Free Property and Casualty Adjuster Practice Questions

Sample Practice Questions

Try these 10 sample questions from the Property and Casualty Adjuster practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

1. 1A covered machine would cost $40,000 to replace with a comparable one. Its depreciation is $10,000. The policy settles at actual cash value, with no deductible. What is the loss value?

   1. A. $30,000, after subtracting depreciation
   2. B. $40,000, without a depreciation adjustment
   3. C. $10,000, using depreciation as the loss
   4. D. $50,000, after adding depreciation

   Answer: A

   Explanation: "replacement cost minus depreciation." The replacement cost is $40,000; subtracting $10,000 gives $30,000. B ignores depreciation, C pays only depreciation, and D adds it.

   Reference: NAIC Glossary of Insurance Terms — Actual Cash Value

2. 2An insured and insurer agree that a house fire is covered but disagree about the cost to repair it. What issue may a property-policy appraisal process resolve?

   1. A. Whether the fire occurred within the policy period
   2. B. Whether an exclusion removes fire coverage
   3. C. The amount of the covered repair loss
   4. D. Whether the claimant is a named insured

   Answer: C

   Explanation: "appraisal process only determines costs, not if your policy covers these costs." Appraisal determines the amount of loss, not coverage. Policy timing, exclusions, and insured status are coverage questions.

   Reference: NAIC Post-Disaster Claims Guide — Appraisal, claims guide p. 15

3. 3A claim is made under the basic insuring clause of the New York Standard Fire Policy referenced by the outline. Which cause of direct damage is expressly insured?

   1. A. Windstorm damage to the described property
   2. B. Lightning damage to the described property
   3. C. Earthquake damage to the described property
   4. D. Vandalism damage to the described property

   Answer: B

   Explanation: "LOSS BY FIRE, LIGHTNING AND BY REMOVAL FROM PREMISES" The basic clause names direct loss by fire and lightning. Windstorm, earthquake, and vandalism require separate coverage and are not among those named basic perils.

   Reference: New York Senate, Insurance Law § 3404(e), Standard Fire Insurance Policy — Insurance Law § 3404(e), standard fire policy first page

4. 4A covered storm caused $20,000 of repairable dwelling damage and $10,000 of separately identified, excluded damage. The policy limit exceeds both amounts and there is no deductible. What amount should the adjuster use for the covered damage settlement?

   1. A. $30,000, including all measured damage
   2. B. $10,000, using only excluded damage
   3. C. $20,000, using the covered damage
   4. D. $25,000, sharing excluded damage equally

   Answer: C

   Explanation: "This adjuster will settle the claim based on the insurance coverage you have and the amount of damage to your home and property." The adjuster uses both measured damage and policy coverage. Only $20,000 is covered; the other amounts include or misapply the separately excluded $10,000.

   Reference: NAIC Post-Disaster Claims Guide — What is a company adjuster?, claims guide

5. 5Under Wyoming law, who appoints the state Insurance Commissioner?

   1. A. The Governor
   2. B. The state Senate
   3. C. The Attorney General
   4. D. The insurance industry advisory board

   Answer: A

   Explanation: The appointment is executive. W.S. 26-2-102(a) states, "The commissioner shall be appointed by the governor."

   Reference: Wy Title 26 — W.S. 26-2-102(a)

6. 6A Wyoming property or casualty insured fails to pay the premium when due. Which statutory cancellation ground applies?

   1. A. Discovery of fraud or material misrepresentation in obtaining the policy
   2. B. Nonpayment of premium after the policy has been in effect for sixty days
   3. C. A substantial change in the risk that increases the hazard originally insured
   4. D. A substantial breach of contractual duties or conditions by the policyholder

   Answer: B

   Explanation: W.S. 26-35-202(a)(i) permits cancellation for "Nonpayment of premium."

   Reference: Wy Title 26 — W.S. 26-35-202(a)(i)

7. 7What bodily-injury limits must Wyoming uninsured-motorist coverage initially match?

   1. A. $10,000 per accident only
   2. B. $50,000 per person and $100,000 per accident
   3. C. $25,000 per person and $50,000 per accident
   4. D. No stated minimum

   Answer: C

   Explanation: W.S. 31-10-101 requires uninsured-motorist coverage in bodily-injury limits "as provided by W.S. 31-9-102(a)(xi)," which states $25,000 for one person and $50,000 for two or more persons.

   Reference: Wy Title 31 — W.S. 31-10-101 and 31-9-102(a)(xi)

8. 8A covered property claim has an $8,000 loss and a $1,000 deductible. Assume no other limits or adjustments apply. How much of this loss does the insurer pay?

   1. A. $8,000; the deductible is paid separately
   2. B. $7,000; the insured bears $1,000
   3. C. $9,000; the deductible increases the loss
   4. D. $1,000; the insurer pays the deductible

   Answer: B

   Explanation: "Deductible - portion of the insured loss (in dollars) paid by the policy holder." The insured bears $1,000 of the $8,000 covered loss, leaving $7,000 for the insurer. A ignores, C adds, and D swaps the deductible with the insurer payment.

   Reference: NAIC Glossary of Insurance Terms — Deductible

9. 9An adjuster compares occurrence and claims-made liability forms. Under a claims-made form, which event is the basic policy-period trigger?

   1. A. The allegedly wrongful act occurs during the policy period
   2. B. The third party first suffers harm during the policy period
   3. C. The insured reports an incident during the policy period
   4. D. The liability claim is filed during the policy period

   Answer: D

   Explanation: "The trigger for claims-made policies is the filing of a claim during the policy period." A claim filing during the term is the basic trigger. The act date, harm date, and incident report are different events and do not replace the claim filing.

   Reference: NAIC, A Regulator's Introduction to the Insurance Industry — Insurance Lines and Products, claims-made coverage

10. 10After a loss under the referenced New York Standard Fire Policy, the insurer requests the contract's formal statement of the insured's loss. Which submission meets that requirement?

    1. A. A repair bid signed only by the contractor
    2. B. An appraisal demand signed only by the agent
    3. C. A sworn proof of loss signed by the insured
    4. D. An inventory estimate signed only by a broker

    Answer: C

    Explanation: "proof of loss, signed and sworn to by the insured" The insured must provide a signed, sworn proof of loss; bids, demands, and estimates signed by others do not fulfill that document requirement.

    Reference: New York Senate, Insurance Law § 3404(e), Standard Fire Insurance Policy — Insurance Law § 3404(e), Requirements in case loss occurs