Download KENTUCKY INDEPENDENT ADJUSTER LICENSE (ALL LINES) EXAM QUESTIONS AND CORRECT ANSWERS (VER and more Exams Insurance law in PDF only on Docsity!
KENTUCKY INDEPENDENT ADJUSTER LICENSE (ALL
LINES) EXAM QUESTIONS AND CORRECT ANSWERS (VERIFIED
ANSWERS) PLUS RATIONALES 2025
- What is the primary purpose of an insurance adjuster? A. Sell insurance policies B. Investigate and settle insurance claims C. Provide legal advice D. Underwrite insurance policies
An adjuster’s main role is to evaluate insurance claims and ensure
settlements are fair and within policy limits.
- Which of the following best defines an “all lines” adjuster in Kentucky? A. An adjuster who works only with auto claims B. An adjuster licensed to handle property, casualty, auto, and workers' comp claims C. An adjuster that sells multiple types of insurance D. A claims processor at a call center
The “all lines” designation means the adjuster can handle multiple claim
types including property and casualty.
- When must a Kentucky licensed adjuster notify the Department of Insurance of a change in address? A. Within 90 days B. At time of license renewal C. Within 30 days D. There is no requirement
Adjusters must notify the Department within 30 days of any address or
contact information change.
- What type of bond must a Kentucky independent adjuster have? A. Fidelity bond B. Surety bond C. $1,000 surety bond D. $10,000 performance bond
Kentucky requires a $1,000 surety bond to protect the public against
misconduct.
- Which of the following is NOT a duty of an independent adjuster? A. Investigate claims B. Negotiate settlements C. Represent the insured in court D. Provide legal representation
Adjusters cannot practice law or represent clients in court; their role is
investigative and administrative.
- What does the term “insurable interest” mean?
C. Kentucky Department of Insurance (DOI) D. National Insurance Bureau
The Kentucky Department of Insurance oversees the licensing and
conduct of insurance professionals.
10.What is considered an unfair claims settlement practice? A. Investigating a claim within 10 days B. Paying a claim within policy limits C. Failing to promptly investigate a claim D. Issuing a reservation of rights letter
Delays in investigating or paying claims without reason can be deemed
unfair practices.
11.What is actual cash value (ACV)? A. The amount it costs to replace an item B. Replacement cost minus depreciation C. Market value D. Agreed value
ACV is the item's value after depreciation has been subtracted from its
replacement cost.
12.Which term refers to the maximum amount an insurer will pay under a policy? A. Deductible B. Policy limit
C. Subrogation limit D. Underwriting amount
The policy limit defines the upper boundary of coverage under an
insurance contract.
13.What is a deductible? A. The amount the insurer pays first B. The co-payment by the insurer C. The amount the insured must pay before coverage begins D. The premium
Deductibles reduce the insurer's liability by having the insured pay a
portion of the loss.
14.In property insurance, what does replacement cost refer to? A. The original purchase price B. The amount owed on a mortgage C. The cost to replace property without deduction for depreciation D. The depreciated value
Replacement cost is the expense of replacing damaged property with
new of like kind and quality.
15.Which of the following must an adjuster do first after being assigned a claim? A. Contact the insured and schedule an inspection B. Issue payment C. Deny the claim
19.A claim is fraudulent if: A. The loss was preventable B. The loss was intentionally fabricated or exaggerated C. The insured had a prior claim D. The adjuster made a mistake
Fraud involves deception or misrepresentation to gain insurance
benefits.
20.What type of insurance policy covers businesses for loss of income after a covered event? A. General liability B. Commercial auto C. Business interruption insurance D. Inland marine
Business interruption covers lost income and ongoing expenses after a
covered disruption.
21.What is a liability insurance policy designed to cover? A. Damage to your own property B. Fire loss C. Legal obligations to third parties D. Equipment breakdown
Liability policies cover damages the insured is legally required to pay
others for injury or property damage.
22.What is an endorsement? A. A written change to an insurance policy B. A denial letter C. A receipt of premium D. A claims estimate
Endorsements modify the terms or coverage of the original policy, either
adding or excluding coverage.
23.What type of loss occurs when property is stolen or damaged unexpectedly? A. Moral hazard B. Direct loss C. Accidental loss D. Indirect loss
Accidental losses are those that are sudden, unforeseen, and
unintended.
24.Which of the following best defines "negligence"? A. Intentional act causing harm B. Failure to use reasonable care C. Vandalism D. A criminal act
Negligence is the failure to act with the care that a reasonably prudent
person would under similar circumstances.
25.The term "proximate cause" refers to:
A. A fire damages inventory B. Business income lost due to a fire C. Hail damage to a car D. Wind damage to a roof
Indirect losses are the secondary consequences of a covered direct loss,
like lost income.
29.What does the appraisal clause in a property policy address? A. Subrogation rights B. Disputes about the value of a loss C. Premium changes D. Liability determinations
The appraisal clause helps resolve disagreements between the insured
and insurer on the amount of a loss.
