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IN Public Adjuster practice questions

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Question 1Indiana insurance law and public adjuster licensing regulations

Under Indiana law, a person must hold a public adjuster license issued by the Indiana Department of Insurance before doing which of the following?

  1. Selling life insurance policies to individual consumers
  2. Inspecting a dwelling to determine its replacement cost for an insurer
  3. Negotiating or settling a claim for loss or damage on behalf of an insured for compensation Correct answer.
  4. Appraising real property for a mortgage lender

Explanation

Indiana requires a public adjuster license for anyone who, for compensation, acts on behalf of an insured to negotiate, settle, or adjust a first-party claim. Selling insurance, insurer-side inspection, and mortgage appraisal are separate regulated activities governed by other licenses.

Question 2Indiana insurance law and public adjuster licensing regulations

Which party does a licensed public adjuster represent when adjusting a property claim in Indiana?

  1. The insured policyholder Correct answer.
  2. The Indiana Department of Insurance
  3. The mortgagee named on the policy
  4. The insurer that issued the policy

Explanation

A public adjuster is retained by and represents the insured, not the insurer. This distinguishes the public adjuster from a company or independent adjuster who works for the carrier.

Question 3Indiana insurance law and public adjuster licensing regulations

An applicant for an Indiana public adjuster license must generally demonstrate which of the following?

  1. A four-year degree in insurance or finance
  2. Completion of a prelicensing course and passage of the state examination Correct answer.
  3. Five years of prior experience as an insurer staff adjuster
  4. Membership in a national adjuster association

Explanation

Indiana's adjuster licensing framework requires applicants to complete required prelicensing education and pass the licensing examination, along with other qualifications such as good character. A degree, association membership, or prior carrier employment is not a universal prerequisite.

Question 4Indiana insurance law and public adjuster licensing regulations

A public adjuster's written contract with an insured in Indiana must contain which element to be enforceable?

  1. The insurer's written preapproval of the fee
  2. A statement that the adjuster will advance claim payments
  3. A clause waiving the insured's right to cancel the contract
  4. A clear description of the services and the compensation to be charged Correct answer.

Explanation

Indiana requires public adjuster contracts to be in writing and to disclose the services to be performed and the compensation arrangement. Terms that strip the insured's cancellation rights or shift approval to the insurer are inconsistent with consumer protection rules.

Question 5Indiana insurance law and public adjuster licensing regulations

An insured signs a public adjuster contract on a Monday. Under Indiana's public adjuster rules, the insured may generally cancel that contract within what period?

  1. Twenty-four hours after signing, by telephone only
  2. Three business days after signing, by written notice Correct answer.
  3. Thirty days after signing, for any reason
  4. No cancellation right exists once the contract is signed

Explanation

Indiana gives insureds a short statutory window, commonly three business days, to rescind a public adjuster contract by written notice. This cooling-off right protects consumers from rushed decisions at a stressful time.

Question 6Indiana insurance law and public adjuster licensing regulations

Which action by a public adjuster would most likely constitute a prohibited conflict of interest under Indiana rules?

  1. Meeting the insurer's adjuster at the loss site to inspect damage
  2. Documenting storm damage with photographs and a written inventory
  3. Referring the insured to three independent contractors for repair bids
  4. Accepting compensation from both the insured and a restoration vendor for the same claim Correct answer.

Explanation

Public adjusters owe undivided loyalty to the insured, so receiving undisclosed compensation from a vendor or other party on the same claim creates a prohibited conflict. Ordinary claim documentation and joint inspections are routine and permitted.

Question 7Indiana insurance law and public adjuster licensing regulations

A public adjuster solicits a homeowner at the scene of a fire loss before the fire department has cleared the property. Which statement best describes Indiana's approach to such solicitation?

  1. Solicitation is permitted only if the adjuster charges no fee
  2. Solicitation at a loss scene is fully permitted because the insured needs immediate help
  3. Solicitation at a loss scene is restricted to protect distressed insureds from pressure Correct answer.
  4. Solicitation is permitted only with the fire chief's written consent

Explanation

Indiana's public adjuster rules restrict solicitation at the scene of a loss to prevent high-pressure tactics against vulnerable insureds. An adjuster may respond to a request for help but may not canvass a disaster scene for business.

