AdjusterPro Practice Exam – Questions With
Logical Solutions
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. Correct 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 Correct 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. Correct 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 Correct 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 Correct 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. Correct 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. Correct 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 Correct 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. Correct 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. Correct 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 Correct
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. Correct Answer - C. morale hazard.
Logical Solutions
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. Correct 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 Correct 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. Correct 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 Correct 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 Correct 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. Correct 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. Correct 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 Correct 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. Correct 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. Correct 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 Correct
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. Correct Answer - C. morale hazard.
