Adjuster Pro - Florida Certified
Adjuster Glossary| 260
QUESTIONS| 19 PAGES
Course
Claims Adjuster
1) What does Actual Cash Value (ACV) mean?
Answer: A valuation method used by insurers to determine the current market value of property
immediately before loss by subtracting accumulated depreciation from replacement cost.
Rationale: ACV ensures reimbursement reflects true economic loss, not original cost.
2) Define Accumulated Depreciation.
Answer: The total decrease in an item’s value over time, calculated by multiplying annual
depreciation by years in use.
Rationale: Depreciation increases over time as wear and tear reduces value.
3) What is Adhesion in an insurance contract?
Answer: A contract characteristic where terms are set by the insurer and the insured can only
accept or reject them.
Rationale: Insurance contracts are “take it or leave it” agreements to prevent bargaining over
terms.
4) Who is an Adjuster – Independent?
Answer: A self-employed adjuster who contracts with multiple insurers and is paid on a fee or
commission basis.
Rationale: Independent adjusters are not employees of one insurer and can handle claims for
several companies.
5) What is an Adjuster – Public?
Answer: An adjuster hired by the claimant to represent their interests and negotiate fair
indemnification.
Rationale: Public adjusters work for the insured, not the insurer, usually paid a commission
percentage.
,6) What does Advance Payment Settlement refer to?
Answer: A settlement option where the insurer pays part of the claim before final settlement; this
amount is later subtracted from the total.
Rationale: Advance payments give immediate financial relief, particularly when the claimant
has urgent needs.
7) What is Agency Authority – Apparent?
Answer: The authority an agent is perceived to have based on conduct or role, even if not
formally granted.
Rationale: Apparent authority can bind the insurer because third parties reasonably believe the
agent is authorized.
8) Define Aggregate Limit.
Answer: The total maximum amount an insurer will pay for all covered losses during the policy
period.
Rationale: Unlike per-occurrence limits, the aggregate cap applies to the entire policy term.
9) What is Agreement in contract law?
Answer: One of the four requirements of a legally binding contract; all parties must accept the
terms.
Rationale: A contract cannot exist without mutual acceptance of terms.
10) Who is an Adjuster – Emergency?
Answer: An adjuster temporarily licensed to handle a surge of claims during catastrophes or
emergencies.
Rationale: Emergency adjusters help manage unusually high claim volumes caused by disasters.
11) What is a Perils Clause?
Answer: The section of an insurance policy that lists the specific risks or events covered.
Rationale: Clearly defines what losses the insurer will compensate to avoid disputes.
,12) Define Policy Limit.
Answer: The maximum amount an insurer will pay for a covered loss under a policy.
Rationale: Sets the ceiling for coverage and determines potential claim payout.
13) What is Subrogation?
Answer: The process by which an insurer recovers money from a third party responsible for the
loss after paying the insured.
Rationale: Prevents insureds from receiving double compensation and allows insurers to recoup
losses.
14) What is a Deductible?
Answer: The amount the insured must pay out of pocket before the insurer pays a claim.
Rationale: Deductibles reduce small claims and encourage risk awareness by the insured.
15) What does Liability Insurance cover?
Answer: Protection against claims for bodily injury or property damage caused by the insured’s
actions.
Rationale: Shields the insured from financial loss due to legal responsibility for accidents.
16) Define Binder.
Answer: A temporary insurance contract providing coverage until a formal policy is issued.
Rationale: Ensures immediate protection while policy processing is completed.
17) What is Replacement Cost?
Answer: The cost to repair or replace damaged property without deducting depreciation.
Rationale: Allows the insured to restore property to its original condition.
18) Define Exclusion.
Answer: Specific conditions, hazards, or types of property not covered by the policy.
Rationale: Helps insurers limit exposure and clarifies coverage boundaries for the insured.
, 19) What is Coinsurance?
Answer: A clause requiring the insured to carry a minimum percentage of insurance relative to
property value to receive full reimbursement.
Rationale: Encourages adequate coverage and shares risk between insurer and insured.
20) What is a Catastrophe (CAT) Claim?
Answer: A claim arising from a widespread disaster, such as a hurricane, flood, or earthquake.
Rationale: Catastrophe claims require specialized handling due to high volume and severity.
21) What is a Loss Reserve?
Answer: Funds set aside by an insurer to pay for reported and unreported claims.
Rationale: Ensures the insurer has adequate financial resources to cover liabilities.
22) Define Endorsement.
Answer: A written amendment to a policy that adds, deletes, or modifies coverage.
Rationale: Allows customization of standard policies to fit the insured’s needs.
23) What is a Salvage?
Answer: Property recovered by the insurer after paying a claim, often sold to offset the loss.
Rationale: Reduces the net financial impact of a claim on the insurer.
24) Define Insurable Interest.
Answer: The financial or legal stake the insured has in the property or life covered.
Rationale: Required to prevent gambling on insurance and ensure a legitimate loss.
25) What is a Claimant?
Answer: The individual or entity submitting a claim to an insurer for compensation.
Rationale: Identifies the party seeking benefits under the policy.
