Public Insurance Adjuster Practice Exam

1. What is the fee required to sit for the state's general property licensing examination?

• A. $49
• B. $39
• C. $29
• D. $59

2. When determining actual cash value, an adjuster invokes the broad-evidence rule. What does this rule permit?

• A. Ignoring depreciation entirely in favor of full replacement cost
• B. Considering any relevant evidence of value, not just replacement cost minus depreciation
• C. Limiting valuation strictly to the original purchase price of the property
• D. Requiring the insured to accept the lowest of three independent appraisals

3. Under most states' Unfair Claims Settlement Practices Act, how does a single act of prohibited conduct differ in regulatory consequence from repeated acts?

• A. A single violation triggers criminal prosecution, while repeated violations are only civil
• B. A single violation may be an unfair practice, but a general business practice of violations triggers regulatory penalties
• C. Neither a single violation nor repeated violations carry any regulatory consequence
• D. A single violation always results in license revocation, while repeated violations result only in a warning

4. A dispute arises between an insurer and its insured over the dollar amount of a covered loss, and the appraisal clause is invoked. Which sequence correctly describes the process, and what may the resulting agreement resolve?

• A. A single court-appointed appraiser sets both the amount of loss and whether coverage applies
• B. Each party selects a competent impartial appraiser, the two appraisers select an umpire, and agreement by any two of the three sets the amount of loss — but not coverage
• C. The insurer alone selects both appraisers, and their agreement decides all coverage questions
• D. The insured's public adjuster acts as umpire and unilaterally decides the amount of loss

5. A policy requires the insured to submit a sworn, formal statement documenting the amount and details of a first-party loss. Which statement about this document is correct?

• A. It is the same as the initial notice of loss, which merely reports that a loss occurred
• B. It is distinct from the initial notice of loss, must be sworn before a notary, and is commonly due within 60 days after the insurer's request
• C. It need not be sworn and may be submitted orally to the adjuster
• D. It applies exclusively to third-party liability claims

6. After paying its insured for a first-party loss, an insurer wishes to recover from the negligent party who caused it, and separately takes title to the damaged property it paid a total loss on. Which pairing correctly identifies these two rights and the principle limiting the first?

• A. Depreciation and hold-back; the insured must first sign a release with the at-fault party
• B. Salvage and subrogation; the broad-evidence rule bars any recovery until repairs are complete
• C. Subrogation and salvage; under the make-whole doctrine the insurer may not recover through subrogation until the insured has been fully compensated
• D. Appraisal and reserves; the insurer may recover before the insured is compensated

7. An insurance company sets aside on its books an estimate of what it expects to pay on an open claim and revises that figure as the claim develops. This bookkeeping estimate is known as the:

• A. Proof of loss
• B. Reserve
• C. Salvage offset
• D. Recoverable depreciation

8. An insured's roof is destroyed by a covered peril. The replacement-cost policy pays the actual cash value first and withholds the depreciation. When is the insurer typically obligated to release the withheld (recoverable) depreciation?

• A. Only after the insured actually completes the repair or replacement
• B. Immediately upon the insurer's approval of the claim, before any work begins
• C. When the insured signs the initial notice of loss
• D. Never; recoverable depreciation is retained by the insurer as salvage

9. Which statement most accurately distinguishes actual cash value (ACV) from replacement cost value (RCV)?

• A. ACV is replacement cost at the time of loss minus depreciation, whereas RCV is the cost to repair or replace with new materials of like kind and quality without deducting depreciation
• B. ACV applies only to liability claims, whereas RCV applies only to property claims
• C. RCV is always lower than ACV because it excludes obsolescence
• D. ACV includes an additional profit margin for the insured, whereas RCV does not

10. An insurer denies a clearly valid claim without any reasonable basis and fails to properly investigate. Beyond ordinary breach-of-contract exposure, what additional consequence does a finding of bad faith create?

• A. The claim is automatically transferred to a public adjuster
• B. The insured forfeits any right to subrogation
• C. The insurer may face extra-contractual and sometimes punitive damages
• D. The policy's appraisal clause is permanently voided

11. How does a first-party claim differ from a third-party claim with respect to the role of fault?

• A. Fault is irrelevant to both first-party and third-party claims
• B. First-party coverage responds only when the insured is legally liable, while third-party coverage responds regardless of fault
• C. Both first-party and third-party coverage respond only when fault is admitted in writing
• D. First-party coverage responds regardless of fault, while third-party liability coverage responds only when the insured is legally liable

12. A public adjuster's license is suspended after the state Department of Insurance substantiates a complaint of trust-account commingling. Before the suspension becomes final, what is the licensee typically entitled to?

