Alabama Adjuster Exam Part 2 (Updated 2025/2026
Study Guide & Practice Questions)
Define: Claimant - correct answerA person or entity that requests indemnification for
losses under the terms of an insurance policy
Define: Adjuster - correct answerPerson who investigates, evaluates, and negotiates
claims arising under insurance contracts
Define: Adjusting - correct answerThe process of comparing a claimant's losses to the
promises made in an insurance policy
Define: Staff adjuster - correct answerSalaried employee of an adjuster
Define: Independent adjuster - correct answerSelf-employed, contracts with insurers or
bureaus, paid by schedule, or time + expense
Define: Public adjuster - correct answerHired by the insured, usually paid commission
Define: Emergency adjuster - correct answerTemporarily licensed to service the many
claims arising from catastrophes
After Jerry pulled the fire alarm, the indoor sprinkler system came on and flooded the
offices at Elliot Designs, causing thousands of dollars in damage. Elliot Designs filed a
claim with KLM Insurance, who dispatched Chrystal to investigate and process the
claim. Who is the claimant in this scenario?
A. KLM Insurance
B. Jerry
C. Chrystal
D. Elliot Designs - correct answerD. Elliot Designs
After a storm demolished Greg's house, his insurance company sent an adjuster out to
adjust his claim. After investigating Greg's claim, the adjuster offered him a settlement
which Greg felt was too low. Not knowing much about property insurance, Greg wans a
second opinion to make sure he is receiving what he deserves. Who might Greg hire to
help him with negotiating a fair settlement?
A. An independent adjuster
B. An insurance adjuster
C. A staff adjuster
D. A public adjuster - correct answerD. A public adjuster
,A severe storm rages through Oklahoma City, with tornados causing multiple square
miles worth of damage. All the licensed adjusters in the area are already occupied or
deployed to the scene. Who can the insurance commissioner look to for temporary help
resolving the rest of the claims from this storm?
A. Staff adjusters
B. Emergency adjusters
C. Independent adjusters
D. Public adjusters - correct answerB. Emergency adjusters
What is the title of the insurance professional who processes claims for compensation?
A. Insurance adjuster
B. Insurance salesman
C. Insurance broker
D. Insurance agent - correct answerA. Insurance adjuster
Jane is a salaried employee of XYZ Insurance. Working out of a regional office, Jane is
sent to deal with some of the most difficult claims in her area. What kind of adjuster is
Jane?
A. Emergency adjuster
B. Public adjuster
C. Staff adjuster
D. Independent adjuster - correct answerC. Staff adjuster
What kind of adjuster represents the insured rather than the insurer?
A. Public adjuster
B. Emergency adjuster
C. Independent adjuster
D. Staff adjuster - correct answerA. Public adjuster
What do you call a self-employed adjuster who works as a contractor for insurers or
claims-handling companies?
A. Public adjuster
B. Emergency adjuster
C. Independent adjuster
D. Staff adjuster - correct answerC. Independent adjuster
Define: Fiduciary agent - correct answerThe adjuster acts on behalf of principal and
must protect the principal's interests
Define: The power to bind - correct answerThe principal may have to honor the
adjuster's decisions, even when made in error
,Define: Report to the principal - correct answerThe adjuster must give the principal
detailed information on how each claim is going
What are the 3 types of adjuster reports? - correct answerPreliminary
Interim
Final
What is included in a preliminary report? - correct answerInitial investigation results,
timeline of claim, initial claim reserve
What is included in a final report? - correct answerFull details of claim investigation,
evidence, loss totals, and final claim resolution
What is included in an interim report? - correct answerUpdate on progress of claim due
at set intervals
An adjuster who acts as a fiduciary agent for an insurer must:
A. Represent the policyholder in her interactions with the insurer
B. Be a salaried employee of that insurer
C. Have authority granted by the insurer through a contract
D. Deal with the insurer's lawyer instead of directly with the insurer - correct answerC.
Have authority granted by the insurer through a contract
In which report to the principal would an adjuster include all witness statements and
other supporting evidence, in addition to the total settlement amount?
