Certified All-Lines Adjuster (CALA) Designation Exam — Questions and Answers

Question 1: A policyholder in a declared disaster area submits a claim for Additional Living Expenses (ALE). The adjuster should verify that:

The home is uninhabitable due to covered damage and the ALE expenses are reasonable and necessary (Correct answer)
The insured's home was in a flood zone prior to the disaster
The insured received FEMA assistance before filing ALE
The insured owns rather than rents the property

Correct answer: The home is uninhabitable due to covered damage and the ALE expenses are reasonable and necessary

ALE coverage requires that the home be uninhabitable due to a covered loss and that the claimed expenses be both reasonable and necessary.

Question 2: When a homeowner's policy contains an 'other insurance' clause and two policies cover the same dwelling, each insurer typically pays:

Equally regardless of limits
Nothing until the other pays first
The full policy limit
Its pro-rata share based on policy limits (Correct answer)

Correct answer: Its pro-rata share based on policy limits

Under pro-rata other insurance clauses, each insurer pays the proportion its policy limit bears to the total limits of all applicable policies.

Question 3: What is a 'Medicare Set-Aside' (MSA) arrangement and when is it relevant to a bodily injury settlement?

A fund set aside to cover future Medicare-eligible medical expenses related to the injury, required in certain workers' comp and liability settlements (Correct answer)
A deduction from the settlement for Medicare premiums
A lien filed by the hospital against the settlement
A separate insurance policy purchased by the claimant

Correct answer: A fund set aside to cover future Medicare-eligible medical expenses related to the injury, required in certain workers' comp and liability settlements

An MSA is a financial arrangement that allocates a portion of a settlement to cover future medical costs for Medicare beneficiaries, protecting Medicare's interests.

Question 4: Which factor most significantly affects the settlement value of a soft-tissue bodily injury claim?

Duration of treatment and documented medical expenses (Correct answer)
The color of the vehicle involved
The deductible amount on the policy
Whether the insured has a prior traffic citation

Correct answer: Duration of treatment and documented medical expenses

For soft-tissue injuries, the length and cost of medical treatment are the primary drivers of settlement value since there are no objective diagnostic findings like fractures.

Question 5: A claimant contacts an adjuster after hours regarding a time-sensitive fire loss. What is the most appropriate response?

Ignore the call until the next business day
Take a recorded statement immediately without proper authorization
Provide a referral to an emergency contact or on-call service (Correct answer)
Deny the claim due to delayed notification

Correct answer: Provide a referral to an emergency contact or on-call service

Insurers should have protocols for emergency after-hours contact so claimants with urgent losses can receive timely assistance.

Question 6: Under a personal auto policy, 'underinsured motorist coverage' applies when:

The insured is driving without a license
The insured's vehicle is unregistered
The at-fault driver has no insurance
The at-fault driver's limits are lower than the insured's damages (Correct answer)

Correct answer: The at-fault driver's limits are lower than the insured's damages

Underinsured motorist (UIM) coverage fills the gap when the at-fault driver's liability limits are insufficient to cover the insured's actual damages.

Question 7: After a major disaster, an adjuster notices the insured has already hired a public adjuster. The CAT adjuster should:

Continue normal claim handling while directing all communications to the public adjuster as the insured's representative (Correct answer)
Report the public adjuster to the state insurance department
Close the claim until the public adjuster withdraws
Refuse to communicate with the insured directly and only speak with the public adjuster

Correct answer: Continue normal claim handling while directing all communications to the public adjuster as the insured's representative

When an insured is represented by a public adjuster, communications should be directed to that representative while the claim proceeds normally.

Question 8: Which standard of practice is MOST important for ensuring quality in Catastrophe Claims Handling?

Minimizing documentation to focus on practical work
Using the most advanced technology available regardless of need
Following evidence-based protocols while adapting to specific circumstances (Correct answer)
Strictly adhering to the same procedure in every situation

Correct answer: Following evidence-based protocols while adapting to specific circumstances

Evidence-based protocols provide a foundation of proven practices, but effective Certified All-Lines Adjuster professionals must also adapt their approach based on specific circumstances and individual case needs within Catastrophe Claims Handling.

Question 9: Under which circumstance is an insurer generally NOT entitled to pursue subrogation?

The loss involved a commercial vehicle
The third party was negligent
The loss was caused by the insured's own negligence (Correct answer)
The third party has insurance

Correct answer: The loss was caused by the insured's own negligence

Subrogation requires a responsible third party; if the loss was caused by the insured's own negligence, there is no third party to subrogate against.

Question 10: What does the term 'causation' mean in the context of a bodily injury claim?

Whether the claimed injury was caused by the insured accident (Correct answer)
The total dollar amount of medical bills
The type of insurance policy in force
The claimant's pre-existing health conditions

Correct answer: Whether the claimed injury was caused by the insured accident

Causation establishes the legal and medical link between the accident and the claimed injuries, which is essential for determining the insurer's liability.

