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Indiana Independent Adjuster License (P&C Lines) Exam
Questions and Correct Answers (Verified Answers) Plus
Rationales 2025
- What is the primary role of an independent adjuster in Indiana? a. Represent the insured b. Investigate and settle claims on behalf of insurers c. Act as an insurance underwriter d. Approve policy applications Independent adjusters work for insurers, not policyholders, to investigate and settle claims fairly.
- Which of the following best describes a "first-party claim"? a. A claim filed by someone injured by the insured b. A claim filed by the policyholder against their own insurance c. A claim filed by an insurer d. A claim filed against another person’s insurer First-party claims involve the insured seeking compensation directly from their own insurer.
- In Indiana, an independent adjuster license must be renewed how often?
a. Every year b. Every two years c. Every five years d. Every six months Indiana requires adjusters to renew their license biennially (every two years).
- What is an “actual cash value” (ACV) policy? a. Pays replacement cost only b. Pays face value of the policy c. Pays replacement cost minus depreciation d. Pays market value plus inflation ACV = Replacement Cost – Depreciation.
- What is the purpose of a reservation of rights letter? a. To deny a claim immediately b. To inform the insured the insurer may not cover a claim c. To settle a claim promptly d. To waive subrogation rights A reservation of rights letter notifies the insured that coverage might be denied after investigation.
- Which type of loss is NOT typically covered by a standard P&C policy? a. Fire b. Theft c. Intentional acts by the insured d. Vandalism
10.When is an adjuster required to provide a written status update to the insured? a. Never b. Once per claim c. As required by state regulation or company policy d. Only when the claim is denied Some states require periodic updates; companies often mandate communication to maintain transparency. 11.What is the main purpose of an insurance deductible? a. Increase the insurer’s liability b. Reduce small claims and discourage fraud c. Eliminate policy limits d. Transfer more risk to the insurer Deductibles require the insured to share in the cost of losses, discouraging minor claims. 12.What does the term “indemnity” mean in property and casualty insurance? a. To offer unlimited coverage b. To increase policy premiums c. To restore the insured to their original financial position d. To guarantee claim payment Indemnity means making the insured financially whole again—no profit, no loss. 13.Which of the following is an example of a moral hazard?
a. A building in a flood zone b. Forgetting to lock the car c. Lying on an insurance application d. Earthquake activity Moral hazards involve dishonest behavior that increases risk, such as fraud. 14.What document is most important to evaluate coverage? a. Police report b. Claim form c. Insurance policy d. Photo evidence The policy is the legal contract that outlines what is and isn’t covered. 15.What is the first step in the adjusting process? a. Negotiate settlement b. Issue payment c. Acknowledge the claim and investigate the loss d. Deny liability An adjuster must first acknowledge the claim and begin an investigation to determine facts. 16.A peril is best defined as: a. A condition that increases loss probability b. An excluded provision c. A cause of loss d. A policy clause
c. Value after depreciation d. Policy limit Replacement cost does not deduct depreciation and pays the cost to replace new for old. 21.Which coverage would pay if a tree falls and damages a neighbor's property? a. Collision b. Medical payments c. Liability coverage d. Comprehensive Liability coverage pays for damage the insured causes to others’ property. 22.An adjuster must act in: a. Their own interest b. The interest of the claimant c. Good faith d. Secrecy Adjusters must act in good faith, fairly and honestly, even if representing the insurer. 23.Which term refers to a condition that increases the chance of loss? a. Claim b. Loss
c. Hazard d. Insurable interest A hazard is anything that increases the likelihood or severity of a loss. 24.Which coverage is used to protect against losses from burglary? a. Collision b. Theft coverage c. Liability d. Uninsured motorist Theft or burglary coverage pays for stolen or vandalized property. 25.A homeowner’s policy typically excludes which of the following? a. Fire b. Lightning c. Earthquake d. Smoke Earthquake coverage must usually be added by endorsement. 26.What type of adjuster is hired directly by the claimant? a. Staff adjuster b. Public adjuster c. Independent adjuster d. Catastrophe adjuster Public adjusters represent the policyholder, not the insurance company. 27.The statute of limitations for filing suit on an insurance claim in Indiana is generally:
31.When can an insurer cancel a policy midterm in Indiana? a. For any reason b. For nonpayment of premium or material misrepresentation c. If a claim is filed d. At the request of the agent Indiana law allows cancellation midterm only for specific valid reasons. 32.What is depreciation? a. Appreciation of property b. Loss of value due to wear and age c. Additional premium d. Market speculation Depreciation is the decrease in value over time due to use or aging. 33.An adjuster must notify the Department of Insurance of a name or address change within: a. 90 days b. 30 days c. 10 days d. 6 months Indiana requires notification of changes within 10 days. 34.Which is NOT a duty of the insured after a loss? a. Prompt notice b. Cooperate with the investigation
c. Determine settlement value d. Protect the property from further damage The adjuster determines the value, not the insured. 35.A binder provides what? a. A refund b. Temporary coverage until a policy is issued c. Claim denial d. Reinsurance Binders offer temporary proof of insurance coverage. 36.What is a “proof of loss”? a. Adjuster’s report b. Payment summary c. Sworn statement detailing the claim d. Medical exam Proof of loss is a formal statement from the insured confirming facts and values. 37.Liability insurance pays: a. The policyholder b. A third party c. The agent d. The reinsurer Liability policies protect the insured from paying damages to others. 38.What is a “reservation of rights” notice used for?
