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WEST VIRGINIA ALL LINES ADJUSTER
PRACTICE EXAM (PEARSON VUE)
QUESTIONS AND CORRECT ANSWERS
(VERIFIED ANSWERS) PLUS RATIONALES
- What is the primary purpose of an insurance adjuster? A. Sell insurance policies B. Prevent insured losses C. Investigate and settle claims D. Advise policyholders on financial planning The adjuster’s role is to investigate, evaluate, and settle claims on behalf of the insurer.
- Which of the following is NOT a type of claim an All Lines Adjuster in West Virginia may handle? A. Auto physical damage B. Property and casualty losses
C. Life insurance claims D. Workers’ compensation claims Life insurance claims are handled by life insurance adjusters or representatives, not All Lines Adjusters.
- What is the standard of conduct that requires an adjuster to act in the best interests of the insurer and the claimant? A. Profit motive B. Fiduciary duty C. Financial incentive D. Adjuster ethics clause Fiduciary duty means the adjuster must act in a position of trust, maintaining honesty and integrity.
- Which of the following best describes "indemnity"? A. Guarantee of profit B. Return on premium C. Restoration to pre-loss condition D. Policy cancellation rights Indemnity is the insurance principle of restoring the insured to the same financial position as before the loss.
- What is the difference between actual cash value (ACV) and replacement cost? A. Replacement cost accounts for depreciation B. ACV pays more than replacement cost C. ACV is replacement cost minus depreciation
D. $6,
The insurer pays the loss amount minus the deductible: $5,000 – $1,000 = $4,000.
- What is the primary purpose of the Declarations page in a policy? A. Describe exclusions B. List who is insured, what is insured, and limits C. Explain duties after a loss D. List optional endorsements The Declarations page identifies the named insured, property covered, policy period, and limits. 10.What coverage part would respond to a liability claim in a Businessowners Policy (BOP)? A. Property B. Liability C. Inland Marine D. Workers’ Compensation The liability section of a BOP covers claims arising from bodily injury or property damage to others. 11.Which of the following is an example of a “first-party” claim? A. A customer sues a business for slip-and-fall injuries B. A pedestrian is hit by a policyholder’s car C. A homeowner files a claim for fire damage to their own home D. An employee sues their employer for discrimination
A first-party claim is between the insured and the insurer for a covered loss to the insured’s property. 12.What must an adjuster do upon receiving a claim notification? A. Wait until contacted by the insured B. Promptly acknowledge the claim and begin investigation C. Refer the claim to underwriting D. Wait 60 days before responding West Virginia regulations require prompt acknowledgment and action on claims. 13.What does a reservation of rights letter do? A. Denies a claim B. Confirms full coverage C. Notifies the insured the insurer is investigating but may not provide coverage D. Cancels the policy A reservation of rights protects the insurer while it investigates and determines if coverage applies. 14.Which type of coverage protects against loss from employee theft? A. Property coverage B. General liability C. Fidelity bond D. Business income coverage Fidelity bonds are used to protect a business from losses caused by dishonest employees.
B. Business interruption C. Physical damage to property D. Extra expense Direct losses involve physical damage to property from a covered peril. 19.Which of the following is a supplementary payment in a liability policy? A. Medical payments B. Defense costs C. Property damage to others D. Lost wages Supplementary payments typically include defense costs in addition to the liability limits. 20.What coverage is designed to protect against lawsuits for bodily injury or property damage to others? A. Medical payments B. Liability insurance C. Uninsured motorist D. Personal injury protection Liability insurance protects the insured from legal responsibility for causing injury or damage. 21.What does the term “proximate cause” refer to in claims handling? A. The last cause of damage B. Any possible cause C. The primary cause that sets others in motion D. The accidental cause
Proximate cause is the direct, effective cause of loss without which the loss would not have occurred. 22.If an insured intentionally damages their own property, what will the insurer most likely do? A. Pay the claim B. Deny the claim C. Increase the limits D. Offer replacement cost Intentional acts are excluded from coverage. Fraudulent claims can lead to denial and legal action. 23.What does subrogation allow the insurer to do after paying a claim? A. Cancel the policy B. Recover the amount from a responsible third party C. Increase the deductible D. Pay additional claims Subrogation lets the insurer sue a negligent third party to recoup the payout. 24.An adjuster must maintain claim files for how long under West Virginia law? A. 1 year B. 2 years C. 5 years D. 10 years West Virginia law requires records to be retained for 5 years after the claim is closed.
