Indiana Adjuster Pro Exam

Annual Depreciation

An item's replacement cost divided by the number of years in its expected lifespan.1-J

Crime

An offense against the state or federal government, or a breach of law, for which the offender must make satisfaction to the public.4-G

Certificate of Insurance

An official document that contains the details of an insurance policy. It typically lists the insurance company, the named insured, what is covered, and the dates of the policy period, among other things. Policyholders may be required to present their certificate as proof that insurance coverage is in effect.1-B

Annual Transit

An uncontrolled inland marine form that covers loss of goods in transit. It applies to all of the insured's shipments during the year. 5-E

Declaratory Judgement Action

As an alternative dispute resolution before litigation, the court can clarify the legal relationship and the rights of both parties: the claimant and the principal. Does NOT decide how to resolve the case.2-D

Agency Authority - Implied

Authority that an agent possesses by implication of her behavior, regardless of whether this authority is granted in writing. For example, a person portraying herself as a representative for an insurance company, even though she is not employed by that company. 2-A

Agency Authority - Express

Authority that is expressly given to the agent in writing. Allows the agent to act on behalf of the principal.2-A

Common Law

Based on court decisions and customs when statutory law does not provide an answer; creates precedent.1-L

Adhesion

Characteristic of an insurance contract. Means that one party (the insurer) sets the terms, and the other (the policyholder) can "take it or leave it."

Business Interruption Coverage

Commercial insurance form designed to indemnify a business if a covered peril leads to lost profits or revenue. The most common type of Time Element Insurance.5-J

Commercial Crime Insurance

Commercial insurance that covers employee dishonesty and theft by employees or others.4-G

Accident Insurance

Covers expenses associated with a covered accident and can extend to ambulance and emergency room expenses, intensive care, and hospital costs. Accident insurance also provides for loss of income, and a death benefit if injuries prove fatal.

Defamation

Damage to another's name or reputation, whether by libel (which is in print) or by slander (which is in speech).6-D

Contribution by Equal Shares

Each policy pays an equal share of the loss up to the lowest policy limit. If the loss is not fully covered, the process is repeated among the remaining insurers with available coverage. As each policy limit is reached, the remaining portion of the loss is split equally between the insurers with available coverage until the loss is either fully covered or all of the policy limits have been reached.2-F

Cancellation and Nonrenewal Condition

Establishes when and how the insurer or the insured can terminate an active insurance contract. The policyholder can cancel at any time by giving a written notice. Typically, the insurer may only cancel the policy for a few specific reasons, and it must give written notice of the cancellation or non-renewal anywhere between 10 and 60 days in advance. 2-F

Black Lung Benefits Act

Federal program that provides monthly payments and medical treatments to coal miners who become totally disabled from black lung disease or pneumoconiosis.5-G

Business Personal Property

Movable property used for business

Bodily Injury (BI)

Physical damage to someone's person. Liability insurance covers bodily injury that the insured might cause to another person through negligence.1-K

Adjuster - Staff

Salaried employee of one insurance company who can work locally, regionally, or nationally. Also called: Company Adjuster.2-B

Concealment

The act of withholding relevant material facts from an insurer.1-F

Copayment

The amount a policyholder must pay each time she accesses the benefits of a health insurance policy.5-H

Arbitrator

The mutually-agreed-upon and neutral third party in an arbitration who reviews the positions of each opposing side before making a final and legally binding decision.2-D

insurance

transfer of risk

Agricultural Producer

A business that grows, harvests, and sells crops for profit.3-E

Aleatory

A characteristic of an insurance contract. Means "depending on an unknown future event." An insurance contract will only pay IF and WHEN covered damages occur. Neither party knows how much the contract will end up paying when they enter into the contract.1-B

Complaint

A complaint initiates a civil lawsuit by one person (the plaintiff) requesting financial relief from damages caused by someone else (the defendant).1-L

Code of Ethics

A set of governing professional standards of conduct, usually created by regulatory bodies or government regulatory agencies. These standards may also be formally codified with statutes.6-C

Advance Payment Settlement

A settlement option that lets the insurer offer some financial relief to the claimant before the claim has been fully settled. The insurer makes advance payments to the claimant, which are then subtracted from the final settlement amount. Often used when a claimant suffers bodily injury and is unable to work. 2-D

Common Crop Insurance Policy

A single uniform policy that combines crop revenue coverage, revenue assurance, income protection, and indexed income protection.3-E

Binder

A temporary contract provided by an insurer, which ensures coverage until the complete, permanent policy is issued.1-F

Actual Cash Value (ACV)

A valuation method used by insurers to reflect an item's current market value right before being damaged or destroyed. Formula: (replacement cost - accumulated depreciation)

Agreed Value

A valued policy in which the insurer and the insured agree to a specific value for an item, appraised at the inception of the policy. Often used to insure items whose value is difficult to quantify, such as antiques or fine art. Also called a Guaranteed Value policy.1-J

