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CA Public Adjuster practice questions

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Question 1California Insurance Code and Regulations Affecting Public Adjusters

Under California law, a person must hold a public adjuster license when the person does which of the following?

  1. Sells life insurance policies to individual consumers
  2. Adjusts claims solely for an admitted insurer
  3. Negotiates a claim settlement for an insured for compensation Correct answer.
  4. Provides clerical support to a licensed public adjuster

Explanation

California requires a public adjuster license for a person who, for compensation, acts on behalf of an insured in negotiating or settling a claim. Selling insurance and adjusting solely for an insurer involve different licenses or roles. Clerical support that does not involve negotiating is not public adjusting.

Question 2California Insurance Code and Regulations Affecting Public Adjusters

A California public adjuster represents which party in a claim?

  1. The insurer
  2. The insured Correct answer.
  3. The mortgage lender
  4. The Insurance Commissioner

Explanation

A public adjuster is retained by and acts on behalf of the insured in negotiating a claim. The insurer is represented by its own staff or independent adjusters. The Commissioner regulates licensees but is not the client.

Question 3California Insurance Code and Regulations Affecting Public Adjusters

Which official or agency licenses public adjusters in California?

  1. County board of supervisors
  2. Department of Real Estate
  3. Secretary of State
  4. Insurance Commissioner Correct answer.

Explanation

The California Insurance Commissioner issues and regulates public adjuster licenses. County boards, the Secretary of State, and the Department of Real Estate do not license public adjusters.

Question 4California Insurance Code and Regulations Affecting Public Adjusters

What is the minimum age to be eligible for a California public adjuster license?

  1. 16 years old
  2. 17 years old
  3. 18 years old Correct answer.
  4. 19 years old

Explanation

An applicant for a California public adjuster license must be at least 18 years old. Age is one of the basic eligibility requirements for licensure.

Question 5California Insurance Code and Regulations Affecting Public Adjusters

A California public adjuster license is issued for what term before renewal?

  1. Four years
  2. Two years Correct answer.
  3. One year
  4. Three years

Explanation

California public adjuster licenses are issued on a two-year term and must be renewed. Continuing education is tied to that renewal cycle.

Question 6California Insurance Code and Regulations Affecting Public Adjusters

What amount of surety bond must a California public adjuster generally maintain?

  1. $50,000
  2. $5,000
  3. $20,000 Correct answer.
  4. $100,000

Explanation

California public adjusters must generally maintain a $20,000 surety bond as a condition of licensure. The bond helps protect persons harmed by improper conduct.

Question 7California Insurance Code and Regulations Affecting Public Adjusters

A California public adjuster's contract for claim services must be which of the following?

  1. Approved by the Commissioner before use
  2. Oral if confirmed by email
  3. In writing and signed by the insured Correct answer.
  4. Filed with the insurer before work begins

Explanation

The public adjuster contract must be written and signed by the insured. This protects the insured by documenting the scope and fee arrangement. Individual contracts do not require advance approval by the Commissioner.

Question 8California Insurance Code and Regulations Affecting Public Adjusters

After signing a public adjuster contract, the insured generally has how long to rescind it?

  1. 24 hours
  2. 3 business days Correct answer.
  3. 7 calendar days
  4. 10 business days

Explanation

California public adjuster contracts give the insured a short statutory rescission period measured in business days. The period is three business days after signing.

Question 9California Insurance Code and Regulations Affecting Public Adjusters

A public adjuster completes a written contract with an insured but does not give the insured a copy. This conduct is which of the following?

  1. Permitted until the claim is settled
  2. Permitted if the insured can download it
  3. Allowed if the adjuster retains the original
  4. A violation of California public adjuster requirements Correct answer.

Explanation

The public adjuster must provide the insured with a copy of the signed written contract. Failing to do so violates the contract requirements. Retaining the original does not excuse the failure to give the insured a copy.

Question 10California Insurance Code and Regulations Affecting Public Adjusters

Which item must a California public adjuster contract clearly disclose?

