Assignment 12: Property Claims Quizzes
Which one of the following statements is correct regarding the marketing value of the claim function?
The claim adjusting process can be a source of new coverage ideas and product niche innovations.
The control of a computer user's ability to review, enter, and change information in a claim information system is an example of which one of the following types of claim department control?
A. Access security
Tobias, a claim representative, is handling a very important and very large claim involving sophisticated corporations. To prevent any insiders from accessing his analytical documentation of the claim, Tobias would likely use which one of the following controls?
A. Access security
Which one of the following is a claim control used to help meet regulatory compliance?
A. Access security
Worthley Insurance Company uses claim audits to ensure compliance with best practices. These audits evaluate both quantitative and qualitative factors. Which one of the following factors that Worthley evaluates is a qualitative factor?
A. Accurate evaluation of insured's liability
Because claim representatives handle a large volume of claims, which one of the following claim procedures is a crucial record of analyses that occurred on each claim?
A. Activity log
Insurers can use different methods of setting claim reserves. Which one of the following methods establishes a predetermined dollar amount of reserve for each claim as it is reported?
A. Average value
Claim audits are a review of claim files to ensure that claims are being handled properly, and
A. Can be conducted by an individual other than an insurer's internal personnel.
Regarding file documentation, the activity log form should be completed as events occur and include the day, month, time, and person making notes. It should also be a brief notation of file activities and analysis. This described procedure is known as a
A. Claim guideline.
Which one of the following statements regarding authority levels is true
A. Claim information systems might allow different authority levels for different types of employees.
In the claim function, supporting the insurer's profit goal is accomplished through
A. Controlling expenses.
Which one of the following statements is correct with respect to state insurance regulators' involvement in the claim handling process? Select one:
A. Enforcement of controls by state insurance regulators is usually handled under the Unfair Claims Settlement Practices Act or similar legislation.
Which one of the following is the most common type of intentionally caused loss?
A. Fire
Jessica has her car insured for liability, collision, and comprehensive coverage with Greatview Insurance. She has decided to purchase a pickup truck as a second vehicle. As she is leaving the dealership with her new pickup, she accidently collides with another vehicle, causing damage to both. Neither she nor the other driver is injured. Jessica returns home and calls her insurer to advise of her new purchase and to report the claim. Her claim is assigned to Lucas. After identifying the policy and entering initial loss information, which one of the following describes how Lucas would most likely proceed?
A. He would confirm that a "newly acquired auto" meets the policy definition of "your covered auto."
Which one of the following statements is correct regarding property claims?
A. Insurers rarely require an examination under oath, but when they do it is usually because they suspect the policyholder of fraud.
Chloe is a claim representative with Fredine Insurance Company. She has been assigned a personal lines automobile claim for insureds, Oscar and Sara. Oscar and Sara were involved in an accident with another vehicle, and there is damage to both vehicles. In addition, the driver of the other vehicle and Sara each suffered minor injuries in the accident and were treated in the emergency room. Chloe follows the usual steps in the claim handling process. She identifies the policy and sets her initial reserves. She also confirms the details of the accident in a conversation with Oscar and Sara. Using the framework for the claim handling process, which one of the following will most likely be Chloe's next step?
A. Investigate the claim.
Which one of the following best describes the purpose of authority levels for claim personnel?
A. Limiting reserve and payment amounts
Which one of the following statements is true concerning claim information users?
A. Producers must have policyholder loss information to prepare renewal policies properly.
Which one of the following statements is true concerning claim information users? Select one:
A. Producers must have policyholder loss information to prepare renewal policies properly.
People who handle claims may be staff claim representatives, independent adjusters, employees of third-party administrators, or
A. Producers who sell policies to insureds.
The question "Is the location of the loss covered?" is a part of the framework for coverage analysis because the location where the loss occurred must be within the policy's territorial limits. The PAP includes which one of the following locations in the definition of policy territory?
A. Puerto Rico
Files chosen by managers or technical support staff for internal claim audits are selected on the basis of the
A. Reason for audit.
Supervisors and managers often use a diary or suspense when handling claims as
A. Reminder systems to review claim files.
Anna has a homeowners policy with RMI Insurance Company. Her full-length mink coat is covered under the policy on a stated amount (value) basis for its appraised value of $3,500. After retrieving her coat from the coat check at a restaurant one evening, Anna discovers that someone has slashed the lining in a number of places and has smeared what appears to be nail polish on the fur. The adjuster handling the claim at RMI determines that the coat is damaged beyond cleaning and repair. He also determines that since the coat was originally appraised, it has suffered significant moth damage and estimates its current value at $1,500. Assuming no exclusions apply to this claim, which one of the following describes how Anna's loss would be settled?
