FL 6-20 Claims Adjuster Questions and
Answers
What is Insurance? - Correct Answer: Financial tool that protects individuals and organizations from
unforeseen and extraordinary financial losses by transferring risk to another party.
What is the Principle of Indemnity? - Correct Answer: Restoration of approximate previous financial
condition; no more, no less.
What is a Premium? - Correct Answer: A fee that the insured pays in exchange for insurance coverage.
What is a Reserve? - Correct Answer: A pool of collected premiums that the insurer sets aside to pay
claims.
Legal Contract - Correct Answer:
Insurance Policy - Correct Answer: A contract to provide financial protection for a fee.
Four Requirements of a Legal Contract - Correct Answer: 1. Agreement (i.e. Offer and Acceptance)
2. Consideration
3. Competent Parties
4. Legal purpose
Termination of Offer - Correct Answer: Offer may be terminated by:
1. Revocation by offeror
2. Rejection by offeree
3. Time lapse
4. Termination by operation of law:
a. Either party does or becomes disabled
, b. Performance of contract becomes illegal after offer
c. Subject matter is destroyed
Six Special Characteristics of Insurance Contracts - Correct Answer: 1. Personal
2. Adhesion
3. Utmost Hood Faith
4. Aleatory
5. Unilateral
6. Conditional
Personal Contract - Correct Answer: 1. It protects the policyholder from financial losses.
2. It does not protect property from becoming damaged.
3. Coverage follows the person, not the property.
Contract of Adhesion - Correct Answer: 1. The insurer is responsible for the terms of the contract.
2. The insured has no say in the wording.
3. Courts favor the insured in the event of an ambiguity.
4. The contract should be interpreted as a reasonable person would interpret it.
Utmost Good Faith - Correct Answer: 1. Applicants are expected to be completely honest about the risk
to the insurer.
2. The insurer must rely on the applicants not to conceal or misrepresent pertinent facts.
Aleatory Contract - Correct Answer: (It depends on an unknown future event)
1. Neither party can know future losses.
2. Insurer only has to pay if and when covered losses occur.
3. Policyholders could pay more in premiums than they ever get for claims, or insurer could pay more in
claims than it receives.
Answers
What is Insurance? - Correct Answer: Financial tool that protects individuals and organizations from
unforeseen and extraordinary financial losses by transferring risk to another party.
What is the Principle of Indemnity? - Correct Answer: Restoration of approximate previous financial
condition; no more, no less.
What is a Premium? - Correct Answer: A fee that the insured pays in exchange for insurance coverage.
What is a Reserve? - Correct Answer: A pool of collected premiums that the insurer sets aside to pay
claims.
Legal Contract - Correct Answer:
Insurance Policy - Correct Answer: A contract to provide financial protection for a fee.
Four Requirements of a Legal Contract - Correct Answer: 1. Agreement (i.e. Offer and Acceptance)
2. Consideration
3. Competent Parties
4. Legal purpose
Termination of Offer - Correct Answer: Offer may be terminated by:
1. Revocation by offeror
2. Rejection by offeree
3. Time lapse
4. Termination by operation of law:
a. Either party does or becomes disabled
, b. Performance of contract becomes illegal after offer
c. Subject matter is destroyed
Six Special Characteristics of Insurance Contracts - Correct Answer: 1. Personal
2. Adhesion
3. Utmost Hood Faith
4. Aleatory
5. Unilateral
6. Conditional
Personal Contract - Correct Answer: 1. It protects the policyholder from financial losses.
2. It does not protect property from becoming damaged.
3. Coverage follows the person, not the property.
Contract of Adhesion - Correct Answer: 1. The insurer is responsible for the terms of the contract.
2. The insured has no say in the wording.
3. Courts favor the insured in the event of an ambiguity.
4. The contract should be interpreted as a reasonable person would interpret it.
Utmost Good Faith - Correct Answer: 1. Applicants are expected to be completely honest about the risk
to the insurer.
2. The insurer must rely on the applicants not to conceal or misrepresent pertinent facts.
Aleatory Contract - Correct Answer: (It depends on an unknown future event)
1. Neither party can know future losses.
2. Insurer only has to pay if and when covered losses occur.
3. Policyholders could pay more in premiums than they ever get for claims, or insurer could pay more in
claims than it receives.
