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UTAH PSI ALL LINES ADJUSTER
PRACTICE EXAM QUESTIONS AND
CORRECT ANSWERS (VERIFIED
ANSWERS) PLUS RATIONALES 2025
- What is the primary purpose of insurance? A. To eliminate risk B. To transfer risk C. To avoid risk D. To retain risk Insurance allows individuals and businesses to transfer the financial burden of risk to the insurer in exchange for premiums.
- Which of the following is considered an insurable interest? A. A neighbor’s house B. A public park C. A spouse’s life D. A celebrity's home
Insurable interest exists when a person would suffer a financial or emotional loss from damage or loss to the person or property insured.
- In Utah, how many days' notice must an insurer give before canceling a personal lines policy for nonpayment of premium? A. 30 days B. 45 days C. 20 days D. 10 days Utah law requires a 10-day notice for cancellation due to nonpayment of premium.
- What is the purpose of an adjuster during a claims process? A. To pay all claims submitted B. To investigate and evaluate claims C. To write insurance policies D. To defend lawsuits Adjusters handle claims by investigating the loss, determining coverage, and negotiating settlement.
- Which of the following is NOT a type of hazard? A. Moral B. Morale C. Physical D. Legal Legal is not a classification of hazard. The main types are physical, moral, and morale hazards.
A. Health insurance B. Auto insurance C. Homeowners insurance D. Life insurance Homeowners insurance typically covers sudden and accidental water damage, such as from a burst pipe. 10.In a liability policy, what does Coverage A typically refer to? A. Personal injury protection B. Bodily injury and property damage liability C. Uninsured motorist coverage D. Collision coverage Coverage A in liability insurance generally refers to bodily injury and property damage liability. 11.Which part of a policy specifies the perils insured against? A. Declarations B. Insuring agreement C. Coverage section D. Conditions The coverage section details what perils are covered and what property is protected. 12.What is subrogation?
A. Denial of a claim B. Coverage for others C. Transfer of the right to recover damages to the insurer D. Requirement to mediate Subrogation allows the insurer to seek reimbursement from the responsible third party after paying the insured. 13.Which of the following is an example of a morale hazard? A. Arson B. Lying on an application C. Careless driving because you have insurance D. Having a wood-burning stove Morale hazard involves carelessness or indifference because insurance exists. 14.What is the minimum auto liability coverage required in Utah? A. 15/30/ B. 25/50/ C. 25/65/ D. 30/60/ Utah requires auto liability limits of $25,000 per person, $65,000 per accident for bodily injury, and $15,000 for property damage. 15.An adjuster acting unethically may be subject to: A. Criminal penalties only B. Civil lawsuits only C. Disciplinary action by the Insurance Department D. Federal prosecution
19.What is actual cash value (ACV)? A. Cost of repair B. Replacement cost minus depreciation C. Market value D. Agreed value ACV reflects the current value of the property after accounting for depreciation. 20.Which term means termination of a policy before its expiration? A. Nonrenewal B. Lapse C. Cancellation D. Rescission Cancellation is the early termination of a policy, often due to nonpayment or misrepresentation. 21.What kind of adjuster works for the insurance company? A. Independent adjuster B. Staff adjuster C. Public adjuster D. Private adjuster Staff adjusters are employees of the insurance company and represent the insurer's interests. 22.A deductible is:
A. The amount the insured must pay before insurance pays B. A co-insurance clause C. An exclusion D. The policy premium The deductible is the portion of a covered loss the insured is responsible for paying. 23.What is the purpose of an appraisal clause? A. Settle all claims B. Resolve disputes over value of a loss C. Establish liability D. Determine coverage The appraisal clause allows each party to hire an appraiser to resolve disagreements about the amount of loss. 24.A waiver is best defined as: A. Voluntary relinquishment of a known right B. A breach of warranty C. A new coverage D. A claim denial A waiver occurs when the insurer voluntarily gives up a right, such as enforcing a policy provision. 25.What is the purpose of reinsurance? A. Protect insureds B. Allow insurers to share large risks C. Avoid state regulation
29.What is the purpose of liability insurance? A. Cover damage to your own property B. Cover damage or injury to others C. Protect from all loss types D. Provide replacement cost Liability insurance pays for bodily injury or property damage the insured causes to others. 30.What does "nonrenewal" mean? A. Cancelled for nonpayment B. Voided policy C. Policy will not be renewed at the end of the term D. Policy is backdated Nonrenewal is when the insurer chooses not to renew a policy once it expires. 31.What does PIP stand for? A. Personal Insurance Plan B. Personal Injury Protection C. Property Insurance Policy D. Primary Injury Plan Personal Injury Protection (PIP) covers medical expenses regardless of fault in auto accidents. 32.Which entity licenses adjusters in Utah?
A. Department of Motor Vehicles B. Utah Insurance Department C. NAIC D. Governor’s Office The Utah Insurance Department handles all licensing for adjusters in the state. 33.A material misrepresentation on a claim can result in: A. Rate increase B. Waiver of deductible C. Claim denial D. Extra payment A material misrepresentation can void the claim or even the entire policy. 34.What is an exclusion? A. A deductible B. A peril or loss type not covered C. An endorsement D. A premium refund Exclusions define what is not covered by the insurance policy. 35.Which policy provides liability for a contractor’s job site? A. Personal auto B. Homeowners C. Commercial general liability (CGL) D. Workers’ compensation CGL policies cover third-party liability for business operations, including job sites.
A. Windstorm B. Earthquake C. Fire D. Theft Earthquake is typically excluded unless specifically added by endorsement. 40.What does the term "assignment" mean in insurance? A. Policy termination B. Transfer of policy rights to another party C. Binding coverage D. Appraisal clause Assignment refers to transferring the rights or benefits of a policy to another person or entity. 41.The term "indemnity" refers to: A. Restoring the insured to their pre-loss condition B. Providing income replacement C. Offering bonuses D. Penalizing the insurer Indemnity means making the insured whole after a covered loss, no better or worse. 42.If an insured files a claim after the statute of limitations has passed, the claim will be:
A. Paid in full B. Covered at reduced amount C. Denied D. Forwarded to arbitration Claims must be filed within the legal time limits or they will be denied. 43.A public adjuster represents: A. The insurance company B. The court C. The insured D. The reinsurer Public adjusters are licensed professionals hired by insureds to assist in claim negotiation. 44.Which of the following is a unilateral contract? A. Real estate B. Auto loan C. Insurance policy D. Mortgage Insurance contracts are unilateral—only the insurer makes a promise to perform upon premium payment. 45.The person who accepts or rejects insurance applications is: A. Adjuster B. Underwriter C. Agent
A. Collision B. Comprehensive C. Personal Injury Protection (PIP) D. Gap insurance Utah is a no-fault state, and PIP is required to cover medical expenses regardless of fault. 50.How often must a Utah adjuster renew their license? A. Every year B. Every 3 years C. Every 2 years D. Every 5 years Utah adjuster licenses must be renewed biennially (every 2 years) with continuing education requirements.
