TEXAS ALL LINES ADJUSTER EXAM BRAND NEW!! QUESTIONS AND
CORRECT ANSWERS) VERIFIED ANSWERS
Question 1
Which of the following Texas Workers' Compensation benefits are increased by a cost-of-living
adjustment (COLA)?
A) Temporary Income Benefits (TIBs) only
B) Impairment Income Benefits (IIBs) only
C) All income benefits
D) Lifetime Income Benefits (LIBs) only
E) Death and Burial Benefits
Correct Answer: D) Lifetime Income Benefits (LIBs) only
Rationale: In Texas, only Lifetime Income Benefits (LIBs) are subject to an annual cost-of-
living adjustment to account for inflation over the recipient's lifetime. Other income
benefits are for a defined period and are not adjusted.
Question 2
According to the Texas Insurance Code, how long do Surplus Lines companies have to
acknowledge the receipt of a claim?
A) 10 business days
B) 15 business days
C) 20 business days
D) 30 business days
E) There is no specific time frame.
Correct Answer: D) 30 business days
Rationale: While standard admitted insurers have shorter time frames, the Texas Insurance
Code allows Surplus Lines companies a longer period, up to 30 business days, to
acknowledge receipt of a new claim.
Question 3
A surety will scrutinize all of the following characteristics of a principal during the underwriting
process, EXCEPT:
A) Character
B) Capacity
,C) Capital
D) Collateral
E) Consideration
Correct Answer: E) Consideration
Rationale: Surety underwriting is often based on the "Three C's": Character (reputation),
Capacity (ability to perform), and Capital (financial stability). Consideration is a required
element for a legal contract to be valid, not a characteristic of the principal that is
underwritten.
Question 4
Under Section II of a Homeowners policy, a cemetery plot owned by the insured is considered to
be:
A) An insured location.
B) Personal property.
C) An "other structure".
D) An incidental occupancy.
E) An exclusion.
Correct Answer: A) An insured location.
Rationale: The definition of "insured location" in a Homeowners policy is broad and
includes various places for which the insured may have liability, including vacant land
(other than farmland), and cemetery plots or burial vaults.
Question 5
Which of the following is NOT one of the four major coverages of an Ocean Marine policy?
A) Hull
B) Cargo
C) Freight
D) Protection & Indemnity
E) Seaworthiness
Correct Answer: E) Seaworthiness
Rationale: The four primary coverages in Ocean Marine insurance are Hull (for the vessel),
, Cargo (for the goods), Freight (for the cost of shipping), and Protection & Indemnity (for
liability). Seaworthiness is an implied warranty, not a coverage.
Question 6
Hannah must take time away from work to help assist in the investigation of a claim made
against her BOP policy. The policy will pay for Hannah's actual loss of earnings up to:
A) $100 per day.
B) $200 per day.
C) $250 per day.
D) $500 per day.
E)
1,000𝑝𝑒𝑟𝑑𝑎𝑦. 𝐶𝑜𝑟𝑟𝑒𝑐𝑡𝐴𝑛𝑠𝑤𝑒𝑟: 𝐶) ∗∗
250 per day.**
Rationale: Under the Supplementary Payments section of a standard Businessowners Policy
(BOP), the insurer will pay up to $250 per day for the insured's lost earnings if they are
required to assist in the investigation or defense of a claim.
Question 7
A ship has suffered damage and sunk. Which of the following Ocean Marine coverages would
respond to cover the loss of the ship itself?
A) Cargo insurance
B) Freight insurance
C) Protection & Indemnity insurance
D) Hull insurance
E) Jettison coverage
Correct Answer: D) Hull insurance
Rationale: Hull insurance is the section of an Ocean Marine policy that provides physical
damage coverage for the vessel itself, including its machinery and equipment.
Question 8
As a fiduciary agent, an adjuster has the power to bind the insurer. Which of the following
statements is FALSE regarding this power?
CORRECT ANSWERS) VERIFIED ANSWERS
Question 1
Which of the following Texas Workers' Compensation benefits are increased by a cost-of-living
adjustment (COLA)?
A) Temporary Income Benefits (TIBs) only
B) Impairment Income Benefits (IIBs) only
C) All income benefits
D) Lifetime Income Benefits (LIBs) only
E) Death and Burial Benefits
Correct Answer: D) Lifetime Income Benefits (LIBs) only
Rationale: In Texas, only Lifetime Income Benefits (LIBs) are subject to an annual cost-of-
living adjustment to account for inflation over the recipient's lifetime. Other income
benefits are for a defined period and are not adjusted.
Question 2
According to the Texas Insurance Code, how long do Surplus Lines companies have to
acknowledge the receipt of a claim?
A) 10 business days
B) 15 business days
C) 20 business days
D) 30 business days
E) There is no specific time frame.
Correct Answer: D) 30 business days
Rationale: While standard admitted insurers have shorter time frames, the Texas Insurance
Code allows Surplus Lines companies a longer period, up to 30 business days, to
acknowledge receipt of a new claim.
Question 3
A surety will scrutinize all of the following characteristics of a principal during the underwriting
process, EXCEPT:
A) Character
B) Capacity
,C) Capital
D) Collateral
E) Consideration
Correct Answer: E) Consideration
Rationale: Surety underwriting is often based on the "Three C's": Character (reputation),
Capacity (ability to perform), and Capital (financial stability). Consideration is a required
element for a legal contract to be valid, not a characteristic of the principal that is
underwritten.
Question 4
Under Section II of a Homeowners policy, a cemetery plot owned by the insured is considered to
be:
A) An insured location.
B) Personal property.
C) An "other structure".
D) An incidental occupancy.
E) An exclusion.
Correct Answer: A) An insured location.
Rationale: The definition of "insured location" in a Homeowners policy is broad and
includes various places for which the insured may have liability, including vacant land
(other than farmland), and cemetery plots or burial vaults.
Question 5
Which of the following is NOT one of the four major coverages of an Ocean Marine policy?
A) Hull
B) Cargo
C) Freight
D) Protection & Indemnity
E) Seaworthiness
Correct Answer: E) Seaworthiness
Rationale: The four primary coverages in Ocean Marine insurance are Hull (for the vessel),
, Cargo (for the goods), Freight (for the cost of shipping), and Protection & Indemnity (for
liability). Seaworthiness is an implied warranty, not a coverage.
Question 6
Hannah must take time away from work to help assist in the investigation of a claim made
against her BOP policy. The policy will pay for Hannah's actual loss of earnings up to:
A) $100 per day.
B) $200 per day.
C) $250 per day.
D) $500 per day.
E)
1,000𝑝𝑒𝑟𝑑𝑎𝑦. 𝐶𝑜𝑟𝑟𝑒𝑐𝑡𝐴𝑛𝑠𝑤𝑒𝑟: 𝐶) ∗∗
250 per day.**
Rationale: Under the Supplementary Payments section of a standard Businessowners Policy
(BOP), the insurer will pay up to $250 per day for the insured's lost earnings if they are
required to assist in the investigation or defense of a claim.
Question 7
A ship has suffered damage and sunk. Which of the following Ocean Marine coverages would
respond to cover the loss of the ship itself?
A) Cargo insurance
B) Freight insurance
C) Protection & Indemnity insurance
D) Hull insurance
E) Jettison coverage
Correct Answer: D) Hull insurance
Rationale: Hull insurance is the section of an Ocean Marine policy that provides physical
damage coverage for the vessel itself, including its machinery and equipment.
Question 8
As a fiduciary agent, an adjuster has the power to bind the insurer. Which of the following
statements is FALSE regarding this power?
