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AZ Adjuster's Exam
Prep material for the AZ Insurance Adjuster's Exam 13-36
| Question | Answer |
|---|---|
| Insurance | An economic device used to protect against the risk of unforeseen and extraordinary financial loss |
| Indemnity | to prevent an insured from making a profit on a loss. |
| Contained on an insurance policy’s declarations page | the deductible, the value of the insured item, the dates of the policy term. |
| The following pieces of information can be found in the Conditions section of an insurance policy | the insured’s duties after a loss has occurred. anything the insured must do for coverage to remain in effect. what the insured must do in the event of a lawsuit. |
| typical exclusions in an insurance policy | flooding. earthquakes. nuclear hazards. |
| A private non-commercial insurance company | a non-profit insurer that returns profits to policyholders by reducing premiums or expanding benefits |
| A non-profit group of people or organizations that insure each other is | reciprocal insurer. |
| Law of Large Numbers? | The larger the number of units insured, the more accurately the insurer can predict the number of claims from that group. |
| binder | temporary coverage for an insurance applicant until the policy is issued |
| An insurance company may consider each of the following a risk, | an old oak tree. a wooden fence. a race car. |
| risk management is used to | increase premiums, ensure that the pool of premiums collected by an insurance company will be sufficient to pay all claims, to determine whether or not to write an insurance policy on a particular individual. |
| Risk management | helps an insurer decide whether or not to issue a policy |
| an implied waiver. | When an insurer takes no action upon realizing material changes in a contract, this is called |
| indirect loss | month of rental income when a tenant must move out while repairs are made to the home. |
| When damages or losses fall under the terms of an insurance contract: | the policyholder has an immediate right to claim payment according to the terms of the policy. |
| Adam is shopping for a car in a local automobile dealership. While visiting the showroom, Adam trips over a rug that has folded over and breaks his arm in the fall. How will Adam be indemnified? | Adam may file a third party claim against the dealership's insurance company |
| Actual Cash Value | Replacement Cost minus Total Depreciation. |
| Tort Law | The defendant is called the tortfeasor Only a simple majority is required to reward the claimant for damages Tort law applies only to civil trials |
| bankruptcy condition | The insurer must defend the insured in a covered lawsuit, even when the insured has declared bankruptcy. |
| General Agent | This agent works for only one insurer, and supervises and trains other agents. |
| adjuster | contracted by an insurance company to settle claims acting on behalf of the insurer. |
| Express Authority | directly granted to an agent in writing via the agent’s contract. |
| claimant | an individual or business that makes a claim for payment after a loss occurs. |
| staff adjuster | a salaried employee working for only one insurer |
| Power to Bind | The principal is bound to decisions the adjuster makes |
| As a fiduciary agent, an adjuster must report to the principal on a regular basis. What information needs to be reported? | the deadlines for each step of the claims process. the final settlement amount. the adjuster's progress on a claim. |
| An insurance adjuster acts as a fiduciary agent for his or her employer and is prohibited from: | giving the claimant materials showing how they came up with a settlement amount. |
| The job of the adjuster | Comparing claimant’s losses to promises made in insurance policy |
| Preliminary report | the adjuster’s reports that usually includes the initial claim reserve |
| Public adjuster | adjuster that is hired by the claimant and is paid by commission. |
| What steps must an adjuster go through to surrender his license? | send a written request to the Director |
| How often does an adjuster's license need to be renewed in Arizona? | every four years |
| requirement to be eligible for an adjuster license in Arizona? | Be a resident of Arizona Take an exam Be fingerprinted Be 18 Years old |
| Once an adjuster has his license revoked, how long must he wait to apply again? | One year |
| If an adjuster or insurer routinely uses unfair practices in dealing with their claimants, they are likely to be investigated by: | The Director of Insurance |
| In TRIA The aggregate retention is best described as the: | total amount of copayments and deductibles that all insurers are responsible for paying in a calendar year for terrorism losses |
| In order for governmental funding under TRIA to apply, the peril must be certified as an act of terrorism by: | Secretary of Treasury, Secretary of Homeland Security, and Attorney General |
| Personal Articles Floater (PAF) policy | offer coverage on an open-peril basis. They are a single policy offer worldwide coverage. |
| When an insurer offers less than what is fair, thereby forcing a claimant to take the insurer to court it: | It is unfair to the claimant It doesn't honor the insurance contract It clogs the legal system |
| Which unfair practice involves an adjuster making false statements about policy coverage in order to reduce the settlement? | Misrepresentation |
| An Umbrella liability policy: | may cover risks not covered in an underlying policy |
| the NFIP General Property Form covers | a motel lobby’s furnishings. a medical office. a furniture store’s inventory. |
| Under a BAP, a total loss is settled according to: | Actual cash value |
| This type of commercial auto insurance is designed for anyone who transports goods or passengers as part of a commercial enterprise. | Motor Carrier Policy |
| Damage caused by a tree branch falling onto a company car would be indemnified under which coverage of a BAP? | Comprehensive coverage |
| Which coverage under a garage-keepers policy splits the loss with the car owner’s insurance coverage when the car is damaged while under the care of the garage? | Direct Primary coverage |
| Business Income Coverage, an Additional Coverage in a Business Owner’s Policy | It protects from loss of income caused by property damage. It starts 72 hours after the damage occurred. It provides up to 12 months of coverage. |
| the following are covered under Coverage A of a Business Owner’s Policy | Owner’s furniture in an apartment that is rented as furnished Flooring and floor coverings Building maintenance equipment, such as fire extinguishers |
