NC CLAIMS ADJUSTER EXAM 2024 NEWEST EXAM 2 VERSIONS
(VERSION A AND B) COMPLETE 400 QUESTIONS WITH
DETAILED VERIFIED ANSWERS (100% CORRECT ANSWERS) /
ALREADY GRADED A+
insurance - ANSWER: - Tool to protect against overwhelming financial loss; a transfer
of risk
Principle of Indemnity" - ANSWER: to restoration of approximate previous financial
condition, no more and no less (claimant made whole again)
The Insurance Policy - ANSWER: a Legal Contract between the insurer and insured
Agreement - ANSWER: mutual consent
Consideration - ANSWER: all parties bring something of value
Competent parties - ANSWER: 18 years old, sane and sober
Legal purpose - ANSWER: no contracts written for illegal activities
Six Characteristics of Insurance Contracts - ANSWER: 1.Personal Contract
2.Adhesion
3.Utmost Good Faith
4.Aleatory
5.Unilateral
6.Conditional
.Personal Contract - ANSWER: protects policyholder, not property
Adhesion - ANSWER: one party dictates terms of the contract, the other party agrees
to adhere to it, or not buy it
Utmost Good Faith - ANSWER: applicants are expected to be honest regarding the
risk involved
Aleatory - ANSWER: depends on unknown or future event
Unilateral - ANSWER: only one party has to act
Conditional - ANSWER: - certain conditions have to be met before pay out
Four parts of an insurance policy - ANSWER: 1.Declarations Page
2.Insuring Agreement
3.Conditions
,4.Exclusions
Declarations Page - ANSWER: · Gives names of both parties, policy number, item,
value, inception/expiration dates of policy, amount and limit of coverage, deductible
and premiums
· Makes it a personal contract
Definition Section - ANSWER: : clarifies terms for understanding and later
interpretation
Insuring Agreement - ANSWER: what the insurer will cover in the event of a loss
· What is covered, which losses, any services, exclusions, policy limit, etc.
Conditions - ANSWER: any limits/conditions the policyholder must meet in the event
of a loss
Also how to file a loss, how to protect after a loss, etc
Exclusions - ANSWER: lists things not covered
· Common exclusions: earthquakes, floods, war, nuclear hazards, intentional acts
Endorsements - ANSWER: modifies coverage to the contract (adds or subtracts)
Also known as a "rider," "addendum," or "attachment"
Government (social) insurance - ANSWER: Non-profit, mandatory participation,
benefits prescribed by law, designed to meet the best needs of the general public,
government has a monopoly
Private insurers - ANSWER: Sell insurance based on consumer's needs and
preferences, wide variety of products, generate a profit, voluntary participation
Private commercial insurers - ANSWER: Operate for profit, collect premiums, portion
of premiums reserved for claims, excess premiums collected are profit
Stock insurance company - ANSWER: Always for profit, usually publicly-traded,
stockholders provide capital, profit and losses, no dividends go to party holders,
"non-participating
Mutual insurance companies - ANSWER: Owned by policyholders who earn
dividends, "participating"
Re-insurer - ANSWER: Provides insurance for insurers, pays a percentage of insurer's
losses
Reciprocal insurer - ANSWER: People/organizations who insure each other
Unincorporated, non-profit, cost of claims shared among members
,Fraternal benefit societies - ANSWER: Share common interests, engage in charitable
activities, provide insurance to members, members are both the providers and
recipients, members pay difference if a member can't cover their own costs
Risk retention groups (RRG) - ANSWER: A form of commercial insurer in which
members use their own capital to issue insurance policies
Both the insurer and insured, assume all risks and share all profits
RRG Syndicate - ANSWER: Group of investors provide a pool for insurance purposes
· Underwriter assesses rick and writes policies
· Members responsible for claims payments, but collect dividends
Risk purchasing group - ANSWER: Formed an organization to buy insurance as a
group
Private non-commercial insurer - ANSWER: Not-for-profit insurance company that
returns profits by expanding coverage or lowering premiums
· Blue Cross or Blue Shield
Classification based on location - ANSWER: 1.Domestic
2.Foreign
3.Alien
Domestic - ANSWER: located in a state, abides by state laws
