TEXAS ALL LINES ADJUSTER EXAM BRAND NEW!! 2025 (200+ QUESTIONS AND CORRECT ANSWERS)
VERIFIED ANSWERS.
Core Domains
1. Texas Insurance Code – Unfair Claims Settlement Practices Act
2. Texas Administrative Code (TAC) – Adjuster Licensing and Conduct
3. Property Insurance – HO Policies, Commercial Property, Valuation
4. Casualty Insurance – Auto, General Liability, Workers’ Compensation
5. Ethical Obligations and Standards of Conduct
6. Reserves, Estimates, and Claims Investigation
7. Bad Faith Law and Extra-Contractual Exposure
8. Catastrophe Response and Time Element Coverages
Introduction
This examination is designed to assess candidate readiness for the Texas All Lines Adjuster licensing exam. It
measures foundational knowledge of insurance contracts, Texas-specific regulations, ethical claims handling, and
real-world decision-making under the Texas Insurance Code and Administrative Code. The format includes
multiple-choice questions and scenario-based applications that emphasize practical adjustment skills, regulatory
compliance, and exposure to bad faith litigation. Each question provides a correct answer with a concise rationale.
Success requires integration of legal standards, coverage analysis, and professional judgment consistent with Texas
Department of Insurance expectations.
,SECTION ONE – QUESTIONS 1 TO 100
Question 1
Under the Texas Insurance Code Chapter 542 (Prompt Payment of Claims), how many business days does an
insurer have to acknowledge receipt of a claim?
A. 10 business days
B. 5 business days
C. 15 business days
D. 3 business days
🟢D
🔴 RATIONALE: Texas Insurance Code §542.055 requires insurers to acknowledge receipt of a claim within 3
business days, not including weekends or legal holidays.
Question 2
An adjuster fails to disclose a known material fact that reduces the insured’s recovery. This is most directly a
violation of which duty?
A. Duty of prompt payment
B. Duty of good faith and fair dealing
C. Duty to defend
D. Duty to indemnify
🟢B
,🔴 RATIONALE: The common law duty of good faith and fair dealing requires adjusters to deal honestly and not
conceal material facts. Nondisclosure that harms the insured is a classic bad faith indicator.
Question 3
A homeowner’s policy excludes earth movement. A foundation cracks due to a nearby sinkhole that opened
after heavy rain. The adjuster determines the sinkhole is the cause. What is the correct coverage decision?
A. Covered as water damage
B. Covered as hidden decay
C. Excluded as earth movement
D. Covered as collapse
🟢C
🔴 RATIONALE: Sinkholes are typically classified as earth movement under ISO HO policies and Texas filings.
Even if rain contributed, earth movement exclusions apply to sinkhole-related damage unless a separate
sinkhole endorsement is purchased.
Question 4
Under Texas law, which of the following is an unfair settlement practice?
A. Requesting a sworn proof of loss within 15 days
B. Offering less than demanded without explanation
C. Failing to attempt in good faith to effectuate a prompt settlement when liability is reasonably clear
D. Conducting a second inspection after repairs begin
, 🟢C
🔴 RATIONALE: Texas Insurance Code §541.060(a)(2)(A) prohibits failing to attempt prompt, fair settlement
when liability is reasonably clear. This is a core unfair claims settlement practice.
Question 5
An adjuster handles a claim for a friend in exchange for a 10% fee on the settlement. The adjuster is licensed. Is
this permissible?
A. Yes, if disclosed to the insured
B. Yes, if the insurer approves
C. No, adjusters cannot receive contingent fees based on claim payments
D. No, unless the fee is under 5%
🟢C
🔴 RATIONALE: TAC §19.4 prohibits adjusters from receiving any contingent fee based on the amount of
payment or settlement. Flat fees or hourly rates are permissible; percentage-of-recovery arrangements are not.
Question 6
Which type of damages is designed to punish an insurer for conscious disregard of an insured’s rights?
