Alabama adjuster exam pt 2

How many steps are there in the claims process?

9

Define: Claimant

A person or entity that requests indemnification for losses under the terms of an insurance policy

Rejecting the request and denying the claim requires what?

A written explanation

When a storm rolled through town a month ago, John's home suffered substantial damage. He files a claim, but his insurer has offered a settlement much lower than John feels is fair. Both Jon and his insurer have each selected an appraiser, who in turn have agreed on an umpire, to help settle the claim. What type of dispute resolution is this? A. Appraisal B. Litigation C. Mediation D. Arbitration

A. Appraisal

Sam works on commission only, selling only insurance products from XYZ Insurance. What type of agent is Sam? A. Exclusive agent B. Independent sales agent C. Direct writer D. General agent

A. Exclusive agent

This agent works for only one insurer and is paid commission. A. Exclusive agent B. Independent agent C. Independent adjuster D. General agent

A. Exclusive agent

In which report to the principal would an adjuster include all witness statements and other supporting evidence, in addition to the total settlement amount? A. Final report B. Preliminary report C. Settlement report D. Interim report

A. Final report

This agent works for only one insurer, and supervises and trains other agents. A. General agent B. Captive agent C. Exclusive agent D. Direct writer

A. General agent

A "scheduled payment release" is a settlement option most commonly used: A. In workers' compensation claims B. In claims that seek damages for property damage C. In flood claims D. When an insurer cannot pay all its claimants and still remain solvent

A. In workers' compensation claims

What is the title of the insurance professional who processes claims for compensation? A. Insurance adjuster B. Insurance salesman C. Insurance broker D. Insurance agent

A. Insurance adjuster

What kind of adjuster represents the insured rather than the insurer? A. Public adjuster B. Emergency adjuster C. Independent adjuster D. Staff adjuster

A. Public adjuster

Don works as an adjuster for ABC Insurance. Which of the following is most likely NOT one of Don's responsibilities? A. Represent the insured if a claim goes to court B. Provide ABC Insurance with complete claim documentation C. Always use reasonable care and judgment D. Adhere to the terms of his contract

A. Represent the insured if a claim goes to court

When an insurer assigns an adjuster to a claim, which of the following best describes the adjuster's role in relation to the claimant? A. The adjuster acts as a liaison between the claimant and the insurer B. The adjuster agrees to get the claimant the highest possible insurance settlement C. The adjuster agrees to represent the claimant in court D. The adjuster collects the premiums from the claimant

A. The adjuster acts as a liaison between the claimant and the insurer

In an investigation, "critical evidence" could include all of the following, EXCEPT: A. The claimant's premium payment history B. Statements from the claimant and at-fault party C. Photographs of the damage D. Sketches of the property

A. The claimant's premium payment history

What are the four options for responding to a claim?

Accept the request and pay the claim Reject the request and deny the claim Negotiate a settlement Dispute the resolution

What is the first step in the claims process?

Acknowledging the claim

What are the 3 responsibilities of an agent?

Adhere to contract at all times Use reasonable judgment Supply all pertinent information to the insurer

What is the seventh step in the claims process?

Applying all policy coverages and provisions

What are the five options to dispute a resolution?

Arbitration Mediation Appraisal Declaratory Judgement Litigation

Which of the following statements is FALSE? A. An agent is authorized to act as a representative of another party B. An agent always has a fiduciary duty to defend the claimant C. An agent may represent more than one party D. An agent's actions are construed as those of the party she represents

B. An agent always has a fiduciary duty to defend the claimant

After her business suffered damage in a fire, Jane filed a claim with Acme Insurance, which dispatched Bob to adjust it, even though he was not allowed to adjust commercial claims. He investigated Jane's losses and submitted his estimate to Acme Insurance, which issued her a settlement check based on that estimate. Bob had _____ because Acme Insurance accepted his estimate and paid Jane's claim. A. Agency authority B. Apparent authority C. Express authority D. Expert authority

B. Apparent authority

A severe storm rages through Oklahoma City, with tornados causing multiple square miles worth of damage. All the licensed adjusters in the area are already occupied or deployed to the scene. Who can the insurance commissioner look to for temporary help resolving the rest of the claims from this storm? A. Staff adjusters B. Emergency adjusters C. Independent adjusters D. Public adjusters

B. Emergency adjusters

Jim is working a claim. Currently, he is applying all financial provisions of the policy, including the policy limits, co-insurance, valuation, and deductibles. In which stage of the claims process is Jim currently working? A. Negotiation B. Evaluation C. Investigation D. Reporting

B. Evaluation

From a legal standpoint, when a policyholder files a claim against her insurance policy, she is essentially submitting a / an: A. Indemnification B. Formal request to settle the damage C. Order for damage repairs D. Bill for damage repairs