Question 8Indiana insurance law and public adjuster licensing regulations

Which of the following best describes the compensation limit Indiana places on a public adjuster's fee for a claim?

  1. The fee may never exceed a flat one hundred dollars per claim
  2. The fee is set by the insurer's claim guidelines
  3. The fee must be reasonable and is subject to statutory percentage limits Correct answer.
  4. The fee may be any amount the insured agrees to in writing

Explanation

Indiana caps public adjuster compensation at a statutory percentage of the claim amount and requires the fee to be reasonable. The cap exists to prevent excessive charges against insureds who are already facing a loss.

Question 9Indiana insurance law and public adjuster licensing regulations

An insured asks a public adjuster to handle only the personal property portion of a homeowners claim. How should the adjuster proceed?

  1. Accept a written contract limited to the personal property claim and disclose the fee Correct answer.
  2. Ask the insurer to assign the adjuster to the full claim
  3. Expand the engagement to the entire claim without written consent
  4. Refuse the engagement because partial claims are prohibited

Explanation

Public adjusters may be retained for a defined portion of a claim as long as the scope is documented in a written contract with disclosed compensation. Unilaterally expanding the scope would exceed the insured's authorization.

Question 10Indiana insurance law and public adjuster licensing regulations

Which record-keeping obligation applies to an Indiana-licensed public adjuster handling a claim?

  1. Destroy all claim files immediately after settlement
  2. Send original claim documents to the insurer and keep no copies
  3. Maintain records of the claim and transactions for the period required by the Department of Insurance Correct answer.
  4. Keep records only if the claim exceeds fifty thousand dollars

Explanation

Indiana requires licensees to keep accurate records of claim transactions for a specified retention period so the Department can audit compliance. Destroying files or retaining nothing frustrates that regulatory oversight.

Question 11Indiana insurance law and public adjuster licensing regulations

A public adjuster licensed in Indiana wants to share commissions with an unlicensed friend who referred a client. Under Indiana law, this arrangement is:

  1. Prohibited because sharing compensation with an unlicensed person is unlawful Correct answer.
  2. Permitted if the referral is disclosed to the insured
  3. Permitted if the friend signs a confidentiality agreement
  4. Permitted because the friend did no adjusting work

Explanation

Indiana prohibits paying or sharing commissions with unlicensed persons for activities requiring a license, which prevents unlicensed entities from profiting from regulated adjusting. Disclosure or a confidentiality agreement does not cure the violation.

Question 12Indiana insurance law and public adjuster licensing regulations

Which continuing education requirement applies to an Indiana public adjuster after initial licensure?

  1. The adjuster must complete ongoing continuing education to renew the license Correct answer.
  2. Continuing education is required only if the adjuster changes employers
  3. No continuing education is ever required after licensing
  4. Continuing education is required only for adjusters over age sixty-five

Explanation

Indiana requires public adjusters to complete continuing education as a condition of license renewal, keeping practitioners current on law and practice. There is no exemption based on employer changes or age.

Question 13Indiana insurance law and public adjuster licensing regulations

A public adjuster's license lapses because the renewal fee was not paid. What is the adjuster's status if the adjuster continues negotiating claims?

  1. The adjuster is acting as an unlicensed consultant exempt from regulation
  2. The adjuster is lawfully operating under a grace period of one year
  3. The adjuster is automatically converted to a company adjuster
  4. The adjuster is operating without a valid license, which is unlawful Correct answer.

Explanation

Once a license lapses, the person may not continue public adjusting activity, and doing so constitutes unlicensed practice subject to penalties. Indiana does not allow a year-long grace period for continued claim negotiation.

Question 14Indiana insurance law and public adjuster licensing regulations

Which statement about the fiduciary duty of an Indiana public adjuster handling claim funds is correct?

