Michigan Insurance Adjuster Licensing
Exam Practice Questions And Correct
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1. An insurance adjuster’s primary responsibility is to:
A. Sell insurance policies
B. Investigate and evaluate insurance claims
C. Underwrite policies
D. Determine premium rates
An adjuster’s main role is to investigate claims, assess damages, and
determine insurer liability under the policy.
2. What type of contract is an insurance policy?
A. Unilateral
B. Aleatory
C. Voidable
D. Bilateral
Insurance contracts are aleatory because they involve unequal
exchange contingent on uncertain events.
3. A binding authority granted to an adjuster by an insurer allows the
adjuster to:
A. Approve policy changes
B. Settle claims on behalf of the insurer
C. Underwrite new policies
D. Cancel coverage
Binding authority gives an adjuster power to negotiate and finalize
claim settlements for the insurer.
,4. The principle of indemnity ensures that a claimant is:
A. Made a profit from loss
B. Compensated above loss value
C. Restored to pre-loss financial position
D. Paid punitive damages
Indemnity prohibits gain from insurance, limiting recovery to actual
financial loss.
5. In Michigan, an adjuster license is required to handle claims for:
A. Life insurance only
B. Health insurance only
C. Property and casualty insurance claims
D. No insurance claims
Adjusters handling property/casualty claims must be licensed in
Michigan.
6. What is the purpose of the deductible in an insurance policy?
A. Increase premium
B. Reduce coverage
C. Reduce moral hazard and share loss cost with insured
D. Eliminate insurer liability
Deductibles require insureds to absorb part of loss, discouraging
small claims and reducing insurer exposure.
7. When an adjuster assesses property damage, they should use:
A. Guess estimates
B. Historical prices only
C. Current repair or replacement cost
D. Insured’s opinion
Adjusters must determine accurate damage values based on current
market repair or replacement costs.
8. A reserve set by an insurer on a claim represents:
A. Insured’s savings
B. Profit margin
C. Estimated amount to be paid on the claim
D. Advertising expense
Reserves estimate potential claim settlement costs, guiding financial
reporting.
, 9. The term “proof of loss” refers to:
A. Policy issuance
B. Claim payment
C. Documentation of claim details submitted by insured
D. Premium payment
Proof of loss documents facts, amount of loss, and support for claim
payment.
10. An adjuster must always adhere to the duty of:
A. Advocate for insured
B. Ignore policy terms
C. Act with good faith and fair dealing
D. Delay claim processing
Adjusters owe all parties honest, fair claim handling without undue
delay.
11. Subrogation allows an insurer to:
A. Waive deductible
B. Increase premium
C. Recover loss payments from responsible third parties
D. Cancel policy
Subrogation lets insurer pursue third parties to recover costs the
insurer paid.
12. The term salvage in property insurance means:
A. Premium refund
B. Total loss only
C. Remaining damaged property with value after loss
D. Policy exclusion
Salvage refers to leftover value that can be sold or reclaimed after
loss.
13. An adjuster who misrepresents coverage to a claimant may be
guilty of:
A. Lawful practice
B. Ethical conduct
C. Insurance fraud or unfair trade practice
D. Good faith
Exam Practice Questions And Correct
Answers (Verified Answers) Plus
Rationale 2026 Q&A| Instant Download
1. An insurance adjuster’s primary responsibility is to:
A. Sell insurance policies
B. Investigate and evaluate insurance claims
C. Underwrite policies
D. Determine premium rates
An adjuster’s main role is to investigate claims, assess damages, and
determine insurer liability under the policy.
2. What type of contract is an insurance policy?
A. Unilateral
B. Aleatory
C. Voidable
D. Bilateral
Insurance contracts are aleatory because they involve unequal
exchange contingent on uncertain events.
3. A binding authority granted to an adjuster by an insurer allows the
adjuster to:
A. Approve policy changes
B. Settle claims on behalf of the insurer
C. Underwrite new policies
D. Cancel coverage
Binding authority gives an adjuster power to negotiate and finalize
claim settlements for the insurer.
,4. The principle of indemnity ensures that a claimant is:
A. Made a profit from loss
B. Compensated above loss value
C. Restored to pre-loss financial position
D. Paid punitive damages
Indemnity prohibits gain from insurance, limiting recovery to actual
financial loss.
5. In Michigan, an adjuster license is required to handle claims for:
A. Life insurance only
B. Health insurance only
C. Property and casualty insurance claims
D. No insurance claims
Adjusters handling property/casualty claims must be licensed in
Michigan.
6. What is the purpose of the deductible in an insurance policy?
A. Increase premium
B. Reduce coverage
C. Reduce moral hazard and share loss cost with insured
D. Eliminate insurer liability
Deductibles require insureds to absorb part of loss, discouraging
small claims and reducing insurer exposure.
7. When an adjuster assesses property damage, they should use:
A. Guess estimates
B. Historical prices only
C. Current repair or replacement cost
D. Insured’s opinion
Adjusters must determine accurate damage values based on current
market repair or replacement costs.
8. A reserve set by an insurer on a claim represents:
A. Insured’s savings
B. Profit margin
C. Estimated amount to be paid on the claim
D. Advertising expense
Reserves estimate potential claim settlement costs, guiding financial
reporting.
, 9. The term “proof of loss” refers to:
A. Policy issuance
B. Claim payment
C. Documentation of claim details submitted by insured
D. Premium payment
Proof of loss documents facts, amount of loss, and support for claim
payment.
10. An adjuster must always adhere to the duty of:
A. Advocate for insured
B. Ignore policy terms
C. Act with good faith and fair dealing
D. Delay claim processing
Adjusters owe all parties honest, fair claim handling without undue
delay.
11. Subrogation allows an insurer to:
A. Waive deductible
B. Increase premium
C. Recover loss payments from responsible third parties
D. Cancel policy
Subrogation lets insurer pursue third parties to recover costs the
insurer paid.
12. The term salvage in property insurance means:
A. Premium refund
B. Total loss only
C. Remaining damaged property with value after loss
D. Policy exclusion
Salvage refers to leftover value that can be sold or reclaimed after
loss.
13. An adjuster who misrepresents coverage to a claimant may be
guilty of:
A. Lawful practice
B. Ethical conduct
C. Insurance fraud or unfair trade practice
D. Good faith