Question 11: Which tool is commonly used by catastrophe adjusters to document damage?

Photographic evidence (Correct answer)
Voice memos
Sketches
Handwritten notes

Correct answer: Photographic evidence

Photo documentation is essential for assessing damage, supporting claims, and maintaining an accurate record.

Question 12: When setting initial reserves on a new claim, the adjuster's reserve documentation should reflect:

Only the deductible amount
The lowest possible estimate to keep costs down
The best estimate of ultimate liability based on known facts at the time, documented with supporting rationale (Correct answer)
The policy limit regardless of actual exposure

Correct answer: The best estimate of ultimate liability based on known facts at the time, documented with supporting rationale

Reserves must be documented with factual support and represent the adjuster's honest estimate of ultimate exposure — both under-reserving and over-reserving are problematic practices.

Question 13: Which red flag is most associated with 'claim padding' in a homeowners contents claim?

The claimant provides a notarized inventory list
The adjuster confirms damage to structural elements
The insured accepts the first settlement offer without negotiation
Claimed items include new high-value electronics with no proof of ownership (Correct answer)

Correct answer: Claimed items include new high-value electronics with no proof of ownership

Claiming new high-value electronics without receipts, photos, or other proof of ownership is a classic indicator of contents claim padding.

Question 14: An insured is sued for a liability claim after the policy has been cancelled. Under which circumstance might the cancelled policy still provide coverage?

If the occurrence that caused the injury happened during the policy period before cancellation (Correct answer)
If the insured pays the overdue premium within 30 days of the lawsuit
If the cancellation was non-renewal rather than mid-term
Coverage never applies after cancellation under any circumstance

Correct answer: If the occurrence that caused the injury happened during the policy period before cancellation

Occurrence-based policies cover incidents that happen during the policy period, even if the claim is filed after the policy has been cancelled.

Question 15: Which document best establishes a claimant's lost wages in a bodily injury claim?

A wage verification letter from the employer and recent pay stubs (Correct answer)
A personal bank account statement
A tax return from five years prior
The claimant's verbal statement of income

Correct answer: A wage verification letter from the employer and recent pay stubs

Employer-verified wage documentation and pay stubs provide contemporaneous, objective evidence of the claimant's earnings and time missed from work.

Question 16: What is the significance of a statute of limitations in a bodily injury claim?

It defines the policy period
It limits the amount the insurer must pay
It restricts the number of medical providers the claimant can see
It sets the deadline by which a lawsuit must be filed or the claim is barred forever (Correct answer)

Correct answer: It sets the deadline by which a lawsuit must be filed or the claim is barred forever

The statute of limitations is a legal deadline; failing to file suit within the prescribed period (typically 2-3 years for personal injury in most US states) permanently extinguishes the claimant's legal right to recover.

Question 17: What are 'specials' in bodily injury claims terminology?

Special policy endorsements
Secret settlement amounts
Quantifiable economic losses such as medical bills and lost wages (Correct answer)
Specialty medical procedures only

Correct answer: Quantifiable economic losses such as medical bills and lost wages

In bodily injury claims, 'specials' refer to special (economic) damages that can be documented with receipts, including medical expenses and lost income.

Question 18: An adjuster receives a subrogation opportunity after paying a homeowner's claim caused by a neighbor's contractor. What is the first step in pursuing subrogation?

Reduce the insured's deductible reimbursement to fund the subrogation effort
Notify the insured and obtain an assignment of rights before pursuing the responsible party (Correct answer)
Close the claim and take no further action
File a lawsuit immediately against the contractor

Correct answer: Notify the insured and obtain an assignment of rights before pursuing the responsible party

Subrogation requires the insurer to stand in the insured's shoes, which begins with notifying the insured and properly documenting assignment of the right to recover.

Question 19: An insured's vehicle is stolen and later recovered with significant interior damage. Which auto coverage applies?

Gap coverage
Collision coverage
Uninsured motorist property damage
Comprehensive coverage (Correct answer)

Correct answer: Comprehensive coverage

Comprehensive coverage applies to theft and non-collision losses, including damage discovered when a stolen vehicle is recovered.

Question 20: What is the primary purpose of obtaining medical authorizations (HIPAA releases) during a bodily injury claim investigation?

To access the claimant's medical records relevant to the injury claimed (Correct answer)
To waive the claimant's right to future treatment
To transfer the claim to a health insurer
To authorize the insurer to perform surgery

Correct answer: To access the claimant's medical records relevant to the injury claimed

A HIPAA-compliant medical authorization allows the adjuster to obtain medical records necessary to evaluate the nature and extent of the claimant's injuries.

Question 21: Under a commercial inland marine policy, which of the following is a key characteristic that distinguishes inland marine property from building coverage?