A. The adjuster would pay the actual cash value of the coat at the time of the loss, or $1,500.
Claim representatives are responsible for determining the cause of loss, liability, and the loss amount. Which one of the following statements is correct with respect to this process?
A. The claim representative reviews all component parts of the policy and applies them to the facts of the case.
Claim representatives begin investigating a claim as soon as it is assigned. Which one of the following statements is correct with respect to investigation?
A. The insurer's claim handling guidelines help determine the type and extent of investigation needed for a satisfactory claim settlement.
State insurance regulators conduct claim audits to ensure
A. Understanding of reserving practices.
At year-end, SBC Insurance Company posted the following results: Incurred losses - $18 million Loss adjustment expenses - $2 million Underwriting expenses - $5 million Written premiums - $26 million Earned premiums - $24 million Based upon the company's year-end results, which one of the following represents SBC's loss ratio?
B. 83%
If a claim is complex or if settlement negotiations are not progressing with the insurer, the insured may hire
B. A public adjuster.
An employee of an insurance company who performs some or all of the insurer's claim-handling activities is called
B. A staff claim representative.
Which one of the following statements is correct with respect to establishing actual cash value (ACV) of damaged property?
B. Adjusters often rely on published guides to determine depreciation and individual insurers create such guides based on their experience.
Property claim adjusters are primarily concerned with
B. Applying detailed policy provisions to specific situations.
The question, "Did the Loss Occur During the Policy Period?" is part of the framework for coverage analysis. Which one of the following statements is true with respect to policy periods?
B. Courts have interpreted the date of occurrence differently.
Which method of discovery can be described as sworn statements made about the activities or knowledge of a party or witness concerning the subject matter of a lawsuit that can be used as trial evidence if that party or witness cannot attend trial?
B. Depositions
For which one of the reasons below might actuaries review claim files?
B. Determination of how reserves were established
Antonia and Philip have their house insured with Durham Insurance under an HO-3 homeowner's policy. Philip is the named insured and there is no mortgagee shown on the policy. During a storm, a lightning strike results in a kitchen fire and high winds causes a tree to fall on the roof, leaving a large hole. The homeowners make emergency repairs to protect against further damage and report the loss to the insurer. The claim is assigned to Miguel who identifies the policy and performs an initial review. After discussing the loss with Antonia and Philip, which one of the following will Miguel most likely do?
B. Determine whether lightning and windstorm are covered causes of loss and whether any exclusions apply
Most insurers give some producers the authority to pay claims up to a certain amount. In this role, producers function much like an
B. Inside claim representative.
A supervisor reviews claim files to examine the technical details of claim settlements, ensure that claim procedures are followed, and verify that appropriate, thorough documentation is included. This supervisor is conducting a(n)
B. Internal claim audit.
Riko is an automobile claim representative who has been assigned a claim submitted by John. John owns a Honda Civic, which is insured in his name for liability, collision, and comprehensive coverage on a Personal Auto Policy (PAP). He is the only named insured on the policy. John lives with his parents and his sister, Carla. One Saturday, while John is asleep, Carla borrows his car to run errands. Unfortunately she backs into the concrete base of a sign at the mall, damaging the vehicle. Riko confirms that the Honda is the covered vehicle, that it is insured against collision, and that the loss occurred during the policy period. Which one of the following will she most likely determine next?
B. Is Carla covered as a driver of the damaged vehicle?
Which one of the following is a main cause of depreciation?
B. Obsolescence
A form of ownership in which two or more owners each have an identifiable fractional interest in property is known as
B. Ownership in common.
Which powerful adjustment tool is written, signed, and sworn to by the insured, yet not often used by property adjusters?
B. Proof of loss
After a property claim is submitted, the insured is required to assist the adjuster with the loss adjustment process by
B. Providing an inventory of the damaged property.
The purpose of an activity log is to
B. Record all activities and analysis of a particular claim.
To determine if a person is a named "insured" under a policy, the claims representative would generally need to review
B. The Declarations section and Definitions section.
An insurer's public image is determined largely by
B. The claim department's behavior
Which one of the following statements is correct regarding the claim function of an insurer? Select one:
B. The claim function helps insurers achieve underwriting profit through control of expenses.
Which term-14one of the following statements is correct regarding the claim function of an insurer?