A. Property damage B. Umbrella C. Premises liability D. Business income Premises liability covers injuries to third parties that occur on the insured’s property. 29.What is the deductible in insurance? A. Premium refund B. Portion of a loss the insured must pay C. Additional limit D. Premium surcharge The deductible is the amount the insured pays out of pocket before the insurer pays. 30.In an adjuster's investigation, which of the following is considered hearsay? A. Recorded statement B. Police report C. Video evidence D. An unverified third-party statement Hearsay is a statement made outside of court that cannot be substantiated by the source. 31.What is the function of an appraisal clause? A. Sets the premium B. Resolves disputes about the value of a loss C. Identifies exclusions
D. Terminates the policy The appraisal clause allows disputed claim values to be resolved by neutral appraisers. 32.Which of the following is NOT required in a valid contract? A. Offer B. Acceptance C. Hospitality D. Consideration A valid contract requires offer, acceptance, legal capacity, and consideration – not hospitality. 33.What does “loss of use” coverage provide? A. Payment for additional living expenses after a covered loss B. Payment for physical damage C. Payment for uninsured losses D. Payment for vehicle repairs Loss of use pays for necessary expenses when the insured property is uninhabitable after a covered loss. 34.An adjuster suspects fraud in a fire loss claim. What is the best course of action? A. Deny the claim immediately B. Conduct a thorough investigation C. Pay a partial amount D. Refer to the police only
38.Which of the following would NOT be covered under the personal property section of a homeowners policy? A. Furniture B. Clothing C. Pets D. Electronics Animals are excluded from personal property coverage. 39.What kind of coverage does a liability policy provide for lawsuits? A. Property damage B. Legal defense and settlements C. Fire damage D. Personal property Liability insurance covers legal expenses and any settlements up to the policy limits. 40.What triggers coverage under a claims-made liability policy? A. Date of incident B. Date the claim is reported C. Date of policy expiration D. Date of underwriting Claims-made policies cover claims reported while the policy is active, regardless of when the incident occurred. 41.Which term refers to the maximum amount an insurer will pay for a covered loss?
A. Deductible B. Premium C. Policy limit D. Loss reserve The policy limit is the maximum amount an insurer will pay for a covered claim under the policy. 42.What is the purpose of the insuring agreement in a policy? A. List deductibles B. Describe the coverage provided C. Identify exclusions D. Provide definitions The insuring agreement details the perils covered and promises payment for losses. 43.Which statement is true about an adjuster acting as a fiduciary? A. The adjuster can share information with all parties B. The adjuster can settle claims at their own discretion C. The adjuster must act in good faith for both insurer and claimant D. The adjuster only serves the claimant Fiduciary duty requires the adjuster to act ethically and honestly for all parties involved. 44.What is the primary goal of insurance regulation in West Virginia? A. Encourage litigation B. Protect the public interest C. Promote insurer profits
Insurers must follow fair claim handling practices. Failing to establish procedures is a violation. 48.What does "additional living expense" coverage apply to? A. Moving costs from one home to another B. Normal monthly rent C. Increased living costs due to covered property loss D. Mortgage payments Additional living expenses cover temporary housing and other increased costs after a covered loss. 49.What does the term “estoppel” refer to in insurance law? A. Denial of a claim B. Preventing a party from asserting a right due to previous actions C. Cancellation of a policy D. Insurer’s right to recover damages Estoppel bars a party from going back on previous actions or representations. 50.What is required to prove negligence? A. Loss and liability B. Duty, breach, causation, and damages C. Breach and deductible D. Injury and insurable interest Negligence requires proof of duty, breach of that duty, actual harm, and a link between them.
51.An adjuster is found to have misrepresented a policy provision. This is considered: A. Fraud by the insured B. An error in underwriting C. An unfair claims practice D. A valid negotiation strategy Misrepresentation by an adjuster is a prohibited unfair claim settlement practice. 52.What is the function of the “conditions” section in a policy? A. Define covered perils B. List excluded coverage C. Outline the responsibilities of both insurer and insured D. Set premium amounts The conditions section outlines duties after a loss, cooperation, and other responsibilities. 53.If a building is vacant for more than 60 days, what happens to most property coverages? A. Some coverages are suspended or limited B. Coverage automatically increases C. No change occurs D. The deductible is waived Vacancy provisions reduce or void certain coverages after extended periods of unoccupancy.
B. At the time of loss C. After policy expiration D. Only for health insurance Insurable interest must exist at the time of the loss to collect benefits. 58.An adjuster licensed in West Virginia must complete how many hours of CE every two years? A. 10 hours B. 12 hours C. 24 hours D. 30 hours West Virginia requires 24 hours of continuing education, including ethics, every biennium. 59.What does a non-waiver agreement accomplish? A. Reserves insurer rights while investigating a claim B. Extends the policy period C. Adds replacement cost coverage D. Denies coverage to the insured A non-waiver agreement allows the insurer to investigate a claim without conceding coverage. 60.Which party is responsible for proving a loss is covered under the policy? A. The insurer B. The insured C. The department of insurance D. The third-party claimant
The insured bears the burden of proving a loss falls within the policy’s coverage. 61.What best describes "contributory negligence"? A. An intentional act B. The injured party’s own negligence contributed to the loss C. Coverage for joint liability D. Negligence by a witness Contributory negligence may bar recovery if the claimant is partly at fault. 62.A public adjuster works on behalf of: A. The insurer B. The insured C. The state D. The reinsurer Public adjusters represent policyholders in settling claims with their insurers. 63.If a claimant fails to file within the statute of limitations, what happens? A. Claim is automatically approved B. Claim is barred and cannot be pursued C. Claim goes to arbitration D. Claim must be refiled in another state Filing outside the statute of limitations generally results in the claim being dismissed. 64.When must an adjuster notify the insured if a claim is being denied? A. Within 90 days
