property Damage, Claims Handling,
Texas Insurance Code, Adjuster Ethics, Licensing
Rules, Unfair Claims Practices, Documentation,
Negotiation, Practice Questions, Answers & Detailed
Rationales
Question 1: According to the Texas Insurance Code, what is the maximum
contingent fee a public adjuster may charge for their services?
A. 5% of the total insurance settlement
B. 10% of the amount of the insurance settlement on the claim
C. 15% of the amount recovered, only if approved by the insured
D. 20% of the first $50,000 of the claim and 5% thereafter
CORRECT ANSWER: B. 10% of the amount of the insurance settlement on the
claim
Rationale: The Texas Insurance Code explicitly limits the contingent fee a public
adjuster may receive to 10 percent of the amount of the insurance settlement on the
claim. This is a statutory cap designed to protect consumers from excessive fees.
Charging a percentage above this limit is a violation of state law and could lead to
disciplinary action .
Question 2: Who does a public insurance adjuster primarily represent during
the claims process?
A. The insurance company
B. The policyholder (insured)
C. The reinsurer
D. The Texas Department of Insurance
CORRECT ANSWER: B. The policyholder (insured)
Rationale: By statutory definition, a public adjuster acts on behalf of an insured in
negotiating for or effecting the settlement of a claim. This distinguishes them from
company adjusters (who work for the insurer) and independent adjusters (who are hired
by the insurer). The public adjuster's fiduciary duty is to the policyholder .
Question 3: Under Texas law, how long is a public adjuster license valid before
it must be renewed?
A. One year from the date of issuance
B. Two years from the date of issuance
,C. Three years from the date of issuance
D. Four years from the date of issuance
CORRECT ANSWER: B. Two years from the date of issuance
Rationale: A license issued to a public adjuster in Texas expires on the second
anniversary of the date of issuance. To renew the license, the holder must file a renewal
application with the required fee and provide evidence of having completed the
mandatory continuing education requirements for that licensing period .
Question 4: A public adjuster must complete how many hours of continuing
education per two-year license period?
A. 15 hours
B. 20 hours
C. 24 hours
D. 30 hours
CORRECT ANSWER: D. 30 hours
Rationale: Each license holder is required to complete at least 30 hours of continuing
education courses for each two-year license period. This requirement ensures that
public adjusters remain current on industry developments, laws, and ethical standards.
The Commissioner of Insurance prescribes the specific requirements for these courses .
Question 5: What is the primary purpose of the Texas laws regulating public
adjusters?
A. To increase the profitability of the insurance industry
B. To protect consumers from potential exploitation and ensure adjusters are qualified
C. To reduce the number of claims filed against insurance companies
D. To promote the use of contractors over licensed adjusters
CORRECT ANSWER: B. To protect consumers from potential exploitation and
ensure adjusters are qualified
Rationale: The Texas Legislature enacted Chapter 4102 of the Insurance Code to close a
gap in the regulatory scheme and address concerns that unscrupulous contractors and
others were preying on unwary Texans, particularly in the aftermath of catastrophic
weather events. The regulations mandate licensing to ensure that public adjusters are
qualified and have the necessary knowledge to properly represent insureds .
Question 6: If an unlicensed person acts as a public adjuster, what is the legal
status of a contract they enter into with an insured?
A. The contract is fully enforceable
B. The contract is void
C. The contract is valid but unenforceable after one year
D. The contract is only valid if the insured requests it in writing
CORRECT ANSWER: B. The contract is void
,Rationale: Texas law provides that contracts involving unlicensed public adjusters are
void. This provision serves as a strong incentive for compliance with licensing
requirements and protects the public by ensuring that individuals negotiating claims on
their behalf are properly credentialed and subject to regulatory oversight .
Question 7: What is the "dual role" prohibition for public adjusters in Texas?
A. A public adjuster cannot be both a real estate agent and an adjuster
B. A contractor cannot act as a public adjuster or advertise to adjust claims for any
property for which the contractor is providing or may provide contracting services
C. A public adjuster cannot represent both the insured and the insurer in the same claim
D. A public adjuster cannot be licensed as both a property and casualty agent
CORRECT ANSWER: B. A contractor cannot act as a public adjuster or
advertise to adjust claims for any property for which the contractor is
providing or may provide contracting services
Rationale: The Texas Insurance Code specifically prohibits a person from serving in a
dual role as both a contractor and a public adjuster in connection with property subject
to an insurance claim. This is considered an impermissible conflict of interest. The
prohibition applies even if the contractor holds a public adjuster license. This rule was
recently upheld as constitutional by the Texas Supreme Court in Texas Dep't of Ins. v.
Stonewater Roofing Co. .
Question 8: Which of the following is NOT a qualification requirement for a
public adjuster license applicant?