Flood is typically excluded unless endorsed or written under NFIP. 42.When multiple policies apply, what clause determines who pays first? a. Indemnity clause b. Other insurance clause c. Appraisal clause d. Exclusion clause The “other insurance” clause helps prevent overpayment by coordinating between policies. 43.What is appraisal used for in claims? a. Determine coverage b. Resolve disputes about the value of loss c. Decide fault d. File suit The appraisal process is for resolving value disputes only, not coverage issues. 44.Who must sign a sworn proof of loss? a. Adjuster only b. Insured c. Agent d. Witness The insured swears to the truth of their loss details. 45.Which of the following is required to legally operate as an adjuster in Indiana?
a. Business degree b. Public notary certification c. Adjuster license d. Legal background You must be licensed to operate as an adjuster in Indiana. 46.What is salvage in property insurance? a. Reimbursement clause b. Damaged property insurer can sell to recover costs c. Fraudulent claim d. Subrogation Salvage lets insurers recover part of their payment by selling damaged goods. 47.A "reservation of rights" does what? a. Guarantees payment b. Reinstates a policy c. Allows investigation without waiving coverage defenses d. Cancels the claim It lets insurers maintain the option to deny a claim later. 48.An adjuster acting without a license is: a. Practicing within the law b. Only warned c. In violation of state insurance law d. Exempt if under training Indiana law requires licensure; violations may result in penalties.
a. Full claim is paid b. Claim is denied c. A partial payment is made based on coinsurance formula d. Deductible is waived If the insured carries less than the required percentage, payment is reduced proportionally. 53.Which of the following would be considered an insurable interest? a. A friend's vehicle b. Your own home c. A rental item you’ve returned d. A neighbor's dog You must stand to suffer a financial loss from damage to or loss of the insured item. 54.What is the main purpose of the conditions section in a policy? a. List covered perils b. Specify obligations of both parties c. Outline endorsements d. Determine replacement cost Conditions define responsibilities and duties of insurer and insured. 55.Which type of report would an adjuster write after inspecting damages? a. Application b. Underwriting memo
c. Field report or adjuster’s report d. Loss summary Field or adjuster’s reports document facts and opinions regarding the claim. 56.What is arbitration? a. Appeal process for the insurer b. Binding or non-binding resolution of disputes by a neutral third party c. A jury trial d. A court order Arbitration resolves disputes without court intervention, often required by the policy. 57.Which of the following is an “open peril” policy? a. Named peril b. Special form c. Basic form d. Limited form Special or “open peril” policies cover all risks except those excluded. 58.What does a claims-made liability policy cover? a. Losses occurring during the policy term b. Claims reported during the policy term c. Incidents before coverage d. All future losses Claims-made policies cover claims reported during the policy term, regardless of when the event occurred (within limits).
a. The insured b. The insurer c. Appraisers and an umpire (via appraisal clause) d. The agent The appraisal clause allows each side to hire an appraiser, with a neutral umpire deciding if they can't agree. 63.A fire damages a building. What kind of loss is this? a. Indirect b. Direct c. Consequential d. Remote A direct loss is physical damage resulting directly from a covered peril. 64.An adjuster may contact a third-party witness if: a. The insurer denies liability b. The claim is over $10, c. It helps clarify the facts of the claim d. Only the agent is present Adjusters can contact third-party witnesses during investigations. 65.When may an adjuster deny a claim? a. To reduce costs b. When the policy clearly excludes the loss c. If the insured has no deductible d. At any time
Adjusters must only deny claims for legally and contractually valid reasons. 66.Which section of a property policy lists coverage limits? a. Exclusions b. Conditions c. Declarations d. Definitions The declarations page provides the limits, premiums, and insured information. 67.What does “liable” mean in legal terms? a. Insured is exempt b. Legally responsible c. Possibly guilty d. Covered by policy Liability refers to legal responsibility for damages or injuries. 68.Which term refers to an agreement between the insured and insurer? a. Binder b. Policy c. Waiver d. Receipt The insurance policy is the contract that governs coverage terms. 69.A non-waiver agreement protects the insurer by: a. Cancelling the policy b. Allowing investigation without admitting liability