  1. The name of the insurer's assigned staff adjuster
  2. The Commissioner's personal approval number
  3. The insurer's internal claim reserve
  4. The compensation or fee arrangement Correct answer.

Explanation

The contract must clearly disclose how the public adjuster will be compensated. The insured needs that information to make an informed decision. Insurer reserves and staff adjuster identities are not contract disclosures required of the public adjuster.

Question 11California Insurance Code and Regulations Affecting Public Adjusters

During a declared state of emergency, California restricts public adjusters from soliciting affected policyholders until how long after the event?

  1. 24 hours
  2. 90 days
  3. 30 days
  4. 7 days Correct answer.

Explanation

California imposes a waiting period before public adjusters may solicit policyholders affected by a declared emergency. The restriction is intended to protect disaster victims from immediate pressure. The waiting period is seven days.

Question 12California Insurance Code and Regulations Affecting Public Adjusters

In each two-year license term, a California public adjuster must complete how many hours of continuing education?

  1. 24 hours Correct answer.
  2. 8 hours
  3. 12 hours
  4. 16 hours

Explanation

California public adjusters must complete 24 hours of continuing education every two-year license term. The required hours include specified ethics education.

Question 13California Insurance Code and Regulations Affecting Public Adjusters

Before taking the California public adjuster licensing exam, an applicant generally must complete a prelicensing course of how many hours?

  1. 5 hours
  2. 10 hours
  3. 20 hours Correct answer.
  4. 40 hours

Explanation

Applicants generally must complete a 20-hour prelicensing course before taking the public adjuster license exam. The course covers California law and claims practices.

Question 14California Insurance Code and Regulations Affecting Public Adjusters

California public adjusters must keep claim-related records for at least how long?

  1. Ten years
  2. Five years Correct answer.
  3. One year
  4. Six months

Explanation

Public adjusters must retain claim-related books and records for at least five years. This supports regulatory review and protection of insureds.

Question 15California Insurance Code and Regulations Affecting Public Adjusters

California public adjuster advertisements must include which item?

  1. The Commissioner's signature
  2. The public adjuster's license number Correct answer.
  3. The insured's policy number
  4. The insurer's NAIC number

Explanation

Public adjuster advertisements must identify the adjuster's license number. This allows consumers to verify that the advertiser is licensed. Insurer and policy numbers are not required in the advertisement.

Question 16California Insurance Code and Regulations Affecting Public Adjusters

A California public adjuster pays a share of the claim fee to an unlicensed person who referred the client. This practice is which of the following?

  1. Prohibited under California law Correct answer.
  2. Proper if the referral agreement is in writing
  3. Proper if disclosed to the insured in writing
  4. Proper if the claim is never settled

Explanation

A licensed public adjuster may not share compensation with an unlicensed person for referring claim business. Such fee sharing encourages unlicensed adjusting activity and is prohibited. Written disclosure or a written referral agreement does not cure the violation.

Question 17California Insurance Code and Regulations Affecting Public Adjusters

A California public adjuster contract must include a statement that the public adjuster is licensed by the Commissioner and that...

  1. The insurer guarantees the settlement amount
  2. The insured waives all rights to negotiate
  3. The Commissioner does not endorse the adjuster Correct answer.
  4. The Commissioner sets the public adjuster's fee

Explanation

The contract must state that the public adjuster is licensed by the Insurance Commissioner and that the Commissioner does not endorse the adjuster's services. This prevents consumers from mistaking licensure for a government guarantee.

Question 18California Insurance Code and Regulations Affecting Public Adjusters

Which of the following creates a conflict that disqualifies a California public adjuster from handling a claim?

  1. Charging an hourly fee instead of a percentage
  2. Referring the insured to an attorney
  3. Representing the insurer on the same claim Correct answer.
  4. Including the license number in advertisements

Explanation

A public adjuster cannot represent both the insured and the insurer on the same claim. That dual role creates an impermissible conflict of interest. Referrals, fee methods, and proper advertising do not create the same disqualifying conflict.

