LA Claims Adjuster Property and Casualty
Practice Exam 1 Questions and Answers
2025-2026 100% Verified.
Insurable Interest - ANS-______in the property and would suffer a financial loss if the property
were damaged by an insured peril, their family members (names need not be listed in the
policy), and others such as a lien holder, for example, the bank that holds the mortgage on a
house.
Cause of Loss Forms - ANS-____establish and define the causes of loss (or perils) for which
coverage is provided under the form. (Please do not confuse the "cause of loss" forms with the
"proof of loss" form, which is the form submitted to the insurance company by the insured when
they have a claim.)
Basic Cause of Loss Form - ANS-This form is a "named peril" form, that specifies the perils
insured against. The perils listed on this form will usually be, as the name implies,
the most basic perils. This form will only cover those perils that are specifically named in the
form.
Broad Cause of Loss Form - ANS-This form is also a "named peril" form and provides coverage
for the perils named in the basic form, but adds additional perils and names
them on the form.
Special Cause of Loss Form - ANS-___form is an "open peril" or "all risk"
form that provides coverage for all risks of loss, from any peril, except those that are
specifically excluded in the policy. Remember for your state licensing exam that
when coverage is provided under an open peril form, the burden of proof lies with
the insurance company to prove that the cause of loss is excluded.
Appraisal Clause - ANS-This property insurance provision allows either the insured or the
insurance company to demand a binding appraisal of the damaged property in the event of a
dispute as to the value of the property. The clause also establishes the required appraisal
procedure.
Coinsurance Clause - ANS-A provision in property insurance policies stating that the insurance
company and the insured will share in the loss incurred by the insured, based on a fixed
percentage of the value of the insured property. In addition, the insured will face a penalty, and
,must pay a higher percentage on the loss if they do not insure the property for a certain
percentage of its full value (usually at least 80%). Sometimes, in Dwelling & Homeowners
policies this clause is called the "Loss Settlement Clause".
Concurrent Causation - ANS-This term, when referring to property insurance, is a doctrine
stating that if loss or damage to property occurs as a result of more than one cause, one of
which is covered under the policy, while the other cause is not covered, the damages are still
likely to be compensated by the insurer. However, this doctrine is being revisited frequently in
the courts and a number of recent cases have been decided in favor of denying the claim.
Pair or Set Clause - ANS-This policy provision states that if part of a pair or set is lost or
damaged, the loss will be valued as a fair proportion of the total value of the set. It gives
consideration to the importance of the damaged article to the set. The insurer is not required to
pay for the value of the whole set
The Standard Mortgage Clause (Mortgagee Rights) - ANS-This provision protects the
interests of the bank/financial institution that holds the mortgage on the insured property.
This clause also grants coverage to the mortgagee, even if the insured intentionally caused the
loss. The bank can also provide a proof of loss or pay the insurance premiums in case the
insured cannot, or refuses to do so. The mortgagee must also be advised if the
contract has been cancelled or nonrenewed by the insurer
broad evidence rule - ANS-which is a combination of
"replacement cost minus depreciation" and "fair market value" that a judge determines
Replacement Cost - ANS-This is defined as "the current cost to purchase new, the item that
was lost or damaged, with no deduction for depreciation".
Functional Replacement Cost - ANS-would be used to value of the property at the cost to
replace the property that was lost,
damaged or destroyed, with property that serves the same function.
Valued Policy Law - ANS-a state law requiring insurance companies to pay the full "agreed
value" of the policy in
the event of a total loss.
• Flood (a separate policy must be purchased);
• Earthquake (a separate policy must be purchased);
• Mold;
• Acts of War;
• Parts of the property in disrepair, such as worn-out electrical wiring and plumbing, air
conditioning, heating units, and roofs. - ANS-perils that are typically not covered under property
insurance policies are:
, Fair Access to Insurance Requirements (FAIR Plans) - ANS-state-mandated insurance
programs that provide "fair" access to property
insurance for individuals who cannot secure insurance in the standard market.
High risk - ANS-FAIR Plans are considered part of the "residual market" of any state. Insurers
in the standard market may consider the individual's claims history or the property they are
attempting to insure, ___
A liability loss - ANS-____ occurs when a person or entity is determined to have been
responsible, or
legally liable, for injury or loss to another person or liable for damage to another's property and
the law requires them to make financial restitution.
A duty of care - ANS-arises when the law recognizes a relationship between two
parties, and due to this relationship, one party has a legal obligation to act in a certain
manner toward the other. For example, a department store has a duty to take reasonable
care to keep their premises safe for customers
Breach of Duty - ANS-A person or entity breaches the duty of care by failing to take reasonable
care in fulfilling the duty.
Contributory Negligence - ANS-Common law defense against negligence states that if an
individual contributes to his or her own loss in any way, then another cannot be held
liable for the loss
Comparative Negligence - ANS-Law that allows an injured party to collect from another
party for a loss, even when the injured party contributed to his or her own loss.
Damages are reduced to the extent of the injured party's negligence. This is the
defense used in most states.
Assumption of Risk - ANS-In some states, a doctrine known as assumption of risk may
apply. Assumption of risk applies when a person knowingly exposes himself or herself to
danger or injury. When a person assumes this risk, he or she may be prevented from
recovering from a negligent party. This doctrine is frequently associated with injuries
incurred by spectators at sporting events
Intervening Cause - ANS-An independent action that breaks the chain of causation and
sets in motion a new chain of events. When this occurs, the intervening cause becomes
the proximate cause of loss. This can serve as a common law defense.
Statute of Limitations - - ANS-States have enacted laws as to when certain types of lawsuits
must be filed.
