TEXAS ALL LINES ADJUSTER EXAM | REAL EXAM QUESTIONS AND ALL
ANSWERS CORRECT| LATEST VERSION 2026/2027 TOP RATED
What is the principle of indemnity? ANSWER To restore the insured to the
approximate financial condition they were in prior to the loss, preventing a
profit.
What is insurable interest? ANSWER A financial or legal interest in the
subject matter of insurance at the time of loss.
What is subrogation? ANSWER The right of an insurer, after paying a loss, to
step into the shoes of the insured to recover the amount paid from a liable third
party.
What is the principle of utmost good faith (uberrimae fidei)? ANSWER Both
parties must disclose all material facts honestly.
What is a peril? ANSWER The cause of a loss (e.g., fire, wind, theft).
What is a hazard? ANSWER A condition that increases the likelihood or
severity of a loss (e.g., frayed wiring).
What is adverse selection? ANSWER The tendency of individuals with a
higher risk of loss to purchase insurance more frequently than those with lower
risk.
What is a moral hazard? ANSWER Dishonesty or character defects in an
insured that increase the likelihood of loss.
What is a morale hazard? ANSWER Carelessness or indifference to loss
because insurance exists.
What is actual cash value (ACV)? ANSWER Replacement cost minus
depreciation.
,What is replacement cost (RC)? ANSWER The cost to replace damaged
property with new property of like kind and quality without deduction for
depreciation.
What is proximate cause? ANSWER The dominant, most effective, or most
direct cause of a loss without which the loss would not have occurred.
What does "named perils" mean? ANSWER The policy only covers losses
specifically listed in the policy.
What does "open perils" (all risks) mean? ANSWER The policy covers all
causes of loss unless specifically excluded.
What is a binder? ANSWER A temporary contract of insurance providing
coverage until a formal policy is issued or denied.
What is consideration in an insurance contract? ANSWER The premium paid
by the insured and the promise to pay for covered losses by the insurer.
What is an aleatory contract? ANSWER A contract where the values
exchanged are unequal (e.g., paying a small premium for a potentially large
payout).
What is a contract of adhesion? ANSWER A contract drafted by one party (the
insurer) that the other party (the insured) must accept as-is.
What is a unilateral contract? ANSWER Only one party (the insurer) is legally
bound to act after the insured pays the premium.
What is concealment? ANSWER Intentionally failing to disclose a material
fact.
What is misrepresentation? ANSWER A false statement of a material fact.
What does "loss in progress" mean? ANSWER A loss that has already started
and cannot be insured against.
What is a waiver? ANSWER The voluntary relinquishment of a known right.
What is estoppel? ANSWER A legal bar preventing a party from asserting a
right or fact contrary to a previous position.
What is market value? ANSWER The price a willing buyer would pay a
willing seller in an arm's-length transaction.
What is functional replacement cost? ANSWER The cost to replace property
with less expensive, functionally equivalent property.
, What is a partial loss? ANSWER A loss where the cost to repair does not
exceed the property's value.
What is a total loss? ANSWER A loss where the cost to repair equals or
exceeds the property's value.
What is salvage? ANSWER Recoverable damaged property that the insurer
takes ownership of after paying a total loss.
What is a loss payee? ANSWER A third party designated to receive insurance
proceeds in the event of a loss.
Section 2: Insurance Contracts & Policy Structure (31-60)
31. What is a policy declaration page? ANSWER The section of the policy
containing specific information about the insured, location, coverages, and
premiums.
32. What is an insuring agreement? ANSWER The section stating the insurer's
promise to pay for covered losses.
33. What is an exclusion? ANSWER A provision removing coverage for
specific perils, property, or situations.
34. What is a condition? ANSWER A provision that qualifies or limits the
insurer's promise to pay.
35. What is an endorsement/ridder? ANSWER A written amendment that
alters the standard policy terms.
36. What is a deductible? ANSWER The portion of a loss the insured must pay
out-of-pocket before the insurer pays.
37. What is a coinsurance clause? ANSWER A clause requiring the insured to
carry insurance equal to a specified percentage of the property's value to avoid a
penalty.
38. What is the coinsurance formula? ANSWER (Did Carry / Should Carry) x
Loss = Amount Paid.
39. What is an appraisal clause? ANSWER A provision allowing the insured
and insurer to resolve disputes over the amount of a loss using impartial
appraisers.
40. What is a vacancy provision? ANSWER A clause that reduces or suspends
coverage if a building is vacant for a specified number of days.
