Insurance adjuster exam questions Test bank
James holds a DP-1 policy on his house for $150,000. His wife, Jane, feels that they should really have closer to $200,000 in total coverage, so she takes out an additional $50,000 DP-1 policy on the same dwelling. Both policies pay settlements on a pro rata basis. After a fire causes $32,000 in damage to the home, how much of the damages will be covered by Jane's DP-1 policy?
8,000
Which of the following would be covered under Coverage B of a typical Business Owners Policy?
Inventory
Which statement about the Jones Act is TRUE?
It protects injured seamen by allowing them to sue for damages and to choose a jury trial.
Under Jacqueline's Personal Injury Protection, all of the following would be covered for bodily injuries except:
Jacqueline's sister who also has PIP.
Appraisal is used to decide:
the settlement amount
In a Personal Auto Policy, the split limits under the liability section will apply to all of the following, EXCEPT:
the total for property damage to the insured's auto caused by the accident.
Insurance policies are aleatory contracts. This means:
they depend on an unknown future event.
A motor carrier that offers transportation services to the public on a regular basis (rather than only for hire) is known as a:
Common Carrier
You are riding in Sarah's car when she fails to yield and causes an accident. Which of the following coverages would NOT pay for your injuries?
Sarah's Collision coverage
As Seth is driving along a country road, a deer jumps out in front of him. This causes Seth to veer off the road and crash into Cassie's wood fence and a brick mailbox. As a result of the crash, Seth suffers $3,700 in damage to his sedan and causes $1,800 in damage to Cassie's property. How much of the damage will be covered by Seth's liability insurance?
$1800
Frank purchases a homeowners policy worth $700,000 with a 4% deductible. A few months later, a heavy hailstorm destroys his roof, porch, and windows, causing $50,000 in damages. Frank should expect __________ from the insurance company to pay for the damages.
$22,000
Bill's home was destroyed by a tornado, and Nick is adjusting the claim. Bill's home will cost $235,000 to rebuild. His homeowners policy has a $225,000 limit and a $1,700 deductible. How much would Nick typically calculate the final settlement amount to be?
$225,000
Kerry accidentally set his kitchen on fire while frying a turkey for the holidays. The fire results in $32,000 in damage to his home, which is valued at $175,000. However, Kerry only has a $120,000 homeowners policy limit. Assuming Kerry's policy has the 80% coinsurance requirement, approximately how much of the damage will Kerry be responsible for paying? (Round all numbers to three decimal places.)
$4,576
XYZ Trucking Company has a franchise deductible policy with a deductible of $100,000. When a tornado rips through their lot, the company sustains $965,000 in damage. How much of the damage will XYZ Trucking Company be responsible for paying?
0$
In South Carolina, how much notice must an insurer give when cancelling a dwelling policy for non-payment of premiums?
10 days
Under the Fraud and False Statements Act, what is the maximum prison sentence that can be imposed on an insurance professional who attempts to influence, obstruct, or impede the proper administration of the law while an insurance company is under investigation?
10 years
The limit of liability for Coverage B - Other Structures is typically:
10% of coverage A
An injured employee or his representative must file a claim within ___ years of an accident or ___ years from the date of death in order to receive workers compensation benefits.
2,2
A typical homeowners policy without a Home Business endorsement has how much coverage available for business personal property?
2,500
Bill's home was destroyed by a tornado, and Nick is adjusting the claim. Bill's home will cost $235,000 to rebuild. His homeowners policy has a $225,000 limit and a $1,700 deductible. How much would Nick typically calculate the final settlement amount to be?
225000, the deductible is absorbed into the amount of damage exceeding the policy limit.
When lightning strikes Brittany's home during a storm, the resulting fire completely consumes the structure before firefighters manage to put it out. Brittany is fully insured by a DP-3 policy with a limit of $245,000, every bit of which is needed to rebuild her home. In addition, she receives a bill from the fire department for $650. How much is Brittany likely to receive from her insurer in response to her claim?
245,500
Jim has a PAP with liability limits of 25/50/25 and $5,000 in medical payments coverage. Jim causes an accident which leaves him with $7,500 in medical costs and $50,000 in property damage to a parked BMW. How much will Jim be out of pocket in total for all damages occurring in this accident?
27,500
Linda's home is worth $525,000. She has a homeowners policy with a $500,000 limit and a 1.5% deductible. When Linda's husband sets their kitchen on fire while frying a turkey, he accidentally causes $36,000 in damages. How much can Linda and her husband expect to receive in their settlement?
28125
How long before the expiration or anniversary date should the insurer notify the insured that it intends to renew the policy?