• A. Automatic license renewal pending appeal
• B. An administrative hearing to contest the finding
• C. Immediate reinstatement upon payment of a fine
• D. A jury trial before a civil court

13. A public adjuster's license comes up for renewal, and the adjuster has not completed the continuing education hours the state requires for that renewal period. What is the most likely outcome?

• A. The license renewal may be denied or delayed until the CE requirement is satisfied
• B. CE requirements apply only to insurance agents, not public adjusters
• C. The adjuster may self-certify completion without documentation
• D. The state waives CE requirements for adjusters with no complaint history

14. A public adjuster fails to maintain the errors and omissions insurance required as a condition of licensure. What is the most likely regulatory consequence?

• A. No consequence unless a client sues
• B. The state automatically pays any future claims against the adjuster
• C. The DOI may suspend or revoke the license for noncompliance
• D. The adjuster's clients lose their own policy coverage

15. A consumer files a complaint with the Department of Insurance alleging a public adjuster misrepresented the likely settlement value to induce a contract signing. What is the DOI's role in this dispute?

• A. To represent the consumer in a lawsuit against the adjuster
• B. To investigate and, if warranted, pursue licensing discipline
• C. To award the consumer monetary damages directly
• D. To rewrite the contract on the consumer's behalf

16. Which entity is primarily responsible for licensing and disciplining public adjusters within a given state?

• A. The insurer whose claim is being adjusted
• B. The National Association of Insurance Commissioners as a binding regulator
• C. The state's Department of Insurance
• D. The local police department

17. A public adjuster's business entity operates through multiple individually licensed adjusters. What does the state typically also require of the entity itself?

• A. A separate business entity license or registration
• B. A federal corporate charter specific to insurance adjusting
• C. Approval from every insurer the entity deals with
• D. Nothing, since individual licenses cover the business

18. Following a hurricane, a state's insurance commissioner issues an emergency bulletin temporarily modifying rules for public adjuster contracts in the declared disaster area. What is the legal effect on adjusters operating there?

• A. The bulletin is only a suggestion with no binding effect
• B. Adjusters may choose whether to follow the bulletin or the ordinary rule
• C. Adjusters must comply with the modified rules while the bulletin is in effect
• D. The bulletin overrides state licensing law permanently

19. What is the fee to sit for the licensing exam that includes the Policy Provisions content area?

• A. $59
• B. $39
• C. $29
• D. $49

20. A student who fails the exam on their first attempt must pay again to retake it. Assuming the fee is unchanged between attempts, what is the total amount paid across two attempts?

• A. $39
• B. $68
• C. $78
• D. $98

21. An insured's replacement-cost homeowners policy covers a damaged roof. After the loss, how does the insurer typically structure payment under the policy's replacement-cost provisions?

• A. It pays the actual cash value first and releases the withheld (recoverable) depreciation only after the insured completes the repair or replacement.
• B. It pays nothing until the insured signs a release of all subrogation rights.
• C. It pays the full replacement value immediately, before any repairs begin.
• D. It pays only the depreciated value and never releases the balance.

22. When the appraisal clause is invoked, how is the binding amount of loss ultimately determined?

• A. The insurer's appraiser alone sets the figure.
• B. Each party selects a competent, impartial appraiser, the two appraisers select an umpire, and an agreement by any two of the three sets the amount of loss.
• C. A court must approve the umpire's decision before it is binding.
• D. The insured's public adjuster has final say on the amount.

23. A policy requires the insured to submit a formal, sworn statement documenting the details of a first-party loss. This document is best described as the:

• A. Notice of loss.
• B. Proof of loss.
• C. Declarations page.
• D. Coverage analysis.

24. Following a covered loss, an insured signs a release with the at-fault third party before the insurer has recovered anything. What is the significance of this act with respect to the policy?

• A. It impairs the insurer's subrogation rights, which the insured must not do after a loss.
• B. It converts the claim from first-party to third-party.
• C. It is required of the insured under the make-whole doctrine.
• D. It triggers the insurer's duty to defend the third party.

25. An insurer denies a clearly valid claim without any reasonable basis. Beyond the amount owed under the contract, why is such conduct especially significant for the insurer?

• A. Because it converts the dispute into an appraisal matter.
• B. Because it eliminates the insurer's subrogation rights.
• C. Because a finding of bad faith can expose the insurer to extra-contractual and sometimes punitive damages, unlike a simple breach of contract.
• D. Because a single such act automatically constitutes a general business practice.

