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Michigan Public Adjuster Practice Exam

20 exam-style questions drawn from the same bank as our full Michigan Public Adjuster course (Michigan Public Adjuster — Exam Prep). Answer all 20, then grade yourself — most state exams require 70% to pass. Explanations for every question are part of the full course.

1. Which statement correctly distinguishes salvage from abandonment?
Both allow the insured to force damaged property on the insurerSalvage is the insurer taking property it has paid for; abandonment is barredAbandonment lets the insurer take property it paid for; salvage does notSalvage is barred by the policy, while abandonment is an insurer right
2. Non recoverable depreciation is depreciation that:
The policy never pays back, typically where the item settles on valueApplies only to components whose useful life has not yet expiredThe insurer must waive whenever repairs are completed on scheduleIs released to the insured once the repair work is proven complete
3. After the insurer proves an exclusion applies, who bears the burden of proving that an exception to that exclusion (such as an ensuing-loss provision) restores coverage?
Both partiesThe courtThe insurerThe insured
4. A carrier defended and paid on a claim for months with full knowledge of a policy defense, then asserted the defense. Under the widely followed general rule, waiver and estoppel in this situation can:
Both forfeit defenses and create entirely new coverage under the policyApply only if the insured proves the carrier acted with intent to deceiveForfeit the carrier's defense, but generally cannot create coverage the policy never providedNever affect the carrier's position once a reservation of rights letter exists in the file
5. The appraisal condition in a standard property policy is available to resolve a dispute about:
The amount of loss, where the parties disagree on scope or priceWhether an exclusion applies to the reported cause of the lossWhether the insured breached a policy condition after the lossWhether the insurer handled the claim in accordance with model rules
6. The short paragraph in a policy that states, in substance, "we will pay" for direct physical loss to covered property is the:
Declarations pageForms scheduleConditions sectionInsuring agreement
7. The extended business income provision:
Continues coverage for a stated window after the business reopens while revenue rebuildsPays out for a set period of time before the covered loss has even occurred yetApplies solely to civil authority orders and to nothing else at all on the formAutomatically doubles the policy's stated business income coverage limit after a loss
8. The 'property removed' additional coverage protects property removed from a premises endangered by a covered peril for how long?
10 daysUp to 30 daysThe full policy term90 days
9. An insured pays a $1,200 annual premium and later collects a $150,000 fire loss payment. Another insured pays premiums for 20 years and collects nothing. This unequal exchange dependent on an uncertain event illustrates which contract characteristic?
AdhesiveUnilateralConditionalAleatory
10. The burden of proving that an exclusion applies rests on:
The appraiser or the umpire appointed under the policy conditionsThe insurer, which is asserting the exclusion as its defenseWhichever party first raises the exclusion in written correspondenceThe insured, who must show the loss is not one that is excluded
11. Line item estimating develops cost by:
Rolling the components together into a composite cost per unit of workPricing each task by unit of measure, quantity, and a unit priceApplying a cost per square foot to the area of the whole structureAdjusting the prior settlement on similar property for regional inflation
12. Because an insurance policy is a contract of adhesion, the most important legal consequence for a public adjuster arguing a coverage position is that:
The policy is unenforceable unless both parties initialed each exclusionAmbiguities in the policy are construed against the insurer as drafterThe insurer must negotiate any term the insured objects to in writingThe insured may cancel the contract at any time without penalty
13. A homeowners form excludes loss caused by flood and by earth movement. These are examples of which type of exclusion?
Cause-based, a peril is carved outConduct-based, specified conduct is carved outProperty-based, a category of property is carved outCondition-based, a procedural duty was breached
14. Reserving is described as a solvency obligation because:
Regulators require carriers to hold adequate reserves against known claimsReserves fix the maximum amount the carrier may pay out on the claimReserves are deposited with a state guaranty fund pending settlementReserves must equal the policy limit until coverage has been confirmed
15. Instead of a coinsurance clause, the ISO BOP uses:
No insurance-to-value mechanism of any kind, so any limit the insured picks pays in fullAn insurance-to-value provision requiring limits at least 80% of value for full replacement costA flat ten-percent underinsurance penalty applied uniformly to every covered property lossAn agreed value schedule that the insured and carrier renegotiate at each annual renewal
16. The scope of loss is:
The itemized description of what was damaged and what restoring it requiresThe list of policy provisions that apply to the loss that was reportedThe portion of the structure the insurer has agreed to inspect in personThe single dollar figure the insured demands from the insurer to settle
17. After a carrier pays its insured for a loss caused by a negligent third party, subrogation allows the carrier to:
Demand the insured sue the wrongdoer on the carrier's behalfCancel the policy retroactively to the date of lossRecover its payment from the insured if the claim later proves excessiveStep into the insured's shoes and pursue the wrongdoer to the extent of its payment
18. Why is a large manufacturer not written on a BOP?
Large manufacturers simply cannot buy property insurance of any kind in the standard admitted market and must use surplus linesThe businessowners program flatly excludes all manufacturing machinery from covered property, so no plant of any kind can be written on itState insurance law reserves the businessowners policy exclusively for retail-class businesses and bars any manufacturer from itThe BOP program restricts eligibility by size, class, and hazard level; large or high-hazard operations belong on a commercial package
19. The initial or field report is filed after the first contact and inspection, and its most important function is to:
Document the release obtained at the conclusion of the claimRecord the full negotiation history of the settlement reachedProvide the preliminary picture and the reserve recommendationReport the final salvage and subrogation disposition of the loss
20. With respect to the carrier's reserve on a claim, a public adjuster may properly:
Demand that the carrier disclose the posted reserve and then raise itSupply documented facts early that make an adequate reserve unavoidableSet an independent reserve figure the carrier must adopt on requestTreat the reserve, once it becomes known, as the carrier's binding offer

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