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Practice test · 25 questions
Adjuster Math Practice Test (Part 1 of 2)
Most adjuster exams include a handful of calculation questions, and they are easy points once you know the formulas. Each question below gives every number you need and the explanation shows the full worked calculation.
Practice coinsurance penalties, the homeowners 80% replacement cost rule, depreciation and actual cash value, percentage deductibles, pro rata and excess other-insurance clauses, split limits with several claimants, and business income losses.
Questions
25
Suggested time
30 min
Difficulty mix
6 / 12 / 7
Passing target
70%
What these questions cover
Coinsurance penalty formula
Homeowners replacement cost settlement under the 80% rule
Depreciation, actual cash value and recoverable depreciation
Flat and percentage deductibles
Pro rata, contribution by equal shares and excess insurance
Split limits, business income and workers comp benefit math
A commercial building insured under ISO CP 00 10 10 12 has a value of $750,000 at the time of loss, and the Declarations show an 80% Coinsurance percentage. What is the minimum Limit of Insurance needed to avoid a coinsurance penalty?
Show answer and explanation
Correct answer: C. $600,000
Step 1 of the CP 00 10 coinsurance condition multiplies the value of the property at the time of loss by the coinsurance percentage: $750,000 x 80% = $600,000. Any limit of $600,000 or more avoids the penalty. $750,000 would insure to 100% of value, more than the condition requires, and $150,000 is only the 20% the insured is not required to carry.
Under ISO CP 00 10 10 12, a warehouse is valued at $400,000 at the time of loss, with a 90% Coinsurance percentage and a $360,000 Limit of Insurance. A covered fire causes a $50,000 loss, and the deductible is $2,500. How much will the insurer pay?
Show answer and explanation
Correct answer: A. $47,500
Required insurance is $400,000 x 90% = $360,000, and the limit carried is exactly $360,000, so no coinsurance penalty applies. The insurer pays the loss minus the deductible: $50,000 - $2,500 = $47,500. Multiplying the loss by 90% (giving $45,000 or $42,500) is a common error; the coinsurance percentage is applied to the property's value, not to the loss.
A retail building is valued at $500,000 at the time of loss. Its ISO CP 00 10 10 12 coverage has an 80% Coinsurance percentage, a $300,000 Limit of Insurance, and a $1,000 deductible. A covered windstorm causes a $100,000 loss. How much will the insurer pay?
Show answer and explanation
Correct answer: D. $74,000
Step 1: $500,000 x 80% = $400,000 required. Step 2: $300,000 / $400,000 = 0.75. Step 3: $100,000 x 0.75 = $75,000. Step 4: $75,000 - $1,000 = $74,000. The form applies the ratio to the loss before the deductible and then subtracts the deductible, so $74,250 (deductible taken first) is wrong. $59,000 measures the requirement at 100% of value instead of 80%.
One blanket Limit of Insurance of $648,000 covers two buildings valued at $300,000 and $500,000 under ISO CP 00 10 10 12, with a 90% Coinsurance percentage and a $1,000 deductible. A fire causes a $100,000 loss to the $300,000 building only. How much will the insurer pay?
Show answer and explanation
Correct answer: B. $89,000
When one limit applies to several items, coinsurance applies to the total of all property under that limit: ($300,000 + $500,000) x 90% = $720,000 required. $648,000 / $720,000 = 0.90, and $100,000 x 0.90 = $90,000, minus the $1,000 deductible = $89,000. Testing only the damaged building ($270,000 required) wrongly suggests no penalty and $99,000.
A factory valued at $600,000 at the time of loss is insured under ISO CP 00 10 10 12 for $360,000, with an 80% Coinsurance percentage and a $5,000 deductible. A covered explosion causes a $520,000 loss. How much will the insurer pay?
Show answer and explanation
Correct answer: A. $360,000
Required: $600,000 x 80% = $480,000. Ratio: $360,000 / $480,000 = 0.75. Then $520,000 x 0.75 = $390,000, minus the $5,000 deductible = $385,000. The form pays the Step 4 amount or the Limit of Insurance, whichever is less, so payment is capped at the $360,000 limit. The deductible is not subtracted from the limit, so $355,000 is wrong.
Under HO 00 03 05 11, Priya's home has a full replacement cost of $400,000 and a Coverage A limit of $300,000. Hail damages the roof: replacement cost $24,000, actual cash value $15,000. Repairs are complete and the deductible is $1,000. Applying the policy's 80% condition, how much does the insurer pay?