Commercial Lines

A variety of insurance coverages that protect those involved in the business of creating, selling, displaying, evaluating, or shipping, etc. Examples include: business owner's policy (BOP); commercial property; commercial general liability (CGL); workers' compensation (WC); professional liability, errors and omissions (E&O); and employment-related practices liability.4-A

Bailee

An individual or company that receives the property of someone else for a special purpose and returns the property after use. 5-E

Catastrophe

An occurrence or a sequence of occurrences that causes enormous property losses. Catastrophes are normally uninsurable by private insurers.2-B

Commercial

Having to do with commerce or business activity in general. 4-A

Acreage Reporting Date

In crop insurance, the deadline for providing the insurer with an acreage report, which is used to determine the amount of coverage needed and the premium charged for a particular crop

Automobile

In insurance policies, automobile generally means any vehicle designed for use on public roads.3-C

Compensatory Damages - Special

Money awarded for the exact value of the physical damage caused to the plaintiff up to the trial date. This is an objective value determined by receipts and medical bills. 1-L

Compensatory Damages

Money awarded in civil court for tangible and intangible damages caused by a policyholder. There are two types: general and special.1-L

Civil Law

Observes court cases of one citizen charging another citizen for damages caused by tort. Differs from criminal law.1-L

Competence

One of the four qualifications of a legally binding contract. All parties must be competent, with the necessary legal and mental capacity.1-A

Consideration

One of the four qualifications of a legally binding contract. All parties must bring something of value to the contract.1-A

Agreement

One of the four requirements of a legally binding contract. All parties involved must agree to the terms of the contract. Can also refer to a binder, which is the preliminary substance of a contract.1-A

Claimant

One who files a claim with an insurer for a loss. 2-B

Criminal

Someone who has been convicted of a criminal act in a court of law.1-L

Agent (Insurance)

Someone who has received authority from an insurer to sell or service insurance policies.2-A

Dangerous Instrumentality Doctrine

States that anyone involved in the use of inherently dangerous products or machines is held 100% liable for their own damages.1-K

Declined Coverage

Takes place when an insurance company rejects an application for coverage. 1-D

Damages - Special

Tangible, financial losses that can be documented.1-L

Agency Authority

The agent's authority to act on behalf of someone else (the principal), usually an insurer. This authority is derived from the agent's contract with the principal. It can be apparent, express, or implied.2-A

Coverages

The amount and extent of protection provided by an insurance policy. 1-B

Deductible

The amount the policyholder must pay out-of-pocket before the insurance company will pay the remaining costs. There are three types: fixed, franchise, and percentage.1-J

Breach of Product Warranty

The failure or falsehood of a stated promise of a product stipulation.1-L

Coercion

The practice of forcing another party to behave in an involuntary manner (whether through action or inaction) by use of threats, intimidation, or some other form of pressure or force.6-D

Auto Policy Insurance

policy designed to protect the policyholder while owning, occupying, or operating a vehicle. Usually combines liability coverage and property coverage into one policy.3-C

Crop Hail Insurance

A form of crop yield insurance that is usually provided by private insurers without government subsidy. It offers named-peril protection on an acreage basis.3-E

Adjuster - Emergency

Adjusters who are temporarily licensed by the insurance commissioner to handle claims during catastrophes or emergencies that produce an overwhelming number of claims in a short period of time. !!!!

Damages - General

Intangible losses, such as pain and suffering or mental anguish. See also: "Punitive Damages."1-L

Deductible - Fixed

One specific, predetermined amount that a policyholder must pay out-of-pocket before his policy coverage kicks in.1-J Deductible - Franchise The policyholder only pays if the total damages come out to less than his deductible. If the cost of damages equals or exceeds the deductible, the insurer pays the full amount and the policyholder pays nothing. 1-J

Business Auto Policy (BAP)

Provides property damage and liability insurance for automobiles used by a business.4-F

Bailee Coverage

Reimburses a bailee's customer for damage to the customer's property while in the bailee's control. 5-E

Adjuster - Independent

Self-employed adjusters who contract with multiple insurers at the same time. Paid on a commission or fee-plus-expenses basis for each claim. Also called: Fee Adjuster, Bureau Adjuster. 2-B

Controlled Line Floaters

Standardized forms provided by a bureau and filed with the state. These forms disclose the rates being charged and can be used as both general property floaters (such as "personal effects" or "personal property") and specific property floaters that break down covered property by type.5-E

Claims Management

The practice of the insurance adjuster of managing a claim by processing it in a prompt and effective manner from the time the claim is filed until a settlement is reached, while adhering to all local and federal laws. 2-B

Business Floater Inland marine coverage

form designed for items that are excluded from most property contracts, such as accounts receivable records, manuscripts, blueprints, etc.5-E

Bond

A contract wherein one party guarantees the performance of a third party. Bonds involve three parties: (1) the surety agrees to pay the second party, (2) the obligee, if the third party, (3) the principal, neglects to carry out an obligation it has to the obligee. 4-D

Deductible - Percentage

A deductible that is calculated as a percentage of the value of the insured risk.1-J

Arbitration

A dispute resolution method in which the opposing parties each submit their evidence to a mutually-agreed-upon and neutral third party, called an arbitrator. The arbitrator reviews the positions of each opposing side and makes a final and legally binding decision.2-D

Appraisal

A dispute resolution method which allows the claimant and the insurer each to select an appraiser. The two appraisers in turn select an umpire. The appraisers then work together to determine a settlement amount. If they cannot agree, the umpire steps in. Agreement by any two of the three is binding. 2-D

Cause of Loss

A form included in a commercial package policy or a commercial property policy that lists the causes of loss against which the insured property is covered. 1-H

Actual Production History

A history of a farmer's crop yields over a multi-year period, which is used to determine the normal production level of a farm.

