Texas All-Lines Adjuster course Final Exam Questions With Correct Answers

A severe thunderstorm damaged a policyholder's residence. He called and asked how long it would be before he receives payment for his claim. Which of the following would NOT be an appropriate response? - Answer We have 6 months to reach a final settlement with you. Janelle has just graduated college and is interested in becoming an adjuster. she would like to be able to handle any type of claim. The most comprehensive type of license would be: - Answer All-Lines Jack and Rebecca own a vacation home on Galveston Island which they have insured under an HO-3 policy. After a week long winter ski trip to Aspen, they return home to find their house burglarized and their 50" TV, computer equipment, jewelry, a valuable gun collection and some fishing equipment stolen. How would their HO-3 policy respond to this loss? - Answer The entire theft loss would be covered under Coverage C. subject the policy limits and to certain limitations. The oldest form of insurance known to exist is: - Answer Ocean Marine Insurance How is an injured employee's weekly compensation rate for Temporary Income Benefits (TIBS) calculated under Texas Work Comp laws? - Answer The comp rate = (AWW - Post Injury Earnings) × 70% In workers compensation, an "injury is defined to mean: - Answer personal injury or death by "accident", arising out of work performed in the course of employment. Justin is a Property adjuster for XYZ Insurance Company. He receives a claim involving the theft loss of various types of property. Justin's initial responsibility upon investigating the loss is to first determine: - Answer If coverage exists Jim is a public adjuster. He has an arrangement with a water extraction company who pays him a commission of 10% for every referral that Jim sends their way. Which of the following statements is correct? - Answer This arrangement reflects a breach of ethical conduct and a violation that could jeopardize Jim's licensure. Which of the following would NOT be covered under Coverage C Personal Property? - Answer Your 10-year old German Shepherd chokes on a bone and passes away. A tornado strikes a duplex that is insured under a Dwelling (DP-3) policy. Which of the following would NOT be covered by the Dwelling policy? - Answer Damage to another duplex right next door, also owned by the landlord. Common carriers (i.e. 18-wheelers, trains, planes, etc.) are responsible for damage to customer goods they transport EXCEPT for damages resulting from: - Answer Acts of God You have just started your career handling Texas workers' compensation claims. Which one of the following WOULD BE considered a violation of the Texas Unfair Claim Settlement Practices Act? - Answer Not responding to an employee's calls because you're overworked and the claim involves complex issues you just don't feel like addressing. Which type of bond would be used to cover the exposure to employee theft? - Answer Fidelity bond Garrett wants a Texas All Lines Adjuster's license. Which of the following actions will be necessary for Garrett to secure such a license? - Answer Pass a state qualifying exam or pre-licensing course that is certified by the Texas Department of Insurance that includes an approved, comprehensive final examination of 150 questions, and attach the Certificate of Completion to an application for licensure. The DP.3 Dwelling form is an "Open Risk" policy. This means that: - Answer All risks of direct physical loss are covered unless they are excluded Assume your home caught fire due to a faulty electrical device. and one month after the fire you receive a bill from the fire department for $450.00 for responding to the fire. Would this be paid under your homeowner's policy? - Answer Yes. It is called Fire Department Service Charge and is an Additional Coverage provided under the policy, limited to $500. Generally, if an employee suffers an occupational injury and accepts workers' compensation benefits, he or she: - Answer Gives up the right to sue the employer for personal injury and pain and suffering. The employee can only make claim for workers' compensation benefits. Janelle has a Texas Personal Auto Policy with 30/60/25 policy limits. She hits a car with 4 occupants, all of whom are hurt. They all sue. Each of the injured parties receives identical verdicts of $40,000. Under Janelle's bodily injury liability coverage, what is the total amount that the company would pay for the injuries to these plaintiffs? - Answer $60,000 A person or entity who guarantees the performance or payment of one party who is obligated by contract to another is called a: - Answer Surety If your insured were to ask you if a Dwelling policy would pay for his loss of rental income after a fire loss while the property is being repaired. what would you tell him? - Answer Yes, and it's called Fair Rental Value coverage and is available under Coverage D. Fred runs a convenience store that sells gasoline. One day a customer pulls away from the pump while the gas is still pumping, breaks the pump line and causes gasoline to escape all over the parking lot and into the storm drain. Fred files a claim under his commercial