CA ADJUSTERS TEST PAPER 2025/2026 QUESTIONS AND
ANSWERS GRADED A+
✔✔If the Commissioner determines that any broker-agent has failed to keep or maintain
complete and accurate records, the Commissioner may order the licensee to establish
those records within:
10 days.
6 months.
60 days.
30 days. - ✔✔The correct answer is: 60 days.
EXPLANATION:
According to the California Insurance Code (CIC 1747), when the Commissioner
determines that any broker-agent has failed to keep or maintain complete and accurate
records as required by law, in connection with or in lieu of any other disciplinary action
against the licensee, the Commissioner may issue an order requiring the licensee to
establish and currently complete those records within 60 days from the date of the
order. Any licensee failing to comply will be subject to disciplinary action.
✔✔The California Insurance Commissioner is:
Elected to a four-year term.
Appointed by the governor for a two-year term.
Appointed by the legislature for a four-year term.
Selected by a committee. - ✔✔The correct answer is: Elected to a four-year term.
EXPLANATION:
The state legislature has established that the Insurance Commissioner should be an
elected position rather than a political appointment.
✔✔Which of the following could be considered a "covered auto" on the PAP?
A newly acquired car reported to the insurer
A owned vehicle not listed on the declarations page
A non-owned vehicle available for regular use
A vehicle used in speed contests - ✔✔The correct answer is: A newly acquired car
reported to the insurer.
EXPLANATION:
The insured has 14 days to report a newly acquired auto which has been done in this
case. The other three answers would all be excluded.
✔✔The definition of bodily injury includes:
,I. Death.
II. Sickness.
III. Perils of the sea.
IV. Slander.
I and II only
I, II, and III only
II, III, and IV only
I, II, III, and IV - ✔✔The correct answer is: I and II only.
EXPLANATION:
Bodily injury does not occur as a result of slander, which is a personal injury coverage.
Perils of the sea are damages that can occur to property when it is transported across
water.
✔✔An agent has altered an auto application for a customer. He struck through the
higher limits of auto coverage for underinsured motorist coverage and inserted a lower
limit. Neither the insured nor the agent initialed the change. The insured signed the
application. The policy was renewed for three years with the lower limit. The insured
was involved in a hit and run accident and was killed. What should the insurer do?
Pay the lower limit of coverage
Deny the claim because of the vagueness of intent
Pay the higher limit
Refuse to adjust the claim on the basis of an altered application - ✔✔The correct
answer is: Pay the higher limit.
EXPLANATION:
This is an actual case and the insurer paid the higher limit that had been struck through
on the application without any acknowledgment on the part of the applicant. Unfair
claims practice laws forbid the adjuster to adjust claims on the basis of an altered
application. It was determined by the insurer's legal counsel that the higher limit should
be paid.
✔✔The doctrine of reasonable expectations is based primarily on:
Canon Law
Contract Law
Negligence Law
Criminal Law - ✔✔The correct answer is: Contract Law.
EXPLANATION:
The doctrine of reasonable expectations is a part of contract law where the insured can
reasonably expect coverage to apply without having to read the contract.
,✔✔Which of the following regarding free insurance offered as an incentive to purchase
or rent property is true?
It is permitted without limitation.
It requires a separate charge.
If it is offered as a guarantee of the performance of goods, it is prohibited.
It may be arranged for by a broker but not an agent. - ✔✔The correct answer is: If it is
offered as a guarantee of the performance of goods, it is prohibited.
EXPLANATION:
According to the California Insurance Code (CIC 777.1), if it is offered as a guarantee of
the performance of goods, it is prohibited.
✔✔How do eligibility requirements of homeowner and dwelling policies differ?
Homeowner policies require that the named insured reside at the described premises
while dwelling policies do not.
Homeowner policies are only for actual home owners while dwelling policies can be
written only for tenants.
Homeowner and dwelling policies have the same eligibility requirements.
Dwelling policies can be written on duplexes while homeowner policies are only for
single-family dwellings. - ✔✔The correct answer is: Homeowner policies require that the
named insured reside at the described premises while dwelling policies do not.
EXPLANATION:
The named insured must be a resident of the insured premises under the HO program.
✔✔An accident reconstructionist is an expert used by insurance companies and plaintiff
lawyers to:
Determine what type of mechanical defect caused an accident.
