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VIRGINIA PROMETRIC ALL LINES
ADJUSTER PRACTICE EXAM QUESTIONS
AND CORRECT ANSWERS (VERIFIED
ANSWERS) PLUS RATIONALES 2025
- What is the primary purpose of an insurance adjuster? A. Sell insurance policies B. Investigate and settle claims C. Underwrite new applicants D. Enforce policyholder compliance Adjusters are responsible for evaluating and settling insurance claims based on the policy terms.
- Under Virginia law, an adjuster must act in accordance with: A. Federal insurance law B. The Virginia Insurance Code C. The adjuster’s company handbook D. Prometric training rules
The Virginia Insurance Code governs the licensing and conduct of insurance professionals in the state.
- What does “indemnification” mean in the context of insurance? A. Denying fraudulent claims B. Increasing policy premiums C. Restoring the insured to their original financial condition D. Punishing negligent policyholders Indemnification ensures the insured is made whole again after a covered loss, without profit.
- Which type of adjuster works on behalf of the insured rather than the insurer? A. Independent adjuster B. Staff adjuster C. Public adjuster D. Claims processor Public adjusters represent policyholders and help them negotiate settlements with insurers.
- An insurance contract is considered what type of contract? A. Bilateral B. Adhesion C. Aleatory D. Conditional Insurance contracts are aleatory because the exchange of value is unequal and dependent on uncertain events.
B. 5 business days C. 10 business days D. 30 days According to Virginia Unfair Claims Settlement Practices regulations, insurers must acknowledge claims promptly, typically within 10 business days. 10.The purpose of insurable interest is to: A. Limit the value of claims B. Prevent moral hazard and gambling C. Establish underwriting standards D. Maximize insurer profit Insurable interest ensures the policyholder would suffer a genuine loss, preventing speculative behavior. 11.Which of the following perils is typically excluded under a standard property insurance policy? A. Fire B. Lightning C. Windstorm D. Earthquake Earthquake is usually excluded from standard property policies and requires an endorsement or separate policy. 12.What is the main role of an independent adjuster? A. Represent the policyholder
B. Sell insurance policies C. Investigate claims on behalf of multiple insurers D. Manage reinsurance contracts Independent adjusters are hired by insurers to handle claims, especially in areas where the insurer has no local office. 13.What is the term for terminating a policy before its expiration date? A. Rescission B. Cancellation C. Nonrenewal D. Forfeiture Cancellation ends a policy before the end of the coverage period. 14.In liability claims, what is the first step in determining legal liability? A. Settlement negotiations B. Offer of judgment C. Investigation of facts D. Coverage analysis Adjusters must investigate all facts and determine if negligence or legal responsibility exists. 15.What is an adjuster’s primary goal in claim settlement? A. Maximize payout B. Resolve fairly and promptly within policy limits C. Minimize contact with insured D. Outsource liability
Replacement cost coverage pays the cost to replace damaged items with new ones of like kind and quality. 19.Which of the following is not a legal element of a contract? A. Offer B. Acceptance C. Insurable risk D. Consideration A valid contract requires offer, acceptance, legal purpose, competent parties, and consideration—not "insurable risk" as a legal element. 20.Which of the following would be considered “actual cash value” (ACV)? A. Price paid for the item B. Market value C. Replacement cost minus depreciation D. Appraised value ACV is typically calculated by taking the replacement cost and subtracting depreciation for age or wear. 21.What is the purpose of the “loss payable clause”? A. Provides extra coverage B. Excludes personal property C. Protects lenders with a financial interest in the property D. Removes the deductible Loss payable clauses ensure that lenders or lienholders are paid in the event of a claim.