property policy. Damage to repair the pump totals $545.00 and $257.00 worth of gasoline was pumped out before anyone noticed and stopped the pump. The local HazMat team was called out by the authorities to clean up the parking lot and the storm drain. Fred received a bill from the County for $12.850.00 for the clean up. He sends the bill to you to pay. What kind of coverage is available to Fred as a commercial property extension of coverage needed to pay this loss? - Answer Pollution Clean Up and Removal A cargo ship loaded with lumber and sailing from Seattle, Washington to Tokyo, Japan, encountered "the perfect storm" during its trip across the Pacific Ocean. Some of the lumber was thrown overboard to save the ship. This action is called: - Answer Jettison Roberto owns a house on Lake Conroe. The house is insured with an HO-3 policy. During a storm, a tornado touches down and severely damages the house. Because the house is untenable and it will take 2 months to complete repairs, Roberto moves Into a local Marriott Residence Inn. Under which of the following coverages would Roberto be able to recover the additional expense of the Marriott and other costs? - Answer Coverage D: Loss of Use Dwelling policies: - Answer provide basic property protection for individuals who want to protect their financial interest in a property Which of the following perils or exposure are Fidelity bonds generally used to insure against? - Answer Embezzlement To be compensable under workers' compensation laws, most jurisdictions require that an injury: - Answer arise out of and in the course of employment. A customer of the Sunshine Grocery Store hit her leg on a low shelf in the isle of the store. The claim was assigned to you for handling. After contacting the claimant and taking a statement, you learn that the injury was minor and, at most, an inconvenience. Medical expenses were only $525.00 and there were no complications. You think the best way to handle the case Is to offer to pay her medical bills without admitting liability and try backing away without committing to any kind of settlement. How would you do it? - Answer Tell her you'll pay her bills and ask her to call you if she has any questions. You would then wish her well and, when the bills arrive, pay them under the business's Medical Payments coverage. You just started working as an adjuster with handling Texas 1st and 3rd party property damage claims. Which one of the following would NOT be an example of an unfair claim settlement practice? - Answer Deciding not to take a statement from an insured under oath in the investigation of a 1st party property claim. Joe is a property adjuster employed by State Farm. He receives a loss assignment to handle a grease fire claim for an insured. Upon contacting the insured, she advises that she has hired her own adjuster (Pete) to represent her in this matter. Pete will be providing Joe with the estimates of repair and has the insured's authority to negotiate the final settlement of the loss. Pete's fee will be paid out of the final settlement amount. Based upon this information, joe and Pete are which of the following types of adjusters? - Answer Joe is a Company Adjuster and Pete is a Public Adjuster You have, just received a new property claim from an insured homeowner who suffered damage from a fire that burned down 30% of the property. During the initial contact, what is the most important thing you should tell the insured to do while waiting for you or your appraiser to arrive? - Answer "Take any and all reasonable steps to protect your property from further damage. These costs are included as part of your coverage and I will reimburse you as part of your claim.' Which of the following would NoT be included in the definition of the term "Building" under a typical Commercial Building and Personal Property policy? - Answer Desks and personal business computers for each of the business' employees. A Texas adjuster must secure how many continuing education credits in every two year period to maintain continued licensure? - Answer 24 Alicia has a home valued at $740,000 that is insured by an HO-3 policy with Coverage A limits of $675.000, Coverage B limits of $67,500 and Coverage C limits of $337,500 and a deductible of $1,000. One summer day a severe storm rolled in with a lot of high winds. Alicia unplugged all of the major electrical devices and rode the storm out in her living room. When it was over she went outside to inspect her property, only to find her detached 2-car garage in back yard gone with only a slab remaining. Alicia immediately called her carrier to report the loss. For which perils does Alicia's HO-3 coverage form provide protection? - Answer The HO-3 policy provides "All Risk" coverage for Coverage A which includes all perils, including windstorm, unless excluded. Harry's Diner suffers severe damage from hurricane winds that blow in all of the windows at the front of the diner and rip off a portion of his roof. It will be about thirty days before he can complete the necessary repairs and re-open the diner. His commercial policy provides standard Business income protection. How long must Harry wait before this coverage