Adjuster license practice test UPDATED
ACTUAL Exam Questions and CORRECT
Answers
The purpose of the principle of indemnity is - CORRECT ANSWER - to prevent an insured
from making a profit on a loss.
Jerrod is awarded $4000 in a court case after Ollie accidentally starts a fire and burns down his
detached garage. This award is an example of - CORRECT ANSWER - special damages
Which of the following best describes a Fraternal Benefit Society - CORRECT ANSWER - A
fraternal benefit society is a social organization based around common interests and beliefs.
SureTrust Insurance was founded and operates in Texas. In Texas, SureTrust is considered: -
CORRECT ANSWER - a domestic insurer.
Jackie files a lawsuit against Ginger after Ginger's three-year-old daughter ruins Jackie's laptop
during a flight. When they go to court, Jackie is the - CORRECT ANSWER - plaintiff
A captive insurance company - CORRECT ANSWER - exists solely to provide insurance for
its parent company.
Which of the following is NOT a qualification of an insurable risk - CORRECT ANSWER -
An insurable risk must have guaranteed protection from damage
Five years ago, when Rosamund was one year old, she had an expensive procedure done to
remove what a doctor said was a cancerous tumor behind her knee. Her parents have recently
discovered, upon the return of her condition, that the growth was merely a harmless cyst and not
a dangerous tumor. Will the Statute of Limitations allow her parents to file a suit against the
doctor? - CORRECT ANSWER - Yes; suits for Medical Malpractice are allowed until the
child is eight years old
,Which of the following statements about a moral hazard is FALSE? - CORRECT ANSWER -
It is the result of an unconscious behavior.
An individual has ________________ to file a lawsuit for False Arrest in Florida. - CORRECT
ANSWER - four years
John has purchased a homeowners insurance policy with a percentage deductible based on the
total limit of insurance for his home. John insures his home for $600,000, and the policy includes
a 3% deductible. A huge thunderstorm passes through one night and blows the roof off his house.
The insurance company estimates that covered damage totals $80,000. How much
indemnification should John expect for the losses to his roof? - CORRECT ANSWER -
$62,000
(First, calculate John's deductible, which is 3% of $600,000. This comes to $18,000. Then
subtract the deductible from the covered damages to get John's indemnification. $80,000 minus
$18,000 equals $62,000.)
What is the formula for actual cash value? - CORRECT ANSWER - Replacement cost minus
total depreciation
Last month, an elderly man slipped and fell on a cracked, uneven icy sidewalk on Mulberry
Street. He sued the homeowner and was awarded $60,000. The insurers of other properties on
Mulberry Street would consider this award to be: - CORRECT ANSWER - a legal hazard
Which of the following best defines premium? - CORRECT ANSWER - The fee paid by the
insured in exchange for an insurance policy
The city of Hillsdale passed a law dictating that all dogs must wear collars with tags. This is an
example of what kind of law? - CORRECT ANSWER - Statutory
Which of the following is true?
,A. Kevin's auto insurance policy protects his car from damage.
B. Kevin's auto insurance policy now covers Bill, who bought Kevin's truck.
C. When Kevin sold his truck to Bill, he lost his auto insurance coverage.
D. Kevin's insurance policy covers him for losses to his new car, even though he sold his truck,
which was previously covered under his policy, to Bill. - CORRECT ANSWER - Kevin's
insurance policy covers him for losses to his new car, even though he sold his truck, which was
previously covered under his policy, to Bill.
In Florida, an insurer has ___ days to pay or deny a claim - CORRECT ANSWER - 90
Which of the following statements best describes the Law of Large Numbers? - CORRECT
ANSWER - The larger the number of units insured, the more accurately the insurer can
predict the number of claims from that group.
Which of the following refers to being restored to the financial condition you were in before a
loss? - CORRECT ANSWER - Indemnification
To meet the 80% level of co-insurance required by his lender, Tom discovers he must insure his
home for at least $320,000. What is the value of Tom's home? - CORRECT ANSWER -
$400,000
(400,000 - 80% = 320,000)
Which of the following statements about risk retention groups is FALSE?
