ILLINOIS PUBLIC ADJUSTER FINAL PAPER 2025/2026
QUESTIONS AND ANSWERS GRADED A+
✔✔What is a hazard in insurance? - ✔✔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? - ✔✔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: - ✔✔- 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 - ✔✔Deduction from a loss
✔✔Percentage of limit deductibles - ✔✔may appear in homeowners or commercial
policies for events such as earthquakes in the south west, hail Midwest and hurricanes
on the coast
✔✔Additional interests - ✔✔Any party other than the names insured who may have may
have insurable interest in a certain property at the time off loss, with rights to file claim
✔✔Bailment - ✔✔involves non owned property, created when one party voluntarily and
temporarily relinquishes property to another for some service
✔✔Concurrent and Non concurrent policies - ✔✔CONCURRENT - more than one policy
covers the same loss with similar terms and conditions
NON CONCURRENT - Same loss but with different terms and conditions. This may
complicate the loss.\
✔✔Declaratory Judgement Action - ✔✔judgement of a court which determines the
rights of parties without ordering anything be done or awarding damages
✔✔Cancellation vs non renewal of a policy - ✔✔Insurer and Insured can do both,
Cancellation is mid term and non renewal is end of term
✔✔Estoppel - ✔✔to legally impede prevent or stop. Estoppel prevents a party (usually
the insurer) from going back on something they previously allowed or represented, if the
other party relied on it to their disadvantage.
, ✔✔Collapse - ✔✔abrupt falling down or caving of building or part of it. Covers when
cause by certain perils, including the use of defective building materials or methods
(latent defect - hidden flaws) but only if the collapse occurs during the course of
construction, remodeling or renovation.
✔✔Glass Breakage - ✔✔Not coverage if the building has been vacant for more than 60-
consecutive days prior or the loss
✔✔Homeowners additional coverages - ✔✔Property removed when an insured peril
endangers covered property, this covers the property for dire4ct loss from ANY cause
for up to 30 days
✔✔Stock out of sight - ✔✔stock that is completely damaged in a loss would need to be
proved with records (receipts, purchase orders, bank statements).
✔✔Bonds - ✔✔are promises that are insured
✔✔Typical limit on the rise of a step? - ✔✔7.5"
✔✔What is a mullion? - ✔✔A vertical member between the panels of a window, door, or
other opening
✔✔what is coping - ✔✔piece covering the top of a wall (parapet)
✔✔Balloon Framing - ✔✔A technique of framing where the long vertical pieces (studs)
are installed in a continuous piece from foundation to roofline. HUGE FIRE SPREAD
RISK, old style
✔✔Direct loss vs Indirect Loss - ✔✔Direct - damage caused by a peril (cause of loss),
includes physical damage destruction, theft, pertains to buildings structures and
personal property
Indirect - loss of use or time, caused by direct losses (in commercial = business
interruption)
✔✔Additional coverages - ✔✔-provided automatically (varies by policy)
-collapse (only during construction)
-glass breakage coverage but not after 60 days of vacancy
- pollution clean up (not detox of pollutants required by ordinance)
✔✔Homeowner Coverage A - ✔✔Dwelling - the residential building
✔✔Homeowner Coverage B - ✔✔Other structures - detached from the dwelling but on
the lot. Limit is automatically 10% of the limit
QUESTIONS AND ANSWERS GRADED A+
✔✔What is a hazard in insurance? - ✔✔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? - ✔✔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: - ✔✔- 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 - ✔✔Deduction from a loss
✔✔Percentage of limit deductibles - ✔✔may appear in homeowners or commercial
policies for events such as earthquakes in the south west, hail Midwest and hurricanes
on the coast
✔✔Additional interests - ✔✔Any party other than the names insured who may have may
have insurable interest in a certain property at the time off loss, with rights to file claim
✔✔Bailment - ✔✔involves non owned property, created when one party voluntarily and
temporarily relinquishes property to another for some service
✔✔Concurrent and Non concurrent policies - ✔✔CONCURRENT - more than one policy
covers the same loss with similar terms and conditions
NON CONCURRENT - Same loss but with different terms and conditions. This may
complicate the loss.\
✔✔Declaratory Judgement Action - ✔✔judgement of a court which determines the
rights of parties without ordering anything be done or awarding damages
✔✔Cancellation vs non renewal of a policy - ✔✔Insurer and Insured can do both,
Cancellation is mid term and non renewal is end of term
✔✔Estoppel - ✔✔to legally impede prevent or stop. Estoppel prevents a party (usually
the insurer) from going back on something they previously allowed or represented, if the
other party relied on it to their disadvantage.
, ✔✔Collapse - ✔✔abrupt falling down or caving of building or part of it. Covers when
cause by certain perils, including the use of defective building materials or methods
(latent defect - hidden flaws) but only if the collapse occurs during the course of
construction, remodeling or renovation.
✔✔Glass Breakage - ✔✔Not coverage if the building has been vacant for more than 60-
consecutive days prior or the loss
✔✔Homeowners additional coverages - ✔✔Property removed when an insured peril
endangers covered property, this covers the property for dire4ct loss from ANY cause
for up to 30 days
✔✔Stock out of sight - ✔✔stock that is completely damaged in a loss would need to be
proved with records (receipts, purchase orders, bank statements).
✔✔Bonds - ✔✔are promises that are insured
✔✔Typical limit on the rise of a step? - ✔✔7.5"
✔✔What is a mullion? - ✔✔A vertical member between the panels of a window, door, or
other opening
✔✔what is coping - ✔✔piece covering the top of a wall (parapet)
✔✔Balloon Framing - ✔✔A technique of framing where the long vertical pieces (studs)
are installed in a continuous piece from foundation to roofline. HUGE FIRE SPREAD
RISK, old style
✔✔Direct loss vs Indirect Loss - ✔✔Direct - damage caused by a peril (cause of loss),
includes physical damage destruction, theft, pertains to buildings structures and
personal property
Indirect - loss of use or time, caused by direct losses (in commercial = business
interruption)
✔✔Additional coverages - ✔✔-provided automatically (varies by policy)
-collapse (only during construction)
-glass breakage coverage but not after 60 days of vacancy
- pollution clean up (not detox of pollutants required by ordinance)
✔✔Homeowner Coverage A - ✔✔Dwelling - the residential building
✔✔Homeowner Coverage B - ✔✔Other structures - detached from the dwelling but on
the lot. Limit is automatically 10% of the limit
