AL PRACTICE EXAM - ADJUSTING (2025/2026) ACTUAL EXAM TEST|COMPREHENSIVE
QUESTIONS AND VERIFIED ANSWERS| GET IT 100% ACCURATE!
Question 1
The insured carries a BOP policy with protective systems such as a sprinkler system. If the
system becomes inoperative, the insured must advise the insurance company of the problem
within how many hours if the system cannot be restored to working order?
A) 12 hours
B) 24 hours
C) 48 hours
D) 72 hours
E) 96 hours
Correct Answer: C) 48 hours
Rationale: In a Business Owners Policy (BOP), the Protective Safeguards endorsement
requires the insured to notify the insurer if a protective system (like a sprinkler or fire
alarm) is out of service for more than 48 hours. Failure to do so can result in a denial of a
fire loss claim.
Question 2
Tina has two policies (Policy X and Policy Y) that cover the same risk on a pro rata basis. Policy
X has a limit of $100,000 and Policy Y has a limit of $25,000. When Tina suffers a loss totaling
$75,000, how will the two policies respond?
A) Policy X will pay $75,000 and Policy Y will pay $0
B) Policy X will pay $37,500 and Policy Y will pay $37,500
C) Policy X will pay $60,000 and Policy Y will pay $15,000
D) Policy X will pay $50,000 and Policy Y will pay $25,000
E) Policy X will pay $100,000 and Policy Y will pay $25,000
Correct Answer: C) Policy X will pay $60,000 and Policy Y will pay $15,000
Rationale: Pro rata means each policy pays its share of the loss based on its percentage of
the total limit. Total limit =
125,000(
100k +
25𝑘). 𝑃𝑜𝑙𝑖𝑐𝑦𝑋ℎ𝑎𝑠80
100k/
125𝑘)𝑎𝑛𝑑𝑃𝑜𝑙𝑖𝑐𝑦𝑌ℎ𝑎𝑠20
25k/$125k). Therefore, Policy X pays 80% of
75,000(
60,000) and Policy Y pays 20% of
, 2
75,000(
15,000).
Question 3
This provision in Ocean Marine insurance obligates insurers of various interests to share the cost
of losses associated with a captain's decision to voluntarily sacrifice a part of the ship or its cargo
to save the rest of the venture.
A) Particular Average
B) General Average
C) Barratry
D) Jettison Clause
E) Hull Proportionality
Correct Answer: B) General Average
Rationale: General Average is a legal principle of maritime law where all stakeholders in a
sea venture (ship owner and cargo owners) proportionally share any losses resulting from a
voluntary sacrifice of part of the ship or cargo to save the whole in an emergency.
Question 4
Which of the following incidents would a liability insurance policy cover?
A) An insured burns down their own house on purpose.
B) An insured breaks their own arm while falling off a ladder.
C) A thief steals the insured's car from the driveway.
D) A man slips inside a grocery store and injures himself.
E) A lightning strike destroys the insured's warehouse.
Correct Answer: D) A man slips inside a grocery store and injures himself.
Rationale: Liability insurance is designed to pay for bodily injury or property damage for
which the insured is legally responsible to a third party. Slips and falls in a place of
business represent a classic third-party liability exposure.
Question 5
Which of the following does NOT apply to commercial property insurance?
A) It can cover buildings and business personal property.
B) Because of their complexity, commercial policies only offer named-peril coverage.
C) It can be written as a monoline policy or part of a package.
D) It often includes a coinsurance clause.
E) It can include business income and extra expense coverage.
Correct Answer: B) Because of their complexity, commercial policies only offer named-peril
coverage.
Rationale: Commercial property insurance is not limited to named-peril coverage. It can be
written on a Basic, Broad (named perils), or Special (open-peril/all-risk) form.
, 3
Question 6
Which of the following perils is excluded from coverage in a National Flood Insurance Program
(NFIP) policy?
A) Overflow of inland or tidal waters
B) Unusual and rapid accumulation or runoff of surface waters from any source
C) Water-main breakage
D) Mudflow caused by accumulation of water on or under the ground
E) Collapse of land along the shore of a lake as a result of erosion
Correct Answer: C) Water-main breakage
Rationale: The NFIP defines flood as a general and temporary condition of partial or
complete inundation of two or more acres of normally dry land or two or more properties.
Water-main breakage is considered a maintenance/utility issue and does not meet the
definition of a natural "flood" event.
Question 7
Sam, who has a typical HO-3 policy, is forced to evacuate his home by civil authorities due to
rising flood waters in his neighborhood. It takes a month before Sam is allowed to come back to
his home. During this time, he has spent $3,000 in hotel expenses. When he files a claim, how
much will Sam receive under Coverage D - Loss of Use?
A) $3,000
B) $1,500
C) $850
D) $0
E) $1,000
Correct Answer: D) $0
Rationale: In a standard Homeowners (HO-3) policy, Coverage D (Loss of Use) is only
triggered if the displacement is caused by a peril covered under the policy. Since flood is an
excluded peril in an HO-3 policy, any expenses resulting from a flood-mandated evacuation
are not covered.