30 days
The DMV suspended Ruby's license and registration when she was caught driving with no insurance. This is her first offense, but Ruby does not surrender her license and registration to the DMV. Which of the following penalties might Ruby face?
30 days in prison
A South Carolina driver with minimum liability limits gets into an accident in Texas, where the minimum liability requirement is 30/60/25. How much liability coverage will his policy provide for the damage?
30/60/25
A policyholder who does not currently have Comprehensive Coverage, but would like to add it to a newly purchased vehicle, must notify the insurer within:
4 days
Graham has an auto liability policy with limits of 30/60/25. While heading to the grocery store, Graham turns onto 2nd street and slams into a stopped vehicle. The driver of the car, Jeremy, is not hurt, but Graham has totaled Jeremy's $30,000 SUV. How much, if any, of the damages will Graham have to pay out of pocket?
5,000
During a storm, heavy winds cause a tree limb to break and fall onto Paul's house, causing $6,500 in damage. Paul's insurance company now considers his house:
A Loss
An economic device used to protect against the risk of realizing unforeseen and extraordinary financial loss is called:
A Peril
Jim has been arrested for drunk driving. In order to be allowed out of jail before his court date, Jim will most likely need:
A bail bond
Which of the following best describes a "risk," according to the insurance definition?
A potential for financial loss
What is the main difference between a stock insurance company and a mutual insurance company?
A stock insurance company is owned by its shareholders, a mutual insurance company is owned by its policy holders
One of the biggest movie studios has just agreed to finance and release Harvey's independent film. However, the studio wants a guarantee that Harvey's movie will be completed and delivered on schedule and within budget. Harvey can satisfy this requirement by purchasing:
A surety bond
Which of the following sequences is most likely in the correct chronological order?
Acknowledge the claim, then open a line of communication with the claimant.
Lena is moving to Japan for two years in order to take advantage of a promotion at her job. She won't bring her 4-seater propeller plane with her. What kind of aviation insurance should Lena purchase for her plane while it's in storage and she is away?
All risks- Not in motion
What does the adjuster's code of ethics say about release forms?
An adjuster shall not draft any form of release, unless approved in writing in advance by the insurer.
During a storm, heavy winds blow a tree over in Norman's back yard, causing it to fall on his house and damage his roof. The wind blowing over the tree would be considered:
An occurrence
In a condo association's commercial property policy, which of the following items would be covered by the Condominium Coverage Form?
An elevator in the common area
Which of the following would NOT be considered an "occurrence" according to a CGL policy?
An employee is mopping the floor of a grocery store while numerous people are present.
Darnell is applying for auto insurance with his agent. Currently, he only wants to get a minimal amount of coverage to keep his premiums as low as possible, so he decides not to include uninsured motorist coverage on his policy. His agent has him sign a document giving up his right to this coverage. What is this called?
An express waiver
Bailee
An individual or company that receives the property of someone else for a special purpose and returns the property after use.
Which of the following is NOT an endorsement commonly added to a Dwelling Policy?
Annual depreciation
In a third-party claim, the injured person has a duty to:
Authorize the insurer to look at her medical records
Which driver is meeting the minimum insurance requirements for South Carolina?
Ben has liability coverage with limits of 100/300/100 and UM coverage with limits of 25/50/25
Jake and his neighbor Bill are working to repair Jake's roof. Jake sets up two ladders side-by-side for each of them to use while working on the gutters. While at the top of the ladder, Jake falls into Bill's ladder, sending both of them tumbling to the ground. Whose injuries will be covered by Jake's homeowners policy under Coverage E - Personal Liability?
Bill's Injuries
Flora is driving in the rain when she skids off the road and slams into Cam's billboard, totalling her car and causing $2,000 in damage to the billboard. Flora has an auto policy with ABC Insurance. Cam files a third-party claim and ABC Insurance pays him $1,500 for the billboard. Which of the following is TRUE?
Cam may sue Flora for $500.
This type of trim is typically placed around windows and doors to give them a finished look.
Casement
Which of the following is NOT a way to determine an insurer's liability in a claim?
Check if the current month's premium had been paid at the time of loss.
Which of the following would most likely be covered under Other Than Collision coverage in a personal auto policy?
Civil Unrest
Greg works for XYZ Insurance. Part of his daily tasks involve visiting sites, investigating liability, and determining the time and cost of repairs. On occasion, Greg will have to negotiate with claimants as part of his job. Which type of agent is Greg?
Claims Adjuster
Sam was tired of the neighbor's trees along the fence line poking through the fence and dropping leaves in his yard, so he reached across the fence with his pole saw and cut down the neighbor's tree. Sam's neighbor was upset and sued him for the damages. Sam is ordered to pay $500 for the tree. Under which category of damage would this fall?
