I85PREP
⌘ K
AR Claims Adjuster study materials
AR Claims Adjuster study resources

AR Claims Adjuster practice questions

One question at a time. Build your AR Claims Adjuster understanding.

First 50 of 200 questions. Each one lists the choices, the correct answer, and an explanation. The checker at the top of this page saves progress in this browser when it is available.

Continue in the practice tool above to load more questions, 50 at a time.

Question 1Licensing of Adjusters

Under the standard state adjuster licensing framework, which activity generally requires an adjuster license?

  1. Negotiating claims on behalf of an insurer for compensation Correct answer.
  2. Providing general legal advice about coverage disputes
  3. Performing home inspections for mortgage lenders
  4. Selling property and casualty policies to consumers

Explanation

An adjuster license authorizes a person to investigate and negotiate settlement of claims for an insurer or insured in exchange for compensation. Selling policies is the licensed producer function, and inspections or legal advice fall outside adjuster authority.

Question 2Licensing of Adjusters

A person who adjusts claims solely for the insurer that employs them as a salaried staff member is best described as which type of adjuster?

  1. Public adjuster
  2. Third-party administrator
  3. Independent adjuster
  4. Company adjuster Correct answer.

Explanation

A company (staff) adjuster is an employee of a single insurer and handles claims for that insurer only. Independent adjusters contract with multiple insurers, public adjusters represent insureds, and TPAs administer programs for others.

Question 3Licensing of Adjusters

Which type of adjuster is retained by and represents the policyholder in preparing and negotiating a claim?

  1. Company adjuster
  2. Public adjuster Correct answer.
  3. Independent adjuster
  4. Catastrophe adjuster

Explanation

A public adjuster is hired by the insured and advocates on the insured's behalf in preparing and negotiating the claim. Company and independent adjusters represent insurers, and catastrophe adjusters are a deployment category, not a representation role.

Question 4Licensing of Adjusters

An applicant for an adjuster license is typically required to demonstrate knowledge of insurance by doing which of the following?

  1. Completing a claims internship
  2. Passing a state licensing examination Correct answer.
  3. Joining a trade association
  4. Submitting a surety bond only

Explanation

States generally require adjuster applicants to pass a licensing exam covering insurance principles, laws, and adjusting practices. A bond or association membership does not substitute for the exam requirement.

Question 5Licensing of Adjusters

Which of the following is a typical continuing education requirement for maintaining an adjuster license?

  1. Sponsorship by a licensed producer
  2. Completion of approved credit hours each renewal period Correct answer.
  3. Monthly submission of claim files to the regulator
  4. Annual re-taking of the full licensing exam

Explanation

Adjusters generally must complete a specified number of approved continuing education credit hours during each renewal cycle. Retaking the full exam, filing monthly claims, and producer sponsorship are not standard CE requirements.

Question 6Licensing of Adjusters

Which of the following best describes the purpose of the adjuster licensing requirement?

  1. To guarantee that every claim is paid in full
  2. To set the premium rates insurers may charge
  3. To protect the public by ensuring competent claim handling Correct answer.
  4. To limit the number of claims an insurer may receive

Explanation

Licensing exists to protect the public by confirming that adjusters meet minimum competence and conduct standards. It does not guarantee claim outcomes, cap claim volume, or set rates.

Question 7Licensing of Adjusters

An adjuster license is generally issued by which authority?

  1. The federal Department of Insurance
  2. The national adjuster association
  3. The local county court
  4. The state insurance department Correct answer.

Explanation

Insurance regulation, including adjuster licensing, is primarily handled at the state level by each state's insurance department. There is no federal adjuster licensing agency, and courts and trade associations do not issue licenses.

Question 8Licensing of Adjusters

Which term describes the process by which a licensed adjuster in one state obtains authority to handle claims in another state?

  1. Reinsurance cession
  2. Reciprocity or nonresident licensing Correct answer.
  3. Surplus lines placement
  4. Policy reinstatement

Explanation

Nonresident licensing, often supported by reciprocity between states, allows an adjuster licensed in one state to obtain authority in another. The other terms refer to insurance transactions unrelated to adjuster credentialing.

