Workers Compensation Adjuster Practice Exam.
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1. A candidate answers correctly on exactly 70 percent of the items on the workers' compensation adjuster exam. Based on the stated passing standard, what is the outcome?
- A. The candidate must retake only the missed sections
- B. The result is pending a manual review
- C. The candidate fails, because more than 70 percent is required
- D. The candidate passes, because the required passing score is met
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Answer: D
Because a passing score of 70% is required, reaching exactly 70% satisfies the requirement and the candidate passes.2. Two candidates compare their scores on the workers' compensation adjuster exam: one scored 68 percent and the other scored 72 percent. Based solely on the stated passing standard, which candidate(s) passed?
- A. Only the candidate who scored 72 percent
- B. Both candidates passed
- C. Only the candidate who scored 68 percent
- D. Neither candidate passed
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Answer: A
A passing score of 70% is required. The 68% score falls below the threshold and fails; the 72% score meets or exceeds it and passes.3. When registering for the workers' compensation adjuster exam, a candidate must submit payment. What is the stated fee to sit for the exam?
- A. $19
- B. $25
- C. $39
- D. $29
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Answer: D
The exam fee is stated as $29, which is the amount due at registration.4. An insurer facing a surge of hurricane claims brings in outside claims professionals to handle the overflow. These professionals work for the insurer under contract but are not on its payroll as employees. They are BEST described as:
- A. Third-party claimants
- B. Staff adjusters
- C. Public adjusters
- D. Independent adjusters
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Answer: D
An independent adjuster is retained by the insurer but works on a contract basis rather than as an employee. A staff adjuster is a salaried employee of the insurer, and a public adjuster works for the insured, not the insurer.5. An insurer declares a hail-damaged vehicle a total loss, pays the insured, and takes title to the wreck, later selling it at auction. The auction proceeds are BEST described as:
- A. Recoverable depreciation owed back to the insured
- B. Subrogation recovery from the at-fault party
- C. Salvage recovery that offsets the insurer's claim cost
- D. An extra-contractual damage award
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Answer: C
Salvage is the damaged property or remaining value the insurer takes title to after paying the insured for a total loss. By selling the salvage, the insurer recovers part of what it paid, offsetting the claim cost. Subrogation, by contrast, is recovery from the third party who caused the loss — not the sale of the damaged property itself.6. After a kitchen fire, an insured calls her insurer to report that a loss has occurred. Two weeks later, the insurer requests a sworn statement documenting the amount and details of the loss. Which of the following is TRUE about this second document?
- A. It is the proof of loss, and policies commonly require it within 60 days after the insurer's request
- B. It is the appraisal demand, which sets the amount of loss automatically
- C. It is the notice of loss, and it may be given orally at any time
- D. It is the reserve estimate, which the insurer must file with the state
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Answer: A
A proof of loss is a formal, usually sworn statement documenting the amount and details of a first-party loss, and policies commonly require the insured to submit it within 60 days after the insurer's request. It is distinct from the initial notice of loss, which merely reports that a loss has occurred.7. Which statement BEST distinguishes an independent adjuster from a staff adjuster?
- A. An independent adjuster handles only third-party claims, while a staff adjuster handles only first-party claims.
- B. An independent adjuster works for the insurer on a contract basis, while a staff adjuster is the insurer's salaried employee.
- C. An independent adjuster is paid a percentage of the settlement, while a staff adjuster is paid hourly.
- D. An independent adjuster represents the insured, while a staff adjuster represents the insurer.
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Answer: B
Both independent and staff adjusters work on behalf of the insurer; the difference is the employment relationship. The independent adjuster is retained on a contract basis, while the staff (company) adjuster is a salaried employee. It is the public adjuster — not the independent adjuster — who represents the insured for a percentage-based fee.8. A pedestrian who is not a policyholder demands payment from a driver's insurer for injuries the driver allegedly caused. What kind of claim is this, and what does it trigger?
- A. A subrogation claim, triggering the insurer's right to recover from the pedestrian
- B. A first-party claim, triggering the insurer's duty to indemnify the pedestrian regardless of fault
- C. A salvage claim, triggering the insurer's right to take title to the damaged property
- D. A third-party claim, triggering the insurer's liability coverage and its duty to defend the insured
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Answer: D
In a third-party claim, a claimant who is not the policyholder seeks payment for injury or damage the insured allegedly caused, which triggers the insurer's liability coverage and its duty to defend the insured. A first-party claim, by contrast, is the insured seeking payment from their own insurer for a loss to their own person or property.9. How does fault affect first-party coverage compared with third-party liability coverage?
- A. Third-party coverage responds regardless of fault; first-party coverage responds only when the insured is at fault.
- B. Neither coverage considers fault at any point in the claim.
- C. Both respond only when the insured is legally liable.
- D. First-party coverage responds regardless of fault; third-party liability coverage responds only when the insured is legally liable.
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Answer: D
First-party coverage pays the insured for a covered loss regardless of who was at fault, while third-party liability coverage responds only when the insured is legally liable for the injury or damage claimed.10. After paying its insured for a garage fire started by a negligent contractor, an insurer sues the contractor to recover what it paid. Which principle gives the insurer this right, and what underlying doctrine supports it?