Compensory Damage
The use of which doctrine would result in David receiving no damages for his loss, if he were found 25% responsible for his own loss?
Contributory negligence
Which part of a homeowners policy provides coverage for the medical expenses of third parties who are injured on your property?
Coverage F
Which of the following statements about a PAF's coverage for silverware and goldware is FALSE?
Coverage does not include silver-plate and gold-plate items.
Which of the following topics would NOT likely be found in the Conditions section of the Standard Fire Policy?
Covered Perils
Helen is looking to reduce her insurance costs for her home. She currently has an HO-3 open-peril policy, but she doesn't feel she needs liability coverage anymore and wants to change over to a dwelling policy. Though the policies are fundamentally different, which dwelling policy would most closely resemble Helen's current homeowners policy?
DP-3
In each of the following, the insured has filed a claim against their homeowners policy. In which of these scenarios would the insurer most likely deny the claim?
Darla files a claim when her estranged husband sets fire to her back deck, but she doesn't notify the police for fear of getting her husband in trouble.
While reviewing his DP-3 policy, Jim notices that some additional coverages are included in his Coverage A limit, while others are paid in addition to that limit. Which TWO additional coverages are included within Jim's Coverage A limit?
Debris Removal and Reasonable Repairs
Which of the following is NOT one of the primary functions of an insurance adjuster?
Defending the insurer
Under a garagekeepers policy, which coverage would pay for a covered loss after the vehicle owner's personal insurance has paid up to its policy limits?
Direct Excess
Under a garagekeepers policy, which coverage would split a covered loss with the car owner's personal insurance?
Direct Primary
Which Commercial Auto endorsement can provide liability, medical payments, physical damage, and UM/UIM coverages for a specific named individual who does not own his own car?
Drive other car
Which endorsement to the BAP would extend policy coverage to Jenny's employee Trisha, who drives her own car around the city to sell the company's hair products?
Employees as additionally insured
Which of the following statements about a Standard Fire Policy is TRUE?
Endorsements either add or change coverage.
Which of the following adjusters is acting appropriately as a fiduciary agent?
Ernest knows the claimant can't possibly afford to pay for their extensive damages, but he denies the claim anyway because the cause of loss was not covered by the policy.
An adjuster's preliminary claim report should:
Establish a claim reserve
Peter, an insurance adjuster, is going over a claim. He's examining the deductible, the total claimed damages, the policy limits, other policies that might also cover the claim, whether the property is adequately insured, and whether or not a coinsurance penalty applies. Which function of an adjuster is Peter performing?
Evaluating a claim
Brendan is applying for a new job at Acme Superstore. Which law limits how much information Brendan's bank and mortgage lender can share with Acme Superstore, with regard to Brendan's finances and credit score?
Fair Credit reporting act
Of the four types of bonds listed below, which guarantees that the principal will NOT do something?
Fidelity Bonds
Which of these homeowners policy coverages does NOT usually have a deductible?
Fire department Service Charge
Which of the following is NOT an example of an "indirect loss"?
Fire department hosing down a house fire causes water damage
Homeowners policies don't provide coverage for:
Flood damage
Which of the following statements about flood insurance is FALSE?
Flood insurance rates are determined by private insurers
Part D of the Personal Auto Policy does NOT cover:
Freezing
If a ship's captain has to jettison a disproportionate amount of one policyholder's cargo in order to save the ship, there is a provision of ocean marine insurance that spreads that loss among all of the insurers involved with the ship. What is this provision called?
General Average clause
Jeremy is purchasing a homeowners policy for his house in the country. He is a beer enthusiast and is especially concerned with protecting his home brewing equipment from the black bears commonly seen in the area. Which of the following is the least expensive option that meets Jeremy's special need?
HO-5
Jim is completely "upside down" financially on his car. He owes the finance company $8,000. If he sells the car, he knows he'll only get about $4,000 for it. But Jim knows that if the car was somehow stolen, his insurance company would pay him somewhere in the neighborhood of $7,000. Jim decides to have a friend steal the car and "make it disappear." Jim then files a claim with his insurance company to report his car stolen. Which best represents Jim's actions?
Hard Fraud
Oscar is covered for fire and lightning under his basic Standard Fire Policy, but he is concerned about facing financial losses related to other perils. Which of the following would be TRUE for Oscar?
He can purchase endorsements for protection from additional perils at any time, with his insurer's agreement.
Hannah is six months pregnant when she switches jobs. Which law ensures that Hannah's "pre-existing condition" will be covered under her new health insurance plan?