26. An insurer sends a written request for a proof of loss. Within what period do policies commonly require the insured to submit it?

• A. 30 days after the request.
• B. 60 days after the request.
• C. 45 days after the request.
• D. 90 days after the request.

27. A homeowner is injured when a tree falls on the house and files a claim under their own property policy. This is best classified as which type of claim, and how does the coverage respond?

• A. A third-party claim that responds only when the insured is legally liable.
• B. A first-party claim that responds regardless of fault.
• C. A third-party claim triggering the duty to defend.
• D. A first-party claim that responds only after subrogation is complete.

28. Under the appraisal clause of a property policy, a dispute has arisen. Which type of dispute is the appraisal process designed to resolve?

• A. The amount of loss, not whether coverage applies.
• B. Whether the insured breached a policy condition.
• C. Whether a particular peril is covered under the policy.
• D. Whether the insurer acted in bad faith.

29. After paying an insured for fire damage caused by a negligent contractor, an insurer seeks to recover its payment from that contractor. Which policy-related right permits this, and on what principle does it rest?

• A. Reserves, resting on the duty of good faith.
• B. Appraisal, resting on the make-whole doctrine.
• C. Salvage, resting on the broad-evidence rule.
• D. Subrogation, resting on the principle of indemnity so the insured does not profit from a loss.

30. An insurer declares a vehicle a total loss, pays the insured, and takes title to the wrecked vehicle. When the insurer later sells the wrecked vehicle, what is that remaining value called and what is its effect?

• A. Salvage, which the insurer sells to recover part of the amount it paid, offsetting the claim cost.
• B. Subrogation, which shifts the loss to a third party.
• C. Depreciation, which reduces the insured's payout.
• D. A reserve, which is set aside as a liability on the books.

31. A homeowners policy contains a coinsurance-like provision requiring the dwelling to be insured to at least 80% of replacement cost to avoid a penalty. If the insured carries less than that percentage, what is the typical effect on a partial loss settlement?

• A. The claim is denied entirely
• B. The insurer pays the full loss regardless of the shortfall
• C. The insured must pay the insurer the difference
• D. The insurer prorates the payment, reducing it below the actual loss amount

32. A property policy contains an other insurance clause. When a loss is also covered by a second policy the insured holds, what does this clause typically govern?

• A. The insured's duty to notify the police
• B. The territorial scope of coverage
• C. How liability for the loss is apportioned or coordinated between the overlapping policies
• D. Whether the insured may collect twice for the same loss

33. A policy's loss payable clause names a mortgagee alongside the insured on the claim draft. What is the effect of this clause?

• A. The mortgagee replaces the insured as the sole payee
• B. The mortgagee's interest in the payment must be recognized alongside the insured's
• C. The clause only applies to liability claims, not property claims
• D. The clause voids the insured's own right to recover

34. A property policy's vacancy clause reduces or suspends certain coverages once a dwelling has been unoccupied beyond a stated period. Why do insurers include this provision?

• A. It shifts the loss entirely onto the mortgagee
• B. Vacant properties are always worth less, so less coverage is needed
• C. It is required by federal law regardless of risk
• D. Vacant properties present increased risk of vandalism, theft, and undetected damage

35. A claimant argues that an ambiguous exclusion in a property policy should be read narrowly against the insurer. Which established principle of policy interpretation supports this argument?

• A. The principle of indemnity
• B. Contra proferentem, construing ambiguity against the drafter
• C. The parol evidence rule
• D. The doctrine of subrogation

36. A policy requires the insured to protect damaged property from further loss after a covered event, such as tarping a damaged roof. What is this requirement called, and what happens if the insured ignores it?

• A. It is the duty of mitigation, and unreasonable failure to comply can jeopardize recovery for the avoidable additional damage
• B. It is the appraisal duty, and ignoring it voids the entire policy
• C. It is the subrogation duty, and ignoring it only affects the insurer's rights against third parties
• D. It is a discretionary suggestion with no consequence

37. A commercial property policy provides a separate sublimit for debris removal expenses, apart from the main building coverage limit. Why does this separate sublimit matter after a major loss?

• A. Debris removal costs draw first from the main limit, leaving nothing for repairs
• B. The sublimit only applies to residential properties, not commercial ones
• C. It has no practical effect since debris removal is always fully covered under the main limit
• D. If debris removal costs exceed the sublimit, the excess may not be covered even though the building limit itself is untouched

38. A public adjuster's compensation is set as a percentage of the claim recovery. What restriction commonly applies after a declared catastrophe?