Question 19California Insurance Code and Regulations Affecting Public Adjusters

If a California public adjuster receives claim settlement funds on behalf of an insured, the adjuster should do which of the following?

  1. Return them to the insurer without notifying the insured
  2. Use them to pay the adjuster's fee before settlement
  3. Hold them in a trust or client account and account for them Correct answer.
  4. Deposit them in the adjuster's general operating account

Explanation

Funds received for an insured are held in a fiduciary capacity and must be safeguarded and accounted for. Commingling client funds with operating funds is improper. The adjuster must also account to the insured for the funds.

Question 20California Insurance Code and Regulations Affecting Public Adjusters

The California Insurance Commissioner may deny or revoke a public adjuster license for which of the following?

  1. Engaging in fraudulent claim settlement conduct Correct answer.
  2. Maintaining the required surety bond
  3. Using a written contract
  4. Completing required continuing education

Explanation

Fraudulent conduct in settling claims is a ground for license denial, suspension, or revocation. Compliance items such as written contracts, continuing education, and bonding support licensure rather than justify discipline.

Question 21California Insurance Code and Regulations Affecting Public Adjusters

An insured signs a public adjuster contract at home on Monday and mails a written rescission on Wednesday. Under California public adjuster rules, the rescission is which of the following?

  1. Invalid because the claim was already assigned
  2. Timely if mailed within the three-business-day period Correct answer.
  3. Effective only if the insurer approves it
  4. Invalid because rescission must be delivered in person

Explanation

The insured has three business days to rescind the public adjuster contract. A written rescission mailed within that period is timely. The insurer's approval is not required for the insured to exercise the statutory rescission right.

Question 22California Insurance Code and Regulations Affecting Public Adjusters

An unlicensed consultant negotiates a settlement with an insurer on behalf of an insured and charges a percentage of the recovery. Under California law, this conduct is which of the following?

  1. Allowed if the fee is under 10 percent
  2. Unlawful public adjusting without a license Correct answer.
  3. Allowed because the consultant is not called an adjuster
  4. Allowed if the insurer agrees in writing

Explanation

The substance of the activity controls, not the title used. Negotiating a claim settlement for an insured for compensation is public adjusting and requires a license. A percentage fee, a low fee, or insurer consent does not excuse the licensing requirement.

Question 23California Insurance Code and Regulations Affecting Public Adjusters

A California public adjuster asks an insured to assign the adjuster a percentage of the claim proceeds as payment. This arrangement is which of the following?

  1. Always permitted if it is in writing
  2. Generally prohibited as a claim interest Correct answer.
  3. Permitted if the Commissioner approves the fee
  4. Permitted only after the insurer denies the claim

Explanation

A public adjuster may not acquire an ownership interest in the insured's claim. Such an arrangement creates a conflict between the adjuster's own stake and the insured's best interests. A written assignment or post-denial timing does not cure the problem.

Question 24California Insurance Code and Regulations Affecting Public Adjusters

A public adjuster's license expires while the adjuster continues negotiating a pending claim for a fee. The continued activity is which of the following?

  1. Permitted for 90 days after expiration
  2. Permitted if the insurer does not object
  3. Unlicensed public adjusting subject to discipline Correct answer.
  4. Permitted because the claim predates expiration

Explanation

A public adjuster must be licensed while performing public adjusting activities. An expired license does not authorize continued negotiation for compensation, even on a pending claim. Continuing after expiration subjects the person to disciplinary action.

Question 25California Insurance Code and Regulations Affecting Public Adjusters

A public adjuster contract includes a clause requiring the insured to waive the right to rescind. The clause is which of the following?

  1. Enforceable if the adjuster reduces the fee
  2. Enforceable if the insured initials the clause
  3. Enforceable after the first 24 hours
  4. Unenforceable as contrary to statute Correct answer.

Explanation

The insured's rescission right is provided by California public adjuster law. A contract clause that attempts to waive that statutory protection is unenforceable. Initialing the clause or reducing the fee does not override the statute.

