Free AIC Adjuster L1 Practice Questions: Liability

AIC means Alberta Insurance Council on this page. This route is for Alberta Adjuster Level 1 licensing practice. Use this focused AIC Adjuster Level 1 page as a short practice test for Liability. The items are original Finance Prep sample exam questions built for scenario-based practice, not trivia, puzzle questions, official AIC questions, copied live-exam content, or exam dumps.

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Sample questions

These are original Finance Prep practice questions aligned to this topic area. They are not official AIC questions, copied live-exam content, or exam dumps. Use them to preview question style and explanation depth before continuing with topic drills, mixed sets, and timed mock exams in Finance Prep.

Question 1

Topic: Liability

A supervised Level 1 adjuster is assigned a liability claim. A customer alleges she slipped on a wet floor near the entrance of the insured grocery store and injured her wrist. The insured says a janitorial contractor had just mopped the area, but the contractor says warning signs were in place. The file currently contains only the claimant’s short email and a repair invoice for a broken shopping basket. Before supporting any liability conclusion, what evidence should the adjuster prioritize obtaining?

• A. Only the store’s insurance policy and broker notes, because coverage review replaces the need to investigate liability facts
• B. Only the contractor’s invoice, because payment for mopping proves the contractor is solely responsible for the loss
• C. Only the claimant’s medical receipts and a settlement release, because the injury allegation is enough to move directly to settlement
• D. Statements from the claimant, insured staff, contractor, and witnesses, plus photos or video, the incident report, and any janitorial contract or related invoices/logs

Best answer: D

What this tests: Liability

Explanation: The key point is that a liability claim requires evidence about duty, breach, causation, damages, and who was involved. In a slip-and-fall claim, the adjuster should gather direct accounts from the claimant, insured staff, contractor, and any independent witnesses. Photos, video, incident reports, cleaning records, warning-sign evidence, contracts, and invoices can help establish the condition of the floor, timing of the work, control of the premises, and any contractor responsibility. A Level 1 adjuster should document and develop these facts under supervision before supporting a liability position. Medical bills or repair invoices may relate to damages, but they do not establish how the accident happened or whether the insured is legally responsible.

• Medical receipts and a release focus on damages and settlement, not on whether liability has been established.
• Policy and broker notes may be relevant to coverage, but they do not replace factual investigation of the incident.
• A contractor invoice may show work was done, but it does not prove warning signs, control, negligence, or sole responsibility.

These items address what happened, who may have been responsible, whether warnings were used, and whether a contractor relationship affects the liability investigation.

Question 2

Topic: Liability

A supervised Adjuster Level 1 is assisting on a liability claim. A customer alleges she slipped on ice at the insured’s retail premises and sends a demand for final settlement. The file contains the incident report, photographs of the walkway, and the claimant’s statement. The demand includes a lump-sum amount for physiotherapy and lost income, but no treatment records, invoices, employer confirmation, or signed release. The insurer has not yet given settlement authority.

What is the most appropriate next step before supporting a final settlement?

• A. Tell the insured to negotiate directly with the claimant to reduce the settlement amount.
• B. Recommend payment of the demand because the incident report and photographs confirm that a fall occurred.
• C. Request the supporting medical, invoice, and income proof, then obtain insurer and Adjuster Level 3 direction before any final settlement and release process.
• D. Ask the claimant to sign a release only after the cheque has cleared.

Best answer: C

What this tests: Liability

Explanation: The key point is that a liability settlement must be supported by both liability and damage information. Even if the occurrence itself is documented, the amounts claimed for treatment and income loss need proof such as medical records, treatment invoices, and employer or wage information. A Level 1 adjuster also cannot independently commit the insurer to a final settlement; insurer instructions and Adjuster Level 3 supervision are required. For a final settlement, a properly approved release is normally obtained so the payment resolves the claim on the agreed terms. Communicating clearly about what documentation is needed is appropriate, but the adjuster should not promise payment or finalize settlement authority without approval.

• An incident report and photographs may help confirm that an event occurred, but they do not prove the amount of the claimant’s damages.
• A release should not be treated as an afterthought after payment; it is part of documenting the final settlement terms.
• Direct negotiation by the insured can create inconsistent statements, unauthorized commitments, and claim-control problems.

A final liability settlement should be supported by proof of damages, settlement authority, supervision, and an appropriate release before payment is completed.

