ALABAMA INSURANCE ADJUSTER EXAM STUDY GUIDE

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ALABAMA INSURANCE ADJUSTER EXAM STUDY GUIDE

EXAM QUESTIONS

Actual Qs and Ans Expert-Verified Explanation

This Exam contains:

-Guarantee passing score -100 Questions and Answers -format set of multiple-choice -Expert-Verified Explanation Question 1: Susan owns a convenience store and wants to protect her business from employee dishonesty or theft. She trusts all of her employees equally, and doesn't want to single any one of them out. She also would rather not insure them by job description.Which type of ensuring agreement would best suit Susan's business needs?

Answer:

Employee theft: all employees

The first insuring agreement is for Employee Theft. This covers losses or damage to money, securities, and other property resulting from theft committed by an employee. It can be written on scheduled persons, scheduled positions, or on a blanket coverage basis. In other words, an employer can buy coverage that applies to particular people, to specific positions, or to everyone in the company.Question 2: Eve's Organic Applesauce makes a family sick in Oregon, and Eve has to recall thousands of boxes of product. Since her base policy does not cover product liability, which coverage could help pay for Eve's losses associated with the recall?

Answer:

Product liability insurance is designed to protect businesses from this type of liability by covering damages to third parties caused by the manufacturing, merchandising, distributing, or operation of a product.

Question 3: After a hail storm passed through his neighborhood, Perry had his roof inspected by a local contractor. The contractor gave Perry an estimate of $9,850 to replace his roof, so he filed a claim with his insurer. The adjuster came up with her own estimate of $9,645 to replace Perry's roof. How will the adjuster likely respond to Perry's claim?

Answer:

Accept the claim, since the difference is small enough to settle in Perry's favor.Question 4: Darren's SUV cost him $28,500 when he bought it new five years ago, but it would cost $29,600 replace it today. The vehicle has an annual depreciation of $1,200. Darren loses control while driving too fast around a bend in the road and flips his vehicle, totaling it.Assuming Darren's auto insurance policy pays ACV, how much can he expect to receive in indemnification for this claim?

Answer:

$23,600

Question 5: Diana is insured under a DP-2 policy with the following coverage limits: Coverage A

• $150,000, Coverage B - $15,000, and Coverage C - $25,000. She and her fiancé have planned a

destination wedding, but their hotel catches fire shortly after their arrival. Smoke from the fire damages all of their belongings, including Diana's $4,000 wedding dress. Diana's loss totals $5,200. When she files a claim with her insurance company, ignoring any deductible, how much can she expect to receive?

Answer:

$5,200

Question 6: Rachel is filling out an application for a homeowners policy. She is truthfully answering the questions regarding her home's location, size, age, etc. Which of the following is a true statement?

Answer:

Rachel is providing representations: Applicants are required to be truthful and provide complete information to the full extent of their knowledge.Question 7: Smith Shipping Co. owns two cargo ships. The first ship is covered by a hull policy with a $50,000 average deductible. The second ship is covered by a hull policy with a $75,000 franchise deductible. One very unlucky month, both ships lose all of their cargo to fire, thereby sustaining $100,000 in each of the 2 losses. Smith Shipping Co. will be indemnified ______ (total) for their losses.

Answer:

$125,000

Question 8: As an adjuster for KLM Insurance, Chrystal has the important role of fiduciary

agent. While acting in this capacity, Chrystal's primary responsibility is to:

Answer:

Protect the financial and property interests of KLM Insurance.An insurance adjuster acts as a fiduciary agent on behalf of the principal. The principal, which is usually the insurer, gives the adjuster the authority to act on its behalf. This means that, when handling claims, the adjuster is responsible for making decisions in place of the insurer and for the insurer's benefit. A fiduciary agent must employ the highest standard of ethics and personal responsibility when exercising this authority, and must always protect the principal's financial and property interests.Question 9: Natalie's brakes have been squealing for several months. Every time she drives her car, she's reminded that she needs to have them replaced, but she forgets all about it as soon

as she gets out of the car. Natalie's brakes can be considered a:

Answer:

Morale hazard is a reckless, careless, and often unconscious change in behavior, often because of the comfort of insurance protection.Question 10: In which situation would Utility Service - Time Element coverage apply?

Answer:

Utility Services-Direct Damage covers losses caused by the interruption of water, communications, or power services when a utility provider is damaged. For example, if a bolt of lightning causes a fire at the power station that supplies power to the insured, and power is cut off for two days, a utility services endorsement would indemnify them insured for any losses incurred when power was interrupted. An additional, similar endorsement called Utility Time Element offers business income and extra expense coverage for the loss of utility services. Both coverages are offered for named-perils only.Question 11: Roxanne bought her 50" TV four years ago for $2,400. During a storm, her house was struck by lightning and the current fried her TV. The TV depreciates at $400 per year and a similar TV costs $1,200 today. Assuming Roxanne's homeowners policy has a replacement cost endorsement for personal property, how much can she expect to receive in indemnification for her damaged TV?

Answer:

$800 Question 12: After a fire destroys Gale's kitchen, she files a claim with her insurer and hires a contractor. The contractor estimates it will take $42,250 to repair the damage, but the adjuster estimates it will only take $38,340. Which of the following is the best option for the adjuster's response to Gale's claim?

Answer:

Negotiate a settlement amount with Gale.

Question 13: Molly borrows her friend Dom's car so she can run to the grocery store. On the way home she rear-ends a van, injuring the driver and 3 other passengers. Each of the passengers suffers $45,000 in injuries, while the driver suffers $40,000. Assuming Dom has a liability policy with limits of 50/100/50, while Molly has 25/50/25 coverage, how much will the primary policy cover?

Answer:

$100,000

Question 14: While Andrea was grocery shopping in BB Mart, the large Dairy sign fell off the wall and landed on her. Because of her extensive injuries, Andrea sued BB Mart and was awarded $375,000 in damages. BB Mart's Commercial General Liability policy has a general aggregate limit of $1,000,000 and a per occurrence limit of $300,000. How much will BB Mart have to pay out-of-pocket in this case?

Answer:

$75,000

Under each aggregate limit, the declarations page will list a per occurrence limit. The per occurrence limit establishes the maximum amount the insurer will pay to satisfy claims for bodily injury, property damage, and medical payments for any single occurrence. For example, consider a CGL with a General Aggregate limit of $1,000,000, and a per occurrence limit at $250,000. If an individual makes a claim against the insured for $350,000 arising out of a single occurrence, the most the CGL will pay to satisfy that particular claim is $250,000, or the per occurrence limit.Question 15: All of the following would be found on the Dec Page, except:

Answer:

Industry insiders often refer to the declarations page as the "Dec Page." It provides an overview of the entire policy, and it states the named insured, the location of the insured property, the policy period, the policy premium, coverage types, coverage limits, and any applicable endorsements.Question 16: Sue owns a nursery that grows and sells flowers and trees. When a hurricane destroys her greenhouse and her grow lights with it, Sue leases some grow lights to use in an extra building until her greenhouse can be replaced. What commercial insurance coverage might pay for this rental?

Answer:

Extra expense This coverage is designed to help the insured business reduce their loss of income in the event of a covered loss. When severe damages cause a disruption in normal business operations, the policyholder will often try to keep the business going by "making do" at a damaged factory, contracting work to other businesses, or leasing space elsewhere to continue operations. By covering the costs associated with these efforts, Extra Expense coverage helps the insured business get up and running again and reduce the amount of income lost due to the damages.