Question 8
Which of the following insurance packages will indemnify a policyholder for a variety of
hospital-related expenses such as nursing care, supplies, and rooming charges?
A) Hospitalization Expense insurance
B) Surgical Expense insurance
C) Major Medical insurance
D) Disability Income insurance
E) Workers' Compensation
Correct Answer: A) Hospitalization Expense insurance
Rationale: Hospitalization expense insurance provides coverage for specific daily costs
, 4
associated with being confined to a hospital, including room and board and miscellaneous
medical supplies.
Question 9
Which of the following statements about Alabama's approach to Workers' Comp (WC) insurance
is true?
A) WC is compulsory, and Alabama has no state WC fund.
B) WC is elective, and Alabama provides a state fund for employers.
C) Only employers with 100+ employees must carry WC.
D) WC is only required for government employees in Alabama.
E) Alabama requires all employers to use the federal WC fund.
Correct Answer: A) WC is compulsory, and Alabama has no state WC fund.
Rationale: Alabama law requires most employers with five or more employees to provide
Workers' Compensation coverage. Unlike some states, Alabama does not have a state-run
insurance fund; employers must purchase through private insurers or be self-insured.
Question 10
Barry lives in Texas but wants to obtain an independent adjuster license in Alabama. He can get
this license without passing the Alabama adjuster licensing exam if:
A) He has a college degree in insurance.
B) He has worked as an adjuster for at least 10 years.
C) He only adjusts claims for small businesses.
D) He has passed the Texas exam and received an all-lines adjuster license in Texas.
E) He pays a double fee for a non-resident waiver.
Correct Answer: D) he has passed the Texas exam and received an all-lines adjuster license
in Texas.
Rationale: Alabama offers reciprocity to adjusters who hold an equivalent license in their
home state, provided that the home state's licensing requirements are substantially similar
to Alabama's, which includes passing a state-specific exam.
Question 11
Driving home after a 14-hour shift, Sam falls asleep at the wheel and plows into Sandra's home,
causing extensive damage. Sandra and her family must move into a hotel until the repairs are
completed. The cost of staying in a hotel is:
A) An indirect loss
B) A direct loss
C) A punitive damage
D) An occurrence
E) A catastrophic peril
Correct Answer: A) An indirect loss
Rationale: Direct loss is the physical damage to property (the house wall). Indirect loss (or
QUESTIONS AND VERIFIED ANSWERS| GET IT 100% ACCURATE!
Question 1
The insured carries a BOP policy with protective systems such as a sprinkler system. If the
system becomes inoperative, the insured must advise the insurance company of the problem
within how many hours if the system cannot be restored to working order?
A) 12 hours
B) 24 hours
C) 48 hours
D) 72 hours
E) 96 hours
Correct Answer: C) 48 hours
Rationale: In a Business Owners Policy (BOP), the Protective Safeguards endorsement
requires the insured to notify the insurer if a protective system (like a sprinkler or fire
alarm) is out of service for more than 48 hours. Failure to do so can result in a denial of a
fire loss claim.
Question 2
Tina has two policies (Policy X and Policy Y) that cover the same risk on a pro rata basis. Policy
X has a limit of $100,000 and Policy Y has a limit of $25,000. When Tina suffers a loss totaling
$75,000, how will the two policies respond?
A) Policy X will pay $75,000 and Policy Y will pay $0
B) Policy X will pay $37,500 and Policy Y will pay $37,500
C) Policy X will pay $60,000 and Policy Y will pay $15,000
D) Policy X will pay $50,000 and Policy Y will pay $25,000
E) Policy X will pay $100,000 and Policy Y will pay $25,000
Correct Answer: C) Policy X will pay $60,000 and Policy Y will pay $15,000
Rationale: Pro rata means each policy pays its share of the loss based on its percentage of
the total limit. Total limit =
125,000(
100k +
25𝑘). 𝑃𝑜𝑙𝑖𝑐𝑦𝑋ℎ𝑎𝑠80
100k/
125𝑘)𝑎𝑛𝑑𝑃𝑜𝑙𝑖𝑐𝑦𝑌ℎ𝑎𝑠20
25k/$125k). Therefore, Policy X pays 80% of
75,000(
60,000) and Policy Y pays 20% of
, 2
75,000(
15,000).
Question 3
This provision in Ocean Marine insurance obligates insurers of various interests to share the cost
of losses associated with a captain's decision to voluntarily sacrifice a part of the ship or its cargo
to save the rest of the venture.
A) Particular Average
B) General Average
C) Barratry
D) Jettison Clause
E) Hull Proportionality
Correct Answer: B) General Average
Rationale: General Average is a legal principle of maritime law where all stakeholders in a
sea venture (ship owner and cargo owners) proportionally share any losses resulting from a
voluntary sacrifice of part of the ship or cargo to save the whole in an emergency.
