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LOUISIANA “ALL LINES” EQUIVALENT — STANDARD ADJUSTER COVERS ALL LINES PRACTICE EXAM QUEST, Exams of Insurance Economics

Louisiana State University (LSU) - EuniceInsurance Economics

LOUISIANA “ALL LINES” EQUIVALENT — STANDARD ADJUSTER COVERS ALL LINES PRACTICE EXAM QUESTIONS AND CORRECT ANSWERS (VERIFIED ANSWERS) PLUS RATIONALES 2025

Typology: Exams

2024/2025

Available from 07/01/2025

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LOUISIANA “ALL LINES” EQUIVALENT — STANDARD ADJUSTER
COVERS ALL LINES PRACTICE EXAM QUESTIONS AND CORRECT
ANSWERS (VERIFIED ANSWERS) PLUS RATIONALES 2025
1. What is the primary purpose of an insurance adjuster?
• Sell policies
• Underwrite risks
• Investigate and settle claims
• Rate policies
- Investigate and settle claims
An adjuster's role is to evaluate insurance claims, determine coverage,
and facilitate settlement in accordance with policy terms.
2. What type of adjuster represents only the insurance company?
• Public Adjuster
• Independent Adjuster
• Staff Adjuster
• Claimant Adjuster
- Staff Adjuster
A staff adjuster is an employee of the insurance company and works on
behalf of the insurer.
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LOUISIANA “ALL LINES” EQUIVALENT — STANDARD ADJUSTER

COVERS ALL LINES PRACTICE EXAM QUESTIONS AND CORRECT

ANSWERS (VERIFIED ANSWERS) PLUS RATIONALES 2025

  1. What is the primary purpose of an insurance adjuster?
  • Sell policies
  • Underwrite risks
  • Investigate and settle claims
  • Rate policies - Investigate and settle claims An adjuster's role is to evaluate insurance claims, determine coverage, and facilitate settlement in accordance with policy terms.
  1. What type of adjuster represents only the insurance company?
  • Public Adjuster
  • Independent Adjuster
  • Staff Adjuster
  • Claimant Adjuster - Staff Adjuster A staff adjuster is an employee of the insurance company and works on behalf of the insurer.
  1. Which of the following best defines indemnity?
  • Paying more than the loss
  • Sharing risk equally
  • Restoring the insured to their pre-loss condition
  • Penalizing the negligent party - Restoring the insured to their pre-loss condition The principle of indemnity ensures that the insured is compensated for their loss without profit.
  1. What is the Louisiana statute that governs insurance claims handling?
  • Insurance Practices Act
  • Fair Claims Settlement Act
  • Insurance Code Title 22
  • Good Faith Claims Act - Insurance Code Title 22 Title 22 of the Louisiana Revised Statutes outlines the laws and regulations for the insurance industry.
  1. A "proof of loss" is:
  • A police report
  • A formal statement from the insurer
  • A sworn statement from the insured detailing the loss
  • The payment check - A sworn statement from the insured detailing the loss
  • File a complaint with the Louisiana DOI
  • File a lawsuit for damages - File a lawsuit for damages Louisiana law allows an insured to pursue damages when an insurer fails to handle claims fairly or in good faith.
  1. What is subrogation?
  • Paying a deductible
  • Sharing liability
  • Transferring recovery rights to the insurer
  • Cancellation of the policy - Transferring recovery rights to the insurer Subrogation allows insurers to seek reimbursement from third parties after paying a claim. 10.A reservation of rights letter:
  • Accepts liability
  • Denies coverage
  • Reserves the insured’s right to sue
  • Notifies the insured that coverage may be denied pending investigation - Notifies the insured that coverage may be denied pending investigation It allows the insurer to investigate a claim without admitting coverage exists.

11.What is the purpose of an insuring agreement in a policy?

  • Lists policy limits
  • Describes the insured’s duties
  • Describes coverage provided
  • Defines exclusions - Describes coverage provided The insuring agreement details what risks are covered and the insurer’s promise to pay. 12.What is a deductible?
  • An endorsement
  • A surcharge
  • The amount the insurer pays
  • The amount the insured pays before the insurer does - The amount the insured pays before the insurer does Deductibles reduce the insurer’s financial responsibility and prevent small claims. 13.Which of the following is a named peril policy?
  • HO- 3
  • HO- 5
  • HO- 2
  • HO- 8 - HO- 2
  • Fire - Fire Fire is a basic covered peril in nearly all standard policies. 17.Under liability coverage, a “third party” is:
  • The adjuster
  • The insured
  • The insurer
  • The claimant - The claimant A third party is someone not listed on the policy who seeks compensation for damages. 18.In Louisiana, how many days does an insurer have to initiate a loss adjustment after notification of claim?
  • 10 days
  • 14 days
  • 30 days
  • 60 days - 14 days Louisiana law requires insurers to begin adjusting a claim within 14 days after notice of loss. 19.Which policy section lists coverage amounts?
  • Conditions
  • Exclusions
  • Declarations
  • Insuring agreement - Declarations The declarations page outlines the who, what, and how much of the policy. 20.An umbrella policy provides:
  • Health insurance
  • No-fault benefits
  • Auto collision coverage
  • Excess liability coverage - Excess liability coverage Umbrella policies offer broader liability coverage beyond standard policy limits. 21.An adjuster must renew their Louisiana license:
  • Every 6 months
  • Every year
  • Every 2 years
  • Every 5 years - Every 2 years Louisiana requires adjusters to renew licenses biennially.

