Adjuster Licensing Exam Practice
Questions And Correct Answers
(Verified Answers) Plus Rationale 2026
Q&A| Instant Download Pdf
1. A claims adjuster reviewing a property loss must primarily determine
which of the following before issuing payment?
A. The marketing value of the insured’s property
B. The insured’s preferred contractor selection
C. Whether the loss is covered under the policy terms
D. The insured’s credit history
The primary duty of an adjuster is to confirm coverage under the insurance
policy, including applicability of exclusions and conditions, before any
valuation or settlement occurs.
2. Which principle best describes the insurer’s obligation to restore an
insured to their financial position prior to a covered loss?
A. Indemnity
B. Subrogation
C. Contribution
D. Estoppel
,Indemnity is the core insurance principle that ensures compensation is
limited to the actual financial loss suffered, preventing profit from
insurance claims.
3. When an insurer pays a claim and then seeks recovery from a
negligent third party, this process is called:
A. Arbitration
B. Salvage
C. Subrogation
D. Coinsurance
Subrogation allows the insurer to pursue reimbursement from responsible
third parties after compensating the insured for a covered loss.
4. Which document establishes the rights and duties of both the insurer
and insured?
A. Certificate of insurance
B. Claim estimate
C. Insurance policy contract
D. Loss report form
The insurance policy contract is the legal agreement that defines coverage
terms, exclusions, and obligations of both parties.
5. An adjuster suspects intentional misrepresentation by the insured. This
is most accurately described as:
A. Negligence
B. Waiver
C. Estoppel
D. Fraud
Fraud involves intentional deception to obtain an unlawful financial benefit
from an insurance claim.
, 6. What is the primary purpose of a reservation of rights letter?
A. To deny coverage immediately
B. To cancel the policy
C. To notify the insured that coverage may be limited while
investigation continues
D. To approve payment without investigation
A reservation of rights letter informs the insured that the insurer is
investigating coverage while preserving the right to later deny the claim if
exclusions apply.
7. Which factor is most important when determining actual cash value
(ACV)?
A. Replacement cost plus inflation
B. Market demand
C. Depreciation deducted from replacement cost
D. Policy deductible amount
Actual cash value is calculated as replacement cost minus depreciation,
reflecting the property’s value at the time of loss.
8. What is the purpose of an adjuster’s scope of loss report?
A. To assign fault to the insured
B. To determine policy premiums
C. To document damages and estimate repair costs
D. To cancel fraudulent claims
A scope of loss report details the extent of damage and provides an
estimate for repairs or replacement.
9. Which coverage protects against claims of bodily injury caused by the
insured’s negligence?
A. Property coverage
B. Liability coverage
Questions And Correct Answers
(Verified Answers) Plus Rationale 2026
Q&A| Instant Download Pdf
1. A claims adjuster reviewing a property loss must primarily determine
which of the following before issuing payment?
A. The marketing value of the insured’s property
B. The insured’s preferred contractor selection
C. Whether the loss is covered under the policy terms
D. The insured’s credit history
The primary duty of an adjuster is to confirm coverage under the insurance
policy, including applicability of exclusions and conditions, before any
valuation or settlement occurs.
2. Which principle best describes the insurer’s obligation to restore an
insured to their financial position prior to a covered loss?
A. Indemnity
B. Subrogation
C. Contribution
D. Estoppel
,Indemnity is the core insurance principle that ensures compensation is
limited to the actual financial loss suffered, preventing profit from
insurance claims.
3. When an insurer pays a claim and then seeks recovery from a
negligent third party, this process is called:
A. Arbitration
B. Salvage
C. Subrogation
D. Coinsurance
Subrogation allows the insurer to pursue reimbursement from responsible
third parties after compensating the insured for a covered loss.
4. Which document establishes the rights and duties of both the insurer
and insured?
A. Certificate of insurance
B. Claim estimate
C. Insurance policy contract
D. Loss report form
The insurance policy contract is the legal agreement that defines coverage
terms, exclusions, and obligations of both parties.
5. An adjuster suspects intentional misrepresentation by the insured. This
is most accurately described as:
A. Negligence
B. Waiver
C. Estoppel
D. Fraud
Fraud involves intentional deception to obtain an unlawful financial benefit
from an insurance claim.
, 6. What is the primary purpose of a reservation of rights letter?
A. To deny coverage immediately
B. To cancel the policy
C. To notify the insured that coverage may be limited while
investigation continues
D. To approve payment without investigation
A reservation of rights letter informs the insured that the insurer is
investigating coverage while preserving the right to later deny the claim if
exclusions apply.
7. Which factor is most important when determining actual cash value
(ACV)?
A. Replacement cost plus inflation
B. Market demand
C. Depreciation deducted from replacement cost
D. Policy deductible amount
Actual cash value is calculated as replacement cost minus depreciation,
reflecting the property’s value at the time of loss.
8. What is the purpose of an adjuster’s scope of loss report?
A. To assign fault to the insured
B. To determine policy premiums
C. To document damages and estimate repair costs
D. To cancel fraudulent claims
A scope of loss report details the extent of damage and provides an
estimate for repairs or replacement.
9. Which coverage protects against claims of bodily injury caused by the
insured’s negligence?
A. Property coverage
B. Liability coverage
