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KENTUCKY INDEPENDENT ADJUSTER LICENSE (ALL LINES) EXAM QUESTIONS AND CORRECT ANSWERS (VERIFIED ANSWERS) PLUS RATIONALES 2025
Typology: Exams
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C. Kentucky Department of Insurance (DOI) D. National Insurance Bureau
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
32.What does "insuring agreement" describe in a policy? A. Exclusions B. What is covered and under what conditions C. Deductibles D. Endorsements
33.Which part of a policy describes what is not covered? A. Declarations B. Conditions C. Exclusions D. Endorsements
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
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
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
40.Which of the following is a type of compensatory damage?
A. Special damages B. Punitive damages C. Criminal penalties D. Insurance premiums
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
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
43.Which of the following is a duty of the insured after a loss? A. Ignore the adjuster’s call B. Rebuild immediately
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
48.Under Kentucky law, how long must an insurer retain claim records? A. 3 years B. 7 years C. 5 years D. 1 year
49.What type of adjuster represents the policyholder? A. Independent adjuster B. Staff adjuster C. Public adjuster D. Company adjuster
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
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
52.Which of the following is not a type of adjuster? A. Staff B. Independent C. Public D. Agent
53.What is a “first-party claim”?
C. An unlicensed insurer D. An insurer from another country
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
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
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
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)
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
62.Which of the following is an intentional tort? A. Assault B. Negligence C. Breach of contract D. Accident