A. Being at least 18 years of age
B. Passing a written examination prescribed by the Commissioner
C. Being a Texas resident for at least two years prior to application
D. Possessing sufficient experience or training in the assessment of property values and
losses
CORRECT ANSWER: C. Being a Texas resident for at least two years prior to
application
Rationale: Texas law does not impose a two-year residency requirement for public
adjuster license applicants. Texas issues licenses to both residents and nonresidents who
meet the application requirements. The key qualifications include being at least 18 years
of age, passing the required examination, demonstrating sufficient experience or
training, and filing the necessary surety bond or other security .
Question 9: Which type of coverage helps pay for additional costs required by
updated building codes after a loss?
A. Inland Marine Coverage
B. Ordinance or Law Coverage
C. Collision Coverage
D. Medical Payments Coverage
, CORRECT ANSWER: B. Ordinance or Law Coverage
Rationale: Ordinance or Law Coverage is an important endorsement that helps cover
the additional costs incurred to bring a damaged building into compliance with current
building codes or ordinances. This is particularly relevant in older properties where
repairs or rebuilding after a loss may trigger code upgrade requirements, and standard
property policies typically exclude these additional costs .
Question 10: Under Texas law, what is the minimum age requirement to apply
for a public adjuster license?
A. 18 years of age
B. 21 years of age
C. 25 years of age
D. There is no minimum age requirement
CORRECT ANSWER: A. 18 years of age
Rationale: Texas law mandates that all applicants for a public adjuster license must be at
least 18 years of age at the time of application. This age requirement is a fundamental
eligibility criterion that must be met before an applicant can be considered for licensure .
Question 11: In the context of insurance, what does the principle of indemnity
mean?
A. The insured must pay a penalty for filing a claim
B. The insured is restored to approximately the same financial condition as before the
loss, without creating a financial gain
C. The insured can profit from an insurance claim if they negotiate properly
D. The insurance company has the right to cancel the policy at any time
CORRECT ANSWER: B. The insured is restored to approximately the same
financial condition as before the loss, without creating a financial gain
Rationale: The principle of indemnity is a foundational concept in insurance. It aims to
compensate the insured for the actual financial loss suffered, placing them back in the
position they were in immediately before the loss occurred. It strictly prevents the
insured from profiting from the insurance claim, as this could create a moral hazard and
undermine the purpose of insurance .
Question 12: According to the Texas Public Adjuster Exam Content Outline,
what percentage of the exam is devoted to "Insurance Regulation"?
A. 10%
B. 15%
C. 18%
D. 25%
CORRECT ANSWER: A. 10%
Public Insurance Adjuster Licensing Study Guide &
Exam Prep 2026/2027 | Texas 3-20 Public Adjuster
Exam Review, Property & Casualty Insurance,
Claims Investigation, Policy Interpretation, Loss
Valuation, Property Damage, Claims Handling,
Texas Insurance Code, Adjuster Ethics, Licensing
Rules, Unfair Claims Practices, Documentation,
Negotiation, Practice Questions, Answers & Detailed
Rationales
Question 1: According to the Texas Insurance Code, what is the maximum
contingent fee a public adjuster may charge for their services?
A. 5% of the total insurance settlement
B. 10% of the amount of the insurance settlement on the claim
C. 15% of the amount recovered, only if approved by the insured
D. 20% of the first $50,000 of the claim and 5% thereafter
CORRECT ANSWER: B. 10% of the amount of the insurance settlement on the
claim
Rationale: The Texas Insurance Code explicitly limits the contingent fee a public
adjuster may receive to 10 percent of the amount of the insurance settlement on the
claim. This is a statutory cap designed to protect consumers from excessive fees.
Charging a percentage above this limit is a violation of state law and could lead to
disciplinary action .
Question 2: Who does a public insurance adjuster primarily represent during
the claims process?
A. The insurance company
B. The policyholder (insured)
C. The reinsurer
D. The Texas Department of Insurance
CORRECT ANSWER: B. The policyholder (insured)
Rationale: By statutory definition, a public adjuster acts on behalf of an insured in
negotiating for or effecting the settlement of a claim. This distinguishes them from
company adjusters (who work for the insurer) and independent adjusters (who are hired
by the insurer). The public adjuster's fiduciary duty is to the policyholder .
Question 3: Under Texas law, how long is a public adjuster license valid before
it must be renewed?
A. One year from the date of issuance
B. Two years from the date of issuance
,C. Three years from the date of issuance
D. Four years from the date of issuance
CORRECT ANSWER: B. Two years from the date of issuance
Rationale: A license issued to a public adjuster in Texas expires on the second
anniversary of the date of issuance. To renew the license, the holder must file a renewal
application with the required fee and provide evidence of having completed the
mandatory continuing education requirements for that licensing period .
Question 4: A public adjuster must complete how many hours of continuing
education per two-year license period?
A. 15 hours
B. 20 hours
C. 24 hours
D. 30 hours
CORRECT ANSWER: D. 30 hours
Rationale: Each license holder is required to complete at least 30 hours of continuing
education courses for each two-year license period. This requirement ensures that
public adjusters remain current on industry developments, laws, and ethical standards.
