Adjuster Kentucky Insurance Exam
Test Questions Answered Correctly
2025-2026 Update.
Four requirements of a legal contract - Answer 1. Agreement
2. Consideration
3. Competent Parties
4. Legal purpose
Six Characteristics of Insurance Contracts - Answer Personal, Adhesion, Utmost Good Faith,
Aleatory, Unilateral, Conditional
Adhesion - Answer One party dictates, the other agrees (or not)
aleatory - Answer Depends on a future, unknown event
unilateral - Answer Only one party agrees to perform an act
Four sections of an insurance policy - Answer Dec page, insuring agreement, conditions,
exclusions (also definitions and endorsements)
Speculative Risk - Answer Consciously taken, gain is possible (not insurable)
Pure Risk - Answer Only loss or no loss is possible, can be insured
hazard - Answer A condition increasing the likelihood or severity of a loss
Adverse Selection - Answer When someone buys insurance because they will probably file a
claims because of info about a risk that the insurer is unaware of
binder - Answer Temporary coverage for an insurance applicant until a policy is issued
warranty - Answer A promise that certain conditions will be met
Estoppel - Answer Prevents an insurer from denying coverage if the insured has reasonable
come to believe that he has such coverage based on insurers practices
,Moral Hazard - Answer Deliberate, involved reckless behavior, an attempt to defraud
Morale Hazard - Answer Indifference/carelessness, no intent to defraud, just feel more
secure because of insurance
proximate cause - Answer Unbroken chain of events between an occurrence and a loss, the
occurrence is the proximate cause of the loss
Claims process (5)) - Answer 1. filed 2. Acknowledgment 3. Investigation 4. Evaluation 5.
Adjustment
Actual Cash Value - Answer Market/depreciated value prior to destruction (replacement cost
minus depreciation)
Replacement Cost - Answer Don't subtract depreciation,
Common in home but not in auto
Valued Policy - Answer Assigns a set value to an item, avoids confusion of depreciation
stated value - Answer Value state by insured when applying for insurance. (Usually for when
insured can't afford to insure for full value)
Deductibles (fixed, percent, franchise) - Answer Fixed- set amount; percent- % of risks value;
franchise- policy kicks in after loss exceeds certain amount, insurer pays 100%
Coinsurance Penalty Formula - Answer (Amount of Insurance )/(Amount of Insurance
Required) x Loss - Deductible
Vicarious Liability - Answer Transfer of negligence (employer or parent)
Four elements of negligence - Answer 1-Duty of care
2-Derelict: breah of duty if care
3-Direct cause: legally recognizable injury occurs as a result of breach of duty of care
4-Damage: wrongful activity must have been caused the injury or harm that occurred
, Defenses to a Claim of Negligence - Answer assumption of risk, contributory negligence,
comparative negligence
Liability policy limits (3) - Answer Single limit, split limits, aggregate limits
tort - Answer Any wrongful act, intentional or unintentional
Diminution of Value - Answer Total amount of all damages resulting from an occurrence;
legal term used in calculating compensatory damages
General Damages - Answer Intangible, not quantifiable (future losses, mental anguish, loss of
reputation)
Special Damages - Answer Awarded for tangible losses, quantifiable value
Punitive Damages - Answer For intentional acts, as punishment
Discovery Rule - Answer Statute of limitations is based on when injury is/should have been
discovered
Adjuster reports (3) - Answer (1) initial - in 15 days, timelines, deadlines, apparent losses,
coverages, initial reserve (2) interim- every 30 days, progress made and any new info (3) final -
all facts and statements, coverages applied, adjusted losses, final claim disposition
Steps of a claim process (9) - Answer 1. Acknowledge the claim
2. Establish lines of communication
3. Prepare necessary paperwork
4. Determine insurer's liability in the claim
5. Investigate the losses
6. Determine the time and cost of repairs
7. Apply all policy coverages and provisions
8. Negotiate a settlement
9. Prepare final reports
How to determine insurer's liability (6) - Answer 1. Was the policy active
2. Does claimant have insurance interest
3. Does policy cover this type of damage
Test Questions Answered Correctly
2025-2026 Update.