Health Insurance Portability and Accountability Act
In a Commercial Auto Policy, Symbol #8 represents:
Hired Autos
Jeremy is purchasing a homeowners policy for his house in the country. He is a beer enthusiast and is especially concerned with protecting his home brewing equipment from the black bears commonly seen in the area. Which of the following is the least expensive option that meets Jeremy's special need?
Homeowners 5
Which ISO is known as the Condominium form?
Homeowners 6
What are the two main types of coverage usually found in an aviation insurance policy?
Hull coverage and Liability coverage
Which of the following statements about litigation is FALSE?
In liability claims, the defendant is usually a third party.
Newman Medical has a balcony on the top floor of their headquarters. During a severe rainstorm, lightning strikes the balcony, breaking it into pieces. The company would like to repair the balcony, but the state's new building codes require construction materials that are quite a bit more expensive than what was used originally. What coverage in their commercial property policy pays for this extra expense?
Increased construction cost
What information does NOT need to be included in the notice given to the insured any time the insurer issues or renews an insurance policy?
Information about how to obtain coverage through the SCWHUA
Widespread insurance fraud has led to increases in the cost of goods and higher insurance premiums for the American public. Which of the following is NOT a contributing factor?
Insurance fraud is seen as a low-risk, high-profit crime
James rents a home to Jill and maintains a DP-3 policy on the dwelling. One day, Jill accidently leaves the oven on all day while she is out, and James' house burns to the ground, along with all the contents. Which items could be covered under Coverage C in James' DP-3?
James Appliances
Which of the following would qualify as an "injury" for the purposes of workers' compensation insurance?
Jordan falls off a defective ladder while working for a home improvement company, and breaks his leg.
Astrid, a public adjuster, agrees to reduce her damage estimates by 5%, in exchange for $500 in cash per claim from LMN Insurance. This is an example of:
Kickback
What does a declaratory judgment action seek?
Legal Clarification of policy coverage
Lucas owns a rental house on the beach in South Carolina. Which of the following is true?
Lucas can get ACV coverage for this property through the South Carolina Wind and Hail Underwriting Association.
Ronald always drives with his windows rolled down because he loves the feeling of the wind in his hair. However, he often forgets to roll his windows up when he gets out of the car. Of course, this behavior makes it easier for thieves to steal his belongings from the car, but Ronald can't help being forgetful. Ronald's behavior would be considered a:
Morale hazard
What is it called when states require employers to buy coverage from a state-designated workers' compensation program?
Monopolistic
Which of the following people is NOT occupying a vehicle that would qualify as "your covered auto" on the declarations page of his Personal Auto Policy?
Patrick borrows his neighbor's 45,000 pound semi truck to help his neighbor move.
Liability limits in a Personal Auto Policy are applied:
Per Person, and Per Accident
Nina's home is located in a high crime neighborhood. One day, she comes home from work to find that her garage door had been spray-painted with graffiti. Nina's insurer would consider the act of vandalism to Nina's garage a:
Peril
Clark lost power to his home when a windstorm blew the roof off of his house. As a result, he lost several hundred dollars worth of meat that he was keeping in a freezer in his basement. Which homeowners coverage might indemnify Clark for the loss of his meat?
Personal Property Coverage
Coverage E refers to which part of a HO policy?
Personal liability
Which of the following would not be covered by Coverage C - Personal Property in a homeowners policy?
Pets
Paul and his wife have three separate insurance policies covering their home: Policy X with a limit of $100,000, Policy Y with $50,000, and Policy Z with $25,000. These policies are set up to pay covered claims by contribution of equal shares. After a fire causes $125,000 in damage to their home, how much will each policy pay (ignoring any deductibles)?
Policy X: 50,000 Policy Y: 50,000 Policy Z: 25,000
As a requirement for getting her New York adjuster license, Alice is required to submit proof of bonding with her application. She purchases a surety bond from PBJ Bonds. In this contract, Alice is considered the:
Principal
What kind of adjuster is hired by the claimant and is paid by commission?
Public Adjuster
Anytown Pediatrics has been having a hard time finding medical malpractice insurance. The premiums are extraordinarily high, and they get higher every year. Finally, fed up with the cost of insurance, the directors decide to join with a group of other medical providers to form an insurance company that will provide liability insurance only for members of the group. In this way, as a group, they are able to retain certain risks instead of transferring them to an outside insurer. Which of the following BEST describes this arrangement?
Risk retention group
An adjuster must make several important decisions during the adjusting process. All of these are examples of such decisions, EXCEPT:
Stacy must determine how much of a limit for Coverage A would best fit John's needs in his new homeowners policy.
