Adjuster Pro - Florida Certified Adjuster
Glossary| 260 QUESTIONS| 19 PAGES
Course
Claims Adjuster
1. Q: What is an "Assignment of Benefits" (AOB)?
A: An Assignment of Benefits is a legal agreement that transfers the insurance claim rights or
benefits from the insured to a third party, often a contractor. In Florida, AOBs are heavily
regulated due to widespread abuse and fraud.
2. Q: Define "Bad Faith" in insurance.
A: Bad Faith refers to an insurer's failure to deal fairly and in good faith with the insured, such as
by delaying or denying a valid claim without a reasonable basis. Florida law allows for civil
remedies in cases of insurer bad faith.
3. Q: What is "Actual Cash Value" (ACV)?
A: Actual Cash Value is the replacement cost of property minus depreciation. It's the amount an
insurer will pay for a loss under an ACV policy.
4. Q: What does "Independent Adjuster" mean in Florida?
A: An Independent Adjuster is a licensed claims professional who represents the insurer and not
the policyholder, and is not employed directly by the insurance company.
5. Q: What is the "Florida Hurricane Catastrophe Fund" (FHCF)?
A: The FHCF is a state-run reinsurance program that provides reimbursement to insurers for a
portion of their catastrophic hurricane losses to protect the insurance market’s stability.
6. Q: Explain "Loss of Use" coverage.
A: Loss of Use is a type of coverage under homeowners insurance that pays for additional living
expenses when a covered peril renders the home uninhabitable.
,7. Q: What is a "Proof of Loss"?
A: A Proof of Loss is a formal statement made by the insured to the insurer regarding the amount
of loss claimed, often required before the insurer pays out benefits.
8. Q: Define "Public Adjuster".
A: A Public Adjuster is a licensed professional who represents the interests of the insured in
appraising and negotiating insurance claims. In Florida, they cannot work on behalf of the
insurer.
9. Q: What is the "Valued Policy Law" in Florida?
A: Florida’s Valued Policy Law requires insurers to pay the full face value of a policy for total
losses caused by covered perils to buildings, regardless of actual cash value.
10. Q: What does “Reservation of Rights” mean?
A: A Reservation of Rights is a notice issued by an insurer to inform the insured that the
company may not cover all portions of a claim while still investigating or defending it.
11. Q: What is Subrogation?
A: The insurer’s legal right to recover the amount it has paid to the insured from a third party
responsible for the loss.
Rationale: Subrogation allows insurers to seek reimbursement from liable parties and prevents
the insured from collecting twice for the same loss.
12. Q: Define Replacement Cost.
A: The cost to replace damaged property with new property of like kind and quality, without
deduction for depreciation.
Rationale: Unlike ACV, replacement cost coverage pays out the full cost of a new item,
encouraging the insured to replace rather than repair.
13. Q: What does Salvage refer to?
A: Salvage is the residual value of damaged property that the insurer may claim after paying a
total loss.
Rationale: The insurer can sell the salvage to recoup part of the loss payment, especially in total
loss auto claims.
,14. Q: What is a Deductible?
A: The portion of a covered loss that the insured must pay before the insurer pays.
Rationale: Deductibles reduce the number of small claims and encourage policyholders to
manage minor damages themselves.
15. Q: What is a Reservation of Rights Letter?
A: A letter sent by the insurer to notify the insured that coverage may not apply to all aspects of a
claim, even as investigation continues.
Rationale: It preserves the insurer's ability to deny coverage later without waiving any defenses.
16. Q: Define Adjuster.
A: An adjuster investigates, evaluates, and settles insurance claims on behalf of the insurer or
insured.
Rationale: Florida licenses public, independent, and company adjusters, each with distinct roles
in the claims process.
17. Q: What is a Binder?
A: A temporary insurance contract that provides proof of coverage until a permanent policy is
issued.
Rationale: Binders protect policyholders during underwriting delays and ensure legal
compliance for activities requiring insurance.
18. Q: Explain Insurable Interest.
A: A financial or other beneficial interest in the subject of the insurance policy that would cause
loss if damaged or destroyed.