- A. Salvage, supported by the doctrine of utmost good faith
- B. Appraisal, supported by the broad-evidence rule
- C. Subrogation, supported by the principle of indemnity
- D. Reservation of rights, supported by the make-whole doctrine
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Answer: C
Subrogation is the insurer's right, after paying a first-party claim, to pursue recovery from the third party who caused the loss. It arises from the principle of indemnity, which holds that the insured should not profit from a loss. Salvage instead concerns the insurer taking title to damaged property, and appraisal resolves disputes over the amount of loss.11. An insurer pays a total-loss settlement on a wrecked vehicle, takes title to the wreck, and sells it at auction. What is this recovery called, and what is its effect on the insurer?
- A. A reserve; it is recorded as a liability on the insurer's books
- B. Recoverable depreciation; it is released to the insured after repairs
- C. Subrogation; it shifts the loss to the at-fault third party
- D. Salvage; the sale proceeds offset part of the claim cost the insurer paid
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Answer: D
Salvage is the damaged property or its remaining value that the insurer takes title to after paying the insured for a total loss. By selling the salvage, the insurer recovers part of the amount it paid, offsetting the claim cost. Subrogation, by contrast, is recovery from the third party who caused the loss.12. An insurer and its insured agree that a kitchen fire is covered but are far apart on what the repairs are worth. The insured invokes the policy's appraisal clause. Which statement accurately describes what happens next?
- A. 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.
- B. The appraisal panel decides both whether the loss is covered and how much it is worth.
- C. The umpire alone determines the amount of loss, and the appraisers may only advise.
- D. The state insurance department appoints a single appraiser whose valuation is binding on both parties.
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Answer: A
Under the appraisal clause, 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. Importantly, appraisal resolves disputes over the amount of loss only — coverage disputes remain for the courts, so choice C is wrong even though coverage was not disputed here.13. An insured and her insurer agree that a kitchen fire is covered but cannot agree on the dollar amount of the damage. If the insured invokes the appraisal clause, which sequence of steps does the provision require?
- A. The insurer's appraiser sets the loss amount, subject to review by a state-appointed umpire.
- 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.
- C. A court appoints a single appraiser whose valuation binds both parties.
- D. Each party hires a public adjuster, and the two adjusters split the difference between their estimates.
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Answer: B
Under the appraisal clause, each party selects a competent, impartial appraiser, the two appraisers choose an umpire, and an agreement by any two of the three sets the amount of loss. The other options describe procedures the clause does not contain.14. After a windstorm, an insurer asks its policyholder to submit a proof of loss. Under a common policy provision, how long does the insured typically have to comply?
- A. Only until the initial notice of loss is filed
- B. 60 days after the insurer's request
- C. 60 days after the date of the loss itself, regardless of any request
- D. Until the claim is paid, with no fixed deadline
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Answer: B
Policies commonly require the insured to submit the proof of loss within 60 days after the insurer's request. The clock is tied to the insurer's request, and the proof of loss is a separate document from the initial notice of loss.15. Which statement BEST distinguishes a proof of loss from a notice of loss?
- A. The notice of loss merely reports that a loss occurred, while the proof of loss is a formal, usually sworn statement documenting the amount and details of the loss.
- B. The proof of loss is filed only in third-party liability claims.
- C. The notice of loss must be notarized, while the proof of loss is informal.
- D. The two terms are interchangeable names for the same document.
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Answer: A
The initial notice of loss simply reports that a loss has happened. The proof of loss is a formal, usually sworn statement documenting the amount and details of a first-party loss, typically stating the time and cause of loss, the insured's interest, other insurance, and the claimed value, sworn before a notary.16. Shortly after a car accident, an insured accepts a small check from the at-fault driver and signs a full release before reporting the claim to his own insurer. Which policy principle has the insured MOST likely violated?
- A. The requirement that reserves be adjusted as the claim develops
- B. The requirement to demand appraisal before settling
- C. The broad-evidence rule
- D. The duty not to impair the insurer's subrogation rights after a loss
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Answer: D
The insured must not do anything after a loss that impairs the insurer's subrogation rights, and signing a release with the at-fault party is the classic example. Releasing the responsible driver can destroy the insurer's ability to recover what it later pays on the claim.17. A homeowner's replacement-cost policy pays her the actual cash value of a destroyed roof up front and withholds the remainder. When is the insurer obligated to release the withheld recoverable depreciation?
- A. Only after the insured actually completes the repair or replacement
- B. Immediately upon the insured's sworn proof of loss
- C. After the umpire confirms the amount of loss
- D. Never — depreciation is always non-recoverable under replacement-cost policies
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Answer: A
Under most replacement-cost policies, the insurer pays ACV first and releases the recoverable depreciation only after the insured completes the repair or replacement. This hold-back prevents the insured from profiting by pocketing full replacement value without rebuilding.18. How does a policy's actual cash value (ACV) settlement basis differ from a replacement cost value (RCV) basis?
- A. ACV always pays more than RCV because it ignores wear and tear.
- B. ACV applies only to third-party liability claims, while RCV applies only to first-party claims.
- C. ACV is replacement cost at the time of loss minus depreciation, while RCV pays the cost to repair or replace with new materials of like kind and quality without deducting depreciation.
- D. RCV deducts depreciation, while ACV pays the full cost of new materials.