Show answer and explanation
Correct answer: C. $21,500
Priya carries $300,000, less than 80% of $400,000 ($320,000), so she receives the greater of ACV ($15,000) or $300,000 / $320,000 x $24,000 = $22,500. The deductible then applies to the loss payable: $22,500 - $1,000 = $21,500. $17,000 wrongly divides by 100% of replacement cost, and $23,000 ignores the underinsurance.
Under HO 00 03 05 11, Marcus insures his home for $250,000, though its full replacement cost is $500,000. A covered fire damages the kitchen: replacement cost $40,000, actual cash value $30,000. Repairs are complete and the deductible is $1,000. Applying the 80% condition, how much is paid?
Show answer and explanation
Correct answer: B. $29,000
80% of $500,000 is $400,000, and Marcus carries only $250,000. The proportional amount is $250,000 / $400,000 x $40,000 = $25,000, but the policy pays the greater of that amount or ACV, so the $30,000 ACV controls. After the $1,000 deductible he receives $29,000. $24,000 skips the greater-of comparison, and $19,000 uses 100% of replacement cost.
Elena's HO 00 03 05 11 policy meets the 80% replacement cost condition. Windstorm destroys her roof, which costs $18,000 to replace. The roof was 12 years old with a 30-year expected life (straight-line depreciation). The deductible is $1,000 and repairs have not started. How much will the insurer pay now?
Show answer and explanation
Correct answer: D. $9,800
Depreciation is 12 / 30 = 40% of $18,000, or $7,200, so ACV is $10,800. Because the repair cost exceeds $2,500, the HO-3 pays no more than ACV until repair or replacement is complete: $10,800 - $1,000 = $9,800. The $7,200 of depreciation is held back as recoverable depreciation, payable once the roof is replaced. $17,000 is due only after completion.
Elena's HO 00 03 05 11 policy meets the 80% condition. Her roof claim (replacement estimate $18,000, $1,000 deductible) was first settled at actual cash value with a $9,800 payment. She then completes the replacement at an actual cost of $17,500. How much additional payment does the insurer owe?
Show answer and explanation
Correct answer: D. $6,700
After repairs, the HO-3 pays the least of the limit, the replacement cost of the damaged part, or the amount actually spent, which here is $17,500. Total due is $17,500 - $1,000 = $16,500; subtracting the $9,800 already paid leaves $6,700. Releasing the full $7,200 holdback would pay more than she spent, and $7,700 forgets the deductible.
Under HO 00 03 05 11, replacement cost is paid before repairs only if the repair cost is less than both 5% of the building's insurance and $2,500. Omar's Coverage A is $320,000 and meets the 80% condition. Storm damage to siding costs $2,200 to replace (ACV $1,400), and the deductible is $500. How much is paid before repairs?
Show answer and explanation
Correct answer: A. $1,700
5% of $320,000 is $16,000. The $2,200 repair cost is below both $16,000 and $2,500, so the small-loss exception applies and the insurer settles at replacement cost even before repairs: $2,200 - $500 = $1,700. $900 (ACV minus the deductible) would apply only if the repair cost met or exceeded either threshold.
A covered water heater would cost $1,500 to replace with one of like kind and quality. It is 12 years old and has an expected useful life of 15 years. Using straight-line depreciation, what is its actual cash value?
Show answer and explanation
Correct answer: C. $300
Straight-line depreciation is age divided by expected life: 12 / 15 = 80%. Depreciation is $1,500 x 80% = $1,200, and ACV equals replacement cost minus depreciation: $1,500 - $1,200 = $300. $1,200 is the depreciation, not the ACV, and $1,400 subtracts only one year of depreciation ($100).
Under HO 00 03 05 11 (80% condition met), a pipe bursts in Darnell's home. Drywall and cabinet repairs cost $8,000 and are complete. Wall-to-wall carpet costing $6,000 to replace is 8 years old and depreciates 10% per year. The deductible is $1,000. What is the total payment?
Show answer and explanation
Correct answer: B. $8,200
Drywall and cabinets are building property paid at replacement cost: $8,000. The HO-3 settles carpeting at actual cash value even when attached to the building. Depreciation is 8 x 10% = 80%, so carpet ACV is $6,000 x 20% = $1,200. Then $9,200 minus the $1,000 deductible = $8,200. $13,000 pays the carpet at replacement cost, and $11,800 confuses 80% depreciation with ACV.
