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Utah “Independent Adjuster” license — Exam
Questions and Correct Answers (Verified
Answers) Plus Rationales 2025
covering Property & Casualty, General Insurance Concepts, Utah-specific laws and regulations.
- What is the primary purpose of insurance? Risk transfer Insurance allows individuals and businesses to transfer the financial burden of a loss to an insurer in exchange for a premium.
- What type of insurance policy protects a business from liability claims? General liability insurance This covers third-party bodily injury, property damage, and personal injury claims made against the business.
- What is the principle that states the insured should not profit from a loss? Indemnity Indemnity restores the insured to their original financial position without gain.
- In insurance, what is a hazard? A condition that increases the likelihood or severity of a loss
Hazards are categorized as physical, moral, or morale and increase risk.
- An adjuster investigates a homeowner's claim for a roof damaged by hail. What kind of claim is this? First-party claim A first-party claim is filed by the policyholder against their own insurer.
- What is the Utah Commissioner of Insurance authorized to do? Enforce state insurance laws The commissioner ensures compliance with insurance statutes and regulations.
- Which of the following best defines insurable interest? A legitimate financial interest in the preservation of the insured item or person Insurable interest must exist at the time of loss to be valid.
- What is the purpose of a deductible in a property insurance policy? To reduce small claims and lower premiums Deductibles help prevent excessive small claims and share risk with the policyholder.
- What is considered an act of negligence? Failure to act as a reasonable person would in similar circumstances Negligence is the failure to use reasonable care, resulting in damage or injury to another. 10.Which type of insurance adjuster works for the insurance company? Staff adjuster
Under Utah law, claimants have three years to file a property damage claim. 17.Which section of a policy includes the insurer's promise to pay? Insuring agreement This outlines the coverage provided and insurer’s obligations. 18.What is the purpose of the declarations page in an insurance policy? Summarize key information like coverage limits and premiums The declarations page is a summary of the most important details of the contract. 19.An independent adjuster must do which of the following before conducting business in Utah? Obtain a license from the Utah Insurance Department Licensing ensures adjusters meet qualifications and follow regulations. 20.What does subrogation allow an insurer to do? Pursue recovery from a third party after paying a claim Subrogation transfers the insured's right of recovery to the insurer. 21.What is a surplus lines insurer? An unauthorized insurer that writes high-risk coverage They are not admitted in Utah but are allowed to cover unusual or high-risk exposures. 22.What is replacement cost? The cost to replace damaged property without depreciation Replacement cost provides payment for new property of like kind and quality.
23.Which party has the burden of proving a loss occurred under a policy? The insured The insured must prove that a covered loss occurred to receive payment. 24.What is the Utah Insurance Fraud Division responsible for? Investigating fraudulent insurance acts The division investigates and prosecutes fraud to protect consumers and insurers. 25.What is the penalty for adjusting claims without a Utah license? Possible fines and cease-and-desist orders Unlicensed adjusting is a violation and subject to enforcement actions. 26.What is the purpose of liability insurance? To protect the insured from claims made by others Liability insurance covers legal responsibility for third-party injuries or damages. 27.An earthquake damages a commercial building. Which policy typically excludes this peril? Standard property policy Earthquake damage usually requires separate coverage or an endorsement. 28.What is an endorsement? A modification to an insurance policy Endorsements add, remove, or modify coverage terms. 29.What is salvage? Insurer’s right to recover value from damaged property
The voluntary relinquishment of a known right A waiver can prevent an insurer from enforcing certain provisions. 37.The Utah Guaranty Association protects policyholders by: Paying covered claims if an insurer becomes insolvent It provides a safety net for consumers when insurers fail. 38.What type of insurance policy would best cover goods in transit? Commercial inland marine Inland marine insurance covers transportation exposures. 39.What is comparative negligence? When fault is shared between parties Under comparative negligence, damages are reduced based on each party’s degree of fault. 40.What does the term “reservation of rights” mean? The insurer defends the claim but may deny coverage later It preserves the insurer’s legal rights while investigating a claim. 41.What is a tort? A civil wrong that causes harm to another Torts can lead to liability claims and insurance payouts. 42.What is considered a compensatory damage? Payment for actual loss or injury Compensatory damages restore the victim’s financial position.