• A. A lower statutory fee cap applies to claims arising from the declared event
• B. The percentage may be raised because of increased workload
• C. Percentage compensation becomes prohibited entirely
• D. Compensation must be approved by the insurer

39. A public adjuster's percentage fee is calculated on a claim where the insurer had already made an undisputed payment before the adjuster was retained. What issue arises?

• A. Whether the fee may be taken on amounts the insurer had already tendered, which many states restrict to the additional recovery the adjuster obtained
• B. No issue, since the fee always applies to the total claim value
• C. The fee must be waived entirely if any payment preceded the engagement
• D. The insurer determines the fee basis

40. A public adjuster solicits business by knocking on doors in a neighbourhood the day after a tornado. What restriction commonly applies?

• A. A solicitation moratorium barring contact for a stated period after the loss, and restrictions on hours during which solicitation may occur
• B. No restriction, since solicitation is protected commercial speech without limit
• C. Solicitation is permitted only if the adjuster is accompanied by a contractor
• D. Solicitation requires the insurer's prior notification

41. A public adjuster also owns a restoration contracting company and proposes to both adjust the claim and perform the repairs. What is the problem?

• A. The dual role is a conflict of interest that many states prohibit outright, because the adjuster would be negotiating the price of their own work
• B. There is no problem if the client consents in writing
• C. The problem is only that two licences are required
• D. The problem arises only if the repair cost exceeds the settlement

42. A public adjuster advertises the ability to obtain settlements substantially larger than policyholders receive on their own. What is the concern?

• A. Promising or implying specific outcomes is a prohibited misrepresentation, since the settlement depends on the policy and the loss rather than on advocacy alone
• B. There is no concern if the claim is supported by past results
• C. The concern is only that competitors may object
• D. The concern applies only to television advertising

43. A public adjuster discovers that a client exaggerated an inventory item's value. What is the obligation?

• A. Refuse to submit the inflated figure, since presenting a claim known to be false is fraud regardless of who supplied the information
• B. Submit it, since the client is responsible for their own representations
• C. Submit it with a note that the value is unverified
• D. Reduce it silently without telling the client

44. A public adjuster is asked by a client to also represent the client's neighbour, whose adjoining property was damaged in the same fire and who may be at fault for its origin. What is the concern?

• A. The interests may be adverse, since one client's recovery could depend on establishing the other's responsibility, creating a conflict
• B. There is no concern, since both are first-party claims
• C. The concern is only that two contracts would be required
• D. The concern applies only if both are insured by the same carrier

45. A public adjuster's engagement letter says the fee applies to all sums recovered under the policy for the loss. A large additional living expense payment is made directly to the insured. Does the fee apply?

• A. It depends on the contract's defined fee base and state limits, which is why the base must be specified precisely rather than left to interpretation
• B. No, because payments made directly to the insured are excluded by law in every state
• C. Yes, because any policy payment is always within the fee base
• D. The insurer decides whether the fee applies

46. A public adjuster's advertisement claims a guaranteed settlement outcome for every prospective client. What is the regulatory problem with this claim?

• A. There is no problem, since advertising is unregulated for adjusters
• B. It is permitted as long as the adjuster is licensed
• C. It is a deceptive or misleading advertising practice, since outcomes cannot be guaranteed
• D. It only matters if a client later complains

47. A public adjuster solicits a homeowner for a contract within hours of a house fire, before the fire department has completed its report. What issue does this raise under most states' solicitation rules?

• A. None, since faster solicitation benefits the client
• B. Solicitation rules only apply to advertising, not direct contact
• C. The rule only applies to catastrophe-declared events
• D. Many states impose waiting periods or restrict in-person solicitation immediately after a loss

48. A public adjuster's marketing team places automated phone calls to a purchased list of policyholders who suffered storm damage, without any prior business relationship. What regulatory concern does this raise?

• A. The concern only applies to calls made outside business hours
• B. Purchased contact lists eliminate any solicitation restrictions
• C. Unsolicited automated solicitation calls may violate telemarketing and insurance solicitation restrictions
• D. Automated calls are exempt from solicitation rules because no person places them

49. A public adjuster offers a referral fee to a contractor for sending homeowner clients to the adjuster's firm. What is the typical regulatory concern with this arrangement?

