Herb owns a processing plant outside of town that services all the local farmers. He's been
using over-the-road transportation but wants to streamline his business by using the rail-
roads. He contacts ABC Railway Transport and the two come to an agreement: ABC Railway
will run a sidetrack onto Herb's business premises, if Herb agrees not to hold ABC Railway
responsible for certain liabilities that could result from the sidetrack's use. This agreement
would fall under __________ in Herb's Commercial General Liability policy. - ANSWER In-
sured Contracts
What is a reserve, in insurance terms? - ANSWER A pool of collected premiums that the
insurer sets aside to pay claims
Norris borrows Arnold's truck to pick up some lumber from the hardware store. On the way
to the store, Norris collides with a car, injuring the three people inside. The driver suffers
$15,000 in injuries, one passenger suffers $25,000, and the other passenger suffers $20,000.
Norris has a PAP with liability limits of 50/100/50, and Arnold's policy has liability limits of
25/50/10. How much will the primary policy pay for the injuries? - ANSWER $50,000
Alice is an adjuster and is currently negotiating a settlement with Gale. Which of the follow-
ing actions that Alice could take would be disrespectful towards Gale, and thus hinder the
negotiation process? - ANSWER Assuming to know what Gale wants
Which of the following automobile components is NOT covered by a Mechanical Breakdown
Insurance policy? - ANSWER Tires (Drive train, steering assembly, engine ARE covered by
a mechanical breakdown insurance policy)
Which of the following statements applies to replacement cost valuation?
A. An actual cash value policy will pay out more than a replacement cost value policy.
1
,B. Replacement cost valuations take into account the depreciated value of an item.
C. Under replacement cost valuation, insurers may safeguard the principle of indemnity by
requiring policyholders to replace insured items before making full reparations.
D. Replacement cost valuations provide cheaper premiums for the policyholder than an ac-
tual cash value insurance policy. - ANSWER Under replacement cost valuation, insurers
may safeguard the principle of indemnity by requiring policyholders to replace insured items
before making full reparations.
James and Eric want to play a prank on Bob for Halloween. They dress up like headless
horsemen and throw ignited Jack O'Lanterns at his house. Unfortunately, one of the in-
flamed pumpkins catches the porch on fire, causing $3,500 in damages. Bob doesn't find this
tomfoolery very entertaining and sues both James and Eric for the cost of the repairs. In
court, James and Eric would be:
A. intentional tort.
B. a joint tortfeasor.
C. a tortfeasor.
D. the plaintiffs. - ANSWER A Joint Tortfeasor
Under the Longshore and Harbor Workers' Compensation Act, how much would the surviv-
ing spouse of a deceased worker receive in benefits? - ANSWER ??
Kirk is adjusting an auto liability claim submitted by Christine, who has retained an attorney
to represent her in the claim. Kirk should: - ANSWER ??
2
,An individual must re-qualify for her license under the Arkansas Insurance Code: - AN-
SWER To get her license reinstated after a suspension.
After a rain storm, Nancy realizes that she left her bedroom windows open the entire time.
Now there is extensive water damage to her area rug and furniture, and the laptop that had
been sitting on her desk is ruined. Nancy has a Broad Form homeowners policy, so she calls
her insurance company and files a claim. What is the likely result of Nancy's claim? - AN-
SWER The insurer will not cover any of the damage, since Nancy left the windows open.
When would a default judgment occur? - ANSWER When a defendant does not answer a
complaint
After recovering money through subrogation demands, the insurer may not take money
from the insured's recovered deductible to cover its own expenses unless: - ANSWER it
hired an attorney to recover the money.
Which item would NOT belong in an adjuster's initial report on a claim?
A. A list of all known circumstances surrounding the claim
B. The date that the adjuster first contacts the claimant
C. The final settlement amount
D. A detailed list of the damages being claimed - ANSWER The final settlement amount
Agnes purchased a home ten years ago in an upcoming neighborhood for $75,000. The
home's value has since tripled to $225,000! Agnes still has $25,000 left on her mortgage, but
has increased her dwelling coverage to $225,000 to keep up with the home's appreciation.
When it burns to the ground in a fire, her mortgage company wants to be indemnified
3
, $75,000 because the value of the home has tripled. Which policy condition protects against
this claim? - ANSWER Insurable Interest
Which of the following does not describe one of the implied warranties of Ocean Marine In-
surance? - ANSWER The vessel must not travel in stormy or otherwise dangerous
weather conditions.
Patricia is a new adjuster whose primary goal is her employer's financial benefit. This goal
makes Patricia susceptible to the ethical challenge of: - ANSWER bias for the insurer.
Phil heads over to visit his friend Josh, who is sick with the flu. While at the house, Josh fails
to cover his mouth when he coughs and Phil ends up contacting the flu. Phil files a claim
with Josh's insurer for medical expenses and lost income while Phil is out sick from work.
The insurer denies the claim because: - ANSWER disease transmitted from the insured to
a third party is excluded
Allen works as an adjuster for Insurer B. Which of the following is FALSE?
A. Insurer B is bound by Allen's words or decisions that he makes while on the job.
B. Allen is an agent of Insurer B.
C. Insurer B has given Allen express authority to perform on its behalf.
D. Allen is a salaried employee who only sells Insurer B's products. - ANSWER Allen is a
salaried employee who only sells Insurer B's products
Sarah suffers acute back pain. Not satisfied with the specialists in her own network, Sarah
elects to see a back specialist outside the network established by her healthcare provider.
