Kentucky Adjuster Practice Test

Correct answer: B. A staff adjuster license issued by the Department of Insurance

KRS 304.9-020(26) defines a staff adjuster as an insurer's employee who investigates, negotiates or settles property, casualty or workers' compensation claims for the employer, and KRS 304.9-430(1) bars acting as a staff adjuster without a license. Kentucky does not exempt company employees; the employee exemption in 304.9-430(10)(i) only removes the need for an independent adjuster license. Public adjusters work for insureds, not insurers.

Reference: KRS 304.9-020(26); KRS 304.9-430(1) and (10)(i)

Correct answer: D. He may not represent both the insurer and the insured

806 KAR 9:030, Section 1 says an independent, staff or public adjuster shall not represent the interests of both the insurer and the insured or claimant. Each applicant elects to act solely for insurers or solely for claimants, and the adjuster acts in a fiduciary capacity for that principal. Disclosure does not cure the conflict, and the 10% figure is a public adjuster fee cap, not permission to switch sides.

Reference: 806 KAR 9:030, Section 1

Correct answer: C. A self-employed contractor paid by insurers to settle homeowners claims

An independent adjuster under KRS 304.9-020(9) is an independent contractor, paid by an insurer or self-insurer, who investigates, negotiates or settles property, casualty or workers' compensation claims, so the self-employed contractor needs a license. KRS 304.9-430(10) exempts attorneys acting as attorneys, people employed only to gather facts or give technical help to a licensed independent adjuster, and people who settle only reinsurance or subrogation claims.

Reference: KRS 304.9-020(9); KRS 304.9-430(10)(b), (c) and (h)

Correct answer: A. 35

806 KAR 9:025, Section 3(4) requires every applicant for a license that needs an examination to answer 70% of the questions correctly. Seventy percent of 50 is 35 (50 x 0.70 = 35). Thirty-three correct is only 66%, and 38 or 40 would be needed only under a 75% or 80% standard, which Kentucky does not use for adjusters.

Reference: 806 KAR 9:025, Section 3(4)

Correct answer: D. Give the Department a copy of her active certification card

806 KAR 9:025, Section 3(3)(c) lets a crop line applicant either pass the crop adjuster examination or show certification through the Crop Adjuster Proficiency Program by giving the Department a copy of an active CAPP identification card issued by the Risk Management Agency. Kentucky requires no adjuster prelicensing course, and each line (property and casualty, workers' compensation, crop) has its own examination.

Reference: 806 KAR 9:025, Section 3(3)

Correct answer: B. It lasts no more than 12 months and cannot be renewed

KRS 304.9-432 lets an applicant who lacks claims experience work without passing the examination on a temporary apprentice license that may not exceed 12 months and is nonrenewable. The apprentice must be a full-time salaried employee of an insurer or adjuster, under the training, direction and control of a licensed adjuster who attests to that supervision, and may be paid only on a salaried or hourly basis.

Reference: KRS 304.9-432(1), (2) and (4)

Correct answer: C. Within 5 days of deployment; 90 days unless extended

KRS 304.9-430(13) allows temporary emergency registration of independent or staff adjusters after a catastrophe declared in Kentucky. The insurer must notify the commissioner within five days of deployment with each adjuster's name, Social Security number, the insurer represented and the catastrophe details, and the registration lasts no more than 90 days unless the commissioner extends it. 806 KAR 9:030 uses Form 8307 for the request.

Reference: KRS 304.9-430(13); 806 KAR 9:030, Section 3

Correct answer: A. Texas counts as her home state, so no Kentucky examination is needed

For nonresident licensing, KRS 304.9-430(14)(a) treats as the home state any state where the applicant holds a resident adjuster license if her state of residence does not issue that license. Elena's Texas license therefore qualifies her for a Kentucky nonresident license without a Kentucky examination, provided Texas licenses Kentuckians on the same basis. She must keep the Texas license in force to keep the Kentucky one.

