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New Hampshire Adjuster Exam Prep: Series
12-75 Questions and Answers.
Which of the following best defines "insured"? A. Transfer of the risk of financial loss from one party to another B. A legally binding contract in which the insurance company agrees to pay for specified losses in exchange for premiums C. An individual or organization that pays premiums in exchange for financial protection D. A company, group, or government agency offering financial protection - Correct answer C. An individual or organization that pays premiums in exchange for financial protection What are the four requirements of a legally binding contract? A. Agreement, consideration, character, signatures B. Authority, character, competent parties, legal purpose C. Authority, consideration, signatures, legal purpose D. Agreement, consideration, competent parties, legal purpose - Correct answer D. Agreement, consideration, competent parties, legal purpose Darnell is applying for auto insurance with his agent. Currently, he only wants to get a minimal amount of coverage to keep his premiums as low as possible, so he decides not to include uninsured motorist coverage on his policy. His agent has him sign a document giving up his right to this coverage. What is this called? A. A warranty B. An express waiver C. A binder D. An implied waiver - Correct answer B. An express waiver
An economic device used to protect against the risk of realizing unforeseen and extraordinary financial loss is called: A. risk avoidance B. insurance C. indemnification D. subrogation - Correct answer B. insurance tom purchases a new car from his local car dealer. he also decides to get insurance coverage that will pay to repair the car if he were to get into an accident. this is because tom wants to protect: A. his own financial interest in the car B. other drivers on the road C. his insurance company's profit margins D. any passengers who ride in his car - Correct answer A. his own financial interest in the car Skip's Convenience Store must agree to install and maintain an emergency shutoff system for its gas pumps in order to qualify for insurance coverage. Which of the following statements is true? A. This requirement is a binder found in the conditions section of the policy B. This requirement is a warranty found in the conditions section of the policy C. This requirement is a warranty found in the declarations section of the policy D. This requirement is a representation found in the declarations section of the policy - Correct answer B. This requirement is a warranty found in the conditions section of the policy
A. warranties B. promises C. subrogation D. representations - Correct answer D. representations Which of the following statements about insurable interest is FALSE? A. Dean has insurable interest in the city's power transformer that supplies power to the homes on his street because damage to the transformer would leave Dean without power. B. Mark has insurable interest in the company that he co-owns with his partner, Aaron. C. Mary has insurable interest in Barry's life because Barry's death would cause Mary economic hardship. D. The bank has insurable interest in Wilson's home, for which it holds the mortgage. - Correct answer A. Dean has insurable interest in the city's power transformer that supplies power to the homes on his street because damage to the transformer would leave Dean without power. Darren's SUV cost him $28,500 when he bought it new five years ago, but it would cost $29,600 to replace it today. The vehicle has an annual depreciation of $1,200. Darren loses control while driving too fast around a bend in the road and flips his vehicle, totaling it. Assuming Darren's auto insurance policy pays ACV, how much can he expect to receive in indemnification for this claim? ACV= Replacement Value-Total Depreciation $29,600-($1,200x5yrs) A. $29, B. $23, C. $22,
D. $27,300 - Correct answer B. $23, Susan is a successful plastic surgeon and wants to purchase liability insurance. Her husband, a teacher, is part of a risk retention group and is quite happy with his insurance. Susan decides to apply to her husband's group, but her application is denied. This is because: A. Susan's business is not similar to that of her husband's B. Susan has not owned her own business for more than two years C. Surgeons cannot be members of a risk retention D. Risk retention groups do not typically provide liability insurance
- Correct answer A. Susan's business is not similar to that of her husband's Roxanne bought her 50" TV four years ago for $2,400. During a storm, her house was struck by lightning and the current fried her TV. The TV depreciates at $400 per year and a similar TV costs $1,200 today. Assuming Roxanne's homeowners policy has a replacement cost endorsement for personal property, how much can she expect to receive in indemnification for her damaged TV? Replacement Cost= Current Cost-[Original Purchase Cost-(Total Depreciation] $1,200-[$2,400-($400x4yrs)] A. $2, B. $ C. $ D. $1,200 - Correct answer B. $ It is important to use the correct units of measurement when documenting damage to a structure in an estimate. Which of the following is TRUE with regards to units of measure?
