Property Insurance Adjuster Examination

1.A windstorm damages the roof of a house insured on an HO-3. Which statement correctly describes that form?

2.A tenant on Oak Avenue wants insurance for furniture and clothing in a rented apartment. The landlord insures the building. Which form fits the tenant?

3.An owner wants open-perils coverage on both the house and the household contents. Which form provides that combination?

4.A person who owns a Harbor Lane condominium unit installed the kitchen cabinets and wants coverage for those improvements and for furniture. Which form is designed for that owner?

5.A kitchen fire burns the walls and built-in cabinets of the insured residence. Under a standard homeowners policy, which coverage applies to that dwelling damage?

6.A covered fire destroys a detached garage behind the insured house. The garage is not attached to the dwelling. Which coverage applies?

7.Clothing, a sofa, and a dining table are destroyed by a covered fire inside the residence. Which coverage applies to those items?

8.After a covered fire, the family cannot live at home. They pay hotel bills and spend more on meals than they normally spend on food. Which coverage applies to those extra costs?

9.A river overflows and standing water enters the ground floor of a house insured on a standard homeowners policy. Which statement is correct?

10.An earthquake cracks the foundation of a house insured on a standard homeowners policy. No fire follows. How is the crack treated?

11.A supply pipe inside a heated wall suddenly bursts, and water ruins drywall and flooring. No river, surface water, or drain backup is involved. How should the adjuster classify the water?

12.A lakeside cottage has been vacant, with no occupants and no furnishings, for 90 consecutive days. Vandals then break the windows and paint the walls. What is the result on a standard homeowners policy?

13.A rowhouse has been vacant, empty of people and furnishings, for 40 consecutive days when vandals damage the front door. Which statement is correct?

14.A property policy settles building losses at actual cash value. Which amount is actual cash value?

15.A hail-damaged roof has a replacement cost of $16,000. Depreciation is 25 percent. What is the actual cash value before the deductible?

16.A kitchen range is the only damaged item. Replacement cost is $1,200 and depreciation is $400. The policy pays actual cash value, and the deductible is $250. What is paid?

17.A covered chair is worth $300, and the policy limit on contents is $40,000. Which result follows from the rule that property insurance indemnifies?

18.A shed insured at actual cash value has a like-kind replacement cost of $10,000 and depreciation of $3,000. The insured wants a larger shed costing $14,000. What is the shed's actual cash value?

19.A floor has a replacement cost of $8,000 and depreciation of $2,000. The policy pays replacement cost after the insured actually completes the repair, which the insured does. Ignore the deductible. What is payable?

20.A deck has a replacement cost of $20,000 and depreciation of $5,000. The deductible is $1,000. The policy pays actual cash value until the deck is actually replaced. Repairs have not started. What is the initial payment?

21.A deck's replacement cost is $20,000 and depreciation is $5,000. The deductible is $1,000. The insurer already paid $14,000, the actual cash value after the deductible. The insured finishes replacement and documents it. What additional amount is due?

22.One storm causes $9,400 of covered fire damage and $30,000 of excluded river-flood damage. The deductible is $1,000. What does the insurer pay?

23.One windstorm damages a covered roof for $7,000 and a covered detached fence for $2,500. The deductible is $1,000. What is paid?

24.Thieves cause a covered loss of $4,000 on Monday. A separate fire on Friday causes a covered loss of $12,000. The deductible is $1,000 for each occurrence. What is the total payment?

25.Coverage A is $200,000, and the wind deductible is 2 percent of Coverage A. A covered wind loss is $18,000. What is paid?

26.A covered fire loss is $700. The deductible is $1,000. What does the insurer pay?

27.A feed store is worth $200,000. Its policy has an 80 percent coinsurance clause and a limit of $120,000. A covered loss is $40,000, and the deductible is $1,000. What is paid?

28.A floral shop is worth $100,000. Coinsurance is 80 percent, and the limit carried is $80,000. The covered loss is $16,000, and the deductible is $500. What is paid?

29.A furniture warehouse is worth $500,000. Coinsurance is 80 percent, and the limit carried is $300,000. The covered loss is $80,000, and the deductible is $4,000. What is paid?

30.A pottery studio is worth $80,000. Coinsurance is 80 percent, and the limit carried is $32,000. The covered loss is $16,000, and the deductible is $1,000. What is paid?

