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Rhode Island “Adjuster” license (2025) Exam
Questions And Correct Answers (Verified Answers)
Plus Rationales 202 5
covering key areas such as property, casualty, liability, claims handling, and state- specific rules.
- What is the primary purpose of an insurance adjuster? A. To solicit insurance policies B. To investigate and settle insurance claims C. To determine underwriting standards D. To sell reinsurance Rationale: An adjuster's main function is to evaluate, investigate, and settle insurance claims on behalf of insurers.
- Which of the following would typically NOT be handled by a property and casualty adjuster? A. Homeowner’s claims B. Commercial property damage C. Health insurance claims D. Auto liability claims
Rationale: Health insurance is not considered part of property and casualty; it falls under health and accident lines.
- Under Rhode Island law, how long does an insurer have to acknowledge receipt of a claim? A. 5 business days B. 10 calendar days C. 15 business days D. 20 calendar days Rationale: Rhode Island regulations require acknowledgment of a claim within 15 business days.
- An insurance policy is considered a contract of: A. Negotiation B. Adhesion C. Flexibility D. Warranty Rationale: Insurance contracts are contracts of adhesion, meaning one party drafts the contract and the other must accept it as-is.
- Which of the following perils is typically covered under a standard HO- 3 policy? A. Flood B. Earthquake C. Fire D. War
A. House destroyed by fire B. Injuring a pedestrian in an auto accident C. Theft of personal property D. Hail damage to a roof Rationale: Liability losses involve damage or injury to others for which the insured is legally responsible. 10.The deductible in an insurance policy serves to: A. Reduce the claim amount paid by the insurer B. Minimize small claims C. Increase coverage limits D. Eliminate liability Rationale: Deductibles are intended to reduce the number of small or nuisance claims. 11.What does “actual cash value” mean? A. Replacement cost B. Purchase price C. Replacement cost minus depreciation D. Fair market value Rationale: Actual cash value is calculated as replacement cost minus depreciation. 12.Under a liability policy, what does the "duty to defend" mean?
A. The insured must hire legal counsel B. The insurer must provide legal defense C. The court must provide representation D. The insured cannot be sued Rationale: Liability policies generally obligate the insurer to defend the insured in lawsuits. 13.A staff adjuster works for: A. The policyholder B. The insurance company C. A third-party administrator D. The state Rationale: Staff adjusters are salaried employees of an insurance company. 14.What is the primary purpose of the declarations page? A. Explains exclusions B. Describes the duties of the insured C. Lists who and what is insured D. Contains legal definitions Rationale: The declarations page outlines key details like the insured, coverages, limits, and policy period. 15.Which of the following is an example of an indirect loss? A. Fire damage to a store B. Lost income due to a store being closed after a fire
C. A settlement offer D. A subrogation notice Rationale: A reservation of rights letter allows the insurer to investigate a claim while maintaining the right to deny it later. 19.An insured’s failure to report a loss in a timely manner could: A. Increase the deductible B. Result in claim denial C. Require subrogation D. Reduce policy limits Rationale: A delay in reporting may be a breach of policy conditions and can justify denial of the claim. 20.Rhode Island requires insurers to complete the investigation of a claim within: A. 30 days B. 60 days C. 90 days D. 120 days Rationale: According to Rhode Island law, insurers must complete claim investigations within 60 days of notice unless more time is justified. 21.What is the purpose of the appraisal clause in property insurance? A. Identify fraud B. Resolve disputes over value
C. Determine liability D. Replace underwriting guidelines Rationale: The appraisal clause allows for independent evaluation when there is disagreement over the value of a loss. 22.Which term describes the maximum an insurer will pay for a covered loss? A. Deductible B. Premium C. Policy limit D. Endorsement Rationale: The policy limit is the maximum amount the insurer agrees to pay for a covered loss. 23.Which is NOT a duty of the insured after a loss? A. Notify the insurer B. Settle the claim independently C. Protect the property from further damage D. Cooperate with the adjuster Rationale: The insured is required to cooperate but not to settle the claim on their own. 24.Which type of coverage applies when a person is legally liable for damaging someone else's property? A. Medical payments B. Property damage liability
Rationale: An endorsement modifies the terms of the original policy. 28.What does indemnification mean? A. Profiting from insurance B. Waiving premiums C. Restoring the insured to pre-loss condition D. Declining coverage Rationale: Indemnification ensures the insured is made whole but does not profit from the loss. 29.Which term refers to the failure to act as a reasonable person would? A. Intentional act B. Subrogation C. Negligence D. Breach Rationale: Negligence is a failure to exercise reasonable care, resulting in damage or injury. 30.What does insurable interest mean? A. Policy can be sold to anyone B. Interest in canceling a policy C. A financial interest in the property insured D. Right to resell a policy Rationale: Insurable interest requires the insured to have a financial stake in the property at the time of loss.