Rationale: Insurable interest must exist at the time of loss in Florida to prevent moral hazard or
gambling on insurance.
19. Q: What is a Catastrophe (CAT) Claim?
A: A claim arising from a widespread disaster, such as a hurricane, involving many insureds and
large-scale losses.
Rationale: Florida's CAT claims often involve special handling due to the volume, and trigger
the Florida Hurricane Catastrophe Fund.
, 20. Q: Define Liability Insurance.
A: Insurance that covers legal responsibilities for bodily injury or property damage caused to
others.
Rationale: Florida requires certain minimum liability coverages in auto and business contexts.
21. Q: What is the Appraisal Clause?
A: A policy provision allowing either party to demand an appraisal of the loss amount when
there is a dispute.
Rationale: It offers an alternative dispute resolution mechanism to litigation, often quicker and
cheaper.
22. Q: Define Moral Hazard.
A: The risk that an insured will act dishonestly or irresponsibly because they have insurance
coverage.
Rationale: Adjusters must be alert to potential fraud, especially in high-loss scenarios.
23. Q: What is the Role of the Department of Financial Services (DFS) in Florida?
A: The DFS regulates insurance adjusters, issues licenses, and enforces compliance with state
laws.
Rationale: Adjusters must follow DFS rules to maintain their licenses and avoid penalties.
24. Q: What is Comparative Negligence?
A: A legal principle under which damages are apportioned based on each party’s degree of fault.
Rationale: In Florida, even if the insured is partially at fault, they may still recover a reduced
claim amount.
25. Q: Define "First-Party Claim".
A: A claim filed by the policyholder against their own insurance policy.
Rationale: Florida adjusters must distinguish between first-party (e.g., property loss) and third-
party (liability) claims, as the handling standards differ.
26. Q: What is a Third-Party Claim?
A: A claim made by someone other than the insured against the insured’s policy for injuries or
damages.
Rationale: Common in liability situations (e.g., auto accidents), where the injured party seeks
recovery under the at-fault party’s policy.
Glossary| 260 QUESTIONS| 19 PAGES
Course
Claims Adjuster
1. Q: What is an "Assignment of Benefits" (AOB)?
A: An Assignment of Benefits is a legal agreement that transfers the insurance claim rights or
benefits from the insured to a third party, often a contractor. In Florida, AOBs are heavily
regulated due to widespread abuse and fraud.
2. Q: Define "Bad Faith" in insurance.
A: Bad Faith refers to an insurer's failure to deal fairly and in good faith with the insured, such as
by delaying or denying a valid claim without a reasonable basis. Florida law allows for civil
remedies in cases of insurer bad faith.
3. Q: What is "Actual Cash Value" (ACV)?
A: Actual Cash Value is the replacement cost of property minus depreciation. It's the amount an
insurer will pay for a loss under an ACV policy.
4. Q: What does "Independent Adjuster" mean in Florida?
A: An Independent Adjuster is a licensed claims professional who represents the insurer and not
the policyholder, and is not employed directly by the insurance company.
5. Q: What is the "Florida Hurricane Catastrophe Fund" (FHCF)?
A: The FHCF is a state-run reinsurance program that provides reimbursement to insurers for a
portion of their catastrophic hurricane losses to protect the insurance market’s stability.
6. Q: Explain "Loss of Use" coverage.
A: Loss of Use is a type of coverage under homeowners insurance that pays for additional living
expenses when a covered peril renders the home uninhabitable.
,7. Q: What is a "Proof of Loss"?
A: A Proof of Loss is a formal statement made by the insured to the insurer regarding the amount
of loss claimed, often required before the insurer pays out benefits.
8. Q: Define "Public Adjuster".
A: A Public Adjuster is a licensed professional who represents the interests of the insured in
appraising and negotiating insurance claims. In Florida, they cannot work on behalf of the
insurer.
9. Q: What is the "Valued Policy Law" in Florida?
A: Florida’s Valued Policy Law requires insurers to pay the full face value of a policy for total
losses caused by covered perils to buildings, regardless of actual cash value.
