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RHODE ISLAND ALL LINES ADJUSTER EXAM (PROMETRIC-BASED) QUESTIONS AND CORRECT ANSWERS (VERIFIED ANSWERS) PLUS RATIONALES 2025
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1. Which of the following is considered a “third party” in a liability insurance claim? A. The insured B. The claimant C. The insurer D. The adjuster The third party is the person who suffers injury or damage due to the actions of the insured. 2. What is the primary purpose of actual cash value (ACV) in property insurance? A. To account for depreciation B. To increase premiums C. To reduce deductibles
D. To pay replacement cost ACV equals replacement cost minus depreciation, reflecting the property's current value.
3. Which of the following is NOT typically covered under the basic DP-1 Dwelling Policy? A. Fire B. Lightning C. Theft D. Internal explosion Theft is not covered under DP-1 unless specifically endorsed. 4. An adjuster who negotiates a settlement on behalf of an insurer must act in accordance with which duty? A. Fiduciary B. Good faith C. Primary liability D. Contribution Adjusters have a duty to act in good faith and treat all parties fairly and honestly. 5. What does the term “proximate cause” refer to in insurance? A. The nearest cause B. The first cause C. The direct and uninterrupted cause of the loss D. A contributing factor
9. What does the “Declarations” section of a policy typically include? A. The insuring agreement B. Name of insured, policy limits, and premium C. Exclusions D. Conditions The Declarations provide essential policy details like names, dates, limits, and coverage amounts. 10. What is the purpose of subrogation? A. To increase premiums B. To allow the insurer to recover from a third party C. To assign benefits D. To waive deductibles Subrogation allows the insurer to pursue a third party responsible for the loss. 11. In liability insurance, the “duty to defend” means the insurer must: A. Pay court fines B. Provide legal defense to the insured C. Pay punitive damages D. Cancel the policy Insurers are obligated to defend insureds in lawsuits related to covered claims. 12. Which coverage is included in the Commercial General Liability (CGL) policy? A. Property damage to owned property B. Workers’ compensation C. Bodily injury and property damage to others
D. Auto physical damage CGL policies cover third-party bodily injury and property damage.
13. What type of adjuster works for the insurance company? A. Public adjuster B. Staff adjuster C. Independent adjuster D. Contracted appraiser Staff adjusters are employees of an insurer. 14. Which form is used to list damaged property and the amount claimed? A. Proof of coverage B. Insurance binder C. Proof of loss D. Declarations page The proof of loss is a formal statement from the insured outlining the amount claimed. 15. What must an adjuster do upon receiving a new claim? A. Settle it within 24 hours B. Acknowledge receipt and begin investigation C. Call the police D. Hire an attorney An adjuster must promptly acknowledge, investigate, and document the claim. 16. Which of the following policies would cover a building under construction? A. Homeowners HO- 3 B. Builders Risk
B. Livery (e.g., ride-share services) C. Commuting to work D. Driving family members Using the vehicle as a taxi or ride-share typically voids coverage unless endorsed.
21. Which of the following perils is typically covered under a standard homeowners policy? A. Fire B. Earthquake C. Flood D. Wear and tear Fire is a named peril covered in most standard homeowners policies. 22. What is the maximum amount an insurer will pay under a policy called? A. Deductible B. Policy limit C. Loss reserve D. ACV The policy limit is the maximum the insurer will pay for a covered loss. 23. A waiver is best described as: A. The intentional relinquishment of a known right B. An increase in premium C. A condition precedent D. An independent claim
A waiver is when the insurer voluntarily gives up a right, such as enforcing a policy condition.
24. What document modifies a policy to change its coverage? A. Application B. Endorsement C. Binder D. Conditions An endorsement adds to, deletes from, or alters the coverage of a policy. 25. A split limit of 100/300/100 in an auto liability policy means: A. $100,000 per person, $300,000 per accident for bodily injury, $100,000 for property damage B. $300,000 for property damage only C. Deductibles of $100, $300, and $ D. No coverage Split limits specify maximum payouts per person, per accident, and for property damage. Let me know if you'd like questions 26– 50 , a printable PDF version , or state- specific law questions focused on Rhode Island statutes (e.g., licensing, unfair claims practices, time limits, etc.). You said: 26 - 65 ChatGPT said:
29. An insurer’s right to recover from a third party after indemnifying the insured is known as: A. Arbitration B. Subrogation C. Contribution D. Waiver Subrogation allows the insurer to assume the insured’s legal right to recover damages. 30. What does the Rhode Island Insurance Division regulate? A. Only health insurance B. All insurance transactions within the state C. Federal crop insurance D. Workers' compensation litigation The division oversees all insurance matters in Rhode Island, including licensing, policy forms, and claims handling. 31. The term “loss of consortium” refers to: A. A liability claim involving a vehicle B. A medical payments claim C. Loss of companionship or services of a spouse due to injury D. Property damage to rental property Loss of consortium is a non-economic damage related to the deprivation of a family relationship. 32. Which clause states that insurance applies separately to each insured as if they were the only insured?
