Kentucky Adjuster Exam Prep Questions
and Answers Graded A+
Insurance - Correct answer-Transfers risk of financial losses from one party to
another
Insured - Correct answer-Individual or organization that pays premiums in
exchange for protection
Insurer - Correct answer-Company, group, or government agency offering financial
protection
Insurance policy - Correct answer-A legally binding contract in which the insurer
agrees to take on specified risks in exchange for the insured's premium.
Principle of indemnity - Correct answer-Restoration to previous financial
condition; no more, no less
Four Qualifications of a contract: - Correct answer--Agreement
-Consideration
-Competent parties
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,-Legal Purpose
Declarations - Correct answer-- Makes contract specific to the policy holder
-Always establishes first section
- Names, Policy #, Location and description of item, value of item, dates of policy,
amount and limit of coverage, deductible, premium
Definitions - Correct answer-- Not essential
- Defines terms used to write policy
Insuring Agreement - Correct answer-What is covered, causes of loss covered,
services provided, exclusions, max limit of coverage
Conditions - Correct answer-Insurer specifies any limits or qualifications the
policyholder must meet
Exclusions - Correct answer-common: Earthquakes, flooding, war, nuclear
hazards, intentional
Endorsements - Correct answer-Additions to policy
Characteristics of Insurance contracts - Correct answer-1. Personal Contract 2.
Contract of Adhesion
3. Utmost Good Faith contract
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
, 4. Aleatory Contract
5 Unilateral Contract 6. Conditional Contract
Meanings of Risk - Correct answer-- Potential for loss
-The insured item
Categories of Risk - Correct answer-- Speculative= any risk in which gain is
possible. Not insurable
- Pure Risk= any risk which no gain is possible
Risk Management Techniques - Correct answer-Risk Avoidance- Eliminates Risks
Risk Reduction- Reduces or mitigates risk
Risk Transference- Paying someone to take on risk
Risk Retention- Assumes or accepts risk
Binder - Correct answer-Temp. coverage until policy is issued
Estoppel - Correct answer-Principle holding that if insurer accepts a practice for a
time, it cannot later refuse coverage because of that practice.
Occurence - Correct answer-Event or circumstance that causes a loss
Proximate cause - Correct answer-original occurrence in an unbroken chain of
events that results in a loss
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
and Answers Graded A+
Insurance - Correct answer-Transfers risk of financial losses from one party to
another
Insured - Correct answer-Individual or organization that pays premiums in
exchange for protection
Insurer - Correct answer-Company, group, or government agency offering financial
protection
Insurance policy - Correct answer-A legally binding contract in which the insurer
agrees to take on specified risks in exchange for the insured's premium.
Principle of indemnity - Correct answer-Restoration to previous financial
condition; no more, no less
Four Qualifications of a contract: - Correct answer--Agreement
-Consideration
-Competent parties
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,-Legal Purpose
Declarations - Correct answer-- Makes contract specific to the policy holder
-Always establishes first section
- Names, Policy #, Location and description of item, value of item, dates of policy,
amount and limit of coverage, deductible, premium
Definitions - Correct answer-- Not essential
- Defines terms used to write policy
Insuring Agreement - Correct answer-What is covered, causes of loss covered,
services provided, exclusions, max limit of coverage
Conditions - Correct answer-Insurer specifies any limits or qualifications the
policyholder must meet
Exclusions - Correct answer-common: Earthquakes, flooding, war, nuclear
hazards, intentional
Endorsements - Correct answer-Additions to policy
Characteristics of Insurance contracts - Correct answer-1. Personal Contract 2.
Contract of Adhesion
3. Utmost Good Faith contract
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
, 4. Aleatory Contract
5 Unilateral Contract 6. Conditional Contract
Meanings of Risk - Correct answer-- Potential for loss
-The insured item
Categories of Risk - Correct answer-- Speculative= any risk in which gain is
possible. Not insurable
- Pure Risk= any risk which no gain is possible
Risk Management Techniques - Correct answer-Risk Avoidance- Eliminates Risks
Risk Reduction- Reduces or mitigates risk
Risk Transference- Paying someone to take on risk
Risk Retention- Assumes or accepts risk
Binder - Correct answer-Temp. coverage until policy is issued
Estoppel - Correct answer-Principle holding that if insurer accepts a practice for a
time, it cannot later refuse coverage because of that practice.
Occurence - Correct answer-Event or circumstance that causes a loss
Proximate cause - Correct answer-original occurrence in an unbroken chain of
events that results in a loss
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