Question 9Licensing of Adjusters

A claims handler who negotiates settlements for an insurer but holds no adjuster license in that state may face which consequence?

  1. Administrative penalties such as fines or cease-and-desist orders Correct answer.
  2. Mandatory issuance of a license without an exam
  3. Automatic promotion to public adjuster status
  4. Exemption from all state insurance laws

Explanation

Handling claims without the required license is unlicensed activity subject to regulatory enforcement, including fines and cease-and-desist orders. It does not create exemptions or automatic licensure.

Question 10Licensing of Adjusters

An adjuster moves to a new state and wishes to continue handling claims there. What is the most appropriate first step?

  1. Rely on the prior state's license indefinitely
  2. Ask the insurer to waive state licensing
  3. Apply for a license or nonresident license in the new state Correct answer.
  4. Begin handling claims immediately and apply later

Explanation

An adjuster must hold authority in the state where the claim activity occurs, so the appropriate step is to apply for a resident or nonresident license there. Prior-state licenses and insurer waivers do not substitute for state authority.

Question 11Licensing of Adjusters

Which of the following activities would most likely fall outside the scope of an adjuster license?

  1. Investigating the cause of a reported loss
  2. Negotiating a settlement with a claimant
  3. Recommending specific coverage limits to a prospect Correct answer.
  4. Estimating the cost to repair damaged property

Explanation

Recommending coverage limits is a sales and solicitation activity reserved for licensed producers. Investigating losses, estimating damages, and negotiating settlements are core adjuster functions.

Question 12Licensing of Adjusters

An insurer wants a licensed professional to represent it at claim scenes across several states after a disaster. Which arrangement best fits an independent adjuster?

  1. A salaried employee of one insurer
  2. A contractor retained by insurers to handle claims as needed Correct answer.
  3. A representative hired by the policyholder
  4. A state regulator assigned to oversee claims

Explanation

Independent adjusters are contractors who can be retained by insurers, often for surge or catastrophe work across jurisdictions where they hold licenses. Staff adjusters are salaried employees, public adjusters represent insureds, and regulators do not adjust claims.

Question 13Licensing of Adjusters

A public adjuster's compensation is most commonly structured as which of the following?

  1. A flat hourly rate paid by the insurer
  2. A salary paid by the state insurance department
  3. A commission on the insured's premium
  4. A percentage of the settled claim amount Correct answer.

Explanation

Public adjusters are typically compensated by a percentage of the claim settlement they obtain for the insured, subject to state caps. They are not paid by the insurer or the state, and their fee is not a premium commission.

Question 14Licensing of Adjusters

Which of the following is most likely a prerequisite to obtaining an adjuster license in many states?

  1. A minimum level of education or experience and a clean background Correct answer.
  2. Ownership of an insurance agency
  3. Five years of prior claim experience in all cases
  4. Membership in a national adjuster association

Explanation

Many states require a minimum age or education, prelicensing coursework, and a background check free of disqualifying conduct. Agency ownership, universal experience minimums, and association membership are not general prerequisites.

Question 15Licensing of Adjusters

An adjuster's license lapses because the renewal fee was not paid. What is the most accurate statement about handling claims during the lapse?

  1. The adjuster may handle claims if the insurer approves in writing
  2. The adjuster may handle claims up to a limited dollar amount
  3. The adjuster may continue handling existing files only
  4. The adjuster may not perform licensed adjusting activity until reinstated Correct answer.

Explanation

Once a license lapses, the adjuster loses authority to perform licensed adjusting activity until the license is reinstated or renewed. Insurer approval or a dollar threshold does not restore state authority.

Question 16Licensing of Adjusters

Which of the following best distinguishes a company adjuster from a public adjuster?

