Adjuster license practice test
The purpose of the principle of indemnity is - ANS to prevent an insured from making a profit on a loss.
Jerrod is awarded $4000 in a court case after Ollie accidentally starts a fire and burns down his detached
garage. This award is an example of - ANS special damages
Which of the following best describes a Fraternal Benefit Society - ANS A fraternal benefit society is a
social organization based around common interests and beliefs.
SureTrust Insurance was founded and operates in Texas. In Texas, SureTrust is considered: - ANS a
domestic insurer.
Jackie files a lawsuit against Ginger after Ginger's three-year-old daughter ruins Jackie's laptop during a
flight. When they go to court, Jackie is the - ANS plaintiff
A captive insurance company - ANS exists solely to provide insurance for its parent company.
Which of the following is NOT a qualification of an insurable risk - ANS An insurable risk must have
guaranteed protection from damage
Five years ago, when Rosamund was one year old, she had an expensive procedure done to remove
what a doctor said was a cancerous tumor behind her knee. Her parents have recently discovered, upon
the return of her condition, that the growth was merely a harmless cyst and not a dangerous tumor. Will
the Statute of Limitations allow her parents to file a suit against the doctor? - ANS Yes; suits for Medical
Malpractice are allowed until the child is eight years old
Which of the following statements about a moral hazard is FALSE? - ANS It is the result of an
unconscious behavior.
,An individual has ________________ to file a lawsuit for False Arrest in Florida. - ANS four years
John has purchased a homeowners insurance policy with a percentage deductible based on the total
limit of insurance for his home. John insures his home for $600,000, and the policy includes a 3%
deductible. A huge thunderstorm passes through one night and blows the roof off his house. The
insurance company estimates that covered damage totals $80,000. How much indemnification should
John expect for the losses to his roof? - ANS $62,000
(First, calculate John's deductible, which is 3% of $600,000. This comes to $18,000. Then subtract the
deductible from the covered damages to get John's indemnification. $80,000 minus $18,000 equals
$62,000.)
What is the formula for actual cash value? - ANS Replacement cost minus total depreciation
Last month, an elderly man slipped and fell on a cracked, uneven icy sidewalk on Mulberry Street. He
sued the homeowner and was awarded $60,000. The insurers of other properties on Mulberry Street
would consider this award to be: - ANS a legal hazard
Which of the following best defines premium? - ANS The fee paid by the insured in exchange for an
insurance policy
The city of Hillsdale passed a law dictating that all dogs must wear collars with tags. This is an example of
what kind of law? - ANS Statutory
Which of the following is true?
A. Kevin's auto insurance policy protects his car from damage.
B. Kevin's auto insurance policy now covers Bill, who bought Kevin's truck.
C. When Kevin sold his truck to Bill, he lost his auto insurance coverage.
,D. Kevin's insurance policy covers him for losses to his new car, even though he sold his truck, which was
previously covered under his policy, to Bill. - ANS Kevin's insurance policy covers him for losses to his
new car, even though he sold his truck, which was previously covered under his policy, to Bill.
In Florida, an insurer has ___ days to pay or deny a claim - ANS 90
Which of the following statements best describes the Law of Large Numbers? - ANS The larger the
number of units insured, the more accurately the insurer can predict the number of claims from that
group.
Which of the following refers to being restored to the financial condition you were in before a loss? -
ANS Indemnification
To meet the 80% level of co-insurance required by his lender, Tom discovers he must insure his home
for at least $320,000. What is the value of Tom's home? - ANS $400,000
(400,000 - 80% = 320,000)
Which of the following statements about risk retention groups is FALSE?
A. Risk retention groups are subject to state laws regarding Unfair Claims Settlement practices.
B. Risk retention groups are a form of self-insurance.
C. Risk retention groups can provide commercial liability insurance.
D. Risk retention groups must be licensed in every state in which they operate. - ANS Risk retention
groups must be licensed in every state in which they operate.
Which of the following statements about insurable interest is FALSE?