31.A print shop is worth $250,000. Coinsurance is 90 percent, and the limit carried is $225,000. The covered loss is $45,000, and the deductible is $2,500. What is paid?

32.A machine shop is worth $150,000. Coinsurance is 80 percent, and the limit carried is $90,000. The covered loss is $60,000, and the deductible is $2,000. What is paid?

33.A clinic building is worth $400,000. The limit is $320,000 with 80 percent coinsurance. A covered fire is a total loss of $400,000. The deductible is $5,000. What is paid?

34.A bookstore building is worth $300,000. Coinsurance is 80 percent, and the limit carried is $180,000. The covered loss is $48,000, and the deductible is $3,000. What is paid?

35.A distribution warehouse is worth $1,000,000. Coinsurance is 80 percent, and the limit carried is $400,000. The covered loss is $200,000, and the deductible is $10,000. What is paid?

36.A bakery building is worth $120,000. Coinsurance is 100 percent, and the limit carried is $80,000. The covered loss is $30,000, and the deductible is $1,000. What is paid?

37.A hardware store on Mill Road is worth $240,000. Coinsurance is 80 percent, and the limit carried is $144,000. The covered loss is $64,000, and the deductible is $4,000. What is paid?

38.A gift shop is worth $100,000. Coinsurance is 80 percent, and the limit carried is $100,000. The covered loss is $20,000, and the deductible is $1,000. What is paid?

39.The insured and the insurer agree that a fire is covered, but they disagree whether repairs cost $27,000 or $18,000. What can the appraisal clause decide?

40.Appraisal goes forward on a disputed repair cost. Coverage is not in dispute. Who can set the amount of the loss?

41.The insurer asks the insured to support a fire claim with a formal statement of what happened, what was damaged, and the amount claimed. Which document is the sworn proof of loss?

42.The insurer has requested a sworn proof of loss on a covered building fire. What must the insured do?

43.After paying a total loss on damaged equipment, the insurer takes what is left and sells it. What is that remaining value called?

44.Damaged shop equipment has an actual cash value of $5,000. The deductible is $500, and salvage is worth $800. The insurer takes the salvage. What is paid to the insured?

45.Shop equipment has an actual cash value of $5,000. The deductible is $500, and salvage is worth $800. The insured keeps the salvage. What is paid?

46.A contractor negligently cuts a supply line, and the escaping water damages drywall in a covered house. The insurer pays the insured's covered sudden-water claim. What may the insurer do next?

47.Before the insurer pays a water claim, the insured signs a full release in favor of the negligent contractor who cut the pipe. What is the subrogation concern?

48.A building loss would measure $80,000. The mortgage balance is $50,000. The named insured intentionally burned the building, so the insured's claim is barred. A standard mortgage clause applies. What may the lender be paid?

49.An adjuster arrives at a house after a kitchen fire and also sees older water stains the fire did not cause. Which task is part of the inspection?

50.Inspection shows $6,000 of covered fire damage and $9,000 of excluded flood damage from a later river overflow. The deductible is $1,000. What is paid?

51.On an HO-3 policy, a resident bumps a bookshelf and a ceramic lamp falls and shatters. No fire, wind, theft, or other named peril occurred. How is the lamp treated?

52.A resident bumps a bookshelf and a ceramic lamp falls and shatters. The lamp is insured under an HO-5, and no exclusion applies. How is the lamp treated?

53.Wind breaks a window, and rain then damages the ceiling. The same week, an earthquake cracks the foundation. No fire occurs. How should the adjuster separate the loss on a standard homeowners policy?

54.A drip under a sink has been rotting a cabinet for eight months. The insured did not repair it. There was no sudden break. How should that damage be treated on a standard homeowners policy?

55.Lightning strikes a house, and fire then spreads through the kitchen. Firefighters soak the burned cabinets. How is that damage treated?

56.A fire stays inside the fireplace and never escapes. Years of ordinary use have darkened the firebox bricks. The insured claims those bricks. Which statement is correct?

57.After a covered fire, the mortgage payment of $1,500 continues. Hotel cost for the uninhabitable period is $1,200, and meals cost $600 more than the family normally spends on food. What does Coverage D pay?