  1. The company adjuster must be licensed, while the public adjuster need not be
  2. The company adjuster handles only auto claims, while the public adjuster handles only property claims
  3. The company adjuster is paid by the insured, while the public adjuster is paid by the insurer
  4. The company adjuster works for the insurer, while the public adjuster works for the insured Correct answer.

Explanation

The key distinction is representation: company adjusters act for the insurer, and public adjusters act for the insured. Both are generally licensed, both may handle various lines, and payment flows from the party each represents.

Question 17Licensing of Adjusters

A state requires adjusters to complete ethics training as part of continuing education. Which rationale best supports this requirement?

  1. To standardize premium rates across insurers
  2. To reinforce fair claim handling and consumer protection Correct answer.
  3. To reduce the cost of licensing exams
  4. To increase the number of claims denied

Explanation

Ethics-focused CE supports fair dealing with claimants and protects consumers, which is the underlying purpose of insurance regulation. It is not aimed at denial rates, exam costs, or rate standardization.

Question 18Licensing of Adjusters

Which of the following situations would most clearly require a nonresident adjuster license?

  1. A licensed adjuster travels to another state to inspect and settle a claim there Correct answer.
  2. A licensed adjuster attends a national conference in another state
  3. A licensed adjuster emails a colleague in another state
  4. A licensed adjuster reviews a file in their home state office

Explanation

Adjusting activity performed in another state generally requires authority in that state, so traveling there to inspect and settle a claim triggers nonresident licensing. Office review at home, conference attendance, and correspondence are not adjusting activity in the other state.

Question 19Licensing of Adjusters

An unlicensed assistant interviews a claimant about a loss and recommends a settlement amount, with the licensed adjuster only signing off later. Which statement is most accurate?

  1. This is acceptable because a licensed adjuster signed off
  2. This is acceptable if the claimant consents in writing
  3. This is acceptable because assistants are exempt from licensing
  4. This may constitute unlicensed adjusting because substantive claim activity was performed Correct answer.

Explanation

Substantive claim investigation and settlement negotiation are licensed activities; a later sign-off by a licensee does not cure unlicensed conduct by the assistant. Exemptions and claimant consent do not authorize unlicensed adjusting.

Question 20Licensing of Adjusters

Which of the following best explains why states regulate adjuster conduct through licensing rather than relying solely on market competition?

  1. Adjusters set policy terms for insurers
  2. Competition cannot set premium rates
  3. Insurers are prohibited from hiring unlicensed staff
  4. Claimants often lack the information and bargaining power to assess adjuster competence Correct answer.

Explanation

Licensing addresses information asymmetry: consumers generally cannot readily evaluate an adjuster's qualifications, so the state sets minimum standards and enforces conduct rules. Rate-setting and adjuster control of policy terms are not the rationale for conduct licensing.

Question 21Licensing of Adjusters

An adjuster licensed only as a company adjuster begins soliciting claim-representation business directly from homeowners for a fee. Which concern is most significant?

  1. The adjuster must obtain a producer license to inspect damage
  2. The adjuster may be acting outside the scope of the license by performing public adjusting without proper authority Correct answer.
  3. The adjuster may proceed because all adjuster licenses are identical
  4. The adjuster must immediately notify the insurer of every claim

Explanation

Representing insureds for a fee is public adjusting, which requires authority for that role; a company adjuster license does not authorize it. Adjuster license categories are not interchangeable, and a producer license is not the relevant credential for public adjusting.

Question 22Licensing of Adjusters

A regulator discovers an adjuster completed required continuing education with a provider that was never approved by the state. What is the most likely outcome?

  1. The credits are automatically accepted because the course was completed
  2. The credits may be rejected, jeopardizing the license renewal Correct answer.
  3. The adjuster is promoted to public adjuster status
  4. The provider must issue a refund to the state

Explanation

Only approved coursework counts toward CE requirements, so credits from an unapproved provider may be rejected and could affect renewal. Completion alone does not guarantee acceptance, and the other outcomes are not regulatory remedies.

Question 23Licensing of Adjusters

Which of the following best describes the relationship between a state adjuster license and the adjuster's authority to bind an insurer to a settlement?