Question 26California Insurance Code and Regulations Affecting Public Adjusters

Under California law, a person who, for compensation, negotiates the settlement of a property insurance claim on behalf of an insured generally must hold which license?

  1. A California surplus lines broker license
  2. A California life-only agent license
  3. A California public adjuster license Correct answer.
  4. No license if the fee is under $500

Explanation

California requires a person who acts as a public adjuster for compensation to be licensed by the Insurance Commissioner. This license is separate from agent, broker, and surplus lines licenses. A fee threshold does not exempt a person from the licensing requirement.

Question 27California Insurance Code and Regulations Affecting Public Adjusters

What is the minimum age for an applicant for a California public adjuster license?

  1. 18 Correct answer.
  2. 23
  3. 25
  4. 21

Explanation

California public adjuster applicants must be at least 18 years old. Other qualifications include examination and background requirements. No higher age minimum applies to this license.

Question 28California Insurance Code and Regulations Affecting Public Adjusters

Before being licensed, a California public adjuster applicant generally must do which of the following?

  1. Obtain a surety bond only
  2. Have five years of claims experience
  3. Pass the licensing examination Correct answer.
  4. Complete a four-year law degree

Explanation

Applicants must pass the Commissioner's licensing examination as part of the qualification process. A prelicensing course and a surety bond are also required, but neither substitutes for the examination.

Question 29California Insurance Code and Regulations Affecting Public Adjusters

A California public adjuster license applicant generally must submit fingerprints for which purpose?

  1. For a criminal history check Correct answer.
  2. To obtain professional references
  3. To prove California residency
  4. To verify the applicant's credit score

Explanation

Fingerprints are used to conduct a criminal history background check as part of the licensing process. Credit history, residency proof, and professional references are not the purpose of the fingerprint requirement.

Question 30California Insurance Code and Regulations Affecting Public Adjusters

A licensed California public adjuster moves the business office. Within what period must the adjuster notify the Commissioner of the change of address?

  1. 90 days
  2. 30 days Correct answer.
  3. Six months
  4. 60 days

Explanation

California licensees must notify the Commissioner within 30 days of a change of business address. This keeps the licensing records current and ensures official notices reach the licensee.

Question 31California Insurance Code and Regulations Affecting Public Adjusters

The California Insurance Commissioner may examine a public adjuster's books and records for which purpose?

  1. To set the adjuster's maximum fee schedule
  2. To approve each contract before it is signed
  3. To determine the adjuster's income tax rate
  4. To verify compliance with insurance laws Correct answer.

Explanation

The Commissioner has authority to examine a public adjuster's books and records to verify compliance with the Insurance Code and regulations. The examination authority is not used to set fees, preapprove contracts, or calculate taxes.

Question 32California Insurance Code and Regulations Affecting Public Adjusters

A California public adjuster proposes a business name that suggests the firm is a government agency. Under California law, that name is generally:

  1. Allowed if disclosed in the contract
  2. Allowed after five years in business
  3. Allowed if the adjuster is licensed
  4. Prohibited as misleading Correct answer.

Explanation

Public adjusters may not use false or misleading business names, including names that imply a government affiliation. Licensing status or contract disclosure does not make such a name permissible.

Question 33California Insurance Code and Regulations Affecting Public Adjusters

A California public adjuster is asked to represent an insured on a claim while also working as an adjuster for the insurer on the same claim. California law generally treats this arrangement as:

  1. Permissible with the insured's written consent
  2. A prohibited conflict of interest Correct answer.
  3. Permissible if the adjuster reduces the fee
  4. Permissible if the insurer requests it

Explanation

A public adjuster represents the insured and may not also act for the insurer on the same claim. This dual representation is a conflict of interest, and written consent or a fee reduction does not cure it.

Question 34California Insurance Code and Regulations Affecting Public Adjusters

A California public adjuster is asked by an insured whether the insurer's denial can be challenged in court. The adjuster should generally:

  1. Interpret court decisions for the insured
  2. Give a legal opinion on the denial
  3. Refer the insured to an attorney Correct answer.
  4. Draft a lawsuit for the insured

Explanation

Public adjusters are not licensed to practice law and should refer legal questions to an attorney. They may discuss claim handling and settlement issues, but they should not provide legal advice or draft legal pleadings.