Reference: KRS 304.9-430(14)(a), (b) and (d)

Correct answer: C. October 31, 2027

KRS 304.9-260(1)(g)2 says an individual born in an odd-numbered year renews by the last day of the birth month in the next odd-numbered year after the license is issued, and every odd year after that. Owen's first deadline is October 31, 2027. Renewal is not tied to the issue month, and 2026 is not an odd year. A renewal received within 60 days after expiration can still be accepted with a penalty.

Reference: KRS 304.9-260(1)(g) and (2)

Correct answer: D. Independent and public adjusters need 24 hours, including 3 of ethics

KRS 304.9-295(5) requires resident independent and public adjusters, and nonresidents who designate Kentucky as home state, to complete 24 hours each biennium, including 3 hours of ethics. The Department's continuing education page says staff adjusters are excluded. Up to 12 excess hours carry forward under 806 KAR 9:025, Section 5(5), and licensees not licensed a full year before the biennium ends are exempt.

Reference: KRS 304.9-295(3) and (5); 806 KAR 9:025, Section 5(5)

Correct answer: A. 30 days

KRS 304.9-200(2) requires a licensee to inform the commissioner in writing, in an acceptable format, of a change of address or legal name within 30 days. The Department's licensing FAQ says residents can make the change as a record correction in eServices, and nonresidents can update through NIPR. Sixty days is the late renewal window in KRS 304.9-260, not the address change deadline.

Reference: KRS 304.9-200(2)

Correct answer: B. A statement and the charging papers within 30 days of service

KRS 304.9-467(3) requires a licensee, within 30 days of service of any criminal complaint, information or indictment, to submit a written statement explaining the circumstances and a copy of the charging document. If the charges are not resolved within that time, subsection (4) requires the resolution documents within 30 days after the charges are resolved. Waiting for a conviction or the next renewal violates the rule.

Reference: KRS 304.9-467(3) and (4)

Correct answer: D. Refuse the license, because cheating is a listed cause

KRS 304.9-440(1)(l) lists cheating, including improperly using notes or other reference material on a license examination, as a cause to refuse, suspend, revoke or place a license on probation, or to levy a civil penalty. Probation or conditions may run for up to 24 months. The statute sets no five-year waiting period, and the commissioner does not need a prosecutor in order to act.

Reference: KRS 304.9-440(1)(l)

Correct answer: C. A $50,000 surety bond or irrevocable letter of credit

KRS 304.9-430(3) requires a public adjuster applicant to obtain, and keep for the life of the license, either a surety bond of at least $50,000 in favor of the state or an irrevocable letter of credit of at least $50,000. Either must require 30 days' notice before termination, and if the security terminates or becomes impaired, the license automatically terminates and must be surrendered. Under KRS 304.9-430(1)(b), the Department is not issuing new public adjuster licenses for two years from April 13, 2026, with narrow exceptions.

Reference: KRS 304.9-430(3)

Correct answer: B. $8,400

For contracts entered into on or after July 15, 2026, KRS 304.9-4333(2) allows a reasonable fee not exceeding 10% of the settlement proceeds on which a fee may be based: $84,000 x 10% = $8,400. The fee may be based only on proceeds the insured actually receives after the contract and rescission period, and it is collected after the insured receives them. $16,800 and $25,200 would be 20% and 30%. Separately, KRS 304.9-4331(7) bars public adjusters from negotiating with insurers for two years from July 15, 2026.

Reference: KRS 304.9-4333(1) and (2); KRS 304.9-4331(7)

Correct answer: A. 5 business days after the copy was provided

KRS 304.9-433(8) lets the insured rescind within five business days after the physical copy of the contract is provided. The ten-day period applies only when the contract arises from events covered by a declared state of emergency. A rescission must be in writing and mailed or delivered to the adjuster within the period, and anything of value must be returned within 15 business days.

Reference: KRS 304.9-433(8) and (9)

Correct answer: D. An insured-signed notice letter and paper contract within 72 hours

KRS 304.9-433(7) requires a public adjuster, within 72 hours of contracting, to give the insurer a notification letter signed by the insured authorizing the adjuster to assist, plus a physical copy of the contract. Subsection (10) says an electronic copy does not satisfy a physical copy requirement. Under KRS 304.9-4331, the adjuster also may not obstruct the insurer's inspection or its access to the insured.