  1. Settlement authority comes from the insurer's grant, while the license establishes legal authority to adjust Correct answer.
  2. A license is unnecessary if the adjuster has settlement authority
  3. The license itself grants unlimited settlement authority
  4. Settlement authority is granted by the state insurance department

Explanation

The license establishes the legal authority to act as an adjuster, while the specific dollar authority to settle is delegated by the insurer. The state does not grant settlement authority, and a license does not itself confer unlimited authority.

Question 24Licensing of Adjusters

An applicant has a prior felony conviction for insurance fraud. How do most states treat this in the licensing decision?

  1. It is ignored if the applicant passes the exam
  2. It automatically bars licensing for life in every state
  3. It requires the applicant to post a surety bond instead of a license
  4. It may be grounds for denial based on lack of good character and trustworthiness Correct answer.

Explanation

States assess character and trustworthiness, and certain convictions, particularly fraud-related ones, may be grounds for denial or conditions on licensure. Passing the exam does not override character review, lifetime bars vary by state, and a bond does not replace a license.

Question 25Licensing of Adjusters

Which of the following is the clearest example of an adjuster exceeding the authority conferred by a license?

  1. Documenting a loss with photographs and statements
  2. Denying a claim after completing a documented investigation
  3. Issuing a policy and collecting premium from a claimant Correct answer.
  4. Settling a claim within authority delegated by the insurer

Explanation

Issuing policies and collecting premium are producer activities, not adjuster functions, so doing so exceeds adjuster authority. Investigating, documenting, and settling within delegated authority are proper adjuster tasks.

Question 26Licensing of Adjusters

An insurer wants a licensed professional to represent it at claim scenes across several states after a disaster. Which arrangement best fits the licensing framework?

  1. Have the adjuster work unlicensed but supervised by a local agent
  2. Use only staff employees, who are exempt from licensing in all states
  3. Obtain appropriate adjuster authority in each state where the adjuster will work Correct answer.
  4. Send one adjuster and rely on a single home-state license everywhere

Explanation

Because adjuster authority is granted state by state, an adjuster who works in multiple states must hold the required authority in each. A single home-state license does not authorize practice everywhere, and staff status does not create a universal exemption.

Question 27Licensing of Adjusters

An unlicensed assistant interviews a claimant about a loss and recommends a settlement amount, with the licensed adjuster merely signing the file. Which statement best reflects the licensing concern?

  1. The assistant performed adjusting functions without holding a license Correct answer.
  2. The insurer is exempt because the assistant is not its employee
  3. No concern arises because the licensed adjuster signed the file
  4. The assistant is exempt because interviewing is a clerical task

Explanation

Interviewing claimants and recommending settlement amounts are adjusting functions that require a license; a licensed adjuster's signature does not launder unlicensed activity. Clerical exemptions do not extend to substantive claim evaluation and settlement recommendations.

Question 28Licensing of Adjusters

Which of the following best explains why states regulate adjuster conduct through licensing rather than relying solely on market forces?

  1. Market forces cannot function in any industry without licensing
  2. Insurers refuse to hire adjusters who are not licensed by a national board
  3. Claimants often lack the information and bargaining power to assess an adjuster's qualifications Correct answer.
  4. Licensing allows states to set the settlement amounts paid to claimants

Explanation

Licensing addresses an information and bargaining imbalance: claimants usually cannot readily evaluate an adjuster's competence or honesty. States therefore impose minimum standards rather than depending entirely on market discipline.

Question 29Licensing of Adjusters

Which type of adjuster license authorizes an adjuster to represent the interests of the insurance company that hired them?

  1. Public adjuster
  2. Surplus lines broker
  3. Company adjuster Correct answer.
  4. Independent adjuster

Explanation

A company adjuster is licensed to handle claims on behalf of the insurer that employs them directly. Public adjusters work for the policyholder, while independent adjusters contract with multiple insurers. Surplus lines brokers place specialty coverage and are not adjusters.