22.In Virginia, an adjuster who acts in bad faith may face penalties under: A. State income tax laws B. Unfair Claims Settlement Practices Act C. The Federal Trade Commission D. Consumer Credit Act The Virginia Unfair Claims Settlement Practices Act outlines penalties for unethical claim practices. 23.An adjuster fails to respond to an insured's inquiry for 30 days. This is considered: A. Legal in all cases B. An unfair claims settlement practice C. Minor oversight D. Allowable in catastrophe situations Unreasonable delay in communication may violate Virginia's regulations on timely and fair claims handling. 24.What is the purpose of the proof of loss form? A. Provides documented evidence of the claim and details of the loss B. Shows replacement value C. Replaces the adjuster’s estimate D. Terminates coverage The proof of loss is a sworn statement by the insured validating the claim’s facts and values. 25.A waiver in insurance terms is: A. A claim denial
Arbitration is an alternative dispute resolution method agreed upon in some insurance policies. 29.A deductible is best described as: A. The amount the insured must pay before insurance applies B. A refund from the insurer C. A surcharge for high-risk coverage D. A penalty for claims Deductibles shift a portion of the loss to the insured and reduce small or frequent claims. 30.When adjusting a liability claim, what is most important in assessing damages? A. Replacement cost B. Proof of negligence and actual damages C. Market value of the asset D. Intent of the defendant The adjuster must determine if there was negligence and whether the claimant suffered actual harm. 31.What is “salvage” in property insurance? A. The policyholder’s deductible B. Remaining value of damaged property that can be sold or reused C. Hidden damages D. Premium refund Salvage refers to any remaining value in the damaged property that the insurer may recover.
32.Which of the following would be classified as a “third-party” claim? A. An insured’s vehicle is stolen B. A homeowner files for wind damage C. A pedestrian sues an insured driver for injury D. A renter submits a fire claim Third-party claims are filed by someone other than the policyholder, usually involving liability. 33.What document outlines the specific coverage, limits, and endorsements of a policy? A. Declarations page B. Proof of loss C. Assignment of benefits D. Certificate of insurance The declarations page summarizes the critical elements of a policy, including coverages and limits. 34.An adjuster suspects arson but has no proof. What should the adjuster do? A. Deny the claim B. Close the file C. Refer the case for further investigation D. Pay the claim immediately Suspicious losses should be referred for investigation or to the Special Investigations Unit (SIU). 35.What is the role of the SIU (Special Investigations Unit)? A. Investigate suspicious or fraudulent claims
Material misrepresentations can void a policy if they impact underwriting decisions. 39.What is the primary function of reinsurance? A. Increase policy premiums B. Reduce adjuster workload C. Spread risk among multiple insurers D. Eliminate underwriting guidelines Reinsurance allows insurers to share large losses and stabilize their risk exposure. 40.A release is signed by a claimant when: A. They agree to accept a final settlement amount B. The policy is issued C. The premium is overdue D. Arbitration is denied A release discharges the insurer from further liability after a settlement is accepted. 41.Which of the following is typically not covered under a standard liability policy? A. Bodily injury B. Property damage C. Intentional acts D. Legal defense costs Intentional acts are generally excluded from liability coverage.
42.What kind of insurance covers losses due to employee theft? A. Professional liability B. Fidelity bond C. Surety bond D. Personal liability Fidelity bonds protect businesses from losses due to dishonest employees. 43.Which of the following would be considered “proof of loss”? A. Adjuster’s field notes B. Signed sworn statement from the insured C. Estimate by a contractor D. Police report A sworn proof of loss is the insured's formal declaration of facts surrounding the loss. 44.Which law requires insurers to act in good faith when settling claims? A. Tort Reform Act B. Unfair Claims Settlement Practices Act C. Declarations Act D. Federal Insurance Law This act outlines how insurers must ethically handle claim investigations and settlements. 45.When does an insurable interest need to exist for a property policy? A. At the time of loss B. When the policy is written C. At time of claim filing
B. A claim report C. Temporary evidence of insurance coverage D. Premium receipt A binder provides temporary proof of coverage before the formal policy is issued. 50.When handling a claim, an adjuster must prioritize: A. Denial of claims B. Protecting the insurer only C. Fair and prompt settlement practices D. Avoiding communication The primary duty is ethical and timely handling of all claims.
