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Illinois Adjuster License Practice Exam
Questions And Correct Answers (Verified
Answers) Plus Rationales 2025
- What is the minimum age requirement to apply for an Illinois Insurance Adjuster license? A. 16 B. 18 C. 21 D. 25 Rationale: Illinois requires adjusters to be at least 21 years old to hold a license.
- Which of the following is a requirement to become a licensed insurance adjuster in Illinois? A. Pass a state licensing exam B. Be a U.S. Senator C. Obtain a surety bond of $50, D. Own an insurance agency Rationale: Passing the state exam is a key licensing requirement in Illinois.
- How often must Illinois adjusters renew their license? A. Every year B. Every 2 years
C. Every 3 years D. Every 5 years Rationale: Adjuster licenses in Illinois are renewed biennially.
- What is the continuing education (CE) requirement for Illinois adjusters per renewal cycle? A. 12 hours B. 20 hours C. 24 hours D. 30 hours Rationale: Illinois requires 24 CE hours every two years, including 3 hours of ethics.
- An adjuster must report a change of address to the Illinois Department of Insurance within how many days? A. 10 B. 30 C. 60 D. 9 0 Rationale: Address changes must be reported within 30 days.
- What type of adjuster works on behalf of the insured rather than the insurer? A. Independent B. Staff C. Public
C. Absolute certainty D. Insurer’s discretion Rationale: Insurance disputes are civil matters, using a preponderance of evidence standard. 11.Which entity oversees insurance regulation in Illinois? A. NAIC B. Illinois Department of Insurance (IDOI) C. FEMA D. FTC Rationale: IDOI regulates the insurance industry in Illinois. 12.A temporary adjuster license in Illinois is valid for how many days? A. 90 B. 60 C. 30 D. 180 Rationale: Temporary licenses are issued for 90 days. 13.What is the penalty for adjusting without a license in Illinois? A. $ B. Up to $10,000 fine per violation C. Suspension only D. Warning Rationale: Unlicensed activity can result in substantial penalties.
14.The principle of indemnity ensures: A. The insured is restored to their pre-loss condition B. The insured profits from loss C. Premiums are refunded D. Coverage doubles after loss Rationale: Indemnity prevents the insured from making a profit on a claim. 15.What type of loss involves multiple properties damaged from one cause? A. Partial B. Hidden C. Catastrophic D. Isolated Rationale: Catastrophic losses involve widespread damage across multiple locations. 16.When must an adjuster notify the IDOI of a felony conviction? A. Never B. Within 30 days C. Annually D. Upon renewal Rationale: Felony convictions must be reported within 30 days. 17.An adjuster must act in which of the following capacities? A. Biased B. Secretive C. Fiduciary
21.What must an adjuster do before negotiating a claim? A. Contact police B. Review the insurance policy coverage C. Interview witnesses only D. Call an attorney Rationale: Coverage must be reviewed before claim resolution. 22.Which insurance principle prevents multiple payouts for the same loss? A. Contribution B. Indemnity C. Loss ratio D. Arbitration Rationale: Indemnity limits recovery to the actual loss. 23.Adjusters should document all of the following EXCEPT: A. Statements B. Photographs C. Personal opinions D. Repair estimates Rationale: Personal opinions are not appropriate in official claim documentation. 24.Adjusters handle which of the following? A. Risk assessments B. Policy underwriting C. Claim investigations
D. Sales pitches Rationale: Their main role is to investigate and resolve claims. 25.When taking a recorded statement, the adjuster should: A. Provide legal advice B. Ask clear, unbiased questions C. Assume liability D. Lead the witness Rationale: Questions must be clear and neutral to ensure accurate testimony. 26.Which is an example of first-party coverage? A. Liability coverage B. Collision coverage C. Legal defense D. Subrogation Rationale: Collision coverage protects the insured’s own vehicle. 27.An “independent adjuster” works for: A. The insured only B. A third-party or adjusting firm C. The state D. No one Rationale: Independent adjusters are contracted by insurers or firms. 28.An “assignment” in claim handling refers to: A. Policy endorsement B. Transfer of claim responsibility
B. 5 days C. 60 days D. 90 days Rationale: Insurers must give 30 days' notice before non-renewal. 33.When is an adjuster allowed to misrepresent policy coverage? A. Always B. Never C. If instructed D. In emergencies Rationale: Misrepresentation is illegal and unethical. 34.What best defines a peril? A. Policy condition B. Cause of loss C. Deductible D. Coverage limit Rationale: Perils are the actual causes of loss (fire, wind, etc.). 35.What type of loss affects only the insured’s property? A. Indirect B. Liability C. Direct D. Casual Rationale: Direct losses are immediate results of a covered peril. 36.If a claim is suspected to be fraudulent, the adjuster should: A. Pay it immediately
B. Inform media C. Report to the special investigation unit (SIU) D. Ignore it Rationale: Suspected fraud must be reported to the SIU. 37.Which policy section lists covered perils? A. Conditions B. Insuring Agreement C. Declarations D. Endorsements Rationale: The insuring agreement outlines what the policy covers. 38.A “reservation of rights” letter does what? A. Informs the insured the claim is being investigated under possible non- coverage B. Confirms payment C. Cancels the policy D. Denies coverage Rationale: It preserves the insurer's right to deny a claim after investigation. 39.An adjuster’s file should be: A. Incomplete B. Sloppy C. Organized and thorough D. Secret Rationale: Well-documented files support claim decisions.
