Texas P&C Adjuster Licensing Exam (Claims Handling) Questions
and Answers | 2025/2026 | latest Update | Instant Download!!
Correct answer is in bold and labeled (correct answer)
1. When an adjuster evaluates a third-party liability claim, what is the FIRST step in determining
whether the insurer owes coverage?
a. Assessing the claimant’s injuries
b. Determining the insured’s intent
c. Reviewing the insuring agreement to confirm that the event meets the definition of an occurrence
(correct answer)
d. Evaluating claimant credibility
Rationale: Coverage analysis always begins with whether the claim fits within the insuring agreement before
exclusions or other provisions are considered.
2. Texas law requires that an adjuster acknowledge receipt of a claim within how many days?
a. 5 days
b. 15 days (correct answer)
c. 30 days
d. 21 days
Rationale: Under Texas Prompt Payment of Claims Act (PPCA), insurers must acknowledge within 15 days.
3. A roof has an RC value of $18,500. It has depreciated 35%. The policy is ACV with a $1,500
deductible. What is the insurer’s payment?
a. $11,025
b. $15,670
c. $10,525 (correct answer)
d. $9,500
Rationale: Depreciation = 18,500 × .35 = 6,475. ACV = 12,025. Deductible = 1,500 → Payment = 10,525.
4. When multiple policies cover the same loss, which clause determines how the insurers share
payment?
a. Salvage clause
b. Subrogation clause
c. Valuation provision
d. Other Insurance clause (correct answer)
Rationale: This clause explains pro rata or contribution by limits.
,5. Under Texas unfair claims settlement rules, which action is prohibited?
a. Requesting documents related to the claim
b. Negotiating settlements
c. Misrepresenting material policy provisions (correct answer)
d. Denying fraudulent claims
Rationale: Misrepresentation is listed as unfair under TDI regulations.
6. A commercial building has RC $2,000,000 and is insured for $1,200,000 with 80% coinsurance. A
$600,000 loss occurs. How much will the carrier pay?
a. $360,000
b. $600,000
c. $450,000 (correct answer)
d. $300,000
Rationale: Required = 1.6M. Carried ÷ Required = 1.2/1.6 = .75. Payment = $600k × .75 = 450k.
7. Which document gives an adjuster authority to act on behalf of the insurer?
a. Reservation of rights
b. Appraisal demand
c. Letter of assignment (correct answer)
d. Salvage authorization
Rationale: Assignment letter outlines authority and claim duties.
8. A claimant demands policy limits immediately. What is the adjuster’s correct response?
a. Offer half the limit
b. Ignore the demand
c. Continue investigating and respond reasonably within statutory timeframes (correct answer)
d. Automatically pay limits
Rationale: Demand for limits does not remove adjuster’s duty to investigate properly.
9. Which loss would typically fall under Coverage B of a HO policy?
a. Damage to the living room
b. Damage to a detached garage (correct answer)
c. Jewelry theft
d. Personal liability loss
Rationale: Coverage B = Other Structures.
10. A car valued at $28,000 ACV is damaged beyond repair. Salvage value is $6,000. Deductible is
$1,000. What is the insurer’s payment?
a. $22,000
b. $27,000
, c. $21,000 (correct answer)
d. $20,000
Rationale: ACV − salvage − deductible = 28,000 − 6,000 − 1,000 = 21,000.
11. When must the insurer notify a claimant that additional time is needed to investigate?
a. Whenever adjuster decides
b. After 60 days
c. Within 15 business days after receiving requested documents (correct answer)
d. Only after lawsuit is filed
Rationale: Texas PPCA requires written notice and explanation.
12. What is the role of the umpire in the appraisal process?
a. Advocate for the insured
b. Advocate for the insurer
c. Neutral party who resolves differences between appraisers (correct answer)
d. Determines coverage
Rationale: Umpire only resolves valuation disputes, not coverage issues.
13. Under liability claims handling, what type of damages compensate for intangible losses?
a. Special damages
b. Punitive damages
c. General damages (correct answer)
d. Nominal damages
Rationale: General damages include pain, suffering, emotional distress.
14. If an exclusion applies, what is the adjuster’s obligation?
a. Deny without explanation
b. Cite the specific policy language supporting the denial (correct answer)
c. Notify claimant orally only
d. Close the file immediately
Rationale: TDI requires written denial with policy language.
15. A property loss involves RC = $650,000. Actual insurance carried = $390,000. Coinsurance = 90%.
Loss = $200,000. How much is paid?
a. $130,000
b. $180,000
c. $133,333 (correct answer)
d. $120,000
Rationale: Required = 585,000. Ratio = 390/585 = .6667. Payment = 200k × .6667 = 133,333.
and Answers | 2025/2026 | latest Update | Instant Download!!
