©THEBRIGHT EXAM SOLUTIONS
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Adjuster license practice test Questions With
Correct Answers
The purpose of the principle of indemnity is - answer✔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 - answer✔special damages
Which of the following best describes a Fraternal Benefit Society - answer✔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: -
answer✔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 - answer✔plaintiff
A captive insurance company - answer✔exists solely to provide insurance for its parent
company.
Which of the following is NOT a qualification of an insurable risk - answer✔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? - answer✔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? - answer✔It is the result of
an unconscious behavior.
An individual has ________________ to file a lawsuit for False Arrest in Florida. - answer✔four
years
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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? - answer✔$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? - answer✔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: - answer✔a legal hazard
Which of the following best defines premium? - answer✔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? - answer✔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. - answer✔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 - answer✔90
Which of the following statements best describes the Law of Large Numbers? - answer✔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? - answer✔Indemnification
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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? - answer✔$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. - answer✔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. - answer✔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: -
answer✔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? - answer✔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? -
answer✔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? -
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answer✔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? - answer✔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: -
answer✔Res Ipsa Loquitur
When an applicant for a homeowners insurance policy lists the address, size, and description of
his home, he is providing: - answer✔representations.
What is a reserve, in insurance terms? - answer✔A pool of collected premiums that the insurer
sets aside to pay claims
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? - 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.
Which of the following best describes the insurance concept of "exposure"? - answer✔The
possibility of damage or loss
Which of the following describes a contract in which only one party makes a promise to
perform? - answer✔Unilateral Contract
Strict liability - answer✔holds a person liable for his actions regardless of how much care he
demonstrates.
Which of the following statements about the principle of estoppel is TRUE? - answer✔Estoppel
protects the insured party from an insurer who initially approves coverage, but then later denies
coverage after the insured pays for repairs.
Sovereign immunity restricts an individual's ability to file a lawsuit against: - answer✔the
government