Steadfast Insurance, Inc wants to cancel Orion's policy after Orion missed a premium payment. Which of the following is true?
Steadfast Insurance must notify Orion at least 15 days before ending the policy.
In which situation would Utility Service - Time Element coverage apply?
Steve's Software Solutions loses power for two days when a bolt of lightning damages the power station. Steve experiences a significant loss of income during the outage.
This type of residential construction consists of lumber delivered to, and assembled on site piece-by-piece, with little or no previous assembly of components.
Stick Frame
Which of the following is NOT one of the requirements an adjuster must meet in order to be qualified to handle small commercial NFIP claims?
Submit written recommendations from three insurance company supervisors or claim management personnel.
In a PAP, the Insurer's Right to Recover Payment basically reinforces the principle of:
Subrogation
Whose responsibility is it to maintain an open line of communication during the settlement process?
The Adjuster
After Cindy crashes into Nancy's mailbox while driving drunk, she gets out of her car, trips over Nancy's sidewalk, falls and breaks her arm. She then sues Nancy for the medical bills related to her broken arm. They are in a state that follows the doctrine of comparative negligence. What is the likely outcome of Cindy's lawsuit against Nancy?
The amount awarded to Cindy will be reduced by the percentage of her own negligence.
Which of the following is NOT a valid reason for an insurance company to reject a claim?
The claimant lists damages that exceed the limits of his insurance policy.
While driving one winter day, April is surprised by a deer jumping into the road directly in front of her. She strikes the deer, overcorrects, and slides on the icy road. Her car skids off the road and plows through a barbed-wire fence. What is the proximate cause of the damage to the fence?
The deer strike
Which of the following is required in order for coverage to apply under the Business Pursuits endorsement in a homeowners policy?
The insured must not be an owner or partner in the business
Under which circumstances may an insurer cancel a policy during the first 90 days that the policy is in effect?
The insurer may cancel for any reason
All of the following are true about the Law of Large Numbers in the insurance industry, except:
The larger the number of units insured the larger the amount the insurer will have to pay out
Marisol has $100,000 in coverage for her fine art collection, as stated in the Scheduled Personal Property endorsement of her homeowners policy. She just purchased another piece of art worth $30,000. Which of the following statements is TRUE?
The new piece is automatically covered for $25,000, and she has 90 days to report the acquisition to the insurer to be eligible for full coverage.
An insurance policy's declarations page contains all of the following, EXCEPT:
The perils insured against
What does it mean when we say that an adjuster has the "power to bind"?
The principal is bound to the decisions the adjuster makes.
Which of these statements about Personal Article Floaters is FALSE?
They have a minimum $100 deductible.
Which of the following is NOT a reason why an adjuster would collect written or recorded witness statements during a claim investigation?
To fully comply with the Conditions section of the insurance policy
Deana has Personal Injury Protection coverage in her PAP. Which of these injuries would NOT be covered by Deana's PIP?
Tom suffers neck injuries when Deana rear-ends him at a stop sign.
In a PAP, Personal Injury Protection:
applies to covered injuries before any available Medical Payments coverage.
If a claim includes lost wages, an adjuster should:
Verify the losses with the employer
XYZ Shipping International is a major shipping company that transports goods both domestically and abroad. The company is looking for a new ocean marine insurer to cover its cargo all the way from the point of origin to its final inland destination. What kind of coverage is XYZ Shipping looking for?
Warehouse to Warehouse
Which of the following is NOT one of the duties of the Director of Insurance?
Write Insurance Laws
Alan has just won a bid to overhaul the town park, getting it ready for the Fourth of July fireworks. While the city is impressed by his low bid, they have some concerns that he will be able to complete the job, so the city requires Alan to secure:
a surety bond
What are the four requirements of a legally binding contract?
agreement, consideration, competant parties, legal purpose
In a full release settlement:
all damages are paid immediately in one lump sum.
Liam, an adjuster for KLM Insurance, is inspecting hail damage on Ken's property. Once his investigation is complete, Liam tells Ken that his final settlement amount is $5,500, writes him a check, and closes the claim. In order to save his employer money, Liam did not tell Ken that he has a Replacement Cost endorsement and can recover the depreciation after he completes repairs. Liam has just:
engaged in misrepresentation.
Stephan's insurance company denied his recent claim, citing that his particular cause of loss was not covered. However, according to Stephan's interpretation of the policy language, his loss could be covered, so he disputed the insurer's decision. When his case went to trial, the jury also decided the policy language was open to interpretation, so they decided in favor of Stephan. This is because:
insurance policies are contracts of adhesion.