C. an indirect loss D. the physical hazard - Correct answer B. a direct loss Jane's shed burns to the ground during a tornado, when a tree falls on the roof and snaps a power line, which then ignites the structure. What is the proximate cause of the loss? A. Wind B. Fire C. Electrical current D. Falling objects - Correct answer A. Wind A power surge sparks a small electrical fire in an office building. The water from the sprinklers soaks the carpets and shorts-out all the computers, causing thousands of dollars in damage. The office must close for two months during repairs. The damage to the carpets and computers would be considered: A. the proximate cause of loss B. a physical hazard C. an indirect loss D. a direct loss - Correct answer D. a direct loss Acme Insurance has entered into a contract to insure a small airline. This involves immense exposure, but also provides Acme with a lot of revenue. Acme wants to ensure that it will always be capable of paying any claims that might arise. What is the best way for Acme to do this? A. Purchase re-insurance B. Join a risk retention group C. Become a stock insurance company D. Establish a fraternal benefit society - Correct answer A. Purchase re-insurance
Robby carpools to school with his friends, and he enjoys racing the other cars on the road whenever he can. His Dad lectures him about the dangers of speeding, but Robby thinks his Dad is overreacting. He's been driving for two whole years, so he knows what he's doing. And besides, they have good insurance, so it wouldn't be that big of a deal even if Robby did damage his car. In insurance terms, Robby's behavior is: A. a morale hazard B. a risk C. a peril D. a moral hazard - Correct answer A. a morale hazard Flora is driving in the rain when she skids off the road and slams into Cam's billboard, totalling her car and causing $2,000 in damage to the billboard. Flora has an auto policy with ABC Insurance. Cam files a third-party claim and ABC Insurance pays him $1,500 for the billboard. Which of the following is TRUE? A. Cam may file a first-party claim with ABC Insurance B. Cam has forfeited his right to collect the remaining $ C. Flora has forfeited her right to collect $2, D. Cam may sue Flora for $500 - Correct answer D. Cam may sue Flora for $ As a direct writer for ABC Insurance, Grace enjoys the benefit of receiving a regular salary. What other aspect applies to her position as a direct writer? A. Grace receives a commission on every policy she sells B. Grace helps to train other insurance agents within the company C. Grace sells a variety of policies for several insurers D. Grace sells policies solely for ABC insurance - Correct answer D. Grace sells policies solely for ABC insurance
Tom is an experienced insurance agent looking for a new job where he works for one insurer and has the responsibility of training and supervising other agents. Which of the following would best fit the type of job Tom is looking for? A. Captive agent B. Independent agent C. Direct writer D. General agent - Correct answer D. General agent An adjuster's preliminary report would most likely not: A. include the settlement amount B. establish a claim reserve C. document the initial contact with the claimant D. list any known liability issues - Correct answer A. include the settlement amount Whose responsibility is it to maintain an open line of communication during the settlement process? A. The insurance company B. The insurance agent C. The claimant D. The adjuster - Correct answer D. The adjuster In the context of insurance adjusting, who is the principle? A. Claimant B. The insurance broker C. The source of the adjuster's authority D. The Director of Insurance - Correct answer C. The source of the adjuster's authority
Which of the following is NOT a reason why an adjuster would collect written or recorded witness statements during a claim investigation? A. To fully comply with the conditions section of the insurance policy B. To dispute an account provided by the claimant or another witness C. To impeach a witness' credibility if he changes his story when the claim goes to court D. To expose data that may have been overlooked in the claim handling process - Correct answer A. To fully comply with the conditions section of the insurance policy An independent adjuster: A. represents the policyholder and charges a commission, usually about 10% of the settlement B. is self-employed and may be contracted by one or more companies at a time C. is solely responsible for processing claims for one insurer either locally, regionally, or nationally D. is contracted by the claimant and may work for more than one at a time - Correct answer B. is self-employed and may be contracted by one or more companies at a time After a hail storm passed through his neighborhood, Perry had his roof inspected by a local contractor. The contractor gave Perry an estimate of $9,850 to replace his roof, so he filed a claim with his insurer. The adjuster came up with her own estimate of $9,645 to replace Perry's roof. How will the adjuster likely respond to Perry's request? A. Negotiate the claim in attempt to get Perry to agree to the lesser amount