  1. Claim funds held for an insured must be handled in a fiduciary capacity and not misappropriated Correct answer.
  2. Claim funds may be used for business expenses until the insured requests payment
  3. Claim funds may be commingled with the adjuster's operating account
  4. Claim funds belong to the insurer until final settlement

Explanation

A public adjuster who receives claim proceeds on behalf of an insured holds them in trust and must account for them promptly. Commingling or spending those funds for business purposes is a breach of fiduciary duty.

Question 15Indiana insurance law and public adjuster licensing regulations

During a claim, a public adjuster learns the insured may have misrepresented facts on the application. What is the adjuster's most appropriate course?

  1. Withdraw from the engagement without explanation and keep the file
  2. Conceal the information from the insurer to protect the settlement
  3. Submit the claim as written and let the insurer discover the issue later
  4. Advise the insured honestly and avoid participating in any misrepresentation to the insurer Correct answer.

Explanation

A public adjuster must not knowingly present false information to an insurer and should counsel the insured on accurate claim presentation. Concealing or forwarding known misrepresentations exposes both parties to fraud liability.

Question 16Indiana insurance law and public adjuster licensing regulations

Which of the following is the primary role of the Indiana Department of Insurance with respect to public adjusters?

  1. Licensing adjusters and enforcing compliance with insurance laws Correct answer.
  2. Issuing court judgments in claim disputes
  3. Representing insureds in claim negotiations
  4. Setting the dollar amount of each claim settlement

Explanation

The Department of Insurance licenses public adjusters, investigates complaints, and enforces the insurance code, including adjuster regulations. It does not set settlement amounts, negotiate for insureds, or adjudicate claims.

Question 17Indiana insurance law and public adjuster licensing regulations

An Indiana public adjuster is convicted of a felony involving dishonesty. What is the most likely regulatory consequence?

  1. Disciplinary action against the license, up to and including revocation Correct answer.
  2. No consequence, because the conviction is unrelated to insurance
  3. Automatic promotion to a senior adjuster classification
  4. A warning letter only, with no effect on the license

Explanation

A felony conviction involving dishonesty bears directly on fitness to handle insureds' money and claims, and the Department may discipline, suspend, or revoke the license. The Department is not limited to a warning.

Question 18Indiana insurance law and public adjuster licensing regulations

Which practice by a public adjuster would most likely violate Indiana's unfair trade practice rules?

  1. Documenting the claim with dated photographs
  2. Misrepresenting the adjuster's authority to guarantee a specific settlement amount Correct answer.
  3. Explaining the policy's coverage limits in plain language
  4. Providing the insured a written estimate of the claim value

Explanation

Misrepresenting authority or promising a guaranteed settlement outcome is a deceptive trade practice under Indiana insurance law. Accurate explanation of coverage and documentation are proper professional activities.

Question 19Indiana insurance law and public adjuster licensing regulations

A public adjuster plans to advertise services in Indiana. Which statement about advertising is correct?

  1. Advertisements need not identify the adjuster's license status
  2. Advertisements may claim guaranteed maximum settlements if written in bold
  3. Advertising must be truthful and not misleading, and must not use deceptive guarantees Correct answer.
  4. Advertising is prohibited entirely for public adjusters

Explanation

Indiana requires public adjuster advertising to be truthful and non-deceptive, and prohibits guarantees of claim outcomes. Advertising is permitted, but it must accurately reflect the adjuster's role and credentials.

Question 20Indiana insurance law and public adjuster licensing regulations

An insured wants a public adjuster to also serve as the contractor performing repairs on the same property. Under Indiana rules, this arrangement is:

  1. Encouraged because it simplifies the claim process
  2. Prohibited or strictly limited because of the conflict between adjusting and contracting roles Correct answer.
  3. Permitted if the contractor discount is shared with the insurer
  4. Permitted only if the repair cost is under ten thousand dollars

Explanation

Indiana restricts public adjusters from also acting as the repair contractor on the same loss because the dual role creates a conflict between maximizing the claim and performing the repairs. The restriction is not keyed to a dollar threshold.