26) What is a Proof of Loss?
Adjuster Glossary| 260
QUESTIONS| 19 PAGES
Course
Claims Adjuster
1) What does Actual Cash Value (ACV) mean?
Answer: A valuation method used by insurers to determine the current market value of property
immediately before loss by subtracting accumulated depreciation from replacement cost.
Rationale: ACV ensures reimbursement reflects true economic loss, not original cost.
2) Define Accumulated Depreciation.
Answer: The total decrease in an item’s value over time, calculated by multiplying annual
depreciation by years in use.
Rationale: Depreciation increases over time as wear and tear reduces value.
3) What is Adhesion in an insurance contract?
Answer: A contract characteristic where terms are set by the insurer and the insured can only
accept or reject them.
Rationale: Insurance contracts are “take it or leave it” agreements to prevent bargaining over
terms.
4) Who is an Adjuster – Independent?
Answer: A self-employed adjuster who contracts with multiple insurers and is paid on a fee or
commission basis.
Rationale: Independent adjusters are not employees of one insurer and can handle claims for
several companies.
5) What is an Adjuster – Public?
Answer: An adjuster hired by the claimant to represent their interests and negotiate fair
indemnification.
Rationale: Public adjusters work for the insured, not the insurer, usually paid a commission
percentage.
,6) What does Advance Payment Settlement refer to?
Answer: A settlement option where the insurer pays part of the claim before final settlement; this
amount is later subtracted from the total.
Rationale: Advance payments give immediate financial relief, particularly when the claimant
has urgent needs.
7) What is Agency Authority – Apparent?
Answer: The authority an agent is perceived to have based on conduct or role, even if not
formally granted.
Rationale: Apparent authority can bind the insurer because third parties reasonably believe the
agent is authorized.
8) Define Aggregate Limit.
Answer: The total maximum amount an insurer will pay for all covered losses during the policy
period.
Rationale: Unlike per-occurrence limits, the aggregate cap applies to the entire policy term.
9) What is Agreement in contract law?
Answer: One of the four requirements of a legally binding contract; all parties must accept the
terms.
Rationale: A contract cannot exist without mutual acceptance of terms.
10) Who is an Adjuster – Emergency?
Answer: An adjuster temporarily licensed to handle a surge of claims during catastrophes or
emergencies.
Rationale: Emergency adjusters help manage unusually high claim volumes caused by disasters.
11) What is a Perils Clause?
Answer: The section of an insurance policy that lists the specific risks or events covered.
Rationale: Clearly defines what losses the insurer will compensate to avoid disputes.
,12) Define Policy Limit.
Answer: The maximum amount an insurer will pay for a covered loss under a policy.
Rationale: Sets the ceiling for coverage and determines potential claim payout.
13) What is Subrogation?
Answer: The process by which an insurer recovers money from a third party responsible for the
loss after paying the insured.
Rationale: Prevents insureds from receiving double compensation and allows insurers to recoup
losses.
14) What is a Deductible?
Answer: The amount the insured must pay out of pocket before the insurer pays a claim.
Rationale: Deductibles reduce small claims and encourage risk awareness by the insured.
15) What does Liability Insurance cover?
Answer: Protection against claims for bodily injury or property damage caused by the insured’s
actions.
Rationale: Shields the insured from financial loss due to legal responsibility for accidents.
16) Define Binder.
Answer: A temporary insurance contract providing coverage until a formal policy is issued.
Rationale: Ensures immediate protection while policy processing is completed.
17) What is Replacement Cost?
Answer: The cost to repair or replace damaged property without deducting depreciation.
Rationale: Allows the insured to restore property to its original condition.
18) Define Exclusion.
Answer: Specific conditions, hazards, or types of property not covered by the policy.
Rationale: Helps insurers limit exposure and clarifies coverage boundaries for the insured.
, 19) What is Coinsurance?
Answer: A clause requiring the insured to carry a minimum percentage of insurance relative to
property value to receive full reimbursement.
Rationale: Encourages adequate coverage and shares risk between insurer and insured.
20) What is a Catastrophe (CAT) Claim?
Answer: A claim arising from a widespread disaster, such as a hurricane, flood, or earthquake.
Rationale: Catastrophe claims require specialized handling due to high volume and severity.
21) What is a Loss Reserve?
Answer: Funds set aside by an insurer to pay for reported and unreported claims.
Rationale: Ensures the insurer has adequate financial resources to cover liabilities.
22) Define Endorsement.
Answer: A written amendment to a policy that adds, deletes, or modifies coverage.
Rationale: Allows customization of standard policies to fit the insured’s needs.
23) What is a Salvage?
Answer: Property recovered by the insurer after paying a claim, often sold to offset the loss.
Rationale: Reduces the net financial impact of a claim on the insurer.
24) Define Insurable Interest.
Answer: The financial or legal stake the insured has in the property or life covered.
Rationale: Required to prevent gambling on insurance and ensure a legitimate loss.
25) What is a Claimant?
Answer: The individual or entity submitting a claim to an insurer for compensation.
Rationale: Identifies the party seeking benefits under the policy.
26) What is a Proof of Loss?