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Answer: C
ACV is commonly defined as replacement cost at the time of loss minus depreciation, which reflects loss in value from age, wear and tear, and obsolescence. RCV is the cost to repair or replace with new materials of like kind and quality with no deduction for depreciation — so choice C reverses the definitions.19. In a state that follows the broad-evidence rule, an adjuster determining actual cash value may:
- A. Consider any relevant evidence of value, not just replacement cost minus depreciation
- B. Defer the valuation entirely to a public adjuster
- C. Rely only on the insured's sworn statement of value
- D. Use replacement cost minus depreciation and nothing else
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Answer: A
The broad-evidence rule lets the adjuster consider any relevant evidence of value when determining ACV, rather than being confined to the replacement-cost-minus-depreciation formula. The other choices improperly narrow or delegate the adjuster's valuation role.20. Which statement best describes the standard of conduct state law imposes on adjusters when handling claims?
- A. Adjusters must always resolve doubts in favor of denying the claim to protect the insurer
- B. Adjusters owe a duty of good faith and fair dealing to the insured and must handle claims promptly and fairly
- C. Adjusters owe loyalty only to the party that pays their fee
- D. Adjusters have no duties until a lawsuit is filed
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Answer: B
Adjusters owe a duty of good faith and fair dealing to the insured and must handle every claim promptly and fairly. The other options describe conduct inconsistent with that duty.21. Most states have enacted unfair claims settlement practices legislation. On what template is this legislation generally based?
- A. Each state's independently drafted insurance code with no common source
- B. An NAIC model act
- C. The Uniform Commercial Code
- D. The federal McCarran-Ferguson framework
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Answer: B
Most states adopt a version of the Unfair Claims Settlement Practices Act modeled on the NAIC. The other choices name legal frameworks that are not the basis for this statute.22. An insurer's claim department repeatedly fails to acknowledge new claims promptly and routinely misstates policy provisions to claimants. Under the Unfair Claims Settlement Practices Act, what distinguishes conduct that triggers regulatory penalties?
- A. Any single violation automatically triggers regulatory penalties
- B. Violations committed as a general business practice trigger regulatory penalties
- C. Penalties apply only when the claimant proves financial harm
- D. Only violations involving first-party claims are penalized
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Answer: B
A single violation may be an unfair practice, but it is a general business practice of violations that triggers regulatory penalties. Because the insurer here acts repeatedly and routinely, its conduct fits the general-business-practice standard.23. A homeowner hires a licensed claims professional to prepare and negotiate her fire claim against her own insurance company, agreeing to pay that professional 10% of whatever settlement is reached. Which type of adjuster has she retained?
- A. A public adjuster
- B. A staff adjuster
- C. A company adjuster
- D. An independent adjuster
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Answer: A
A public adjuster is hired by and represents the insured for a fee, typically a percentage of the settlement. A staff or company adjuster is a salaried employee of the insurer, and an independent adjuster is retained by the insurer on a contract basis — neither works for the insured.24. An insured telephones her insurer the day after a storm to report that her roof was damaged. Two weeks later the insurer asks her to submit a sworn statement detailing the claimed value, her interest in the property, other insurance, and the time and cause of the loss. Which statement about these two submissions is correct?
- A. The proof of loss must be submitted before any notice of loss is given.
- B. The phone call is the notice of loss, and the sworn statement is the proof of loss, which policies commonly require within 60 days after the insurer's request.
- C. They are the same document; the phone call satisfies the proof-of-loss requirement.
- D. The sworn statement is optional because the notice of loss already established the amount of the claim.
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Answer: B
The initial notice of loss merely reports that a loss has occurred, while the proof of loss is a formal, usually sworn statement documenting the amount and details of the loss — typically the time and cause of loss, the insured's interest, other insurance, and the claimed value, sworn before a notary. Policies commonly require the proof of loss within 60 days after the insurer's request.25. Shortly after a collision, an insured accepts a small payment from the at-fault driver and signs a full release before contacting his own insurer. Why is this a problem?
- A. The insured has impaired the insurer's subrogation rights, which the insured must not do after a loss.
- B. It violates the appraisal clause of the policy.
- C. It eliminates the insurer's obligation to set reserves on the claim.
- D. It converts the first-party claim into a third-party claim.
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Answer: A
The insured must not do anything after a loss that impairs the insurer's subrogation rights, and signing a release with the at-fault party is a classic example. Doing so undercuts the insurer's ability to recover from the party who caused the loss after it pays the claim.26. Under a typical replacement-cost policy, an insured's storm-damaged roof is being adjusted. What payment sequence should the insured expect, and why is part of the payment initially withheld?
- A. The insurer pays only the depreciation first and releases the ACV after repairs are complete.
- B. The insurer pays actual cash value first and releases the recoverable depreciation only after the repair or replacement is completed, so the insured cannot profit by pocketing full replacement value without rebuilding.
- C. The insurer pays nothing until an appraisal umpire sets the amount of loss.
- D. The insurer pays full replacement cost up front; nothing is withheld under a replacement-cost policy.
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Answer: B
Under most replacement-cost policies, the insurer initially pays the ACV and releases the withheld recoverable depreciation only after the insured actually completes the repair or replacement. This hold-back prevents the insured from profiting by keeping full replacement value without rebuilding. ACV itself is commonly defined as replacement cost at the time of loss minus depreciation.27. Under the Unfair Claims Settlement Practices Act as adopted in most states, what generally distinguishes conduct that triggers regulatory penalties from a single prohibited act?