58.The insured rented a basement apartment in the residence for $800 a month. A covered fire makes that apartment unlivable for three months. Coverage D includes fair rental value. Ignore any deductible. What fair rental value is payable?

59.Coverage A is $300,000, and the policy sets Coverage B at 10 percent of Coverage A. A detached workshop, an other structure, has a covered replacement cost of $40,000. Ignore the deductible and depreciation. What is the most payable for the workshop?

60.Coverage A is $200,000, and the policy sets Coverage C at 50 percent of Coverage A. A covered contents loss is $70,000. Ignore the deductible and special limits. What is paid for this contents loss?

61.The policy states a $2,000 special limit for theft of jewelry. Thieves take jewelry worth $7,000 and a television worth $1,000. Theft is otherwise covered. The deductible is $500. What is paid?

62.A tenant's furniture is stolen from a rented apartment. The tenant has an HO-4. The landlord has a building policy. Which policy covers the tenant's furniture?

63.An HO-6 covers a unit owner's interior alterations. The association, not the unit owner, insures the exterior roof. A kitchen fire damages the owner's cabinets and the association's roof. Which item does this HO-6 Coverage A address?

64.Two primary policies cover the same bookstore building and share by limits. Policy X has a limit of $60,000. Policy Y has a limit of $40,000. Neither has a deductible. A covered loss is $20,000. What does Policy X pay?

65.Policy X insures a building for $60,000 and Policy Y insures it for $40,000. Both are primary, neither has a deductible, and they share a $20,000 covered loss pro rata by limits. What does Policy Y pay?

66.An insured's insurable interest in a building is $40,000. The policy limit is $100,000, and the deductible is $1,000. The building is a total loss as to that interest. What is the most this insured is paid?

67.A commercial wall can be repaired in like kind for $18,000. The insured asks for an upgraded stone wall costing $28,000. Replacement cost conditions are met for the like-kind repair, and the deductible is $1,000. What is paid?

68.A warehouse sprinkler pipe breaks suddenly and soaks cartons of merchandise. No river or surface water is involved. The commercial policy covers sudden sprinkler leakage. What is the cause of loss?

69.Damaged merchandise has a replacement cost of $24,000. Depreciation is 25 percent. The policy pays actual cash value, and the deductible is $1,000. What is paid?

70.A retail policy covers business income as net profit the loss prevented plus continuing operating expenses. For the shutdown, lost net profit is $8,000 and continuing expenses are $12,000. Building repairs are settled separately. What is the business-income loss?

71.The same store spends $3,000 above its normal costs to operate from a temporary shop. The policy covers that extra expense separately. Business income was already measured at $20,000. What does extra-expense coverage add?

72.A commercial shop has been vacant for 70 days. Vandals damage the interior. The policy suspends vandalism coverage after 60 days of vacancy. What is the result?

73.Hail breaks windows. Replacement cost of the glass is $3,200, and depreciation is $0. The deductible is $500. This is the whole loss. What is paid?

74.The insured swears in a proof of loss that a laptop was stolen. Inspection finds the laptop in a closet. It was not stolen. What is the proper result for that claim?

75.Old cracked caulk has let small amounts of rain in for a year. Last night's wind did not create a new opening. The ceiling stain comes from that long-standing opening. How is the stain treated?

76.Wind blows a tree into the roof and opens a hole. Rain then soaks the attic insulation through that new hole. Which statement is correct?

77.The policy covers debris removal as an additional amount up to $4,000 after a covered loss. Covered fire debris removal costs $3,000. The direct building damage is settled separately. What is paid for debris removal?

78.Coverage is agreed. The umpire and the insurer's appraiser agree the repair cost is $21,000. The insured's appraiser said $26,000. The deductible is $1,000. What is paid?

79.Which record belongs in the adjuster's inspection notes for a dwelling fire?

80.The insured kept a house heated, but a pipe in an exterior wall froze and burst. Water damaged the floor. No surface water was involved. The policy is an HO-3. How is the floor damage treated?

81.The policy covers property removed from premises endangered by a covered peril, against direct loss, for up to 30 days. A chair was moved to storage 10 days ago because of a covered fire and is then stolen. Before the deductible, what is the result?

82.An office building is worth $600,000. The limit is $480,000 with 80 percent coinsurance. A covered loss is $96,000, and the deductible is $6,000. What is paid?

