Claims Adjuster

What are the three elements that must be present for a risk to be considered insurable?

• APure risk, large number of similar exposure units, and accidental loss
• BSpeculative risk, catastrophic potential, and measurable loss
• CMoral hazard, financial hardship, and legal requirement
• DPhysical hazard, premium affordability, and government approval

What is the principle of indemnity in insurance?

• AThe insured should profit from insurance payments
• BThe insured is restored to the same financial position after loss as before, without prof…
• CThe insurer must pay the full policy limit regardless of actual loss
• DThe insured can collect from multiple policies for the same loss

Which of the following best describes insurable interest?

• AA financial interest in the preservation of property or life being insured
• BA legal requirement to purchase insurance
• CThe amount of premium paid for insurance coverage
• DThe relationship between an agent and an insurance company

In property insurance, when must insurable interest exist for a claim to be valid?

• AOnly at the time the policy is purchased
• BOnly at the time of loss
• CBoth at the time of policy inception and at the time of loss
• DInsurable interest is not required for property insurance

What is subrogation in insurance?

• AThe cancellation of an insurance policy by the insured
• BThe transfer of the insured's right to recover damages from a third party to the insurer
• CThe process of renewing an expired insurance policy
• DThe assignment of policy benefits to a creditor

Which element is NOT required for a valid insurance contract?

• AOffer and acceptance
• BConsideration
• CWritten documentation in all cases
• DCompetent parties

What does the term "consideration" mean in an insurance contract?

• AThe insurance agent's recommendation
• BThe exchange of value between parties - premium from insured, promise to pay from insurer
• CThe deductible amount on the policy
• DThe policy limits and coverage terms

What is the purpose of the coinsurance clause in property insurance policies?

• ATo require the insured to carry insurance equal to a specified percentage of the property…
• BTo split premiums between multiple insurers
• CTo allow multiple insureds to share one policy
• DTo prevent assignment of the policy to third parties

An insured has a building valued at $200,000 with an 80% coinsurance clause and carries $120,000 in coverage. A fire causes $50,000 in damages. What amount will the insurer pay?

• A$50,000
• B$40,000
• C$37,500
• D$30,000

Which statement best describes the difference between actual cash value (ACV) and replacement cost?

• AACV includes depreciation; replacement cost does not
• BReplacement cost is always lower than ACV
• CACV applies only to commercial property
• DThere is no difference between the two valuation methods

What is the primary difference between a DP-1 and DP-3 dwelling policy?

• ADP-1 covers named perils only; DP-3 provides open perils coverage on the dwelling
• BDP-1 is for renters; DP-3 is for homeowners
• CDP-1 covers only fire; DP-3 covers all risks automatically
• DThere is no difference between these policy forms

Under a standard HO-3 homeowners policy, personal property is covered on what basis?

• AOpen perils with replacement cost valuation
• BNamed perils with actual cash value valuation
• COpen perils with actual cash value valuation
• DNamed perils with replacement cost valuation

What is the purpose of the Building Ordinance or Law endorsement in property insurance?

• ATo cover the cost of complying with current building codes during reconstruction
• BTo void coverage if local building codes are violated
• CTo provide liability coverage for building code violations
• DTo ensure contractors follow OSHA regulations

In commercial property insurance, what does the Causes of Loss - Special Form cover?

• AOnly the 16 named perils listed in the policy
• BAll risks of direct physical loss except those specifically excluded
• CFire, lightning, and internal explosion only
• DTheft and vandalism only

What type of property is typically covered under an Inland Marine policy?

• AOcean-going vessels and cargo
• BProperty that moves or is transported over land
• CAircraft and aviation equipment
• DUnderground mining equipment

Which peril is covered under the standard fire policy but typically excluded from flood insurance?

• AFire caused by flood
• BMudslide caused by heavy rain
• CSurface water runoff
• DSewer backup

A commercial building suffers a fire loss. The building had a replacement cost of $500,000 but was insured for only $300,000 with an 80% coinsurance clause. The actual cash value of the loss is $200,000, but replacement cost is $250,000. If the insured elects not to repair, what is the maximum recovery?

• A$250,000
• B$200,000
• C$150,000
• D$187,500

What does the Business Income coverage form provide?

• ACoverage for loss of income due to suspension of operations from a covered peril
• BCoverage for employee salaries only
• CCoverage for business expansion costs
• DCoverage for inventory replacement

What is the standard deductible in most homeowners policies?

• A$100 per occurrence
• B$500 or $1,000 per occurrence
• C10% of the dwelling coverage
• DThere is no standard deductible

Under the Mortgage Clause in property policies, what rights does the mortgage holder have?

• AThe right to cancel the policy
• BThe right to receive payment for loss to the insured building even if the insured has vio…
• CThe right to increase policy limits
• DThe right to choose the repair contractor