Question 3

Topic: Liability

A supervised Adjuster Level 1 is assisting on a liability claim for a customer who slipped on an icy walkway outside an insured retail store in Edmonton. The file has a witness statement supporting that the fall occurred, but the claimant is now demanding $8,000 for a wrist injury and missed work. The file contains no medical records, receipts, employer confirmation, or details of the claimant’s recovery. What damages information is most needed before a liability payment recommendation can be supported?

• A. A signed statement from the insured admitting that the store was responsible for the icy walkway
• B. A copy of the insured’s full commercial liability policy limits page
• C. The claimant’s preferred payment method and mailing address for the settlement cheque
• D. Medical support for the injury, documentation of treatment expenses, and confirmation of any income loss claimed

Best answer: D

What this tests: Liability

Explanation: The key point is that a liability payment recommendation needs support for both liability and damages. Even if there is evidence that the incident occurred, the claimed amount still has to be documented. For a bodily injury claim, damages information commonly includes medical records or treatment notes, invoices or receipts, details of recovery or ongoing limitations, and proof of wage loss such as employer confirmation. A supervised Adjuster Level 1 should gather and document this information and review the file with the supervising Adjuster Level 3 before a report or payment recommendation is finalized.

• An admission from the insured concerns liability, not proof of the claimant’s damages.
• Payment instructions are administrative and do not support the amount of the claim.
• Policy limits may affect the maximum available coverage, but they do not prove the claimant’s injury, expenses, or income loss.

A payment recommendation for damages must be supported by evidence showing the nature, extent, and amount of the claimant’s loss.

Question 4

Topic: Liability

A supervised Adjuster Level 1 is assigned a liability claim. The insured restaurant says a customer slipped near the entrance, but the owner insists the floor was dry and wants the adjuster to tell the claimant the insurer will deny the claim. The claimant has retained a lawyer, alleges a wrist fracture, and says security video shows staff ignored water on the floor for 20 minutes. What is the most appropriate claim-handling implication?

• A. Offer a small settlement to avoid legal costs before reviewing the video or policy.
• B. Tell the claimant that liability is admitted because staff may have ignored the water.
• C. Escalate the file for Level 3 direction before making any coverage or liability commitment.
• D. Deny the claim immediately because the insured states the floor was dry.

Best answer: C

What this tests: Liability

Explanation: The key point is that a Level 1 adjuster should recognize when a liability file needs escalation rather than deciding coverage, liability, denial, or settlement independently. This claim includes several escalation indicators: a represented claimant, an alleged fracture, conflicting accounts, possible video evidence, and a disputed liability allegation. The adjuster should preserve and gather information as directed, document the file, and obtain Level 3 supervision before communicating a denial, admission, or settlement position. Liability claims can be legally sensitive because statements to claimants, insureds, or lawyers may affect the insurer’s position. A supervised adjuster must avoid making commitments beyond authority or before the facts and policy position are properly reviewed.

• Relying only on the insured’s account is incomplete because the claimant alleges contrary video evidence and injury.
• Offering settlement before reviewing evidence and coverage may prejudice the insurer and exceeds a Level 1 role.
• Admitting liability based on an unverified allegation is premature, especially where facts are disputed.

The lawyer involvement, injury allegation, disputed facts, and potential coverage or liability issues make the claim legally sensitive and unsuitable for an unsupervised commitment.

Question 5

Topic: Liability

A supervised Alberta Level 1 adjuster takes a first call on a liability claim. The claimant says she slipped on wet tile inside the insured grocery store near the entrance, there was no warning sign, and she injured her wrist. The insured manager says staff had placed mats at the entrance but has not yet provided video, cleaning logs, or witness names. Which claim note best records the liability allegation and unresolved issues?

• A. Claimant slipped at the store entrance and injured her wrist; insured should obtain legal advice before any further contact with the claimant.
• B. Claimant alleges she slipped on wet tile near the entrance, no warning sign was present, and she injured her wrist; insured reports mats were in place. Video, cleaning logs, witness details, and coverage review remain outstanding.
• C. The insured appears responsible because the claimant fell on wet tile and no warning sign was seen; proceed to settlement after confirming the wrist injury.
• D. The claim should be denied because the insured says mats were in place and the claimant has not yet proven negligence.

Best answer: B

What this tests: Liability

Explanation: The key point is to document the allegation accurately without admitting or denying liability before the investigation is complete. A good liability claim note identifies who said what, records the alleged condition, injury, and location, and separates reported facts from unresolved issues. Here, the claimant alleges wet tile, no warning sign, and a wrist injury. The insured provides a potentially relevant response, but supporting evidence has not yet been obtained. At supervised Level 1 depth, the adjuster should preserve a neutral file record and identify the next investigation items, such as video, cleaning logs, witnesses, and coverage review, for supervisory guidance.