- A. Penalties apply only when the insurer is also found liable for breach of contract.
- B. A single violation may be an unfair practice, but a general business practice of violations is what triggers regulatory penalties.
- C. Any single violation automatically triggers regulatory penalties.
- D. Only violations involving misrepresentation of policy provisions can ever be penalized.
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Answer: B
Most states adopt a version of the Unfair Claims Settlement Practices Act modeled on the NAIC. Under it, a single violation may be an unfair practice, but it is a general business practice of violations that triggers regulatory penalties. Prohibited conduct includes misrepresenting policy provisions, failing to acknowledge claims promptly, and not attempting in good faith to effectuate a prompt, fair settlement once liability is clear — misrepresentation is one example, not the only penalizable conduct.28. A policyholder demands appraisal after the insurer denies that water damage is covered at all. Why is appraisal the wrong tool for this dispute?
- A. The appraisal clause resolves disputes over the amount of loss, not coverage disputes, which remain for the courts.
- B. Appraisal may only be used for total losses.
- C. Appraisal requires the insured to first sign a release with the insurer.
- D. Appraisal is only available to the insurer, never the policyholder.
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Answer: A
The appraisal clause is a mechanism for resolving disagreements over the amount of loss. Whether the policy covers the loss at all is a coverage question, which is left to the courts rather than the appraisal panel.29. An insurer pays its policyholder for collision damage caused by a negligent driver, then sues that driver to recover what it paid. This right of the insurer is called:
- A. Appraisal
- B. Salvage
- C. Subrogation
- D. Recoverable depreciation
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Answer: C
Subrogation is the insurer's right, after paying a first-party claim, to pursue recovery from the third party who caused the loss. Salvage instead refers to damaged property the insurer takes title to after paying a total loss, and the other options are unrelated provisions.30. Under the make-whole doctrine, when may an insurer collect on its subrogation recovery?
- A. Only after the insured has been fully compensated for the loss
- B. Whenever its claim reserves have been exhausted
- C. Only after the at-fault party admits liability in writing
- D. As soon as it issues any partial payment on the claim
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Answer: A
Under the make-whole doctrine, the insurer may not recover through subrogation until the insured has been fully compensated. This flows from the principle of indemnity, under which the insured should be restored but not profit from a loss.31. An insurer denies a homeowner's clearly valid claim without any reasonable basis for the denial. Beyond ordinary breach-of-contract damages, what additional exposure does this conduct create for the insurer?
- A. Automatic license revocation for the assigned adjuster
- B. Extra-contractual and possibly punitive damages for bad faith
- C. None — contract damages are the exclusive remedy
- D. Forfeiture of the insurer's subrogation rights on all open claims
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Answer: B
Denying a valid claim without a reasonable basis is bad faith — a breach of the insurer's duty of good faith and fair dealing. Unlike a simple breach of contract, a bad-faith finding can expose the insurer to extra-contractual and sometimes punitive damages.32. A policyholder whose home was damaged in a storm hires a licensed professional to prepare and negotiate her claim in exchange for a percentage of the settlement. Under state licensing categories, this professional is a:
- A. Independent adjuster
- B. Staff adjuster
- C. Public adjuster
- D. Company adjuster
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Answer: C
A public adjuster is hired by and represents the insured for a fee, typically a percentage of the settlement. A staff or company adjuster is a salaried employee of the insurer, and an independent adjuster is retained by the insurer on a contract basis — none of them represents the policyholder.33. A homeowner whose property was damaged in a storm hires a claims professional to prepare and negotiate the claim on her behalf, agreeing to pay a percentage of whatever settlement is recovered. Which type of adjuster has she hired?
- A. A public adjuster
- B. An appraisal umpire
- C. An independent adjuster
- D. A staff adjuster
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Answer: A
A public adjuster is hired by and represents the insured, typically for a fee equal to a percentage of the settlement. A staff adjuster is a salaried employee of the insurer, and an independent adjuster is retained by the insurer on a contract basis — both work for the insurer, not the policyholder.34. Which statement correctly distinguishes how first-party and third-party coverages respond to a loss?
- A. Third-party coverage responds regardless of fault, while first-party coverage requires proof of the insured's negligence
- B. Both respond only when the insured is legally liable
- C. First-party coverage responds regardless of fault, while third-party liability coverage responds only when the insured is legally liable
- D. Both respond regardless of fault as long as a proof of loss is filed
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Answer: C
First-party coverage responds regardless of fault, while third-party liability coverage responds only when the insured is legally liable. The other options reverse or misstate this fault distinction.35. An insured's fence is destroyed by a negligent neighbor. Before her insurer pays the claim, the neighbor offers her a small cash payment in exchange for signing a full release of liability. Why should the insured refuse to sign?
- A. Signing would waive the insured's right to salvage proceeds
- B. Signing could impair the insurer's subrogation rights against the at-fault party
- C. Signing would trigger the appraisal clause
- D. Signing would convert the claim from first-party to third-party
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Answer: B
Subrogation is the insurer's right, after paying a first-party claim, to pursue recovery from the third party who caused the loss. The insured must not do anything after a loss that impairs those rights — such as signing a release with the at-fault party.36. An insured and insurer agree that a covered loss occurred but sharply disagree on how much it is worth. The insured invokes the policy's appraisal clause. Which statement about what happens next is correct?