The Commissioner of Insurance prescribes the specific requirements for these courses .
Question 5: What is the primary purpose of the Texas laws regulating public
adjusters?
A. To increase the profitability of the insurance industry
B. To protect consumers from potential exploitation and ensure adjusters are qualified
C. To reduce the number of claims filed against insurance companies
D. To promote the use of contractors over licensed adjusters
CORRECT ANSWER: B. To protect consumers from potential exploitation and
ensure adjusters are qualified
Rationale: The Texas Legislature enacted Chapter 4102 of the Insurance Code to close a
gap in the regulatory scheme and address concerns that unscrupulous contractors and
others were preying on unwary Texans, particularly in the aftermath of catastrophic
weather events. The regulations mandate licensing to ensure that public adjusters are
qualified and have the necessary knowledge to properly represent insureds .
Question 6: If an unlicensed person acts as a public adjuster, what is the legal
status of a contract they enter into with an insured?
A. The contract is fully enforceable
B. The contract is void
C. The contract is valid but unenforceable after one year
D. The contract is only valid if the insured requests it in writing
CORRECT ANSWER: B. The contract is void
,Rationale: Texas law provides that contracts involving unlicensed public adjusters are
void. This provision serves as a strong incentive for compliance with licensing
requirements and protects the public by ensuring that individuals negotiating claims on
their behalf are properly credentialed and subject to regulatory oversight .
Question 7: What is the "dual role" prohibition for public adjusters in Texas?
A. A public adjuster cannot be both a real estate agent and an adjuster
B. A contractor cannot act as a public adjuster or advertise to adjust claims for any
property for which the contractor is providing or may provide contracting services
C. A public adjuster cannot represent both the insured and the insurer in the same claim
D. A public adjuster cannot be licensed as both a property and casualty agent
CORRECT ANSWER: B. A contractor cannot act as a public adjuster or
advertise to adjust claims for any property for which the contractor is
providing or may provide contracting services
Rationale: The Texas Insurance Code specifically prohibits a person from serving in a
dual role as both a contractor and a public adjuster in connection with property subject
to an insurance claim. This is considered an impermissible conflict of interest. The
prohibition applies even if the contractor holds a public adjuster license. This rule was
recently upheld as constitutional by the Texas Supreme Court in Texas Dep't of Ins. v.
Stonewater Roofing Co. .
Question 8: Which of the following is NOT a qualification requirement for a
public adjuster license applicant?
A. Being at least 18 years of age
B. Passing a written examination prescribed by the Commissioner
C. Being a Texas resident for at least two years prior to application
D. Possessing sufficient experience or training in the assessment of property values and
losses
CORRECT ANSWER: C. Being a Texas resident for at least two years prior to
application
Rationale: Texas law does not impose a two-year residency requirement for public
adjuster license applicants. Texas issues licenses to both residents and nonresidents who
meet the application requirements. The key qualifications include being at least 18 years
of age, passing the required examination, demonstrating sufficient experience or
training, and filing the necessary surety bond or other security .
Question 9: Which type of coverage helps pay for additional costs required by
updated building codes after a loss?
A. Inland Marine Coverage
B. Ordinance or Law Coverage
C. Collision Coverage
D. Medical Payments Coverage
, CORRECT ANSWER: B. Ordinance or Law Coverage
Rationale: Ordinance or Law Coverage is an important endorsement that helps cover
the additional costs incurred to bring a damaged building into compliance with current
building codes or ordinances. This is particularly relevant in older properties where
repairs or rebuilding after a loss may trigger code upgrade requirements, and standard
property policies typically exclude these additional costs .
Question 10: Under Texas law, what is the minimum age requirement to apply
for a public adjuster license?
A. 18 years of age
B. 21 years of age
C. 25 years of age
D. There is no minimum age requirement
CORRECT ANSWER: A. 18 years of age
Rationale: Texas law mandates that all applicants for a public adjuster license must be at
least 18 years of age at the time of application. This age requirement is a fundamental
eligibility criterion that must be met before an applicant can be considered for licensure .
Question 11: In the context of insurance, what does the principle of indemnity
mean?
A. The insured must pay a penalty for filing a claim
B. The insured is restored to approximately the same financial condition as before the
loss, without creating a financial gain
C. The insured can profit from an insurance claim if they negotiate properly
D. The insurance company has the right to cancel the policy at any time
CORRECT ANSWER: B. The insured is restored to approximately the same
financial condition as before the loss, without creating a financial gain
Rationale: The principle of indemnity is a foundational concept in insurance. It aims to
compensate the insured for the actual financial loss suffered, placing them back in the
position they were in immediately before the loss occurred. It strictly prevents the
insured from profiting from the insurance claim, as this could create a moral hazard and
undermine the purpose of insurance .
Question 12: According to the Texas Public Adjuster Exam Content Outline,
what percentage of the exam is devoted to "Insurance Regulation"?
A. 10%
B. 15%
C. 18%
D. 25%
CORRECT ANSWER: A. 10%