Question 21Indiana insurance law and public adjuster licensing regulations

Which of the following is an accurate statement about the examination requirement for an Indiana public adjuster license?

  1. The examination is optional and may be waived for anyone with a high school diploma
  2. The examination is administered by the insurer the adjuster plans to work for
  3. The examination covers only Indiana insurance law and no claim practices
  4. The examination must be passed to obtain the license unless a statutory waiver applies Correct answer.

Explanation

Passing the licensing examination is generally required for licensure, subject to any statutory waiver the Department recognizes. The exam tests both insurance law and claim adjusting knowledge and is administered through the state's testing process.

Question 22Indiana insurance law and public adjuster licensing regulations

A public adjuster accepts a claim, then discovers the insured has already signed a contract with another public adjuster for the same loss. What is the best practice?

  1. Ask the insurer to void the earlier contract
  2. Decline or withdraw from the engagement to avoid a duplicate or conflicting contract Correct answer.
  3. Proceed anyway and split the fee with the other adjuster
  4. Continue and bill the insured twice for the same work

Explanation

Taking on a loss already under a valid public adjuster contract creates a conflict and potential double-charging, so the adjuster should decline or withdraw. The insurer has no authority to void a contract between the insured and another adjuster.

Question 23Indiana insurance law and public adjuster licensing regulations

Which statement correctly describes the standard of conduct expected of an Indiana public adjuster toward the insured?

  1. The adjuster owes loyalty and good faith to the insured, acting in the insured's best interest Correct answer.
  2. The adjuster may prioritize the insurer's interests when the claim is large
  3. The adjuster may disclose the insured's confidential information freely
  4. The adjuster may settle a claim without the insured's knowledge

Explanation

A public adjuster acts as the insured's representative and owes loyalty, good faith, and confidentiality. Settling without the insured's knowledge or favoring the carrier breaches that duty.

Question 24Indiana insurance law and public adjuster licensing regulations

An adjuster licensed in another state moves to Indiana and wants to adjust claims immediately. What must the adjuster generally do?

  1. Post a surety bond in lieu of any license
  2. Register with a local insurer instead of the state
  3. Begin work immediately because licenses are reciprocal nationwide
  4. Apply for and obtain an Indiana public adjuster license, using any available nonresident or reciprocity pathway Correct answer.

Explanation

Indiana requires a license to adjust claims in the state, though nonresident applicants may use a reciprocity or nonresident pathway where available. A license from another state does not by itself authorize Indiana activity.

Question 25Indiana insurance law and public adjuster licensing regulations

Which of the following best explains why Indiana imposes a written contract and fee disclosure requirement on public adjusters?

  1. To guarantee that every claim is settled at policy limits
  2. To protect insureds from surprise charges and ensure informed consent to representation Correct answer.
  3. To eliminate the need for the adjuster to be licensed
  4. To transfer claim negotiation authority to the insurer

Explanation

Written contracts and fee disclosure ensure insureds understand the scope of representation and the cost before committing. These consumer protections do not guarantee settlement amounts or shift authority to the insurer.

Question 26Indiana insurance law and public adjuster licensing regulations

Under Indiana law, a person must hold a public adjuster license in order to do which of the following?

  1. Negotiate a claim for loss or damage on behalf of an insured for compensation Correct answer.
  2. Appraise property value for mortgage lending purposes
  3. Adjust claims solely on behalf of an insurer as a staff employee
  4. Sell homeowners insurance policies to consumers

Explanation

Indiana requires a public adjuster license for anyone who, for compensation, acts on behalf of an insured to negotiate or settle a first-party property claim. Staff adjusters employed by insurers are licensed under a different category and do not need a public adjuster license. Selling insurance requires a producer license, and appraising for lending is outside the public adjuster scope.

Question 27Indiana insurance law and public adjuster licensing regulations

An Indiana public adjuster enters into a contract with an insured to adjust a fire loss. Which element must the written contract contain to comply with Indiana requirements?

