ADJUSTER PRO EXAM TEST WITH ANSWERS

ADJUSTER PRO EXAM TEST WITH ANSWERS Stu has a collection of rare comic books. He wants to purchase theft insurance for his collection, separate from his home and other property. What term most accurately describes the type of policy Stu would purchase? - CORRECT ANSWER-Monoline Policy Which of the following statements does NOT apply to the Standard Fire Policy? - CORRECT ANSWER-It automatically covers wind and vandalism. Which of the following refers to being restored to the financial condition you were in before a loss? - CORRECT ANSWER-Indemnification The fee paid by the insured in exchange for an insurance policy is called a: - CORRECT ANSWER-premium Haley takes a bottle of water into a store, pours some of it on the floor when no one is looking, and then pretends to slip and fall. She cries out for help in apparent pain until someone comes to her aid. She then sues the store for her fake injury in an effort to collect an insurance settlement. What has Haley committed? - CORRECT ANSWER-Hard fraud Which settlement option is most often used when a claimant misses work because of bodily injury, but a settlement has not yet been reached? - CORRECT ANSWERAdvance payment settlement Cindy and her insurer cannot reach an agreement for her property claim, and have gone back and forth for weeks without coming within $10,000 of each other. At this point, since both believe they are offering a fair settlement, a third party is needed to help facilitate the negotiation. Both parties still want to retain their ability to "walkaway" if they cannot reach an agreement. What is the next best step for Cindy and her insurer? - CORRECT ANSWER-Mediation When Jeanette shows up to handle a claim on behalf of ABC Insurance, she evaluates the claim and negotiates a settlement. Maintaining her integrity and acting ethically, Jeanette is fulfilling her: - CORRECT ANSWER-fiduciary duty. Many adjusters prefer arbitration to litigation, because professional arbitrators tend to be more ___________ than civil juries. - CORRECT ANSWER-knowledgeable Which of the following is NOT true of the no-release settlement? - CORRECT ANSWER-It's also called an "advance payment settlement." Why should litigation be considered a last resort option? - CORRECT ANSWER-It can be costly and unpredictable Which of the following steps would occur LAST in the processing of a claim? - CORRECT ANSWER-Negotiate a settlement with the claimant As an adjuster for KLM Insurance, Chrystal has the important role of fiduciary agent. While acting in this capacity, Chrystal's primary responsibility is to: - CORRECT ANSWER-protect the financial and property interests of KLM Insurance Bobby is adjusting a complicated auto claim. Which of the following is TRUE? - CORRECT ANSWER-Because the policyholder (Jane) is 84 years old and seems to have trouble remembering what happened before the accident, Bobby should feel free to contact her 45-year-old caretaker for clarification. Jim is an insurance adjuster working a theft claim. As part of his investigation, Jim might want to do all of the following, EXCEPT: - CORRECT ANSWER-look for ways to lower the settlement for the claimant. Adjuster Alice is trying to determine the final settlement amount for Ted's claim. Ted's house was damaged in a covered loss, and Alice has estimated that it will cost $25,000 to make the necessary repairs. Ted's homeowners policy has a $100,000 limit and a $2,000 deductible. Typically, how much would Adjuster Alice calculate Ted's final settlement amount to be? - CORRECT ANSWER-$23,000 As an insurance adjuster, Heather is responsible for updating and maintaining an accurate record of all the information pertinent to an individual's insurance claim, including copies of all written documentation, photos and property sketches, witness statements, and copies of medical bills. What is this record called? - CORRECT ANSWER-Claim file Bill is going to switch employers, and therefore switch healthcare providers. Which federal law ensures that he won't be denied coverage when he switches health plans? - CORRECT ANSWER-HIPAA Cindy, a drunk driver, accidentally crashes into Nancy's house, causing $22,000 in damage. On top of that, Nancy tries to get the adjuster to add an additional $20,000 for punitive damages to punish Cindy for driving while intoxicated. However, Nancy fails in her attempts at negotiation. This is because: - CORRECT ANSWER-the adjuster does not have authority to negotiate for punitive damages. Bill's new home is in the final stages of construction, and he has purchased an HO-2 policy to insure his financial interest in the property. This morning, Bill's contractor calls to tell him that an electrical fire has destroyed his new kitchen, and all of the crown molding that was supposed to be installed today has been stolen. It will be $15,000 to rebuild the kitchen and another $4,200 to replace the trim. How will Bill's insurer respond when he files a claim? - CORRECT ANSWER-His insurer will pay $15,000 to rebuild the kitchen and nothing for the stolen trim. Tim's $2,500 boat trailer was stolen from his driveway. Ignoring any deductibles, how much can Tim receive for his stolen trailer when he files a claim against his homeowners policy? - CORRECT ANSWER-$1,500 For loss settlement purposes, most homeowners policies: - CORRECT ANSWER-pay for damages to personal property at actual cash value, and damages to structures at replacement cost. After a rain storm, Nancy realizes that she left her bedroom windows open the entire time. Now there is extensive water damage to her area rug and furniture, and the laptop that had been sitting on her desk is ruined. Nancy has a Broad Form homeowners policy, so she calls her