Adjuster PRO Final Exam Questions And Already
Passed Answers.
,What is a reserve, in insurance terms? - Answer A pool of collected premiums that the insurer sets aside to pay
claims
Which of these scenarios is NOT an example of indemnification? - Answer When trying to renew her dog's
license, Ellen has to pay a penalty to the city for letting its rabies vaccination lapse.
Ellen having to pay a fine is not an example of indemnification. Indemnification means being restored to the
financial condition you were in before a loss. In three of these situations, someone experienced a loss and was then
"made whole": Joe-Bob's neighbor lost his TV, Alice lost her house, and Hugh lost the use of his car. But in the case
of Ellen's dog, the city did not experience a loss; it simply imposed a
penalty to teach Ellen a lesson about keeping up with her dog's shots.
Greg plays trombone in his school band during football games. During a rally song in the stands one day,
Greg annoys one of the opposing team's fans, who grabs his $400 trombone and hurls it down the
bleachers, completely destroying it. Greg's insurance pays him $400 to replace the trombone, but then the
opposing team's coach also offers to replace the instrument, at whatever the cost. So Greg orders a new $3,200
trombone and has the opposing team's athletic department absorb the cost. Which principle has Greg violated? -
Answer The principle of indemnity
Which of the following statements is true about an insurance policy? - Answer It relies on the utmost good faith
of both the insured and the insurer
An insurance policy relies on the utmost good faith of both the insured and the insurer.
Which of the following would you find in the Conditions section of an insurance policy? - Answer The insured's
duty after a loss
In which section of an insurance policy might you find the following statement? "Damage to insured property
must be reported within 15 days of the damaging occurrence." - Answer Conditions
A captive insurance company: - Answer exists solely to provide insurance for its parent company.
, Cindy holds an insurance policy from Sine Nomine Insurance. This is not a publicly traded company, and Cindy
can participate in the election of the board, receiving dividends if the company does well. Sine Nomine Insurance
could be best described as a: - Answer Sine Nomine Insurance is a mutual insurance company.
When an insurer issues an insurance policy, the actual item, person, or organization that is being insured is called
the: - Answer risk.
Which of the following is a hazard? - Answer A driver's tendency to text while driving
Which of the following situations does NOT involve an insurable risk? - Answer Dale just bought 30 shares of a
hot new startup company online.
Which of the following situations does NOT involve an instance of "pure risk?" - Answer Loss of money invested
in the stock market
Which of the following is an insurable risk? - Answer football stadium
Risk avoidance is a risk management technique that: - Answer eliminates risk.
Amy needs more floor space in her antique furniture store, so she buys a storage building 3 miles away. She is
worried about keeping the furniture in the storage building safe, so she puts in an alarm system and smoke
detectors. By purchasing the alarm system and smoke detectors, Amy is practicing: - Answer risk reduction.
Six Stars Development Company has just been offered a great deal on ten large properties in Las Vegas. The
economy in Las Vegas has been declining recently, but the CEO of Six Stars expects it to recover soon. This could
be an exceptional opportunity for Six Stars, but it's also pretty risky. Ultimately, the Six Stars executive team
decides not to purchase the properties. This is an example of: - Answer risk avoidance.
Jason's auto policy states that the insurer may cancel coverage if a premium is more than 30 days late. However,
Jason is currently more than 30 days late, and has been so five times in the last year, and his
Passed Answers.
,What is a reserve, in insurance terms? - Answer A pool of collected premiums that the insurer sets aside to pay
claims
Which of these scenarios is NOT an example of indemnification? - Answer When trying to renew her dog's
license, Ellen has to pay a penalty to the city for letting its rabies vaccination lapse.
Ellen having to pay a fine is not an example of indemnification. Indemnification means being restored to the
financial condition you were in before a loss. In three of these situations, someone experienced a loss and was then
"made whole": Joe-Bob's neighbor lost his TV, Alice lost her house, and Hugh lost the use of his car. But in the case
of Ellen's dog, the city did not experience a loss; it simply imposed a
penalty to teach Ellen a lesson about keeping up with her dog's shots.
Greg plays trombone in his school band during football games. During a rally song in the stands one day,
Greg annoys one of the opposing team's fans, who grabs his $400 trombone and hurls it down the
bleachers, completely destroying it. Greg's insurance pays him $400 to replace the trombone, but then the
opposing team's coach also offers to replace the instrument, at whatever the cost. So Greg orders a new $3,200
trombone and has the opposing team's athletic department absorb the cost. Which principle has Greg violated? -
Answer The principle of indemnity
Which of the following statements is true about an insurance policy? - Answer It relies on the utmost good faith
of both the insured and the insurer
An insurance policy relies on the utmost good faith of both the insured and the insurer.
Which of the following would you find in the Conditions section of an insurance policy? - Answer The insured's
duty after a loss
In which section of an insurance policy might you find the following statement? "Damage to insured property
must be reported within 15 days of the damaging occurrence." - Answer Conditions
A captive insurance company: - Answer exists solely to provide insurance for its parent company.
, Cindy holds an insurance policy from Sine Nomine Insurance. This is not a publicly traded company, and Cindy
can participate in the election of the board, receiving dividends if the company does well. Sine Nomine Insurance
could be best described as a: - Answer Sine Nomine Insurance is a mutual insurance company.
When an insurer issues an insurance policy, the actual item, person, or organization that is being insured is called
the: - Answer risk.
Which of the following is a hazard? - Answer A driver's tendency to text while driving
Which of the following situations does NOT involve an insurable risk? - Answer Dale just bought 30 shares of a
hot new startup company online.
Which of the following situations does NOT involve an instance of "pure risk?" - Answer Loss of money invested
in the stock market
Which of the following is an insurable risk? - Answer football stadium
Risk avoidance is a risk management technique that: - Answer eliminates risk.
Amy needs more floor space in her antique furniture store, so she buys a storage building 3 miles away. She is
worried about keeping the furniture in the storage building safe, so she puts in an alarm system and smoke
detectors. By purchasing the alarm system and smoke detectors, Amy is practicing: - Answer risk reduction.
Six Stars Development Company has just been offered a great deal on ten large properties in Las Vegas. The
economy in Las Vegas has been declining recently, but the CEO of Six Stars expects it to recover soon. This could
be an exceptional opportunity for Six Stars, but it's also pretty risky. Ultimately, the Six Stars executive team
decides not to purchase the properties. This is an example of: - Answer risk avoidance.
Jason's auto policy states that the insurer may cancel coverage if a premium is more than 30 days late. However,
Jason is currently more than 30 days late, and has been so five times in the last year, and his