Foreign - ANSWER: - abides by state or US laws, but it can be located elsewhere
Alien - ANSWER: obeys another country's laws altogether
"Risk": - ANSWER: 'Probability of loss or damage
' The insured item
"speculative risk - ANSWER: · undertaken with no certainty of gain or loss
Made knowingly, cannot be insured (buying a lottery ticket)
"pure risk" - ANSWER: · no chance of gain, either loss or no loss
o Can be insured
§ Persons, items, or organizations can be pure risks
Exposure" - ANSWER: o the extent to which a person or item is open to damage or
loss
§ Expressed in dollars or units, helpful in setting the premium
"Hazard" - ANSWER: increases the chance of loss
A condition increasing the likelihood or severity of a loss
"Peril" - ANSWER: actual cause of loss
, "named-peril" - ANSWER: - list all of the perils covered in the policy
"all (open)-peril" - ANSWER: covers all perils except for those excluded by the policy
"Loss" - ANSWER: Reduction in value of an insured item
Financial loss due to an occurrence
For insurers, amount paid out in a claim settlement
Insurable risk" - ANSWER: six qualifications determine what can be insured
Adequate premiums - ANSWER: need to be able to cover claims or expenses
· If premium is set too high, item in uninsureable
Definable risk - ANSWER: exact conditions offered
· Item itself is definable and has a precise value
o Emotions have no insurable value
Unexpected loss - ANSWER: loss must be unforeseeable, unexpected, reasonably
unpreventable, and random in nature
· Flood insurance isn't unexpected
Substantial loss - ANSWER: - must cause substantial economic hardship
Exclusions - ANSWER: must be able to exclude coverage for large scale disasters and
catastrophic events
· Wars, terrorism, earthquakes, etc.
Law of Large Numbers - ANSWER: large number of similar risks must be insured
· Helps predict losses and spread risks
Law of Large Numbers - ANSWER: statistics are more accurate the more numbers
involves
Reduces possibility of variation from expected number of claims
RISK MANAGEMENT - ANSWER: keeps insurers in the black
Risk avoidance - ANSWER: eliminates risk by refusing to issue policy
· High exposure to loss, applicant record of fraud/poor credit, high number of claims
by applicant
Risk reduction - ANSWER: · Charge higher premiums
· Ask policyholders to take action
Provide less coverage
Risk transference - ANSWER: · Insurance protection for insurers
o Keep the same obligation to policyholders
(VERSION A AND B) COMPLETE 400 QUESTIONS WITH
DETAILED VERIFIED ANSWERS (100% CORRECT ANSWERS) /
ALREADY GRADED A+
insurance - ANSWER: - Tool to protect against overwhelming financial loss; a transfer
of risk
Principle of Indemnity" - ANSWER: to restoration of approximate previous financial
condition, no more and no less (claimant made whole again)
The Insurance Policy - ANSWER: a Legal Contract between the insurer and insured
Agreement - ANSWER: mutual consent
Consideration - ANSWER: all parties bring something of value
Competent parties - ANSWER: 18 years old, sane and sober
Legal purpose - ANSWER: no contracts written for illegal activities
Six Characteristics of Insurance Contracts - ANSWER: 1.Personal Contract
2.Adhesion
3.Utmost Good Faith
4.Aleatory
5.Unilateral
6.Conditional
.Personal Contract - ANSWER: protects policyholder, not property
Adhesion - ANSWER: one party dictates terms of the contract, the other party agrees
to adhere to it, or not buy it
Utmost Good Faith - ANSWER: applicants are expected to be honest regarding the
risk involved
Aleatory - ANSWER: depends on unknown or future event
Unilateral - ANSWER: only one party has to act
Conditional - ANSWER: - certain conditions have to be met before pay out
Four parts of an insurance policy - ANSWER: 1.Declarations Page
2.Insuring Agreement
3.Conditions
,4.Exclusions
Declarations Page - ANSWER: · Gives names of both parties, policy number, item,
value, inception/expiration dates of policy, amount and limit of coverage, deductible
and premiums
· Makes it a personal contract
Definition Section - ANSWER: : clarifies terms for understanding and later
interpretation
Insuring Agreement - ANSWER: what the insurer will cover in the event of a loss
· What is covered, which losses, any services, exclusions, policy limit, etc.