  1. A statement that the adjuster will advance all necessary repair funds
  2. A guarantee that the insurer will pay the full amount of the claim
  3. The fee or compensation method and a description of the services to be provided Correct answer.
  4. A clause waiving the insured's right to cancel the contract

Explanation

Indiana requires public adjuster contracts to be in writing and to clearly disclose the compensation method and the services the adjuster will perform. The contract may not include provisions that waive the insured's cancellation rights or guarantee a specific claim outcome. Advancing repair funds is not a required or typical contract element.

Question 28Indiana insurance law and public adjuster licensing regulations

An Indiana public adjuster charges a fee equal to 15% of the insurance proceeds on a claim arising from a declared disaster. Which statement is correct under Indiana's fee cap rules?

  1. The fee is permitted because disaster claims are exempt from fee limits
  2. The fee is permitted only if the insurer approves the percentage
  3. The fee is permitted because the insured agreed to it in writing
  4. The fee exceeds the statutory maximum for a declared disaster claim Correct answer.

Explanation

Indiana sets a lower maximum fee for claims arising from a declared disaster or emergency than for ordinary claims. A 15% fee on a disaster claim generally exceeds that cap, so the adjuster may not charge it even with the insured's written consent. Insurer approval does not override the statutory limit.

Question 29Indiana insurance law and public adjuster licensing regulations

Which action by an Indiana public adjuster would violate the prohibition on representing conflicting interests?

  1. Representing both the insured and the insurer in the same claim Correct answer.
  2. Explaining the policy's coverage provisions to the insured
  3. Referring the insured to an independent contractor without receiving compensation for the referral
  4. Documenting the insured's loss inventory for the claim file

Explanation

A public adjuster represents the insured and may not also represent the insurer in the same claim because that creates a direct conflict of interest. Explaining coverage, documenting losses, and making uncompensated referrals are permissible activities. The prohibition targets dual representation and undisclosed financial interests.

Question 30Indiana insurance law and public adjuster licensing regulations

An Indiana public adjuster's license is suspended for failure to comply with a continuing education audit. What is the adjuster's authority to negotiate claims during the suspension?

  1. The adjuster may negotiate claims only if supervised by a licensed adjuster
  2. The adjuster may not negotiate claims until the license is reinstated Correct answer.
  3. The adjuster may continue negotiating claims already under contract
  4. The adjuster may negotiate claims after notifying the Department of Insurance

Explanation

A suspended license removes all authority to act as a public adjuster, including on existing contracts. The adjuster must stop negotiating claims until the Department of Insurance reinstates the license. Notification or supervision does not restore the authority during suspension.

Question 31Indiana insurance law and public adjuster licensing regulations

Which of the following must an Indiana public adjuster do when the adjuster receives claim proceeds on behalf of an insured?

  1. Apply the funds to the adjuster's fee before disbursing the remainder to the insured
  2. Deposit the funds in a separate fiduciary account and account for them promptly Correct answer.
  3. Retain the funds until the insurer confirms the final settlement amount
  4. Hold the funds in the adjuster's general business account until the claim closes

Explanation

Claim funds received on behalf of an insured are held in trust, and Indiana requires the adjuster to keep them in a separate fiduciary account and account for them promptly. Commingling with business funds or applying them to fees without authorization violates the adjuster's fiduciary duty. The adjuster must disburse the funds as directed by the insured or the settlement terms.

Question 32Indiana insurance law and public adjuster licensing regulations

An Indiana public adjuster wants to use a trade name that implies the adjuster is an agency of the state. What does Indiana law require regarding such a name?

  1. The name is permitted if the adjuster discloses the true legal name in the contract
  2. The name is prohibited because it is deceptive or misleading Correct answer.
  3. The name is permitted if the adjuster registers it with the Secretary of State
  4. The name is permitted if the adjuster obtains written consent from the insured

Explanation

Indiana prohibits public adjusters from using business names that are deceptive or that imply affiliation with a government agency. Registration or disclosure does not cure a misleading name. The adjuster must use a name that accurately identifies the business.