- A. 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
- B. The insurer's reserve amount becomes the binding settlement figure
- C. The appraisal panel first decides whether coverage applies, then values the loss
- D. A single court-appointed appraiser determines both coverage and value
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Answer: A
Under the appraisal clause, 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. Appraisal resolves disputes over the amount of loss only — coverage disputes remain for the courts. Reserves are merely the insurer's internal estimate of what it expects to pay, adjusted as the claim develops; they do not bind the settlement.37. A pedestrian who is not the policyholder demands payment from a driver's auto insurer for injuries the driver allegedly caused. What kind of claim is this, and what key obligation does it trigger for the insurer?
- A. A first-party claim, triggering the insurer's duty to pay regardless of fault
- B. A subrogation claim, triggering the insurer's right to recover from the pedestrian
- C. A third-party claim, triggering the insurer's liability coverage and its duty to defend the insured
- D. A salvage claim, triggering the insurer's right to take title to damaged property
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Answer: C
In a third-party claim, a claimant who is not the policyholder seeks payment for injury or damage the insured allegedly caused, which triggers the insurer's liability coverage and its duty to defend the insured. A first-party claim is the insured seeking payment from their own insurer for a loss to the insured's own person or property.38. An insurer pays part of an insured's loss and then seeks to recover from the responsible third party, even though the insured has not yet been fully compensated. Under the make-whole doctrine, the insurer's recovery effort is:
- A. Permitted, because the make-whole doctrine applies only to salvage
- B. Improper, because subrogation is only available through a court-ordered judgment
- C. Improper, because the insurer may not recover through subrogation until the insured has been fully compensated
- D. Permitted, because subrogation rights arise immediately upon any payment
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Answer: C
Under the make-whole doctrine, the insurer may not recover through subrogation until the insured has been fully compensated for the loss. Because the insured here has not been made whole, the insurer's recovery effort is premature. Note that subrogation itself may be contractual (based on a policy provision) or equitable (arising by operation of law), so option D is also wrong.39. Under a typical replacement-cost policy, an insured's roof is destroyed. The insurer issues an initial payment and withholds a portion of the estimate. When does the insured become entitled to the withheld amount, and what is the purpose of this arrangement?
- A. Never; withheld depreciation is always retained by the insurer as salvage
- B. Only after completing the repair or replacement; the hold-back prevents the insured from pocketing full replacement value without rebuilding
- C. Only after the appraisal umpire sets the amount of loss; the hold-back funds the appraisal process
- D. Immediately upon filing the proof of loss; the hold-back exists to speed up settlements
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Answer: B
Under most replacement-cost policies, the insurer pays the actual cash value first and releases the withheld recoverable depreciation only after the insured actually completes the repair or replacement. This hold-back prevents the insured from profiting by pocketing full replacement value without rebuilding — consistent with the principle of indemnity, under which the insured should not profit from a loss.40. During a first-party property claim, the adjuster notices that the policy's suit-limitation period will expire soon and the insured appears unaware of it. What does the adjuster's regulatory duty require in this situation?
- A. Remain silent, since deadlines are the insured's sole responsibility
- B. Close the claim immediately to avoid liability
- C. Unilaterally extend the deadline in the claim file
- D. Warn the insured of the approaching deadline
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Answer: D
The adjuster has a duty to warn the insured of an approaching policy deadline, such as the proof-of-loss or suit-limitation period. Staying silent would be inconsistent with the adjuster's duty of good faith and fair dealing toward the insured.41. An employee is injured while driving between two job sites during the workday. What determines whether the injury is compensable?
- A. Whether the employee had clocked out for the trip
- B. Whether it arose out of and in the course of employment, which travel between assigned work locations generally satisfies
- C. Whether the employer owned the vehicle
- D. Whether the employee was at fault in the collision
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Answer: B
Compensability turns on the two-part arising out of and in the course of test, addressing causal connection to the work and the time, place and circumstances. Employee fault is irrelevant in a no-fault system, and travel between assigned sites is work travel regardless of whose vehicle is used.42. An employee is injured in a car accident while commuting from home to the regular workplace. What rule generally applies?
- A. Commuting injuries are compensable only if the employee was on time
- B. Commuting injuries are always compensable
- C. Commuting injuries are compensable only if the employee is salaried
- D. The going and coming rule generally bars compensability, subject to recognized exceptions such as special errands or employer-provided transportation
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Answer: D
The ordinary commute is treated as personal rather than employment activity, so the going and coming rule excludes it. The exceptions matter more than the rule in practice, covering special errands, travelling employees with no fixed situs, employer-furnished transportation and injuries within the employer's premises or parking area.43. A worker develops carpal tunnel syndrome over several years of repetitive work. How does this differ from a traumatic injury claim?
- A. It uses the date of hire as the date of injury
- B. It is not compensable because there was no accident
- C. It is a cumulative trauma or occupational disease claim where the date of injury is often defined by statute, such as the date of disability or of knowledge of the work connection
- D. It is compensable only if the employer admits the connection
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Answer: C
Gradual-onset conditions lack a discrete accident, so statutes supply a constructive date of injury, commonly the date of disability or of the worker knowing or reasonably should have known the condition was work related. That date determines the applicable benefit rates, the notice period and which carrier is on the risk.44. An employee with a pre-existing degenerative back condition suffers a work incident that makes the condition symptomatic. What is the general treatment?