30.What is an adjuster required to do if they suspect insurance fraud? A. Do nothing B. Pay the claim C. Report it to the Department of Insurance or insurer’s fraud unit D. Notify the police directly
Adjusters must report suspected fraud to the appropriate authority or
internal fraud unit.
31.What is an aleatory contract?
A. One where terms are non-binding B. One in which the exchange of value is unequal C. A short-term agreement D. A conditional refund agreement
In insurance, contracts are aleatory because the insured may pay
premiums for years without filing a claim, or receive large payments
after one.
32.What does "insuring agreement" describe in a policy? A. Exclusions B. What is covered and under what conditions C. Deductibles D. Endorsements
The insuring agreement outlines the coverage provided and the
circumstances under which benefits are paid.
33.Which part of a policy describes what is not covered? A. Declarations B. Conditions C. Exclusions D. Endorsements
Exclusions clarify which losses, perils, or property are not covered by the
policy.
34.What is the purpose of the declarations page in a policy?
A. A claim between two insurers B. A claim submitted by an agent C. A liability claim filed by someone other than the insured D. A duplicate claim
A third-party claim arises when someone other than the insured files
against the policyholder’s liability coverage.
38.When must continuing education (CE) be completed in Kentucky for adjusters? A. Every 3 years B. Only for public adjusters C. Every 2 years before license renewal D. No CE is required
Independent adjusters in Kentucky must complete CE requirements
every 2 years to maintain their license.
39.What does the term “binder” refer to? A. A policy denial B. A loss report C. Temporary evidence of insurance coverage D. A claims form
Binders provide temporary insurance coverage until the actual policy is
issued.
40.Which of the following is a type of compensatory damage?
A. Special damages B. Punitive damages C. Criminal penalties D. Insurance premiums
Special damages are measurable losses like medical bills or lost wages.
They compensate the claimant.
41.What is the purpose of a non-waiver agreement? A. To preserve insurer rights during a claim investigation B. To deny coverage C. To release the insured from liability D. To increase the deductible
It protects the insurer's rights while it investigates coverage issues.
42.What is the Kentucky Insurance Code? A. A set of claim forms B. An underwriting manual C. A body of laws that governs insurance practices in the state D. A list of insurance companies
This legal framework outlines the rules and regulations for insurers and
adjusters operating in Kentucky.
43.Which of the following is a duty of the insured after a loss? A. Ignore the adjuster’s call B. Rebuild immediately
Comparative negligence assigns fault percentages and adjusts
compensation accordingly.
47.What type of coverage would pay for a customer’s injury on business premises? A. Property coverage B. General liability coverage C. Workers’ compensation D. Auto coverage
General liability policies protect businesses from legal claims for bodily
injury or property damage to others.
48.Under Kentucky law, how long must an insurer retain claim records? A. 3 years B. 7 years C. 5 years D. 1 year
The law requires insurers to retain claim records for at least 5 years.
49.What type of adjuster represents the policyholder? A. Independent adjuster B. Staff adjuster C. Public adjuster D. Company adjuster
Public adjusters are hired by and represent the interests of the insured,
not the insurer.
50.What is the penalty for adjusting without a license in Kentucky? A. No penalty B. Fines and possible criminal charges C. Temporary suspension D. CE requirements waived
Adjusting without a license is illegal and punishable by fines or criminal
prosecution.
51.What is required before an insurer can deny a claim? A. Verbal notification B. Written explanation of denial with policy reference C. Supervisor's approval D. A call to the agent
Insurers must provide a written reason for denial, citing the relevant
policy provisions.
52.Which of the following is not a type of adjuster? A. Staff B. Independent C. Public D. Agent
Agents sell policies; they are not licensed to adjust claims.
53.What is a “first-party claim”?
C. An unlicensed insurer D. An insurer from another country
A foreign insurer is based in another state but licensed to operate in
Kentucky.
57.The "doctrine of adhesion" refers to: A. Shared fault B. Optional terms C. Policy language is interpreted in favor of the insured D. Voluntary agreements
Because the insurer writes the policy, any ambiguity is interpreted in
favor of the policyholder.
58.What happens if an insured intentionally sets fire to their own property? A. The claim is paid B. The claim is denied for arson C. The insurer must prove intent D. The deductible is increased
Intentional acts are excluded from coverage, and arson voids the claim.
59.A claims adjuster must remain: A. Biased toward the insurer B. A policyholder advocate C. Fair and impartial D. Focused only on the bottom line
Adjusters must act professionally, objectively, and ethically during claim
handling.
60.The Kentucky Insurance Code is enforced by: A. U.S. Congress B. The Commissioner of Insurance C. The Supreme Court D. The Insurance Services Office (ISO)
The Kentucky Department of Insurance and the Commissioner enforce
state insurance law.
61.What does the term “contract of indemnity” mean? A. All policies pay the same B. The insured profits from a loss C. The insured is restored to their financial position prior to loss D. The policy only covers cash losses
Indemnity means the purpose is to make the insured whole—not to
provide a profit.
62.Which of the following is an intentional tort? A. Assault B. Negligence C. Breach of contract D. Accident
Intentional torts are deliberate acts, such as assault or fraud.