ANSWERS CORRECT| LATEST VERSION 2026/2027 TOP RATED
What is the principle of indemnity? ANSWER To restore the insured to the
approximate financial condition they were in prior to the loss, preventing a
profit.
What is insurable interest? ANSWER A financial or legal interest in the
subject matter of insurance at the time of loss.
What is subrogation? ANSWER The right of an insurer, after paying a loss, to
step into the shoes of the insured to recover the amount paid from a liable third
party.
What is the principle of utmost good faith (uberrimae fidei)? ANSWER Both
parties must disclose all material facts honestly.
What is a peril? ANSWER The cause of a loss (e.g., fire, wind, theft).
What is a hazard? ANSWER A condition that increases the likelihood or
severity of a loss (e.g., frayed wiring).
What is adverse selection? ANSWER The tendency of individuals with a
higher risk of loss to purchase insurance more frequently than those with lower
risk.
What is a moral hazard? ANSWER Dishonesty or character defects in an
insured that increase the likelihood of loss.
What is a morale hazard? ANSWER Carelessness or indifference to loss
because insurance exists.
What is actual cash value (ACV)? ANSWER Replacement cost minus
depreciation.
,What is replacement cost (RC)? ANSWER The cost to replace damaged
property with new property of like kind and quality without deduction for
depreciation.
What is proximate cause? ANSWER The dominant, most effective, or most
direct cause of a loss without which the loss would not have occurred.
What does "named perils" mean? ANSWER The policy only covers losses
specifically listed in the policy.
What does "open perils" (all risks) mean? ANSWER The policy covers all
causes of loss unless specifically excluded.
What is a binder? ANSWER A temporary contract of insurance providing
coverage until a formal policy is issued or denied.
What is consideration in an insurance contract? ANSWER The premium paid
by the insured and the promise to pay for covered losses by the insurer.
What is an aleatory contract? ANSWER A contract where the values
exchanged are unequal (e.g., paying a small premium for a potentially large
payout).
What is a contract of adhesion? ANSWER A contract drafted by one party (the
insurer) that the other party (the insured) must accept as-is.
What is a unilateral contract? ANSWER Only one party (the insurer) is legally
bound to act after the insured pays the premium.
What is concealment? ANSWER Intentionally failing to disclose a material
fact.
What is misrepresentation? ANSWER A false statement of a material fact.
What does "loss in progress" mean? ANSWER A loss that has already started
and cannot be insured against.
What is a waiver? ANSWER The voluntary relinquishment of a known right.
What is estoppel? ANSWER A legal bar preventing a party from asserting a
right or fact contrary to a previous position.
What is market value? ANSWER The price a willing buyer would pay a
willing seller in an arm's-length transaction.
What is functional replacement cost? ANSWER The cost to replace property
with less expensive, functionally equivalent property.
, What is a partial loss? ANSWER A loss where the cost to repair does not
exceed the property's value.
What is a total loss? ANSWER A loss where the cost to repair equals or
exceeds the property's value.
What is salvage? ANSWER Recoverable damaged property that the insurer
takes ownership of after paying a total loss.
What is a loss payee? ANSWER A third party designated to receive insurance
proceeds in the event of a loss.
Section 2: Insurance Contracts & Policy Structure (31-60)
31. What is a policy declaration page? ANSWER The section of the policy
containing specific information about the insured, location, coverages, and
premiums.
32. What is an insuring agreement? ANSWER The section stating the insurer's
promise to pay for covered losses.
33. What is an exclusion? ANSWER A provision removing coverage for
specific perils, property, or situations.
34. What is a condition? ANSWER A provision that qualifies or limits the
insurer's promise to pay.
35. What is an endorsement/ridder? ANSWER A written amendment that
alters the standard policy terms.
36. What is a deductible? ANSWER The portion of a loss the insured must pay
out-of-pocket before the insurer pays.
37. What is a coinsurance clause? ANSWER A clause requiring the insured to
carry insurance equal to a specified percentage of the property's value to avoid a
penalty.
38. What is the coinsurance formula? ANSWER (Did Carry / Should Carry) x
Loss = Amount Paid.
39. What is an appraisal clause? ANSWER A provision allowing the insured
and insurer to resolve disputes over the amount of a loss using impartial
appraisers.
40. What is a vacancy provision? ANSWER A clause that reduces or suspends
coverage if a building is vacant for a specified number of days.
