Insurance Adjuster Exam Questions and
Answers Latest Version 2025/2026.
How can insurance companies afford to pay for an individual's catastrophic loss? - ANS-The
insurer collects premiums from all policyholders and pools to pay the claims of the few
purpose of principle of indemnity - ANS-to prevent the insured from profiting from the loss
What is the reserve in the insurance term? - ANS-A pool of collected premiums that the
insurers sets aside to pay claims
Mark incurred $8,000 damage to his car in an accident. He received $8,000 from his insurance
company and $4,000 from the other driver. By receiving a profit from the loss, Mark could be in
violation of: - ANS-the principle of indemnity
which of the following best describes insurance? - ANS-An economic device used to protect
against the risk of unforeseen and extraordinary financial loss
which of the following best describes the premium? - ANS-The fee paid by the insured in the
exchange for an insurance policy
A legally binding contract where the risk of financial loss is transferred in exchange for
premiums is called - ANS-an insurance policy
which of the following referred to being restored to the financial condition you were in before a
loss? - ANS-indemnification
if covered by insurance policy, an insured may be indemnified for all the following except: -
ANS-home remodels
Which of the following is not an requirement for a legally binding contract - ANS-it must be a
notarized document
Which of these scenarios is not an example of indemnification - ANS-When trying to renew her
dog license, Ellen has to pay a penalty to the city for letting its rabies vaccination lapse
, Which of the following best defines "insurer"? - ANS-A company, group, or government agency
offerer financial protection
Tom decides to purchase an insurance policy to protect his home. According to the definition of
insurance of personal property, which of the following most accurately describes what tom's
insurance actually protects? - ANS-Tom's financial interest in the home
Bobby just purchased an insurance policy for his home from XYZ Insurance. Which of the
following would be a reason this policy may not be legally binding? - ANS-Bobby has been
diagnosed as mentally incompetent
Which of the following is not true about an insurance policy? - ANS-The concept of utmost good
faith only applies to the insured
What is the primary distinguishing characteristic of a contract of adhesion? - ANS-A contract of
adhesion implies an unequal balance power in the creation of the contract
An insurance applicant revealing his convictions for drunk driving to an insurer is an example of:
- ANS-utmost good faith
Matt offers to lend Shawn his truck so he can pick up some stones for his landscaping project.
Matt tells Shawn, "Don't worry, my truck is insured." What is matt really saying? - ANS-Matt's
financial interests in the truck is protected, should covered loss occurred
Mark wants to add "towing and labor costs" coverage to his auto insurance policy. Under which
part of the policy would he add this coverage? - ANS-Endorsements
Charlottes's just turned 16 and got his driver's license. She wants him to be covered, so she
added him to his auto insurance policy. Where would this addition be founded in Charlotte's
policy? - ANS-Endorsements
Janelle wants to change her coverage for personal property in her homeowner's policy from
ACV replacement cost. She visits her local insurance agent and asks him to make this change
to her policy while keeping all the other details the same. Which section of her policy would the
agent use to make this change? - ANS-Endorsements
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? -
ANS-Condition
In which section of the policy might you find the following statement? "Property Address: 246
Rosemead Drive." - ANS-Declarations
Answers Latest Version 2025/2026.
How can insurance companies afford to pay for an individual's catastrophic loss? - ANS-The
insurer collects premiums from all policyholders and pools to pay the claims of the few
purpose of principle of indemnity - ANS-to prevent the insured from profiting from the loss
What is the reserve in the insurance term? - ANS-A pool of collected premiums that the
insurers sets aside to pay claims
Mark incurred $8,000 damage to his car in an accident. He received $8,000 from his insurance
company and $4,000 from the other driver. By receiving a profit from the loss, Mark could be in
violation of: - ANS-the principle of indemnity
which of the following best describes insurance? - ANS-An economic device used to protect
against the risk of unforeseen and extraordinary financial loss
which of the following best describes the premium? - ANS-The fee paid by the insured in the
exchange for an insurance policy
A legally binding contract where the risk of financial loss is transferred in exchange for
premiums is called - ANS-an insurance policy
which of the following referred to being restored to the financial condition you were in before a
loss? - ANS-indemnification
if covered by insurance policy, an insured may be indemnified for all the following except: -
ANS-home remodels
Which of the following is not an requirement for a legally binding contract - ANS-it must be a
notarized document
Which of these scenarios is not an example of indemnification - ANS-When trying to renew her
dog license, Ellen has to pay a penalty to the city for letting its rabies vaccination lapse
, Which of the following best defines "insurer"? - ANS-A company, group, or government agency
offerer financial protection
Tom decides to purchase an insurance policy to protect his home. According to the definition of
insurance of personal property, which of the following most accurately describes what tom's
insurance actually protects? - ANS-Tom's financial interest in the home
Bobby just purchased an insurance policy for his home from XYZ Insurance. Which of the
following would be a reason this policy may not be legally binding? - ANS-Bobby has been
diagnosed as mentally incompetent
Which of the following is not true about an insurance policy? - ANS-The concept of utmost good
faith only applies to the insured
What is the primary distinguishing characteristic of a contract of adhesion? - ANS-A contract of
adhesion implies an unequal balance power in the creation of the contract
An insurance applicant revealing his convictions for drunk driving to an insurer is an example of:
- ANS-utmost good faith
Matt offers to lend Shawn his truck so he can pick up some stones for his landscaping project.
Matt tells Shawn, "Don't worry, my truck is insured." What is matt really saying? - ANS-Matt's
financial interests in the truck is protected, should covered loss occurred
Mark wants to add "towing and labor costs" coverage to his auto insurance policy. Under which
part of the policy would he add this coverage? - ANS-Endorsements
Charlottes's just turned 16 and got his driver's license. She wants him to be covered, so she
added him to his auto insurance policy. Where would this addition be founded in Charlotte's
policy? - ANS-Endorsements
Janelle wants to change her coverage for personal property in her homeowner's policy from
ACV replacement cost. She visits her local insurance agent and asks him to make this change
to her policy while keeping all the other details the same. Which section of her policy would the
agent use to make this change? - ANS-Endorsements
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? -
ANS-Condition
In which section of the policy might you find the following statement? "Property Address: 246
Rosemead Drive." - ANS-Declarations