- A. The claim is transferred to the worker's health insurer
- B. An aggravation of a pre-existing condition is generally compensable, with apportionment rules in some states allocating responsibility
- C. The claim is denied entirely because the condition pre-existed
- D. The claim is accepted only if the worker disclosed the condition at hire
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Answer: B
Employers take employees as they find them, so a work event that aggravates an existing condition is compensable even where a healthy worker would not have been injured. States differ on whether and how responsibility is apportioned between the pre-existing condition and the work event, which is often the central dispute in these claims.45. An employee is injured at a voluntary company softball game held off site on a weekend. What analysis applies?
- A. Compensability depends solely on whether the injury was severe
- B. Recreational injuries are always compensable if the employer paid for the equipment
- C. Recreational injuries are never compensable
- D. Whether the activity was sufficiently connected to employment, considering employer sponsorship, whether participation was expected and whether the employer derived benefit
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Answer: D
Recreational activity cases turn on the degree of employer involvement and expectation, with sponsorship, on-premises location, implicit pressure to participate and employer benefit all weighing toward compensability. Several states have enacted statutory exclusions for voluntary recreational activity, which makes the governing jurisdiction decisive.46. A worker's average weekly wage is $900 and the state pays temporary total disability at two-thirds of the average weekly wage. What is the weekly indemnity rate before applying any statutory maximum?
- A. $900
- B. $600
- C. $675
- D. $450
Show answer & explanation
Answer: B
Two-thirds of 900 is 600, which is the compensation rate before the state maximum and minimum are applied. The rate is capped at a statewide maximum tied to the average weekly wage for the state, so high earners receive proportionally less replacement, and benefits are generally not subject to income tax.47. How is average weekly wage typically calculated for an hourly employee with variable hours?
- A. From actual earnings over a statutory lookback period, with statutory alternatives where the period is unrepresentative or the employment was short
- B. From the employer's average wage across all employees
- C. From the earnings in the single week of the injury
- D. From the employee's hourly rate multiplied by forty hours in every case
Show answer & explanation
Answer: A
The lookback smooths variable hours, and statutes provide alternative methods for short tenure, seasonal work or periods distorted by leave. Getting the average weekly wage wrong propagates into every indemnity payment on the claim, which is why it is one of the most frequently litigated calculations in workers compensation.48. A worker returns to modified duty at reduced earnings while still recovering. Which benefit class applies?
- A. No benefit, since the worker is earning wages
- B. Permanent partial disability
- C. Temporary total disability at the full rate
- D. Temporary partial disability, typically paying a portion of the difference between pre-injury and current earnings
Show answer & explanation
Answer: D
Temporary partial bridges the wage gap during recovery, paying a fraction of the earnings difference rather than the full indemnity rate. It distinguishes itself from permanent partial, which compensates lasting impairment after maximum medical improvement rather than an ongoing wage loss during healing.49. What does maximum medical improvement signify in a workers compensation claim?
- A. That the worker has fully recovered with no residual impairment
- B. That the condition has stabilized and further material improvement is not expected, which typically ends temporary benefits and triggers impairment rating
- C. That the claim is closed and cannot be reopened
- D. That all medical treatment must stop
Show answer & explanation
Answer: B
Maximum medical improvement is a plateau rather than a cure, so a worker can reach it with substantial permanent impairment. It ends temporary indemnity and starts the permanent disability evaluation, while future medical treatment for maintenance may remain payable depending on the jurisdiction and any settlement.50. A physician assigns a whole person impairment rating. What is it measuring?
- A. The employer's degree of fault in causing the injury
- B. The likelihood the worker will need future surgery
- C. The percentage of wages the worker has lost
- D. The permanent anatomical or functional loss, evaluated against a published rating guide, which is distinct from the worker's loss of earning capacity
Show answer & explanation
Answer: D
Impairment is a medical measure of physical loss assessed against a standard guide, while disability is the legal and economic consequence, and states translate one into the other differently. Some jurisdictions pay purely on the impairment percentage while others weigh age, occupation and actual wage loss, which is why the same rating produces different awards across state lines.51. A state schedules a specific number of weeks of benefits for the loss of a hand. What does a scheduled loss provision accomplish?
- A. It fixes compensation for enumerated body parts by a set number of weeks regardless of actual wage loss, simplifying and standardizing those awards
- B. It applies to all injuries including the back and internal organs
- C. It requires the worker to prove lost earnings for the scheduled period
- D. It caps the medical treatment payable for that body part
Show answer & explanation
Answer: A
Scheduled awards pay by statute for listed extremities and senses without litigating economic loss, which is why two workers with identical hand injuries and very different earnings receive the same scheduled award. Unscheduled injuries such as the back and internal conditions fall outside the schedule and are evaluated on disability or wage loss instead.52. A worker is permanently and totally disabled. How does this differ from permanent partial disability in benefit duration?
- A. Permanent total benefits are a single lump sum
- B. Both classes pay the same duration
- C. Permanent partial benefits continue for life
- D. Permanent total benefits typically continue for life or for a lengthy statutory period, while permanent partial is limited to a defined number of weeks
Show answer & explanation
Answer: D
Permanent total reflects an inability to return to any gainful employment and carries lifetime or long-duration benefits, sometimes with cost of living adjustments. Permanent partial reflects residual impairment with continued earning capacity and is capped by statute, which makes the classification between the two the highest-value determination on a serious claim.53. A worker dies from a compensable injury. Who typically receives death benefits?
