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Arizona Adjuster Licensing Questions And Correct Answers (Verified Answers) Plus Rationa, Exams of Insurance law

DeVry University - CaliforniaInsurance law

Arizona Adjuster Licensing Questions And Correct Answers (Verified Answers) Plus Rationales 2025 This set covers general adjuster knowledge, Arizona-specific regulations, ethics, and claims practices.

Typology: Exams

2024/2025

Available from 07/01/2025

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Arizona Adjuster Licensing Questions And
Correct Answers (Verified Answers) Plus
Rationales 2025
This set covers general adjuster knowledge, Arizona-specific regulations, ethics,
and claims practices.
1. What is the minimum age requirement to apply for an Arizona adjuster
license?
18 years old
An applicant must be at least 18 years of age to be eligible for licensure in
Arizona.
2. Which of the following is a requirement for an Arizona resident adjuster
license?
Pass the state licensing exam
Arizona requires passing a state exam for resident adjuster licensure unless
exempt by reciprocity.
3. Which of these is a duty of an insurance adjuster in Arizona?
Investigating and settling claims
Adjusters are responsible for investigating insurance claims and negotiating
settlements within policy limits.
4. How often must Arizona adjusters renew their license?
Every 4 years
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Download Arizona Adjuster Licensing Questions And Correct Answers (Verified Answers) Plus Rationa and more Exams Insurance law in PDF only on Docsity!

Arizona Adjuster Licensing Questions And

Correct Answers (Verified Answers) Plus

Rationales 2025

This set covers general adjuster knowledge, Arizona-specific regulations, ethics, and claims practices.

  1. What is the minimum age requirement to apply for an Arizona adjuster license? 18 years old An applicant must be at least 18 years of age to be eligible for licensure in Arizona.
  2. Which of the following is a requirement for an Arizona resident adjuster license? Pass the state licensing exam Arizona requires passing a state exam for resident adjuster licensure unless exempt by reciprocity.
  3. Which of these is a duty of an insurance adjuster in Arizona? Investigating and settling claims Adjusters are responsible for investigating insurance claims and negotiating settlements within policy limits.
  4. How often must Arizona adjusters renew their license? Every 4 years

Arizona adjuster licenses are valid for 4 years and must be renewed before expiration.

