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California Independent Adjuster License practice
test Questions and Correct Answers (Verified
Answers) Plus Rationales 2025
- What is the primary role of an independent adjuster in California? a. Represent only insurance companies b. Represent policyholders only c. Act as a third party to assess claims d. Sell insurance policies Independent adjusters serve as neutral third parties hired by insurers to investigate and evaluate insurance claims.
- Which California department oversees independent adjuster licensing? a. Department of Corporations b. Secretary of State c. California Department of Insurance (CDI) d. California State Board The California Department of Insurance regulates and licenses adjusters, ensuring compliance with insurance laws.
- To become licensed as an independent adjuster in California, you must:
a. Be a California resident b. Have a law degree c. Pass the California adjuster licensing exam d. Work for an insurance company Passing the state exam is a core requirement to ensure the applicant understands California laws and regulations.
- Which of the following is NOT required for California adjuster licensure? a. Fingerprinting b. Background check c. Bachelor’s degree d. Application through the CDI A bachelor's degree is not required; education level is not a barrier, but integrity and legal compliance are.
- What is the minimum age to apply for a California independent adjuster license? a. 18 b. 19 c. 18 years old d. 21 Applicants must be at least 18 years old to apply for a license in California.
- California requires adjusters to renew their licenses: a. Every year b. Every five years
Fraud or dishonest conduct can lead to license suspension or revocation. 10.The California Insurance Code defines an “adjuster” as someone who: a. Only investigates bodily injury claims b. Only works for public entities c. Investigates and negotiates insurance claims d. Issues insurance policies An adjuster evaluates, negotiates, and settles insurance claims on behalf of an insurer. 11.Which of the following best defines a "contract of adhesion"? a. A contract negotiable by both parties b. A take-it-or-leave-it contract from the insurer c. A verbal insurance agreement d. A contract between adjusters Insurance policies are contracts of adhesion; the insured must accept the terms as written by the insurer. 12.What is the consequence of adjusting claims without a license in California? a. A fine only b. Fines and possible criminal charges c. License granted retroactively d. Temporary license issuance Unlicensed activity can result in legal penalties, including fines and criminal prosecution. 13.Independent adjusters must notify the CDI of a change in address within:
a. 60 days b. 10 days c. 30 days d. 90 days Adjusters are required to update the CDI within 30 days of any address change. 14.What must an adjuster carry when working claims in the field? a. A notepad b. A driver’s license c. A copy of their license or license number d. A badge Proof of licensure must be available to show to insureds and others. 15.Which of the following is considered an ethical violation? a. Denying a claim with supporting evidence b. Misrepresenting facts to a claimant c. Referring a claimant to another insurer d. Delaying a response pending more evidence Misrepresentation is unethical and can lead to disciplinary action. 16.How many hours of continuing education are required for license renewal? a. 10 hours b. 15 hours c. 24 hours d. 30 hours California requires 24 hours of CE every two years for license renewal.
c. Acting legally d. Automatically granted immunity Exceeding the scope of licensure can result in legal and administrative penalties. 21.Which regulation governs claims settlement practices? a. Insurance Contract Act b. CDI Code of Ethics c. California Fair Claims Settlement Practices Regulations d. Uniform Claims Code These regulations ensure fair and timely claims handling. 22.Who is responsible for ensuring an adjuster is properly licensed? a. The claimant b. The insurer c. The Department of Finance d. The adjuster’s attorney The appointing insurer must ensure the adjuster has the proper credentials. 23.If a license lapses, an adjuster must: a. Wait a year to reapply b. Continue working c. Cease adjusting immediately d. Renew it within 90 days automatically A lapsed license invalidates the authority to act as an adjuster. 24.Which of the following is required in an adjuster’s file?
a. A marketing plan b. Notes and documentation of claim activity c. Claimant’s driver's license d. Profit/loss report Documentation of all actions and communications is essential for accountability. 25.A “reservation of rights” letter is: a. A denial b. A notice reserving the right to deny a claim later c. A threat of legal action d. A policy cancellation notice It informs the claimant the insurer is continuing to investigate but may later deny the claim. 26.What is the purpose of the Fair Claims Settlement Practices Regulations? a. To favor insurers b. To prolong investigations c. To promote prompt, fair, and equitable claim handling d. To delay payments to claimants These regulations are intended to protect consumers by requiring fair and efficient claims handling. 27.An adjuster must respond to a claimant’s inquiry within: a. 30 days b. 20 days
An adjuster must act honestly and in good faith while protecting the interests of the appointing insurer. 31.Which insurance line is typically excluded from the independent adjuster’s authority in California? a. Property b. Liability c. Life insurance d. Auto Life insurance is generally not handled by independent adjusters because it involves complex underwriting and beneficiary issues. 32.Which code contains California’s rules for adjusters? a. Business & Professions Code b. Labor Code c. Insurance Code d. Vehicle Code The California Insurance Code regulates licensing, conduct, and penalties related to insurance professionals. 33.Adjusters must maintain records of transactions for: a. 1 year b. 3 years c. 5 years d. 10 years
Adjusters must maintain records for at least five years for regulatory review and audits. 34.A licensee may be denied renewal for: a. Working overtime b. Changing address c. Failing to complete continuing education d. Adjusting commercial claims Continuing education is required for license renewal; failure to complete it may result in denial. 35.Which of the following best describes “material misrepresentation”? a. A typo in the report b. An intentional lie affecting claim outcome c. A formatting error d. A missing phone number Material misrepresentation is a deliberate false statement that impacts the claim's validity or value. 36.How soon must a claim be paid after acceptance of liability? a. 60 days b. 30 calendar days c. 10 days d. 15 business days After accepting liability, payment must be issued within 30 calendar days. 37.An adjuster is appointed by an insurer by submitting what to the CDI?