A. Severability of insurance B. Conditions clause C. Subrogation clause D. Coinsurance clause Severability allows coverage to be applied individually to each insured under the policy.
33. A liability policy with a “per occurrence” limit means: A. The limit applies to each insured separately B. The most the policy will pay for all claims from a single event C. The insured pays this amount as a deductible D. The limit resets annually Per occurrence limits apply to all claims arising from the same event, regardless of the number of claimants. 34. Which of the following is a time element coverage? A. Equipment breakdown B. Business income C. General liability D. Inland marine Business income insurance covers loss of revenue due to interruption of operations. 35. What kind of insurance is designed to cover goods while in transit? A. Commercial Property B. Inland Marine C. Business Auto
B. To prevent double payment on a loss C. To eliminate exclusions D. To increase limits The “other insurance” clause coordinates benefits when multiple policies cover the same loss.
40. When an insurer denies a claim with no valid reason, it is engaging in: A. Arbitration B. Mediation C. Bad faith D. Reservation of rights Bad faith occurs when an insurer acts unreasonably or dishonestly in handling a claim. 41. A public adjuster represents the interests of: A. The insurer B. The policyholder C. The court D. A reinsurer Public adjusters are licensed to work on behalf of insureds in claims. 42. Which law gives insureds the right to sue for unfair settlement practices in Rhode Island? A. McCarran-Ferguson Act B. Federal Insurance Law C. Rhode Island Unfair Claims Settlement Practices Act D. Insurance Fraud Act
This state law ensures fair treatment of claimants and provides recourse for violations.
43. The standard homeowners policy excludes coverage for: A. Lightning B. Fire C. Flood D. Windstorm Flood damage requires a separate National Flood Insurance Program policy. 44. Under the personal auto policy, “collision” coverage applies when: A. The car is stolen B. The windshield cracks C. The insured hits a tree or another car D. A storm floods the car Collision coverage pays for damage from striking another object or vehicle. 45. What is the definition of a “hazard”? A. A condition that increases the chance of a loss B. A legal contract C. A claims form D. A type of deductible Hazards are conditions that make loss more likely or severe, such as icy roads. 46. What is a “moral hazard”? A. A natural disaster B. Fire-prone materials C. Dishonest behavior by the insured
50. Which coverage pays regardless of fault in an auto policy? A. Collision B. Medical payments (MedPay) C. Liability D. Comprehensive Medical payments coverage provides no-fault medical expense reimbursement. 51. When two or more policies apply to the same loss, how are losses typically settled? A. Each pays full value B. Pro-rata based on policy limits C. Only one pays D. The insured chooses Insurers share the loss proportionally based on their policy limits. 52. A tornado damages a home. This peril is classified as: A. Windstorm B. Vandalism C. Earthquake D. Negligence A tornado is a type of windstorm and is covered under standard policies. 53. The primary goal of insurance regulation is to: A. Increase taxes B. Assist insurers C. Protect the public
D. Limit competition Regulation exists to protect consumers and ensure fair practices.
54. What is arbitration in insurance? A. A binding method of resolving disputes outside of court B. A trial C. A form of loss mitigation D. A clause found only in marine policies Arbitration settles disputes efficiently without litigation. 55. What kind of risk is insurable? A. Speculative B. Business C. Pure D. Political Only pure risks—those involving only the possibility of loss—are insurable. 56. The adjuster’s first duty upon receiving a new claim is to: A. Call the claimant’s lawyer B. Confirm coverage and begin investigation C. Issue payment immediately D. Refer the claim to arbitration The adjuster must confirm that the loss is covered and start collecting facts. 57. A “friendly fire” is: A. A fire caused by arson B. A fire that remains in its intended place C. A fire that causes smoke damage
C. Every 5 years D. Never Adjuster licenses in Rhode Island must be renewed biennially.
62. What happens when an insured fails to cooperate with the adjuster during an investigation? A. The claim is paid in full B. It can result in denial of the claim C. The insurer must proceed regardless D. It’s irrelevant Insureds have a duty to cooperate; failure may void coverage. 63. Who can revoke a Rhode Island adjuster license? A. The insurer B. The insured C. The Department of Business Regulation D. The NAIC The state regulatory authority enforces licensing and compliance. 64. An insurer's duty to act in the best interest of the insured is part of: A. Subrogation B. The duty of good faith C. Arbitration D. Reinsurance This duty requires honesty and fair dealing in all claims handling. 65. What is the penalty for adjusting claims in Rhode Island without a license? A. No penalty
B. Referral to arbitration C. Fines and possible criminal charges D. Denial of claim payment Unlicensed adjusting is illegal and subject to regulatory penalties.