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AZ state law · part 2 of 2
Arizona Adjuster Practice Test: Arizona law, Part 2
15 more Arizona law questions for the Arizona Adjuster exam. Every explanation cites the statute or rule it is based on, so you can read the source when a rule surprises you. Start with part 1 on the main Arizona adjuster page if you have not done it yet.
Subtopics in this part: Adjuster conduct, Claim acknowledgment deadlines, Claim decision deadlines, Claim investigation deadlines, Notice of expiring time limits, Auto total loss settlement, Unfair claim settlement practices, Timely payment of claims, Insurance fraud, Auto liability minimums, UM and UIM coverage, Guaranty fund.
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Adjuster conduct · Application
A settlement check on a fire claim is payable to the insured, the mortgage company and the insured's licensed adjuster. The insured is out of state. Under A.R.S. 20-321.02(D), may the adjuster sign the insured's name to deposit it?
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Correct answer: D. No, the insured must personally endorse and sign it
A.R.S. 20-321.02(D) prohibits an adjuster from endorsing payment instruments issued to an insured on a claim without the insured's direct endorsement and signature. Phone permission, a contract clause or another payee's endorsement does not meet that standard. The check has to reach the insured for a personal endorsement before the funds can be deposited.
An insurer's agent receives notice of a new auto claim on Monday, March 2, 2026. No payment will be made soon, and no holidays fall in the period. Under R20-6-801(E)(1), by what date must the insurer acknowledge the claim?
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Correct answer: C. March 16, 2026
R20-6-801(E)(1) requires an insurer to acknowledge a claim within 10 working days after notification unless it pays within that time, and notice to the insurer's agent counts as notice to the insurer. Counting only weekdays after Monday, March 2 gives Monday, March 16. March 12 counts 10 calendar days, and April 1 reflects the 30-day investigation standard instead.
Notice of a homeowners claim reached the insurer on June 1. Proofs of loss arrived on June 10, and within 15 working days the insurer told the insured it needed more time. Under R20-6-801(G)(1)(b), when must it send status letters if the investigation stays open?
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Correct answer: B. On July 16, and every 45 days after that
R20-6-801(G)(1)(a) and (b) require an insurer to accept or deny within 15 working days after receiving properly executed proofs of loss, or within that time to explain why it needs more time. If the investigation remains incomplete, it must write to the claimant 45 days from the date of the initial notification and every 45 days thereafter, so letters are due July 16 and then August 30.
Under R20-6-801(F), how long does an Arizona insurer have to complete its investigation of a claim, unless the investigation cannot reasonably be completed in that time?
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Correct answer: C. 30 days after notification
R20-6-801(F) requires every insurer to complete its investigation within 30 days after notification of a claim unless it cannot reasonably be done in that time. The 10 working day figure is the acknowledgment deadline, 15 working days is the time to answer a DIFI inquiry or to accept or deny after proofs of loss, and 45 days is the interval for status letters.
An insurer is negotiating directly with Mateo, an unrepresented third-party claimant injured by its insured, and the statute of limitations on his claim is approaching. Under R20-6-801(G)(4), when must the insurer give Mateo written notice that the time limit may expire?
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Correct answer: C. At least 60 days before the limit expires
R20-6-801(G)(4) bars an insurer from continuing settlement negotiations with an unrepresented claimant, until a statute of limitations or policy time limit may affect the claimant's rights, without written notice that the limit may be expiring. The notice is due 30 days ahead for first-party claimants and 60 days ahead for third-party claimants. Mateo is a third-party claimant, so 60 days applies.
Nadia's 2019 pickup is a total loss under a policy that settles on actual cash value. No comparable truck is for sale in her local market, and the insurer elects a cash settlement. Under R20-6-801(H)(1), how may it set the amount?
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Correct answer: A. Use one of two or more quotes from qualified local dealers
R20-6-801(H)(1)(b) bases a cash settlement on the actual cost, less any deductible, to buy a comparable vehicle, including applicable taxes, license fees and transfer fees. When no comparable vehicle is available locally, the cost may be set by one of two or more quotations from qualified dealers in the local market area. Leaving taxes and fees to the insured, or using distant listings, does not comply.
Which statement about Arizona's unfair claim settlement practices statute, A.R.S. 20-461, is correct?
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Correct answer: C. It reaches acts done often enough to show a general business practice
A.R.S. 20-461(A) says a person shall not commit the listed acts with such frequency as to indicate a general business practice. Subsection D states that the section creates no private right of action and provides solely an administrative remedy to the Director. It applies to any person, including adjusters, and specific deadlines come from rule R20-6-801, not from a flat payment rule in the statute.
