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All-Lines Insurance Adjuster Exam (Texas and Florida 6-20)

Insurance terms and contract law: practice questions

Our Insurance adjuster (all lines) bank has 36 questions on this topic. Here are 5 of them with answers; the full mock exam draws from every topic, like the real one.

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Question 1

In insurance, a 'peril' is:

  1. A cause of loss, such as fire or windstorm
  2. A condition that increases the chance of loss
  3. The amount the insured pays first
  4. The person who buys the policy
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A. A cause of loss, such as fire or windstorm — A peril is the cause of loss; a hazard is a condition that increases the likelihood or severity of loss.

Question 2

An endorsement is:

  1. A written agreement attached to a policy that expands or limits its benefits
  2. A claim form the insured signs after a covered loss
  3. A notice of cancellation
  4. The insurer's published financial strength rating
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A. A written agreement attached to a policy that expands or limits its benefits — TDI glossary: an endorsement is a written agreement attached to a policy expanding or limiting the benefits otherwise payable; also called a rider.

Question 3

Which insurer is owned by its policyholders?

  1. A stock insurer
  2. A Lloyd's syndicate
  3. A surplus lines broker
  4. A mutual insurer
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D. A mutual insurer — Mutual insurers are owned by policyholders; stock insurers by shareholders; reciprocal exchanges are unincorporated groups of subscribers managed by an attorney-in-fact.

Question 4

Waiver means:

  1. A written guarantee in the application
  2. The voluntary giving up of a known right
  3. A clause transferring recovery rights
  4. A refusal to renew the policy
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B. The voluntary giving up of a known right — Waiver is the intentional relinquishment of a known right; it can lead to estoppel.

Question 5

A valued policy pays:

  1. Only actual cash value for a total loss
  2. The full face amount for a total loss
  3. Replacement cost minus a deductible, whatever the face amount
  4. The market value of the land and building
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B. The full face amount for a total loss — A valued policy pays a stated amount on a total loss. Some states, including Florida and Texas, have valued policy laws for total losses to buildings.

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