Question 4
Which of the following incidents would a liability insurance policy cover?
A) An insured burns down their own house on purpose.
B) An insured breaks their own arm while falling off a ladder.
C) A thief steals the insured's car from the driveway.
D) A man slips inside a grocery store and injures himself.
E) A lightning strike destroys the insured's warehouse.
Correct Answer: D) A man slips inside a grocery store and injures himself.
Rationale: Liability insurance is designed to pay for bodily injury or property damage for
which the insured is legally responsible to a third party. Slips and falls in a place of
business represent a classic third-party liability exposure.
Question 5
Which of the following does NOT apply to commercial property insurance?
A) It can cover buildings and business personal property.
B) Because of their complexity, commercial policies only offer named-peril coverage.
C) It can be written as a monoline policy or part of a package.
D) It often includes a coinsurance clause.
E) It can include business income and extra expense coverage.
Correct Answer: B) Because of their complexity, commercial policies only offer named-peril
coverage.
Rationale: Commercial property insurance is not limited to named-peril coverage. It can be
written on a Basic, Broad (named perils), or Special (open-peril/all-risk) form.
, 3
Question 6
Which of the following perils is excluded from coverage in a National Flood Insurance Program
(NFIP) policy?
A) Overflow of inland or tidal waters
B) Unusual and rapid accumulation or runoff of surface waters from any source
C) Water-main breakage
D) Mudflow caused by accumulation of water on or under the ground
E) Collapse of land along the shore of a lake as a result of erosion
Correct Answer: C) Water-main breakage
Rationale: The NFIP defines flood as a general and temporary condition of partial or
complete inundation of two or more acres of normally dry land or two or more properties.
Water-main breakage is considered a maintenance/utility issue and does not meet the
definition of a natural "flood" event.
Question 7
Sam, who has a typical HO-3 policy, is forced to evacuate his home by civil authorities due to
rising flood waters in his neighborhood. It takes a month before Sam is allowed to come back to
his home. During this time, he has spent $3,000 in hotel expenses. When he files a claim, how
much will Sam receive under Coverage D - Loss of Use?
A) $3,000
B) $1,500
C) $850
D) $0
E) $1,000
Correct Answer: D) $0
Rationale: In a standard Homeowners (HO-3) policy, Coverage D (Loss of Use) is only
triggered if the displacement is caused by a peril covered under the policy. Since flood is an
excluded peril in an HO-3 policy, any expenses resulting from a flood-mandated evacuation
are not covered.
Question 8
Which of the following insurance packages will indemnify a policyholder for a variety of
hospital-related expenses such as nursing care, supplies, and rooming charges?
A) Hospitalization Expense insurance
B) Surgical Expense insurance
C) Major Medical insurance
D) Disability Income insurance
E) Workers' Compensation
Correct Answer: A) Hospitalization Expense insurance
Rationale: Hospitalization expense insurance provides coverage for specific daily costs
, 4
associated with being confined to a hospital, including room and board and miscellaneous
medical supplies.
Question 9
Which of the following statements about Alabama's approach to Workers' Comp (WC) insurance
is true?
A) WC is compulsory, and Alabama has no state WC fund.
B) WC is elective, and Alabama provides a state fund for employers.
C) Only employers with 100+ employees must carry WC.
D) WC is only required for government employees in Alabama.
E) Alabama requires all employers to use the federal WC fund.
Correct Answer: A) WC is compulsory, and Alabama has no state WC fund.
Rationale: Alabama law requires most employers with five or more employees to provide
Workers' Compensation coverage. Unlike some states, Alabama does not have a state-run
insurance fund; employers must purchase through private insurers or be self-insured.
Question 10
Barry lives in Texas but wants to obtain an independent adjuster license in Alabama. He can get
this license without passing the Alabama adjuster licensing exam if:
A) He has a college degree in insurance.
B) He has worked as an adjuster for at least 10 years.
C) He only adjusts claims for small businesses.
D) He has passed the Texas exam and received an all-lines adjuster license in Texas.
E) He pays a double fee for a non-resident waiver.
Correct Answer: D) he has passed the Texas exam and received an all-lines adjuster license
in Texas.
Rationale: Alabama offers reciprocity to adjusters who hold an equivalent license in their
home state, provided that the home state's licensing requirements are substantially similar
to Alabama's, which includes passing a state-specific exam.
Question 11
Driving home after a 14-hour shift, Sam falls asleep at the wheel and plows into Sandra's home,
causing extensive damage. Sandra and her family must move into a hotel until the repairs are
completed. The cost of staying in a hotel is:
A) An indirect loss
B) A direct loss
C) A punitive damage
D) An occurrence
E) A catastrophic peril
Correct Answer: A) An indirect loss
Rationale: Direct loss is the physical damage to property (the house wall). Indirect loss (or