Question 35California Insurance Code and Regulations Affecting Public Adjusters

California public adjuster continuing education must include instruction in which subject?

  1. Marine insurance
  2. Mortgage lending
  3. Ethics Correct answer.
  4. Workers' compensation

Explanation

California's continuing education requirements for public adjusters include ethics instruction. Other insurance topics may be offered, but ethics is a specifically required component of the continuing education program.

Question 36California Insurance Code and Regulations Affecting Public Adjusters

A California public adjuster's compensation for handling a claim must be:

  1. Reasonable in relation to the services Correct answer.
  2. Approved in advance by the insurer
  3. Fixed at 15 percent of the claim
  4. Set by the Commissioner each year

Explanation

Public adjuster fees must be reasonable in relation to the services provided. California does not set a single fixed percentage for ordinary claims, although special limits may apply to claims arising from a declared emergency.

Question 37California Insurance Code and Regulations Affecting Public Adjusters

After a declared state of emergency, California law generally limits a public adjuster's fee for a claim arising from the emergency to what percentage of the claim settlement?

  1. 25 percent
  2. 10 percent Correct answer.
  3. 20 percent
  4. 15 percent

Explanation

For claims arising from a declared state of emergency, California limits public adjuster compensation to 10 percent of the claim settlement. This cap is designed to protect disaster victims from excessive fees.

Question 38California Insurance Code and Regulations Affecting Public Adjusters

Acting as a public adjuster in California without a license is generally punishable as:

  1. A felony
  2. A civil infraction only
  3. A licensing violation with no penalty
  4. A misdemeanor Correct answer.

Explanation

Unlicensed public adjusting is a misdemeanor under California law and may result in fines or imprisonment. The licensing requirement is enforced through criminal as well as administrative means.

Question 39California Insurance Code and Regulations Affecting Public Adjusters

A California public adjuster refuses to let the Commissioner inspect claim files during an examination. That refusal is:

  1. Permissible if the files are confidential
  2. Grounds for disciplinary action Correct answer.
  3. Allowed after 30 days' notice
  4. Permissible if the client objects

Explanation

Licensees must cooperate with the Commissioner's examinations, including providing access to claim-related books and records. Refusing inspection can result in disciplinary action against the public adjuster license.

Question 40California Insurance Code and Regulations Affecting Public Adjusters

A California public adjuster allows an unlicensed employee to negotiate claim settlements with insurers. The licensed adjuster is:

  1. Subject to discipline Correct answer.
  2. Required only to notify the insurer
  3. Not responsible if the employee is supervised
  4. Allowed for claims under $1,000

Explanation

Only a licensed public adjuster may negotiate claims for compensation. A licensee may not delegate that activity to unlicensed staff, and doing so exposes the licensee to disciplinary action.

Question 41Licensing, Contracting, and Fiduciary Duties of Public Adjusters

Under California law, a person who, for compensation, negotiates or settles a first-party property claim on behalf of an insured must hold which license?

  1. A general contractor license issued by the state
  2. A private investigator license issued by the state
  3. A public adjuster license Correct answer.
  4. A property broker-agent license issued by the state

Explanation

California requires a separate public adjuster license for anyone who, for compensation, represents an insured in negotiating or settling a first-party claim. A broker-agent license covers the sale of insurance, not claims representation for insureds.

Question 42Licensing, Contracting, and Fiduciary Duties of Public Adjusters

A California public adjuster's fiduciary duty runs primarily to which party?

  1. The insurer that issued the policy
  2. The mortgage lender named on the policy
  3. The insured who retained the adjuster Correct answer.
  4. The Insurance Commissioner

Explanation

A public adjuster is retained by and acts for the insured, so the fiduciary duty runs to the insured. The adjuster must place the insured's interests above the adjuster's own and must not favor the insurer.