A. Risk retention groups are subject to state laws regarding Unfair Claims Settlement practices.
B. Risk retention groups are a form of self-insurance.
C. Risk retention groups can provide commercial liability insurance.
D. Risk retention groups must be licensed in every state in which they operate. - CORRECT
ANSWER - Risk retention groups must be licensed in every state in which they operate.
Which of the following statements about insurable interest is FALSE?
, A. Maintaining property values allows your neighbor to have an insurable interest in your house.
B. When a renter leases your house, your insurable interest in the home remains.
C. Purchasing an insurance policy on your home helps protect your insurable interest in the
home.
D. A wife can have an insurable interest in her husband's life. - CORRECT ANSWER -
Maintaining property values allows your neighbor to have an insurable interest in your house.
Ginger, under the mistaken impression that Jackie made a lewd gesture at her, attacks and injures
Jackie after a soccer game. When Jackie takes Ginger to court, Ginger is the: - CORRECT
ANSWER - tortfeasor.
Jane's shed burns to the ground during a tornado, when the high winds break a wall of the shed,
knocking over a lantern inside. What is the proximate cause of the loss? - CORRECT
ANSWER - The tornado
Josephine's gas station suffered severe damage when one of the fuel tanks caught fire and
exploded. After completing his inspection, the adjuster determines that Josephine's claim is not
covered because she did not have automatic shut-offs for the fuel tanks. If this safety measure
was in fact required in order for coverage to apply, where might Josephine find it in the policy? -
CORRECT ANSWER - Conditions
ABC Masonry, Inc. has an aggregate liability policy with limits of 100,000/300,000. One day, an
accident at a construction site leads to $150,000 in damage to public property. Assuming the
cause of loss is covered under ABC Masonry's liability policy, how will this claim be paid? -
CORRECT ANSWER - The insurer pays $100,000; the aggregate limit is now $200,000; and
ABC Masonry must pay $50,000.
(Since the per-occurrence limit is only $100,000, that's all the insurer will pay. This payment
reduces the aggregate to $200,000 and leaves $50,000 that ABC Masonry is responsible for
paying.)
Which of the following incidents would a liability insurance policy cover? - CORRECT
ANSWER - A man slips inside a grocery store and injures himself.
ACTUAL Exam Questions and CORRECT
Answers
The purpose of the principle of indemnity is - CORRECT ANSWER - to prevent an insured
from making a profit on a loss.
Jerrod is awarded $4000 in a court case after Ollie accidentally starts a fire and burns down his
detached garage. This award is an example of - CORRECT ANSWER - special damages
Which of the following best describes a Fraternal Benefit Society - CORRECT ANSWER - A
fraternal benefit society is a social organization based around common interests and beliefs.
SureTrust Insurance was founded and operates in Texas. In Texas, SureTrust is considered: -
CORRECT ANSWER - a domestic insurer.
Jackie files a lawsuit against Ginger after Ginger's three-year-old daughter ruins Jackie's laptop
during a flight. When they go to court, Jackie is the - CORRECT ANSWER - plaintiff
A captive insurance company - CORRECT ANSWER - exists solely to provide insurance for
its parent company.
Which of the following is NOT a qualification of an insurable risk - CORRECT ANSWER -
An insurable risk must have guaranteed protection from damage
Five years ago, when Rosamund was one year old, she had an expensive procedure done to
remove what a doctor said was a cancerous tumor behind her knee. Her parents have recently
discovered, upon the return of her condition, that the growth was merely a harmless cyst and not
a dangerous tumor. Will the Statute of Limitations allow her parents to file a suit against the
doctor? - CORRECT ANSWER - Yes; suits for Medical Malpractice are allowed until the
child is eight years old
,Which of the following statements about a moral hazard is FALSE? - CORRECT ANSWER -
It is the result of an unconscious behavior.
An individual has ________________ to file a lawsuit for False Arrest in Florida. - CORRECT
ANSWER - four years
John has purchased a homeowners insurance policy with a percentage deductible based on the
total limit of insurance for his home. John insures his home for $600,000, and the policy includes
a 3% deductible. A huge thunderstorm passes through one night and blows the roof off his house.