• A. There is no concern since referral fees are standard business practice
• B. Undisclosed referral fees can create conflicts of interest and may violate anti-rebating or fee-sharing rules
• C. It is only a concern if the contractor is unlicensed
• D. It only affects the contractor's business, not the adjuster's license

50. A public adjuster advertises using testimonials from former clients describing exceptionally large settlements. What must typically accompany such testimonials to avoid a misleading impression?

• A. Disclosure that individual results vary and are not typical or guaranteed
• B. Written approval from the insurer involved in each testimonial
• C. Nothing, testimonials are self-evidently accurate
• D. A notarized copy of the original claim file

51. A public adjuster's client wants to invoke the appraisal provision. What should the client understand about it?

• A. It resolves the amount of loss but not coverage disputes, and both sides bear costs, so it fits a valuation disagreement rather than a denial
• B. It resolves all disputes including whether the loss is covered
• C. It is free to the policyholder
• D. It may be invoked only by the insurer

52. A public adjuster presents a supplemental claim after repairs uncover concealed damage. What supports the supplement?

• A. Documentation showing the damage was not reasonably discoverable at the original inspection and results from the same covered loss
• B. A statement that the original settlement was too low
• C. A new proof of loss for a separate occurrence
• D. The contractor's preference for a higher-grade material

53. A public adjuster's estimate and the insurer's estimate differ mainly in the depreciation applied to a roof. What is the productive line of argument?

• A. The actual age, condition and remaining useful life of the roof, supported by evidence, since depreciation is a factual determination rather than a formula
• B. That depreciation should never be applied to any roof
• C. That the insurer's software output is inherently invalid
• D. That the client's premium payments should offset depreciation

54. A public adjuster's client wants to use the claim proceeds for something other than repairs. What should the client be told about the replacement cost holdback?

• A. That not repairing forfeits the recoverable depreciation, so the client will receive only actual cash value, and a mortgagee may separately require repair
• B. That the full replacement cost is payable regardless of whether repairs occur
• C. That the insurer may sue to compel repairs
• D. That the choice has no financial consequence

55. A public adjuster prepares a repair estimate using current local labor and material pricing, while the insurer's estimate relies on a national average price database. What is the most productive way to reconcile the difference?

• A. Present documented local pricing, such as quotes and invoices, showing the actual cost to complete repairs in that market
• B. Simply average the two estimates
• C. Accept the insurer's figure since it is data-driven
• D. Threaten litigation without further documentation

56. An insurer's estimate omits overhead and profit for a loss requiring the coordination of multiple trades. Why is this omission significant to a public adjuster reviewing the estimate?

• A. Overhead and profit only apply to commercial properties
• B. Including overhead and profit is prohibited by most policies
• C. Overhead and profit are optional line items with no industry basis
• D. Multi-trade jobs commonly warrant a general contractor, whose overhead and profit is a legitimate cost of completing the repair

57. A total-loss vehicle claim settles on an actual cash value basis, but the insured still owes more on the loan than the ACV payout. What additional coverage, if purchased, would typically address this shortfall?

• A. Collision coverage
• B. Uninsured motorist coverage
• C. Comprehensive coverage
• D. Gap coverage

58. A public adjuster maintains records of engagements and settlements. Why does the state require this?

• A. So the regulator can examine fee practices, contract compliance and client fund handling during a market conduct review
• B. So the insurer can audit the adjuster's estimates
• C. So competitors can verify market share
• D. Records are recommended but never required

59. A public adjuster obtains a non-resident licence in another state. What typically governs eligibility?

• A. Reciprocity based on holding a licence in good standing in a home state with comparable requirements, plus any additional state-specific conditions
• B. Automatic issuance to anyone licensed anywhere
• C. Residency in the new state
• D. Sponsorship by an insurer

60. A public adjuster must post a bond as a licensing condition. What does the bond secure?

• A. Performance of the adjuster's obligations to clients, giving a harmed policyholder a source of recovery for misappropriated funds or misconduct
• B. The adjuster's own losses from unpaid fees
• C. The insurer's exposure on claims the adjuster handles
• D. The state's cost of regulating the profession

61. A public adjuster is engaged after the insurer has already denied a claim outright. What is the realistic assessment to give the client?