  1. What is the continuing education (CE) requirement for adjusters in Arizona? 24 hours every 4 years Arizona requires 24 hours of CE, including 3 hours of ethics, every 4-year license term.
  2. Which entity oversees insurance licensing in Arizona? Arizona Department of Insurance and Financial Institutions (DIFI) DIFI regulates insurance licensing and compliance in Arizona.
  3. When must a licensee report a change in address to the Arizona Department of Insurance? Within 30 days Arizona law requires address changes to be reported within 30 days.
  4. Which type of adjuster works directly for an insurance company? Staff adjuster A staff adjuster is an employee of the insurance company, not an independent contractor.
  5. What is a public adjuster? A licensed professional who represents the policyholder Public adjusters advocate for the insured in the claims process, not the insurer.
  6. What must be included in every Arizona adjuster license application? Fingerprint card for background check Background checks with fingerprints are mandatory for licensure.
  1. Which of the following is required for Arizona adjuster license renewal? Proof of completed continuing education Renewal requires evidence of completed CE hours.
  2. What is a reservation of rights letter? A notice that the insurer is investigating coverage This letter informs the insured that a claim is being reviewed but coverage is not yet confirmed.
  3. When must an adjuster notify the Arizona Department of a criminal conviction? Within 30 days Any criminal conviction must be reported within 30 days of the final disposition.
  4. What is a deductible? The amount the insured pays before coverage applies A deductible reduces the insurer’s liability by shifting part of the cost to the insured.
  5. When does an Arizona adjuster license expire? On the last day of the licensee’s birth month every 4 years Arizona licenses expire quadrennially on the licensee’s birth month’s end date.
  6. What is fraud in insurance? Intentional deception for financial gain Fraud includes misrepresenting facts to obtain benefits or deny rightful claims.
  7. Which of the following is NOT a type of property claim? Disability claim Disability claims fall under health insurance, not property insurance.
  1. An adjuster must complete CE in ethics every 4-year term totaling: 3 hours Ethics training ensures professionals understand proper conduct and compliance.
  2. The Arizona Unfair Claims Settlement Practices Act requires claim payments to be issued within: 30 days after acceptance of liability Delays in payment beyond 30 days can result in regulatory action.
  3. What is a proof of loss? A sworn statement of the amount claimed It is a document the insured submits to substantiate the value of the claim.
  4. What type of adjuster license must an Arizona resident obtain to handle property claims? Property and casualty adjuster license This license type covers most personal and commercial property claims.
  5. What is a total loss? When repair cost exceeds actual cash value Total loss occurs when a vehicle or property cannot be economically repaired.
  6. In Arizona, who may revoke or suspend an adjuster's license? Director of Insurance The Director has the authority to impose disciplinary action against licensees.
  7. What is the main reason for requiring adjuster licensing? To protect the public and ensure competence Licensing ensures adjusters meet educational and ethical standards.
  1. An adjuster who misrepresents policy provisions may be guilty of: Unfair trade practice Misleading claimants about coverage is a serious violation.
  2. What happens if an adjuster fails to meet CE requirements in Arizona? License cannot be renewed Without proof of CE completion, renewal will be denied.
  3. What is an appraisal clause? A method to resolve claim disputes Appraisal allows both parties to agree on loss value through third-party evaluators.
  4. A “release of liability” in a claim settlement means: The claimant waives further claims after settlement Signing the release closes the claim with no further liability.
  5. What is an exclusion in an insurance policy? A situation not covered by the policy Exclusions limit the insurer’s responsibility by defining non-covered events.
  6. What is the purpose of underwriting? To assess risk before issuing a policy Underwriting ensures policies are priced according to the level of risk.
  7. A claim reserve is: The estimated amount needed to pay a claim Reserves help insurers remain financially prepared for expected claim payouts.
  8. What is actual cash value (ACV)? Replacement cost minus depreciation ACV reflects the item's current value considering wear and tear.
  1. An adjuster commits “twisting” by: Misrepresenting policy terms to induce a change Twisting is an unethical practice to gain business or conversions.