Question 33Indiana insurance law and public adjuster licensing regulations

An Indiana public adjuster is approached by an insured who has already signed a contract with a different public adjuster for the same loss. What should the adjuster do?

  1. Accept the claim and notify the first adjuster of the change
  2. Accept the claim and split the fee with the first adjuster
  3. Decline to represent the insured unless the prior contract is properly canceled Correct answer.
  4. Accept the claim because the insured may hire any adjuster at any time

Explanation

A public adjuster should not interfere with an existing public adjuster contract. The adjuster should decline representation unless the prior contract is canceled in accordance with its terms and applicable law. Accepting the claim while another valid contract exists can create legal and ethical problems.

Question 34Indiana insurance law and public adjuster licensing regulations

Which of the following best describes the standard of care an Indiana public adjuster owes to an insured client?

  1. A duty to maximize the insurer's loss ratio on each claim
  2. A duty to follow only the insurer's settlement instructions
  3. A duty to avoid communicating with the insured after the contract is signed
  4. A duty to act in the insured's best interest and to deal honestly and in good faith Correct answer.

Explanation

A public adjuster owes the insured a fiduciary duty to act in the insured's best interest and to deal honestly and in good faith. The adjuster does not work for the insurer and may not subordinate the insured's interests to the insurer's. Ongoing communication with the insured is part of that duty.

Question 35Indiana insurance law and public adjuster licensing regulations

An Indiana public adjuster learns that the insured may have misrepresented facts on the insurance application. What is the adjuster's most appropriate course of action?

  1. Advise the insured to correct the information and avoid participating in any misrepresentation Correct answer.
  2. Report the insured to law enforcement before notifying the insured
  3. Conceal the information from the insurer to protect the claim
  4. Withdraw from the claim without explaining the reason to the insured

Explanation

A public adjuster may not assist or participate in a misrepresentation to an insurer. The adjuster should advise the insured to correct the information and should not knowingly present false information. Concealing the issue or withdrawing without explanation does not fulfill the adjuster's ethical obligations.

Question 36Indiana insurance law and public adjuster licensing regulations

Which of the following is a permissible way for an Indiana public adjuster to solicit business?

  1. Contacting a homeowner at the scene of a loss before the insurer has been notified
  2. Making an uninvited in-person visit to a residence to solicit a claim
  3. Sending a written solicitation that clearly identifies the adjuster and the services offered Correct answer.
  4. Using a uniformed person to imply the adjuster is a government official

Explanation

Indiana permits public adjusters to solicit business through written materials that accurately identify the adjuster and the services offered. Solicitation at the scene of a loss before the insurer is notified, uninvited in-person visits, and impersonating a government official are prohibited. The rules aim to prevent deceptive or high-pressure solicitation.

Question 37Indiana insurance law and public adjuster licensing regulations

An Indiana public adjuster's license expires on October 31, but the adjuster submits a complete renewal application on November 15. What is the adjuster's licensing status between November 1 and November 15?

  1. The license remains active during a mandatory 30-day grace period
  2. The license remains active because a renewal application is pending
  3. The license is automatically converted to an inactive status without penalty
  4. The license is expired and the adjuster may not act as a public adjuster Correct answer.

Explanation

An Indiana public adjuster license expires if not renewed by the expiration date, and the adjuster may not act as a public adjuster after expiration. Filing a renewal application after expiration does not retroactively keep the license active. Indiana does not provide a general 30-day grace period that authorizes practice.

Question 38Indiana insurance law and public adjuster licensing regulations

Which of the following best explains why Indiana requires public adjusters to provide a written contract and fee disclosure to insureds?

  1. To require the insurer to approve the adjuster's fee
  2. To protect insureds from misunderstandings about services and compensation Correct answer.
  3. To increase the administrative burden on adjusters
  4. To ensure the adjuster's fee is paid before the claim is settled

Explanation

The written contract and fee disclosure requirement protects insureds by making the scope of services and the compensation method clear before the adjuster begins work. This reduces the risk of disputes and surprise charges. The requirement is not intended to burden adjusters or to give insurers approval authority over fees.

Question 39Indiana insurance law and public adjuster licensing regulations

An Indiana public adjuster is asked by an insured to also act as the general contractor for repairs on the same property. Under Indiana law, what is the adjuster's most appropriate response?

  1. Agree only if the insured signs a separate repair contract and the adjuster discloses the dual role in writing
  2. Agree only if the insurer approves the arrangement in writing
  3. Decline because a public adjuster may not also perform repairs on the same loss Correct answer.
  4. Agree because the insured has the right to choose any contractor

Explanation

Indiana prohibits a public adjuster from also serving as the contractor performing repairs on the same loss because that creates an inherent conflict of interest. The adjuster's role is to represent the insured in the claim, not to profit from the repair work. Separate contracts or insurer approval do not cure the prohibition.

Question 40Indiana insurance law and public adjuster licensing regulations

Which of the following statements about the Indiana public adjuster examination requirement is correct?

  1. The examination may be taken after the license is issued within 90 days
  2. The examination is required only for nonresident applicants
  3. The examination must be passed before a public adjuster license is issued Correct answer.
  4. The examination requirement is waived for applicants with five years of insurance experience

Explanation

Indiana requires applicants for a public adjuster license to pass the licensing examination before the license is issued. Experience does not waive the examination for public adjuster applicants. The examination is not limited to nonresidents and cannot be deferred until after licensure.

Question 41Public adjuster duties, ethics, and fiduciary responsibilities

Under the typical public adjuster licensing statute, which activity requires a public adjuster license?

  1. Providing general legal advice about a claim to a policyholder
  2. Selling life insurance policies to homeowners
  3. Negotiating a first-party property claim on behalf of the insured for compensation Correct answer.
  4. Adjusting claims as a salaried staff employee of an insurer

Explanation

A public adjuster is licensed to represent the insured in negotiating a first-party property claim in exchange for compensation. Insurer staff adjusters and insurance producers operate under different licenses, and giving legal advice is reserved to attorneys.

Question 42Public adjuster duties, ethics, and fiduciary responsibilities

A public adjuster's fiduciary duty to a client most directly requires the adjuster to do which of the following?

  1. Share the claim file freely with the insurer's counsel without consent
  2. Hold and account for client claim funds and settlement proceeds entrusted to the adjuster Correct answer.
  3. Guarantee that the insurer will pay the full amount demanded
  4. Advance the deductible so the insured can rebuild sooner

Explanation

Fiduciary status means the adjuster must handle money and property entrusted by the client with loyalty and strict accounting. The adjuster cannot promise a specific outcome, cannot fund the insured's deductible as a workaround, and cannot disclose the file without authorization.

Question 43Public adjuster duties, ethics, and fiduciary responsibilities

A public adjuster contract must typically be in writing and signed by the insured. Which additional element is most commonly required by statute?

  1. A waiver of the insured's right to cancel the contract
  2. An assignment of the insured's entire policy to the adjuster
  3. A statement of the adjuster's fee or commission and how it is calculated Correct answer.
  4. A clause naming the insurer as a third-party beneficiary

Explanation

Disclosure of compensation is a core consumer protection in public adjuster contracts, so the fee or percentage and its basis must be stated clearly. Statutes generally preserve a cancellation right rather than waive it, and the adjuster does not take assignment of the policy.

Question 44Public adjuster duties, ethics, and fiduciary responsibilities

An insured asks a public adjuster to inflate the claimed square footage of a damaged structure. What is the adjuster's proper response?

  1. Refuse to include the inflated figure and explain the legal and ethical consequences Correct answer.
  2. Include the figure and reduce the fee to offset the risk
  3. Include the figure but note in the file that the insured supplied it
  4. Include the figure only if the insurer is unlikely to verify it

Explanation

Presenting a claim the adjuster knows to be false is insurance fraud, and the adjuster may not knowingly participate regardless of who supplied the figure. Documenting the source does not cure the misrepresentation, and fee adjustments do not legitimize it.