Conditions - ANSWER: any limits/conditions the policyholder must meet in the event
of a loss
Also how to file a loss, how to protect after a loss, etc
Exclusions - ANSWER: lists things not covered
· Common exclusions: earthquakes, floods, war, nuclear hazards, intentional acts
Endorsements - ANSWER: modifies coverage to the contract (adds or subtracts)
Also known as a "rider," "addendum," or "attachment"
Government (social) insurance - ANSWER: Non-profit, mandatory participation,
benefits prescribed by law, designed to meet the best needs of the general public,
government has a monopoly
Private insurers - ANSWER: Sell insurance based on consumer's needs and
preferences, wide variety of products, generate a profit, voluntary participation
Private commercial insurers - ANSWER: Operate for profit, collect premiums, portion
of premiums reserved for claims, excess premiums collected are profit
Stock insurance company - ANSWER: Always for profit, usually publicly-traded,
stockholders provide capital, profit and losses, no dividends go to party holders,
"non-participating
Mutual insurance companies - ANSWER: Owned by policyholders who earn
dividends, "participating"
Re-insurer - ANSWER: Provides insurance for insurers, pays a percentage of insurer's
losses
Reciprocal insurer - ANSWER: People/organizations who insure each other
Unincorporated, non-profit, cost of claims shared among members
,Fraternal benefit societies - ANSWER: Share common interests, engage in charitable
activities, provide insurance to members, members are both the providers and
recipients, members pay difference if a member can't cover their own costs
Risk retention groups (RRG) - ANSWER: A form of commercial insurer in which
members use their own capital to issue insurance policies
Both the insurer and insured, assume all risks and share all profits
RRG Syndicate - ANSWER: Group of investors provide a pool for insurance purposes
· Underwriter assesses rick and writes policies
· Members responsible for claims payments, but collect dividends
Risk purchasing group - ANSWER: Formed an organization to buy insurance as a
group
Private non-commercial insurer - ANSWER: Not-for-profit insurance company that
returns profits by expanding coverage or lowering premiums
· Blue Cross or Blue Shield
Classification based on location - ANSWER: 1.Domestic
2.Foreign
3.Alien
Domestic - ANSWER: located in a state, abides by state laws
Foreign - ANSWER: - abides by state or US laws, but it can be located elsewhere
Alien - ANSWER: obeys another country's laws altogether
"Risk": - ANSWER: 'Probability of loss or damage
' The insured item
"speculative risk - ANSWER: · undertaken with no certainty of gain or loss
Made knowingly, cannot be insured (buying a lottery ticket)
"pure risk" - ANSWER: · no chance of gain, either loss or no loss
o Can be insured
§ Persons, items, or organizations can be pure risks
Exposure" - ANSWER: o the extent to which a person or item is open to damage or
loss
§ Expressed in dollars or units, helpful in setting the premium
"Hazard" - ANSWER: increases the chance of loss
A condition increasing the likelihood or severity of a loss
"Peril" - ANSWER: actual cause of loss
, "named-peril" - ANSWER: - list all of the perils covered in the policy
"all (open)-peril" - ANSWER: covers all perils except for those excluded by the policy
"Loss" - ANSWER: Reduction in value of an insured item
Financial loss due to an occurrence
For insurers, amount paid out in a claim settlement
Insurable risk" - ANSWER: six qualifications determine what can be insured
Adequate premiums - ANSWER: need to be able to cover claims or expenses
· If premium is set too high, item in uninsureable
Definable risk - ANSWER: exact conditions offered
· Item itself is definable and has a precise value
o Emotions have no insurable value
Unexpected loss - ANSWER: loss must be unforeseeable, unexpected, reasonably
unpreventable, and random in nature
· Flood insurance isn't unexpected
Substantial loss - ANSWER: - must cause substantial economic hardship
Exclusions - ANSWER: must be able to exclude coverage for large scale disasters and
catastrophic events
· Wars, terrorism, earthquakes, etc.
Law of Large Numbers - ANSWER: large number of similar risks must be insured
· Helps predict losses and spread risks
Law of Large Numbers - ANSWER: statistics are more accurate the more numbers
involves
Reduces possibility of variation from expected number of claims
RISK MANAGEMENT - ANSWER: keeps insurers in the black
Risk avoidance - ANSWER: eliminates risk by refusing to issue policy
· High exposure to loss, applicant record of fraud/poor credit, high number of claims
by applicant
Risk reduction - ANSWER: · Charge higher premiums
· Ask policyholders to take action
Provide less coverage
Risk transference - ANSWER: · Insurance protection for insurers
o Keep the same obligation to policyholders