Mei's television is stolen. Her HO 00 03 05 11 policy has no replacement cost endorsement for personal property. The TV would cost $1,600 to replace, has an 8-year expected life, and was 3 years old. She buys a new one for $1,600. Disregarding the deductible, what total will the insurer pay for the TV?
Show answer and explanation
Correct answer: A. $1,000
Unendorsed HO-3 personal property is settled at actual cash value. Depreciation is 3 / 8 = 37.5% of $1,600, or $600, so ACV is $1,000. Because the settlement basis is ACV, the $600 of depreciation is non-recoverable even after Mei replaces the TV, so the total stays $1,000. $1,600 treats depreciation as recoverable, and $600 is the depreciation itself.
After a covered collision under PP 00 01 09 18, Luis's repair estimate is $4,200. It includes a $240 new tire replacing one that was 75% worn, and the insurer will not pay for betterment. His collision deductible is $500. How much will the insurer pay?
Show answer and explanation
Correct answer: D. $3,520
The PAP does not pay for the amount of betterment when a repair results in better than like kind or quality. Luis had used 75% of the tire, so betterment is $240 x 75% = $180. Payment is $4,200 - $180 - $500 = $3,520. $3,700 ignores betterment, $3,460 removes the entire tire, and $4,020 forgets the deductible.
Sofia's homeowners policy has a Coverage A limit of $350,000, a $1,000 all-other-perils deductible, and a hurricane deductible equal to 2% of Coverage A. A hurricane causes $25,000 of covered damage to the dwelling, her first hurricane loss of the year. How much will the insurer pay?
Show answer and explanation
Correct answer: C. $18,000
A percentage deductible is based on the Coverage A limit, not on the size of the loss: 2% x $350,000 = $7,000. The hurricane deductible replaces the all-other-perils deductible for this loss: $25,000 - $7,000 = $18,000. $24,500 takes 2% of the loss, $24,000 uses the $1,000 deductible, and $17,000 stacks both deductibles.
A Florida homeowners policy has Coverage A of $300,000, a 2% calendar-year hurricane deductible, and a $1,000 all-other-perils deductible. An August hurricane causes a reported $4,500 loss. An October hurricane causes a $12,000 loss. Applying the largest deductible Fla. Stat. 627.701(5) allows, how much is paid for the October loss?
Show answer and explanation
Correct answer: B. $10,500
The hurricane deductible is 2% x $300,000 = $6,000, applied on a calendar-year basis. The August loss used $4,500, leaving $1,500. For a later hurricane in the same year, the insurer may apply the greater of the remaining hurricane deductible ($1,500) or the all-other-perils deductible ($1,000): $12,000 - $1,500 = $10,500. Charging the full $6,000 again is wrong.
Under HO 00 03 05 11, a single covered loss of $12,000 triggers two deductibles shown in Hannah's policy: $1,000 and $2,500. How much will the insurer pay?
Show answer and explanation
Correct answer: B. $9,500
The HO-3 deductible provision states that if two or more deductibles under the policy apply to a loss, only the highest deductible amount applies. Payment is $12,000 - $2,500 = $9,500. Subtracting both deductibles ($8,500) or using the lower one ($11,000) misapplies the rule, and averaging them ($10,250) has no basis in the policy.
Jamal's homeowners policy has Coverage A of $280,000 and a windstorm or hail deductible of 1% of Coverage A per occurrence. One hailstorm causes $9,500 of roof damage to the dwelling and $1,500 of damage to a detached garage covered under Coverage B. How much will the insurer pay?
Show answer and explanation
Correct answer: C. $8,200
The deductible is 1% x $280,000 = $2,800 and applies once to the total of all loss payable from the occurrence: ($9,500 + $1,500) - $2,800 = $8,200. Subtracting $2,800 separately from the dwelling and the garage leaves only $6,700, which wrongly applies two deductibles. $10,890 takes 1% of the loss instead of 1% of Coverage A.
A policy has a $500 disappearing deductible. For losses between $500 and $2,500, the insurer pays 125% of the amount of loss above $500, so the deductible vanishes at $2,500. A covered loss totals $1,700. How much will the insurer pay?
Show answer and explanation
Correct answer: A. $1,500
The amount above the deductible is $1,700 - $500 = $1,200, and the insurer pays 125% of it: $1,200 x 1.25 = $1,500, so the insured retains only $200. A disappearing deductible shrinks as the loss grows; at $2,500, 125% x $2,000 = $2,500 and nothing is retained. $1,200 treats it as a straight deductible.