83.The insured asks the adjuster to include undamaged bedrooms in a kitchen-fire estimate so the payment will exceed the damage. What should the adjuster do?

84.Carpet replacement cost is $6,000. The carpet is 4 years old and has a 10-year useful life. Depreciation is straight line. What is the actual cash value before the deductible?

85.A hardware store's damaged stock has a replacement cost of $50,000 and depreciation of $12,500. The policy pays actual cash value. The deductible is $2,500. What is paid?

86.A policy names the lender under a loss-payable clause, not a standard mortgage clause. The named insured's claim is barred by the insured's intentional act. What does the loss-payable clause do?

87.A contents inventory lists $4,800 of covered items and one excluded item worth $2,200. The deductible is $500. What is paid?

88.A school building, insured for direct property loss only, is worth $360,000. Coinsurance is 90 percent, and the limit carried is $270,000. The covered loss is $72,000, and the deductible is $2,000. What is paid?

89.A bakery oven is a total loss. Actual cash value is $9,000, the deductible is $1,000, and salvage is worth $500. The insurer takes the salvage. What is paid to the insured?

90.The insurer paid the bakery's covered oven claim and took the salvage. A repair firm negligently caused the oven failure and is legally responsible. What may the insurer do?

91.Coverage A is $250,000, and a 1 percent deductible applies to wind. A covered wind loss is $9,000. What is paid?

92.A water heater ruptures suddenly and causes $5,500 of covered floor damage. The next day a river flood adds $14,000 of excluded damage. The deductible is $1,000. What is paid?

93.A tenant's HO-4 limit for personal property is $40,000. A covered fire destroys the tenant's contents, worth $12,000. The deductible is $500. The landlord owns the burned building. What does the HO-4 pay the tenant for the contents?

94.Which pairing of homeowners coverages is correct?

95.A dental office building is worth $800,000. Coinsurance is 80 percent, and the limit carried is $500,000. The covered loss is $160,000, and the deductible is $10,000. What is paid?

96.The insurer says earthquake damage is excluded. The insured agrees with the repair price but demands appraisal to force payment. What is the correct response?

97.One lamp from a matching pair is destroyed in a covered fire. The pair was worth $600, and the remaining lamp is worth $150. Replacing the lost lamp costs $250. The policy pays the lesser of that replacement cost or the drop in set value. The deductible was already applied to other items in this same fire. What is paid for the lamp?

98.The insured reports a fresh kitchen fire. Before any payment, what should the adjuster do?

99.A commercial special-perils policy excludes earthquake and flood. A truck strikes the loading dock, causing $11,000 of accidental impact damage. Later that week an earthquake cracks a separate wall for $40,000. The deductible is $1,000. What is paid?

100.A roof's replacement cost is $15,000, and depreciation is $4,500. The deductible is $500. The insurer already paid $10,000, which is actual cash value after the deductible. The insured completes replacement. What additional recoverable depreciation is due?

101.Owners leave a furnished house for a 20-day trip. The house is unoccupied but not vacant. On day 20, vandals damage a door. The policy is a standard homeowners policy. What is the result?

102.A motel office building is worth $450,000. Coinsurance is 80 percent, and the limit carried is $270,000. The covered loss is $90,000, and the deductible is $5,000. What is paid?

103.After a covered dwelling fire, which duty belongs to the insured?

104.Fire damages a landlord's building for $30,000 and a tenant's contents for $6,000. The tenant's HO-4 deductible is $500. What does the HO-4 pay?

105.Smoke from a hostile kitchen fire blackens the living-room walls. The fire left the pan and spread. No river water or earthquake is involved. How is the smoke treated?

106.The insured finishes repairs, and the invoices match the agreed replacement cost of $13,000. Depreciation had been $3,000. The deductible is $1,000. No payment has been made yet, and the replacement-cost condition is satisfied. What is paid?

107.The insurer paid $14,000 on a covered roof claim. The deductible was $1,000. The policy says a subrogation recovery repays the insurer first and then reimburses the deductible. A negligent roofer pays a $15,000 recovery. What does the insured receive from it?

108.A covered dwelling fire causes $32,000 of damage. Excluded earthquake cracks in the same inspection measure $8,000. The deductible is $1,000. There is no coinsurance penalty, and the amount is under the limit. What is the settlement?