PUBLIC ADJUSTER ILLINOIS PRACTICE EXAM 170
QUESTIONS & CORRECT ANSWERS LATEST 2025
What are the insureds in the event of a loss? (Along with paying the premium) -
ANSWER-- PROTECT the damaged property from further loss
-REPORT the loss to the insurer
-COOPERATE with the insurer during the entire adjustment process
-PROVE the loss
What is the Replacement Cost Value policy ? (consider deductible) - ANSWER-You
get the full value of the damage MINUS deductible. You WILL get the
depreciation.
What is the Actual Cash Value policy ? (consider deductible) - ANSWER-You will
receive the the full value of damage MINUS depreciation MINUS deductible. You
will NOT get the deductible.
Insurable Interest - ANSWER--there is always a limit on recovery, claimant will
never recover more than the limit.
- having something to lose if the property is lost, damaged or destroyed. When
have financial stake in the property.
Coinsurance - ANSWER-COMMERCIAL - building and personal property form
contains a standard coinsurance clause, with an 80% to value replacement.
,RESIDENTIAL - losses are settled at replacement cost as long as the policy limits
are 80% and the repair is done.
Abandonment - ANSWER-No insured may abandon covered property in a covered
loss
Fraud - ANSWER-Fruad by the insured at any time voids the contract
Appraisal - ANSWER-If dispute over the amount of a covered loss, (not if it is
covered but the actual amount), either party can call for appraisal. An UMPIRE is
hired to settle between the two parties
Right of assignment - ANSWER-A named insured may transfer/assign the policy to
another party only with written consent of the insurer
What is the right of subrogation in insurance - ANSWER-The insured gets covered
by the Insurer, the insurer then has to recover money from the 3rd party. An
insured CANNOT subrogate against its insurer.
Right of Cancelation - ANSWER-The insured can cancel at anytime, the insurer
may cancel with 5 days notice with proof of mailing and full refund of
overpayments
What is pro rata liability in insurance? - ANSWER-When more than one INSURER,
each pays their proportion
What is loss payment - ANSWER-losses are to be paid within 60 days after the
proof of loss is received and agreed to by the insurer.
,ChatGPT - The section of a policy that explains how, when, and to whom the
insurer will pay for a covered loss (e.g., repair, replace, or cash settlement).
Vacancy - ANSWER-Whenever a building is "vacant" for more than 60 days prior
to a loss, there is no coverage for vandalism or glass breakage and a 15%
reduction in payment for loss (vacancy penalty) cause by any other peril.
Insurance definition - ANSWER-arrangement between insured and insurer, risk is
transfer to the insurer
What is indemnity in insurance? - ANSWER-Indemnity means restoring the
insured to their financial position before the loss — no better, no worse. It
prevents profit from a claim.
Insurer promises to make the insured financially whole.
What is the Doctrine of Reasonable Expectations? - ANSWER-When a contract is
vague or unclear, courts interpret it in favor of the policyholder — the party that
did not write the contract — based on what they reasonably expected to be
covered.
What does uninsurable mean in insurance? - ANSWER-A risk is uninsurable if it
cannot be covered by insurance due to being too it being intentional, inevitable or
controllable
What is obsolescence in insurance? - ANSWER-Obsolescence is the loss of value
due to a property or item becoming outdated or no longer useful — not from
, physical wear, but from changes in technology or demand. (old cellphones or old
computers)
What is adverse selection in insurance? - ANSWER-Abuse of the insurance system,
such as people buying insurnace when they are highest risk. Like buying flood
insurance right before the storm. Flood insurance requires 30 days.
What is misrepresentation in insurance? - ANSWER-A false statement made by
the applicant or insured that can affect coverage. If material, it may lead to denial
of a claim or cancellation of the policy.
Lies during the application/adjustment process (exotic animal, smokers, previous
claims)
What is a hazard in insurance? - ANSWER-A hazard is anything that increases the
chance or severity of a loss. Existing before a loss.
What are physical and moral hazards in insurance? - ANSWER-Physical hazard: A
tangible condition that increases risk (e.g., faulty wiring, icy steps). Characteristics
of PROPERTY that make the loss more likely.
Moral hazard: Risk from dishonest behavior (e.g., lying on a claim or staging a
loss). Characteristics of PEOPLE that make the loss more likely.
insurable insterest is created when: - ANSWER-- OWN a property or when we use,
borrow or have custody of non-owned property other than buildings.
-LIENHOLDER or Mortgagee (Ex Bank)
- BAILEE, possession of non-owner property to service it (dry cleaner, car repair)
Deductible - ANSWER-Deduction from a loss
QUESTIONS & CORRECT ANSWERS LATEST 2025
What are the insureds in the event of a loss? (Along with paying the premium) -
ANSWER-- PROTECT the damaged property from further loss
-REPORT the loss to the insurer
-COOPERATE with the insurer during the entire adjustment process
-PROVE the loss
What is the Replacement Cost Value policy ? (consider deductible) - ANSWER-You
get the full value of the damage MINUS deductible. You WILL get the
depreciation.
What is the Actual Cash Value policy ? (consider deductible) - ANSWER-You will
receive the the full value of damage MINUS depreciation MINUS deductible. You
will NOT get the deductible.
Insurable Interest - ANSWER--there is always a limit on recovery, claimant will
never recover more than the limit.
- having something to lose if the property is lost, damaged or destroyed. When
have financial stake in the property.
Coinsurance - ANSWER-COMMERCIAL - building and personal property form
contains a standard coinsurance clause, with an 80% to value replacement.
,RESIDENTIAL - losses are settled at replacement cost as long as the policy limits
are 80% and the repair is done.
Abandonment - ANSWER-No insured may abandon covered property in a covered
loss
Fraud - ANSWER-Fruad by the insured at any time voids the contract
Appraisal - ANSWER-If dispute over the amount of a covered loss, (not if it is
covered but the actual amount), either party can call for appraisal. An UMPIRE is
hired to settle between the two parties
Right of assignment - ANSWER-A named insured may transfer/assign the policy to
another party only with written consent of the insurer
What is the right of subrogation in insurance - ANSWER-The insured gets covered
by the Insurer, the insurer then has to recover money from the 3rd party. An
insured CANNOT subrogate against its insurer.
Right of Cancelation - ANSWER-The insured can cancel at anytime, the insurer
may cancel with 5 days notice with proof of mailing and full refund of
overpayments
What is pro rata liability in insurance? - ANSWER-When more than one INSURER,
each pays their proportion
What is loss payment - ANSWER-losses are to be paid within 60 days after the
proof of loss is received and agreed to by the insurer.
,ChatGPT - The section of a policy that explains how, when, and to whom the
insurer will pay for a covered loss (e.g., repair, replace, or cash settlement).
Vacancy - ANSWER-Whenever a building is "vacant" for more than 60 days prior
to a loss, there is no coverage for vandalism or glass breakage and a 15%
reduction in payment for loss (vacancy penalty) cause by any other peril.
Insurance definition - ANSWER-arrangement between insured and insurer, risk is
transfer to the insurer
What is indemnity in insurance? - ANSWER-Indemnity means restoring the
insured to their financial position before the loss — no better, no worse. It
prevents profit from a claim.
Insurer promises to make the insured financially whole.
What is the Doctrine of Reasonable Expectations? - ANSWER-When a contract is
vague or unclear, courts interpret it in favor of the policyholder — the party that
did not write the contract — based on what they reasonably expected to be
covered.
What does uninsurable mean in insurance? - ANSWER-A risk is uninsurable if it
cannot be covered by insurance due to being too it being intentional, inevitable or
controllable
What is obsolescence in insurance? - ANSWER-Obsolescence is the loss of value
due to a property or item becoming outdated or no longer useful — not from
, physical wear, but from changes in technology or demand. (old cellphones or old
computers)
What is adverse selection in insurance? - ANSWER-Abuse of the insurance system,
such as people buying insurnace when they are highest risk. Like buying flood
insurance right before the storm. Flood insurance requires 30 days.
What is misrepresentation in insurance? - ANSWER-A false statement made by
the applicant or insured that can affect coverage. If material, it may lead to denial
of a claim or cancellation of the policy.
Lies during the application/adjustment process (exotic animal, smokers, previous
claims)
What is a hazard in insurance? - ANSWER-A hazard is anything that increases the
chance or severity of a loss. Existing before a loss.
What are physical and moral hazards in insurance? - ANSWER-Physical hazard: A
tangible condition that increases risk (e.g., faulty wiring, icy steps). Characteristics
of PROPERTY that make the loss more likely.
Moral hazard: Risk from dishonest behavior (e.g., lying on a claim or staging a
loss). Characteristics of PEOPLE that make the loss more likely.
insurable insterest is created when: - ANSWER-- OWN a property or when we use,
borrow or have custody of non-owned property other than buildings.
-LIENHOLDER or Mortgagee (Ex Bank)
- BAILEE, possession of non-owner property to service it (dry cleaner, car repair)
Deductible - ANSWER-Deduction from a loss