Under ISO CP 00 10 10 12, one fire damages Building 1 ($40,000 loss), Building 2 ($30,000 loss), and business personal property at Building 2 ($12,000 loss). Each item has its own adequate Limit of Insurance, and no coinsurance penalty applies. The deductible is $2,500. What is the total payment?
Show answer and explanation
Correct answer: D. $79,500
The CP 00 10 deductible is applied only once per occurrence, even when several items with separate limits are damaged. The losses total $40,000 + $30,000 + $12,000 = $82,000, and all are within their limits, so one $2,500 deductible leaves $79,500. Subtracting the deductible from each of the three items ($74,500) or from two of them ($77,000) is the classic mistake.
A CGL policy carries a $2,500 bodily injury deductible on a per claim basis (CG 03 00). One occurrence injures three people, with damages of $10,000, $1,500, and $6,000. The insurer settles all three and is reimbursed by the insured for the deductible amounts. What is the insurer's net cost for damages?
Show answer and explanation
Correct answer: A. $11,000
On a per claim basis, the deductible applies to all damages sustained by any one person. The insured bears $2,500 + $1,500 (the whole small claim) + $2,500 = $6,500, so the insurer's net cost is $17,500 - $6,500 = $11,000. A per occurrence deductible would apply only once ($15,000). $10,000 wrongly charges a full $2,500 against the $1,500 claim.
A dwelling is covered by two HO 00 03 05 11 policies: Policy A with a $200,000 dwelling limit and Policy B with $300,000. A covered $50,000 dwelling loss occurs. Under the Section I Other Insurance condition, and disregarding deductibles, how much does Policy A pay?
Show answer and explanation
Correct answer: D. $20,000
Under the HO-3 Section I Other Insurance condition, each insurer pays the proportion of the loss that its limit bears to the total insurance covering the loss. Policy A: $200,000 / $500,000 = 40% x $50,000 = $20,000, and Policy B pays $30,000. Splitting the loss equally ($25,000) is not the homeowners method, and $50,000 would pay the loss twice.
Other insurance and liability limits · Challenging
Two primary CGL policies (CG 00 01 04 13) cover the same occurrence, and both permit contribution by equal shares. Insurer A's applicable limit is $500,000 and Insurer B's is $1,000,000. The covered judgment is $1,200,000. How much does Insurer B pay?
Show answer and explanation
Correct answer: B. $700,000
Under equal shares, each insurer contributes equal amounts until it has paid its limit or the loss is paid. Each pays $500,000, which exhausts Insurer A; the remaining $200,000 comes from Insurer B, for $700,000. $600,000 splits evenly while ignoring A's limit, and $800,000 is contribution by limits, used only when some other policy does not permit equal shares.
Reference: ISO CG 00 01 04 13, Section IV Conditions, 4. Other Insurance, c. Method Of Sharing
Other insurance and liability limits · Application
Aisha borrows a friend's car with permission. The friend's PAP (PP 00 01 09 18) has limits of 50/100/25; Aisha's own PAP has 100/300/100. She causes an accident injuring one person, who recovers $80,000 in bodily injury damages. How much does Aisha's insurer pay?
Show answer and explanation
Correct answer: C. $30,000
The owner's policy covers its own car as primary and pays its $50,000 per person limit. Aisha's PAP covers a vehicle she does not own on an excess basis, so it pays the remaining $80,000 - $50,000 = $30,000. $53,333 applies the pro rata method (100/150), which the PAP uses for other insurance on owned vehicles, and $40,000 splits the loss equally.
Other insurance and liability limits · Application
Carlos has auto liability limits of 50/100/25. He causes a crash injuring three people, with bodily injury damages of $65,000, $45,000, and $20,000, plus $28,000 of damage to another car. What is the most his insurer will pay in total?
Show answer and explanation
Correct answer: C. $125,000
Each person is capped at $50,000, so the bodily injury claims count as $50,000 + $45,000 + $20,000 = $115,000, but the $100,000 per accident limit caps all bodily injury at $100,000. Property damage is capped at $25,000. Total: $100,000 + $25,000 = $125,000. $140,000 ignores the per accident cap, and $128,000 ignores the property damage cap.
Pick an answer and the correct choice appears with an explanation and the policy form, statute or FEMA document it comes from. Difficulty is labeled on each question: recall items test a definition, application items put the rule into a short claim scenario, and challenging items combine two rules or require a calculation.
Aim for at least 80% before moving on, since the real exam mixes these topics with state law under time pressure. When you are consistently above that line, take a full timed exam or the version for your state: Texas or Florida 6-20.