B. The claim function helps insurers achieve underwriting profit through control of expenses.
People who handle claims fall into a number of categories. Those who handle claims, keep claim records, and perform statistical analysis on behalf of self-insureds are called
B. Third-party administrators.
An important aspect of acknowledging a claimant's liability claim, upon first contact, is
B. To try to obtain information on the nature and extent of the injury.
Generally anyone has an insurable interest in property who
B. Would be financially harmed by the destruction of that property.
Anil has his automobile insured with ABC Insurance through his agent, Chad. Returning to his car in a shopping mall parking lot, Anil sees that vandals have spray painted graffiti on his vehicle. He calls Chad to report the damage and ask what he should do. Chad tells him to report the vandalism to the police, follow their instructions, and then take the vehicle home and wait for a call from a claim representative. Chad then reports the loss to ABC. Melissa is the claim representative assigned Anil's loss. Which one of the following will be the first step Melissa takes?
C. Acknowledge receipt of the claim to Chad and enter the claim information into ABC's computer system.
Whenever a claim representative performs an activity related to a claim that is being managed, a notation is made into an activity log. This is an example of which one of the following?
C. Claim guidelines
Soon after a loss has been assigned and initial reserves have been established, a claim representative contacts the insured or the insured's representative. Which one of the following statements is correct with respect to that contact?
C. Claim representatives must be careful not to give the impression that a claim will be paid if potential grounds exist to deny the claim.
Which one of the following statements is true regarding claim department contacts? Select one:
C. Consumer complaints are investigated by the state insurance departments.
Coverage analysis is the process of examining a policy by reviewing all its component parts and applying them to the facts of a claim. Within this analysis, the question "Is the Type of Loss Covered?" helps the claim representative to classify losses as
C. Direct and indirect.
Which one of the following statements is correct with respect to claimants' representation by lawyers?
C. For some types of claims and in certain areas of the U.S., claimants are more likely to hire lawyers.
Damages that courts award in order to compensate claimants for such things as pain and suffering that do not involve specific measurable expenses are referred to as
C. General damages.
In addition to claims personnel, internal claim audits may be conducted by personnel from other departments, such as
C. Human resources and training.
A prerequisite to asserting a claim under a property insurance policy is which one of the following types of interest in the policy?
C. Insurable
Which one of the following statements is true?
C. Intentionally set fires are arson, whether committed by the insured or not.
Angus, a claim representative for Premium Insurance Company, is adjusting a liability claim where his insured, Josephine, lost control of her brother Horace's car and caused $1,500 in damage to a grocery store. Horace has auto coverage with Upland Insurance Company. Seeking to determine whether other coverage applies, Angus refers to the Other Insurance section of Josephine's Personal Auto Policy (PAP) and finds that
C. Josephine's PAP is excess over Horace's PAP.
Incurred losses (including loss adjustment expenses) divided by earned premium is the formula for
C. Loss ratio.
Which one of the following statements is correct?
C. Most property insurance policies provide coverage only for direct physical loss.
A direct marketing company sells its merchandise on the Internet and relies on a large number of owned computers to process its orders. One evening, a fire destroys the office and all of its personal property. The marketing company insures the office personal property on an actual cash value basis. Given this information, which one of the following is the major factor in determining depreciation with this loss?
C. Obsolescence
For liability claims, damages for which the insured may be found liable include compensatory and
C. Punitive.
When adjusting a property loss, a claim representative must determine whether or not the loss was caused by a covered peril. Insurance that covers every cause of direct physical loss or damage that is not specifically excluded is referred to as
C. Special form coverage.
One of the primary goals of the claim function is
C. Supporting the insurer's financial goals.
The claim handling process begins when the insured reports the loss to the producer or to the insurer's claim center. Which one of the following statements is correct with respect to the next element of the claim handling process?
C. The insurer provides the insured with a claim number and contact information for the assigned claim representative.
Benjamin has his home insured with Westfork Mutual under an HO-3 policy for $100,000. He is the named insured on the policy. There are three other residents of the home: Maria, Benjamin's mother; Daniel, his nephew; and Cian, a family friend. An accidental fire causes damage to the home and to personal property of all four occupants. Benjamin reports the loss to Westfork and Fatima, a claim representative, is assigned the claim. Which one of the following will most likely be Fatima's principal concern when analyzing coverage for the loss?
C. Whether Maria's, Daniel's, and Cian's property would be covered
An insurance company employee who investigates the scene of a loss; meets with insureds, claimants, lawyers, and others; and inspects damage is most accurately called
D. A field claim representative.
Juanita is the senior claim officer for Worthy Insurance Company, which uses the claim audit as a performance measure for its claim operations. Claim audits usually evaluate both quantitative and qualitative factors. Which one of the following factors is qualitative for Juanita and her staff?