Question 30Licensing of Adjusters

What does a nonresident adjuster license typically permit an adjuster to do?

  1. Adjust only workers' compensation claims
  2. Practice in any state without further authorization
  3. Handle claims in a state where the adjuster does not reside Correct answer.
  4. Supervise other adjusters without a separate license

Explanation

A nonresident license allows an adjuster who lives in another state to lawfully handle claims within the licensing state. It does not create nationwide authority, since each state issues its own license. It also does not limit the holder to a single claim type.

Question 31Licensing of Adjusters

Which of the following is typically required of an adjuster applicant before a license is issued?

  1. Five years of prior claims experience
  2. Completion of a prelicensing course or passing a licensing exam Correct answer.
  3. A college degree in insurance or finance
  4. Membership in a national claims association

Explanation

Most states require adjuster applicants to demonstrate minimum competence, usually through a prelicensing course, a licensing exam, or both. Association membership, a degree, and prior experience are not standard universal prerequisites for licensure.

Question 32Licensing of Adjusters

An adjuster's license is suspended by the state regulator. What is the most accurate description of the adjuster's status during the suspension?

  1. The adjuster may not perform licensed adjusting activities until reinstated Correct answer.
  2. The adjuster may handle claims outside the state only
  3. The adjuster may work under a licensed supervisor
  4. The adjuster may continue handling existing claims only

Explanation

A suspension removes the authority to engage in licensed adjusting activity until the regulator reinstates the license. Continuing to adjust claims during suspension would constitute unlicensed activity. Neither supervising nor out-of-state work cures the suspension.

Question 33Licensing of Adjusters

An applicant for an adjuster license fails to disclose a prior administrative action taken against a professional license in another state. How does this omission most likely affect the application?

  1. It may be grounds for denial or later disciplinary action for misrepresentation Correct answer.
  2. It is cured automatically once the license is issued
  3. It only matters if the prior action involved a criminal conviction
  4. It has no effect because the prior action was in another state

Explanation

Adjuster applications require truthful disclosure of prior licensing and disciplinary history, and material omissions can support denial or later discipline. The location of the prior action does not excuse nondisclosure. Disclosure obligations are not limited to criminal matters.

Question 34Licensing of Adjusters

A licensed independent adjuster is hired by an insurer to handle a single large commercial fire loss. Which statement best describes the adjuster's authority?

  1. The adjuster may act for the insurer within the scope of the license and the assignment Correct answer.
  2. The adjuster may settle the claim without any authority limit from the insurer
  3. The adjuster may bind new coverage for the insured as part of the claim
  4. The adjuster may represent the insured in the same claim

Explanation

An adjuster's authority comes from the license plus the specific assignment and any authority limits the insurer sets. Adjusters investigate and evaluate claims but do not bind coverage. They also cannot represent both the insurer and the insured in the same matter.

Question 35Licensing of Adjusters

A state regulator is deciding whether to renew an adjuster's license. Which factor is most directly relevant to that renewal decision?

  1. Whether the adjuster has a business office in the state
  2. Whether the adjuster completed the required continuing education hours Correct answer.
  3. Whether the adjuster belongs to a professional association
  4. Whether the adjuster handled a minimum number of claims

Explanation

Continuing education completion is a standard condition of license renewal in most states. Association membership, claim volume, and office location are not typical renewal criteria. Failing to complete required education can block renewal.

Question 36Licensing of Adjusters

An insurer wants to use a claims professional to evaluate a loss, but the professional's only credential is a general business license. What is the most accurate conclusion?

  1. The general business license is sufficient because claims work is a business activity
  2. The professional may adjust the claim if the insured consents
  3. The professional likely needs an adjuster license to evaluate the claim for the insurer Correct answer.
  4. The professional may adjust the claim if no payment is made

Explanation

Investigating and evaluating claims for an insurer is licensed adjusting activity in most states, and a general business license does not substitute for it. Insured consent does not create licensing authority. Payment is not the test for whether a license is required.

