Texas Public Adjuster License Exam (3-20) Prep – Real Practice
Questions, Answers & Detailed Rationales (Updated 2026) | Texas
Insurance Laws & TDI Regulations, Property & Casualty Claims Handling,
Policy Interpretation & Coverage Analysis, Claims Investigation &
Documentation, Loss Estimation & Settlement Negotiation, Insurance
Contracts, Ethics & Fraud Prevention, Adjuster Responsibilities & Real-
World Claims Scenarios
Question 1: What is the statutory maximum compensation a licensed Texas public
adjuster may collect on a first-party property claim unless a different percentage is
agreed upon in writing before services begin? A. 5% of the claim payment B. 10% of
the claim payment C. 15% of the claim payment D. 20% of the claim payment
CORRECT ANSWER: B. 10% of the claim payment Rationale: Texas Insurance Code
§4102.103 caps a public adjuster's compensation at 10% of the total claim payment for
first-party property claims, unless the policyholder and adjuster execute a written
agreement specifying a different percentage prior to the commencement of services.
Question 2: Under Texas law, which entity is responsible for licensing and
regulating public adjusters? A. Texas Real Estate Commission (TREC) B. Texas
Department of Insurance (TDI) C. Texas Insurance Agents Association D. National
Association of Insurance Commissioners (NAIC) CORRECT ANSWER: B. Texas
Department of Insurance (TDI) Rationale: The Texas Department of Insurance (TDI) is
the sole state regulatory body authorized to issue, renew, suspend, and revoke public
adjuster licenses under Chapter 4102 of the Texas Insurance Code.
Question 3: Which of the following activities is strictly prohibited for a Texas public
adjuster? A. Advising a policyholder on policy coverage B. Negotiating a settlement on
behalf of a policyholder C. Soliciting business during a catastrophic event declaration
period D. Charging a fee based on a percentage of the settlement CORRECT ANSWER:
C. Soliciting business during a catastrophic event declaration period Rationale:
Texas law prohibits public adjusters from soliciting, negotiating, or adjusting claims
within 72 hours after a catastrophic event declaration, to prevent predatory practices
and allow policyholders time to assess their needs without pressure.
Question 4: A public adjuster must maintain their license in Texas by completing
how many hours of continuing education (CE) every two years? A. 10 hours B. 15
hours C. 24 hours D. 30 hours CORRECT ANSWER: C. 24 hours Rationale: Texas
requires licensed public adjusters to complete 24 hours of approved continuing
education every two-year licensing cycle, which must include at least 1 hour of ethics
training and 1 hour of insurance updates.
Question 5: Which document establishes the contractual relationship between a
Texas public adjuster and a policyholder? A. Power of Attorney B. Public Adjuster
Contract C. Claim Filing Form D. Settlement Agreement CORRECT ANSWER: B. Public
Adjuster Contract Rationale: A written public adjuster contract is legally required under
,Texas Insurance Code §4102.101 to define the scope of services, compensation,
termination rights, and obligations of both parties before any adjusting work begins.
Question 6: When a policyholder terminates a public adjuster contract in Texas,
what notice period is generally required if no specific clause states otherwise? A. 3
days B. 5 days C. 10 days D. 14 days CORRECT ANSWER: C. 10 days Rationale: Texas
law typically requires a 10-day written notice period for terminating a public adjuster
contract, allowing both parties to wrap up administrative tasks and transfer claim files
appropriately, unless the contract specifies a shorter period.
Question 7: Which Texas insurance policy form specifically covers owner-occupied
residential properties with a single family dwelling? A. DP-1 B. HO-A C. CP 00 10 D.
BOP Form CORRECT ANSWER: B. HO-A Rationale: The HO-A (Homeowners-3) form is
the standard Texas residential dwelling policy for owner-occupied, single-family homes,
providing named-peril or open-peril coverage depending on the section.
Question 8: Under Texas law, what is the maximum time an insurer has to
acknowledge receipt of a first-party property claim after receiving notice? A. 5
business days B. 10 business days C. 15 calendar days D. 30 calendar days CORRECT
ANSWER: C. 15 calendar days Rationale: Texas Insurance Code §541.060 requires
insurers to acknowledge receipt of a claim within 15 calendar days, initiate
investigation, and request necessary information from the policyholder promptly.