begins to kick in and provide loss of profits? - Answer 72 hours after the direct damage to the premises. cameron owns a home in west Texas and a severe hail storm recently caused substantial damage to his roof. Cameron filed a claim with his homeowner's carrier. While on the phone reporting the claim, he asked how long it would be before he might expect payment. Which of the following would NOT be an appropriate response? - Answer "We have 6 months to reach a final settlement with you." An adjuster whose license has expired for more than 90 days can obtain a new license without taking the licensing examination as long as the license has not been expired for more than: - Answer One year A typical commercial building and personal property policy provides additional coverage for all of the following types of property EXCEPT? - Answer Money, cash, or securities John and Jerrica own a Ford Expedition that has a Texas Personal Auto Policy with full coverage, including "uninsured/underinsured" motorist coverage. Why would they want "uninsured/underinsured" coverage? - Answer To protect them from loss for injuries they sustain if another at-fault driver is uninsured or carries less coverage than that needed to pay for the insured's injuries. Of the following statements, which is NOT true? - Answer Adjuster licensure is really just a formality in Texas. Its requirements are not monitored very closely and they are merely given lip service. You own a small Bar & Grill. What kind of insurance would you need to protect you from claims that you served too much liquor to a customer and that customer's intoxication caused bodily injury or property damage? - Answer Liquor Liability coverage XYZ Laundry has a commercial property policy with your company. One day an XYZ employee dropped a cigarette into a waste basket without putting it out completely and a fire destroyed half the store before it was extinguished. The fire department sent the laundry a bill for $626.00 for their response to put out the fire. Will the policy cover this expense and how much? - Answer Yes. Fire Department Service Charge is included in a commercial property policy up to $1,000, thus covering the entire bill. Imagine that you own a home in North Dallas with your spouse and 2 children. You insure the house with a typical HO-3 policy. Which of the following situations would NOT be covered under Coverage C: Personal Property? - Answer The dead fish when the insured accidentally overturns his tropical fish tank and all fish die from lack of oxygen. Ben and Sandy insured their home ten years ago for $160,000 which was its value at the time. They never again bothered to think about the value of their home or the amount of insurance. Two weeks ago a burning log rolled out of their fireplace and caused the house to catch fire. The CV of the cost to repair the home is $41,725. The ACV of the repairs is $27,500. The adjuster finds that the value of their home is now $275,000. There is a deductible of $500. The policy has an 80% coinsurance clause. Considering the amount of insurance carried vs. how much should have been carried, how much should the adjuster pay the couple? - Answer $30.094.25 Luke decided to take up sky-diving. His girlfriend tried to convince him not to do so, as she was afraid he could be injured or killed. Luke acknowledged the risk but told her that he was going to do it anyway. This would be known as what? - Answer Assumption of Risk Two years ago Dustin purchased a state-of-the-art PC with all the latest bells and whistles. One afternoon during a thunderstorm. lightning struck Dustin's house and the electrical surge damaged his PC beyond repair. Dustin demanded that his insurance company pay him $5,575.00, the amount that a brand new PC would cost today with the latest operating system and features, even though his exact PC model with the original operating system and features could be purchased today for $3,250. When the company refused to pay him what he wanted, Dustin sued and the case went to trial in small claims court. The judge ruled in favor of the insurance company, stating that an insured should not profit from loss. The judge's ruling is an example of what well-known insurance principle? - Answer The principle of indemnity A grocery store has endorsed its Commercial Property Policy with Crime and Employee Dishonesty Coverage. If, over a period of time, one of the store's cashiers were to steal over $1,500 from cash purchases not processed through the register which of the following coverages would reimburse the insured for such a loss? - Answer Employee theft or dishonesty Jerome was driving on the interstate between Dallas and Ft. Worth and decided to change into the left lane of travel. He did not see a car approaching from the rear in the left lane at a high rate of speed. The car sideswiped Jerome's car and sent it spinning until it ultimately crashed into a retainer wall. The other driver accused Jerome of negligence in improperly changing lanes. Which of the following would NOT be a defense that Jerome could possibly use against the driver and his claim of negligence? - Answer Breach of Warranty Nicki is a company adjuster for Nutmeg