• Stating that the insured appears responsible goes beyond the available facts and risks an unsupported admission of liability.
• Denying the claim based only on the insured manager’s statement is premature because key evidence is still missing.
• Referring the insured for legal advice may be appropriate in some cases, but the note fails to record the unresolved evidence issues and overstates the immediate response needed.

This note records both sides of the reported facts and identifies the key liability and evidence issues still unresolved.

Question 6

Topic: Liability

A supervised Level 1 adjuster is reviewing a liability claim for a grocery store insured in Alberta. The claimant says she slipped on water near a freezer aisle and wants the insurer to pay her claim. The file includes the insured’s incident report, a witness statement confirming the fall, and a repair vendor’s invoice for fixing the freezer drain the next day. The claimant has not provided medical records, wage-loss details, receipts, or a written summary of the amount being claimed. What is the best next action before supporting any liability payment recommendation?

• A. Recommend payment because the witness confirmed the fall and the freezer repair supports a possible hazard.
• B. Ask the broker to negotiate a settlement amount directly with the claimant.
• C. Deny the claim until the claimant proves the store knew about the water before the fall.
• D. Request documentation of the claimant’s alleged damages, including injury treatment, wage loss, out-of-pocket expenses, and the amount claimed.

Best answer: D

What this tests: Liability

Explanation: The key point is that a liability payment recommendation must be supported by both liability facts and damages information. The file may contain evidence about the fall and a possible hazard, but it does not yet show what loss the claimant actually suffered or the amount being claimed. Before recommending payment, the adjuster should gather and document damages evidence such as medical treatment records, receipts, wage-loss information, and a clear statement of the claimed amount. A Level 1 adjuster should do this under supervision and avoid committing the insurer to payment until the file supports both responsibility and quantum.

• Evidence of a fall and a repair invoice may be relevant to liability, but they do not establish the claimant’s damages.
• A denial based only on lack of notice may be premature when the file still needs investigation and damages support.
• The broker is not the proper person to negotiate the insurer’s liability settlement without insurer instruction and proper claim-handling authority.

A payment recommendation needs support for the nature and amount of damages, not only evidence that an incident occurred.

Question 7

Topic: Liability

A supervised Level 1 adjuster is investigating a slip-and-fall liability claim at an insured grocery store in Alberta. A store employee says a customer witnessed the fall and provides the witness’s phone number. When the adjuster calls, the witness asks, “Before I answer, can you tell me what the store manager said about the spill?” What is the most appropriate claim-handling response?

• A. Tell the witness that the insurer will deny the claim unless the witness supports the store’s version of events.
• B. Explain the adjuster’s role, request the witness’s own observations, and avoid disclosing other statements from the file.
• C. Summarize the manager’s statement so the witness can confirm whether it matches what the witness saw.
• D. Ask the store manager to speak with the witness first and report back with the witness’s answers.

Best answer: B

What this tests: Liability

Explanation: The key point is to obtain information fairly while protecting confidential claim information. A witness can be asked for direct observations, contact details, and any relevant documents or photos, but the adjuster should not disclose another person’s statement or try to shape the witness’s evidence. A Level 1 adjuster should identify the purpose of the call, remain neutral, document the witness’s own account, and work under Level 3 supervision when evaluating liability or reporting conclusions. Professionalism also means avoiding pressure, threats, or statements that suggest the claim outcome has already been decided.

• Sharing the manager’s statement risks breaching confidentiality and may influence the witness’s independent evidence.
• Threatening denial unless the witness supports one side is improper and undermines fair claim investigation.
• Having the insured collect the witness’s answers is not a proper substitute for neutral claim documentation and may compromise evidence quality.

Confidentiality and professionalism require collecting the witness’s evidence without revealing another person’s statement or claim file information.

Question 8

Topic: Liability

A supervised Adjuster Level 1 receives a new liability claim for a slip and fall at an insured grocery store in Alberta. The store manager says the entrance camera footage is normally overwritten after 48 hours, and two employees may have seen the fall. The claimant is asking whether the insurer will accept fault. Which investigation step best preserves evidence without exceeding Level 1 authority?

• A. Independently deny liability because the claimant has not yet provided a formal proof of loss.
• B. Promptly notify the supervising Adjuster Level 3 and ask the insured to preserve the video, incident report, and witness information while making no liability commitment.
• C. Authorize settlement of the claim before the video is overwritten to avoid losing evidence.
• D. Tell the claimant the insured appears responsible so the claimant will cooperate with a statement.