B. Formal request to settle the damage

Jim is currently working on a property damage claim, gathering evidence, reviewing police reports, and interviewing witnesses. In which stage of the claim adjusting process is Jim currently working? A. Evaluation B. Investigation C. Resolution D. Negotiation

B. Investigation

A witness who has had a recorded interview: A. Must have a lawyer present during the interview B. Must have a chance to correct anything that is incorrect C. Is taken more seriously D. Must do so under oath

B. Must have a chance to correct anything that is incorrect

Which of the following is NOT a duty of a captive agent? A. Representing the insurer B. Negotiating settlements C. Selling insurance policies D. Servicing policies

B. Negotiating settlements

Of the following adjuster duties, which would be first? A. Prepare adjustment reports B. Open lines of communication C. Assess the damages D. Investigate liability

B. Open lines of communication

An adjuster acts as an agent for the insurer. As such, it is essential that the adjuster understand: A. Her duty to check in daily with the insurance company B. That her words or actions may bind the insurance company C. Her duty to profit from every claim investigation D. That she must always offer a settlement favorable to the claimant

B. That her words or actions may bind the insurance company

Define: Structured settlement

Breaks up the indemnity into a series of smaller payment

An insurance claim is essentially: A. A formal request to repair the damage B. A formal explanation of insurance coverage C. A formal request to settle the damage D. A formal offer to repair the damage

C. A formal request to settle the damage

Allen is adjusting an auto claim on behalf of ABC Insurance, which ahs given Allen $5,000 in draft authority. The total damages in the auto claim come to $7,200. Which of the following is true? A. Allen can write a check for a half of the damages and ABC Insurance will write another check for the other half B. Allen must negotiate with the claimant to reach an agreement on a settlement amount of $5,000 or less C. Allen can adjust the claim, but ABC Insurance must write the settlement check D. Allen is not allowed to adjust this claim, because the amount of damages exceeds his draft authority

C. Allen can adjust the claim, but ABC Insurance must write the settlement check

Which of the following statements is NOT true of an insurance adjuster? A. An insurance adjuster who settles claims on behalf of an insurer has the power to bind that insurer, even if she makes a mistake B. An insurance adjuster is an agent C. An insurance adjuster receives her authority to sell products on behalf of the insurer through a written contract D. An insurance adjuster must always use reasonable judgment for both the insurer and the claimant

C. An insurance adjuster receives her authority to sell products on behalf of the insurer through a written contract

Tom is looking for a job in the insurance industry. He wants to work for only one insurance company, selling policies on commission basis. Which type of insurance agent position best fits what Tom is looking for? A. General agent B. Direct writer C. Captive agent D. Independent agent

C. Captive agent

What is the first step of the evaluation process of a claim? A. Investigating the claim B. Determining the cause of the loss C. Determining time and cost of repairs D. Acknowledging the claim

C. Determining time and cost of repairs

James signed a contract with XYZ Insurance that enables him to sell insurance policies and collect premiums on their behalf. What authority has James been granted? A. Implied authority B. Full authority C. Express authority D. Apparent authority

C. Express authority

Ben's automobile was struck by another driver, Roxanne. Ben files a claim with Roxanne's insurer, who accepts the claim. Ben signs a release form and is issued a check that covers all damage to his car. Which settlement type would this fall under? A. No release settlement B. Partial release settlement C. Full release settlement D. Advanced payment

C. Full release settlement

An adjuster who acts as a fiduciary agent for an insurer must: A. Represent the policyholder in her interactions with the insurer B. Be a salaried employee of that insurer C. Have authority granted by the insurer through a contract D. Deal with the insurer's lawyer instead of directly with the insurer

C. Have authority granted by the insurer through a contract

What do you call a self-employed adjuster who works as a contractor for insurers or claims-handling companies? A. Public adjuster B. Emergency adjuster C. Independent adjuster D. Staff adjuster

C. Independent adjuster

An adjuster who has just taken witness statements for a claim she is currently investigating, but is not yet ready to close the claim, may submit to the insurer a / an: A. Preliminary report B. Witness deposition report C. Interim report D. Full report

C. Interim report

Roger is an insurance adjuster. He has just arrived at the claimant's home with an engineer in order to determine the exact repair costs of repairing the home's foundation that was damaged in an earthquake. Which step of the claim process is Roger currently engaged in? A. Reporting B. Negotiation C. Investigation D. Claims management

C. Investigation

Julie works as an insurance adjuster for XYZ Insurance. While adjusting a claim, she determines that the claimant is covered by his insurance contract and issues him a settlement check for $5,000. The insured cashes the check and performs the repairs. Two months later, the insurer reviews the file and realizes that the claimant's damages were NOT covered by the policy. The insurer demands the settlement money back. Which of the following best explains why the claimant will most likely not have to return the money? A. Subrogation does not allow the insurer to recover payment B. The settlement payment was a warranty C. Julie had the power to bind the insurer to her decision to pay the claim D. Julie issued the settlement based on guarantees provided by the claimant

