TheoryInsurance Adjuster
Practice Test
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Insurance Adjuster exam — full Q&A walkthrough
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30 free Insurance Adjuster questions
Sampled across every topic area — not just the first page. Try them as a quiz or flip them as flashcards.
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Claims Handling Process
What is the term for the initial report a policyholder makes to begin a claim?
Correct — A. First Notice of Loss (FNOL) is the policyholder's initial report that triggers the claims process and starts applicable timelines for adjuster contact. -
Claims Handling Process
Under most property policies, an insured's duty after a loss includes all of the following EXCEPT:
Correct — B. Deciding coverage and limits is the adjuster's task. The insured's duties are notice, mitigation, protection of property, and cooperation. -
Claims Handling Process
An adjuster sends a reservation of rights letter primarily to:
Correct — C. A reservation of rights notifies the insured that the insurer is investigating but may dispute coverage, preventing an unintended waiver of policy defenses. -
Claims Handling Process
A 'proof of loss' is best described as:
Correct — C. A proof of loss is a formal, usually sworn document in which the insured states the amount claimed and supporting facts; many policies require it within a set period. -
Claims Handling Process
The MAIN purpose of a claim investigation is to:
Correct — A. Investigation gathers facts so the adjuster can decide whether coverage applies, what caused the loss, and the proper amount to pay. -
Claims Handling Process
Setting a claim 'reserve' means the insurer:
Correct — B. A reserve is the insurer's good-faith estimate of the total amount it expects to pay on a claim, set aside on its financial statements. -
Claims Handling Process
Subrogation allows an insurer that has paid a claim to:
Correct — D. After paying the insured, the insurer 'steps into the shoes' of the insured to recover from the at-fault third party, preventing double recovery. -
Claims Handling Process
When an insurer takes title to damaged property after paying a total loss, the recovered property is called:
Correct — C. Salvage is damaged property the insurer takes ownership of after settling; its sale proceeds offset the claim cost. -
Claims Handling Process
Thorough, contemporaneous claim file documentation primarily serves to:
Correct — A. Good documentation records the basis for each decision, supports fair handling, and protects against bad-faith allegations. -
Claims Handling Process
An independent adjuster differs from a staff (company) adjuster in that the independent adjuster:
Correct — B. Independent adjusters contract with one or more insurers to handle claims, whereas staff adjusters are direct employees of a single insurer. -
Claims Handling Process
A public adjuster is retained by and represents the interests of:
Correct — D. A public adjuster works for the insured for a fee to prepare and negotiate the claim, opposite to company and independent adjusters who serve insurers. -
Claims Handling Process
Most state regulations require an adjuster to make initial contact with a claimant:
Correct — B. Unfair claims settlement practice rules require prompt acknowledgment and contact after notice of a claim, commonly within 10-15 days. -
Claims Handling Process
In a liability claim, 'coverage' and 'liability' are separate questions because:
Correct — A. Coverage asks whether the policy responds; liability asks whether the insured is legally responsible. Both must be analyzed independently. -
Claims Handling Process
After a covered water loss, the insured tarps the roof and extracts standing water. These actions reflect the duty to:
Correct — B. Insureds must take reasonable steps to protect property and prevent additional damage; such reasonable emergency costs are often covered. -
Claims Handling Process
An insurer that needs more time to decide a claim within a statutory period should:
Correct — C. When a decision cannot be made in time, fair-claims rules require written notice of the delay, the reason, and a new expected timeframe. -
Claims Handling Process
When the insurer and insured agree coverage applies but dispute the amount of a property loss, the policy's appraisal clause:
Correct — C. Appraisal resolves valuation disputes (not coverage disputes): each side names an appraiser and they select an umpire; agreement by any two binds the amount. -
Claims Handling Process
A signed 'release' in claim settlement generally:
Correct — A. A release is the claimant's agreement to accept settlement as full satisfaction, barring further recovery for that loss. -
Claims Handling Process
Failing to conduct a reasonable investigation before denying a claim most directly exposes the insurer to:
Correct — B. A denial without an adequate, reasonable investigation can constitute bad faith, since insurers owe a duty to investigate fairly before deciding. -
Claims Handling Process
Which detail is LEAST necessary to capture at first notice of loss?
