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

KY Claims Adjuster practice questions

One question at a time. Build your KY 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 1Insurance Fundamentals and Terminology

Which term describes the possibility that a loss or no loss will occur?

  1. Hazard
  2. Loss exposure
  3. Risk Correct answer.
  4. Peril

Explanation

Risk is the uncertainty about whether a loss will occur. A peril is the actual cause of loss, while a hazard is a condition that increases the chance or severity of loss.

Question 2Insurance Fundamentals and Terminology

An insurable interest in property generally must exist at which point?

  1. At the time of the loss Correct answer.
  2. At the time the premium is first paid
  3. At the time the policy is delivered
  4. At the time the application is signed

Explanation

For property insurance, the insured must have an insurable interest at the time of the loss, meaning a financial stake that would be harmed by the loss. Life insurance generally requires insurable interest at policy inception.

Question 3Insurance Fundamentals and Terminology

The amount a policyholder pays an insurer in exchange for insurance coverage is called the:

  1. Premium Correct answer.
  2. Limit
  3. Deductible
  4. Coinsurance

Explanation

The premium is the consideration paid by the insured for the insurer's promise to provide coverage. A deductible is the insured's retained portion of a loss, and a limit is the maximum the insurer will pay.

Question 4Insurance Fundamentals and Terminology

A deductible in an insurance policy is best described as:

  1. A penalty charged for late premium payment
  2. The maximum the insurer will pay for one loss
  3. The part of a loss the insured retains Correct answer.
  4. A percentage of loss shared by the insurer

Explanation

A deductible is the amount of a covered loss that the insured must bear before the insurer begins to pay. It reduces small claims and affects the premium charged.

Question 5Insurance Fundamentals and Terminology

Fire, windstorm, and theft are examples of:

  1. Exposures
  2. Hazards
  3. Risks
  4. Perils Correct answer.

Explanation

Perils are the actual causes of loss, such as fire, windstorm, or theft. Hazards are conditions that increase the chance of loss, and risk is uncertainty about loss.

Question 6Insurance Fundamentals and Terminology

A claims adjuster's primary function is to:

  1. Underwrite applications for coverage
  2. Sell new policies to claimants
  3. Investigate and evaluate claims Correct answer.
  4. Set the premium rates for a policy

Explanation

A claims adjuster investigates a reported loss, evaluates coverage and damages, and recommends or makes claim payments. Selling policies, setting rates, and underwriting are separate insurance functions.

Question 7Insurance Fundamentals and Terminology

The section of an insurance policy that lists the named insured, policy period, and amount of coverage is the:

  1. Declarations page Correct answer.
  2. Conditions section
  3. Insuring agreement
  4. Exclusions section

Explanation

The declarations page identifies the insured, the policy period, the limits, and other key facts about the coverage. The insuring agreement states the insurer's promise, and conditions set out duties of the parties.

Question 8Insurance Fundamentals and Terminology

The principle of indemnity means that an insured should:

  1. Profit from a loss if the claim is valid
  2. Collect from every policy that covers the loss
  3. Be restored to roughly the pre-loss position Correct answer.
  4. Receive a fixed amount regardless of loss

Explanation

Indemnity restores the insured to approximately the same financial position as before the loss, no better and no worse. It prevents an insured from profiting from a loss.

Question 9Insurance Fundamentals and Terminology

Utmost good faith in insurance requires each party to:

  1. Pay all claims without any investigation
  2. Renew the policy automatically each year
  3. Disclose material facts honestly and fully Correct answer.
  4. Waive all policy conditions after a loss

Explanation

Utmost good faith requires both parties to deal honestly and to disclose material facts. It supports the insurer's reliance on the application and the insured's reliance on the policy terms.

Question 10Insurance Fundamentals and Terminology

Because an insurance policy is a contract of adhesion, ambiguities are generally interpreted:

  1. In favor of the insured who did not draft it Correct answer.
  2. By the state legislature that approved it
  3. By deleting the ambiguous language
  4. In favor of the insurer that drafted the policy

Explanation

A contract of adhesion is drafted by one party and accepted or rejected by the other. Courts generally resolve ambiguities against the drafter, which in insurance is usually the insurer.

Question 11Insurance Fundamentals and Terminology

An insurance contract is aleatory because:

  1. Both parties exchange promises of equal value
  2. Payment depends on an uncertain event Correct answer.
  3. Only the insurer makes a binding promise
  4. The insured may cancel at any time without notice

Explanation

An aleatory contract depends on an uncertain event, and the amounts exchanged may be unequal. The insured may pay premiums for years and never have a loss, or may receive a much larger payment after one loss.

Question 12Insurance Fundamentals and Terminology

Subrogation allows an insurer that has paid a claim to:

  1. Seek recovery from the responsible third party Correct answer.
  2. Cancel the policy after paying the claim
  3. Collect extra premium from the insured
  4. Deny later claims by the insured

Explanation

Subrogation lets the insurer step into the insured's shoes and pursue a responsible third party after paying the loss. It helps prevent duplicate recovery and allocates loss to the party at fault.

Question 13Insurance Fundamentals and Terminology

In property insurance, a coinsurance clause is intended to:

  1. Require equal sharing of every loss with the insurer
  2. Encourage coverage near a stated percentage of value Correct answer.
  3. Apply only to third-party liability claims
  4. Limit recovery to the policy deductible amount

Explanation

A coinsurance clause encourages the insured to carry coverage close to a stated percentage of the property's value. If the insured carries less, recovery for a partial loss may be reduced.

Question 14Insurance Fundamentals and Terminology

A policy limit is best described as:

  1. The most the insurer will pay for a covered loss Correct answer.
  2. The amount of premium due each month
  3. The period during which a claim may be filed
  4. The value assigned to property at policy inception

Explanation

The limit is the maximum amount the insurer is obligated to pay for a covered loss under the policy. It may apply per occurrence, per item, or in the aggregate.

Question 15Insurance Fundamentals and Terminology

An endorsement is used to:

  1. Change the terms of an existing policy Correct answer.
  2. Cancel a policy for nonpayment of premium
  3. Verify the insured's identity at application
  4. Report a claim to the insurer

Explanation

An endorsement is a written amendment that changes, adds to, or restricts the terms of an existing policy. It becomes part of the policy and takes effect according to its terms.

Question 16Insurance Fundamentals and Terminology

A binder provides:

  1. A permanent policy with no expiration
  2. A receipt showing premium has been refunded
  3. Temporary coverage until the policy is issued Correct answer.
  4. A list of excluded perils for a policy

Explanation

A binder is temporary evidence that coverage is in force while the insurer completes underwriting and issues the policy. It is subject to the terms of the eventual policy.

Question 17Insurance Fundamentals and Terminology

An insured's statement on an application that is believed true to the best of the insured's knowledge is a:

  1. Waiver
  2. Concealment
  3. Warranty
  4. Representation Correct answer.

Explanation

A representation is a statement made to induce the insurer to issue coverage and is generally believed true to the best of the applicant's knowledge. A warranty is a stricter promise or statement that must be literally true.

Question 18Insurance Fundamentals and Terminology

Unlike a stock insurer, a mutual insurer is owned by its:

  1. Reinsurers
  2. Policyholders Correct answer.
  3. State insurance department
  4. Shareholders

Explanation

A mutual insurer is owned by its policyholders, who may receive dividends or other benefits. A stock insurer is owned by shareholders.

Question 19Insurance Fundamentals and Terminology

Reinsurance is best described as insurance:

  1. Provided only for life and health policies
  2. Sold directly to the public by the state
  3. Required for all admitted insurers
  4. Bought by an insurer for its own protection Correct answer.

Explanation

Reinsurance is insurance purchased by an insurer to protect itself against large or accumulated losses. It transfers part of the insurer's risk to a reinsurer.

Question 20Insurance Fundamentals and Terminology

Proximate cause in a property claim refers to the:

  1. Dominant cause that sets the loss in motion Correct answer.
  2. Cause that the insured believes is most important
  3. Last event in time before the damage occurred
  4. Cause specifically listed in the declarations

Explanation

Proximate cause is the dominant, efficient cause that sets a chain of events in motion resulting in loss. It is not necessarily the last event in time.

Question 21Insurance Fundamentals and Terminology

An insurer's adjuster accepts a late proof of loss without objection, and the insurer later tries to deny the claim for lateness. The insurer may be barred by:

  1. Coinsurance and deductibles
  2. Subrogation and contribution
  3. Waiver and estoppel Correct answer.
  4. Arbitration and appraisal

Explanation

Waiver is the voluntary relinquishment of a known right, and estoppel can prevent a party from asserting a right after another party relied on its conduct. Accepting a late proof without objection may support both doctrines.

Question 22Insurance Fundamentals and Terminology

A policy clause that excludes a loss caused by an excluded peril regardless of any concurrent or subsequent covered cause is called a(n):

  1. Anti-concurrent causation clause Correct answer.
  2. Coinsurance clause
  3. Subrogation clause
  4. Appraisal clause

Explanation

An anti-concurrent causation clause excludes loss from an excluded peril even when a covered peril contributes concurrently or in sequence. It is designed to prevent coverage when an excluded cause is part of the loss.

Question 23Insurance Fundamentals and Terminology

Contribution among insurers applies when:

  1. An insured cancels one policy before a loss
  2. Two policies cover the same loss at the same level Correct answer.
  3. One policy has a deductible and another does not
  4. A reinsurer refuses to pay its share of a loss

Explanation

Contribution allows insurers with policies covering the same loss at the same level to share payment. It helps prevent the insured from recovering more than the actual loss.

Question 24Insurance Fundamentals and Terminology

When an insurer and insured disagree solely on the amount of a property loss, the policy provision usually used to resolve the dispute is:

  1. Subrogation
  2. Abandonment
  3. Salvage
  4. Appraisal Correct answer.

Explanation

Appraisal is the policy mechanism for resolving a disagreement about the amount of loss. Each side typically selects an appraiser, and the appraisers may select an umpire if they disagree.

Question 25Property Insurance Coverages and Policy Provisions

Under a homeowners HO-3 policy, which coverage part pays to repair or replace the dwelling structure itself?

  1. Coverage C, which insures personal property
  2. Coverage A, which insures the dwelling Correct answer.
  3. Coverage D, which insures loss of use
  4. Coverage B, which insures other structures

Explanation

Coverage A insures the dwelling on the residence premises, including structures attached to it. Coverage B covers detached structures such as a garage, Coverage C covers personal property, and Coverage D pays additional living expense after a covered loss.

Question 26Property Insurance Coverages and Policy Provisions

Actual cash value in a property insurance policy is best described as which of the following?

  1. Replacement cost with no deduction
  2. Replacement cost minus depreciation Correct answer.
  3. The price originally paid for the property
  4. The limit shown on the declarations page

Explanation

Actual cash value reflects the value of the property in its pre-loss condition, typically computed as replacement cost less depreciation. Replacement cost coverage, by contrast, pays to replace without deducting depreciation.

Question 27Property Insurance Coverages and Policy Provisions

A homeowners policy carries a $2,500 deductible. A single windstorm damages both the dwelling and a detached garage. How is the deductible applied?

  1. Once for each structure damaged
  2. Once for the whole storm Correct answer.
  3. Once, but only for the dwelling
  4. Once for each coverage part involved

Explanation

A property deductible applies once to each occurrence, no matter how many structures or coverage parts are damaged by that event. Separate or higher deductibles apply only where the policy includes an endorsement such as a windstorm or hurricane deductible.

Question 28Property Insurance Coverages and Policy Provisions

A standard mortgage clause in a property policy protects the mortgagee by doing which of the following?

  1. Transferring ownership of the policy to the lender
  2. Requiring the lender to pay the premium
  3. Removing the insured's duties after a loss
  4. Protecting the lender's interest in the proceeds Correct answer.

Explanation

The standard mortgage clause gives the lender a right to receive loss proceeds to the extent of its interest, even if the insured's own acts would otherwise defeat coverage. It also typically gives the lender notice and cancellation rights.

Question 29Property Insurance Coverages and Policy Provisions

To recover under a property insurance policy, the claimant must have had an insurable interest in the property at which point?

  1. Only when the claim is paid
  2. At any point during the policy period
  3. At the time of the loss Correct answer.
  4. Only when the policy was purchased

Explanation

Insurable interest must exist at the time of loss, because property insurance indemnifies actual pecuniary loss and is not a wager. A person with no interest when the loss occurs has nothing to indemnify.

Question 30Property Insurance Coverages and Policy Provisions

Additional living expense coverage in a homeowners policy is designed to pay which of the following?

  1. Extra costs to keep up a normal standard of living Correct answer.
  2. The amount of the policy deductible
  3. The insured's full mortgage payment while repairs are made
  4. Costs that increase the value of the home during repairs

Explanation

Additional living expense pays the increase in living costs necessary to maintain a normal standard of living while the dwelling is uninhabitable because of a covered loss. Ordinary expenses the insured would have incurred anyway are not reimbursed.

Question 31Property Insurance Coverages and Policy Provisions

Which of the following is a duty of the insured after a covered property loss?

  1. Giving prompt notice of the loss to the insurer Correct answer.
  2. Paying the adjuster's fees
  3. Negotiating with contractors for the insurer
  4. Replacing the damaged property before inspection

Explanation

The duties after loss conditions require prompt notice, protection of the property from further damage, cooperation with the investigation, and a signed proof of loss. Substantial compliance is a condition of recovery.

Question 32Property Insurance Coverages and Policy Provisions

An insurance policy that covers only the causes of loss specifically listed in the policy is known as which of the following?

  1. A valued policy
  2. A named peril policy Correct answer.
  3. An open peril policy
  4. A blanket policy

Explanation

A named peril policy covers only the causes of loss listed in the form, and the insured bears the burden of showing the loss resulted from a listed peril. An open peril policy covers all risks of direct physical loss except those excluded.

Question 33Property Insurance Coverages and Policy Provisions

Under an unendorsed HO-3, personal property owned or used by an insured while away from the residence premises is covered up to what percentage of the Coverage C limit?

  1. 50% of the Coverage C limit
  2. 20% of the Coverage C limit
  3. 10% of the Coverage C limit Correct answer.
  4. 100% of the Coverage C limit

Explanation

The HO-3 limits coverage for personal property away from the residence premises to 10% of the Coverage C limit, and that amount is part of, not in addition to, the Coverage C limit. Tighter limits apply to property usually located at another residence.

Question 34Property Insurance Coverages and Policy Provisions

Under an unendorsed homeowners HO-3, the special limit for loss by theft of money is which of the following amounts?

  1. $500
  2. $1,000
  3. $200 Correct answer.
  4. $1,500

Explanation

The homeowners form imposes a $200 special limit for theft of money, with similar low limits for bank notes, bullion, and numismatic property. Higher limits require an endorsement or a separate policy.

Question 35Property Insurance Coverages and Policy Provisions

Under an unendorsed homeowners HO-3, the special limit that applies to loss by theft of jewelry, watches, and furs is which of the following?

  1. $1,500 Correct answer.
  2. $1,000
  3. $2,500
  4. $500

Explanation

The HO-3 caps theft losses of jewelry, watches, furs, and precious or semiprecious stones at $1,500. The limit is specific to theft; damage from a fire or other covered peril is not subject to this theft cap.

Question 36Property Insurance Coverages and Policy Provisions

Coverage for trees, shrubs, and other plants under an HO-3 is limited to 5% of the Coverage A limit, with a maximum of what amount for any one tree, shrub, or plant?

  1. $500 Correct answer.
  2. $2,500
  3. $250
  4. $1,000

Explanation

The homeowners form limits outdoor plant coverage to 5% of the Coverage A limit with a $500 cap per item, and only for a listed group of perils such as fire, lightning, explosion, riot, and vandalism. Wind and hail generally are not among the covered perils for plants.

Question 37Property Insurance Coverages and Policy Provisions

When a covered loss requires rebuilding in compliance with current building codes, an unendorsed HO-3 provides Ordinance or Law coverage in an amount up to which of the following?

  1. 5% of the Coverage A limit
  2. The full Coverage A limit
  3. 10% of the Coverage A limit Correct answer.
  4. 25% of the Coverage A limit

Explanation

Ordinance or Law is an additional coverage in the homeowners form that pays the increased cost to repair or rebuild in compliance with building codes, up to 10% of the Coverage A limit. Larger code-upgrade exposures require a specific endorsement.

Question 38Property Insurance Coverages and Policy Provisions

Under the HO-3, the exclusion for vandalism applies when the dwelling has been vacant for more than how many consecutive days immediately before the loss?

  1. 90 consecutive days before the loss
  2. 60 consecutive days before the loss Correct answer.
  3. 180 consecutive days before the loss
  4. 30 consecutive days before the loss

Explanation

Vandalism and malicious mischief are excluded if the dwelling has been vacant for more than 60 consecutive days immediately before the loss. The exclusion reflects the sharply increased hazard of an unattended building.

Question 39Property Insurance Coverages and Policy Provisions

The insurer and the insured agree that a loss is covered but cannot agree on how much the loss is worth. Which policy provision is used to resolve the dispute?

  1. Appraisal Correct answer.
  2. Salvage
  3. Subrogation
  4. Arbitration

Explanation

The appraisal provision allows either party to demand appraisal when the amount of loss is disputed; each side selects a competent appraiser and the appraisers choose an umpire. Appraisal determines the amount of loss, not whether coverage applies.

Question 40Property Insurance Coverages and Policy Provisions

Two property policies cover the same loss on the same basis, and neither contains an excess clause that applies. How is the insured's recovery determined?

  1. The insured's choice of either policy for the full amount
  2. Equal shares regardless of the policy limits
  3. The policy with the earlier effective date paying first
  4. Pro rata sharing based on each policy's limit Correct answer.

Explanation

When other insurance applies on the same basis, each policy contributes in proportion to its limit relative to the total insurance in force. This supports indemnity by preventing the insured from collecting more than the loss.

Question 41Property Insurance Coverages and Policy Provisions

After paying a covered loss caused by a negligent third party, an insurer's right to recover that payment from the responsible party is called which of the following?

  1. Indemnity
  2. Salvage
  3. Subrogation Correct answer.
  4. Contribution

Explanation

Subrogation lets the insurer stand in the insured's shoes and pursue the party that caused the loss, after paying the claim. It reinforces indemnity by placing the ultimate cost on the responsible party.

Question 42Property Insurance Coverages and Policy Provisions

An insured intentionally conceals a material fact and submits false statements in support of a claim. Under the policy's concealment or fraud condition, which result generally follows?

  1. The policy is void and the claim may be denied Correct answer.
  2. Only the misstated part of the claim is reduced
  3. The claim is paid but the policy is not renewed
  4. Coverage continues with a 10% penalty

Explanation

The concealment or fraud condition voids the policy when the insured intentionally hides or misrepresents material facts relating to the insurance or the claim. The insurer may deny the claim and treat the policy as void.

Question 43Property Insurance Coverages and Policy Provisions

Business income coverage written on an actual loss sustained basis pays which of the following?

  1. Only the rent the business would have collected
  2. The full policy limit regardless of the actual loss
  3. A fixed daily amount that is stated on the declarations page
  4. Lost net income plus continuing normal expenses Correct answer.

Explanation

Actual loss sustained business income coverage reimburses the net income the business would have earned plus continuing normal operating expenses during the period of restoration. The amount is measured by the insured's actual figures rather than a stated daily value.

Question 44Property Insurance Coverages and Policy Provisions

An insured's home is damaged by rising surface water, and the homeowners policy contains the standard water damage exclusion. Which statement is accurate?

  1. It is covered under the HO-3 water damage coverage
  2. It is covered because flood is an open peril under Coverage A
  3. A separate flood policy, such as NFIP, may cover it Correct answer.
  4. It is covered only if the community has no flood map

Explanation

The homeowners form excludes loss caused by flood, surface water, waves, and similar water conditions, so the HO policy does not respond. Separate flood insurance, through the National Flood Insurance Program or a private flood insurer, is designed to cover that exposure.

Question 45Property Insurance Coverages and Policy Provisions

A building with a replacement cost of $1,000,000 is insured for $600,000 under a policy containing an 80% coinsurance clause. A covered partial loss of $200,000 occurs and there is no deductible. What amount does the insurer pay?

  1. $160,000
  2. $150,000 Correct answer.
  3. $200,000
  4. $120,000

Explanation

The coinsurance requirement is 80% of $1,000,000, or $800,000. Because the insured carried $600,000, the insurer pays the ratio of insurance carried to insurance required (600,000 / 800,000, or 75%) applied to the $200,000 loss, which is $150,000.

Question 46Property Insurance Coverages and Policy Provisions

Kentucky law requires that fire insurance policies issued on property in the state do which of the following?

  1. Include a mandatory 90-day suit limitation
  2. Be written only on a valued policy basis for real property
  3. Conform to the standard fire policy form Correct answer.
  4. Exclude coinsurance clauses entirely

Explanation

Kentucky's fire insurance statute requires policies to conform to the standard fire policy form, or to a form filed and approved as substantially equivalent. The requirement guarantees minimum uniform terms and conditions in fire coverage written in the state.

Question 47Property Insurance Coverages and Policy Provisions

A homeowners endorsement states that a listed exclusion applies regardless of any other cause or event contributing concurrently to the loss. Wind opens the roof, and rain driven through the opening damages the interior. Applying that language, which outcome is most consistent with the clause?

  1. It limits the insurer's payment to one-half of the loss
  2. It has no effect, because concurrent causation always favors the insured
  3. It can bar coverage for the entire loss Correct answer.
  4. It applies only to earthquake losses

Explanation

Anti-concurrent causation wording is intended to exclude a loss whenever an excluded cause contributes, regardless of sequence or any covered cause acting at the same time. Where the clause is enforced, the presence of an excluded contributing cause can defeat coverage for the whole loss rather than only part of it.

Question 48Property Insurance Coverages and Policy Provisions

Builders risk coverage on a building under construction typically provides which of the following?

  1. It excludes coverage for the structure itself
  2. It applies only after the building is complete
  3. It covers the structure and materials while under construction Correct answer.
  4. It covers only materials that have already been delivered and installed

Explanation

Builders risk insures the structure, materials, and supplies while the building is being constructed, and is often written on a completed value basis. Coverage usually ends when construction is complete or the building is occupied, and off-site or in-transit property may be added by endorsement.

Question 49Property Insurance Coverages and Policy Provisions

A policy excludes faulty workmanship but contains an ensuing loss clause. Defective wiring causes a fire that damages the dwelling. How does the insurer generally respond?

  1. Pays the fire damage but not the rewiring cost Correct answer.
  2. Pays nothing unless the wiring was up to code
  3. Denies the entire claim because the faulty workmanship started the sequence
  4. Pays only the cost to rewire the house

Explanation

An ensuing loss clause restores coverage for a separate, non-excluded loss that follows an excluded cause, such as fire started by defective wiring. The cost of correcting the excluded defect itself remains uninsured.

Question 50Property Insurance Coverages and Policy Provisions

Under an unendorsed HO-5 homeowners policy, how are the dwelling and the personal property covered with respect to causes of loss?

  1. Named perils listed in the policy apply to both the dwelling and personal property
  2. Open perils apply to the dwelling, and named perils apply to personal property
  3. Named perils apply to the dwelling, and open perils apply to personal property
  4. Open perils apply to both the dwelling and personal property Correct answer.

Explanation

The HO-5 is the comprehensive form; it insures Coverage A and Coverage C against risks of direct physical loss unless the loss is excluded. The HO-3, by contrast, covers the dwelling on an open-peril basis but limits personal property to named perils.