insurance company and files a claim. What is the likely result of Nancy's claim? - CORRECT ANSWER-The insurer will not cover any of the damage, since Nancy left the windows open. Sherrie's roof and fence are damaged in a violent windstorm. Sherrie has a typical HO-3 policy with a $150,000 limit for Coverage A - Dwelling. Assuming she has no endorsements, how much coverage does she have available for the damage to her fence? - CORRECT ANSWER-$15,000 Phil heads over to visit his friend Josh, who is sick with the flu. While at the house, Josh fails to cover his mouth when he coughs and Phil ends up contacting the flu. Phil files a claim with Josh's insurer for medical expenses and lost income while Phil is out sick from work. The insurer denies the claim because: - CORRECT ANSWERdisease transmitted from the insured to a third party is excluded. Mark is on vacation in Italy when his luggage is stolen, including a $2,000 laptop, a $500 suitcase, and $400 in clothes. Mark has an HO-3 homeowners policy. Excluding any applicable deductible, which of the following statements is TRUE? - CORRECT ANSWER-Mark's homeowners policy will cover $2,400 of this loss. Which of the following losses may qualify for coverage under Coverage F - Medical Payments? - CORRECT ANSWER-Kevin accidentally shoots himself in the foot with a nail gun while he is helping Joe build a deck in Joe's backyard. Veronica owns a pottery business and is insured under a commercial property policy. She was in the process of building an extra structure for the sole purpose of kiln firing her pottery, but after 40 days of waiting for it to be completed, she moved her business to a new location without any intention of moving back. Her Builder's Risk Coverage Form was terminated because: - CORRECT ANSWER-the property is abandoned. A fire burns down Jenny's Hardware, leaving virtually nothing salvageable. Which of the following items would NOT be covered under Coverage B of the Building and Personal Property Coverage Form in her commercial property policy? - CORRECT ANSWER-A paint mixer permanently affixed to the floor After Tony, the owner of XYZ Cleaners, accidentally starts a fire, XYZ Cleaners burns to the ground, taking all the garments with it. Afterwards, Tony has to rent a new building and purchase new equipment and supplies. He is also responsible for all the clothing that was in his care. Which type of coverage in his commercial property policy could help Tony with the cost of paying for his customers' destroyed clothing? - CORRECT ANSWER-Legal Liability Coverage A fire in Sarah's factory causes her to shut the factory doors for 50 days. To limit her loss of income and keep production going, Sarah spends $125,000 renting equipment and another building. Sarah's commercial property policy doesn't have Business Income Coverage, but it does include Extra Expense Coverage. The limit on her Extra Expense coverage is $100,000 and she has Limits of Loss Payment of 40%/80%/100% during her period of restoration. How much indemnification will Sarah receive for her extra expenses? - CORRECT ANSWER-$80,000 Helen's business is growing rapidly, so she decided to add an annex onto her office and hire another worker. While under construction, a storm blows down most of the annex structure, forcing Helen to restart from scratch. Her commercial policy provides insurance coverage equal to 75% of the property value, despite the fact that her policy requires 80% coverage to be fully insured. Which coverage extension could help Helen rebuild at replacement cost? - CORRECT ANSWER-None - Extensions are only available if the policyholder maintains the minimum level of insurance of 80% to value A fire burns down Jenny's Hardware, leaving virtually nothing salvageable. Which of the following items would NOT be covered under Coverage A of the Building and Personal Property Coverage Form in her commercial property policy? - CORRECT ANSWER-An employee's laptop which she uses for work Honey's Bakery is a local coffee shop run by two sisters. In a rush to leave one afternoon, their new employee forgets to turn off the gas stove. The leaking gas causes an explosion, destroying the kitchen. Which condition in their commercial property policy could help the sisters cover the cost of the damage? - CORRECT ANSWER-Control of Property Francis owns a small shoe store. Since his business isn't particularly risky, he has a commercial property policy that provides named-peril coverage to his building and personal property, without any additional coverages. Which Causes of Loss form does Francis have attached to his coverage form? - CORRECT ANSWER-Basic Form Which of the following perils is excluded from coverage in a National Flood Insurance Program policy? - CORRECT ANSWER-Water-main breakage When a severe flood is imminent, Erica goes out and spends $1,200 on sandbags, $760 on plastic sheeting and lumber, and $1,500 on a pump. Then she hires two neighbors to help her flood-proof her house with these materials. She and her neighbors work together for 16 hours, and she pays them the federal minimum wage for their labor. After the flood passes, Erica files a claim for these expenses. Assuming the federal minimum wage at that time is $7.00 per hour, how much will her flood policy indemnify her? - CORRECT ANSWER-$2,872 Jackie lives in an area recently devastated by a hurricane and has filed a claim with her insurance company, ABC Insurance. Jerry, an adjuster contracted by ABC Insurance, pulls up to Jackie's house in a truck with the ABC Insurance logo on the side, and wearing a shirt with the ABC Insurance logo on the front. Although Jackie doesn't know that Jerry is contracted by ABC Insurance, she has reason to believe he has the authority