A. Maintaining property values allows your neighbor to have an insurable interest in your house.
B. When a renter leases your house, your insurable interest in the home remains.
, C. Purchasing an insurance policy on your home helps protect your insurable interest in the home.
D. A wife can have an insurable interest in her husband's life. - ANS Maintaining property values allows
your neighbor to have an insurable interest in your house.
Ginger, under the mistaken impression that Jackie made a lewd gesture at her, attacks and injures Jackie
after a soccer game. When Jackie takes Ginger to court, Ginger is the: - ANS tortfeasor.
Jane's shed burns to the ground during a tornado, when the high winds break a wall of the shed,
knocking over a lantern inside. What is the proximate cause of the loss? - ANS The tornado
Josephine's gas station suffered severe damage when one of the fuel tanks caught fire and exploded.
After completing his inspection, the adjuster determines that Josephine's claim is not covered because
she did not have automatic shut-offs for the fuel tanks. If this safety measure was in fact required in
order for coverage to apply, where might Josephine find it in the policy? - ANS Conditions
ABC Masonry, Inc. has an aggregate liability policy with limits of 100,000/300,000. One day, an accident
at a construction site leads to $150,000 in damage to public property. Assuming the cause of loss is
covered under ABC Masonry's liability policy, how will this claim be paid? - ANS The insurer pays
$100,000; the aggregate limit is now $200,000; and ABC Masonry must pay $50,000.
(Since the per-occurrence limit is only $100,000, that's all the insurer will pay. This payment reduces the
aggregate to $200,000 and leaves $50,000 that ABC Masonry is responsible for paying.)
Which of the following incidents would a liability insurance policy cover? - ANS A man slips inside a
grocery store and injures himself.
A passenger on a commercial airline flight was injured when the plane crashed due to a mechanical
problem. In court, the injured passenger's lawyer could invoke the doctrine of: - ANS Res Ipsa Loquitur
When an applicant for a homeowners insurance policy lists the address, size, and description of his
home, he is providing: - ANS representations.
The purpose of the principle of indemnity is - ANS to prevent an insured from making a profit on a loss.
Jerrod is awarded $4000 in a court case after Ollie accidentally starts a fire and burns down his detached
garage. This award is an example of - ANS special damages
Which of the following best describes a Fraternal Benefit Society - ANS A fraternal benefit society is a
social organization based around common interests and beliefs.
SureTrust Insurance was founded and operates in Texas. In Texas, SureTrust is considered: - ANS a
domestic insurer.
Jackie files a lawsuit against Ginger after Ginger's three-year-old daughter ruins Jackie's laptop during a
flight. When they go to court, Jackie is the - ANS plaintiff
A captive insurance company - ANS exists solely to provide insurance for its parent company.
Which of the following is NOT a qualification of an insurable risk - ANS An insurable risk must have
guaranteed protection from damage
Five years ago, when Rosamund was one year old, she had an expensive procedure done to remove
what a doctor said was a cancerous tumor behind her knee. Her parents have recently discovered, upon
the return of her condition, that the growth was merely a harmless cyst and not a dangerous tumor. Will
the Statute of Limitations allow her parents to file a suit against the doctor? - ANS Yes; suits for Medical
Malpractice are allowed until the child is eight years old
Which of the following statements about a moral hazard is FALSE? - ANS It is the result of an
unconscious behavior.
,An individual has ________________ to file a lawsuit for False Arrest in Florida. - ANS four years
John has purchased a homeowners insurance policy with a percentage deductible based on the total
limit of insurance for his home. John insures his home for $600,000, and the policy includes a 3%
deductible. A huge thunderstorm passes through one night and blows the roof off his house. The
insurance company estimates that covered damage totals $80,000. How much indemnification should
John expect for the losses to his roof? - ANS $62,000
(First, calculate John's deductible, which is 3% of $600,000. This comes to $18,000. Then subtract the
deductible from the covered damages to get John's indemnification. $80,000 minus $18,000 equals
$62,000.)