c. Have no liability d. Can explain it away Breach of confidentiality can result in license suspension or revocation. 41.A claim file must include which of the following? a. The claimant’s family history b. Documentation of all communications and decisions c. Details of other unrelated claims d. The adjuster’s resume Complete documentation ensures transparency and compliance. 42.Adjusters must avoid which type of conflict? a. Scheduling b. Pay scale c. Conflict of interest d. Volume of claims A conflict of interest can compromise an adjuster's neutrality and lead to penalties. 43.Which California law requires prompt, fair claims settlements? a. Ethics Code b. Insurance Contract Act c. Unfair Practices Act d. Claims and Benefits Regulation The Unfair Practices Act enforces regulations ensuring fair treatment of policyholders.
44.If a claimant submits false documents, the adjuster should: a. Ignore them b. Approve the claim c. Report potential fraud d. File the claim anyway Adjusters must report suspicious activity to the insurer and CDI Fraud Division. 45.Which of the following is legal for an adjuster? a. Referring claimants to attorneys for a fee b. Accepting gifts from vendors c. Promptly communicating with all parties d. Denying claims without cause Clear, timely communication is essential and legally required. 46.The term “proof of loss” refers to: a. A legal deposition b. The adjuster’s statement c. A sworn statement by the insured about the claim d. A court order Proof of loss documents the facts and amount of the insured's loss and supports the claim. 47.Who may revoke an adjuster's license? a. The insurer b. The claimant
Let me know if you'd like a printable version or a new set for a different state. You said: 51 - 100 ChatGPT said: Here are Questions 51– 100 of the California Independent Adjuster License practice test. Each question includes the correct answer in bold and a rationale in bold italics , following your format: 51.What is required if an adjuster changes their legal name? a. Notify the claimant b. Notify the police c. Notify the California Department of Insurance within 30 days d. Submit a new license application Legal name changes must be reported to the CDI within 30 days to maintain accurate records. 52.Which of the following would be a violation under the California Unfair Practices Act? a. Requesting a police report b. Offering unreasonably low settlements c. Reviewing policy terms with the insured d. Providing written claim status updates Offering unreasonably low settlements is considered an unfair and deceptive practice.
53.Which is the proper order of steps in claim handling? a. Payment → Inspection → Coverage analysis b. Denial → Investigation → Documentation c. Notice of claim → Investigation → Documentation → Resolution d. Resolution → Claim filed → Investigation This sequence ensures all claims are properly assessed and resolved in compliance with law. 54.What does the term “exclusion” mean in a policy? a. An additional benefit b. A loss that is not covered c. A deductible d. A payment to the insured Exclusions specify conditions or situations where coverage will not apply. 55.What is the term for a written amendment to a policy? a. Underwriting b. Endorsement c. Binder d. Certificate An endorsement is a written change to the terms of an existing policy. 56.An adjuster may legally work in California only if: a. The insurer approves verbally b. They pass an ethics course
Deductibles shift part of the loss cost to the insured before the insurer pays. 60.What does “bad faith” mean in insurance? a. Offering settlements b. Acting dishonestly or unfairly in claim handling c. Declaring fraud d. Reviewing claims Bad faith involves unfair, dishonest, or deceptive practices by insurers or adjusters. 61.If a license is revoked, the individual must: a. Apply to another state b. Stop all adjuster activity immediately c. Transfer to a public adjuster license d. Continue under supervision Revocation voids the legal right to act as an adjuster. 62.Who may inspect an adjuster's records? a. Claimants b. The adjuster’s attorney c. The California Department of Insurance d. Any insurer CDI has the authority to review adjuster records during investigations or audits. 63.What is the purpose of an insurance policy? a. Generate profit b. Transfer risk
c. Provide legal protection from losses d. Reduce taxes Insurance policies transfer financial risk from the insured to the insurer. 64.What is the function of reinsurance? a. Protects policyholders b. Increases adjuster authority c. Transfers risk from one insurer to another d. Prevents fraud Reinsurance spreads risk by allowing insurers to insure a portion of their own exposure. 65.Which of the following is NOT a type of claim report? a. Initial b. Summary judgment c. Interim d. Final Summary judgment is a legal term, not a type of claim report. 66.What should an adjuster do first upon receiving a claim assignment? a. Deny the claim b. Acknowledge the claim and review policy coverage c. Send a payment d. Close the file Proper claim handling starts with timely acknowledgment and policy review. 67.An adjuster falsifies a report. What can result?