to adjust her claim. This is an example of: - CORRECT ANSWERimplied authority. This agent is self-employed and able to offer insurance products from more than one company at a time. - CORRECT ANSWER-Independent Sales Agent Jerry is an adjuster and has signed a contract with ABC Insurance to adjust claims in an area recently devastated by a hurricane. Jerry receives the claims from ABC Insurance, completes the inspections, and settles claims on behalf of ABC Insurance according to his contract. What type of authority has ABC Insurance given Jerry? - CORRECT ANSWER-Express authority Don works as an adjuster for ABC Insurance. Which of the following is most likely NOT one of Don's responsibilities? - CORRECT ANSWER-Represent the insured if a claim goes to court An insurer may NOT: - CORRECT ANSWER-try to settle a claim using an application that was altered without the knowledge of the insured. After a car accident, Barbara files a claim with her insurer for the body damage to her car. The insurer instructs Barbara to bring her car to a body shop for repair, and she hears back a week later that it is ready to be picked up. To her surprise, Barbara finds that the parts used in the repair are poor quality and do not even match the rest of the car. How has the insurer failed to meet fair settlement standards? - CORRECT ANSWER-The insurer did not allow Barbara to choose the type of body part that she wanted to be used in the repair All of the following pieces of information can be found in the Conditions section of an insurance policy, EXCEPT: - CORRECT ANSWER-causes of loss that are not covered. Which of the following is NOT a characteristic of insurance contracts? - CORRECT ANSWER-Universal All of the following are typical exclusions in an insurance policy, EXCEPT - CORRECT ANSWER-explosion Which of the following would you find in the Conditions section of an insurance policy? - CORRECT ANSWER-The insured's duty after a loss Which of the following is found in the declarations page of an insurance policy? - CORRECT ANSWER-The name of the insured party In which section of an insurance policy might you find the following statement? "Damage to insured property must be reported within 15 days of the damaging occurrence." - CORRECT ANSWER-Conditions Which of the following best describes a Fraternal Benefit Society? - CORRECT ANSWER-A fraternal benefit society is a social organization based around common interests and beliefs. Which of the following is NOT a characteristic of social insurance programs? - CORRECT ANSWER-Social insurance programs are for-profit programs. A "hazard" is defined as: - CORRECT ANSWER-something that increases the chance of a loss An oral or written statement providing temporary insurance coverage until an insurance policy can be issued is called a: - CORRECT ANSWER-binder The Severability of Interests condition states that: - CORRECT ANSWER-coverage applies to each insured separately, as if no other insured existed. Tina has two policies (Policy X and Policy Y) that cover the same risk on a pro rata basis. Policy X has a limit of $100,000 and Policy Y has a limit of $25,000. When Tina suffers a loss totaling $75,000, how will the two policies respond? - CORRECT ANSWER-Policy X will pay $60,000 and Policy Y will pay $15,000 An insurance contract is an agreement between two parties where each side promises to be truthful, factual, and honest about their respective positions. Therefore, an insurance contract is said to be a contract of: - CORRECT ANSWERutmost good faith. Which of the following statements about the principle of estoppel is TRUE? - CORRECT ANSWER-Estoppel protects the insured party from an insurer who initially approves coverage, but then later denies coverage after the insured pays for repairs. Which of the following would be considered an insurable risk? - CORRECT ANSWER-A squadron of police cars The Liberalization Clause in an insurance policy: - CORRECT ANSWER-states that any change to a policy form that broadens coverage without increasing the premium will automatically apply to existing policies. Rachel is filling out an application for a homeowners policy. She is truthfully answering the questions regarding her home's location, size, age, etc. Which of the following is a true statement? - CORRECT ANSWER-Rachel is providing representations. Jason's auto policy states that the insurer may cancel coverage if a premium is more than 30 days late. However, Jason is currently more than 30 days late, and has been so five times in the last year, and his insurer has done nothing about it. When Jason gets into an accident and files a claim, which of the following is most likely to happen? - CORRECT ANSWER-The insurer will pay the claim because of the implied waiver they have made by not canceling Jason's policy the previous times he was late with his payments. Bob has been in the construction business a long time and is ready to retire. He sells the company to his friend Scott and then lets the insurer know that any claims against his policy should be paid to Scott from now on. The insurer informs Bob that they cannot do this due to which condition? - CORRECT ANSWER-Assignment Which of the following is NOT true of the Company's Options provision in the standard fire policy? - CORRECT ANSWER-It requires the insurer to settle the claim, in whichever manner it chooses, within 30 days of receiving notice of the claim Which of the following situations does NOT involve an insurable risk? - CORRECT ANSWER-Dale just bought 30 shares of a hot new startup company online Which of the following would be considered an insurable risk? - CORRECT ANSWER-A football stadium Agnes purchased a home ten years ago in an upcoming neighborhood for $75,000