AE21 INSURANCE ADJUSTER LICENSE
SIMULATION MIDTERM EXAM 2026 QUESTIONS
AND SOLUTIONS GUARANTEED TO PASS
◉ An "insured" under an unendorsed Homeowners policy can be all of
the following, EXCEPT: Answer: A childhood friend of the named
insured who is visiting for a month from England.
◉ An oral or written contract for temporary insurance is referred to as a:
Answer: Binder
◉ The Coverage C - Uninsured Motorists coverage of a standard,
unendorsed Personal Automobile policy applies to all of the following,
EXCEPT: Answer: Property damage sustained by the insured vehicle by
an uninsured vehicle..
◉ The Builders' Risk form provides an extension of coverage for
building materials within 100 feet of the building being constructed and
belonging to others, but under the care, custody, and control of the
insured for up to: Answer: $5,000
◉ All of the following are characteristics of an insurable risk, EXCEPT:
Answer: The loss must be catastrophic in nature.
,◉ Which of the following endorsements permits the insured under a
Commercial Property policy to increase their business personal property
coverage amount for specified periods of time when inventory may be
higher than usual? Answer: Peak Season Endorsement.
◉ Of the following businesses, which one is NOT eligible for coverage
under a Businessowners policy? Answer: An auto dealership with $1
million dollars in gross annual sales..
◉ All of the following "personal effects" would be covered by the Part
D -- Additional Coverage of the Personal Watercraft, EXCEPT: Answer:
jewelry
◉ An alternative dispute resolution (ADR) method by which disputing
parties use a neutral outside party to examine the issues and develop a
settlement, which is a final binding decision is known as: Answer:
Arbitration
◉ An insured has an auto accident and sustains bodily injury worth
$50,000. The responsible party carries auto liability limits of 15/30/15
which provides $15,000 for bodily injury for any one person per
occurrence. The insured carries Underinsured Motorist limits providing
$100,000 bodily injury for any one person per occurrence. Therefore, the
responsible party's policy will pay its limit of $15,000 and the insured's
Underinsured Motorist policy will pay: Answer: $35,000
,◉ Which of the following situations would NOT be considered an unfair
claim settlement practice according to the NAIC Model Act? Answer:
Indemnify Insurance pays thousands of claims per year, but on two of
those claims they failed to accept or deny the claim within the time
frame required by state law
◉ A claim is made on an excess liability policy. It is discovered during
the claims investigation, that the underlying liability policy and the
excess liability policy have different inception and expiration dates. The
adjuster finds that the different dates has created a situation where the
underlying policy was not in effect at the time of the occurrence, and
therefore cannot trigger the excess liability policy to pay the claim. This
situation is known as: Answer: Nonconcurrency.
◉ The auto liability limits $100/300/50 are an example of: Answer: split
limits
◉ The insured is covered under a standard HO-5 policy. What coverage
does the insured have for personal property? Answer: open perils
◉ Which of the following is used to bring a standardized insurance form
into compliance with state laws? Answer: Endorsements.
◉ When an insurer files a declaratory judgement action with a court of
law, all of the following questions will be resolved by the court,
, EXCEPT: Answer: Will the insurer become insolvent if they pay the
claim as submitted by the insured?
◉ The freight charge is paid by the shipper to the carrier: Answer: When
the cargo has been delivered to its destination point.
◉ Joe makes a small down payment on a sports car and finances the
remainder of the cost of the car with Benevolent Bank, Inc. He also
purchases a standard Personal Automobile policy through Binders
Keepers Insurance Company to cover the car. Joe makes one car
payment before he is caught with $200,000 of drugs in the car on his
way to deliver it to addicts for money. Joe is arrested and the car is
permanently confiscated by the authorities. How will coverage apply in
this situation? Answer: The policy will cover the damage to the body of
the automobile on behalf of Benevolent Bank, Inc.
◉ Imogene has purchased a personal auto policy including Parts A
through D. She is driving to work one day and rolls through a stop sign,
crashing into the car that had the right-of-way in an intersection.
Imogene submits a claim for the accident. Which of the following would
NOT be included in her claims payment? Answer: The transmission
problem Imogene was having prior to the accident..
◉ Which of the following watercraft would be covered under Section II
- Liability of the Homeowners forms? Answer: A watercraft in storage.