10. Q: What does “Reservation of Rights” mean?
A: A Reservation of Rights is a notice issued by an insurer to inform the insured that the
company may not cover all portions of a claim while still investigating or defending it.
11. Q: What is Subrogation?
A: The insurer’s legal right to recover the amount it has paid to the insured from a third party
responsible for the loss.
Rationale: Subrogation allows insurers to seek reimbursement from liable parties and prevents
the insured from collecting twice for the same loss.
12. Q: Define Replacement Cost.
A: The cost to replace damaged property with new property of like kind and quality, without
deduction for depreciation.
Rationale: Unlike ACV, replacement cost coverage pays out the full cost of a new item,
encouraging the insured to replace rather than repair.
13. Q: What does Salvage refer to?
A: Salvage is the residual value of damaged property that the insurer may claim after paying a
total loss.
Rationale: The insurer can sell the salvage to recoup part of the loss payment, especially in total
loss auto claims.
,14. Q: What is a Deductible?
A: The portion of a covered loss that the insured must pay before the insurer pays.
Rationale: Deductibles reduce the number of small claims and encourage policyholders to
manage minor damages themselves.
15. Q: What is a Reservation of Rights Letter?
A: A letter sent by the insurer to notify the insured that coverage may not apply to all aspects of a
claim, even as investigation continues.
Rationale: It preserves the insurer's ability to deny coverage later without waiving any defenses.
16. Q: Define Adjuster.
A: An adjuster investigates, evaluates, and settles insurance claims on behalf of the insurer or
insured.
Rationale: Florida licenses public, independent, and company adjusters, each with distinct roles
in the claims process.
17. Q: What is a Binder?
A: A temporary insurance contract that provides proof of coverage until a permanent policy is
issued.
Rationale: Binders protect policyholders during underwriting delays and ensure legal
compliance for activities requiring insurance.
18. Q: Explain Insurable Interest.
A: A financial or other beneficial interest in the subject of the insurance policy that would cause
loss if damaged or destroyed.
Rationale: Insurable interest must exist at the time of loss in Florida to prevent moral hazard or
gambling on insurance.
19. Q: What is a Catastrophe (CAT) Claim?
A: A claim arising from a widespread disaster, such as a hurricane, involving many insureds and
large-scale losses.
Rationale: Florida's CAT claims often involve special handling due to the volume, and trigger
the Florida Hurricane Catastrophe Fund.
, 20. Q: Define Liability Insurance.
A: Insurance that covers legal responsibilities for bodily injury or property damage caused to
others.
Rationale: Florida requires certain minimum liability coverages in auto and business contexts.
21. Q: What is the Appraisal Clause?
A: A policy provision allowing either party to demand an appraisal of the loss amount when
there is a dispute.
Rationale: It offers an alternative dispute resolution mechanism to litigation, often quicker and
cheaper.
22. Q: Define Moral Hazard.
A: The risk that an insured will act dishonestly or irresponsibly because they have insurance
coverage.
Rationale: Adjusters must be alert to potential fraud, especially in high-loss scenarios.
23. Q: What is the Role of the Department of Financial Services (DFS) in Florida?
A: The DFS regulates insurance adjusters, issues licenses, and enforces compliance with state
laws.
Rationale: Adjusters must follow DFS rules to maintain their licenses and avoid penalties.
24. Q: What is Comparative Negligence?
A: A legal principle under which damages are apportioned based on each party’s degree of fault.
Rationale: In Florida, even if the insured is partially at fault, they may still recover a reduced
claim amount.
25. Q: Define "First-Party Claim".
A: A claim filed by the policyholder against their own insurance policy.
Rationale: Florida adjusters must distinguish between first-party (e.g., property loss) and third-
party (liability) claims, as the handling standards differ.
26. Q: What is a Third-Party Claim?
A: A claim made by someone other than the insured against the insured’s policy for injuries or
damages.
Rationale: Common in liability situations (e.g., auto accidents), where the injured party seeks
recovery under the at-fault party’s policy.