• A. That a coverage denial may require legal rather than adjusting remedies, and the client should understand the fee structure against that possibility
• B. That the denial can always be reversed through negotiation
• C. That the adjuster can file suit on the client's behalf
• D. That the denial makes the policy void

62. A public adjuster is retained by a homeowner after a fire. Whose interest does the public adjuster represent?

• A. The insured's, as the insured's representative in presenting and negotiating the claim against the insurer
• B. The insurer's, as an outsourced claims resource
• C. Neither party, as a neutral evaluator
• D. The mortgage lender's, as the party holding the security interest

63. A public adjuster contract must generally include what to be enforceable in most states?

• A. The compensation basis, the services to be provided, the adjuster's licence information and a cancellation right disclosed in the required form
• B. Only the parties' signatures and the date
• C. The insurer's written approval of the engagement
• D. An estimate of the final settlement amount

64. A homeowner signs a public adjuster contract two days after a hurricane and wishes to cancel. What right typically applies?

• A. A statutory right to cancel within a stated number of days of signing, without penalty
• B. No right to cancel once signed
• C. A right to cancel only with the insurer's consent
• D. A right to cancel only after the claim is settled

65. A public adjuster is asked by a client whether a coverage dispute should be litigated and how the policy's exclusions will be interpreted by a court. What is the appropriate response?

• A. Decline to give legal advice and refer the client to an attorney, since interpreting rights and advising on litigation is the practice of law
• B. Provide the analysis, since policy interpretation is part of the adjuster's expertise
• C. Advise the client to accept whatever the insurer offers
• D. Refer the client to the insurer's counsel

66. Claim proceeds are paid by draft naming the public adjuster along with the insured. What handling obligation applies?

• A. The funds are held in a fiduciary or trust capacity and must not be commingled with the adjuster's own funds, with prompt accounting to the client
• B. The adjuster may retain the full amount until the fee is disputed
• C. The adjuster may deposit the funds in a business account and remit the balance at leisure
• D. The adjuster has no obligation, since the draft names both parties

67. A public adjuster's client asks whether to accept an insurer's offer that is close to but below the adjuster's estimate. What is the adjuster's role?

• A. Present the analysis, the gap, the cost and time of pursuing it further, and let the client decide, since the settlement decision belongs to the client
• B. Reject the offer on the client's behalf without consultation
• C. Accept the offer to close the file efficiently
• D. Refer the decision to the insurer's adjuster

68. A public adjuster's client faces a policy deadline to bring suit against the insurer while negotiations continue. What must the adjuster do?

• A. Alert the client to the deadline and advise obtaining legal counsel, since the adjuster cannot preserve the client's legal rights
• B. Assume the deadline is tolled while negotiations are ongoing
• C. Request an extension from the insurer's adjuster verbally
• D. Take no action, since deadlines are the client's concern alone

69. A public adjuster contract fails to state the percentage fee or method of calculating compensation. What is the likely consequence in most states?

• A. The contract is still fully enforceable as written
• B. The adjuster may set the fee unilaterally after the fact
• C. The contract may be deemed unenforceable or the fee provision void for missing a required term
• D. The client automatically owes a statutory default fee

70. A client delivers timely written notice exercising a statutory right to cancel a newly signed public adjuster contract. Regarding fees, what must the adjuster do?

• A. Honor the cancellation and forgo charging a fee for the canceled engagement
• B. Continue performing services since the contract was validly executed
• C. Impose a cancellation penalty tied to the estimated claim value
• D. Demand a written justification before honoring the cancellation

71. A prospective client asks a public adjuster to begin work before signing a written contract. What should the adjuster do?

• A. Begin work immediately based on a verbal agreement
• B. Draft a contract only after the claim is settled
• C. Use the insurer's contract template instead
• D. Decline to begin substantive work until a compliant written contract is executed

72. A public adjuster's contract term extends indefinitely with no stated end date or claim-specific scope. What problem does this raise?

• A. Indefinite contracts are always preferred by clients
• B. An open-ended scope can conflict with requirements that the contract clearly define the specific claim and engagement
• C. It has no legal significance
• D. It automatically transfers to any future claim the client has

73. A public adjuster's business partner separately owns a restoration company that would perform the repairs on a loss the adjuster is adjusting. Beyond the conflict-of-interest concern itself, what disclosure obligation typically applies?

• A. The adjuster must disclose the relationship and potential conflict to the client in writing
• B. Disclosure is owed to the insurer rather than the client
• C. None, since a business partner's separate company is legally unrelated
• D. Disclosure is required only if the client independently discovers the relationship

74. A public adjuster's contract is challenged in court as void because it lacked a required disclosure at signing. If the court agrees, what is the typical effect on the adjuster's fee for work already performed?