Correct — D. FNOL captures who, what, when, where, and how. The adjuster's compensation is irrelevant to documenting the loss. -
Claims Handling Process
A 'third-party claim' is one brought:
Correct — D. Third-party claims arise when someone outside the policy seeks payment for harm the insured allegedly caused, handled under liability coverage. -
Claims Handling Process
A 'first-party claim' is one in which:
Correct — A. First-party claims are the insured's own losses (e.g., fire damage to the insured's home) paid under the insured's policy. -
Claims Handling Process
Preparing a 'scope of loss' means the adjuster is:
Correct — B. A scope documents the full extent of damage and repairs needed, forming the basis for an accurate estimate. -
Claims Handling Process
If an insured refuses to submit to a reasonable examination under oath required by the policy, the insurer may:
Correct — D. Examinations under oath and cooperation are policy conditions; an unjustified refusal can be grounds to deny because it impedes investigation. -
Claims Handling Process
Adjusters deployed after a hurricane to handle a surge of claims are commonly called:
Correct — B. CAT adjusters are mobilized to disaster areas to handle large volumes of claims following catastrophic events. -
Claims Handling Process
A proper claim denial letter should:
Correct — A. Fair claims practices require denials in writing that cite the specific policy provisions and factual basis so the insured can respond. -
Claims Handling Process
A closed claim may generally be reopened when:
Correct — D. Claims can be reopened if material new facts or supplemental damages arise that were not addressed in the original settlement. -
Claims Handling Process
A 'desk adjuster' differs from a 'field adjuster' mainly because the desk adjuster:
Correct — B. Desk (inside) adjusters manage claims by phone, email, and documentation, while field adjusters physically inspect losses. -
Claims Handling Process
Effective claim negotiation is grounded primarily in:
Correct — D. Fair negotiation rests on the investigated facts, the policy terms, and an objective loss valuation, not pressure tactics. -
Claims Handling Process
A 'statute of limitations' relevant to claims sets:
Correct — B. Statutes of limitations bar legal actions filed after a set period; adjusters track them because they affect litigation exposure and subrogation. -
Claims Handling Process
Late notice of a loss may jeopardize coverage primarily when the delay:
Correct — A. Many jurisdictions excuse late notice unless the insurer shows it was actually prejudiced in investigating or defending the claim.
Insurance Adjuster sample questions
Tap any question below to reveal the answer and a plain-English explanation.
Claims Handling Process An 'assignment of benefits' (AOB) in a property claim typically transfers:
A. The policy ownership to a bank
B. The deductible to the contractor
C. The insured's right to claim payment to a third party such as a contractor ✓
D. The premium obligation to the insurer
Correct — C. An AOB lets a vendor (e.g., a restoration company) collect claim proceeds directly from the insurer by stepping into the insured's payment rights.
Property Coverages A 'named peril' property policy covers loss:
A. From any cause not excluded
B. Only from perils specifically listed in the policy ✓
C. Only from flood
D. Only from theft
Correct — B. Named-peril forms cover only the perils explicitly listed; the insured must show the loss was caused by a listed peril.
Casualty Coverages Liability insurance protects the insured against:
A. Legal responsibility for bodily injury or property damage to others ✓
B. Damage to the insured's own car
C. Lost wages of the insured
D. The insured's medical bills only
Correct — A. Liability coverage pays sums the insured becomes legally obligated to pay third parties for covered bodily injury or property damage, plus defense.
Policy Interpretation The declarations page of a policy primarily states:
A. The named insured, limits, premium, and policy period ✓
B. All exclusions in full
C. The claims process steps
D. The state insurance code
Correct — A. The declarations (dec) page summarizes the specific facts of the contract: insured, covered property, limits, deductibles, premium, and effective dates.
Loss Estimating & Settlement A roof costs $12,000 to replace, has a 20-year life, and is 5 years old. Straight-line depreciation reduces its value by:
A. $6,000
B. $3,000 ✓
C. $1,200
D. $12,000
Correct — B. Depreciation = (age/life) x cost = (5/20) x $12,000 = $3,000, so ACV would be $12,000 - $3,000 = $9,000 before any deductible.
Fraud Recognition Insurance fraud generally requires:
A. A knowing misrepresentation made to obtain a benefit the person is not entitled to ✓
B. An honest mistake on a form
C. A late premium payment
D. A small claim
Correct — A. Fraud requires a knowing, intentional false statement or act intended to obtain an undeserved insurance benefit; honest errors are not fraud.
Ethics & Good Faith An insurer owes its insured a duty of:
A. Good faith and fair dealing in handling claims ✓
B. Maximizing its own profit at the insured's expense
C. Secrecy about coverage
D. Delay
Correct — A. The implied covenant of good faith and fair dealing requires insurers to handle claims honestly and fairly, considering the insured's interests.
Adjuster Law & Regulation In most states, a person who adjusts insurance claims for compensation must:
A. Hold an adjuster license where required ✓
B. Have no qualifications
C. Be an attorney
D. Be an actuary
Correct — A. Most states require adjusters to be licensed, meeting education, examination, and character requirements before handling claims for pay.
About the Insurance Adjuster test
Built around Finance & Accounting, this Insurance Adjuster question bank mirrors the real exam format instead of guessing at trick questions. Work through the free sample, read every explanation, then move on to full timed mock exams once you're ready.
You will be tested on
- The core topics and terminology you'll be tested on
- Rules, standards and best-practice procedures
- Real-world scenarios and how to respond
- Common mistakes and how to avoid them
How TheoryPractice helps you pass
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Topics in this question bank
The core topics and terminology you'll be tested on
Rules, standards and best-practice procedures
Real-world scenarios and how to respond
Common mistakes and how to avoid them
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