An independent adjuster:
is self-employed and may be contracted by one or more companies at a time.
When the settlement difference between an insurer and a claimant is minor:
it should be settled in favor of the claimant.
All of the following statements are true of liability insurance, EXCEPT:
liability coverage indemnifies the insured
Ned's insurer made a business decision that broadened coverage in new standard policies without increasing premiums. Because of this, the insurer was required to automatically apply this new broadened coverage to Ned's existing policy. This requirement is documented in the:
liberalization clause
In a Business Owners Policy, Business Income coverage:
provides coverage from 72 hours after a loss occurs, up to a maximum of 12 months.
A few weeks ago, Grace's garage was destroyed by an out-of-control motorist named Zach. Fortunately, Zach had sufficient liability insurance to cover the damages, but Zach's insurer is giving Grace the runaround negotiating the claim. Grace finally files a complaint, forcing Zach to:
submit an answer
Which of the following does NOT constitute one of the four elements of a negligent act?
the defendant entered a legal contract with the plantif
Nancy borrows Drew's car so she can run to the grocery store. While out, she rear-ends an SUV, injuring the driver and one passenger. The passenger suffers $40,000 in injuries, while the driver suffers $60,000. Assuming Drew has a liability policy with limits of 30/60/10, while Nancy carries minimum coverage for South Carolina, how much will Nancy's policy cover?
$35,000
Molly borrows her friend Dom's car to run to the grocery store. On the way home, she rear-ends a van, injuring the driver and 3 other passengers. Each of the passengers suffers $45,000 in injuries, while the driver suffers $40,000. Assuming Dom has a liability policy with limits of 50/100/50, while Molly has 25/50/25 coverage, how much will the primary policy cover?
100,000
Under a Personal Auto Policy, an insurer will cover Medical Payments for up to ____ from the date of the accident.
3 years
In order to be considered "fully insured" at 80% or more, Richard must carry at least $240,000 in insurance coverage on his home. What is the value of Richard's home?
300,000
Blue Lines Shipping sustains hundreds of thousands of dollars in losses when one of their ships full of cargo catches fire and sinks in the Pacific Ocean. Which of the following situations would NOT be cause for the insurer to refuse to indemnify Blue Lines Shipping for its losses?
A storm knocks out the navigation system, causing an electrical fire.
After a hail storm passed through his neighborhood, Perry had his roof inspected by a local contractor. The contractor gave Perry an estimate of $9,850 to replace his roof, so he filed a claim with his insurer. The adjuster came up with her own estimate of $9,645 to replace Perry's roof. How will the adjuster likely respond to Perry's request?
Accept his request, since the difference between the two amounts is small enough to settle in Perry's favor.
Which of the following is the easiest and least costly option?
Adjuster/clamant negotiation
Jackie recently inherited a life-sized marble statue of her great-grandfather. It is an irreplaceable antique, and it is nearly impossible to determine the ACV. Which type of policy would best indemnify Jackie in the event that the statue was ever damaged?
Agreed Value Policy
A power surge sparks a small electrical fire in an office building. The electrical fire triggers the automatic sprinkler system. The water from the sprinklers soaks the carpets and shorts-out all the computers, causing thousands of dollars in damage. The office must close for two months during repairs. The sprinklers soaking the office would be considered:
An occurrence
On January 27, 2008, Ryan is using an exercise bike purchased from NusquamCycle when the chain breaks, causing him to fall and severely bruise his knee. It seems to heal just fine, but three years later, on January 29, 2011, Ryan's knee gives out while jogging. His doctor informs him that he'll need surgery and that this deterioration was most likely caused by his earlier accident with the exercise bike. Assuming NusquamCycle is no longer in business, which Commercial General Liability policy would cover Ryan's claim filed January 29, 2011?
An occurrence policy from Jan 31 2006-Jan 31 2009
Anytown Pediatrics has been having a hard time finding medical malpractice insurance. The premiums are extraordinarily high, and they get higher every year. Finally, fed up with the cost of insurance, the directors decide to form their own insurance company, which will serve only Anytown Pediatrics. This way, any profits generated by the insurer will come back to Anytown Pediatrics. What kind of insurance company would this be?
Captive insurer
The Director has just received a complaint stating that an adjuster has violated insurance law. Which of the following actions may the Director take?
Commence an investigation of the adjuster's actions
Sarah and a carload of her friends are driving to Vermont for the weekend when she hits a deer, causing $10,000 in damages to her car and $5,000 in medical bills for herself and her passengers. Which insurance coverage will pay for the damages to Sarah's car?