  2. Which of the following must be reported to the Arizona Department of Insurance? Felony convictions Felony convictions are material and must be disclosed promptly to the Department.
  3. When can an adjuster discuss a claim with unauthorized third parties? Never, unless authorized by the claimant or law Adjusters must maintain confidentiality unless legally permitted or with the claimant’s consent.
  4. Which type of damages compensate for pain and suffering? General damages General damages are non-economic losses like pain, suffering, and emotional distress.
  5. Which damages are awarded to punish the wrongdoer? Punitive damages Punitive damages are intended to deter egregious misconduct, not to compensate the victim.
  6. What is a claims-made policy? A policy that covers claims made during the policy period Claims must be reported while the policy is active, regardless of when the event occurred.
  1. What must an adjuster do when a policyholder disputes a claim decision? Reinvestigate the claim and communicate findings Disputes require fair reconsideration and clear communication of outcomes.
  2. What is an adjuster’s obligation under the principle of utmost good faith? To act honestly and fairly Adjusters must deal with all parties truthfully and in good faith.
  3. How long must an insurer keep records of claims in Arizona? 3 years Claim records must be preserved for at least three years for regulatory review.
  4. What must an adjuster do when a conflict of interest arises? Disclose the conflict and recuse if necessary Transparency and avoidance of bias are essential for ethical adjusting.
  5. Which of the following is an example of insurer bad faith? Unreasonable delay in claim payment Deliberate delays in payment violate fair claims handling laws.
  6. What happens if a claimant signs a release of liability? The claim is considered closed A signed release typically ends the insurer’s legal obligation on that claim.
  7. What is the Arizona deadline for responding to a claim inquiry? 10 working days Arizona adjusters must reply to inquiries about claims within 10 business days.
  8. Which of the following is NOT a reason for license suspension? Voluntarily taking time off from adjusting Taking time off is not misconduct; suspension is for violations such as fraud.
  1. How should an adjuster handle an irate claimant? Remain calm and professional Adjusters must maintain composure and de-escalate emotional interactions.
  2. Which Arizona law governs unfair claims practices? Unfair Claims Settlement Practices Act This act outlines prohibited conduct and sets standards for fair claims handling.
  3. What is the standard of proof for insurance fraud? Preponderance of the evidence In civil cases like insurance fraud, this lower standard applies, not “beyond a reasonable doubt.”
  4. What is the Arizona time limit for filing a homeowner’s claim after a loss? As specified in the policy Policies often specify time limits, such as 1 year from date of loss.
  5. Which party determines negligence in a liability claim? The adjuster or court Adjusters assess fault, but legal disputes may be settled by courts.
  6. What is the term for insurance that covers the cost to replace an item without depreciation? Replacement cost Replacement cost covers a new item of like kind without subtracting for wear and tear.
  7. Which of the following is NOT a valid form of claim documentation? Verbal testimony without a witness Unverified verbal testimony is weak evidence and difficult to validate.
  1. Which claim would most likely involve a reservation of rights? One with questionable policy coverage Reservation letters preserve the insurer’s rights while a coverage decision is pending.
  2. If an adjuster suspects fraud, what is the best course of action? Report it to the insurer’s fraud unit or SIU Suspected fraud must be reported and investigated further.
  3. What is the insured’s duty after a loss? Take reasonable steps to prevent further damage Insureds must mitigate damages to avoid worsening the loss.
  4. What is an insurable interest? A financial stake in the insured property or person Only individuals who stand to suffer a financial loss can insure the subject.
  5. What is coinsurance in property insurance? A clause requiring the insured to carry a certain amount of coverage If the insured underinsures, they may face a penalty when filing a claim.
  6. When may an Arizona license be denied or revoked? For felony convictions, fraud, or CE violations Serious misconduct or noncompliance with license rules may result in denial or revocation.
  7. What is abandonment in property claims? When the insured leaves property to the insurer Insureds cannot abandon property unless the insurer agrees to accept it.
  8. What is moral hazard? The increased risk of loss due to dishonest behavior