Inland marine covers property that is mobile or in transit (Correct answer)
Inland marine covers only property at a fixed location
Inland marine is only available for manufacturing businesses
Inland marine excludes equipment that is scheduled

Correct answer: Inland marine covers property that is mobile or in transit

Inland marine policies are designed for property that moves — such as equipment in transit, contractors' tools, or goods being shipped — unlike building coverage for fixed locations.

Question 22: When inspecting a vehicle for damage, an adjuster should primarily rely on which resource to price parts and labor?

The repair shop's handwritten quote exclusively
Manufacturer MSRP sticker price
The insured's personal estimate
Computerized estimating software such as Mitchell or CCC ONE (Correct answer)

Correct answer: Computerized estimating software such as Mitchell or CCC ONE

Industry-standard estimating platforms like Mitchell or CCC ONE provide standardized parts pricing and labor times accepted across the US insurance industry.

Question 23: When an insured submits a sworn proof of loss that contains material misrepresentations, the adjuster should:

Accept it without question to avoid conflict
Immediately pay the claim and note the discrepancy later
Destroy the proof of loss to protect the insured
Document the discrepancies, notify the SIU, and consult with counsel before taking further action (Correct answer)

Correct answer: Document the discrepancies, notify the SIU, and consult with counsel before taking further action

Suspected fraud must be referred to the Special Investigations Unit (SIU) and documented thoroughly, as material misrepresentations can void coverage under most policies.

Question 24: A property policy is written on a 'replacement cost' basis. The insured's 10-year-old roof is destroyed by a covered peril. How is the claim typically settled?

Depreciated value of the old roof
Market value of the home minus the land value
Cost of a new roof of like kind and quality (Correct answer)
Actual cash value minus a $1,000 deductible

Correct answer: Cost of a new roof of like kind and quality

Replacement cost coverage pays the cost to replace damaged property with new property of like kind and quality, without a deduction for depreciation.

Question 25: Which standard of practice is MOST important for ensuring quality in Coverage Analysis & Interpretation?

Strictly adhering to the same procedure in every situation
Minimizing documentation to focus on practical work
Using the most advanced technology available regardless of need
Following evidence-based protocols while adapting to specific circumstances (Correct answer)

Correct answer: Following evidence-based protocols while adapting to specific circumstances

Question 26: Which element is NOT required to establish a valid subrogation right?

The insurer must have paid the claim
A third party must be legally responsible for the loss
The insured must have suffered a covered loss
The third party must be insolvent (Correct answer)

Correct answer: The third party must be insolvent

Third-party insolvency is not a requirement for subrogation; however, it may affect the practical ability to recover funds.

Question 27: The primary purpose of the National Flood Insurance Program (NFIP) Write-Your-Own (WYO) arrangement is to:

Replace state-mandated flood coverage requirements
Allow private insurers to set flood rates independently
Enable private insurers to issue and service NFIP policies while the federal government retains financial risk (Correct answer)
Create competition between federal and private flood markets

Correct answer: Enable private insurers to issue and service NFIP policies while the federal government retains financial risk

Under the WYO program, participating private insurers issue and service NFIP flood policies in their own names, but the federal government (FEMA) bears the underwriting risk.

Question 28: A 'swoop and squat' staged accident typically involves which scenario?

A vehicle rear-ending a truck on a highway
One vehicle cutting off another, causing a deliberate rear-end collision to collect liability damages (Correct answer)
A pedestrian stepping in front of a slow-moving vehicle
A driver backing into another vehicle in a parking lot

Correct answer: One vehicle cutting off another, causing a deliberate rear-end collision to collect liability damages

In a swoop and squat, one vehicle cuts in front of another and brakes suddenly, engineering a rear-end collision in which the following driver appears at fault.

Question 29: Which party is responsible for proving the amount of an auto property damage loss under a standard US policy?

The repair facility submitting the invoice
An independent court-appointed arbitrator
The insured (burden of proof lies with the policyholder) (Correct answer)
The insurer must prove the loss amount

Correct answer: The insured (burden of proof lies with the policyholder)

Under US insurance law, the insured bears the burden of proving the existence and amount of the claimed loss to trigger the insurer's duty to pay.

Question 30: Under a standard homeowners policy, which of the following losses would be covered by Coverage B (Other Structures)?

A detached garage damaged by a fallen tree (Correct answer)
A storage shed used partially for business
A fence damaged by flood water
A swimming pool that cracks due to soil settlement

Correct answer: A detached garage damaged by a fallen tree

Coverage B applies to detached structures on the residence premises; wind-blown tree damage is a covered peril under standard HO forms.

Certified All-Lines Adjuster (CALA) Designation Exam

The Certified All-Lines Adjuster (CALA) is a Florida-approved designation offered by Kaplan Financial Education that qualifies candidates for the Florida 6-20 All-Lines Adjuster License, covering property and casualty insurance, medical claims, claims handling procedures, coverage interpretation, and catastrophe adjusting.

Questions

35 min

Time Limit

70%

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