Comprehensive
Most states require businesses to purchase workers' compensation insurance to cover their employees. Workers' comp in those states is:
Compulsory
In which section of the Standard Fire Policy would one find the following subsection titled: "Duties of the Insured after an Occurrence"?
Conditions
Which of the following coverages is typically included in a BOP?
Coverage for slander and copyright
The primary purpose of the Insuring Agreement is to specify the ____________ of an insurance policy.
Coverages
An adjuster has several tasks to complete during the adjusting process. All of the following are examples of the types of tasks an adjuster may be required to perform, EXCEPT:
During a meeting with Darlene, Mindy collects various pieces of information and writes an auto policy for Darlene to purchase.
Which of the following people are in the process of submitting a formal request to settle the damage?
Grace is filing a claim with her insurer for hail damage to her roof.
In which section of the Standard Fire Policy would you find an explanation of the losses covered under the policy and what the insurer has agreed to provide in exchange for premiums?
Insuring agreement
After Jerry pulled the fire alarm, the indoor sprinkler system came on and flooded the offices at Elliot Designs, which caused thousands of dollars in damage. Elliot Designs filed a claim with KLM Insurance, who dispatched Chrystal to investigate and process the claim. Who is the principal in this scenario?
KLM Insurance
D'Anton spills coffee in his lap while driving, causing him to veer off the road and smash into a lamp post. Which part of his Personal Auto Policy will help him pay for the repairs to the lamp post?
Liability Coverage
Kerry's advertising business employs Meg to clean offices at night, and recently Meg slipped and fell at work, hurting her back. Kerry can be assured that workers' compensation insurance will provide Meg with:
Medical Payments and lost wages
Don has a PAP with $500 Collision and Comprehensive deductibles, Liability limits of 25/50/25, and $5,000 in Medical Payments coverage. He is struck by a car while taking a walk in his neighborhood, leaving him with $36,500 in medical costs. The driver of the vehicle has liability coverage of 30/60/25, which pays up to its limit for Don's injuries. How will Don's policy respond to the loss?
Medical Payments will pay $5,000.
ABC Consulting has a CGL policy and an Umbrella policy, but the CGL runs from January 1 to December 31 and the Umbrella policy runs from June 1 to May 31. This difference in inception and expiration dates creates confusion when settling claims. This condition is known as:
Nonconcurency
Which of the following is eligible for coverage under the Personal Property Replacement Cost endorsement in a homeowners policy?
Photographers equipment
A lion at a zoo escaped when a zoo employee failed to follow protocol. The lion injured a zoo patron. In court, the injured patron's lawyer could invoke the doctrine of:
Res Ipsa Loquitur.
What document do insurance companies give to claimants when they think something in the claim is not covered by the policy, but they are not sure yet?
Reservation of rights letter
Sylvia is in the process of building an addition onto her used book store, which is insured under a commercial property policy. About 40 days into the process, her mother takes a bad fall and breaks her hip. Seeing that she needs to move closer to her mom, Sylvia sells the book store. Her Builder's Risk coverage is terminated because:
Sylvia no longer has insurable interest in the bui;ding
Which of the following is FALSE regarding terrorism insurance coverage under the Terrorism Risk Insurance Act (TRIA)?
TRIA coverage is available for both personal and commercial lines of insurance.
Why might a Reservation of Rights letter be sent?
The Clamant took too long to file the claim
Who is responsible for paying the premiums on a workers' compensation policy?
The Employer
PAP holders have several duties after a loss. Which of the following is NOT one of them?
The Policy holder must complete a drivering safety course
Rebecca has Collision coverage in her Personal Auto Policy. After a collision, the adjuster determines that Rebecca's car is totaled. How much is Rebecca likely to receive from her insurer (ignoring the deductible)?
The actual cash value of her vehicle
Which of the following would be covered under Coverage B of the Business Owners Policy?
The copy machine in a restaurant's back office
If a building is completely destroyed by a fire, the Valued Policy Law states that the insurer should pay:
The full amount listed in the policy
Which of the following people would NOT qualify as an "insured" under a BAP?
The policyholder's spouse, who is not named on the policy but habitually drives the company's SUV without permission.
The adjusters preliminary report would most likely not include:
The settlement amount
Julie owns the local shopping mall. One day, Julie sees Greg walking through the mall and doesn't like the way he looks, so she forces him to leave the premises. Greg then sues Julie for her actions. This is an example of what type of personal injury covered under Julie's Commercial General Liability policy?
Wrongful eviction
In a Personal Auto Policy, the definition of "Your Covered Auto" can refer to any of the following vehicles, EXCEPT:
a trailer that Tim's neighbor let him borrow.