Her healthcare provider pays the amount that the same appointment would reasonably
have cost with an in-network specialist, and Sarah has to pay the additional costs out of her
4
using over-the-road transportation but wants to streamline his business by using the rail-
roads. He contacts ABC Railway Transport and the two come to an agreement: ABC Railway
will run a sidetrack onto Herb's business premises, if Herb agrees not to hold ABC Railway
responsible for certain liabilities that could result from the sidetrack's use. This agreement
would fall under __________ in Herb's Commercial General Liability policy. - ANSWER In-
sured Contracts
What is a reserve, in insurance terms? - ANSWER A pool of collected premiums that the
insurer sets aside to pay claims
Norris borrows Arnold's truck to pick up some lumber from the hardware store. On the way
to the store, Norris collides with a car, injuring the three people inside. The driver suffers
$15,000 in injuries, one passenger suffers $25,000, and the other passenger suffers $20,000.
Norris has a PAP with liability limits of 50/100/50, and Arnold's policy has liability limits of
25/50/10. How much will the primary policy pay for the injuries? - ANSWER $50,000
Alice is an adjuster and is currently negotiating a settlement with Gale. Which of the follow-
ing actions that Alice could take would be disrespectful towards Gale, and thus hinder the
negotiation process? - ANSWER Assuming to know what Gale wants
Which of the following automobile components is NOT covered by a Mechanical Breakdown
Insurance policy? - ANSWER Tires (Drive train, steering assembly, engine ARE covered by
a mechanical breakdown insurance policy)
Which of the following statements applies to replacement cost valuation?
A. An actual cash value policy will pay out more than a replacement cost value policy.
1
,B. Replacement cost valuations take into account the depreciated value of an item.
C. Under replacement cost valuation, insurers may safeguard the principle of indemnity by
requiring policyholders to replace insured items before making full reparations.
D. Replacement cost valuations provide cheaper premiums for the policyholder than an ac-
tual cash value insurance policy. - ANSWER Under replacement cost valuation, insurers
may safeguard the principle of indemnity by requiring policyholders to replace insured items
before making full reparations.
James and Eric want to play a prank on Bob for Halloween. They dress up like headless
horsemen and throw ignited Jack O'Lanterns at his house. Unfortunately, one of the in-
flamed pumpkins catches the porch on fire, causing $3,500 in damages. Bob doesn't find this
tomfoolery very entertaining and sues both James and Eric for the cost of the repairs. In
court, James and Eric would be:
A. intentional tort.
B. a joint tortfeasor.
C. a tortfeasor.
D. the plaintiffs. - ANSWER A Joint Tortfeasor
Under the Longshore and Harbor Workers' Compensation Act, how much would the surviv-
ing spouse of a deceased worker receive in benefits? - ANSWER ??
Kirk is adjusting an auto liability claim submitted by Christine, who has retained an attorney
to represent her in the claim. Kirk should: - ANSWER ??
2
,An individual must re-qualify for her license under the Arkansas Insurance Code: - AN-
SWER To get her license reinstated after a suspension.
After a rain storm, Nancy realizes that she left her bedroom windows open the entire time.
Now there is extensive water damage to her area rug and furniture, and the laptop that had
been sitting on her desk is ruined. Nancy has a Broad Form homeowners policy, so she calls
her insurance company and files a claim. What is the likely result of Nancy's claim? - AN-
SWER The insurer will not cover any of the damage, since Nancy left the windows open.
When would a default judgment occur? - ANSWER When a defendant does not answer a
complaint
After recovering money through subrogation demands, the insurer may not take money
from the insured's recovered deductible to cover its own expenses unless: - ANSWER it
hired an attorney to recover the money.
Which item would NOT belong in an adjuster's initial report on a claim?
A. A list of all known circumstances surrounding the claim
B. The date that the adjuster first contacts the claimant
C. The final settlement amount
D. A detailed list of the damages being claimed - ANSWER The final settlement amount
Agnes purchased a home ten years ago in an upcoming neighborhood for $75,000. The
home's value has since tripled to $225,000! Agnes still has $25,000 left on her mortgage, but
has increased her dwelling coverage to $225,000 to keep up with the home's appreciation.
When it burns to the ground in a fire, her mortgage company wants to be indemnified
3
, $75,000 because the value of the home has tripled. Which policy condition protects against
this claim? - ANSWER Insurable Interest
Which of the following does not describe one of the implied warranties of Ocean Marine In-
surance? - ANSWER The vessel must not travel in stormy or otherwise dangerous
weather conditions.
Patricia is a new adjuster whose primary goal is her employer's financial benefit. This goal
makes Patricia susceptible to the ethical challenge of: - ANSWER bias for the insurer.
Phil heads over to visit his friend Josh, who is sick with the flu. While at the house, Josh fails
to cover his mouth when he coughs and Phil ends up contacting the flu. Phil files a claim
with Josh's insurer for medical expenses and lost income while Phil is out sick from work.
The insurer denies the claim because: - ANSWER disease transmitted from the insured to
a third party is excluded
Allen works as an adjuster for Insurer B. Which of the following is FALSE?
A. Insurer B is bound by Allen's words or decisions that he makes while on the job.
B. Allen is an agent of Insurer B.
C. Insurer B has given Allen express authority to perform on its behalf.
D. Allen is a salaried employee who only sells Insurer B's products. - ANSWER Allen is a
salaried employee who only sells Insurer B's products
Sarah suffers acute back pain. Not satisfied with the specialists in her own network, Sarah
elects to see a back specialist outside the network established by her healthcare provider.
Her healthcare provider pays the amount that the same appointment would reasonably
have cost with an in-network specialist, and Sarah has to pay the additional costs out of her
4