- A. Statutorily defined dependents, commonly a surviving spouse and minor children, with benefits often ending on remarriage or a child reaching a stated age
- B. The worker's estate, distributed under the will
- C. Any person named by the worker as a beneficiary
- D. The employer, as reimbursement for training costs
Show answer & explanation
Answer: A
Death benefits follow statutory dependency rather than testamentary designation, so the worker cannot direct them by will or beneficiary form. Burial expenses are payable up to a statutory cap in addition, and dependency questions such as a separated spouse or an adult disabled child are frequent points of dispute.54. An adjuster refers a treatment request for utilization review. What is being evaluated?
- A. Whether the worker's injury was work related
- B. Whether the proposed treatment is medically necessary and consistent with applicable treatment guidelines for the accepted condition
- C. Whether the worker has returned to work
- D. Whether the provider is charging above the fee schedule
Show answer & explanation
Answer: B
Utilization review addresses medical necessity against evidence-based guidelines, and it is separate from compensability, which asks whether the injury is covered at all, and from bill review, which applies the fee schedule to an approved service. Denials through utilization review generally carry a defined appeal or independent review path.55. A state applies a medical fee schedule to workers compensation treatment. What does it govern?
- A. How long temporary benefits continue
- B. Which treatments are medically necessary
- C. Which physician the worker must see
- D. The maximum allowable reimbursement for covered services, with providers generally barred from balance billing the injured worker
Show answer & explanation
Answer: D
Fee schedules cap payment for approved services, and because the injured worker has no cost share in workers compensation, providers cannot bill the worker for the difference. Necessity is decided by utilization review and provider choice is governed by separate rules, which vary widely between employer-directed and employee-choice states.56. A treating physician releases a worker to light duty with a twenty-pound lifting restriction, and the employer offers a conforming position. What is the effect if the worker declines?
- A. Indemnity benefits may be suspended or reduced, since a valid offer within the restrictions removes the wage loss the benefit compensates
- B. Benefits continue unchanged, since return to work is voluntary
- C. The employer must offer the worker's original position instead
- D. The claim is closed and medical benefits also end
Show answer & explanation
Answer: A
Indemnity replaces lost wages, so a bona fide offer within the medical restrictions eliminates the basis for continued payment. The offer must genuinely conform to the restrictions and be within reasonable commuting distance, and medical benefits continue independently of the indemnity question.57. Why do employers and carriers invest in return to work programs beyond the direct indemnity saving?
- A. Because return to work programs are legally mandatory in every state
- B. Because they eliminate the employer's experience modification
- C. Because the probability of a worker ever returning falls sharply with time out of work, so early modified duty reduces the risk of a claim becoming permanent
- D. Because they convert the claim to a medical-only file automatically
Show answer & explanation
Answer: C
Duration is the strongest predictor of outcome in disability claims, and the longer a worker is out, the less likely a return becomes regardless of the medical condition. Early modified duty interrupts that trajectory, which is why the programs pay for themselves well beyond the weeks of indemnity they directly avoid.58. A nurse case manager is assigned to a complex workers compensation claim. What is the role?
- A. To coordinate medical care, communicate with providers about restrictions and support return to work planning within the boundaries of the worker's privacy rights
- B. To negotiate the settlement value of the claim
- C. To select which physician the worker must use in all states
- D. To determine whether the claim is compensable
Show answer & explanation
Answer: A
Case management addresses care coordination and communication rather than coverage or settlement, both of which belong to the adjuster. The boundaries matter because states differ on whether a case manager may attend appointments or speak with the physician without the worker present, and overstepping generates complaints and litigation.59. An adjuster investigating a claimed back injury obtains an authorization for prior medical records. What limitation typically applies?
- A. The adjuster may obtain the worker's complete lifetime medical file in all states
- B. The authorization is generally limited to records relevant to the claimed condition rather than the worker's entire medical history
- C. Only the treating physician may request prior records
- D. No authorization is required, since filing a claim waives all privacy
Show answer & explanation
Answer: B
Filing a claim places the injured body part in issue, not the worker's entire health history, so authorizations are scoped to relevant conditions and time periods. Overbroad requests are among the most common privacy complaints in workers compensation, and some states impose specific limits on what may be sought.60. An adjuster schedules an independent medical examination. What is its function?
- A. To obtain an evaluating opinion on diagnosis, causation, restrictions or impairment from a physician who does not treat the worker
- B. To provide treatment the worker's physician has not offered
- C. To determine the worker's wage rate
- D. To replace the treating physician going forward
Show answer & explanation
Answer: A
The examining physician evaluates rather than treats, producing an opinion on the disputed medical questions, and no treatment relationship is created. States regulate how often such examinations may be required, the notice due and who pays for travel, and unreasonable scheduling can itself become a claims handling issue.61. An adjuster receives surveillance video showing a claimant performing activity inconsistent with stated restrictions. How should it be used?