The Guaranty Association steps in to pay covered claims if an insurer becomes insolvent. 25.Replacement Cost Coverage pays for:

  • Market value
  • ACV
  • Cost to replace property with new of like kind
  • Depreciated value - Cost to replace property with new of like kind Replacement cost restores property to its original condition without depreciation. 26.A binder is:
  • A final policy
  • A coverage guarantee pending policy issuance
  • An exclusion form
  • A claims release - A coverage guarantee pending policy issuance Binders provide temporary coverage until a policy is formally issued. 27.Which of the following is considered a liability coverage?
  • Collision
  • Personal injury protection
  • Bodily injury to others
  • Comprehensive - Bodily injury to others Liability coverage protects the insured when they are legally responsible for injury to others. 28.Which law requires insurers to act promptly and fairly?
  • Louisiana Unfair Trade Practices Act
  • Consumer Credit Act
  • Claims Settlement Practices Act
  • Fair Claims Resolution Statute - Claims Settlement Practices Act This law ensures fair treatment of policyholders during the claims process. 29.What is arbitration?
  • Court trial
  • Mediation by adjuster
  • Binding or non-binding dispute resolution by a third party
  • Legal appeal - Binding or non-binding dispute resolution by a third party Arbitration is used to resolve disputes outside of court, often faster and less costly. 30.What is the purpose of salvage rights?
  • To charge the insured more
  • To recover part of a claim payout

33.In Louisiana, who regulates the insurance industry?

  • FEMA
  • State courts
  • Department of Insurance
  • Department of Commerce - Department of Insurance The Louisiana Department of Insurance oversees licensing and regulation of insurers and adjusters. 34.A fidelity bond covers:
  • Customer injuries
  • Fire loss
  • Employee dishonesty
  • Product defects - Employee dishonesty Fidelity bonds protect businesses from theft or fraud by their own employees. 35.What does “first-party claim” mean?
  • A claim by an outsider
  • A lawsuit
  • A claim made by the policyholder
  • A request by an attorney - A claim made by the policyholder

A first-party claim involves the insured requesting payment from their own policy. 36.Inland marine coverage typically insures:

  • Ocean vessels
  • Mobile equipment and goods in transit
  • Home foundations
  • Personal liability - Mobile equipment and goods in transit Inland marine covers movable or transportable property, like tools or goods in transit. 37.Which of the following is NOT a common homeowner policy form?
  • HO- 2
  • HO- 3
  • HO- 6
  • HO- 9 - HO- 9 HO-9 is not a standard ISO form; HO-2, HO-3, and HO-6 are common. 38.What is the maximum number of days for an insurer to pay a settled claim in Louisiana?
  • 10 days
  • 15 days
  • 30 days
  • No continuing education
  • 40 hours per year - 24 hours every 2 years Louisiana adjusters must complete 24 CE hours biennially, including ethics. 42.What is comparative negligence?
  • Complete fault of one party
  • No fault
  • Sharing fault among parties
  • Fault determined by police - Sharing fault among parties Comparative negligence reduces recovery based on the claimant’s share of fault. 43.A bailee is:
  • A property owner
  • A person in custody of another’s property
  • An insured driver
  • A policyholder - A person in custody of another’s property A bailee temporarily holds goods for another party and may be liable for damage. 44.The term “proximate cause” means:
  • Most recent cause
  • Closest cause
  • First cause in the chain of events
  • Direct, uninterrupted cause of loss - Direct, uninterrupted cause of loss Proximate cause is the primary event without which the loss wouldn’t have occurred. 45.The limit of liability is:
  • A deductible
  • The maximum the insurer will pay for a loss
  • A co-insurance clause
  • Policy duration - The maximum the insurer will pay for a loss It defines the insurer’s financial obligation per policy terms. 46.What type of coverage would protect an insured if their dog bites a guest?
  • Medical Payments
  • Dwelling Coverage
  • Personal Liability
  • Scheduled Property - Personal Liability Personal liability covers injuries caused by the insured or their pets to others. 47.An “occurrence” policy covers:

A CPP bundles coverages such as property, liability, and crime into one package. 50.A claims-made policy requires:

  • Loss during policy period
  • Claim reported during policy period
  • Loss reported before policy begins
  • No report of loss - Claim reported during policy period Claims-made coverage triggers only when a claim is reported during the policy term. 51.Which policy provision protects the insurer from fraud?
  • Conditions
  • Declarations
  • Insuring Agreement
  • Fraud Clause - Fraud Clause The fraud clause allows the insurer to deny claims and void the policy if fraud is discovered. 52.Which of the following is NOT required to be included in a proof of loss?
  • Cause of loss
  • Witness statements
  • Amount of loss
  • Date of loss - Witness statements While helpful, witness statements are not mandatory in a standard proof of loss. 53.In Louisiana, when can an insurer deny a claim for misrepresentation?
  • If it’s immaterial
  • Only if intentional
  • If it’s material and affects risk
  • If discovered after renewal - If it’s material and affects risk Material misrepresentation that impacts underwriting decisions may lead to claim denial. 54.A public adjuster works on behalf of:
  • The insurer
  • The DOI
  • The claimant
  • The insured - The insured Public adjusters advocate for policyholders in claim settlements. 55.A waiver is:
  • A refusal of liability