| What requirements must Wholesalers and Distributors meet in order to be eligible for a Business owners Policy? | 25% or less of floor space is available to the general public, and less than 25% of gross income may come from retail sales |
| Named Peril Endorsement in a BOP | The endorsement reduces the premium. Volcanic action is a covered peril. The endorsement reduces policy coverage. |
| lines of coverage that may be offered in a Commercial Package Policy | Boiler and Machinery Equipment Breakdown Professional Liability |
| liability coverage in a Business Owner’s Policy, | Coverage is provided for both bodily injury and property damage from business operations and premises. Coverage is provided for product and operation liability. Coverage comes with a series of separate aggregate limits. |
| typically found in a Business Owners Policy? | Inflation Guard for buildings and structures |
| Which of the following would be covered under Coverage B of the Business owners Policy? | The copy machine |
| typical Businessowners Policy? | Built-in inflation protection Liability protection for lawsuits from accidents or products Extra Expense coverage |
| Errors and Omissions insurance would be used by who? | Insurance Agent Building Contractor Accountant |
| In the CGL Coverage for Premises Rented by You, how is the coverage for fire damage different than for other perils? | In the case of fire, only the rented premises are covered, not personal property |
| Premium Audit Condition of the Commercial General Liability Policy | At the start of the policy, the insured pays a deposit premium. The “actual premium earned” depends on factors such as the insured’s payroll and annual sales. The insurer calculates the “actual premium earned” at the end of each year. |
| What type of loss is the RCBAP specifically designed to insure? | Flood |
| Which form is the basis for all Commercial Property policies? | Building and Personal Property coverage form |
| What is Commercial Property Business Interruption? | Provides funds for fixed expenses while damaged property is being repaired |
| Under the Earthquake and Volcanic Eruption endorsement, what is the time span within which multiple events are considered a single occurrence? | 168 hours |
| In a PAP, the Insurer’s Right to Recover Payment basically reinforces the principle of: | Subrogation |
| Someone caught driving without insurance in Arizona would receive what fine for a first offense? | up to $500 |
| Proving financial responsibility can be done by all of the following | purchasing motor vehicle liability insurance bonds self-insurance |
| Which of the following is an acceptable reason for an insurer to cancel an auto policy? | The insured is undergoing treatment for heart disease |
| Which of the following provides residual market auto insurance to private Arizona drivers who have been denied coverage through the voluntary market? | Arizona Automobile Insurance Plan |
| Part A, Liabiilty Coverage provides for all of the following | the insured's defense in court for the injuries of others. for the property damage of others. |
| PAP holders have several duties after a loss. | The policyholder must submit to examination under oath. The policyholder must authorize insurer to obtain medical reports. The policyholder must authorize insurer to obtain any pertinent records. |
| If an insurer decides not to renew an auto policy, the policyholder must be informed: | in writing, 30 days before the end of the policy period. |
| Dwelling Insurance is intended for | Property coverage Persons not eligible for homeowners insurance Corporations not eligible for homeowners insurance |
| In Dwelling policies, the Concealment, Fraud and Misrepresentation condition is binding for: | both the insurer and the insured. |
| In the case of a loss on a covered Dwelling caused by fire: | f there is a tax lien and the building is a 3 or 4 family structure, the lien will be paid first |
| Dwelling policies cover: | property, and liability with an endorsement |
| A DP-3 is known as: | a Special Form |
| Homeowners policies are intended for: | Individuals |
| Coverage B in a HO policy provides insurance for | Garages |
| The Permitted Incidental Occupies endorsement on a homeowners policy provides: | a specified amount of coverage under Coverages B and C for business purposes. |
| Homeowners policies don’t provide coverage for: | flood damage |
| Who is NOT eligible for a Homeowners policy? | owners who rent their homes to others |
| Credit Card Fraud or Forgery, an HO additional coverage, has a limit of: | $500 |
| In a HO policy, Coverage F Medical Payments would pay for | Dental costs Hospital stays Funeral services |
| Which ISO form is known as the Condominium Form? | HO-6 |
| Asking questions can be a useful negotiation technique. What would not help the adjuster during negotiations? | Questioning the claimant’s ethics when the claimant is apparently lying |
| If a claim dispute goes to trial, the adjuster is usually a: | witness |
| Arbitration | The arbitrator is a neutral third party Arbitration may allow evidence court would not Arbitrators often have more expertise than juries |
| In a Full Release Settlement: | All damages are paid immediately in one lump sum |
| If an insurer is unwilling to pay what the claimant is asking, the adjuster must: | Negotiate a settlement |
| An adjuster might deny a claim for all of the following reasons | The claim is fraudulent The claimant can’t prove the damages The loss occurred outside of the policy period |
| In appraisal, who chooses the umpire? | The two appraisers |
| What does a declaratory judgment action seek? | Legal clarification of policy coverage |
| By signing a settlement release, the claimant gives up the right to: | seek any further damages. |
| Which settlement option is used when a claimant’s damages are mostly bodily injury so she can’t work? | Advance Payment Settlement |
| When a claimant submits an offer, an adjuster can | Accept the offer and pay the claim Reject the offer and deny the claim Negotiate a settlement with the claimant |
| An insurer has the primary obligation to: | pay any claims that are covered under the policy |
| What is the first step in any claims settlement process? | acknowledging the claim |
| For a bodily injury liability claim, all are important | type of injury severity of injury pre-existing conditions |
| What is the document issued by insurance companies to claimants when they think something in the claim is not covered by the policy but they are not sure yet? | Reservation of Rights letter |
| Why might a Reservation of Rights letter be sent? | if there is a coverage dispute |
Created by:
ekalf33