• A. The full contractual fee still applies
• B. The client owes double the contractual fee as a penalty
• C. The insurer must pay the fee instead of the client
• D. The adjuster may be barred from recovering the contractual fee, though limited equitable recovery may be considered in some jurisdictions

75. A public adjuster contract is silent on how the fee applies to supplemental payments obtained after the initial settlement. How should this ambiguity generally be handled going forward?

• A. Assume no fee applies to any supplemental recovery
• B. Supplemental payments are always excluded by law
• C. The insurer decides how supplements are treated
• D. The contract should clearly state whether supplemental recoveries are included, to avoid future disputes

76. An insurer denies a clearly valid claim without any reasonable basis and fails to investigate. Beyond ordinary contract damages, what additional exposure does this conduct create for the insurer?

• A. No additional exposure; damages are capped at the policy limit
• B. Extra-contractual and sometimes punitive damages
• C. A refund of the premium only
• D. Automatic license revocation for the insured

77. A driver's own collision coverage pays to repair her car after a single-vehicle accident that was her fault. How is this claim best classified, and why does coverage respond?

• A. A third-party claim, because another person was involved
• B. A first-party claim, because the insured seeks payment from her own insurer, and first-party coverage responds regardless of fault
• C. A third-party claim, because the insured was at fault
• D. Not a claim at all, since fault bars any recovery

78. An insured, after a covered loss, signs a release with the at-fault driver before consulting the insurer. Why is this a problem?

• A. It impairs the insurer's subrogation rights, which the insured must not do after a loss
• B. It converts the claim into a third-party claim automatically
• C. It requires the insured to submit a proof of loss twice
• D. It voids the appraisal clause for all future claims

79. An adjuster is evaluating a first-party property loss. Which sequence best describes the adjuster's primary duties on the claim?

• A. Investigate the facts of the loss, determine whether coverage applies, evaluate the amount of loss, and negotiate a fair settlement
• B. Refer every claim to litigation before investigating
• C. Collect the premium, issue the policy, then deny the claim
• D. Set reserves, sell the salvage, and close the file without contacting the insured

80. A homeowner's roof is 15 years old when a storm destroys it. The policy pays on an actual cash value basis. Which figure most closely reflects how ACV is commonly calculated?

• A. The original purchase price of the home
• B. Replacement cost at the time of loss minus depreciation
• C. Replacement cost with no deduction of any kind
• D. The insured's sentimental valuation of the property

81. Under a typical replacement-cost policy, when does the insurer release the recoverable depreciation that it initially withheld?

• A. Only after the insured actually completes the repair or replacement
• B. As soon as the insured hires a public adjuster
• C. Never, because depreciation is always non-recoverable
• D. Immediately upon the first notice of loss

82. A dispute arises between an insurer and insured strictly over the dollar amount of a covered loss. Under the appraisal clause, how is the amount of loss ordinarily determined?

• A. A single court-appointed judge decides the figure
• B. Each party selects a competent, impartial appraiser, the two appraisers select an umpire, and any two of the three agreeing sets the amount of loss
• C. The insurer's staff adjuster unilaterally sets the final amount
• D. The insured's public adjuster sets the amount with no insurer input

83. After paying its insured for fire damage caused by a negligent contractor, an insurer wants to recover the amount it paid from that contractor. Which right allows this, and on what principle does it rest?

• A. Reservation of rights, based on the appraisal clause
• B. Salvage, based on the principle of utmost good faith
• C. Coinsurance, based on the broad-evidence rule
• D. Subrogation, based on the principle of indemnity

84. How does a proof of loss differ from the initial notice of loss, and what formality does a proof of loss ordinarily require?

• A. They are identical documents filed at the same time
• B. The proof of loss merely reports that a loss occurred, while the notice states the claimed value under oath
• C. The notice of loss merely reports that a loss occurred, while the proof of loss is a formal, usually sworn statement of the amount and details of the loss
• D. Neither document needs to be signed or sworn

85. A claims professional is compensated by a percentage of the settlement and represents the policyholder rather than the insurer. Which type of adjuster is this?

