COLORADO PUBLIC ADJUSTER LICENSING EXAM
QUESTIONS AND CORRECT ANSWERS (VERIFIED
ANSWERS) Q&A 2026 |INSTANT DOWNLOAD PDF
1. What is the primary role of a public adjuster?
A) Represent the insurance company
B) Represent the insured in claim settlement
C) Regulate insurance laws
D) Underwrite insurance policies
Rationale: Public adjusters advocate for policyholders in claims.
Correct answer: B
2. Which entity licenses public adjusters in Colorado?
A) Federal Insurance Office
B) Colorado Division of Insurance
C) NAIC
D) IRS
Rationale: State insurance departments handle licensing.
Correct answer: B
3. A contract of insurance is best described as:
A) A guarantee of profit
B) A unilateral contract
C) A negotiable instrument
D) A partnership agreement
,Rationale: Only insurer makes enforceable promise.
Correct answer: B
4. What is indemnity in insurance?
A) Profit from a loss
B) Restoration to prior financial position
C) Payment of premiums
D) Risk transfer to reinsurer
Rationale: Indemnity restores, not profits.
Correct answer: B
5. Which principle requires utmost honesty from both parties?
A) Subrogation
B) Utmost good faith
C) Contribution
D) Estoppel
Rationale: Insurance contracts require full disclosure.
Correct answer: B
6. A deductible is:
A) Amount insurer pays first
B) Amount insured pays before coverage applies
C) Commission paid to adjuster
D) Tax on premiums
,Rationale: Deductible reduces insurer liability.
Correct answer: B
7. Replacement cost means:
A) Market value minus depreciation
B) Cost to replace with similar new item
C) Original purchase price
D) Salvage value
Rationale: No depreciation considered.
Correct answer: B
8. Actual Cash Value (ACV) is:
A) Replacement cost + profit
B) Replacement cost minus depreciation
C) Market speculation value
D) Policy limit
Rationale: ACV accounts for depreciation.
Correct answer: B
9. Subrogation allows:
A) Insured to file multiple claims
B) Insurer to recover losses from third party
C) Adjuster to increase fees
D) Policy cancellation
, Rationale: Rights transfer after payment.
Correct answer: B
10. What is a peril?
A) Policy document
B) Cause of loss
C) Insurance premium
D) Deductible clause
Rationale: Peril is risk event.
Correct answer: B
11. Which is NOT a basic insurance principle?
A) Indemnity
B) Utmost good faith
C) Speculation guarantee
D) Insurable interest
Rationale: Insurance avoids gambling profits.
Correct answer: C
12. Insurable interest must exist:
A) Only at policy purchase
B) Only at loss time
C) At both policy inception and loss
D) Never required
QUESTIONS AND CORRECT ANSWERS (VERIFIED
ANSWERS) Q&A 2026 |INSTANT DOWNLOAD PDF
1. What is the primary role of a public adjuster?
A) Represent the insurance company
B) Represent the insured in claim settlement
C) Regulate insurance laws
D) Underwrite insurance policies
Rationale: Public adjusters advocate for policyholders in claims.
Correct answer: B
2. Which entity licenses public adjusters in Colorado?
A) Federal Insurance Office
B) Colorado Division of Insurance
C) NAIC
D) IRS
Rationale: State insurance departments handle licensing.
Correct answer: B
3. A contract of insurance is best described as:
A) A guarantee of profit
B) A unilateral contract
C) A negotiable instrument
D) A partnership agreement
,Rationale: Only insurer makes enforceable promise.
Correct answer: B
4. What is indemnity in insurance?
A) Profit from a loss
B) Restoration to prior financial position
C) Payment of premiums
D) Risk transfer to reinsurer
Rationale: Indemnity restores, not profits.
Correct answer: B
5. Which principle requires utmost honesty from both parties?
A) Subrogation
B) Utmost good faith
C) Contribution
D) Estoppel
Rationale: Insurance contracts require full disclosure.
Correct answer: B
6. A deductible is:
A) Amount insurer pays first
B) Amount insured pays before coverage applies
C) Commission paid to adjuster
D) Tax on premiums
,Rationale: Deductible reduces insurer liability.
Correct answer: B
7. Replacement cost means:
A) Market value minus depreciation
B) Cost to replace with similar new item
C) Original purchase price
D) Salvage value
Rationale: No depreciation considered.
Correct answer: B
8. Actual Cash Value (ACV) is:
A) Replacement cost + profit
B) Replacement cost minus depreciation
C) Market speculation value
D) Policy limit
Rationale: ACV accounts for depreciation.
Correct answer: B
9. Subrogation allows:
A) Insured to file multiple claims
B) Insurer to recover losses from third party
C) Adjuster to increase fees
D) Policy cancellation
, Rationale: Rights transfer after payment.
Correct answer: B
10. What is a peril?
A) Policy document
B) Cause of loss
C) Insurance premium
D) Deductible clause
Rationale: Peril is risk event.
Correct answer: B
11. Which is NOT a basic insurance principle?
A) Indemnity
B) Utmost good faith
C) Speculation guarantee
D) Insurable interest
Rationale: Insurance avoids gambling profits.
Correct answer: C
12. Insurable interest must exist:
A) Only at policy purchase
B) Only at loss time
C) At both policy inception and loss
D) Never required