An insurance adjuster has a duty to do all of the following regarding a claim, EXCEPT: A. determine if the claim falls under the coverage of the insurance policy B. decide whether the claim has any merit C. protect the insurer from the claim D. investigate the claim - Correct answer C. protect the insurer from the claim Which of the following is NOT true arbitration? A. The arbitrator's decision is not legally binding B. Arbitration may allow evidence that a court would not C. The arbitrator is neutral third party D. Arbitrators often have more expertise than juries - Correct answer A. The arbitrator's decision is not legally binding Greg works for XYZ Insurance. Part of his daily tasks involve visiting sites, investigating liability, and determining the time and cost of repairs. On occasion, Greg will have to negotiate with claimants as part of his job. Which type of agent is Greg? A. Secret agent B. Direct writer C. Claims adjuster D. Sales agent - Correct answer C. Claims adjuster Peter, an insurance adjuster, is going over a claim. He's examining the deductible, the total claimed damages, the policy limits, other policies that might also cover the claim, whether the property is adequately insured, and whether or not a coinsurance penalty applies. Which function of an adjuster is Peter performing?
A. Investigating a claim B. Evaluating a claim C. Reporting a claim D. Managing a claim - Correct answer B. Evaluating a claim Which of the following sequences is most likely in the correct chronological order? A. Determine the cost of repairs, then investigate the claim B. Acknowledge the claim, then open a line of communication with the claimant C. Negotiate a settlement, then complete the investigation D. Determine the amount of damages, then see if the claim is covered under the policy - Correct answer B. Acknowledge the claim, then open a line of communication with the claimant Which of the following is acting appropriately a fiduciary agent? A. Kim is trying to calm a claimant who is very upset, so she tells him the she is sure the loss is covered, even though she has not yet determined the cause of loss B. Gail investigates a claim and decides the loss is not covered, but writes up her estimate in such a way that it would appear to be covered so she could pay the claimant anyway C. Victor finds additional damage that seems to be related to the claim, but he leaves it off of his estimate because the claimant didn't notice it in the first place D. Ernest knows the claimant can't possibly afford to pay for their extensive damages, but he denies the claim anyway because the cause of loss was not covered by the policy - Correct answer D. Ernest knows the claimant can't possibly afford to pay for their extensive damages, but he denies the claim anyway because the cause of loss was not covered by the policy
Quincy is in court attempting to convince the jury through a preponderance of evidence that his insurer is deliberately withholding his rightful indemnification for his property claim. In which type of legal proceeding are Quincy and his insurer currently involved? A. Criminal trial B. Contributory negligence hearing C. Civil trial D. Comparative negligence hearing - Correct answer C. Civil trial Carol is adjusting a liability claim. After thoroughly examining the case, Carol comes up with what she believes is a fair and equitable amount of indemnification for the claimant. However, the claimant may reject her offer, so she prepares a second offer, just in case. Which function of an insurance adjuster might Carol be preparing for? A. Negotiating a claim B. Reporting a claim C. Evaluating a claim D. Investigating a claim - Correct answer A. Negotiating a claim After being rear-ended by Kacy, Alicia filed a claim against Kacy's insurer, NED Insurance. NED dispatched their adjuster, Ulric, to investigate the claim. Who is the claimant in this scenario? A. Alicia B. Ulric C. Kacy D. NED Insurance - Correct answer A. Alicia Zach totalled his car in an accident. The insurer offered him $60,000 to replace the vehicle, which Zach rejected. The insurer even went up to $70,000, but Zach stuck by his demand for