Four requirements of a legal contract - Answer 1. Agreement
2. Consideration
3. Competent Parties
4. Legal purpose
Six Characteristics of Insurance Contracts - Answer Personal, Adhesion, Utmost Good Faith,
Aleatory, Unilateral, Conditional
Adhesion - Answer One party dictates, the other agrees (or not)
aleatory - Answer Depends on a future, unknown event
unilateral - Answer Only one party agrees to perform an act
Four sections of an insurance policy - Answer Dec page, insuring agreement, conditions,
exclusions (also definitions and endorsements)
Speculative Risk - Answer Consciously taken, gain is possible (not insurable)
Pure Risk - Answer Only loss or no loss is possible, can be insured
hazard - Answer A condition increasing the likelihood or severity of a loss
Adverse Selection - Answer When someone buys insurance because they will probably file a
claims because of info about a risk that the insurer is unaware of
binder - Answer Temporary coverage for an insurance applicant until a policy is issued
warranty - Answer A promise that certain conditions will be met
Estoppel - Answer Prevents an insurer from denying coverage if the insured has reasonable
come to believe that he has such coverage based on insurers practices
,Moral Hazard - Answer Deliberate, involved reckless behavior, an attempt to defraud
Morale Hazard - Answer Indifference/carelessness, no intent to defraud, just feel more
secure because of insurance
proximate cause - Answer Unbroken chain of events between an occurrence and a loss, the
occurrence is the proximate cause of the loss
Claims process (5)) - Answer 1. filed 2. Acknowledgment 3. Investigation 4. Evaluation 5.
Adjustment
Actual Cash Value - Answer Market/depreciated value prior to destruction (replacement cost
minus depreciation)
Replacement Cost - Answer Don't subtract depreciation,
Common in home but not in auto
Valued Policy - Answer Assigns a set value to an item, avoids confusion of depreciation
stated value - Answer Value state by insured when applying for insurance. (Usually for when
insured can't afford to insure for full value)
Deductibles (fixed, percent, franchise) - Answer Fixed- set amount; percent- % of risks value;
franchise- policy kicks in after loss exceeds certain amount, insurer pays 100%
Coinsurance Penalty Formula - Answer (Amount of Insurance )/(Amount of Insurance
Required) x Loss - Deductible
Vicarious Liability - Answer Transfer of negligence (employer or parent)
Four elements of negligence - Answer 1-Duty of care
2-Derelict: breah of duty if care
3-Direct cause: legally recognizable injury occurs as a result of breach of duty of care
4-Damage: wrongful activity must have been caused the injury or harm that occurred
, Defenses to a Claim of Negligence - Answer assumption of risk, contributory negligence,
comparative negligence
Liability policy limits (3) - Answer Single limit, split limits, aggregate limits
tort - Answer Any wrongful act, intentional or unintentional
Diminution of Value - Answer Total amount of all damages resulting from an occurrence;
legal term used in calculating compensatory damages
General Damages - Answer Intangible, not quantifiable (future losses, mental anguish, loss of
reputation)
Special Damages - Answer Awarded for tangible losses, quantifiable value
Punitive Damages - Answer For intentional acts, as punishment
Discovery Rule - Answer Statute of limitations is based on when injury is/should have been
discovered
Adjuster reports (3) - Answer (1) initial - in 15 days, timelines, deadlines, apparent losses,
coverages, initial reserve (2) interim- every 30 days, progress made and any new info (3) final -
all facts and statements, coverages applied, adjusted losses, final claim disposition
Steps of a claim process (9) - Answer 1. Acknowledge the claim
2. Establish lines of communication
3. Prepare necessary paperwork
4. Determine insurer's liability in the claim
5. Investigate the losses
6. Determine the time and cost of repairs
7. Apply all policy coverages and provisions
8. Negotiate a settlement
9. Prepare final reports
How to determine insurer's liability (6) - Answer 1. Was the policy active
2. Does claimant have insurance interest
3. Does policy cover this type of damage