What is the formula for actual cash value? - ANS Replacement cost minus total depreciation
Last month, an elderly man slipped and fell on a cracked, uneven icy sidewalk on Mulberry Street. He
sued the homeowner and was awarded $60,000. The insurers of other properties on Mulberry Street
would consider this award to be: - ANS a legal hazard
Which of the following best defines premium? - ANS The fee paid by the insured in exchange for an
insurance policy
The city of Hillsdale passed a law dictating that all dogs must wear collars with tags. This is an example of
what kind of law? - ANS Statutory
Which of the following is true?
A. Kevin's auto insurance policy protects his car from damage.
B. Kevin's auto insurance policy now covers Bill, who bought Kevin's truck.
C. When Kevin sold his truck to Bill, he lost his auto insurance coverage.
,D. Kevin's insurance policy covers him for losses to his new car, even though he sold his truck, which was
previously covered under his policy, to Bill. - ANS Kevin's insurance policy covers him for losses to his
new car, even though he sold his truck, which was previously covered under his policy, to Bill.
In Florida, an insurer has ___ days to pay or deny a claim - ANS 90
Which of the following statements best describes the Law of Large Numbers? - ANS The larger the
number of units insured, the more accurately the insurer can predict the number of claims from that
group.
Which of the following refers to being restored to the financial condition you were in before a loss? -
ANS Indemnification
To meet the 80% level of co-insurance required by his lender, Tom discovers he must insure his home
for at least $320,000. What is the value of Tom's home? - ANS $400,000
(400,000 - 80% = 320,000)
Which of the following statements about risk retention groups is FALSE?
A. Risk retention groups are subject to state laws regarding Unfair Claims Settlement practices.
B. Risk retention groups are a form of self-insurance.
C. Risk retention groups can provide commercial liability insurance.
D. Risk retention groups must be licensed in every state in which they operate. - ANS Risk retention
groups must be licensed in every state in which they operate.
Which of the following statements about insurable interest is FALSE?
A. Maintaining property values allows your neighbor to have an insurable interest in your house.
B. When a renter leases your house, your insurable interest in the home remains.
, C. Purchasing an insurance policy on your home helps protect your insurable interest in the home.
D. A wife can have an insurable interest in her husband's life. - ANS Maintaining property values allows
your neighbor to have an insurable interest in your house.
Ginger, under the mistaken impression that Jackie made a lewd gesture at her, attacks and injures Jackie
after a soccer game. When Jackie takes Ginger to court, Ginger is the: - ANS tortfeasor.
Jane's shed burns to the ground during a tornado, when the high winds break a wall of the shed,
knocking over a lantern inside. What is the proximate cause of the loss? - ANS The tornado
Josephine's gas station suffered severe damage when one of the fuel tanks caught fire and exploded.
After completing his inspection, the adjuster determines that Josephine's claim is not covered because
she did not have automatic shut-offs for the fuel tanks. If this safety measure was in fact required in
order for coverage to apply, where might Josephine find it in the policy? - ANS Conditions
ABC Masonry, Inc. has an aggregate liability policy with limits of 100,000/300,000. One day, an accident
at a construction site leads to $150,000 in damage to public property. Assuming the cause of loss is
covered under ABC Masonry's liability policy, how will this claim be paid? - ANS The insurer pays
$100,000; the aggregate limit is now $200,000; and ABC Masonry must pay $50,000.
(Since the per-occurrence limit is only $100,000, that's all the insurer will pay. This payment reduces the
aggregate to $200,000 and leaves $50,000 that ABC Masonry is responsible for paying.)
Which of the following incidents would a liability insurance policy cover? - ANS A man slips inside a
grocery store and injures himself.
A passenger on a commercial airline flight was injured when the plane crashed due to a mechanical
problem. In court, the injured passenger's lawyer could invoke the doctrine of: - ANS Res Ipsa Loquitur
When an applicant for a homeowners insurance policy lists the address, size, and description of his
home, he is providing: - ANS representations.