Question 45Public adjuster duties, ethics, and fiduciary responsibilities

Which record-keeping practice best satisfies a public adjuster's accountability obligations?

  1. Storing records solely in the adjuster's personal memory until the claim closes
  2. Retaining records only when the insured requests copies
  3. Keeping only final settlement letters and discarding working notes
  4. Maintaining a claim file with correspondence, estimates, and disbursement records for the required retention period Correct answer.

Explanation

Accountability requires a contemporaneous, complete file that documents communications, damage estimates, and how funds were handled, kept for the statutory retention period. Discarding working papers or relying on memory defeats any later audit or dispute.

Question 46Public adjuster duties, ethics, and fiduciary responsibilities

A public adjuster wants to solicit business at the scene of a residential fire shortly after firefighters leave. Which statement reflects the usual regulatory limit?

  1. Solicitation is permitted only if the adjuster is unpaid for that claim
  2. Solicitation is always permitted because the loss site is a public place
  3. Solicitation at a loss site may be restricted or prohibited during an emergency period set by statute Correct answer.
  4. Solicitation is permitted if the adjuster arrives with the fire department

Explanation

Many jurisdictions restrict door-to-door solicitation at a loss scene for a defined period to protect vulnerable insureds from high-pressure tactics. Public visibility of the site does not remove the restriction, and no rule permits riding along with emergency responders.

Question 47Public adjuster duties, ethics, and fiduciary responsibilities

Before signing a representation contract, a public adjuster should disclose which of the following to the insured?

  1. That the insurer will reimburse the adjuster's fee on top of the claim payment
  2. That the adjuster works for the insurer as an independent contractor
  3. That the adjuster is paid by the insured, not the insurer, and the fee reduces net recovery Correct answer.
  4. That hiring an adjuster voids the policy's appraisal clause

Explanation

Informed consent requires the insured to understand that the adjuster's fee comes out of the recovery rather than being added by the insurer. Misstating the source of compensation or the effect on coverage terms would be deceptive.

Question 48Public adjuster duties, ethics, and fiduciary responsibilities

Which of these best describes the standard of care a public adjuster owes when preparing a damage estimate?

  1. The lowest estimate that will still be accepted by the insurer
  2. The skill and diligence ordinarily exercised by a competent adjuster in similar circumstances Correct answer.
  3. The absolute accuracy of an engineering report in every claim
  4. Whatever standard the insured specifies in the contract

Explanation

Professionals are held to the ordinary skill and care of a competent practitioner in the field, not to perfection or to a client-dictated standard. Deliberately low estimates would harm the client and breach the duty of loyalty.

Question 49Public adjuster duties, ethics, and fiduciary responsibilities

A public adjuster also holds an insurance producer license and wants to sell the insured a new policy while handling the claim. What is the primary ethical concern?

  1. No concern, because the insured benefits from added coverage
  2. A licensing problem, because dual licensure is never permitted
  3. A record-keeping problem, because two files must be kept
  4. A conflict of interest arising from the adjuster's financial interest in the policy sale Correct answer.

Explanation

Recommending insurance the adjuster sells while advocating on the claim creates a conflict between the client's interest and the adjuster's compensation. Dual licensure may be allowed, but the adjuster must avoid or fully disclose and manage the conflict.

Question 50Public adjuster duties, ethics, and fiduciary responsibilities

An insurer sends a settlement check payable to the insured and the mortgagee. The insured asks the public adjuster to deposit it in the adjuster's trust account. What is the appropriate handling?

  1. Deposit it in the adjuster's general operating account and pay the fee first
  2. Deposit it in a segregated trust account and disburse only per written authorization and lien requirements Correct answer.
  3. Hold the check undeposited indefinitely until all repairs are complete
  4. Endorse it over to the insured and let the insured negotiate it without documentation

Explanation

Client funds must be segregated from the adjuster's own money and disbursed according to the insured's authorization and any mortgagee or lien rights. Commingling with operating funds or ignoring the mortgagee's interest breaches fiduciary duties.