A. Compensatory damages
B. Consequential damages
C. Punitive damages
D. Incidental damages
VERIFIED ANSWERS.
Core Domains
1. Texas Insurance Code – Unfair Claims Settlement Practices Act
2. Texas Administrative Code (TAC) – Adjuster Licensing and Conduct
3. Property Insurance – HO Policies, Commercial Property, Valuation
4. Casualty Insurance – Auto, General Liability, Workers’ Compensation
5. Ethical Obligations and Standards of Conduct
6. Reserves, Estimates, and Claims Investigation
7. Bad Faith Law and Extra-Contractual Exposure
8. Catastrophe Response and Time Element Coverages
Introduction
This examination is designed to assess candidate readiness for the Texas All Lines Adjuster licensing exam. It
measures foundational knowledge of insurance contracts, Texas-specific regulations, ethical claims handling, and
real-world decision-making under the Texas Insurance Code and Administrative Code. The format includes
multiple-choice questions and scenario-based applications that emphasize practical adjustment skills, regulatory
compliance, and exposure to bad faith litigation. Each question provides a correct answer with a concise rationale.
Success requires integration of legal standards, coverage analysis, and professional judgment consistent with Texas
Department of Insurance expectations.
,SECTION ONE – QUESTIONS 1 TO 100
Question 1
Under the Texas Insurance Code Chapter 542 (Prompt Payment of Claims), how many business days does an
insurer have to acknowledge receipt of a claim?
A. 10 business days
B. 5 business days
C. 15 business days
D. 3 business days
🟢D
🔴 RATIONALE: Texas Insurance Code §542.055 requires insurers to acknowledge receipt of a claim within 3
business days, not including weekends or legal holidays.
Question 2
An adjuster fails to disclose a known material fact that reduces the insured’s recovery. This is most directly a
violation of which duty?
A. Duty of prompt payment
B. Duty of good faith and fair dealing
C. Duty to defend
D. Duty to indemnify
🟢B
,🔴 RATIONALE: The common law duty of good faith and fair dealing requires adjusters to deal honestly and not
conceal material facts. Nondisclosure that harms the insured is a classic bad faith indicator.
Question 3
A homeowner’s policy excludes earth movement. A foundation cracks due to a nearby sinkhole that opened
after heavy rain. The adjuster determines the sinkhole is the cause. What is the correct coverage decision?
A. Covered as water damage
B. Covered as hidden decay
C. Excluded as earth movement
D. Covered as collapse
🟢C
🔴 RATIONALE: Sinkholes are typically classified as earth movement under ISO HO policies and Texas filings.
Even if rain contributed, earth movement exclusions apply to sinkhole-related damage unless a separate
sinkhole endorsement is purchased.
Question 4
Under Texas law, which of the following is an unfair settlement practice?
A. Requesting a sworn proof of loss within 15 days
B. Offering less than demanded without explanation
C. Failing to attempt in good faith to effectuate a prompt settlement when liability is reasonably clear
D. Conducting a second inspection after repairs begin
, 🟢C
🔴 RATIONALE: Texas Insurance Code §541.060(a)(2)(A) prohibits failing to attempt prompt, fair settlement
when liability is reasonably clear. This is a core unfair claims settlement practice.
Question 5
An adjuster handles a claim for a friend in exchange for a 10% fee on the settlement. The adjuster is licensed. Is
this permissible?
A. Yes, if disclosed to the insured
B. Yes, if the insurer approves
C. No, adjusters cannot receive contingent fees based on claim payments
D. No, unless the fee is under 5%
🟢C
🔴 RATIONALE: TAC §19.4 prohibits adjusters from receiving any contingent fee based on the amount of
payment or settlement. Flat fees or hourly rates are permissible; percentage-of-recovery arrangements are not.
Question 6
Which type of damages is designed to punish an insurer for conscious disregard of an insured’s rights?
A. Compensatory damages
B. Consequential damages
C. Punitive damages
D. Incidental damages