Correct answer is in bold and labeled (correct answer)
1. When an adjuster evaluates a third-party liability claim, what is the FIRST step in determining
whether the insurer owes coverage?
a. Assessing the claimant’s injuries
b. Determining the insured’s intent
c. Reviewing the insuring agreement to confirm that the event meets the definition of an occurrence
(correct answer)
d. Evaluating claimant credibility
Rationale: Coverage analysis always begins with whether the claim fits within the insuring agreement before
exclusions or other provisions are considered.
2. Texas law requires that an adjuster acknowledge receipt of a claim within how many days?
a. 5 days
b. 15 days (correct answer)
c. 30 days
d. 21 days
Rationale: Under Texas Prompt Payment of Claims Act (PPCA), insurers must acknowledge within 15 days.
3. A roof has an RC value of $18,500. It has depreciated 35%. The policy is ACV with a $1,500
deductible. What is the insurer’s payment?
a. $11,025
b. $15,670
c. $10,525 (correct answer)
d. $9,500
Rationale: Depreciation = 18,500 × .35 = 6,475. ACV = 12,025. Deductible = 1,500 → Payment = 10,525.
4. When multiple policies cover the same loss, which clause determines how the insurers share
payment?
a. Salvage clause
b. Subrogation clause
c. Valuation provision
d. Other Insurance clause (correct answer)
Rationale: This clause explains pro rata or contribution by limits.
,5. Under Texas unfair claims settlement rules, which action is prohibited?
a. Requesting documents related to the claim
b. Negotiating settlements
c. Misrepresenting material policy provisions (correct answer)
d. Denying fraudulent claims
Rationale: Misrepresentation is listed as unfair under TDI regulations.
6. A commercial building has RC $2,000,000 and is insured for $1,200,000 with 80% coinsurance. A
$600,000 loss occurs. How much will the carrier pay?
a. $360,000
b. $600,000
c. $450,000 (correct answer)
d. $300,000
Rationale: Required = 1.6M. Carried ÷ Required = 1.2/1.6 = .75. Payment = $600k × .75 = 450k.
7. Which document gives an adjuster authority to act on behalf of the insurer?
a. Reservation of rights
b. Appraisal demand
c. Letter of assignment (correct answer)
d. Salvage authorization
Rationale: Assignment letter outlines authority and claim duties.
8. A claimant demands policy limits immediately. What is the adjuster’s correct response?
a. Offer half the limit
b. Ignore the demand
c. Continue investigating and respond reasonably within statutory timeframes (correct answer)
d. Automatically pay limits
Rationale: Demand for limits does not remove adjuster’s duty to investigate properly.
9. Which loss would typically fall under Coverage B of a HO policy?
a. Damage to the living room
b. Damage to a detached garage (correct answer)
c. Jewelry theft
d. Personal liability loss
Rationale: Coverage B = Other Structures.
10. A car valued at $28,000 ACV is damaged beyond repair. Salvage value is $6,000. Deductible is
$1,000. What is the insurer’s payment?
a. $22,000
b. $27,000
, c. $21,000 (correct answer)
d. $20,000
Rationale: ACV − salvage − deductible = 28,000 − 6,000 − 1,000 = 21,000.
11. When must the insurer notify a claimant that additional time is needed to investigate?
a. Whenever adjuster decides
b. After 60 days
c. Within 15 business days after receiving requested documents (correct answer)
d. Only after lawsuit is filed
Rationale: Texas PPCA requires written notice and explanation.
12. What is the role of the umpire in the appraisal process?
a. Advocate for the insured
b. Advocate for the insurer
c. Neutral party who resolves differences between appraisers (correct answer)
d. Determines coverage
Rationale: Umpire only resolves valuation disputes, not coverage issues.
13. Under liability claims handling, what type of damages compensate for intangible losses?
a. Special damages
b. Punitive damages
c. General damages (correct answer)
d. Nominal damages
Rationale: General damages include pain, suffering, emotional distress.
14. If an exclusion applies, what is the adjuster’s obligation?
a. Deny without explanation
b. Cite the specific policy language supporting the denial (correct answer)
c. Notify claimant orally only
d. Close the file immediately
Rationale: TDI requires written denial with policy language.
15. A property loss involves RC = $650,000. Actual insurance carried = $390,000. Coinsurance = 90%.
Loss = $200,000. How much is paid?
a. $130,000
b. $180,000
c. $133,333 (correct answer)
d. $120,000
Rationale: Required = 585,000. Ratio = 390/585 = .6667. Payment = 200k × .6667 = 133,333.