The insurance company estimates that covered damage totals $80,000. How much
indemnification should John expect for the losses to his roof? - CORRECT ANSWER -
$62,000
(First, calculate John's deductible, which is 3% of $600,000. This comes to $18,000. Then
subtract the deductible from the covered damages to get John's indemnification. $80,000 minus
$18,000 equals $62,000.)
What is the formula for actual cash value? - CORRECT ANSWER - Replacement cost minus
total depreciation
Last month, an elderly man slipped and fell on a cracked, uneven icy sidewalk on Mulberry
Street. He sued the homeowner and was awarded $60,000. The insurers of other properties on
Mulberry Street would consider this award to be: - CORRECT ANSWER - a legal hazard
Which of the following best defines premium? - CORRECT ANSWER - The fee paid by the
insured in exchange for an insurance policy
The city of Hillsdale passed a law dictating that all dogs must wear collars with tags. This is an
example of what kind of law? - CORRECT ANSWER - Statutory
Which of the following is true?
,A. Kevin's auto insurance policy protects his car from damage.
B. Kevin's auto insurance policy now covers Bill, who bought Kevin's truck.
C. When Kevin sold his truck to Bill, he lost his auto insurance coverage.
D. Kevin's insurance policy covers him for losses to his new car, even though he sold his truck,
which was previously covered under his policy, to Bill. - CORRECT ANSWER - Kevin's
insurance policy covers him for losses to his new car, even though he sold his truck, which was
previously covered under his policy, to Bill.
In Florida, an insurer has ___ days to pay or deny a claim - CORRECT ANSWER - 90
Which of the following statements best describes the Law of Large Numbers? - CORRECT
ANSWER - The larger the number of units insured, the more accurately the insurer can
predict the number of claims from that group.
Which of the following refers to being restored to the financial condition you were in before a
loss? - CORRECT ANSWER - Indemnification
To meet the 80% level of co-insurance required by his lender, Tom discovers he must insure his
home for at least $320,000. What is the value of Tom's home? - CORRECT ANSWER -
$400,000
(400,000 - 80% = 320,000)
Which of the following statements about risk retention groups is FALSE?
A. Risk retention groups are subject to state laws regarding Unfair Claims Settlement practices.
B. Risk retention groups are a form of self-insurance.
C. Risk retention groups can provide commercial liability insurance.
D. Risk retention groups must be licensed in every state in which they operate. - CORRECT
ANSWER - Risk retention groups must be licensed in every state in which they operate.
Which of the following statements about insurable interest is FALSE?
, A. Maintaining property values allows your neighbor to have an insurable interest in your house.
B. When a renter leases your house, your insurable interest in the home remains.
C. Purchasing an insurance policy on your home helps protect your insurable interest in the
home.
D. A wife can have an insurable interest in her husband's life. - CORRECT ANSWER -
Maintaining property values allows your neighbor to have an insurable interest in your house.
Ginger, under the mistaken impression that Jackie made a lewd gesture at her, attacks and injures
Jackie after a soccer game. When Jackie takes Ginger to court, Ginger is the: - CORRECT
ANSWER - tortfeasor.
Jane's shed burns to the ground during a tornado, when the high winds break a wall of the shed,
knocking over a lantern inside. What is the proximate cause of the loss? - CORRECT
ANSWER - The tornado
Josephine's gas station suffered severe damage when one of the fuel tanks caught fire and
exploded. After completing his inspection, the adjuster determines that Josephine's claim is not
covered because she did not have automatic shut-offs for the fuel tanks. If this safety measure
was in fact required in order for coverage to apply, where might Josephine find it in the policy? -
CORRECT ANSWER - Conditions
ABC Masonry, Inc. has an aggregate liability policy with limits of 100,000/300,000. One day, an
accident at a construction site leads to $150,000 in damage to public property. Assuming the
cause of loss is covered under ABC Masonry's liability policy, how will this claim be paid? -
CORRECT ANSWER - The insurer pays $100,000; the aggregate limit is now $200,000; and
ABC Masonry must pay $50,000.
(Since the per-occurrence limit is only $100,000, that's all the insurer will pay. This payment
reduces the aggregate to $200,000 and leaves $50,000 that ABC Masonry is responsible for
paying.)
Which of the following incidents would a liability insurance policy cover? - CORRECT
ANSWER - A man slips inside a grocery store and injures himself.