• A. A staff (company) adjuster, a salaried employee of the insurer
• B. An independent adjuster, retained by the insurer on a contract basis
• C. A public adjuster, hired by and representing the insured for a fee
• D. An umpire selected under the appraisal clause

86. An insurable interest must generally exist for a property claim to be valid. When must this interest exist?

• A. At the time of the loss
• B. Insurable interest is not required for property insurance
• C. Only at the time the policy is purchased
• D. Only if the insured later sells the property

87. A named-peril policy differs from an open-peril, or all-risk, policy in that the named-peril policy:

• A. Covers every cause of loss except those specifically excluded
• B. Provides broader coverage than an open-peril policy
• C. Never applies to real property
• D. Covers only the specific causes of loss it lists

88. The principle of indemnity in property insurance is best described as limiting recovery to:

• A. Whatever amount the insured requests
• B. Twice the actual loss to deter fraud
• C. The full policy limit regardless of loss amount
• D. The amount necessary to restore the insured to the pre-loss financial position, without profit

89. In insurance terminology, the party who transfers risk by purchasing a policy is called the:

• A. Insurer
• B. Reinsurer
• C. Insured
• D. Underwriter

90. An insurer's duty to defend under a liability policy is generally broader than its duty to indemnify. What does this mean in practice?

• A. The insurer has no duty to defend unless coverage is certain
• B. The insurer only defends claims it will ultimately have to pay
• C. Duty to defend and duty to indemnify are always identical in scope
• D. The insurer must defend any lawsuit alleging facts potentially within coverage, even if it later has no duty to pay the judgment

91. Which of the following best describes premium in an insurance contract?

• A. The commission paid to an agent
• B. The amount paid by the insurer to settle a claim
• C. The deductible amount on a policy
• D. The price paid by the insured in exchange for risk transfer

92. A public adjuster prepares a claim presentation. What is the most important documentation to assemble first?

• A. A complete declarations page and full policy form, since the coverages, limits, sublimits and conditions define what can be claimed
• B. Contractor estimates, before reviewing the policy
• C. The insurer's initial offer letter
• D. The client's prior claim history

93. A public adjuster documents contents damage after a fire. What approach produces the strongest presentation?

• A. A room-by-room inventory identifying each item with age, condition and replacement source, since aggregate estimates invite reduction
• B. A single lump sum figure based on the client's overall estimate of household value
• C. A list of only the most expensive items
• D. The insurer's contents specialist report, adopted without review

94. A public adjuster is presenting a water damage claim where the insurer contends the damage resulted from long-term leakage. What evidence best addresses this?

• A. Technical evidence on the timeline of the water intrusion, such as moisture mapping, material staining patterns and plumbing failure analysis
• B. The client's statement that the leak was recent
• C. The absence of prior claims on the property
• D. The size of the repair estimate

95. A public adjuster retains an engineer to evaluate structural damage the insurer's engineer attributed to settlement rather than the covered event. What is the value of the second report?

• A. It puts a qualified opposing opinion into the record, which is often what moves a causation dispute since the insurer's report otherwise stands unrebutted
• B. It obligates the insurer to accept the second engineer's conclusion
• C. It converts the dispute into an appraisal matter
• D. It has no value, since the insurer chooses the expert

96. A public adjuster documenting a fire loss photographs each damaged room before any cleanup begins. Why is pre-cleanup documentation important?

• A. It has no evidentiary value once repairs start
• B. It is only useful for the insurer's records, not the adjuster's
• C. It replaces the need for a written estimate
• D. It preserves an accurate, contemporaneous record of the damage before conditions change

97. A public adjuster reviews a homeowners policy and finds ordinance or law coverage the insurer's estimate ignored. Why does this matter on an older building?

• A. Because current codes may require upgrades the base repair estimate excludes, and the coverage funds that gap along with demolition of undamaged portions
• B. Because it increases the dwelling limit automatically
• C. Because it eliminates the deductible on code-related work
• D. Because it applies only to commercial buildings

98. A public adjuster identifies that the insured's policy limit is below the cost to rebuild. What is the practical consequence for the claim presentation?

• A. Recovery is capped at the limit regardless of the true cost, so effort shifts to maximizing recovery within available coverages such as other structures, contents and loss of use
• B. The insurer must pay the full rebuild cost regardless of the limit
• C. The limit is automatically increased to the rebuild cost
• D. The claim must be abandoned

99. A public adjuster is handling a claim where the insured's business is closed after a covered loss. Which coverage should be pursued alongside the property claim?

• A. Business income and extra expense, which are frequently under-claimed because they require financial records rather than physical inspection
• B. General liability coverage
• C. Workers compensation coverage
• D. Employment practices liability coverage

100. A public adjuster's client is a condominium unit owner whose association has assessed all owners after an uninsured portion of a common-area loss. Which coverage should be checked?

• A. Loss assessment coverage under the unit owner's policy, which responds to assessments arising from a covered cause subject to its own limit
• B. The dwelling coverage, which covers all association charges
• C. Loss of use coverage
• D. No coverage exists for association assessments