- A. Terminate benefits immediately based on the video alone
- B. Provide it to the evaluating physician for a medical opinion on whether the activity is consistent with the restrictions, rather than denying benefits on the adjuster's own interpretation
- C. Send it to the worker's employer for a disciplinary decision
- D. Disregard it, since surveillance is inadmissible
Show answer & explanation
Answer: B
A brief clip does not establish sustained capacity, and whether observed activity contradicts medical restrictions is a medical judgment rather than an adjuster's. Acting unilaterally on surveillance is a frequent source of bad faith and penalty exposure, while routing it through the physician converts it into usable evidence.62. A worker is injured by a defective machine manufactured by a third party. What recovery avenue exists beyond workers compensation?
- A. A tort action against the employer for providing the machine
- B. A claim against the state fund for the difference
- C. None, since workers compensation is the exclusive remedy for all parties
- D. A third-party liability action against the manufacturer, with the carrier holding a lien or subrogation interest in the recovery
Show answer & explanation
Answer: D
Exclusive remedy bars suit against the employer but not against third parties whose negligence or defective product caused the injury, and the carrier asserts a lien to avoid the worker recovering twice for the same loss. Identifying third-party recovery early is one of the highest-value activities in workers compensation claim handling.63. An employer disputes a claim and instructs the adjuster to deny it. What governs the adjuster's decision?
- A. The evidence and the applicable statute, since the compensability determination belongs to the carrier and the employer's preference does not control
- B. The employer's instruction, since the employer pays the premium
- C. The treating physician's preference
- D. The worker's willingness to accept a settlement
Show answer & explanation
Answer: A
The carrier makes the compensability decision on the evidence, and denying a valid claim at an employer's direction exposes the carrier to penalties and bad faith liability. Employer input on the facts is valuable and should be investigated, but it is evidence to weigh rather than an instruction to follow.64. A state imposes a penalty for late payment of indemnity benefits. What does this reflect?
- A. That workers compensation payments are discretionary
- B. That penalties apply only where the delay was intentional
- C. That the employer rather than the carrier bears the penalty
- D. That benefits replace wages the worker depends on immediately, so statutory deadlines carry automatic penalties and sometimes interest
Show answer & explanation
Answer: D
Because indemnity substitutes for a paycheque, delay causes immediate hardship, so statutes impose penalties that typically attach on the deadline regardless of intent. Some jurisdictions add interest and attorney fee exposure, which makes payment timeliness one of the most closely tracked metrics in a claims operation.65. An adjuster wishes to close a claim with a settlement that resolves future medical as well as indemnity. What is generally required?
- A. The employer's written consent alone
- B. Nothing beyond a payment and a closing letter
- C. Only the worker's signature on a release
- D. Approval by the state workers compensation agency or a judge, since settlements affecting a worker's statutory rights are subject to review
Show answer & explanation
Answer: D
Workers compensation rights are statutory rather than purely contractual, so settlements closing them typically require agency or judicial approval to protect the worker. Where Medicare's interests are implicated, a set-aside analysis may also be required so the settlement does not shift future injury-related medical cost onto Medicare.
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Key facts: Workers Compensation Adjuster exam
The Workers Compensation Adjuster is administered by State DOI, with a 1 hour time limit and a passing score of 70%.
This free Workers Compensation Adjuster practice test has 65 original questions written to State DOI's official content outline, last checked against it on July 18, 2026. Every question shows a worked explanation, and nothing here requires a signup.
As of 2026, the Workers Compensation Adjuster exam fee is $29 (typical, varies by state).
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Official sources
Primary documents used to verify the exam details shown on this page.
- Texas Insurance Licensing Candidate HandbookPearson VUE / Texas Department of Insurancepearsonvue.com
- Adjuster: workers' compensation licenseTexas Department of Insurancetdi.texas.gov
- Texas Department of Insurance – Licensing ExamsPearson VUEpearsonvue.com
- Workers Compensation Adjuster ExamState DOI / Pearson VUEtdi.texas.gov
Last verified against the official exam content outline:
Frequently asked questions
Do these practice questions match the real Workers Compensation Adjuster exam?
Yes — the questions are written to mirror the style and topic coverage of the licensing exam, including adjuster duties, coverage analysis, claim types, valuation, and settlement rules. They test the same concepts the real exam draws on, such as comparing a loss to the policy's insuring agreement, conditions, exclusions, and endorsements. Exact wording will differ on test day, but if you can reason through these, the real questions should feel familiar.
How many practice questions should I do before the exam?
Work in short, regular sessions rather than one marathon — a set of questions most days in the weeks before your test date beats cramming. Keep going until you can consistently answer questions correctly across every topic area, not just your favorites. Since the real exam is timed at 60 minutes, add some timed sessions near the end so pacing becomes automatic.
How should I use the answer explanations?
Read the explanation for every question, including the ones you got right. The explanation tells you why the correct answer works and why the tempting wrong answers fail — for example, why the appraisal clause resolves disputes over the amount of loss but never coverage disputes. When you miss a question, write down the rule you got wrong and re-test yourself on it a few days later.
How do I know when I'm ready to take the real exam?
You need 70% to pass, so aim to score comfortably above that — consistently in the 80s or better — on practice sets covering all topics. Readiness also shows in how you answer: you should be able to explain why each wrong option is wrong, not just recognize the right one. If certain areas like subrogation or proof-of-loss rules still trip you up, drill those before booking your test.
Are these Workers Compensation Adjuster practice questions really free?
Yes, the practice questions are completely free and you do not need to create an account or sign up to use them. You can start answering questions right away and come back as often as you like. Explanations are included with every question at no cost.