An insurer receives an acceptable proof of loss with all information needed to decide Ruth's first-party property claim. It does not deny the claim and pays it 50 days later. Under A.R.S. 20-462, what does the insurer owe besides the claim amount?
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Correct answer: B. Interest at the legal rate from claim receipt
A.R.S. 20-462(A) requires interest at the legal rate on a first-party claim not paid within 30 days after the insurer receives an acceptable proof of loss containing all information needed to decide it. The interest runs from the date the claim was received, not from day 31. Claims denied in good faith within those 30 days are exempt, and the statute sets no flat 10% penalty.
Under A.R.S. 20-466.03, what must every claim form that an insurer provides for reporting a claim include?
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Correct answer: A. A false-claim penalty warning in 12-point type
A.R.S. 20-466.03 requires claim forms to include, in at least 12-point type, a statement that Arizona law requires the notice and that any person who knowingly presents a false or fraudulent claim for payment of a loss is subject to criminal and civil penalties. The statute does not require license numbers, interest notices or DIFI phone numbers on the form.
While handling an auto theft claim, an adjuster finds strong evidence that the insured staged the theft. Under A.R.S. 20-466(G), what should the insurer do with this information?
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Correct answer: C. Send it to the Director on the form the Director prescribes
A.R.S. 20-466(G) requires an insurer that believes a fraudulent claim has been or is being made to send the Director, on a prescribed form, information about the claim, and the fraud unit decides whether to investigate. Good-faith reporters are protected from liability under 20-466(K) and 20-463(B). Knowingly presenting a false claim with intent to defraud is a class 6 felony under 20-466.01.
Ben's 2026 Arizona auto policy carries the minimum liability limits required by A.R.S. 28-4009. He causes a crash that injures three people, with damages of $30,000, $15,000 and $10,000, and destroys an $18,000 car. What is the most his policy pays?
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Correct answer: B. $65,000
For policies issued or renewed since July 1, 2020, A.R.S. 28-4009(A)(2)(b) requires $25,000 per person and $50,000 per accident for bodily injury and $15,000 for property damage. The first claimant is capped at $25,000, so bodily injury totals $25,000 + $15,000 + $10,000 = $50,000, and property damage is capped at $15,000, for $65,000. Ben is personally exposed for the $5,000 and $3,000 above the limits.
Under A.R.S. 20-259.01, how must an insurer handle uninsured and underinsured motorist coverage when it writes an Arizona auto liability policy?
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Correct answer: D. Offer both in writing on a Director-approved form at the BI limits
A.R.S. 20-259.01(A) and (B) require insurers to make available, and offer by written notice on a form approved by the Director, both uninsured and underinsured motorist coverage in limits not less than the policy's bodily injury limits. The insured may buy them at those limits, choose lower limits (UM cannot go below the 28-4009 minimums) or reject them, and the declarations page is the final expression of that choice. No new offer is needed at renewal or when minimum limits change.
Iris suffers $60,000 in bodily injury damages caused by a driver whose policy pays its full $25,000 per person limit. Iris carries $50,000 of underinsured motorist coverage. Under A.R.S. 20-259.01(G), how much does her UIM coverage pay?
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Correct answer: B. $35,000
A.R.S. 20-259.01(G) says that, to the extent total damages exceed the total applicable liability limits, underinsured motorist coverage applies to the difference. Here $60,000 minus $25,000 leaves $35,000, which is within her $50,000 UIM limit. The statute measures UIM by the gap between damages and liability limits; it does not reduce her UIM limit by the other driver's $25,000, which is the trap behind $25,000.
Under A.R.S. 20-667(B), what limits apply to most covered claims paid by the Arizona Property and Casualty Insurance Guaranty Fund?
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Correct answer: D. Claims over $100 and under $300,000; unearned premium up to $10,000
Except for workers' compensation benefits, A.R.S. 20-667(B) limits the fund's obligation to the part of each covered claim that is more than $100 and less than $300,000, and to more than $25 but not more than $10,000 for a claim for unearned premium. The fund never pays more than the face amount of the policy, so the unlimited option is wrong.
Wei's Scottsdale home was insured by a surplus lines insurer that was placed in liquidation with a finding of insolvency before paying her $40,000 fire claim. Under A.R.S. 20-661, will the Arizona Property and Casualty Insurance Guaranty Fund pay it?
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Correct answer: A. No, because the fund covers only insurers licensed in Arizona
Under A.R.S. 20-661, an insolvent insurer must have been licensed to transact insurance in Arizona when the policy was issued or the loss occurred, and the definition of member insurer excludes companies writing only surplus lines. A surplus lines carrier is not licensed in Arizona, so its policyholders have no fund protection. Had her insurer been licensed, the $100 threshold and $300,000 cap in 20-667 would apply.