Moral hazard arises when the insured may intentionally cause or exaggerate a loss.

  1. What is physical hazard? A tangible condition that increases risk Examples include frayed wiring or slippery floors.
  2. What is the difference between misrepresentation and concealment? Misrepresentation is a false statement; concealment is withholding information Both can void a policy, but they differ in form.
  3. How soon must an adjuster respond after receiving a claim? Promptly, no later than 10 business days Arizona requires timely acknowledgment of all claims.
  4. What must be done before settling a claim with a minor? Court or guardian approval Minors cannot legally release claims without proper representation.
  5. What does it mean when coverage is “excess”? It applies only after primary insurance is exhausted Excess coverage fills in after the main policy limits are reached.
  6. What is the purpose of depreciation in a claim? To account for reduced value due to wear and age Depreciation reflects the item's current value, not its original or replacement cost.
  7. What is arbitration? A method of resolving disputes outside of court Arbitration can be binding or non-binding and avoids lengthy litigation.
  1. When can an adjuster make a settlement offer? Only after full investigation of the claim Premature offers may be inappropriate or insufficient, violating fair practices.
  2. What is the definition of earnest effort in claim negotiations? A genuine attempt to resolve the claim fairly Adjusters are expected to negotiate in good faith to settle claims equitably.
  3. What is insurable interest required for? To legally bind an insurance contract Without insurable interest, the policy lacks legal and financial validity.
  4. What is adverse selection? The tendency of higher-risk individuals to purchase more insurance Insurers mitigate this risk through underwriting and pricing strategies.
  5. What should an adjuster do when coverage is uncertain? Issue a reservation of rights letter This protects the insurer while it investigates whether coverage applies.
  6. What document is essential in settling a bodily injury liability claim? Medical records and bills Medical documentation supports the evaluation of injury severity and value.
  7. Which coverage pays for damage to your car in a collision? Collision coverage This pays for vehicle damage resulting from a crash, regardless of fault.
  8. What is the term for a written estimate of damage? Appraisal An appraisal is a formal valuation, often used in dispute resolution.
  1. What is the name of the person who causes a third-party claim? Tortfeasor The tortfeasor is the individual allegedly responsible for causing harm.
  2. Which of the following perils is typically excluded under most policies? War War is universally excluded due to its catastrophic and unpredictable nature.
  3. What is the purpose of a non-waiver agreement? To protect the insurer’s rights during claim investigation It clarifies that ongoing actions do not imply acceptance of liability or coverage.
  4. What is the coinsurance formula? (Insurance carried / Insurance required) × Loss = Claim payment This formula determines how much of a loss the insurer will pay if underinsured.
  5. What kind of policy covers everything not specifically excluded? All-risk (open perils) policy This broad form covers all causes of loss except those expressly excluded.
  6. What is the term for repair cost minus depreciation? Actual Cash Value (ACV) ACV represents the fair market value of damaged property at the time of loss.
  7. Which is NOT a duty of the insured after a loss? Determining the value of the loss Adjusters—not insureds—evaluate and determine claim values.
  8. What type of adjuster works for an independent firm? Independent adjuster These professionals are contracted by insurers but are not their direct employees.
  1. What is an ALE (Additional Living Expense) claim? Reimbursement for costs incurred due to loss of use ALE covers increased expenses when a home becomes uninhabitable.
  2. What is the purpose of policy endorsements? To modify or add to the terms of the policy Endorsements allow customization and clarification of coverage.
  3. What does a reservation of rights letter do? Notifies the insured that coverage may not apply It allows the insurer to investigate without admitting liability.
  4. What does "proximate cause" help determine? Whether the loss is covered under the policy Only losses directly resulting from covered causes are compensable.
  5. Which term describes illegal inducement in insurance? Rebating Rebating includes offering benefits not specified in the policy to induce purchase.
  6. What type of loss occurs from continuous or repeated exposure to harmful conditions? Occurrence An occurrence can be a single event or continuous exposure leading to damage.
  7. What is the difference between arbitration and mediation? Arbitration results in a binding decision; mediation does not Mediation is non-binding and voluntary; arbitration can be legally enforceable.
  8. If an insured fails to notify of a loss promptly, what may the insurer do?

Deny the claim if prejudice can be shown The delay must have harmed the insurer’s ability to assess or defend the claim.

  1. When can an insurer cancel a policy mid-term in Arizona? For specific reasons like fraud or nonpayment Mid-term cancellation is restricted to allowable conditions listed by state law.
  2. What must be provided when denying a claim? Written explanation of the reasons Transparency and documentation are required by Arizona law.
  3. What is meant by "replacement cost value"? The cost to replace property without depreciation This pays for brand-new items of similar kind and quality.
  4. What happens when coinsurance requirements are not met? A penalty is applied to the claim payment The insured may receive a reduced settlement based on the underinsured amount.
  5. What is salvage value? The residual value of damaged property Insurers may sell salvage to offset claim costs.
  6. What does “loss of use” refer to? Inability to use property due to a covered loss Coverage may pay for alternative accommodations or lost income.
  7. What is the time frame for insurers to pay a claim after agreeing to liability in Arizona? 30 calendar days Prompt payment is required once liability is accepted.