31.When can an adjuster contact a third party involved in a claim? A. Only with court approval B. If relevant to the claim investigation C. Never D. Only after settlement Rationale: Adjusters may contact third parties if it is necessary to investigate the claim. 32.Which of the following is considered unfair claims practice? A. Investigating a claim B. Denying a claim with proper documentation C. Failing to provide a reason for denial D. Offering a fair settlement Rationale: Failing to explain a denial violates fair claims practices under Rhode Island law. 33.An example of comparative negligence is: A. One party is fully at fault B. Fault is shared between parties C. The loss is not covered D. There is no negligence Rationale: Comparative negligence reduces damages based on each party’s share of fault. 34.What does proximate cause refer to?
C. The claim may be denied for fraud D. A new policy is issued Rationale: Inflating losses is fraud and can result in denial or cancellation. 38.Which document summarizes the adjuster’s findings? A. Policyholder statement B. Adjuster’s report C. Declaration page D. Coverage form Rationale: The adjuster's report details the investigation and conclusions on coverage and loss amount. 39.What is the difference between an independent and staff adjuster? A. Staff adjusters work for public clients B. Independent adjusters are contractors; staff are employees C. Independent adjusters cannot handle liability claims D. Staff adjusters always represent the claimant Rationale: Independent adjusters work under contract; staff adjusters are employed by insurers. 40.What is the primary goal of salvage? A. Reduce time to pay claims B. Recover value from damaged property C. Increase premiums D. Settle third-party claims
Rationale: Salvage allows insurers to recover part of the payout by selling damaged property. 41.When must an adjuster in Rhode Island notify the Department of a change in address? A. Annually B. Within 60 days C. Within 30 days D. Never Rationale: Adjusters must report address changes to the Department within 30 days. 42.A "waiver" in insurance refers to: A. Increasing premiums B. Giving up a known right voluntarily C. Avoiding underwriting D. Filing a claim late Rationale: A waiver is a voluntary relinquishment of a known legal right. 43.Which of the following best describes a claim reserve? A. Premium amount B. Funds set aside to pay claims C. Legal fees D. Commission for an adjuster
47.Who must hold an adjuster license in Rhode Island? A. Only public adjusters B. Anyone adjusting claims for compensation C. Only employees of insurers D. Only staff adjusters Rationale: Rhode Island requires all individuals adjusting claims for compensation to be licensed. 48.What type of damages are intended to punish the wrongdoer? A. Compensatory B. Special C. Punitive D. General Rationale: Punitive damages punish the defendant and deter similar conduct. 49.A non-waiver agreement: A. Replaces a denial letter B. Protects the insurer's right to deny a claim later C. Waives all conditions D. Increases premiums Rationale: Like a reservation of rights, a non-waiver agreement protects the insurer’s future legal position. 50.Under Rhode Island law, an adjuster must complete how many hours of continuing education every license term?
A. 12
B. 24
C. 10
D. 36
Rationale: Rhode Island adjusters must complete 24 hours of CE, including 3 hours of ethics, each renewal cycle. 51.What is the purpose of coinsurance in property insurance? A. Reduce deductible B. Eliminate exclusions C. Encourage insureds to carry adequate coverage D. Provide unlimited replacement Rationale: Coinsurance ensures that policyholders carry a certain percentage of insurance relative to the property's value. 52.A commercial property policy lists the building value at $500,000. The coinsurance requirement is 80%. How much minimum insurance must be carried to avoid penalty? A. $100, B. $400, C. $300, D. $450, Rationale: 80% of $500,000 is $400,000. That is the minimum required to avoid a coinsurance penalty.
56.What does "loss of use" coverage provide? A. Coverage for property replacement B. Reimbursement for additional living expenses C. Coverage for liability D. Coverage for depreciation Rationale: Loss of use pays for increased living expenses when a home becomes uninhabitable after a covered loss. 57.What is considered a “material misrepresentation” on an insurance application? A. An error in address B. A significant false statement that affects the insurer’s decision C. A typo in the name D. An unknown prior claim Rationale: Material misrepresentation can void a policy if it impacts underwriting decisions. 58.What is the purpose of a claims-made policy? A. Covers claims arising from after the policy expires B. Pays for property damage regardless of time C. Covers claims filed during the policy period D. Offers open-ended coverage Rationale: Claims-made policies require the claim to be reported during the policy period.
59.What coverage applies if an insured’s tree falls and damages a neighbor’s property? A. Medical payments B. Dwelling coverage C. Personal liability D. Other structures coverage Rationale: The insured’s personal liability coverage applies to damage caused to others' property. 60.Under what condition may an adjuster share claim-related information with a third party? A. Always B. Only when legally allowed or authorized C. Never D. Only during renewals Rationale: Claim information is confidential and may only be shared when law or policy permits. 61.What does a fidelity bond cover? A. Fire damage B. Theft by outsiders C. Employee dishonesty D. Contractual liability