Question 9: Which of the following best describes "Actual Cash Value" (ACV) in
Texas property claims? A. Replacement cost minus depreciation B. Market value at the
time of loss C. Original purchase price plus inflation D. Cost to rebuild without
deduction CORRECT ANSWER: A. Replacement cost minus depreciation Rationale:
In Texas property insurance, ACV is calculated as the replacement cost of the damaged
property at the time of loss, minus depreciation for age, wear, and obsolescence.
Question 10: What is the primary purpose of a "Proof of Loss" statement in Texas
property claims? A. To authorize the insurer to investigate the claim B. To formally
document the amount and basis of the claimed loss C. To transfer claim rights to a third
party D. To waive subrogation rights CORRECT ANSWER: B. To formally document the
amount and basis of the claimed loss Rationale: A Proof of Loss is a sworn statement
submitted by the insured or their adjuster detailing the nature, extent, and monetary
value of the loss, serving as a foundational document for claim settlement.
Question 11: Which Texas statutory provision prohibits insurers from engaging in
unfair claims settlement practices? A. Chapter 541 B. Chapter 4102 C. Chapter 1950
D. Chapter 84 CORRECT ANSWER: A. Chapter 541 Rationale: Texas Insurance Code
Chapter 541 outlines prohibited unfair practices, including misrepresenting policy
provisions, delaying investigations without cause, and failing to attempt good-faith
settlements.
Question 12: A public adjuster receives a partial payment from an insurer. How
should the adjuster handle the compensation calculation? A. Take 10% of the partial
, payment immediately B. Wait until the final settlement is paid C. Charge based on the
total policy limit D. Deduct fees from the policyholder's out-of-pocket expenses
CORRECT ANSWER: A. Take 10% of the partial payment immediately Rationale:
Texas law permits public adjusters to collect their statutory or contracted percentage
from each partial payment received, provided the fee does not exceed the legal cap
overall.
Question 13: Which of the following is considered a conflict of interest for a Texas
public adjuster? A. Representing multiple policyholders in different counties B. Having
a financial interest in a contracting company used for repairs C. Referring clients to
licensed restoration contractors D. Charging a flat fee for consultation CORRECT
ANSWER: B. Having a financial interest in a contracting company used for repairs
Rationale: Texas regulations prohibit public adjusters from holding a financial stake in
repair or contracting businesses to which they refer clients, as it compromises fiduciary
duty and creates undue influence.
Question 14: What is the standard waiting period for business interruption
coverage to apply under a Texas commercial property policy? A. 0 hours B. 24 hours
C. 48 to 72 hours D. 7 days CORRECT ANSWER: C. 48 to 72 hours Rationale: Most
Texas commercial policies include a waiting period (typically 48–72 hours) before
business interruption coverage triggers, ensuring only sustained losses from covered
perils are compensated.
Question 15: Under Texas law, which party has the right to request an appraisal
when a property claim value is disputed? A. Only the insurer B. Only the policyholder
C. Either the insurer or the policyholder D. The Texas Department of Insurance
CORRECT ANSWER: C. Either the insurer or the policyholder Rationale: Texas
insurance policies typically include an appraisal clause allowing either party to demand
a formal valuation process by independent appraisers and an umpire when the loss
amount is contested.
Question 16: Which document must a Texas public adjuster provide to a
policyholder within 24 hours of signing a contract? A. A copy of the adjuster's license
B. A cancellation notice form C. An itemized scope of services D. A receipt for the
retainer fee CORRECT ANSWER: C. An itemized scope of services Rationale: Texas
regulations require public adjusters to furnish a detailed scope of work outlining
specific services to be rendered within 24 hours of contract execution to ensure
transparency.
Question 17: What is the primary function of the "Windstorm Pool" in Texas coastal
counties? A. Provide flood insurance B. Offer subsidized wind and hail coverage C.
Regulate public adjuster fees D. Manage catastrophe response teams CORRECT
ANSWER: B. Offer subsidized wind and hail coverage Rationale: The Texas Windstorm
Insurance Association (TWIA) provides essential wind and hail coverage for properties in
designated coastal counties where private insurers limit or deny such risks.
