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Virginia “Property & Casualty Adjuster” License Exam
Questions And Correct Answers (Verified Answers) Plus
Rationales 2025
- What is the primary purpose of a property insurance policy? A. To protect the insured from liability claims B. To provide a profit in case of loss C. To indemnify the insured for covered losses D. To pay more than the insured's financial interest The purpose of property insurance is to indemnify, or restore, the insured to the financial position they were in before the loss.
- Which of the following is an example of a liability loss? A. A house burns down B. A car is stolen C. A storm damages a roof D. A guest slips and falls on the insured's property Liability losses occur when a person is held legally responsible for injury or damage to others.
- What does "actual cash value" (ACV) mean? A. The original purchase price B. Replacement cost minus depreciation
C. The market value D. The insurer's cost ACV considers depreciation and is calculated by subtracting depreciation from the replacement cost.
- The Virginia Bureau of Insurance regulates: A. Insurance companies and adjusters B. Only insurance companies C. Only policyholders D. Only out-of-state adjusters The Bureau regulates the business of insurance in Virginia, including adjusters.
- An adjuster who misrepresents facts about a policy may be charged with: A. Subrogation B. Unfair claims settlement practices C. Contribution D. Arbitration Misrepresentation during claim handling can violate unfair trade practices laws.
- What is the purpose of subrogation? A. To deny coverage B. To allow the insurer to recover from a third party C. To transfer ownership D. To increase premiums Subrogation allows the insurer to recover the amount it paid from a third party responsible for the loss.
A. Name of insured, coverage limits, premium B. Policy exclusions C. Claims history D. Adjuster's license The declarations page outlines the essential facts of the insurance agreement. 11.Which policy section lists specific causes of loss not covered? A. Insuring Agreement B. Exclusions C. Declarations D. Conditions Exclusions clarify what the policy does not cover. 12.Negligence is defined as: A. Failure to use reasonable care resulting in damage or injury B. Intentional harm to others C. Strict liability D. A type of policy exclusion Negligence involves failing to act with the care a reasonable person would. 13.An adjuster must act in: A. Their own interest B. Good faith C. Favor of insurer only D. Favor of claimant only
Adjusters are expected to act ethically and in good faith toward all parties. 14.A "first-party claim" involves: A. A claim by the insured against their own policy B. A third party suing the insured C. Subrogation D. Arbitration First-party claims are those made by the insured for their own losses. 15.Which of the following would likely be excluded under a standard homeowners policy? A. Fire damage B. Theft C. Earthquake D. Windstorm Earthquake is not covered unless specifically added via endorsement. 16.An adjuster may have their license revoked for: A. Honest mistakes B. Fraudulent or dishonest acts C. Writing estimates D. Referring to policy provisions Dishonesty or fraud can result in disciplinary action, including license revocation. 17.The Virginia Property and Casualty Guaranty Association: A. Offers flood insurance B. Sets policy premiums
21.What does liability insurance cover? A. Medical bills of insured B. Damage to insured’s property C. Legal responsibility for injury or damage to others D. Business losses Liability insurance covers legal responsibility for bodily injury or property damage to others. 22.A windstorm damages a house. What is the proximate cause? A. Windstorm B. Tree C. Roof D. Negligence Proximate cause is the event that started the chain of events leading to the loss. 23.Which is considered a "named peril" policy? A. Covers any loss not excluded B. Covers only specifically listed perils C. Automatically includes liability D. Covers all risks Named peril policies cover only the perils listed in the contract. 24.What is the purpose of coinsurance? A. Increase premiums B. Encourage insureds to carry insurance close to full value
C. Allow partial payments D. Penalize adjusters Coinsurance ensures the property is insured to a minimum percentage of its value. 25.The adjuster’s role in a claim includes all EXCEPT: A. Investigating the claim B. Determining policy coverage C. Offering legal advice D. Evaluating damages Adjusters may not offer legal advice unless they are licensed attorneys. 26.Which of the following is an element of a valid insurance contract? A. Premium refund guarantee B. Legal purpose C. Unlimited coverage D. Nonrenewable term A contract must have a legal purpose to be valid and enforceable. 27.What does “proof of loss” refer to? A. Adjuster’s investigation notes B. Insurance application C. A formal statement by the insured supporting the claim D. Initial binder
31.What is the maximum allowable penalty the Bureau of Insurance may impose on an adjuster per violation? A. $ B. $1, C. $5, D. $10, Virginia law allows up to $5,000 per violation in administrative penalties for licensees. 32.What does liability insurance NOT cover? A. Injuries to third parties B. Legal defense costs C. Injury to the insured D. Property damage to others Liability insurance does not cover the insured's own bodily injury. 33.Under a homeowners policy, which of the following is covered under Coverage C? A. Personal property B. Dwelling C. Other structures D. Liability Coverage C provides protection for the insured’s personal belongings. 34.Which of the following losses is generally excluded from most property policies?