Question 37Licensing of Adjusters

Which of the following best describes the purpose of a reciprocal or reciprocal licensing arrangement between states?

  1. It streamlines licensing for adjusters who are already licensed in another state Correct answer.
  2. It transfers disciplinary authority to the adjuster's home state
  3. It allows an adjuster to avoid all state licensing requirements
  4. It eliminates continuing education obligations in the new state

Explanation

Reciprocal arrangements let a state recognize an adjuster's existing license from another state to simplify the application process. They do not eliminate licensing altogether or automatically waive education requirements. Each state generally retains its own disciplinary authority.

Question 38Licensing of Adjusters

An adjuster licensed in State A wants to handle a claim involving a loss located in State B, where the adjuster holds no license. Which statement is most accurate?

  1. The adjuster may proceed because the policy was issued in State A
  2. The adjuster generally must obtain authority from State B before adjusting there Correct answer.
  3. The adjuster may proceed if the insurer is licensed in State A
  4. The adjuster may proceed because the claim is a single isolated loss

Explanation

Adjuster licensing is governed by the state where the adjusting activity occurs, so the adjuster generally needs authority from State B. The policy's origin or the insurer's home-state licensure does not substitute. Isolated or single claims are not automatically exempt.

Question 39Licensing of Adjusters

A regulator discovers that a licensed adjuster allowed an unlicensed person to negotiate a settlement directly with a claimant. Which principle best explains why this is a licensing violation?

  1. Only public adjusters may negotiate settlements
  2. Licensing attaches to the individual performing adjusting activities, not just the agency Correct answer.
  3. Settlements must always be negotiated in writing
  4. An insurer may delegate adjusting duties to any employee

Explanation

Adjuster licensing is personal, so the person actually performing adjusting activities must be licensed regardless of who employs them. Delegating the work to an unlicensed person does not transfer the licensing obligation. Written settlement rules and public adjuster rules do not address this issue.

Question 40Licensing of Adjusters

A state legislature is considering whether to require adjusters to report certain administrative actions to the regulator. Which rationale best supports such a requirement?

  1. It helps the regulator assess ongoing fitness and protect policyholders Correct answer.
  2. It guarantees that no adjuster will ever commit misconduct
  3. It replaces the need for continuing education
  4. It shifts enforcement costs to insurers

Explanation

Reporting requirements give regulators timely information to evaluate whether a licensee remains fit to hold a license. They are a monitoring tool, not a guarantee against misconduct. They supplement rather than replace education and do not shift enforcement costs to insurers.

Question 41Insurance Regulation and Consumer Protection

A claims adjuster is licensed under a state's adjuster statute. Which activity generally requires an adjuster license?

  1. Selling a homeowners policy to a neighbor as a licensed producer
  2. Inspecting a vehicle for a state safety registration program
  3. Underwriting a new commercial policy and setting the rate
  4. Investigating and negotiating a first-party property claim on behalf of the insurer for compensation Correct answer.

Explanation

Adjuster licensing statutes generally cover persons who, for compensation, investigate or negotiate claims on behalf of an insurer or insured. Selling policies is producer activity, underwriting is a different function, and state safety inspections are not claims work.

Question 42Insurance Regulation and Consumer Protection

An adjuster moves to a new state and wants to handle claims there. What is the standard requirement before the adjuster may lawfully adjust claims in the new state?

  1. Notify the prior state's regulator by letter
  2. Obtain a license or reciprocal nonresident authorization from the new state Correct answer.
  3. Complete a claims course and begin working immediately
  4. Register with the insurer's home-state department only

Explanation

Adjusters must hold a license or nonresident authorization issued by the state where the claim activity occurs. Licensing is jurisdiction-specific, so a license in one state does not authorize work in another.

Question 43Insurance Regulation and Consumer Protection

An insurer must acknowledge a claim from a first-party insured. Which statement best reflects the typical unfair claims practice standard?

