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Claims Adjuster Exam | 1000 Questions
and Answers | Complete Study Guide &
Exam Preparation
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Define indemnity in property and casualty Indemnity is the principle that an insured should be restored financially
insurance. Why is it considered a fundamental to approximately the same position occupied before a covered loss,
principle of claims adjusting? without profiting from the event. Claims adjusters apply indemnity by
determining the actual covered loss, considering deductibles,
depreciation (when applicable), policy limits, exclusions, and valuation
provisions.
A homeowner suffers $15,000 in covered fire The insurer pays $14,000 because the insured absorbs the first $1,000
damage. The policy has a $1,000 deductible. deductible. The deductible reduces the insurer's payment but does not
Assuming no other limitations apply, what is the reduce the amount of the actual loss.
insurer's payment?
What is insurable interest, and when must it exist Insurable interest means the insured would suffer a financial loss if the
for property insurance? insured property were damaged or destroyed. In property insurance,
insurable interest generally must exist at the time of the loss, allowing
recovery only for the insured's financial interest.
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The legal transfer of the insured's recovery rights Subrogation. After paying a covered loss, the insurer may pursue the
against a responsible third party to the insurer negligent third party to recover amounts paid while preventing the
after claim payment is called __________. insured from collecting twice for the same loss.
Differentiate first-party claims from third-party First-party claims involve payment directly to the insured for covered
claims. losses under the policy. Third-party claims arise when another party
alleges the insured caused injury or damage, triggering the insurer's
duty to defend and potentially indemnify the insured under liability
coverage.
Liability insurance primarily protects the insured's False. Liability insurance primarily protects the insured against legal
own damaged property. Explain your answer. liability for bodily injury or property damage to others, including
defense costs when covered. Damage to the insured's own property is
generally addressed by property coverage.
What is an occurrence in liability insurance? An occurrence is generally defined as an accident, including
continuous or repeated exposure to substantially the same harmful
conditions, resulting in bodily injury or property damage during the
policy period. Exact wording varies by policy.
Explain Actual Cash Value (ACV). Actual Cash Value (ACV) generally equals the replacement cost of
damaged property minus depreciation, although jurisdictions may use
different valuation methods. ACV reflects the property's value
immediately before the loss.
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An adjuster pays Replacement Cost benefits The adjuster failed to follow the policy's replacement cost settlement
before confirming repairs were completed when conditions. Many replacement cost policies require the insured to
the policy requires repair first. What mistake repair or replace damaged property before receiving full replacement
occurred? cost benefits beyond ACV.
Define Replacement Cost Value (RCV). Replacement Cost Value (RCV) is the cost to repair or replace
damaged property with comparable new property of like kind and
quality, without deducting depreciation, subject to policy conditions.
What is a peril? Give examples. A peril is the direct cause of loss insured against. Examples include fire,
windstorm, hail, lightning, theft, vandalism, and explosion, depending
on policy language.
Differentiate a peril from a hazard. A peril causes the loss directly, while a hazard increases the likelihood
or severity of loss. Hazards may be physical, moral, or morale hazards.
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https://www.stuvia.com/user/educatorjake
Claims Adjuster Exam | 1000 Questions
and Answers | Complete Study Guide &
Exam Preparation
https://www.stuvia.com/user/educatorjake
https://www.stuvia.com/user/educatorjake https://www.stuvia.com/user/educatorjake
,https://www.stuvia.com/user/educatorjake https://www.stuvia.com/user/educatorjake
Define indemnity in property and casualty Indemnity is the principle that an insured should be restored financially
insurance. Why is it considered a fundamental to approximately the same position occupied before a covered loss,
principle of claims adjusting? without profiting from the event. Claims adjusters apply indemnity by
determining the actual covered loss, considering deductibles,
depreciation (when applicable), policy limits, exclusions, and valuation
provisions.
A homeowner suffers $15,000 in covered fire The insurer pays $14,000 because the insured absorbs the first $1,000
damage. The policy has a $1,000 deductible. deductible. The deductible reduces the insurer's payment but does not
Assuming no other limitations apply, what is the reduce the amount of the actual loss.
insurer's payment?
What is insurable interest, and when must it exist Insurable interest means the insured would suffer a financial loss if the
for property insurance? insured property were damaged or destroyed. In property insurance,
insurable interest generally must exist at the time of the loss, allowing
recovery only for the insured's financial interest.
https://www.stuvia.com/user/educatorjake https://www.stuvia.com/user/educatorjake
,https://www.stuvia.com/user/educatorjake https://www.stuvia.com/user/educatorjake
The legal transfer of the insured's recovery rights Subrogation. After paying a covered loss, the insurer may pursue the
against a responsible third party to the insurer negligent third party to recover amounts paid while preventing the
after claim payment is called __________. insured from collecting twice for the same loss.
Differentiate first-party claims from third-party First-party claims involve payment directly to the insured for covered
claims. losses under the policy. Third-party claims arise when another party
alleges the insured caused injury or damage, triggering the insurer's
duty to defend and potentially indemnify the insured under liability
coverage.
Liability insurance primarily protects the insured's False. Liability insurance primarily protects the insured against legal
own damaged property. Explain your answer. liability for bodily injury or property damage to others, including
defense costs when covered. Damage to the insured's own property is
generally addressed by property coverage.
What is an occurrence in liability insurance? An occurrence is generally defined as an accident, including
continuous or repeated exposure to substantially the same harmful
conditions, resulting in bodily injury or property damage during the
policy period. Exact wording varies by policy.
Explain Actual Cash Value (ACV). Actual Cash Value (ACV) generally equals the replacement cost of
damaged property minus depreciation, although jurisdictions may use
different valuation methods. ACV reflects the property's value
immediately before the loss.
https://www.stuvia.com/user/educatorjake https://www.stuvia.com/user/educatorjake
, https://www.stuvia.com/user/educatorjake https://www.stuvia.com/user/educatorjake
An adjuster pays Replacement Cost benefits The adjuster failed to follow the policy's replacement cost settlement
before confirming repairs were completed when conditions. Many replacement cost policies require the insured to
the policy requires repair first. What mistake repair or replace damaged property before receiving full replacement
occurred? cost benefits beyond ACV.
Define Replacement Cost Value (RCV). Replacement Cost Value (RCV) is the cost to repair or replace
damaged property with comparable new property of like kind and
quality, without deducting depreciation, subject to policy conditions.
What is a peril? Give examples. A peril is the direct cause of loss insured against. Examples include fire,
windstorm, hail, lightning, theft, vandalism, and explosion, depending
on policy language.
Differentiate a peril from a hazard. A peril causes the loss directly, while a hazard increases the likelihood
or severity of loss. Hazards may be physical, moral, or morale hazards.
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