California Claims Adjuster FINAL EXAM Question and Answers [100% Correct] 2025
0 view 0 purchase
Course
California claims adjuster
Institution
California Claims Adjuster
California Claims Adjuster FINAL EXAM
Question and Answers [100% Correct] 2025
Reinsurers play a key role in the insurance industry. Describe their primary function and how they
mitigate risk for insurers.
Reinsurers provide insurance to other insurers, absorbing a percentage of their los...
California Claims Adjuster FINAL EXAM
Question and Answers [100% Correct] 2025
Reinsurers play a key role in the insurance industry. Describe their primary function and how they
mitigate risk for insurers.
Reinsurers provide insurance to other insurers, absorbing a percentage of their losses or covering
any losses beyond a set threshold.
Explain reciprocal insurance and how it operates within an insurance group context.
Reciprocal insurance involves a collective group, often unincorporated and non-profit, where
members mutually insure one another. Costs are shared among the entire group, with individual
members paying into dedicated accounts.
What is unique about Fraternal Benefit Societies in their approach to insurance and community service?
They operate as non-profits focused on charitable work and providing insurance, often for
individuals with shared beliefs, occupations, or backgrounds.
Compare and contrast a Risk Retention Group with a traditional insurer.
Risk Retention Groups allow businesses with similar risks to collectively purchase liability
insurance, but they do not act as insurers and are not exposed to risks directly like traditional insurance
companies.
Define a Private Non-Commercial Insurance model and how profits are handled differently compared to
commercial insurers.
Private non-commercial insurers are non-profits that return any profits to policyholders, either by
lowering premiums or enhancing benefits.
What distinguishes a Domestic Insurer from Foreign and Alien Insurers?
A Domestic Insurer operates within and adheres to the laws of a specific state in which it is
located.
1
,Discuss the characteristics of an Alien Insurer and the types of laws it follows.
Alien Insurers adhere to the laws of a foreign country entirely.
Identify and describe the fundamental distinction between speculative and pure risk.
Pure risk involves scenarios where only loss or no loss can occur, making it insurable. Speculative
risk, such as gambling, carries potential for gain or loss, making it uninsurable.
Describe how exposure is evaluated by insurers and provide examples of regions with different types of
exposures.
Exposure measures the degree of risk or potential damage, often evaluated in terms of dollar
amounts or risk units. Examples include high exposure to hurricanes in the Gulf Coast or earthquakes in
California.
Define a hazard in an insurance context and differentiate it from exposure.
A hazard increases the probability or severity of a loss, whereas exposure indicates the possibility
of loss itself.
What is the purpose of insuring against perils, and how do named peril and all-peril policies differ?
Perils are causes of loss or damage, like fires or floods. Named peril policies specify which perils
are covered, while all-peril policies cover everything except those explicitly excluded.
Explain what constitutes a "loss" for an insured party and provide examples of losses an insurer might
compensate for.
A loss refers to a decrease in the value of the insured property or incurred costs from an accident.
Examples include covering repairs to a damaged car or medical bills after an injury.
Illustrate the concept of insurable risk and provide examples of items that meet the criteria.
Insurable risks must meet specific conditions, such as being definable, measurable, and
unexpected. For example, a car qualifies as insurable, whereas a family photo album might not.
What does it mean for a risk to be "definable," and why is this significant for insurance coverage?
2
, Definable risks can be precisely described and valued, such as the coverage terms for stolen
jewelry or the description of a car, which ensures clarity in policy coverage.
Explain why insurers might refuse to cover certain "expected" losses, using flooding as an example.
Losses must be unexpected to be insurable; frequent and predictable flooding disqualifies certain
areas from flood insurance availability.
Describe how insurers determine if premiums are "adequate" and why this condition is critical for
insurability.
Premiums must be sufficient to cover expected claims and operating expenses. If potential losses
exceed what premiums can reasonably cover, the risk is considered uninsurable.
How does a Risk Retention Group's structure benefit businesses with similar insurance needs?
Risk Retention Groups allow businesses with comparable risks to collectively purchase
commercial liability insurance, providing tailored coverage without acting as traditional insurers
themselves.
Describe how Private Non-Commercial Insurance companies utilize profits to benefit policyholders.
Profits are redistributed by reducing premiums or enhancing the benefits offered to
policyholders, reflecting their not-for-profit structure.
What is the primary distinction between a Foreign Insurer and an Alien Insurer?
A Foreign Insurer follows U.S. state laws while being based outside of that state. In contrast, an
Alien Insurer adheres to laws from an entirely different country.
Discuss how insurers evaluate and measure exposure and why it is critical in determining premiums.
Exposure quantifies the extent to which a person, item, or organization is at risk of loss, often
expressed in monetary terms, which helps insurers assess and set appropriate premiums.
Provide an example of a hazard and explain its role in increasing exposure.
Slippery floors in a store are a physical hazard that raises the likelihood and severity of falls,
thereby increasing the store's exposure to loss.
3
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller StellarGrades. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $9.60. You're not tied to anything after your purchase.