Property and Casualty. She works within Nutmeg's "Auto Liability Unit" handling third-party, bodily injury and property damage claims. As such, her responsibilities include all of the following EXCEPT: - Answer Notify insured's of non-renewals and policy cancellation The State of Texas will Issue all of the following types of adjuster licenses except: - Answer Casualty and Surety In May, the owners of the Bayside Inn closed to take a vacation. They boarded up the motel and didn't return until in late August, only to find that someone had broken into the motel, stolen their computers, security system, and the televisions in each room. They incurred $9,500 in property damage to the building and $16.350 in theft losses. The Inn has a commercial Building and Personal Property coverage form with a $500 deductible with Replacement Cost coverage. Is the loss covered and, if so. what would you pay? - Answer It would not be covered. If a property is left vacant for more than 60 consecutive days, theft and vandalism coverages are suspended. Houston Real Estate Services is insured by a Commercial Package Policy that includes a standard suite of property and lability coverages. A fire loss results in damage to one of its commercial buildings. The adjuster's repair appraisal totals $180.450 Before repairs can begin, all debris must be removed at a cost of $19,500. Ignoring any policy limit, deductible, or coinsurance issues, how much will the policy pay to remove the debris and will it affect the amount payable for repairs to the building? - Answer The policy will pay the maximum debris removal coverage of $10,000 in addition to the repair estimate of $180,450, less any applicable deductible. Dustin has an HO-3 policy covering his personal residence, One day his septic tank backed up, causing a flood of blackwater throughout his home. He was forced to live in a hotel while the home was cleaned and the damage was repaired. Select the one TRUE statement from the following? - Answer Dustin's hotel expenses would be covered under Coverage D: Loss of Use A shipper wants to obtain insurance coverage on both outgoing and incoming shipments while in transit. This type of coverage is called: - Answer Cargo Coverage The ultimate goal in handling any claim is to get it closed..for good. Which of the following is NOT an appropriate end to a claim? - Answer Denying a claim in hopes that the claimant will go away, and if not forcing the claimant to go to trial in hopes of compromising the case for a smaller percentage of the claim. An award of "compensatory damages" would NOT include which of the following? - Answer A jury verdict of $1.000.000 against the defendant to punish them for their reprehensible actions in causing the loss. Stacy is a new adjuster handling Texas workers compensation claims. Her supervisor asked her which of the following WOULD be considered a violation of the Texas Unfair Claim Settlement Practices Act. Which of the following is correct? - Answer Not responding to a claimant's calls due to an extra heavy case load. Whether it is done by a carrier or its adjuster, a breach of contract is taken very seriously. This could be done through non-payment, or even non compliance with policy requirements. Which of the following consequences would a carrier face due to a breach of contract? - Answer If found gullty of a breach of contract, the carrier could be punished with a "bad faith" verdict that would cost it millions of dollars. Your home is insured with an HO-3 policy that carries a $60.000 limit for Coverage C (Personal Property) with a $500 deductible and a Replacement Cost endorsement. You lose personal property valued at $6,435.00 in a kitchen fire. How much would you expect to be paid under your homeowner's policy? - Answer $5,935 In Texas, other than emergency adjusters, who must have an adjuster's license? - Answer All adjusters, regardiess of type of claim handled or source of employment Jefferson Auto Sales and Service has has a Business Auto policy with Symbol #1 for Liability and Uninsured Motorist coverage and Symbol #2 for Physical Damage coverage. The business owns only one vehicle, the owner's 2019 Cadillac Escalade. All of the following claims would be covered under jefferson's Business Auto policy EXCEPT: - Answer One of Jefferson's employees is injured while changing a tire on his boss's Escalade. The Texas Homeowners' policy that most closely resembles the ISO HO-5, providing all-risk coverage for both the building rand personal property is the: - Answer HO-C An insurance policy is often referred to as a contract of adhesion. This means that: - Answer If the wording or language in an insurance policy is vague or ambiguous. the interpretation of its meaning shall be in favor of the party who did not control its terms, i.e. the policyholder. Continental Claims Adjusting Services is an independent adjusting company that has just opened an office in Houston to prepare for the upcoming hurricane season. They are researching Texas regulations regarding "poor or inappropriate claims practice behaviors" and find that, in Texas, these behaviors are regulated by: - Answer The Texas Unfair Claim Settlement Practices Act