Questions, Answers & Detailed Rationales (Updated 2026) | Texas
Insurance Laws & TDI Regulations, Property & Casualty Claims Handling,
Policy Interpretation & Coverage Analysis, Claims Investigation &
Documentation, Loss Estimation & Settlement Negotiation, Insurance
Contracts, Ethics & Fraud Prevention, Adjuster Responsibilities & Real-
World Claims Scenarios
Question 1: What is the statutory maximum compensation a licensed Texas public
adjuster may collect on a first-party property claim unless a different percentage is
agreed upon in writing before services begin? A. 5% of the claim payment B. 10% of
the claim payment C. 15% of the claim payment D. 20% of the claim payment
CORRECT ANSWER: B. 10% of the claim payment Rationale: Texas Insurance Code
§4102.103 caps a public adjuster's compensation at 10% of the total claim payment for
first-party property claims, unless the policyholder and adjuster execute a written
agreement specifying a different percentage prior to the commencement of services.
Question 2: Under Texas law, which entity is responsible for licensing and
regulating public adjusters? A. Texas Real Estate Commission (TREC) B. Texas
Department of Insurance (TDI) C. Texas Insurance Agents Association D. National
Association of Insurance Commissioners (NAIC) CORRECT ANSWER: B. Texas
Department of Insurance (TDI) Rationale: The Texas Department of Insurance (TDI) is
the sole state regulatory body authorized to issue, renew, suspend, and revoke public
adjuster licenses under Chapter 4102 of the Texas Insurance Code.
Question 3: Which of the following activities is strictly prohibited for a Texas public
adjuster? A. Advising a policyholder on policy coverage B. Negotiating a settlement on
behalf of a policyholder C. Soliciting business during a catastrophic event declaration
period D. Charging a fee based on a percentage of the settlement CORRECT ANSWER:
C. Soliciting business during a catastrophic event declaration period Rationale:
Texas law prohibits public adjusters from soliciting, negotiating, or adjusting claims
within 72 hours after a catastrophic event declaration, to prevent predatory practices
and allow policyholders time to assess their needs without pressure.
Question 4: A public adjuster must maintain their license in Texas by completing
how many hours of continuing education (CE) every two years? A. 10 hours B. 15
hours C. 24 hours D. 30 hours CORRECT ANSWER: C. 24 hours Rationale: Texas
requires licensed public adjusters to complete 24 hours of approved continuing
education every two-year licensing cycle, which must include at least 1 hour of ethics
training and 1 hour of insurance updates.
Question 5: Which document establishes the contractual relationship between a
Texas public adjuster and a policyholder? A. Power of Attorney B. Public Adjuster
Contract C. Claim Filing Form D. Settlement Agreement CORRECT ANSWER: B. Public
Adjuster Contract Rationale: A written public adjuster contract is legally required under
,Texas Insurance Code §4102.101 to define the scope of services, compensation,
termination rights, and obligations of both parties before any adjusting work begins.
Question 6: When a policyholder terminates a public adjuster contract in Texas,
what notice period is generally required if no specific clause states otherwise? A. 3
days B. 5 days C. 10 days D. 14 days CORRECT ANSWER: C. 10 days Rationale: Texas
law typically requires a 10-day written notice period for terminating a public adjuster
contract, allowing both parties to wrap up administrative tasks and transfer claim files
appropriately, unless the contract specifies a shorter period.
Question 7: Which Texas insurance policy form specifically covers owner-occupied
residential properties with a single family dwelling? A. DP-1 B. HO-A C. CP 00 10 D.
BOP Form CORRECT ANSWER: B. HO-A Rationale: The HO-A (Homeowners-3) form is
the standard Texas residential dwelling policy for owner-occupied, single-family homes,
providing named-peril or open-peril coverage depending on the section.
Question 8: Under Texas law, what is the maximum time an insurer has to
acknowledge receipt of a first-party property claim after receiving notice? A. 5
business days B. 10 business days C. 15 calendar days D. 30 calendar days CORRECT
ANSWER: C. 15 calendar days Rationale: Texas Insurance Code §541.060 requires
insurers to acknowledge receipt of a claim within 15 calendar days, initiate
investigation, and request necessary information from the policyholder promptly.
