Adjuster Exam 2: Questions With
Correct Solutions
Agnes purchased a home ten years ago in an upcoming neighborhood for
$75,000. The home's value has since tripled to $225,000! Agnes still has
$25,000 left on her mortgage, but has increased her dwelling coverage to
$225,000 to keep up with the home's appreciation. When it burns to the
ground in a fire, her mortgage company wants to be indemnified $75,000
because the value of the home has tripled. Which policy condition protects
against this claim? Correct Ans - Severability of Interests
Driving home after a 14-hour shift, Sam falls asleep at the wheel and plows
into Sandra's home, causing extensive damage to the East wall and roof. As a
result, Sandra and her family must move into a hotel until the repairs are
completed. Sam's car crashing into the house would be considered:
Correct Ans - an occurrence.
Which of the following is NOT true of the Company's Options provision in the
standard fire policy? Correct Ans - It requires the insurer to settle the
claim, in whichever manner it chooses, within 30 days of receiving notice of
the claim.
"During a storm, lightning strikes a tree in Harry's yard and starts a fire that
spreads to his shed where he keeps all his equipment for his landscaping
business. In addition to the shed, Harry has to purchase all new equipment to
stay in business. The cost to replace the equipment would be considered:
Correct Ans - a direct loss.
"Six Stars Development Company has just purchased several large properties
in Las Vegas. As a result of this large purchase, they are a little short on money
and decide to save money by not purchasing insurance on their new
properties. Six Stars is practicing:
" Correct Ans - risk retention.
"What is the last step in the claim settlement process? Correct Ans -
Preparing the final adjustment reports
, "This agent is a salaried employee who sells insurance products for only one
insurer. Correct Ans - Direct Writer
"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, on top of his monthly mortgage payment of
$850. When he files a claim, how much will Sam receive under Coverage D -
Loss of Use?
" Correct Ans - 0
"Mark is on vacation in Italy when his luggage is stolen, including a $2,000
laptop, a $500 suitcase, and $400 in clothes. Mark has an HO-3 homeowners
policy. Excluding any applicable deductible, which of the following statements
is TRUE?
" Correct Ans - Mark's homeowners policy will cover $2,400 of this
loss.
Cameron is fully insured by a DP-2 on his $130,000 home. His monthly
mortgage payment is $775 per month, and he usually pays $400 per month in
groceries. When a kitchen fire damages his house, causing $61,000 in damage,
he forced to move out for a month while the repairs can be made. Cameron's
hotel bill for the month comes to $1,250 and he spends $600 eating at
restaurants. Based only on this information, how much indemnification can
Cameron expect to receive for this claim? Correct Ans - Coverage A -
$61,000; Coverage E - $1,450
"Due to decreased demand, the market price of beets dropped dramatically
during the recent growing season. Consequently, Michelle's crop of beets did
not make as much money as she was expecting this year, based on her
production history and the harvest-time futures price. However, Michelle is
insured for this type of situation. What kind of insurance does she have?
" Correct Ans - Crop-Revenue
"In a homeowners policy, Coverage B - Other Structures provides insurance
for which of the following?
" Correct Ans - Detached garages
Correct Solutions
Agnes purchased a home ten years ago in an upcoming neighborhood for
$75,000. The home's value has since tripled to $225,000! Agnes still has
$25,000 left on her mortgage, but has increased her dwelling coverage to
$225,000 to keep up with the home's appreciation. When it burns to the
ground in a fire, her mortgage company wants to be indemnified $75,000
because the value of the home has tripled. Which policy condition protects
against this claim? Correct Ans - Severability of Interests
Driving home after a 14-hour shift, Sam falls asleep at the wheel and plows
into Sandra's home, causing extensive damage to the East wall and roof. As a
result, Sandra and her family must move into a hotel until the repairs are
completed. Sam's car crashing into the house would be considered:
Correct Ans - an occurrence.
Which of the following is NOT true of the Company's Options provision in the
standard fire policy? Correct Ans - It requires the insurer to settle the
claim, in whichever manner it chooses, within 30 days of receiving notice of
the claim.
"During a storm, lightning strikes a tree in Harry's yard and starts a fire that
spreads to his shed where he keeps all his equipment for his landscaping
business. In addition to the shed, Harry has to purchase all new equipment to
stay in business. The cost to replace the equipment would be considered:
Correct Ans - a direct loss.
"Six Stars Development Company has just purchased several large properties
in Las Vegas. As a result of this large purchase, they are a little short on money
and decide to save money by not purchasing insurance on their new
properties. Six Stars is practicing:
" Correct Ans - risk retention.
"What is the last step in the claim settlement process? Correct Ans -
Preparing the final adjustment reports
, "This agent is a salaried employee who sells insurance products for only one
insurer. Correct Ans - Direct Writer
"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, on top of his monthly mortgage payment of
$850. When he files a claim, how much will Sam receive under Coverage D -
Loss of Use?
" Correct Ans - 0
"Mark is on vacation in Italy when his luggage is stolen, including a $2,000
laptop, a $500 suitcase, and $400 in clothes. Mark has an HO-3 homeowners
policy. Excluding any applicable deductible, which of the following statements
is TRUE?
" Correct Ans - Mark's homeowners policy will cover $2,400 of this
loss.
Cameron is fully insured by a DP-2 on his $130,000 home. His monthly
mortgage payment is $775 per month, and he usually pays $400 per month in
groceries. When a kitchen fire damages his house, causing $61,000 in damage,
he forced to move out for a month while the repairs can be made. Cameron's
hotel bill for the month comes to $1,250 and he spends $600 eating at
restaurants. Based only on this information, how much indemnification can
Cameron expect to receive for this claim? Correct Ans - Coverage A -
$61,000; Coverage E - $1,450
"Due to decreased demand, the market price of beets dropped dramatically
during the recent growing season. Consequently, Michelle's crop of beets did
not make as much money as she was expecting this year, based on her
production history and the harvest-time futures price. However, Michelle is
insured for this type of situation. What kind of insurance does she have?
" Correct Ans - Crop-Revenue
"In a homeowners policy, Coverage B - Other Structures provides insurance
for which of the following?
" Correct Ans - Detached garages