C. Julie had the power to bind the insurer to her decision to pay the claim

Jim is currently working on a liability claim, and has completed his investigation. He presents his findings to the claimant, who disagrees with the settlement offer. Into which stage of the adjusting process is Jim about to enter? A. Claim evaluation B. Determining liability C. Negotiation and resolution D. Claim reporting

C. Negotiation and resolution

When responding to a claim, the adjuster's primary motivation should be: A. Negotiate effectively B. Find a way to deny the claim C. Settle the claim quickly and fairly without litigation D. Settle the claim for the least possible amount

C. Settle the claim quickly and fairly without litigation

Jane is a salaried employee of XYZ Insurance. Working out of a regional office, Jane is sent to deal with some of the most difficult claims in her area. What kind of adjuster is Jane? A. Emergency adjuster B. Public adjuster C. Staff adjuster D. Independent adjuster

C. Staff adjuster

For a bodily injury liability claim, the adjuster must determine all of the following, EXCEPT: A. The severity of the injury B. The presence of any pre-existing conditions C. The amount of punitive damages requested D. The type of injury

C. The amount of punitive damages requested

Which item would NOT belong in an adjuster's initial report on a claim? A. The date that the adjuster first contacts the claimant B. A list of all known circumstances surrounding the claim C. The final settlement amount D. A detailed list of the damages being claimed

C. The final settlement amount

Which of the following is NOT a characteristic of a full release settlement? A. The claimant signs a full release form B. The insurer pays an immediate, single lump sum to the claimant C. The insurer pays for certain future "incidentals" related to the claim D. All damages are paid at once

C. The insurer pays for certain future "incidentals" related to the claim

Which of the following does not apply to the adjuster's responsibility of reporting to the principal? A. The reports should include any pertinent information about investigations the adjuster has performed B. The reports should be frequent and detailed C. The reports should include advice on how to get out of paying covered claims D. The reports should include information that would benefit the principal

C. The reports should include advice on how to get out of paying covered claims

Define: Exclusive agent (captive agent)

Commissioned; offers products from only one insurer

After a storm demolished Greg's house, his insurance company sent an adjuster out to adjust his claim. After investigating Greg's claim, the adjuster offered him a settlement which Greg felt was too low. Not knowing much about property insurance, Greg wans a second opinion to make sure he is receiving what he deserves. Who might Greg hire to help him with negotiating a fair settlement? A. An independent adjuster B. An insurance adjuster C. A staff adjuster D. A public adjuster

D. A public adjuster

Sue suffered some property damage to her home. She makes a claim with her insurer based on a damage estimate of $12,000 she received from a contractor. The adjuster inspects the damages as well and comes up with an estimate of $11,957. What is the best solution to resolve this claim? A. Negotiate the claim until the claimant and the adjuster come up with closer settlement amounts B. Reject the claim, since the claimant's offer is higher than the adjuster's estimate C. Allow a court to decide a proper settlement amount, since the two estimates are different D. Accept the claim, since the damage has been proven and the total is very close

D. Accept the claim, since the damage has been proven and the total is very close

Which of the following statement about arbitration is TRUE? A. An arbitrator plays no role in the outcome of negotiations B. An arbitrator costs significantly more than a civil trial C. An arbitrator tries to get both sides to come together in agreement D. An arbitrator makes a legally binding decision upon the evidence

D. An arbitrator makes a legally binding decision upon the evidence

At what point in the claims process might a Reservation of Rights letter be sent? A. At the end of the claims settlement process B. When a witness statement contradicts the adjuster's evaluation C. When the investigation is complete D. At the beginning of the investigation

D. At the beginning of the investigation

Ben is an adjuster with XYZ Insurance and is currently working on a claim. He has already called the claimant and has just finished preparing all the paperwork needed to move forward with the claim. What is the next step for Ben? A. Open a line of communication with the claimant B. Begin negotiations C. Investigate the claim D. Determine whether the claimant has an insurable interest in the damaged property

D. Determine whether the claimant has an insurable interest in the damaged property

After Jerry pulled the fire alarm, the indoor sprinkler system came on and flooded the offices at Elliot Designs, causing thousands of dollars in damage. Elliot Designs filed a claim with KLM Insurance, who dispatched Chrystal to investigate and process the claim. Who is the claimant in this scenario? A. KLM Insurance B. Jerry C. Chrystal D. Elliot Designs

D. Elliot Designs

_____ authority is what the public reasonably believes the agent has, based on the agent's representations. A. Contract B. Apparent C. Express D. Impied