A. Final report
B. Preliminary report
C. Settlement report
D. Interim report - correct answerA. Final report
An adjuster who has just taken witness statements for a claim she is currently
investigating, but is not yet ready to close the claim, may submit to the insurer a / an:
A. Preliminary report
B. Witness deposition report
C. Interim report
D. Full report - correct answerC. Interim report
An adjuster acts as an agent for the insurer. As such, it is essential that the adjuster
understand:
A. Her duty to check in daily with the insurance company
B. That her words or actions may bind the insurance company
, C. Her duty to profit from every claim investigation
D. That she must always offer a settlement favorable to the claimant - correct answerB.
That her words or actions may bind the insurance company
Which of the following does not apply to the adjuster's responsibility of reporting to the
principal?
A. The reports should include any pertinent information about investigations the adjuster
has performed
B. The reports should be frequent and detailed
C. The reports should include advice on how to get out of paying covered claims
D. The reports should include information that would benefit the principal - correct
answerC. The reports should include advice on how to get out of paying covered claims
Julie works as an insurance adjuster for XYZ Insurance. While adjusting a claim, she
determines that the claimant is covered by his insurance contract and issues him a
settlement check for $5,000. The insured cashes the check and performs the repairs.
Two months later, the insurer reviews the file and realizes that the claimant's damages
were NOT covered by the policy. The insurer demands the settlement money back.
Which of the following best explains why the claimant will most likely not have to return
the money?
A. Subrogation does not allow the insurer to recover payment
B. The settlement payment was a warranty
C. Julie had the power to bind the insurer to her decision to pay the claim
D. Julie issued the settlement based on guarantees provided by the claimant - correct
answerC. Julie had the power to bind the insurer to her decision to pay the claim
Which item would NOT belong in an adjuster's initial report on a claim?
A. The date that the adjuster first contacts the claimant
B. A list of all known circumstances surrounding the claim
C. The final settlement amount
D. A detailed list of the damages being claimed - correct answerC. The final settlement
amount
Which of these is NOT an essential detail for an adjuster to include in a loss report?
A. The policy limit
B. The policy deductible
C. The policy number
D. The policy premium - correct answerD. The policy premium
What are the 3 types of authority? - correct answerExpress authority
implied authority
apparent authority
Study Guide & Practice Questions)
Define: Claimant - correct answerA person or entity that requests indemnification for
losses under the terms of an insurance policy
Define: Adjuster - correct answerPerson who investigates, evaluates, and negotiates
claims arising under insurance contracts
Define: Adjusting - correct answerThe process of comparing a claimant's losses to the
promises made in an insurance policy
Define: Staff adjuster - correct answerSalaried employee of an adjuster
Define: Independent adjuster - correct answerSelf-employed, contracts with insurers or
bureaus, paid by schedule, or time + expense
Define: Public adjuster - correct answerHired by the insured, usually paid commission
Define: Emergency adjuster - correct answerTemporarily licensed to service the many
claims arising from catastrophes
After Jerry pulled the fire alarm, the indoor sprinkler system came on and flooded the
offices at Elliot Designs, causing thousands of dollars in damage. Elliot Designs filed a
claim with KLM Insurance, who dispatched Chrystal to investigate and process the
claim. Who is the claimant in this scenario?
A. KLM Insurance
B. Jerry
C. Chrystal
D. Elliot Designs - correct answerD. Elliot Designs
After a storm demolished Greg's house, his insurance company sent an adjuster out to
adjust his claim. After investigating Greg's claim, the adjuster offered him a settlement
which Greg felt was too low. Not knowing much about property insurance, Greg wans a
second opinion to make sure he is receiving what he deserves. Who might Greg hire to
help him with negotiating a fair settlement?
A. An independent adjuster
B. An insurance adjuster
C. A staff adjuster
D. A public adjuster - correct answerD. A public adjuster
,A severe storm rages through Oklahoma City, with tornados causing multiple square
miles worth of damage. All the licensed adjusters in the area are already occupied or
deployed to the scene. Who can the insurance commissioner look to for temporary help
resolving the rest of the claims from this storm?
A. Staff adjusters
B. Emergency adjusters
C. Independent adjusters
D. Public adjusters - correct answerB. Emergency adjusters
What is the title of the insurance professional who processes claims for compensation?