$95,000. The case eventually went to trial and the jury awarded Zach $65,000. Which of the following statements is TRUE? A. Zach can appeal the decision to try to the $70,000 offered by the insurer during the negotiation B. Zach can reopen negotiations with his insurer C. Zach will only get $65,000 dollars because $70,000 dollar was inadmissible to court D. Zach will get $70,000, because that was the last offer given by the insurer - Correct answer C. Zach will only get $65,000 dollars because $70,000 dollar was inadmissible to court What document do insurance companies give to claimants when they think something in the claim is not covered by the policy, but they are not sure yet? A. Declaratory judgment action B. Coverage clause C. Non-waiver agreement D. Reservation of Rights letter - Correct answer D. Reservation of Rights letter During a heavy rainstorm, the water accumulation rose high enough to flow under Angie's front door and ruined her hardwood floors. In response to Angie's claim, an adjuster came out to her home and inspected the damage. The adjuster determined that the loss was covered, wrote Angie a check, and closed the claim. Later, the insurance company reviewed Angie's claim and discovered that the adjuster should have denied it because Angie's policy doesn't cover flood. However, Angie refuses to return the settlement because of the adjuster's: A. expert authority B. utmost good faith C. apparent authority
D. list all of the evidence of the claim - Correct answer C. establish a claim reserve Which of the following is NOT a way to determine an insurer's liability in a claim? A. Check if the policy covers the type of damage being claimed B. Check if the claimant has insurable interest C. Check if the current month's premium had been paid at the time of loss D. Check if the policy was active at the time of loss - Correct answer C. Check if the current month's premium had been paid at the time of loss Paul and his wife have three separate insurance policies covering their home: Policy X with a limit of $100,000, Policy Y with $50,000, and Policy Z with $25,000. These policies are set up to pay covered claims by contribution of equal shares. After a fire causes $125,000 in damage to their home, how much will each policy pay (ignoring any deductibles)? A. Policy X pays $50,000; Policy Y pays $50,000; and Policy Z pays $25, B. Policy X pays $71,250; Policy Y pays $36,250; and Policy Z pays $17, C. Each policy pays $41, D. Policy X pays $100,000; Policy Y pays $12,500; and Policy Z pays $12,500 - Correct answer A. Policy X pays $50,000; Policy Y pays $50,000; and Policy Z pays $25, Under the Contribution by Equal Shares provision, each policy will pay an equal share of the loss, up to the lowest policy limit. Then this process will repeat, if needed, among the remaining policies with available coverage. First, the three policies will pay $25, each, for a total of $75,000. Policy Z has reached its limit, leaving
$50,000 to divide between the two remaining policies. This brings the amount paid under Policy X and Policy Y to $50,000 each, while Policy Z only pays $25,000. Sara's vehicle was stolen and her insurer paid her theft claim for the total value of the car. A week later, the police found Sara's car and returned it to her. Which of the following statements is true? A. The Abandonment provision states that Sara must surrender her rights to the vehicle to her insurer B. The Assignment provision states that because Sara was already indemnified for the loss, she must sign over the vehicle title to the insurer C. The Salvage provision states that Sara must sell the vehicle and give the proceeds to the insurer to pay back the settlement she received D. The Recovered Property provision states that Sara must notify the insurer and either return the settlement payment or surrender the vehicle to the insurer - Correct answer D. The Recovered Property provision states that Sara must notify the insurer and either return the settlement payment or surrender the vehicle to the insurer In an insurance contract, exclusions are NOT used to: A. manage moral and morale hazard B. eliminate duplication of coverages C. add coverages that need special treatment D. lower premiums - Correct answer C. add coverages that need special treatment In a liability policy, the Legal Action Against the Insurer provision typically states:
