CA ADJUSTERS EXAMS SCRIPT 2025/2026 QUESTIONS
AND ANSWERS GRADED A+
✔✔Mary intentionally trips her neighbor while the neighbor is trespassing on the
insured's property. Although the neighbor is not injured, Mary gives the neighbor $500 in
cash to settle any potential liability claim. How will Mary's insurance company most
likely respond in this situation?
The insurer will reimburse Mary for the entire $500.
The insurer will reimburse Mary for $500, less any applicable deductible.
The insurer will sue the neighbor for the return of the $500 because the neighbor was
not injured.
The insurer will deny liability coverage because Mary's action was intentional. - ✔✔The
correct answer is: The insurer will deny liability coverage because Mary's action was
intentional.
EXPLANATION:
Intentional acts are excluded and the company will deny the claim. The only exception
to this exclusion is when the insured is attempting to use reasonable force to protect
themselves or their property.
✔✔The insured is liable for $500,000 in damages for a personal injury claim that is
covered under the insured's primary liability policy. The primary liability policy has a
$300,000 limit per occurrence. The insured also has a $1 million umbrella liability policy
with a $3,000 self insured retention limit. How would this case likely be settled?
- The primary policy would pay $300,000 and the insured would pay $200,000.
- The primary policy would pay $300,000, the insured would pay $3,000, and the
umbrella policy would pay $197,000.
- The primary policy would pay nothing; the umbrella policy would pay the full $500,000.
- The primary policy would pay $300,000 and the umbrella policy would pay $200,000. -
✔✔The correct answer is: The primary policy would pay $300,000 and the umbrella
policy would pay $200,000.
EXPLANATION:
Since it is a covered claim under the underlying coverage, the umbrella policy picks up
and pays the remaining portion of the claim.
✔✔An inland marine coverage which covers a store that has an average inventory of
$250,000 or less of jewelry would need:
A jewelers block policy.
Commercial articles floater.
Floor plan merchandise coverage form.
Bailee's customers policy. - ✔✔The correct answer is: A jewelers block policy
,EXPLANATION:
A jewelers block policy is designed to cover a store that has an average inventory of
$250,000 or less.
✔✔If your insurance company cancels your commercial insurance, whom must they
notify?
They must notify all Insureds listed on the policy.
They must notify whoever is listed first on the policy.
They must notify the first named insured listed on the policy.
They must notify whoever is responsible for premium payments. - ✔✔The correct
answer is: They must notify the first named insured listed on the policy.
EXPLANATION:
Only the first named insured listed on the policy is to receive any notices.
✔✔Which of the following is an official notice of a lawsuit?
Interrogatory
Bailment
Summons
Notice of release - ✔✔The correct answer is: Summons
EXPLANATION:
A summons is an official notice of a lawsuit. It is given to the person being sued, the
defendant. If someone is being sued, he or she must notified in order to come to court
and prepare to defend themselves. When a defendant is served with a summons, he or
she is officially notified of the lawsuit.
✔✔Mr. Jones has injured Susan Miller in an auto accident. Susan has sustained
medical expenses, loss of wages, and the loss of use of her vehicle. These types of
expenses are known as:
Special Damages.
General Damages.
Exemplary Damages.
Punitive Damages. - ✔✔The correct answer is: Special Damages.
EXPLANATION:
These are called "special damages" and involve expenses where the costs are known
or can easily be determined.
✔✔Which of the following is the type of report indicating the initial results of the
investigation of a claim?
,Field Report
Interim Report
Full Report
Claims Report - ✔✔The correct answer is: Field Report.
EXPLANATION:
This report can also be called the initial report and is the result of the initial investigation.
✔✔Name the coverage that applies to the extra cost the insured incurs to make
temporary repairs and speed up the permanent repairs or replacement of damaged
covered equipment under an Equipment Breakdown policy.
Expediting expense coverage
Extra expense coverage
Removal expense coverage
Contributing expense coverage - ✔✔The correct answer is: Expediting expense
coverage
EXPLANATION:
This is called expediting expense coverage.
✔✔Which part of an insurance policy sets the rules of conduct, duties, and obligations
of the insured and insurer under the terms of the insurance contract?
Conditions
Declarations
Insuring Agreement
Exclusions - ✔✔The correct answer is: Conditions.
EXPLANATION:
The conditions section of the policy sets the provisions, rules of conduct, and
obligations of the insured and the insurance company and is the correct answer. The
insuring agreement describes the covered perils, the nature of the coverage and the
contractual agreement between the parties. The declarations page of the policy lists the
name and address of the named insured, the policy period, the amount of coverage, the
premium and the deductibles. The exclusions list the perils that are excluded from the
coverage under the contract.
✔✔Another name for umbrella liability insurance is:
Excess.
Primary.
Malpractice.
Errors and omissions. - ✔✔The correct answer is: Excess.
, EXPLANATION:
Excess is another name given to umbrella coverage. It pays in excess of the limits of
underlying coverage.
✔✔Basic benefits available under a typical workers compensation policy include which
of the following?
I. Medical expenses.
II. Loss of income.
III. Rehabilitation.
IV. Pain and suffering.
I, II, and III only.
I and II only.
I, III, and IV only.
I, II, III and IV. - ✔✔The correct answer is: I, II, and III only.
EXPLANATION:
Workers compensation indemnifies an injured or ill worker for direct expenses resulting
from the cause with rehabilitation provided to encourage a worker to return to
productivity.
✔✔What is "insolvency" under the California Insurance Code?
- An insurer whose paid-in capital is impaired beyond the minimum for the class of
insurance that it transacts in the state.
- An insurer whose policyholder's surplus is insufficient to pay the claims under its
policies,
- An insurer whose liabilities exceed its assets.
- An insurer which has frequently failed to pay covered claims on a timely basis. -
✔✔The correct answer is: An insurer whose paid-in capital is impaired beyond the
minimum for the class of insurance that it transacts in the state.
EXPLANATION:
The correct answer comes directly from the Code's definition of an insolvent carrier.
✔✔One purpose of a deductible is to:
Eliminate small claims.
Prevent underinsurance.
Prevent catastrophic claims.
Allow the insured to ignore physical hazards. - ✔✔The correct answer is: Eliminate
small claims.
EXPLANATION:
AND ANSWERS GRADED A+
✔✔Mary intentionally trips her neighbor while the neighbor is trespassing on the
insured's property. Although the neighbor is not injured, Mary gives the neighbor $500 in
cash to settle any potential liability claim. How will Mary's insurance company most
likely respond in this situation?
The insurer will reimburse Mary for the entire $500.
The insurer will reimburse Mary for $500, less any applicable deductible.
The insurer will sue the neighbor for the return of the $500 because the neighbor was
not injured.
The insurer will deny liability coverage because Mary's action was intentional. - ✔✔The
correct answer is: The insurer will deny liability coverage because Mary's action was
intentional.
EXPLANATION:
Intentional acts are excluded and the company will deny the claim. The only exception
to this exclusion is when the insured is attempting to use reasonable force to protect
themselves or their property.
✔✔The insured is liable for $500,000 in damages for a personal injury claim that is
covered under the insured's primary liability policy. The primary liability policy has a
$300,000 limit per occurrence. The insured also has a $1 million umbrella liability policy
with a $3,000 self insured retention limit. How would this case likely be settled?
- The primary policy would pay $300,000 and the insured would pay $200,000.
- The primary policy would pay $300,000, the insured would pay $3,000, and the
umbrella policy would pay $197,000.
- The primary policy would pay nothing; the umbrella policy would pay the full $500,000.
- The primary policy would pay $300,000 and the umbrella policy would pay $200,000. -
✔✔The correct answer is: The primary policy would pay $300,000 and the umbrella
policy would pay $200,000.
EXPLANATION:
Since it is a covered claim under the underlying coverage, the umbrella policy picks up
and pays the remaining portion of the claim.
✔✔An inland marine coverage which covers a store that has an average inventory of
$250,000 or less of jewelry would need:
A jewelers block policy.
Commercial articles floater.
Floor plan merchandise coverage form.
Bailee's customers policy. - ✔✔The correct answer is: A jewelers block policy
,EXPLANATION:
A jewelers block policy is designed to cover a store that has an average inventory of
$250,000 or less.
✔✔If your insurance company cancels your commercial insurance, whom must they
notify?
They must notify all Insureds listed on the policy.
They must notify whoever is listed first on the policy.
They must notify the first named insured listed on the policy.
They must notify whoever is responsible for premium payments. - ✔✔The correct
answer is: They must notify the first named insured listed on the policy.
EXPLANATION:
Only the first named insured listed on the policy is to receive any notices.
✔✔Which of the following is an official notice of a lawsuit?
Interrogatory
Bailment
Summons
Notice of release - ✔✔The correct answer is: Summons
EXPLANATION:
A summons is an official notice of a lawsuit. It is given to the person being sued, the
defendant. If someone is being sued, he or she must notified in order to come to court
and prepare to defend themselves. When a defendant is served with a summons, he or
she is officially notified of the lawsuit.
✔✔Mr. Jones has injured Susan Miller in an auto accident. Susan has sustained
medical expenses, loss of wages, and the loss of use of her vehicle. These types of
expenses are known as:
Special Damages.
General Damages.
Exemplary Damages.
Punitive Damages. - ✔✔The correct answer is: Special Damages.
EXPLANATION:
These are called "special damages" and involve expenses where the costs are known
or can easily be determined.
✔✔Which of the following is the type of report indicating the initial results of the
investigation of a claim?
,Field Report
Interim Report
Full Report
Claims Report - ✔✔The correct answer is: Field Report.
EXPLANATION:
This report can also be called the initial report and is the result of the initial investigation.
✔✔Name the coverage that applies to the extra cost the insured incurs to make
temporary repairs and speed up the permanent repairs or replacement of damaged
covered equipment under an Equipment Breakdown policy.
Expediting expense coverage
Extra expense coverage
Removal expense coverage
Contributing expense coverage - ✔✔The correct answer is: Expediting expense
coverage
EXPLANATION:
This is called expediting expense coverage.
✔✔Which part of an insurance policy sets the rules of conduct, duties, and obligations
of the insured and insurer under the terms of the insurance contract?
Conditions
Declarations
Insuring Agreement
Exclusions - ✔✔The correct answer is: Conditions.
EXPLANATION:
The conditions section of the policy sets the provisions, rules of conduct, and
obligations of the insured and the insurance company and is the correct answer. The
insuring agreement describes the covered perils, the nature of the coverage and the
contractual agreement between the parties. The declarations page of the policy lists the
name and address of the named insured, the policy period, the amount of coverage, the
premium and the deductibles. The exclusions list the perils that are excluded from the
coverage under the contract.
✔✔Another name for umbrella liability insurance is:
Excess.
Primary.
Malpractice.
Errors and omissions. - ✔✔The correct answer is: Excess.
, EXPLANATION:
Excess is another name given to umbrella coverage. It pays in excess of the limits of
underlying coverage.
✔✔Basic benefits available under a typical workers compensation policy include which
of the following?
I. Medical expenses.
II. Loss of income.
III. Rehabilitation.
IV. Pain and suffering.
I, II, and III only.
I and II only.
I, III, and IV only.
I, II, III and IV. - ✔✔The correct answer is: I, II, and III only.
EXPLANATION:
Workers compensation indemnifies an injured or ill worker for direct expenses resulting
from the cause with rehabilitation provided to encourage a worker to return to
productivity.
✔✔What is "insolvency" under the California Insurance Code?
- An insurer whose paid-in capital is impaired beyond the minimum for the class of
insurance that it transacts in the state.
- An insurer whose policyholder's surplus is insufficient to pay the claims under its
policies,
- An insurer whose liabilities exceed its assets.
- An insurer which has frequently failed to pay covered claims on a timely basis. -
✔✔The correct answer is: An insurer whose paid-in capital is impaired beyond the
minimum for the class of insurance that it transacts in the state.
EXPLANATION:
The correct answer comes directly from the Code's definition of an insolvent carrier.
✔✔One purpose of a deductible is to:
Eliminate small claims.
Prevent underinsurance.
Prevent catastrophic claims.
Allow the insured to ignore physical hazards. - ✔✔The correct answer is: Eliminate
small claims.
EXPLANATION:
