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Arkansas Adjuster Practice Exam

Description

a practice exam in preparation for the licensing exam
Anna Mattei
Quiz by Anna Mattei, updated more than 1 year ago
Anna Mattei
Created by Anna Mattei over 4 years ago
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Resource summary

Question 1

Question
Mark incurred $8,000. damage to his car in an accident. He received $8,000. from his insurance company and $4,000. from the other driver. By receiving a profit from the loss, Mark could be violation of:
Answer
  • the principle of indemnity
  • the principle of financial status.
  • the principle of financial restoration
  • the principle of profit and loss.

Question 2

Question
What is a reserve, in insurance terms?
Answer
  • The amount of revenue that the insurer sets aside to pay employee salaries.
  • A pool of collected premiums that the insurer sets aside to pay claims.
  • A group of policyholders who pay into the same pool of premiums.
  • A set of rules governing how the insurance industry should work.

Question 3

Question
The purpose of the principle of indemnity is:
Answer
  • To transfer the risk of financial loss from one party to another.
  • to transfer the right to collect a debt from one party to another.
  • to prevent an insured from making a profit on a loss.
  • to prevent an insurer from making a profit on a loss.

Question 4

Question
Greg plays trombone in his school band during football games. During a rally song in the stands on day. Greg annoys one of the opposing team's fans, who grabs his $400 trombone and hurls it down the bleachers, completely destroying it. Greg's insurance pays him $400 to replace the trombone, but then the opposing team's coach also offers to replace the instrument, at whatever the cost. So Greg orders a new 3,200 trombone and has the opposing team's athletic department absorb the cost. Which principle has Greg violated?
Answer
  • the principle of indemnity
  • the principle of consideration
  • the principle of legal purpose
  • the principle of opposing team

Question 5

Question
Which of the following refers to being restored to the financial condition you were in before a loss?
Answer
  • Estoppel
  • Subjugation
  • indemnification
  • restoration

Question 6

Question
Bobby just purchased an insurance policy for his home from xyz insurance. Which of the following would be a reason this policy may not be legally binding?
Answer
  • Bobby has an outstanding warrant for selling marijuana
  • Bobby has been diagnosed with schizophrenia
  • Bobby is only 19 years old
  • Bobby paid his first premium when he and his agent agreed on a policy, but he is waiting for the policy documents to be prepared so he can sign them.

Question 7

Question
Indemnification may include all of the following except:
Answer
  • payment for pain and suffering.
  • payment for repairs to property.
  • reimbursement for hotel costs.
  • reimbursement for rental car costs.

Question 8

Question
Which of the following is NOT a requirement for a legally binding contract?
Answer
  • There must be a legal purpose
  • There must be mutual consent
  • Both parties must bring something of value
  • It must be notarized document

Question 9

Question
The fee paid by the insured in exchange for an insurance policy is called a:
Answer
  • Premium
  • legal purpose
  • binder
  • contract

Question 10

Question
Which of the following best defines the principle of indemnity?
Answer
  • Both parties to an insurance contract must contribute something of value.
  • After a loss, the insured should be restored to his approximate financial condition before the loss.
  • In order to be legally binding, a contract must have agreement, consideration,competent parties, and legal purpose.
  • In exchange for a premium, the insurer grants peace of mind by reducing the insured's insecurity about the future.

Question 11

Question
Which one of the following is found on the declarations page of an insurance policy?
Answer
  • Declarations
  • Conditions
  • Exclusions
  • The name of the insured party.

Question 12

Question
In which section of an insurance policy might you find the following statement? "We, us, and our' refers to ABC insurance company.
Answer
  • Declarations
  • Conditions
  • Definitions
  • Exclusions

Question 13

Question
In which section of an insurance policy might you find the following statement? "Damage to insured property must be reported within 15 days of the damaging occurrence."
Answer
  • Conditions
  • Exclusions
  • Definitions
  • Declaration Page

Question 14

Question
Which section of an insurance policy is designed to OMIT certain risks from coverage?
Answer
  • Insurance agreement
  • Exclsions
  • Definitions
  • Coverage Forms

Question 15

Question
Which of the following would you find in the conditions section of an insurance policy?
Answer
  • The meaning of certain important words in the contract.
  • Policy limits.
  • The insured's duty after a loss.
  • Causes of loss that are not covered.

Question 16

Question
All of the following are typical exclusions in an insurance policy, EXCEPT:
Answer
  • nuclear hazards
  • explosion
  • flooding
  • earthquakes

Question 17

Question
All of the following pieces of information can be found in the Conditions section of an insurance policy, EXCEPT:
Answer
  • the insured's duties after loss.
  • anything the insured must do for coverage to remain in effect.
  • What the insured must do in the event of a lawsuit
  • causes of loss that are not covered.

