West Virginia Adjusters Exam 2 UPDATED
ACTUAL Exam Questions and CORRECT
Answers
Chris and Matt are playing a friendly game of one-on-one basketball in Matt's driveway. When
Chris goes up for a slam dunk, Matt accidentally trips him while attempting to block the shot.
Chris lands hard and tears the ACL in his left knee. Matt's homeowners liability insurance will
cover Chris' medical bills because: - CORRECT ANSWER - Matt's actions were
unintentional, but negligent.
Which of the following statements about insurance is FALSE? - CORRECT ANSWER - If
the policy limit is greater than the value of the insured item, the claimant may profit from a total
loss.
Which of the following statements applies to actual cash value? - CORRECT ANSWER -
Actual cash value generally reflects the fair market value of an item.
Policy rescission means: - CORRECT ANSWER - declaring that the policy was never a valid
agreement.
Skip's Convenience Store suffers severe fire damage after a gas pump explodes. The adjuster
asks if the emergency shutoff system, which is required by the policy, was properly maintained
and functional at the time of the accident. Skip says "yes," even though the system was actually
broken at the time. Which of the following statements is true? - CORRECT ANSWER - Skip
is guilty of misrepresentation and violating a warranty, so the insurer could deny the claim.
A(n) ________ is a bilateral statement that must be signed by the policyholder. It says that the
insurer may continue to investigate a claim or defend the policyholder in court, but that it still
keeps its right to deny coverage. - CORRECT ANSWER - non-waiver agreement
All of the following scenarios may be covered under a liability insurance policy, except: -
CORRECT ANSWER - A homeowner's son breaks her window with a baseball while playing
in the back yard.
, 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: - CORRECT ANSWER - the principle of
indemnity.
Darren's SUV cost him $28,500 when he bought it new five years ago, but it would cost $29,600
to replace it today. The vehicle has an annual depreciation of $1,200. Darren loses control while
driving too fast around a bend in the road and flips his vehicle, totaling it. Assuming Darren's
auto insurance policy pays ACV, how much can he expect to receive in indemnification for this
claim? - CORRECT ANSWER - $23,600
A power surge sparks a small electrical fire in an office building. The electrical fire triggers the
automatic sprinkler system. The water from the sprinklers soaks the carpets and shorts-out all the
computers, causing thousands of dollars in damage. The office must close for two months during
repairs. The cost of renting a temporary office space while the physical damage is repaired is
considered: - CORRECT ANSWER - an indirect loss.
During a storm, lightning strikes a tree in Norman's back yard, causing it to fall on his house and
damage his roof. In this case, Norman's fallen tree is considered: - CORRECT ANSWER - a
direct loss.
Which one of the following is NOT an essential section that's included in every insurance
policy? - CORRECT ANSWER - Endorsements
All of the following are true about the Law of Large Numbers in the insurance industry, except: -
CORRECT ANSWER - The larger the number of units insured, the more an insurer will have
to pay out.
PAP holders have several duties after a loss. Which of the following is NOT one of them? -
CORRECT ANSWER - The policyholder must complete a driving safety course.
Part D of the Personal Auto Policy does NOT cover: - CORRECT ANSWER - freezing.
ACTUAL Exam Questions and CORRECT
Answers
Chris and Matt are playing a friendly game of one-on-one basketball in Matt's driveway. When
Chris goes up for a slam dunk, Matt accidentally trips him while attempting to block the shot.
Chris lands hard and tears the ACL in his left knee. Matt's homeowners liability insurance will
cover Chris' medical bills because: - CORRECT ANSWER - Matt's actions were
unintentional, but negligent.
Which of the following statements about insurance is FALSE? - CORRECT ANSWER - If
the policy limit is greater than the value of the insured item, the claimant may profit from a total
loss.
Which of the following statements applies to actual cash value? - CORRECT ANSWER -
Actual cash value generally reflects the fair market value of an item.
Policy rescission means: - CORRECT ANSWER - declaring that the policy was never a valid
agreement.
Skip's Convenience Store suffers severe fire damage after a gas pump explodes. The adjuster
asks if the emergency shutoff system, which is required by the policy, was properly maintained
and functional at the time of the accident. Skip says "yes," even though the system was actually
broken at the time. Which of the following statements is true? - CORRECT ANSWER - Skip
is guilty of misrepresentation and violating a warranty, so the insurer could deny the claim.
A(n) ________ is a bilateral statement that must be signed by the policyholder. It says that the
insurer may continue to investigate a claim or defend the policyholder in court, but that it still
keeps its right to deny coverage. - CORRECT ANSWER - non-waiver agreement
All of the following scenarios may be covered under a liability insurance policy, except: -
CORRECT ANSWER - A homeowner's son breaks her window with a baseball while playing
in the back yard.
, 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: - CORRECT ANSWER - the principle of
indemnity.
Darren's SUV cost him $28,500 when he bought it new five years ago, but it would cost $29,600
to replace it today. The vehicle has an annual depreciation of $1,200. Darren loses control while
driving too fast around a bend in the road and flips his vehicle, totaling it. Assuming Darren's
auto insurance policy pays ACV, how much can he expect to receive in indemnification for this
claim? - CORRECT ANSWER - $23,600
A power surge sparks a small electrical fire in an office building. The electrical fire triggers the
automatic sprinkler system. The water from the sprinklers soaks the carpets and shorts-out all the
computers, causing thousands of dollars in damage. The office must close for two months during
repairs. The cost of renting a temporary office space while the physical damage is repaired is
considered: - CORRECT ANSWER - an indirect loss.
During a storm, lightning strikes a tree in Norman's back yard, causing it to fall on his house and
damage his roof. In this case, Norman's fallen tree is considered: - CORRECT ANSWER - a
direct loss.
Which one of the following is NOT an essential section that's included in every insurance
policy? - CORRECT ANSWER - Endorsements
All of the following are true about the Law of Large Numbers in the insurance industry, except: -
CORRECT ANSWER - The larger the number of units insured, the more an insurer will have
to pay out.
PAP holders have several duties after a loss. Which of the following is NOT one of them? -
CORRECT ANSWER - The policyholder must complete a driving safety course.
Part D of the Personal Auto Policy does NOT cover: - CORRECT ANSWER - freezing.