43.What are punitive damages? Damages awarded to punish wrongdoing Punitive damages are meant to deter reckless or malicious behavior. 44.A condition in the policy typically refers to: Rules both parties must follow Conditions specify duties of the insurer and insured under the contract. 45.What is the minimum age to become a licensed adjuster in Utah? 18 years old Applicants must be at least 18 to qualify for licensure. 46.What is a non-waiver agreement? Statement reserving rights while investigating a claim It prevents unintentional waiver of policy defenses. 47.What type of loss affects only one person or property? Particular loss Particular loss impacts a specific individual, not the community. 48.What is a moral hazard? A risk arising from dishonest behavior Moral hazards involve character flaws like fraud or lying. 49.What is considered an unfair claims settlement practice? Failing to promptly investigate or pay a claim
55.Which of the following is an example of a physical hazard? Worn-out electrical wiring Physical hazards are tangible conditions that increase the likelihood of loss. 56.What is the maximum fine for willfully violating Utah insurance laws? $5,000 per violation Utah imposes civil penalties for willful violations to enforce compliance. 57.Who does the adjuster represent during the claims process? The insurance company Independent adjusters work on behalf of the insurer, even though they are not employees. 58.What is the purpose of a proof of loss? To formally state the facts and amount of the claim A proof of loss is a sworn statement used to evaluate and confirm a claim’s validity. 59.What is an adjuster prohibited from doing without proper authorization? Settling a claim beyond their authority limit Adjusters must act within the scope of their authority or risk penalties and denied settlements. 60.Which of the following is an example of vicarious liability? An employer held responsible for an employee’s actions
Vicarious liability occurs when one party is held liable for the actions of another due to a relationship, such as employer-employee. 61.A policyholder intentionally damages their own property to file a claim. What is this? Insurance fraud This is a criminal act involving deception to gain financially from an insurance policy. 62.What does the term "occurrence" mean in liability policies? An accident or repeated exposure that causes injury or damage An occurrence may be a single event or continuous exposure resulting in a covered loss. 63.What type of policy covers all risks unless specifically excluded? Open perils policy Also known as "all-risk," this policy covers any peril not listed as an exclusion. 64.What is a contingent liability? Liability that may arise from the actions of others This occurs when a person or entity may be held liable for actions they did not directly commit. 65.What is the primary responsibility of the Utah Insurance Department? Regulate the insurance industry in Utah It ensures fair practices, solvency of insurers, and consumer protection.
A license issued for up to 180 days during emergencies or specific needs Temporary licenses allow for immediate service during insurer needs or public catastrophes. 72.What is insurable risk? A risk that meets the criteria to be underwritten by insurance It must involve pure risk, be measurable, and have predictable losses. 73.What is an example of morale hazard? An insured being careless because they have insurance Morale hazards arise from attitudes or behaviors that increase risk. 74.What document outlines the duties of the insured and the insurer? Conditions section of the policy Policy conditions define responsibilities such as notifying of losses and cooperating in investigations. 75.An adjuster who delays payment of a valid claim may be guilty of: Unfair claims settlement practice Such delays can harm consumers and violate Utah regulations. 76.What is a blanket insurance policy? A policy that covers multiple properties or risks under one limit It simplifies coverage and provides flexibility for insured parties. 77.What is the difference between a personal and commercial lines policy? Commercial lines insure businesses, personal lines insure individuals
Each is tailored to its audience’s specific risks and exposures. 78.Which of the following best describes a contract of adhesion? A contract written by one party with no negotiation Insurance contracts are take-it-or-leave-it and interpreted in favor of the insured if ambiguous. 79.What is an "aggregate limit" in a liability policy? The maximum amount the insurer will pay for all claims during the policy period Once reached, no further claims are paid. 80.When is an insurer obligated to provide a non-renewal notice in Utah? At least 30 days before policy expiration This gives the insured time to secure replacement coverage. 81.What is included in the duties after a loss clause? Prompt notice, protection from further damage, proof of loss The insured must take these steps to maintain eligibility for coverage. 82.What is arbitration? A method of resolving disputes without going to court Arbitration is often required in policy language to settle disagreements efficiently. 83.What is the primary purpose of licensing adjusters? To ensure competence and ethical conduct Licensing maintains professional standards and protects the public. 84.An insurer that is approved by the Utah Insurance Department is called:
It goes beyond actual losses and deters future misconduct. 91.What does "no-fault" mean in auto insurance? Each driver’s insurer pays their own medical expenses regardless of fault Utah is a no-fault state, reducing the need for litigation in minor accidents. 92.When is a written estimate required for property damage in Utah? When the damage exceeds a specific threshold Insurers and adjusters must provide documentation for large or complex claims. 93.A property insurance policy pays the lesser of ACV or: The cost to repair or replace Policies are designed to indemnify the insured, not provide profit. 94.What type of loss is considered direct? Damage caused immediately by a peril Fire destroying a home is a direct loss; water damage from fire suppression is indirect. 95.What is a "named peril" policy? Covers only the perils listed in the policy If it’s not named, it’s not covered. 96.What is coinsurance? A clause that requires the insured to carry a minimum percentage of coverage Failing to meet coinsurance requirements can result in reduced claim payments. 97.What must a Utah adjuster do upon a change of address?
Notify the Insurance Department within 30 days Failure to do so may result in administrative penalties. 98.What is an adjusting report? A summary of findings, coverage analysis, and recommendations It provides documentation of the claim evaluation process for the insurer. 99.Who may revoke an adjuster’s license in Utah? The Insurance Commissioner The commissioner has authority to take disciplinary action for violations.
- What is waiver and estoppel? Waiver is giving up a right; estoppel prevents enforcing it later Both are legal doctrines that prevent unfair enforcement of policy provisions once waived.
- What does the term “insured” refer to in a policy? Any person or organization covered under the policy The term can include named insureds, additional insureds, and others defined in the contract.
- What is the difference between binder and endorsement? A binder provides temporary coverage; an endorsement modifies the policy A binder is issued before the full policy; an endorsement changes the policy's terms.
This coverage pays for damage to others' property that the insured causes.
- What is rescission? Termination of a contract from the beginning as if it never existed Used in cases of fraud or material misrepresentation during policy inception.
- How long must an adjuster retain claim records in Utah? At least 5 years Maintaining records ensures regulatory compliance and supports audits or disputes.
- What is the definition of “underwriting”? The process of evaluating risk to determine insurability and premium Underwriters assess the likelihood of claims and set policy terms accordingly.
- What is the purpose of the Utah Workers' Compensation Fund? To provide workers’ compensation coverage to Utah employers It ensures all businesses can obtain legally required coverage.
- What is the limit of liability? The maximum amount the insurer will pay for a covered loss This is clearly stated in the declarations and policy terms.
- What is a retroactive date in a claims-made policy? The earliest date an incident can occur and still be covered Claims-made coverage only applies to claims made after this date.
- What does the word “concurrent causation” refer to?
Two perils cause a loss at the same time If one peril is excluded, this principle can affect whether coverage applies.
- What must a Utah licensee do before using a new trade name? Obtain approval from the Insurance Commissioner This ensures transparency and avoids misleading the public.
- A homeowner's policy with replacement cost coverage pays: The cost to replace the damaged property without depreciation Replacement cost coverage pays for new property of like kind and quality.
- What is an “appraisal clause” used for? To resolve disputes over the value of a claim Each party selects an appraiser, and a third neutral party helps determine value.
- What is a public adjuster? A person who represents the policyholder in a claim Public adjusters advocate for the insured, not the insurer.
- What is Utah's minimum required auto liability coverage? 25/65/ Utah mandates $25,000 for bodily injury (per person), $65,000 per accident, and $15,000 property damage.
- Which of the following would be considered a tort? Negligence resulting in bodily injury A tort is a civil wrong for which the injured party may seek compensation.
