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TENNESSEE ALL LINES ADJUSTER
PRACTICE EXAM QUESTIONS AND
CORRECT ANSWERS (VERIFIED
ANSWERS) PLUS RATIONALES 2025
- What is the primary purpose of an insurance adjuster? A. To determine underwriting risk B. To investigate and settle insurance claims C. To increase policy premiums D. To market insurance policies An adjuster’s core duty is to evaluate and settle claims on behalf of the insurer to ensure proper payment according to the policy.
- Which of the following is considered a first-party claim? A. A liability claim filed by a third party B. A claim filed by someone who is not the policyholder C. A claim filed by the insured against their own policy D. A subrogation claim
First-party claims are made by the insured for losses covered under their own insurance policy.
- What is the standard statute of limitations for filing a property claim in Tennessee? A. 6 months B. 1 year C. 2 years D. 4 years Tennessee law allows a 2-year statute of limitations for property claims, unless otherwise stated in the policy.
- A non-waiver agreement is used by insurers to: A. Deny coverage B. Preserve their rights while investigating a claim C. Approve immediate settlement D. Increase policy limits This agreement protects the insurer’s rights to later deny coverage, even if they begin to investigate the loss.
- Which type of adjuster is employed directly by an insurance company? A. Public adjuster B. Staff adjuster C. Independent adjuster D. Catastrophe adjuster Staff adjusters are salaried employees working exclusively for one insurance company.
- What coverage would apply to damage caused by an electrical fire in the insured’s home? A. General liability B. Dwelling coverage (Coverage A) C. Personal property coverage D. Medical payments Dwelling coverage protects the structure itself, including damage caused by covered perils like fire. 10.In a claims investigation, which of the following is most important? A. The premium paid by the insured B. The policy provisions and exclusions C. The agent’s recommendation D. The insured’s opinion Claims are settled based on the terms, coverage, and exclusions in the policy language. 11.A tornado damages a home and neighboring properties. This event is considered: A. A hazard B. A loss C. An occurrence D. An exposure An occurrence is an event that results in a covered loss, including natural disasters.
12.Which of the following policies covers indirect losses? A. Business interruption insurance B. Inland marine insurance C. Dwelling policy D. Surety bond Business interruption covers lost income and operating expenses following a direct physical loss. 13.A written amendment used to change the terms of an insurance policy is called: A. A binder B. A rider C. An endorsement D. A waiver An endorsement modifies the terms, coverage, or conditions of the original policy. 14.What is the purpose of an adjuster's initial inspection? A. Estimate salvage value B. Document underwriting risk C. Verify the cause and extent of the damage D. Adjust premiums Initial inspections are key to determining the validity and scope of the claim. 15.A public adjuster represents: A. The policyholder
Most policies have prompt notice requirements; delay can lead to claim denial. 18.The purpose of the declarations page is to: A. Outline exclusions B. Provide definitions C. Summarize policy specifics like coverage, limits, and premiums D. Detail the claims process The declarations page is essentially the summary of the policy information. 19.Which of the following would be excluded under a standard homeowner's policy? A. Fire B. Theft C. Hail D. Earthquake Earthquake is typically excluded and requires a separate endorsement. 20.The process of legally transferring the right to recover damages to the insurer is: A. Arbitration B. Subrogation C. Indemnification D. Estoppel Subrogation allows the insurer to step into the insured’s shoes to seek recovery.
21.Which of the following best defines indemnity? A. Payment of more than the loss B. Guaranteed profit after a claim C. Restoration to the same financial position as before the loss D. Transfer of risk to another party Indemnity ensures the insured is made whole but not enriched. 22.A windstorm damages only the roof. Under a DP-1 Basic Dwelling Policy, what type of coverage applies? A. Named peril coverage B. Open peril coverage C. Comprehensive coverage D. Exclusionary coverage DP-1 covers only perils specifically named, like fire, windstorm, and hail. 23.What type of bond guarantees that a person will perform their duties honestly and faithfully? A. Contract bond B. License bond C. Fidelity bond D. Bid bond Fidelity bonds protect against employee dishonesty and misconduct. 24.In a liability policy, which part obligates the insurer to defend the insured? A. Conditions B. Exclusions
28.Which of the following best describes "proximate cause"? A. The most recent cause B. The primary cause that sets the event chain into motion C. An unrelated contributing factor D. The last cause before the loss Proximate cause is the first event in a sequence that results in the loss. 29.What is a deductible? A. Payment to the agent B. The amount the insured must pay before insurance applies C. The policy fee D. The total coverage limit A deductible reduces the insurer’s payout and encourages loss prevention. 30.What is a peril? A. The cause of a loss B. A type of exclusion C. A condition D. The deductible amount Perils are events like fire, theft, or hail that cause a covered loss. 31.A policy that covers all perils except those specifically excluded is known as: A. Basic form B. Broad form C. Special form (open perils) D. Named perils form
Special form coverage provides broader protection by covering all perils unless excluded. 32.When does the appraisal clause in a policy apply? A. To determine if a loss is covered B. To resolve disputes over the amount of a covered loss C. To handle liability claims D. To issue subrogation Appraisal clauses help resolve disagreements over loss value without litigation. 33.If an adjuster fails to treat all parties fairly, they violate: A. The policy limits B. Unfair Claims Settlement Practices Act C. Tort reform D. Subrogation rules The act outlines ethical and procedural expectations for fair claim handling. 34.Under liability insurance, which coverage pays for legal defense costs? A. Supplementary payments B. Medical payments C. Collision coverage D. Excess coverage Supplementary payments cover defense costs, even beyond policy limits in many cases.
D. A liability waiver To insure something, the policyholder must face financial loss if it’s damaged. 39.The term "proof of loss" refers to: A. Premium billing B. A sworn statement by the insured detailing the loss C. An estimate from a contractor D. A settlement letter This document is used by the insurer to evaluate and process a claim. 40.Which of the following best represents comparative negligence? A. One party is 100% at fault B. No party is liable C. Each party shares fault based on their contribution to the loss D. The at-fault party avoids all responsibility Comparative negligence allocates damages according to the degree of fault. 41.Which Tennessee authority enforces insurance laws? A. State Supreme Court B. Governor’s office C. Tennessee Department of Commerce and Insurance D. U.S. Department of Insurance This state agency regulates licensing, compliance, and insurance practices.
42.What type of property policy provides the broadest coverage? A. DP- 1 B. HO- 2 C. HO- 5 D. HO- 8 HO-5 offers comprehensive coverage for both the dwelling and personal property. 43.What must an adjuster do before discussing a claim with a third party? A. Deny the claim B. Take a recorded statement C. Obtain a signed authorization from the insured D. Issue the payment Adjusters must respect confidentiality and get consent before sharing claim info. 44.When can an insurer cancel a policy mid-term in Tennessee? A. Never B. For nonpayment of premium or material misrepresentation C. If a claim is filed D. Only with court approval Tennessee law allows cancellation for specific legal reasons like fraud or nonpayment. 45.Which part of the policy lists perils not covered? A. Declarations B. Exclusions
49.What policy condition requires the insured to take reasonable steps to prevent further loss? A. Arbitration clause B. Duties after loss C. Coinsurance clause D. Loss payable clause The insured must mitigate damages and cooperate during the claim. 50.The purpose of coinsurance in a property policy is to: A. Encourage policyholders to insure property to value B. Increase premiums C. Reduce deductible D. Expand exclusions Coinsurance penalties apply if the insured underinsures their property.