Question 43Licensing, Contracting, and Fiduciary Duties of Public Adjusters

Before representing an insured, a California public adjuster must do which of the following?

  1. Obtain the insurer's written consent to the representation
  2. File the claim form with the Department of Insurance
  3. Enter into a written contract signed by the insured Correct answer.
  4. Record a notice of representation with the county recorder

Explanation

A public adjuster may not act under a compensation agreement unless the agreement is in writing and signed by the insured. This protects the insured by documenting the services and the fee before work begins.

Question 44Licensing, Contracting, and Fiduciary Duties of Public Adjusters

California law requires a licensed public adjuster to maintain which of the following?

  1. A surety bond filed with the Insurance Commissioner Correct answer.
  2. Membership in a statewide adjuster association
  3. A letter of credit from a California bank
  4. A professional liability policy with at least $1 million in coverage

Explanation

Public adjusters must file and maintain a surety bond with the Insurance Commissioner as a condition of licensure. The bond protects the public if the adjuster fails to account for funds or violates the law.

Question 45Licensing, Contracting, and Fiduciary Duties of Public Adjusters

A public adjuster contract must clearly state which of the following?

  1. The insurer's internal claims-handling guidelines and manuals
  2. The compensation the public adjuster will receive Correct answer.
  3. The name of the insurer's assigned staff adjuster
  4. The date by which the insurer must pay the claim

Explanation

The contract must disclose the fee or method of calculating compensation so the insured understands the cost of the representation. Internal insurer guidelines and payment dates are not controlled by the public adjuster and are not required contract terms.

Question 46Licensing, Contracting, and Fiduciary Duties of Public Adjusters

A public adjuster may not represent an insurer on a claim for which the public adjuster represents the insured because doing so would...

  1. create an impermissible conflict of interest Correct answer.
  2. bar all contact between the adjuster and the insurer
  3. transfer the claim to the Department of Insurance
  4. require the insurer to use only staff adjusters

Explanation

Representing both the insured and the insurer on the same claim is a conflict of interest that violates the adjuster's fiduciary duty to the insured. The adjuster must remain loyal to the party that retained it.

Question 47Licensing, Contracting, and Fiduciary Duties of Public Adjusters

Money a public adjuster receives from an insurer on behalf of an insured, such as a settlement draft, must be...

  1. deposited in the adjuster's general operating account
  2. applied to the adjuster's fee before any disclosure to the insured
  3. returned to the insurer until the insured signs a release
  4. held as trust funds and promptly accounted for to the insured Correct answer.

Explanation

Funds received for an insured are trust funds, not the adjuster's own money. The adjuster must safeguard them and account for and remit them promptly to the insured.

Question 48Licensing, Contracting, and Fiduciary Duties of Public Adjusters

A California public adjuster license is issued for a term of how long before renewal is required?

  1. Three years
  2. Four years
  3. Two years Correct answer.
  4. One year

Explanation

California public adjuster licenses are issued for two-year terms and must be renewed with the required fee and continuing education. Licensees should track their expiration dates to avoid practicing on a lapsed license.

Question 49Licensing, Contracting, and Fiduciary Duties of Public Adjusters

Under California law, a public adjuster contract must give the insured the right to rescind within what period after signing?

  1. Three business days Correct answer.
  2. Twenty-four hours
  3. Thirty calendar days
  4. Ten calendar days

Explanation

The insured has a short cooling-off period of three business days to rescind the public adjuster contract. This right must be disclosed so the insured can make an informed decision about the representation.

Question 50Licensing, Contracting, and Fiduciary Duties of Public Adjusters

After a public adjuster contract is signed, the public adjuster must...

  1. file a copy with the Department of Insurance
  2. record the contract with the county recorder
  3. give the insured a copy of the signed contract Correct answer.
  4. send the original contract to the insurer

Explanation

The insured is entitled to a copy of the signed agreement documenting the services and compensation. The contract is not filed with the state or recorded with the county as part of the transaction.