A. Insurance adjuster
B. Insurance salesman
C. Insurance broker
D. Insurance agent - correct answerA. Insurance adjuster
Jane is a salaried employee of XYZ Insurance. Working out of a regional office, Jane is
sent to deal with some of the most difficult claims in her area. What kind of adjuster is
Jane?
A. Emergency adjuster
B. Public adjuster
C. Staff adjuster
D. Independent adjuster - correct answerC. Staff adjuster
What kind of adjuster represents the insured rather than the insurer?
A. Public adjuster
B. Emergency adjuster
C. Independent adjuster
D. Staff adjuster - correct answerA. Public adjuster
What do you call a self-employed adjuster who works as a contractor for insurers or
claims-handling companies?
A. Public adjuster
B. Emergency adjuster
C. Independent adjuster
D. Staff adjuster - correct answerC. Independent adjuster
Define: Fiduciary agent - correct answerThe adjuster acts on behalf of principal and
must protect the principal's interests
Define: The power to bind - correct answerThe principal may have to honor the
adjuster's decisions, even when made in error
,Define: Report to the principal - correct answerThe adjuster must give the principal
detailed information on how each claim is going
What are the 3 types of adjuster reports? - correct answerPreliminary
Interim
Final
What is included in a preliminary report? - correct answerInitial investigation results,
timeline of claim, initial claim reserve
What is included in a final report? - correct answerFull details of claim investigation,
evidence, loss totals, and final claim resolution
What is included in an interim report? - correct answerUpdate on progress of claim due
at set intervals
An adjuster who acts as a fiduciary agent for an insurer must:
A. Represent the policyholder in her interactions with the insurer
B. Be a salaried employee of that insurer
C. Have authority granted by the insurer through a contract
D. Deal with the insurer's lawyer instead of directly with the insurer - correct answerC.
Have authority granted by the insurer through a contract
In which report to the principal would an adjuster include all witness statements and
other supporting evidence, in addition to the total settlement amount?
A. Final report
B. Preliminary report
C. Settlement report
D. Interim report - correct answerA. Final report
An adjuster who has just taken witness statements for a claim she is currently
investigating, but is not yet ready to close the claim, may submit to the insurer a / an:
A. Preliminary report
B. Witness deposition report
C. Interim report
D. Full report - correct answerC. Interim report
An adjuster acts as an agent for the insurer. As such, it is essential that the adjuster
understand:
A. Her duty to check in daily with the insurance company
B. That her words or actions may bind the insurance company
, C. Her duty to profit from every claim investigation
D. That she must always offer a settlement favorable to the claimant - correct answerB.
That her words or actions may bind the insurance company
Which of the following does not apply to the adjuster's responsibility of reporting to the
principal?
A. The reports should include any pertinent information about investigations the adjuster
has performed
B. The reports should be frequent and detailed
C. The reports should include advice on how to get out of paying covered claims
D. The reports should include information that would benefit the principal - correct
answerC. The reports should include advice on how to get out of paying covered claims
Julie works as an insurance adjuster for XYZ Insurance. While adjusting a claim, she
determines that the claimant is covered by his insurance contract and issues him a
settlement check for $5,000. The insured cashes the check and performs the repairs.
Two months later, the insurer reviews the file and realizes that the claimant's damages
were NOT covered by the policy. The insurer demands the settlement money back.
Which of the following best explains why the claimant will most likely not have to return
the money?
A. Subrogation does not allow the insurer to recover payment
B. The settlement payment was a warranty
C. Julie had the power to bind the insurer to her decision to pay the claim
D. Julie issued the settlement based on guarantees provided by the claimant - correct
answerC. Julie had the power to bind the insurer to her decision to pay the claim
Which item would NOT belong in an adjuster's initial report on a claim?
A. The date that the adjuster first contacts the claimant
B. A list of all known circumstances surrounding the claim
C. The final settlement amount
D. A detailed list of the damages being claimed - correct answerC. The final settlement
amount
Which of these is NOT an essential detail for an adjuster to include in a loss report?
A. The policy limit
B. The policy deductible
C. The policy number
D. The policy premium - correct answerD. The policy premium
What are the 3 types of authority? - correct answerExpress authority
implied authority
apparent authority