Determine how much the at-fault driver had been drinking.
Determine which way the vehicles were traveling prior to impact.
Thoroughly examine the accident scene and conduct the appropriate tests to reach a
reasonable conclusion as to causative factors. - ✔✔The correct answer is: Thoroughly
examine the accident scene and conduct the appropriate tests to reach a reasonable
conclusion as to causative factors.
EXPLANATION:
Reconstructionists thoroughly examine the accident scene and conduct the appropriate
tests to reach a reasonable conclusion as to the cause of an accident.
✔✔Supplementary payments under the liability section of a commercial auto policy
include reasonable expenses incurred by the insured including loss of earnings up to
___ per day.
, $50
$150
$250
$500 - ✔✔The correct answer is: $250.
EXPLANATION:
Reasonable expenses including loss of earnings up to $250 per day.
✔✔The insured carries an Equipment Breakdown policy with a limit of $300,000. A
boiler has exploded and caused extensive damage to the building and its contents. As a
result of the explosion a fire ensues causing $100,000 in damages. How much will the
Equipment Breakdown policy pay for the fire damage?
$50,000
$25,000
$100,000
$0 - ✔✔The correct answer is: $0.
EXPLANATION:
The Equipment Breakdown policy excludes fire damage. The loss would be covered
under a commercial property form.
✔✔Mr. Smith's bicycle shop enters into many written and oral agreements with
customers. Mr. Smith's agent informs him that the liability on his BOP contains:
Products and Completed Operations Liability
Contractual Liability
Fidelity Bond
Premises and Operations Liability - ✔✔The correct answer is: Contractual Liability.
EXPLANATION:
Like the CGL policy, the liability section of the BOP contains coverage for the written
and oral agreements the insured enters into known as Contractual Liability.
✔✔What commercial auto policy form would be used to cover a company who
transports their own property and property of others?
The motor carrier form
The business auto form
The truckers form
The garage liability form - ✔✔The correct answer is: The motor carrier form.
EXPLANATION:
A motor carrier is anyone who transports property by auto in a commercial enterprise,
regardless of whether he or she was hired for that purpose. The BAP can be used to
ANSWERS GRADED A+
✔✔If the Commissioner determines that any broker-agent has failed to keep or maintain
complete and accurate records, the Commissioner may order the licensee to establish
those records within:
10 days.
6 months.
60 days.
30 days. - ✔✔The correct answer is: 60 days.
EXPLANATION:
According to the California Insurance Code (CIC 1747), when the Commissioner
determines that any broker-agent has failed to keep or maintain complete and accurate
records as required by law, in connection with or in lieu of any other disciplinary action
against the licensee, the Commissioner may issue an order requiring the licensee to
establish and currently complete those records within 60 days from the date of the
order. Any licensee failing to comply will be subject to disciplinary action.
✔✔The California Insurance Commissioner is:
Elected to a four-year term.
Appointed by the governor for a two-year term.
Appointed by the legislature for a four-year term.
Selected by a committee. - ✔✔The correct answer is: Elected to a four-year term.
EXPLANATION:
The state legislature has established that the Insurance Commissioner should be an
elected position rather than a political appointment.
✔✔Which of the following could be considered a "covered auto" on the PAP?
A newly acquired car reported to the insurer
A owned vehicle not listed on the declarations page
A non-owned vehicle available for regular use
A vehicle used in speed contests - ✔✔The correct answer is: A newly acquired car
reported to the insurer.
EXPLANATION:
The insured has 14 days to report a newly acquired auto which has been done in this
case. The other three answers would all be excluded.
✔✔The definition of bodily injury includes:
,I. Death.
II. Sickness.
III. Perils of the sea.
IV. Slander.
I and II only
I, II, and III only
II, III, and IV only
I, II, III, and IV - ✔✔The correct answer is: I and II only.
EXPLANATION:
Bodily injury does not occur as a result of slander, which is a personal injury coverage.
Perils of the sea are damages that can occur to property when it is transported across
water.
✔✔An agent has altered an auto application for a customer. He struck through the
higher limits of auto coverage for underinsured motorist coverage and inserted a lower
limit. Neither the insured nor the agent initialed the change. The insured signed the
application. The policy was renewed for three years with the lower limit. The insured
was involved in a hit and run accident and was killed. What should the insurer do?
Pay the lower limit of coverage
Deny the claim because of the vagueness of intent
Pay the higher limit
Refuse to adjust the claim on the basis of an altered application - ✔✔The correct
answer is: Pay the higher limit.
EXPLANATION:
This is an actual case and the insurer paid the higher limit that had been struck through
on the application without any acknowledgment on the part of the applicant. Unfair
claims practice laws forbid the adjuster to adjust claims on the basis of an altered
application. It was determined by the insurer's legal counsel that the higher limit should
be paid.
✔✔The doctrine of reasonable expectations is based primarily on:
Canon Law
Contract Law
Negligence Law
Criminal Law - ✔✔The correct answer is: Contract Law.
EXPLANATION:
The doctrine of reasonable expectations is a part of contract law where the insured can
reasonably expect coverage to apply without having to read the contract.
,✔✔Which of the following regarding free insurance offered as an incentive to purchase
or rent property is true?
It is permitted without limitation.
It requires a separate charge.
If it is offered as a guarantee of the performance of goods, it is prohibited.
It may be arranged for by a broker but not an agent. - ✔✔The correct answer is: If it is
offered as a guarantee of the performance of goods, it is prohibited.
EXPLANATION:
According to the California Insurance Code (CIC 777.1), if it is offered as a guarantee of
the performance of goods, it is prohibited.
✔✔How do eligibility requirements of homeowner and dwelling policies differ?
Homeowner policies require that the named insured reside at the described premises
while dwelling policies do not.
Homeowner policies are only for actual home owners while dwelling policies can be
written only for tenants.
Homeowner and dwelling policies have the same eligibility requirements.
Dwelling policies can be written on duplexes while homeowner policies are only for
single-family dwellings. - ✔✔The correct answer is: Homeowner policies require that the
named insured reside at the described premises while dwelling policies do not.
EXPLANATION:
The named insured must be a resident of the insured premises under the HO program.
✔✔An accident reconstructionist is an expert used by insurance companies and plaintiff
lawyers to:
Determine what type of mechanical defect caused an accident.
Determine how much the at-fault driver had been drinking.
Determine which way the vehicles were traveling prior to impact.
Thoroughly examine the accident scene and conduct the appropriate tests to reach a
reasonable conclusion as to causative factors. - ✔✔The correct answer is: Thoroughly
examine the accident scene and conduct the appropriate tests to reach a reasonable
conclusion as to causative factors.
EXPLANATION:
Reconstructionists thoroughly examine the accident scene and conduct the appropriate
tests to reach a reasonable conclusion as to the cause of an accident.
✔✔Supplementary payments under the liability section of a commercial auto policy
include reasonable expenses incurred by the insured including loss of earnings up to
___ per day.
, $50
$150
$250
$500 - ✔✔The correct answer is: $250.
EXPLANATION:
Reasonable expenses including loss of earnings up to $250 per day.
✔✔The insured carries an Equipment Breakdown policy with a limit of $300,000. A
boiler has exploded and caused extensive damage to the building and its contents. As a
result of the explosion a fire ensues causing $100,000 in damages. How much will the
Equipment Breakdown policy pay for the fire damage?
$50,000
$25,000
$100,000
$0 - ✔✔The correct answer is: $0.
EXPLANATION:
The Equipment Breakdown policy excludes fire damage. The loss would be covered
under a commercial property form.
✔✔Mr. Smith's bicycle shop enters into many written and oral agreements with
customers. Mr. Smith's agent informs him that the liability on his BOP contains:
Products and Completed Operations Liability
Contractual Liability
Fidelity Bond
Premises and Operations Liability - ✔✔The correct answer is: Contractual Liability.
EXPLANATION:
Like the CGL policy, the liability section of the BOP contains coverage for the written
and oral agreements the insured enters into known as Contractual Liability.
✔✔What commercial auto policy form would be used to cover a company who
transports their own property and property of others?
The motor carrier form
The business auto form
The truckers form
The garage liability form - ✔✔The correct answer is: The motor carrier form.
EXPLANATION:
A motor carrier is anyone who transports property by auto in a commercial enterprise,
regardless of whether he or she was hired for that purpose. The BAP can be used to