  1. The insurer must acknowledge and act reasonably promptly upon notification of the claim Correct answer.
  2. The insurer may wait until the policy period ends to respond
  3. Acknowledgment is optional if the claim is small
  4. Acknowledgment is required only after the proof of loss is notarized

Explanation

Unfair claims practice rules require insurers to acknowledge and begin handling claims promptly after notification. Delay without reasonable justification can constitute an unfair practice regardless of claim size.

Question 44Insurance Regulation and Consumer Protection

An adjuster sends a written request for additional information to a claimant. Under typical claims regulation, the request should include which element?

  1. A deadline set without regard to the claimant's ability to respond
  2. A demand that the claimant hire an attorney
  3. A clear statement of what is needed and why it is needed Correct answer.
  4. A warning that coverage will be denied automatically

Explanation

Regulators expect claim inquiries to be specific so the claimant can meaningfully respond. Explaining what is needed and its purpose supports fair and prompt handling.

Question 45Insurance Regulation and Consumer Protection

Which conduct most clearly constitutes an unfair claims settlement practice?

  1. Offering a settlement supported by the claim file
  2. Requesting a recorded statement during investigation
  3. Making a settlement offer materially below the documented value without explanation Correct answer.
  4. Explaining policy exclusions to the insured in writing

Explanation

Unfair practice rules prohibit offering substantially less than the amount a reasonable investigation shows is owed. Legitimate investigation steps and clear coverage explanations are permitted.

Question 46Insurance Regulation and Consumer Protection

An insured asks an adjuster how a claim will be handled. What does the typical claims regulation require regarding communication with the claimant?

  1. The insurer may respond only through the agent of record
  2. The insurer must respond to reasonable inquiries about the status of the claim Correct answer.
  3. The insurer may decline to respond if litigation is threatened
  4. The insurer may keep the claim status confidential until closing

Explanation

Claims regulations generally require insurers to respond to reasonable requests for information about claim status. Silence or refusal can be treated as an unfair practice.

Question 47Insurance Regulation and Consumer Protection

An adjuster is handling a claim where liability is clear and damages are documented. Which practice best supports the duty of good faith?

  1. Delay payment to preserve the insurer's cash position
  2. Pay the undisputed amount promptly while investigating any disputed portion Correct answer.
  3. Require the claimant to accept a lower amount as a condition of any payment
  4. Condition payment on a release broader than the claim requires

Explanation

Good-faith handling supports prompt payment of undisputed amounts. Withholding clear amounts to gain leverage can expose the insurer to bad-faith liability.

Question 48Insurance Regulation and Consumer Protection

An adjuster denies a claim based on a policy exclusion. What does typical regulation require the denial notice to contain?

  1. Only a statement that the claim is denied
  2. A referral to the insurer's underwriting department
  3. An estimate of future premiums
  4. The specific policy provision and factual basis for the denial Correct answer.

Explanation

Denial notices must state the policy provision relied on and the factual basis so the insured can understand and challenge the decision. A bare denial is generally insufficient.

Question 49Insurance Regulation and Consumer Protection

An insured submits a claim and the adjuster needs more time to complete the investigation. Under typical claims timing rules, what should the insurer do?

  1. Notify the insured in writing of the need for additional time and the reason Correct answer.
  2. Close the claim and invite a new submission later
  3. Deny the claim so the insured can refile with more information
  4. Suspend all communication until the investigation concludes

Explanation

When an investigation cannot be completed within the required period, insurers must give written notice of the extension and its reason. Closing or denying the claim to manage timing is improper.

Question 50Insurance Regulation and Consumer Protection

A third-party claimant is represented by an attorney. How should the adjuster generally direct claim communications?

  1. Continue contacting the claimant directly about settlement
  2. Contact the claimant's employer for verification
  3. Refuse to communicate with anyone until suit is filed
  4. Communicate with the claimant's attorney rather than the represented claimant Correct answer.

Explanation

Once a claimant is represented, communications about the claim should go through counsel. Bypassing counsel can violate ethical and regulatory standards.