Question 18

Question
Which of the following statements is true about an insurance policy?
Answer
  • The insured is obligated to the terms of the contract for the entire policy period.
  • It is transferable if the property is sold to another party.
  • The insured sets the terms of the policy.
  • It relies on the utmost good faith of both the insured and the insurer.

Question 19

Question
In an insurance policy, the summary of what the insurer will do in the even of a covered loss is called.
Answer
  • the dec page.
  • the insurance agreement.
  • the conditions section.
  • the definitions section.

Question 20

Question
In a ________________ , only one party is legally obligated to perform.
Answer
  • Unilateral contract
  • conditional contract
  • contract of adhesion
  • contract of utmost good faith

Question 21

Question
Insurance policies are unilateral contracts. This means:
Answer
  • they rely on the honesty of both parties
  • they depend on an unknown future event.
  • only one party has an obligation to perform.
  • ambiguities are settled in favor of the insured.

Question 22

Question
Which of the following is not a characteristic of insurance contracts?
Answer
  • Conditional
  • Unilateral
  • Universal
  • Aleatory

Question 23

Question
Which of the following best describes a Fraternal Benefit Society?
Answer
  • A fraternal benefit society is a for-profit provider of insurance.
  • A fraternal benefit society uses investors' money to pay claims.
  • A fraternal benefit society pays dividends to its stockholders.
  • A fraternal benefit society is a social organization
  • A fraternal benefit society is a social organization based around common interests and beliefs.

Question 24

Question
When an insurer buys insurance to reduce its exposure to loss, this called.
Answer
  • re-insurance
  • mitigation
  • loss reduction
  • co-insurance

Question 25

Question
Which of the following is NOT a characteristic of social insurance programs?
Answer
  • Social insurance programs involve mandatory participation.
  • Social insurance programs are for-profit programs.
  • The benefits of a social insurance program may be prescribed by federal law.
  • Social insurance programs are designed to meet the needs of the general public as a whole.

Question 26

Question
When an insurer buys insurance to reduce its exposure to loss, this is called.
Answer
  • re-insurance
  • mitigation
  • loss reduction
  • co-insurance

Question 27

Question
Frank purchases an automobile policy from publicly traded xyz insurance. He pays regular monthly premiums, and also purchases stock in xyz and receives dividends when the company turns a profit. From which type of company has Frank purchased insurance?
Answer
  • Re-insurer
  • Mutual insurer
  • Stock insurer
  • Reciprocal insurer

Question 28

Question
Xavier owns a small insurance company. Recently the company won a bid to insure a new housing development in Omaha, NE. His company can handle any claims that arise, but if a series of tornado were to tear through the area and destroy the entire development, Xavier's company would suffer financially. Which type of insurer could help Xavier's company protect itself the most from this potential loss?
Answer
  • A fraternal benefits society
  • A re-insurer
  • A stock insurer
  • A reciprocal insurance group

Question 29

Question
Cindy holds an insurance policy from Sine Nomine Insurance. This is not a publicly traded company, and Cindy can participate in the election of the board, receiving dividends if the company does well. Sine Nomine insurance could be best described as a:
Answer
  • Mutual insurance company
  • A risk retention group
  • fraternal benefits society
  • stock insurance company

Question 30

Question
Edward is a member of the Knights of Columbus, a religious group dedicated to voluntary service to the benefit of society. He also recently purchased a $100,000 life insurance policy from the organization. This was possible because the Knights of Columbus is:
Answer
  • a risk retention group
  • a mutual insurer
  • a fraternal benefit society
  • a reciprocal insurer

Question 31

Question
An insurer that adheres to the laws of a state but is located outside of that state is called a(n) _____
Answer
  • national
  • foreign
  • alien
  • domestic

Question 32

Question
Sure trust insurance was founded and operates in Texas. In Texas, Sure Trust is condsidered:
Answer
  • a domestic insurer
  • a state insurer
  • an alien insurer
  • a foreign insurer

Question 33

Question
A reciprocal insurer is:
Answer
  • a publicly traded insurance company owned by stockholders, which provide capital and participate in the insurer's profits and losses.
  • An insurance company that is owned by its policyholders, is not traded publicly, and is governed by a board of directors elected by the policyholders.
  • An unincorporated organization of subscribers that operates through an attorney-in-fact to provide insurance benefits for its member's.
  • A non-profit mutual aid organization that engages in charitable or benevolent activities and provides insurance to its members.

Question 34

Question
A captive insurance company:
Answer
  • exists solely to provide insurance for its parent company.
  • provides insurance that is designed to meet the needs of the general public.
  • provides insurance for insurers
  • operates through an attorney-in-fact to provide insurance benefits for its members.

Question 35

Question
An insurance company might consider any of the following a risk, EXCEPT:
Answer
  • a jewelry collection
  • an automobile
  • a high crime neighborhood.
  • a home

Question 36

Question
Which of the following would be considered an insurable risk?
Answer
  • The gold stored in Fort Knox
  • A high crime area
  • A riverbank
  • A squadron of police cars
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