SIMULATION MIDTERM EXAM 2026 QUESTIONS
AND SOLUTIONS GUARANTEED TO PASS
◉ An "insured" under an unendorsed Homeowners policy can be all of
the following, EXCEPT: Answer: A childhood friend of the named
insured who is visiting for a month from England.
◉ An oral or written contract for temporary insurance is referred to as a:
Answer: Binder
◉ The Coverage C - Uninsured Motorists coverage of a standard,
unendorsed Personal Automobile policy applies to all of the following,
EXCEPT: Answer: Property damage sustained by the insured vehicle by
an uninsured vehicle..
◉ The Builders' Risk form provides an extension of coverage for
building materials within 100 feet of the building being constructed and
belonging to others, but under the care, custody, and control of the
insured for up to: Answer: $5,000
◉ All of the following are characteristics of an insurable risk, EXCEPT:
Answer: The loss must be catastrophic in nature.
,◉ Which of the following endorsements permits the insured under a
Commercial Property policy to increase their business personal property
coverage amount for specified periods of time when inventory may be
higher than usual? Answer: Peak Season Endorsement.
◉ Of the following businesses, which one is NOT eligible for coverage
under a Businessowners policy? Answer: An auto dealership with $1
million dollars in gross annual sales..
◉ All of the following "personal effects" would be covered by the Part
D -- Additional Coverage of the Personal Watercraft, EXCEPT: Answer:
jewelry
◉ An alternative dispute resolution (ADR) method by which disputing
parties use a neutral outside party to examine the issues and develop a
settlement, which is a final binding decision is known as: Answer:
Arbitration
◉ An insured has an auto accident and sustains bodily injury worth
$50,000. The responsible party carries auto liability limits of 15/30/15
which provides $15,000 for bodily injury for any one person per
occurrence. The insured carries Underinsured Motorist limits providing
$100,000 bodily injury for any one person per occurrence. Therefore, the
responsible party's policy will pay its limit of $15,000 and the insured's
Underinsured Motorist policy will pay: Answer: $35,000
,◉ Which of the following situations would NOT be considered an unfair
claim settlement practice according to the NAIC Model Act? Answer:
Indemnify Insurance pays thousands of claims per year, but on two of
those claims they failed to accept or deny the claim within the time
frame required by state law
◉ A claim is made on an excess liability policy. It is discovered during
the claims investigation, that the underlying liability policy and the
excess liability policy have different inception and expiration dates. The
adjuster finds that the different dates has created a situation where the
underlying policy was not in effect at the time of the occurrence, and
therefore cannot trigger the excess liability policy to pay the claim. This
situation is known as: Answer: Nonconcurrency.
◉ The auto liability limits $100/300/50 are an example of: Answer: split
limits
◉ The insured is covered under a standard HO-5 policy. What coverage
does the insured have for personal property? Answer: open perils
◉ Which of the following is used to bring a standardized insurance form
into compliance with state laws? Answer: Endorsements.
◉ When an insurer files a declaratory judgement action with a court of
law, all of the following questions will be resolved by the court,
, EXCEPT: Answer: Will the insurer become insolvent if they pay the
claim as submitted by the insured?
◉ The freight charge is paid by the shipper to the carrier: Answer: When
the cargo has been delivered to its destination point.
◉ Joe makes a small down payment on a sports car and finances the
remainder of the cost of the car with Benevolent Bank, Inc. He also
purchases a standard Personal Automobile policy through Binders
Keepers Insurance Company to cover the car. Joe makes one car
payment before he is caught with $200,000 of drugs in the car on his
way to deliver it to addicts for money. Joe is arrested and the car is
permanently confiscated by the authorities. How will coverage apply in
this situation? Answer: The policy will cover the damage to the body of
the automobile on behalf of Benevolent Bank, Inc.
◉ Imogene has purchased a personal auto policy including Parts A
through D. She is driving to work one day and rolls through a stop sign,
crashing into the car that had the right-of-way in an intersection.
Imogene submits a claim for the accident. Which of the following would
NOT be included in her claims payment? Answer: The transmission
problem Imogene was having prior to the accident..
◉ Which of the following watercraft would be covered under Section II
- Liability of the Homeowners forms? Answer: A watercraft in storage.