When a storm rolled through town a month ago, John's home suffered substantial damage. He filed a claim, but his insurer has offered a settlement much lower than John feels is fair. Each party selects an appraiser, who in turn agree on an umpire, to help settle the claim. If two of the three parties agree, their decision is:
binding
Coverage L in a Personal Liability Supplement provides:
coverage for both bodily injury and property damage to a third party for which the insured is legally liable.
The Water Backup and Sump Discharge or Overflow endorsement:
covers water damage if it results from a mechanical breakdown of sump pump equipment.
In a Personal Watercraft policy, Part C would cover:
damage to the covered craft caused by an uninsured operator of another watercraft.
Every time Maria adjusts an auto claim, she refers the claimant to Bud's Body Shop for repairs. In turn, Bud's Body Shop pays Maria $50 dollars for every vehicle brought to their shop based on Maria's recommendation. By taking this money, Maria is accepting:
kickbacks
An unendorsed Dwelling Policy is intended to cover all of the following except:
liability damages
In a personal auto policy, Collision coverage:
pays for physical damage to the vehicle caused by a rollover.
In a Commercial Auto Policy, which coverage symbol indicates that a car is subject to mandatory no-fault insurance?
5
African Spice Exporters Inc. brings two shipments of cloves from Zanzibar, Tanzania to the United States each year. When their second shipment of the year is stopped by the Coast Guard off the coast of Florida, 10 pounds of contraband is found hidden among the bins of cloves. All of the ship's cargo is seized and the ship's crew arrested. When African Spice Exporters Inc. files a claim with its insurer for the seized cargo, the claim comes back denied. Why might this claim have been denied?
African Spice Exporters Inc. violated the "legality" implied warranty of ocean marine insurance.
The Standard Fire policy has 4 main parts. They are:
Declarations, Insuring Agreement, Conditions, and Exclusions
Simon just bought his first home-a cheap fixer-upper in a town where average snowfall exceeds 80 inches per year. It may be an old house in a run-down neighborhood, but he still wants to protect his initial investment. What is the cheapest policy option that would protect Simon's financial interest in his home, even in the brutal winters?
HO-2
After a fire destroys Gale's kitchen, she files a claim with her insurer and hires a contractor. The contractor estimates it will take $42,250 to repair the damage, but the adjuster estimates it will only take $38,340. Which of the following is the best option for the adjuster's response to Gale's claim?
Negotiate a settlement amount with Gail.
Sara's vehicle was stolen and her insurer paid her theft claim for the total value of the car. A week later, the police found Sara's car and returned it to her. Which of the following statements is true?
The Recovered Property provision states that Sara must notify the insurer and either return the settlement payment or surrender the vehicle to the insurer.
Andrew's house is struck by lightning. The power surge fries two of the family's laptop computers, and starts a fire that damages his roof, two living room walls, and a leather sofa. Which of these damages would fall under Coverage C of Andrew's Homeowners 3 policy?
The Sofa and laptop computers
Which of the following best defines the doctrine of Res Ipsa Loquitur?
The circumstances of the injury make it obvious that the defendant is negligent; no proof is needed.
Mindy filed a claim against XYZ Consulting on March 5, 2016 for an accident that happened on September 15, 2015. XYZ Consulting was previously covered by a claims-made CGL policy, but changed to an occurrence policy in January 2016, when the policy came up for annual renewal. How will XYZ Consulting's insurer respond to Mindy's claim?
The claim will not be covered because the accident did not occur during the current policy period.
In an insurance contract, exclusions serve all of the following purposes, except:
add coverages that need special treatment.
Michelle just purchased a homeowners policy for her new single-family home. Although she would have liked the best coverage money can buy, she could not afford the most expensive policy. She compromised with a policy that provides open-peril coverage for her house and detached garage, and named-peril coverage for her personal property. Which homeowners policy did Michelle purchase?
HO-3
Which of the following is least likely to be one of the important questions an adjuster must answer before entering into the negotiations process?
How much is the insured willing to pay
In a personal auto policy, the Miscellaneous Vehicle Coverage endorsement:
allows coverage to be added for motorcycles and motor homes.
If an insurance professional who has been convicted of fraud wishes to return to work in the insurance industry, in most cases he must:
apply for a 1033 Waiver and have an offer of employment.
Jared is fishing from his 22-foot sailboat when he is caught in a sudden hailstorm. His boat suffers extensive hail damage. When he files a claim against his homeowners policy, he is upset to learn that his claim is denied because:
the boat was not fully enclosed inside a building during the hailstorm.