D. Accurate evaluation of insured's liability
A rare antique French desk in the foyer of a commercial office building is destroyed when the automatic sprinkler system deploys during a minor fire. Under a commercial property policy, which one of the following property valuations was best suited for this antique?
D. Agreed amount
Which one of the following is an example of the use of access security?
D. Allowing only managers to review certain data
Jerry is an experienced claim adjuster who handles claims for Jackson Insurance Company during hurricane season when Jackson's staff adjusters need assistance. Jerry is
D. An independent adjuster.
Which one of the following items' property value would be most dramatically and suddenly affected by depreciation?
D. Computer system
In handling a property claim under Special Form Coverage, a claim representative should gather facts about the cause of loss and then
D. Determine if the cause of loss is excluded in the Special Form Coverage
In handling a property claim under Special Form Coverage, a claim representative should gather facts about the cause of loss and then
D. Determine if the cause of loss is excluded in the Special Form Coverage.
Which one of the following statements is true concerning personal property?
D. Fixtures are personal property that have become attached to and part of real property.
All of the following are questions adjusters ask to determine whether fixtures are real property, EXCEPT:
D. How long has the fixture been on the property?
When the investigation has been completed and all documentation has been received, the claim representative must decide whether to pay the claim or deny it. Which one of the following statements is correct with respect to this element of claim handling?
D. If a disagreement arises over the value of a claim, alternative dispute resolution methods may be used to resolve the situation.
Under certain circumstances, an insurer may authorize the adjustment of claims by producers. One of the benefits of providing producers with draft authority is that
D. If an agent can issue a draft directly to the insured, it reduces the time an insured waits for payment.
Which one of the following statements is correct with regard to the various users of claim information?
D. Individual underwriters are interested in claim information for the specific accounts they have underwritten.
Which one of the following statements is correct with regard to notice of loss requirements under property policies?
D. Insurers require prompt notice of claims because claim representatives can't properly investigate losses after too much time has passed.
The first goal of the claim function is to
D. Look for reasons to avoid paying reported claims.
With a property loss, the insured is required to
D. Notify the police in case of loss by theft.
Liability policies cover insureds for compensatory damages an insured owes to a third party. Compensatory damages normally covered by the policy include
D. Pain and suffering and out-of-pocket expenses claimed up to the policy limit
After a property loss, the insured is required to protect the property from further loss by making emergency repairs and by implementing emergency safeguards. Such measures are a reimbursable part of the loss as long as they are
D. Reasonable and necessary.
Alexis has inherited a family cottage that she has insured with Millstone Insurance for $100,000. One weekend while Alexis is at the cottage, a fire starts in the night. The cottage is a total loss. Alexis calls her insurance agent who reports the claim to Millstone. The claim is assigned to Victor, a property claim representative. After entering the information from the notice of loss into Millstone's claim-processing system, which one of the following will Victor most likely do?
D. Set preliminary loss reserves
Insurers use a variety of different methods when setting claim reserves. Which one of the following statements is correct with respect to loss reserves?
D. Setting accurate and adequate reserves is important to an insurer's continued solvency and ability to write new business.
Which one of the following statements is true concerning claim department contacts?
D. State regulators monitor insurers' activities in the claim settlement process.
Which method of valuing property is typically used for jewelry or furs, when a sales receipt or appraisal is available for the property in question?
D. Stated value
When the policy does not define a cause of loss or another term, which one of the following can the claim representative use to determine the meaning?
D. Statutory provisions
One of the first determinations a claim representative must make is whether or not the person involved in a loss is covered. In order for an individual to be covered under a property insurance policy, all of the following conditions must apply, EXCEPT:
D. The individual must provide the systematic framework for coverage to the claim representative.
All of the following correctly describe reasons for the use of independent adjusters, EXCEPT:
D. The insured may retain an independent adjuster if settlement negotiations with the insurer are not progressing satisfactorily.
Buddy's store is damaged in a fire. He suffers loss of his merchandise as well as loss of income while he replenishes his stock. His direct loss is
D. The loss of his merchandise and damage to the store.
A property claim adjuster must answer a series of questions as part of the claim adjusting process. All of the following questions can be answered by consulting the policy and applying policy language to the given situation, EXCEPT:
D. What is the dollar amount of the loss?
Which one of the following statements is true regarding property claim adjusting?
D. When the application of a coinsurance penalty reduces the recoverable amount of a property loss, the insured benefits by having the deductible applied first.