Best answer: B

What this tests: Liability

Explanation: The key point is to protect evidence while staying within the limits of a supervised Level 1 role. In a liability claim, early evidence may include surveillance video, incident reports, cleaning records, photographs, and witness information. A Level 1 adjuster may help gather and document facts, but should not admit liability, deny the claim, or commit the insurer to settlement without proper instruction and supervision. Because the video may be overwritten quickly, the practical step is to escalate promptly to the supervising Adjuster Level 3 and ensure the insured is asked to preserve relevant material. That supports a fair investigation and avoids prejudicing the insurer’s position.

• Preserving video and witness information protects evidence without making a coverage or liability decision.
• Telling the claimant the insured appears responsible is an improper liability commitment before investigation is complete.
• Authorizing settlement exceeds Level 1 authority and skips the needed liability investigation.
• Denying liability based only on a missing proof of loss is premature and does not address the urgent evidence issue.

This preserves time-sensitive evidence and keeps the Level 1 adjuster within supervised authority without admitting liability.

Question 9

Topic: Liability

A supervised Adjuster Level 1 is assisting with a third-party slip-and-fall claim against an insured grocery store in Alberta. The file contains these facts:

• A witness says the floor near the entrance was wet for at least 20 minutes before the fall.
• The claimant provides physiotherapy invoices and a note confirming missed work.
• The store manager says warning cones were put out after the fall.

Which conclusion best separates liability evidence from damages evidence?

• A. The witness statement and manager statement relate to liability; the physiotherapy invoices and missed-work note relate to damages.
• B. The witness statement is damages evidence because it may increase the amount payable to the claimant.
• C. The physiotherapy invoices are liability evidence because they prove the fall happened at the store.
• D. All listed facts are liability evidence until the insurer decides whether to accept responsibility.

Best answer: A

What this tests: Liability

Explanation: The key point is to separate evidence that addresses fault from evidence that measures the amount of loss. In a third-party liability claim, liability evidence helps determine whether the insured may be legally responsible, such as how long a hazard existed, whether staff knew or should have known about it, and what steps were taken to warn or protect customers. Damages evidence supports the nature and amount of the claimant’s loss, such as medical treatment, expenses, income loss, and other claimed harm. A Level 1 adjuster should document both categories clearly and avoid treating proof of injury or expense as proof that the insured is liable.

• Treatment invoices and wage-loss notes support the amount of the claim, but they do not by themselves prove negligence.
• A witness account about the wet floor and warning measures helps assess liability, not the dollar value of the injury.
• Accepting or denying responsibility does not change the nature of the evidence already gathered.

The timing of the wet floor and warning cones helps assess fault, while treatment costs and wage loss help measure the claimed loss.

Question 10

Topic: Liability

A Level 1 adjuster in Alberta receives a first notice of a liability claim. The insured restaurant reports that “a customer fell yesterday and wants us to pay.” The notice gives the customer’s name and phone number, but it does not identify the exact area of the restaurant, how the fall occurred, or what injury or property damage is being claimed. What is the best next action?

• A. Advise the customer that the restaurant is responsible because the incident occurred on the insured premises.
• B. Contact the customer and insured to document who was involved, what happened, where it happened, and what damage is alleged.
• C. Close the file until the customer provides a formal proof of loss.
• D. Ask the insurer to issue payment once the customer provides receipts for any expenses.

Best answer: B

What this tests: Liability

Explanation: The key point is that a liability claim starts with understanding the allegation. A supervised Level 1 adjuster should gather and document the basic facts: the parties involved, the event sequence, the exact location, and the injury or damage being claimed. These facts help the insurer and supervising Adjuster Level 3 evaluate coverage, liability, damages, and any need for further investigation. The adjuster should not admit responsibility, recommend payment, or close the file before the basic facts are known. A first notice that only says a customer fell is too incomplete to support a liability conclusion.

• Treating the restaurant as responsible just because the fall occurred on its premises ignores the need to investigate negligence and causation.
• Requesting payment based only on receipts skips the required review of what happened, where it happened, and whether the claimed damage is connected.
• Closing the file for lack of a proof of loss is premature when the immediate task is to obtain basic allegation facts.

The file is missing the basic allegation facts needed before liability, coverage, or settlement can be assessed.

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• Free AIC Adjuster Level 1 Practice Exam
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