Reference: KRS 304.9-433(7) and (10)

Correct answer: C. Failing to promptly explain the policy basis for a denial

KRS 304.12-230(14) makes it an unfair claims settlement practice to fail to promptly give a reasonable explanation of the policy basis, in relation to the facts or law, for denying a claim or offering a compromise. Recorded statements and independent appraisals are normal investigation tools, and paying undisputed amounts early is what 806 KAR 12:095 requires, not a violation.

Reference: KRS 304.12-230(14)

Correct answer: A. Monday through Friday, excluding holidays

Section 1(5) of 806 KAR 12:095 defines days as Monday through Friday, except holidays, so the 15-day acknowledgment in Section 5(1) runs on business days. Notice given to the insurer's agent counts as notice to the insurer, and an acknowledgment not made in writing must be noted and dated in the claim file. Deadlines the rule labels calendar days, such as the 30-day payment rule, run differently.

Reference: 806 KAR 12:095, Sections 1(5) and 5(1)

Correct answer: D. Tell the claimant within 30 calendar days why it needs more time

Section 6(1) requires an insurer to offer any payment due within 30 calendar days of receiving proof of loss. If it needs more time to accept or deny a first-party claim, it must notify the claimant within 30 calendar days of the proof of loss, giving the reasons, and while the investigation stays open it must send a letter explaining the delay 45 days after the initial notice and every 45 days after that.

Reference: 806 KAR 12:095, Section 6(1)(a), (c) and (d)

Correct answer: B. $720

KRS 304.12-235(1) requires payment within 30 days after notice and proof of claim. If the insurer fails to make a good-faith attempt to settle within that time, subsection (2) adds 12% annual interest from the end of the 30-day period, so interest runs 60 days: $36,500 x 0.12 x 60/365 = $720. Charging all 90 days ($1,080) ignores the 30-day window. An unreasonable delay also makes attorney's fees recoverable.

Reference: KRS 304.12-235(1) to (3)

Correct answer: C. Give written notice at least 30 days before the deadline

Section 6(3) bars an insurer from continuing to negotiate directly with an unrepresented first-party claimant whose rights may be affected by a statute of limitations or policy time limit unless it has given written notice of the limit at least 30 calendar days before the limit expires. An oral reminder does not satisfy the rule, and the regulation does not require ending negotiations.

Reference: 806 KAR 12:095, Section 6(3)

Correct answer: A. Reopen the claim, because she notified it within 35 days

Under the right of recourse in Section 7(1)(c), if the insurer is told within 35 days of the insured's receipt of the settlement check that she cannot buy a comparable vehicle for the fair market value, it must reopen the file. It may then locate a comparable vehicle at that value through a licensed dealer, pay the price difference or buy the vehicle for her, or conclude the loss under the policy's appraisal provision.

Reference: 806 KAR 12:095, Section 7(1)(c)

Correct answer: D. Pay the $700 difference or name a shop that will do it for $3,200

Section 8(1)(c) says that when the insured shows with a written estimate that necessary repairs exceed the insurer's estimate, the insurer must either pay the difference ($3,900 - $3,200 = $700) or promptly name at least one repair shop that will make the repairs for the insurer's estimate. It must also give the insured a copy of its estimate and document these communications. Splitting or averaging estimates is not an option the rule provides.

Reference: 806 KAR 12:095, Section 8(1)

Correct answer: B. Replace siding in the area for a reasonably uniform look

Section 9(1)(b) says that when replacement items do not reasonably match in quality, color and size, the insurer must replace all items in the area so it has a reasonably uniform appearance, inside or outside the home, and the insured pays nothing beyond the deductible. The rule targets the area of the loss, not every surface of the house, and an actual cash value payment ignores the replacement cost basis.

Reference: 806 KAR 12:095, Section 9(1)