D. Inflate estimates Rationale: Adjusters must act in good faith to avoid bad faith lawsuits. 44.Adjuster licenses must be displayed: A. Never B. Upon request C. Online D. Public billboard Rationale: Licenses must be presented when requested by regulators or clients. 45.In Illinois, a licensed adjuster must maintain records for how long? A. 6 months B. 1 year C. 7 years D. Indefinitely Rationale: Illinois requires record retention for 7 years. 46.All of the following are typical property policy exclusions EXCEPT: A. Wear and tear B. Insects C. Fire D. Earth movement Rationale: Fire is a covered peril, not an exclusion. 47.A waiver is best defined as: A. The voluntary surrender of a known right B. A deductible
C. Policy cancellation D. Extra coverage Rationale: A waiver relinquishes a contractual right. 48.When investigating bodily injury claims, adjusters must consider: A. Policy number only B. Medical records and bills C. Adjuster salary D. Vehicle color Rationale: Injury claims require medical documentation. 49.Which document officially outlines an insurance contract? A. Claim form B. Loss run C. Policy D. Memo Rationale: The policy is the legal contract between the insured and insurer. 50.Which is considered an ethical violation for adjusters? A. Explaining coverage B. Accepting kickbacks C. Providing a copy of the claim file D. Inspecting damage Rationale: Kickbacks are unethical and prohibited.
C. Waiver of rights D. Deductible increase Rationale: Filing proof of loss is a requirement before the insurer must perform. 55.A claimant is: A. The insurer B. The adjuster C. The person making the claim D. The underwriter Rationale: A claimant is the party seeking compensation for a covered loss. 56.The Illinois Department of Insurance has the authority to do all of the following EXCEPT: A. Investigate fraud B. Settle private disputes between insurer and insured C. Audit insurers D. Enforce licensing rules Rationale: The Department cannot arbitrate civil disputes between private parties. 57.Which of the following is an example of an indirect loss? A. Wind damage to a roof B. Fire damage to personal property C. Loss of income due to business interruption
D. Theft of a car Rationale: Indirect losses occur as a consequence of a direct loss. 58.In Illinois, an adjuster may legally adjust claims: A. Only with an attorney present B. After receiving company approval C. Only after being licensed or exempt D. At their own discretion Rationale: Adjusters must be licensed or exempt to handle claims legally. 59.If an insured exaggerates a loss on a claim, the adjuster should: A. Approve it B. Ignore it C. Investigate and possibly refer for fraud D. Deny the entire policy Rationale: Suspected exaggeration should be investigated and potentially flagged as fraud. 60.All of the following are types of liability insurance EXCEPT: A. Personal liability B. Life insurance C. Auto liability D. General commercial liability Rationale: Life insurance is not a liability product; it is a life contingency product.
D. Within a year Rationale: Proof of loss is usually required within 60 days unless extended. 65.A “loss reserve” refers to: A. Funds set aside by the insurer for a claim B. Deductible refund C. Policy premium D. Expense reimbursement Rationale: Insurers reserve funds for anticipated claim payments. 66.An “open peril” policy covers: A. Only named risks B. All perils except those excluded C. Earthquake only D. Nothing Rationale: Open peril policies cover all risks unless they are specifically excluded. 67.What is arbitration? A. A trial B. A method of resolving disputes outside of court C. A deposition D. A premium adjustment Rationale: Arbitration is a dispute resolution alternative to litigation. 68.The standard for proving insurance fraud is: A. Beyond a doubt B. Preponderance of evidence
C. No standard D. Eyewitness only Rationale: Fraud cases are civil and use the preponderance standard. 69.A claim file should be closed when: A. You feel like it B. The claim is fully settled and documented C. After 7 days D. When the policyholder requests Rationale: Closure should only occur after final settlement and documentation. 70.The principle of contribution applies when: A. More than one policy covers the same loss B. A deductible is paid C. A claim is denied D. A broker is involved Rationale: Contribution helps allocate payments between insurers. 71.A “hard fraud” claim is: A. A deliberate fabrication or staging of loss B. An accidental overstatement C. Due to error D. Legal Rationale: Hard fraud involves intentional acts to deceive.