A. Flood B. Fire C. Lightning D. Hail Flood is typically excluded and requires separate coverage. 35.When can an insurer cancel a property policy midterm in Virginia? A. For any reason B. Without notice C. For non-payment of premium D. Only after 90 days Non-payment of premium is a valid reason for midterm cancellation. 36.The time limit to file a claim under most property policies is: A. 90 days B. 1 year from purchase C. As stated in the policy, often 60–90 days from loss D. No time limit Claim filing deadlines are specified in the policy and usually range from 30 to 90 days. 37.An endorsement does what to a policy? A. Cancels coverage B. Modifies or adds coverage
A. Claimant’s rights B. Insurer’s ability to deny coverage C. Public adjusters D. Agent commissions A non-waiver agreement allows an insurer to investigate without admitting liability. 42.A property’s insurable value is based on: A. Tax value B. Replacement cost or actual cash value C. Original purchase price D. Market trends Insurable value is typically based on either ACV or replacement cost of the property. 43.A standard Businessowners Policy (BOP) is designed for: A. Large manufacturing plants B. Small to medium-sized businesses C. Government agencies D. Farms BOPs are intended for small to mid-sized commercial businesses. 44.What happens if the insured violates the concealment or fraud clause? A. Coverage may be denied B. Deductible is waived
C. Policy premium decreases D. Adjuster takes over the claim Intentional misrepresentation or concealment can void coverage. 45.What is arbitration? A. A method of resolving disputes outside court B. Subrogation C. Coverage endorsement D. Rate setting Arbitration is used to resolve disputes between parties without litigation. 46.Which of the following is considered a “direct loss”? A. Loss of income B. Fire damage to a building C. Loss of market D. Additional living expenses A direct loss is physical damage directly caused by a peril. 47.What is “loss of use” coverage? A. Damage to business equipment B. Pays additional expenses if home is uninhabitable C. Covers personal liability D. Replaces stolen property Loss of use pays for temporary housing and related expenses after a covered event.
A. A claim by the insurer B. A claim by the insured C. A claim filed by someone other than the insured or insurer D. A claim for replacement cost Third-party claims involve a person who is not the policyholder or insurer but who is claiming injury or damage caused by the insured. 52.In a liability policy, the duty to defend: A. Applies only after the claim is proven B. Begins when a claim is filed C. Is shared with the insured D. Is not the insurer’s responsibility The insurer has a duty to defend the insured in any potentially covered liability claim. 53.Which of the following is NOT a component of insurable risk? A. Definable loss B. Loss must be accidental C. Loss must be inevitable D. Large number of similar exposure units For a risk to be insurable, it must be uncertain or accidental—not inevitable. 54.The standard homeowners policy excludes: A. Theft B. Intentional acts by the insured
C. Fire D. Windstorm Intentional acts are excluded because insurance only covers fortuitous (accidental) losses. 55.In Virginia, an adjuster must notify the Bureau of Insurance of an address change within: A. 90 days B. 30 days C. 60 days D. 10 days Virginia law requires adjusters to report address changes within 30 days. 56.Which term means “the insured has transferred their rights of recovery to the insurer”? A. Contribution B. Subrogation C. Arbitration D. Indemnity Subrogation allows the insurer to pursue reimbursement from the responsible third party. 57.The term "bailee" refers to: A. A party that sells policies B. A party temporarily holding property of another
61.Which liability coverage pays regardless of fault? A. Personal liability B. Medical payments to others C. Bodily injury D. Products liability Medical payments coverage is a no-fault provision that pays for injuries regardless of liability. 62.A "moral hazard" refers to: A. Tornado risk B. Dishonest behavior by the insured C. Improper construction D. A higher deductible Moral hazards relate to the character of the insured, such as dishonesty or fraud. 63.What is the purpose of an "appraisal clause"? A. Allows insurer to cancel policy B. Resolves disputes over the value of a loss C. Provides reinsurance D. Replaces arbitration Appraisal is used when the insured and insurer disagree about the value of a loss. 64.A policy that covers all risks except those specifically excluded is called:
A. Named peril policy B. Open peril (special form) policy C. Limited coverage form D. Indirect loss policy Open peril policies cover all causes of loss unless specifically excluded. 65.A staff adjuster is employed by: A. The insured B. An insurance company C. A third-party administrator D. A contractor Staff adjusters work directly for the insurance company. 66.The term “tort” refers to: A. A criminal act B. A civil wrong C. A type of contract D. A breach of warranty Torts are civil wrongs that result in injury or damage to another person. 67.What is an "occurrence" policy? A. Covers only sudden accidents B. Covers losses that happen during the policy period C. Covers only claims filed during the policy term D. Excludes prior acts