Question 9: Which of the following best describes "Actual Cash Value" (ACV) in
Texas property claims? A. Replacement cost minus depreciation B. Market value at the
time of loss C. Original purchase price plus inflation D. Cost to rebuild without
deduction CORRECT ANSWER: A. Replacement cost minus depreciation Rationale:
In Texas property insurance, ACV is calculated as the replacement cost of the damaged
property at the time of loss, minus depreciation for age, wear, and obsolescence.
Question 10: What is the primary purpose of a "Proof of Loss" statement in Texas
property claims? A. To authorize the insurer to investigate the claim B. To formally
document the amount and basis of the claimed loss C. To transfer claim rights to a third
party D. To waive subrogation rights CORRECT ANSWER: B. To formally document the
amount and basis of the claimed loss Rationale: A Proof of Loss is a sworn statement
submitted by the insured or their adjuster detailing the nature, extent, and monetary
value of the loss, serving as a foundational document for claim settlement.
Question 11: Which Texas statutory provision prohibits insurers from engaging in
unfair claims settlement practices? A. Chapter 541 B. Chapter 4102 C. Chapter 1950
D. Chapter 84 CORRECT ANSWER: A. Chapter 541 Rationale: Texas Insurance Code
Chapter 541 outlines prohibited unfair practices, including misrepresenting policy
provisions, delaying investigations without cause, and failing to attempt good-faith
settlements.
Question 12: A public adjuster receives a partial payment from an insurer. How
should the adjuster handle the compensation calculation? A. Take 10% of the partial
, payment immediately B. Wait until the final settlement is paid C. Charge based on the
total policy limit D. Deduct fees from the policyholder's out-of-pocket expenses
CORRECT ANSWER: A. Take 10% of the partial payment immediately Rationale:
Texas law permits public adjusters to collect their statutory or contracted percentage
from each partial payment received, provided the fee does not exceed the legal cap
overall.
Question 13: Which of the following is considered a conflict of interest for a Texas
public adjuster? A. Representing multiple policyholders in different counties B. Having
a financial interest in a contracting company used for repairs C. Referring clients to
licensed restoration contractors D. Charging a flat fee for consultation CORRECT
ANSWER: B. Having a financial interest in a contracting company used for repairs
Rationale: Texas regulations prohibit public adjusters from holding a financial stake in
repair or contracting businesses to which they refer clients, as it compromises fiduciary
duty and creates undue influence.
Question 14: What is the standard waiting period for business interruption
coverage to apply under a Texas commercial property policy? A. 0 hours B. 24 hours
C. 48 to 72 hours D. 7 days CORRECT ANSWER: C. 48 to 72 hours Rationale: Most
Texas commercial policies include a waiting period (typically 48–72 hours) before
business interruption coverage triggers, ensuring only sustained losses from covered
perils are compensated.
Question 15: Under Texas law, which party has the right to request an appraisal
when a property claim value is disputed? A. Only the insurer B. Only the policyholder
C. Either the insurer or the policyholder D. The Texas Department of Insurance
CORRECT ANSWER: C. Either the insurer or the policyholder Rationale: Texas
insurance policies typically include an appraisal clause allowing either party to demand
a formal valuation process by independent appraisers and an umpire when the loss
amount is contested.
Question 16: Which document must a Texas public adjuster provide to a
policyholder within 24 hours of signing a contract? A. A copy of the adjuster's license
B. A cancellation notice form C. An itemized scope of services D. A receipt for the
retainer fee CORRECT ANSWER: C. An itemized scope of services Rationale: Texas
regulations require public adjusters to furnish a detailed scope of work outlining
specific services to be rendered within 24 hours of contract execution to ensure
transparency.
Question 17: What is the primary function of the "Windstorm Pool" in Texas coastal
counties? A. Provide flood insurance B. Offer subsidized wind and hail coverage C.
Regulate public adjuster fees D. Manage catastrophe response teams CORRECT
ANSWER: B. Offer subsidized wind and hail coverage Rationale: The Texas Windstorm
Insurance Association (TWIA) provides essential wind and hail coverage for properties in
designated coastal counties where private insurers limit or deny such risks.
