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VERMONT PROMETRIC 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 loss D. To create profits for insurers Insurance is designed to transfer the financial consequences of risk from the insured to the insurer in exchange for a premium.
- Which of the following types of authority is specifically stated in an adjuster's contract? A. Apparent B. Implied C. Express D. Assumed
Express authority is explicitly granted in writing in the contract between the principal and the agent.
- A windstorm damages both the roof and contents of a building. Under the Dwelling policy, what coverage applies to the damaged furniture? A. Coverage A B. Coverage C C. Coverage B D. Coverage D Coverage C applies to personal property or contents in the dwelling.
- Which of the following is NOT a type of hazard? A. Physical B. Moral C. Morale D. Predictable Hazards are conditions that increase the chance of a loss. Predictable is not a hazard category.
- Under the Standard Fire Policy, how many perils are covered? A. Two B. Four C. Three D. Five The Standard Fire Policy covers three perils: fire, lightning, and removal.
- What is the purpose of a proof of loss?
A. Symbol 2 B. Symbol 1 C. Symbol 3 D. Symbol 4 Symbol 1 means “any auto,” offering the broadest coverage under a BAP. 10.The maximum amount an insurer will pay in a liability claim is called: A. Premium B. Actual cash value C. Limit of liability D. Deductible The limit of liability sets the cap on how much the insurer pays for a covered loss. Questions 11–50 continue below: 11.Which of the following best describes an "occurrence"? A. A single, sudden event B. Continuous or repeated exposure to harmful conditions C. A fire loss D. A deductible An occurrence includes both sudden events and repeated exposure over time that result in injury or damage. 12.What does indemnification mean in insurance?
A. Paying more than the loss B. Guaranteeing no future losses C. Restoring the insured to the pre-loss condition D. Avoiding financial recovery Indemnity means restoring the insured as closely as possible to their original financial position before the loss. 13.Which of the following would be covered under the liability section of a homeowner’s policy? A. A fire damaging the insured's house B. The insured’s dog biting a neighbor C. Theft of the insured’s TV D. Loss from flood The liability section covers bodily injury or property damage the insured causes to others. 14.Under Vermont law, adjusters must complete how many hours of continuing education every license period? A. 12 hours B. 15 hours C. 24 hours D. 30 hours As of current regulations, Vermont requires 24 hours of CE for adjusters per renewal cycle, including 3 hours of ethics. 15.Which is a responsibility of the adjuster during the claim process?
D. Liability limits The deductible is the amount the insured must pay before insurance kicks in. 19.An insured building is damaged and temporarily unusable. What policy provision pays for temporary relocation? A. Property damage B. Additional living expense C. Personal property D. Ordinance and law Additional living expense helps cover costs for alternative living arrangements when the home is uninhabitable due to a covered loss. 20.What type of adjuster works directly for the insurer? A. Public adjuster B. Staff adjuster C. Independent adjuster D. Field adjuster Staff adjusters are salaried employees of insurance companies. Questions 21–50 continue below: 21.A public adjuster represents the interests of: A. The insurer B. The policyholder C. The underwriter D. The state
Public adjusters are hired by and advocate on behalf of the insured/policyholder. 22.What type of coverage would respond if a customer slipped and fell in a retail store? A. Property B. Equipment Breakdown C. Commercial General Liability D. Inland Marine Commercial General Liability covers third-party bodily injury claims, such as slips and falls. 23.Which clause prevents an insured from collecting more than the actual loss? A. Subrogation B. Liberalization C. Indemnity D. Assignment The principle of indemnity ensures the insured does not profit from a loss. 24.What is subrogation? A. Transferring risk B. The insurer's right to recover from a third party C. The insured’s duty to pay a deductible D. A type of coverage Subrogation allows the insurer to pursue a third party that caused an insurance loss to the insured.
C. Lightning D. Windstorm Standard property policies typically exclude earthquakes unless endorsed. 29.Which policy would best cover goods in transit? A. Commercial property B. Homeowner’s C. Inland marine D. CGL Inland marine policies cover property that is mobile or in transit. 30.An endorsement is: A. A separate policy B. A modification to the existing policy C. A cancellation D. A deductible Endorsements are used to change or add coverage to the original policy. Questions 31–50 continue below: 31.What is the purpose of the Conditions section in an insurance policy? A. List covered perils B. Explain the responsibilities of each party C. Describe property values D. Provide coverage exclusions
The Conditions section outlines duties of both the insurer and the insured, such as notice of loss and cooperation. 32.A policy that covers all perils unless excluded is known as: A. Named peril policy B. Open peril policy C. Standard policy D. Extended policy An open peril policy provides broader protection, covering all risks unless specifically excluded. 33.What does the term “reservation of rights” mean in claims handling? A. Denial of coverage B. The insurer defends the claim while reserving the right to deny coverage later C. Full payment of a claim D. The insured defers payment It allows the insurer to investigate or defend a claim without waiving its right to later deny it. 34.Which of the following best defines insurable interest? A. Financial speculation B. A financial stake in the property being insured C. An emotional attachment D. A legal assumption Insurable interest must exist at the time of loss to collect insurance proceeds. 35.What is proximate cause?
The appraisal clause provides a process to resolve valuation disputes between insured and insurer. 39.Which policy section lists the exclusions? A. Conditions B. Exclusions C. Declarations D. Endorsements The Exclusions section clearly defines what is not covered. 40.Which type of liability applies whether or not the insured was negligent? A. Intentional B. Strict liability C. Legal D. Criminal Strict liability applies in cases like defective products, where negligence does not need to be proven. 41.The intentional relinquishment of a known right is: A. Fraud B. Misrepresentation C. Waiver D. Estoppel A waiver occurs when a party knowingly gives up a right. 42.Estoppel is best described as:
A. Cancellation of coverage B. Preventing a party from denying a previous action or statement C. Increasing limits D. Waiving a deductible Estoppel prevents a party from asserting something contrary to what was previously implied or stated. 43.What is the purpose of an insurance binder? A. Cancel coverage B. Provide temporary coverage until a policy is issued C. Deny coverage D. Collect deductibles A binder offers immediate temporary coverage before the formal policy is issued. 44.Which coverage would apply to damage done to another vehicle in an at- fault accident? A. Collision B. Medical Payments C. Property Damage Liability D. Comprehensive Property Damage Liability covers damage caused to other vehicles or property. 45.Which coverage pays medical expenses without regard to fault? A. Liability B. Medical Payments C. Uninsured Motorist
49.What type of coverage would protect against theft of cargo in a delivery truck? A. CGL B. Inland Marine C. Workers' Compensation D. Commercial Auto Inland Marine coverage includes transportation and mobile property such as cargo. 50.If a policy is ambiguous, courts will typically interpret it: A. In favor of the insurer B. In favor of the insured C. As unenforceable D. In favor of the regulator Ambiguities in insurance contracts are interpreted in favor of the insured because insurers write the policy language.
