NEW MEXICO ADJUSTER STATE PREP EXAM: PART 2
QUESTIONS WITH COMPLETE VERIFIED CORRECT
ANSWERS UPDATED
Linda’s home is worth $525,000. She has a homeowners policy with a $500,000
limit and a 1.5% deductible. When Linda’s husband sets their kitchen on fire while
frying a turkey, he accidentally causes $36,000 in damages. How much can Linda
and her husband expect to receive in their settlement?
Linda is fully insured with $500,000 in coverage. Her policy has a 1.5% deductible. 1.5%
of 500,000 = 7,500. So, when she suffers a $36,000 loss, her settlement will be $36,000
minus $7,500 which equals $28,500.
As Jonathan was driving through an intersection, another driver ran a red light
and crashed into the side of Jonathan’s car, which caused significant physical
damage. Jonathan must now rent a car while his is being repaired. The collision
with the other driver would be considered a/an:
peril. The collision would be considered a peril, which is a cause of loss or damage.
Which of the following pieces of information would NOT be found on the
Declarations Page of the Standard Fire Policy?
Duties of the Insured After a Loss is a policy condition that would appear in the
conditions section, not the declarations.
During a storm, heavy winds cause a tree limb to break and fall onto Paul’s
house, causing $6,500 in damage. Paul’s insurance company now considers his
house:
Paul's insurance company now considers his house a loss.
During a storm, lightning strikes a tree in Norman’s back yard, causing it to fall
on his house and damage his roof. In this case, Norman’s fallen tree is
considered:
In this case, Norman's fallen tree would be considered a direct loss.
, Jim owns a home valued at $187,500, but he only has a $100,000 homeowner’s
policy and is underinsured. During a storm, lightning strikes Jim’s home causing
$45,000 in damages. The insurer decides to invoke a coinsurance penalty. How
much will Jim be required to pay for the penalty?
he coinsurance requirement of 80% means that Jim should have maintained a minimum
policy of $150,000 in coverage. Instead, Jim maintained a $100,000 policy, under-
insuring himself by a third. When the insurer invokes the coinsurance penalty, Jim is
then responsible for a third of the damages, which in this case totaled $45,000. So, Jim
must pay $15,000.
Insurance policies are aleatory contracts. This means:
An insurance policy is an aleatory contract, which means that its execution depends on
an unknown future event.
As a result of a recent business decision, Company Q’s insurer has broadened
mold coverage in new standard commercial property policies without increasing
the premium rate. Which of the following is true?
The Liberalization clause requires that this broadened coverage automatically apply to
Company Q's existing policy.. Under the liberalization clause, Company Q's policy
would automatically get this increase in coverage.
When a claimant submits a claim, an adjuster can do any of the following except:
The adjuster must always respond to a claim, whether or not the claim is covered.
Whose responsibility is it to maintain an open line of communication during the
settlement process?
The adjuster is responsible for providing an open line of communication throughout the
claims process.
The Permitted Incidental Occupancies endorsement to a homeowners policy
provides:
The Permitted Incidental Occupancies endorsement on a homeowners policy provides a
specified amount of coverage under Coverages B and C for business purposes.
A windstorm causes damage on a property covered by a DP-2 form. There is
downed fencing, some furniture in the dwelling gets water damage from rainwater
QUESTIONS WITH COMPLETE VERIFIED CORRECT
ANSWERS UPDATED
Linda’s home is worth $525,000. She has a homeowners policy with a $500,000
limit and a 1.5% deductible. When Linda’s husband sets their kitchen on fire while
frying a turkey, he accidentally causes $36,000 in damages. How much can Linda
and her husband expect to receive in their settlement?
Linda is fully insured with $500,000 in coverage. Her policy has a 1.5% deductible. 1.5%
of 500,000 = 7,500. So, when she suffers a $36,000 loss, her settlement will be $36,000
minus $7,500 which equals $28,500.
As Jonathan was driving through an intersection, another driver ran a red light
and crashed into the side of Jonathan’s car, which caused significant physical
damage. Jonathan must now rent a car while his is being repaired. The collision
with the other driver would be considered a/an:
peril. The collision would be considered a peril, which is a cause of loss or damage.
Which of the following pieces of information would NOT be found on the
Declarations Page of the Standard Fire Policy?
Duties of the Insured After a Loss is a policy condition that would appear in the
conditions section, not the declarations.
During a storm, heavy winds cause a tree limb to break and fall onto Paul’s
house, causing $6,500 in damage. Paul’s insurance company now considers his
house:
Paul's insurance company now considers his house a loss.
During a storm, lightning strikes a tree in Norman’s back yard, causing it to fall
on his house and damage his roof. In this case, Norman’s fallen tree is
considered:
In this case, Norman's fallen tree would be considered a direct loss.
, Jim owns a home valued at $187,500, but he only has a $100,000 homeowner’s
policy and is underinsured. During a storm, lightning strikes Jim’s home causing
$45,000 in damages. The insurer decides to invoke a coinsurance penalty. How
much will Jim be required to pay for the penalty?
he coinsurance requirement of 80% means that Jim should have maintained a minimum
policy of $150,000 in coverage. Instead, Jim maintained a $100,000 policy, under-
insuring himself by a third. When the insurer invokes the coinsurance penalty, Jim is
then responsible for a third of the damages, which in this case totaled $45,000. So, Jim
must pay $15,000.
Insurance policies are aleatory contracts. This means:
An insurance policy is an aleatory contract, which means that its execution depends on
an unknown future event.
As a result of a recent business decision, Company Q’s insurer has broadened
mold coverage in new standard commercial property policies without increasing
the premium rate. Which of the following is true?
The Liberalization clause requires that this broadened coverage automatically apply to
Company Q's existing policy.. Under the liberalization clause, Company Q's policy
would automatically get this increase in coverage.
When a claimant submits a claim, an adjuster can do any of the following except:
The adjuster must always respond to a claim, whether or not the claim is covered.
Whose responsibility is it to maintain an open line of communication during the
settlement process?
The adjuster is responsible for providing an open line of communication throughout the
claims process.
The Permitted Incidental Occupancies endorsement to a homeowners policy
provides:
The Permitted Incidental Occupancies endorsement on a homeowners policy provides a
specified amount of coverage under Coverages B and C for business purposes.
A windstorm causes damage on a property covered by a DP-2 form. There is
downed fencing, some furniture in the dwelling gets water damage from rainwater