Absolute Liability - ANS-As we have discussed, negligence has to be present to hold someone
Practice Exam 1 Questions and Answers
2025-2026 100% Verified.
Insurable Interest - ANS-______in the property and would suffer a financial loss if the property
were damaged by an insured peril, their family members (names need not be listed in the
policy), and others such as a lien holder, for example, the bank that holds the mortgage on a
house.
Cause of Loss Forms - ANS-____establish and define the causes of loss (or perils) for which
coverage is provided under the form. (Please do not confuse the "cause of loss" forms with the
"proof of loss" form, which is the form submitted to the insurance company by the insured when
they have a claim.)
Basic Cause of Loss Form - ANS-This form is a "named peril" form, that specifies the perils
insured against. The perils listed on this form will usually be, as the name implies,
the most basic perils. This form will only cover those perils that are specifically named in the
form.
Broad Cause of Loss Form - ANS-This form is also a "named peril" form and provides coverage
for the perils named in the basic form, but adds additional perils and names
them on the form.
Special Cause of Loss Form - ANS-___form is an "open peril" or "all risk"
form that provides coverage for all risks of loss, from any peril, except those that are
specifically excluded in the policy. Remember for your state licensing exam that
when coverage is provided under an open peril form, the burden of proof lies with
the insurance company to prove that the cause of loss is excluded.
Appraisal Clause - ANS-This property insurance provision allows either the insured or the
insurance company to demand a binding appraisal of the damaged property in the event of a
dispute as to the value of the property. The clause also establishes the required appraisal
procedure.
Coinsurance Clause - ANS-A provision in property insurance policies stating that the insurance
company and the insured will share in the loss incurred by the insured, based on a fixed
percentage of the value of the insured property. In addition, the insured will face a penalty, and
,must pay a higher percentage on the loss if they do not insure the property for a certain
percentage of its full value (usually at least 80%). Sometimes, in Dwelling & Homeowners
policies this clause is called the "Loss Settlement Clause".
Concurrent Causation - ANS-This term, when referring to property insurance, is a doctrine
stating that if loss or damage to property occurs as a result of more than one cause, one of
which is covered under the policy, while the other cause is not covered, the damages are still
likely to be compensated by the insurer. However, this doctrine is being revisited frequently in
the courts and a number of recent cases have been decided in favor of denying the claim.
Pair or Set Clause - ANS-This policy provision states that if part of a pair or set is lost or
damaged, the loss will be valued as a fair proportion of the total value of the set. It gives
consideration to the importance of the damaged article to the set. The insurer is not required to
pay for the value of the whole set
The Standard Mortgage Clause (Mortgagee Rights) - ANS-This provision protects the
interests of the bank/financial institution that holds the mortgage on the insured property.
This clause also grants coverage to the mortgagee, even if the insured intentionally caused the
loss. The bank can also provide a proof of loss or pay the insurance premiums in case the
insured cannot, or refuses to do so. The mortgagee must also be advised if the
contract has been cancelled or nonrenewed by the insurer
broad evidence rule - ANS-which is a combination of
"replacement cost minus depreciation" and "fair market value" that a judge determines
Replacement Cost - ANS-This is defined as "the current cost to purchase new, the item that
was lost or damaged, with no deduction for depreciation".
Functional Replacement Cost - ANS-would be used to value of the property at the cost to
replace the property that was lost,
damaged or destroyed, with property that serves the same function.
Valued Policy Law - ANS-a state law requiring insurance companies to pay the full "agreed
value" of the policy in
the event of a total loss.
• Flood (a separate policy must be purchased);
• Earthquake (a separate policy must be purchased);
• Mold;
• Acts of War;
• Parts of the property in disrepair, such as worn-out electrical wiring and plumbing, air
conditioning, heating units, and roofs. - ANS-perils that are typically not covered under property
insurance policies are:
, Fair Access to Insurance Requirements (FAIR Plans) - ANS-state-mandated insurance
programs that provide "fair" access to property
insurance for individuals who cannot secure insurance in the standard market.
High risk - ANS-FAIR Plans are considered part of the "residual market" of any state. Insurers
in the standard market may consider the individual's claims history or the property they are
attempting to insure, ___
A liability loss - ANS-____ occurs when a person or entity is determined to have been
responsible, or
legally liable, for injury or loss to another person or liable for damage to another's property and
the law requires them to make financial restitution.
A duty of care - ANS-arises when the law recognizes a relationship between two
parties, and due to this relationship, one party has a legal obligation to act in a certain
manner toward the other. For example, a department store has a duty to take reasonable
care to keep their premises safe for customers
Breach of Duty - ANS-A person or entity breaches the duty of care by failing to take reasonable
care in fulfilling the duty.
Contributory Negligence - ANS-Common law defense against negligence states that if an
individual contributes to his or her own loss in any way, then another cannot be held
liable for the loss
Comparative Negligence - ANS-Law that allows an injured party to collect from another
party for a loss, even when the injured party contributed to his or her own loss.
Damages are reduced to the extent of the injured party's negligence. This is the
defense used in most states.
Assumption of Risk - ANS-In some states, a doctrine known as assumption of risk may
apply. Assumption of risk applies when a person knowingly exposes himself or herself to
danger or injury. When a person assumes this risk, he or she may be prevented from
recovering from a negligent party. This doctrine is frequently associated with injuries
incurred by spectators at sporting events
Intervening Cause - ANS-An independent action that breaks the chain of causation and
sets in motion a new chain of events. When this occurs, the intervening cause becomes
the proximate cause of loss. This can serve as a common law defense.
Statute of Limitations - - ANS-States have enacted laws as to when certain types of lawsuits
must be filed.
Absolute Liability - ANS-As we have discussed, negligence has to be present to hold someone