D. Implied

William is wearing an ABC Insurance jacket and has an ABC Insurance sign over his rented office. The walk-in customer could reasonably believe that he has the authority to write an insurance contract because of his: A. Apparent authority B. Express authority C. Agent authority D. Implied authority

D. Implied authority

Susan calls herself an insurance broker. She sells multiple lines of insurance from a variety of insurance companies. What type of agent is Susan? A. Direct writer B. General agent C. Captive agent D. Independent sales agent

D. Independent sales agent

A / an _____ plays an advisory role in the negotiation process, working from a neutral position to assist the opposing parties to come to an equitable resolution. A. Arbitrator B. Adjuster C. Judge D. Mediator

D. Mediator

Which of these is NOT an essential detail for an adjuster to include in a loss report? A. The policy limit B. The policy deductible C. The policy number D. The policy premium

D. The policy premium

Why might an insurer send a claimant a Reservation of Rights letter? A. When the insurer has decided not to cover the loss B. When the insurer needs more information before making a final decision C. To let the claimant know that the insurer has received all necessary paperwork D. To let the claimant know that there is a coverage dispute

D. To let the claimant know that there is a coverage dispute

Jake is selling insurance policies for XYZ Insurance. Olivia buys a homeowners policy from Jake and asks him to write down on a separate piece of paper all the perils the policy covers so she can show her husband. Jake writes "hail," but when Olivia's house is damaged by hail, the adjuster says "hail isn't covered in your policy." Olivia produces the piece of paper and threatens to sue XYZ Insurance if they don't pay. Does she have grounds for a lawsuit? Why or why not? A. No; Jake was unaware of the policy's hail coverage exclusion B. Yes; hail coverage is standard in property policies, and the insurer should have included it in the first place C. No; Jake had no authority to promise coverage that was not listed in Olivia's policy D. Yes; Jake exercised implied authority when he wrote that Olivia had hail coverage

D. Yes; Jake exercised implied authority when he wrote that Olivia had hail coverage

What is the fourth step in the claims process?

Determining insurer's liability in the claim

What is the sixth step in the claims process?

Determining the time and cost of repairs

What is the second step in the claims process?

Establishing lines of communication

What are the 3 types of authority?

Express authority implied authority apparent authority

How many options are there to dispute a resolution?

Five

How many options are there for responding to a claim?

Four

What is included in a final report?

Full details of claim investigation, evidence, loss totals, and final claim resolution

Define: Express authority

Given in writing within the agent's contract

Define: Apparent authority

Granted when the insurer does not stop the agent from acting in a certain way, even when those actions do not adhere to the authority granted in the contract

Define: Public adjuster

Hired by the insured, usually paid commission

What is included in a preliminary report?

Initial investigation results, timeline of claim, initial claim reserve

Define: No release form

Insurer cuts a check for the amount of the damages, but the claimant is not required to sign a release form

Define: Payment of property damage, bodily injury pending

Insurer indemnifies for property damage first; then bodily injury, when the amount is availalbe

Define: Advanced payment

Insurer makes multiple partial payments until the final settlement is agreed upon

Define: Scheduled payment release

Insurer pays all compensatory damages and agrees to pay certain future "incidentals"

Define: Full release

Insurer writes one check to cover all damages; claimant signs a full release form

What is the fifth step in the claims process?

Investigating the losses

Which dispute resolution should be a last resort?

Litigation

What is the eighth step in the claims process?

Negotiating a settlement

Define: Adjuster

Person who investigates, evaluates, and negotiates claims arising under insurance contracts

What are the 3 types of adjuster reports?

Preliminary Interim Final

What is the ninth step in the claims process?

Preparing final reports

What is the third step in the claims process?

Preparing necessary paperwork

Define: Implied authority

Reasonable for public to believe, not expressly granted in writing

Define: Agent

Receives the authority to act on behalf of another

Define: Staff adjuster

Salaried employee of an adjuster

Define: Direct writer

Salaried employee; works for one company

Define: Independent adjuster

Self-employed, contracts with insurers or bureaus, paid by schedule, or time + expense

Define: Independent agent

Self-employed; sells insurance from many insurers

Define: Emergency adjuster

Temporarily licensed to service the many claims arising from catastrophes

Define: Fiduciary agent

The adjuster acts on behalf of principal and must protect the principal's interests

Define: Report to the principal

The adjuster must give the principal detailed information on how each claim is going

Define: The power to bind

The principal may have to honor the adjuster's decisions, even when made in error

Define: Adjusting

The process of comparing a claimant's losses to the promises made in an insurance policy

Define: General agent

Trains and supervises exclusive agents for an insurer

What is included in an interim report?

Update on progress of claim due at set intervals

When should you negotiate a settlement?

When the claimant's offer is within a reasonable range of the insurer's