Claims-Made Form

A liability policy in which the insurer covers claims that are filed during the policy period, no matter when the loss occurred. The opposite of an occurrence form.4-B

Commercial Property Floater

A means of protecting a business' property that is not in one fixed location. Includes domestic shipments, instrumentalities of transportation and communication, and commercial property floater risks.5-E

Coinsurance Payment (Health Insurance)

A percentage of the total health care expenses that the insured must pay. 5-HCommerceThe exchange or transport of goods or property.4-A

Conditionally Renewable Policy

A policy that gives the insurer the option to cancel coverage only if certain stated conditions are met.5-H

Commercial General Liability (CGL)

A policy that protects a business against damages and injuries it may cause to third parties.4-B

Coinsurance

A property insurance provision that requires the policyholder to carry adequate coverage (typically at least 80% of the property's value). If a property does not meet this requirement (i.e. if it is underinsured), the insurer applies a penalty on claims for partial losses. The penalty requires the policyholder to pay a percentage of the claim, depending on how underinsured the property is. To calculate: divide the actual coverage by the coinsurance requirement and then multiply that by the loss. In health insurance, coinsurance refers to the portion of a covered claim that the insured is responsible for paying out-of-pocket, after the deductible has been paid. 1-J

Coarse Grains

A provision in crop insurance that covers reduction in crop quality, as well as crop-yield losses. Coarse grains are corn, grain sorghum, and soybeans. 3-E

Artificially Generated Current

Also called "artificial current." A peril covered in some property insurance policies. It includes sudden and accidental damage from any electrical current, except currents that are naturally generated, such as lightning or static electricity.3-A

Declarations Page

Also called the Dec page. First page of a policy, which provides a summary of the contract; includes names of insured, addresses, coverage limits, policy period, etc.1-B

Adjuster - Public

An adjuster who is hired to represent the claimant and help determine a fair indemnification. Usually specializes in appraisals and negotiation. Paid commission, usually a percentage of final settlement.2-B

Adjuster

An agent who, for compensation, processes insurance claims. The adjuster investigates the damages, evaluates the claim, and makes a fair and equitable settlement based on the insurance contract. Can represent either the insured or the insurer.

Contract

An agreement entered into voluntarily by two parties or more with the intention of creating a legal obligation.1-A

Capitation

An arrangement in which an insurer pays a certain healthcare provider up front, and in return, the healthcare provider agrees to treat all of that insurer's members.5-H

Crop Revenue Insurance

Crop insurance that combines crop-yield insurance and price insurance to protect against losses to crop value.3-E

Crop Yield Insurance

Crop insurance that covers physical losses to actual crops

Answer

In liability cases, the defendant's response to a complaint. There are three possible answers: 1) accept complaint and pay for damages, 2) deny the complaint, or 3) accept the complaint with a right to insert evidence into the case.1-L

Agency Authority - Apparent

Indirect authority that the agent can reasonably be assumed to have, based on appearances. If an adjuster is equipped to represent an insurer (with the insurer's permission), then an individual can assume that the adjuster has the authority to act on the insurer's behalf. 2-A

Crop Insurance

Insurance coverage designed to protect a farmer's financial investment in his crops. Covers losses to a crop's profitability.3-E

Automobile No-Fault Laws

Laws in effect in some states that require any owner of a vehicle to purchase no-fault insurance; that is, insurance that indemnifies the insured, regardless of who was at fault in an accident. No-fault laws also restrict the insured's right to sue the at-fault party. 3-C

Adjusted Gross Revenue (Crop Insurance)

Narrowest (and least expensive) form of crop revenue insurance. Insures farm revenue as a whole instead of individual crops. Guarantees a percentage of the insured farm's average revenue.

Average Weekly Wage (AWW)

The average amount of income that an employee earns each week while able to perform normal job duties. When an employee is injured on the job, his workers' compensation income benefits will depend on his AWW before the injury.5-G

Claim

The request for settlement that the policyholder files with an insurer after she experiences a loss. 2-C

Conditions

The section of a policy that qualifies or limits an insurer's promise to pay or perform.1-B

Accumulated Depreciation

The total decrease in an item's value over a period of time. Formula: (annual depreciation x number of years used). Subtract this number from the item's replacement cost to get its actual cash value (ACV).

Boiler & Machinery Insurance

coverage designed to indemnify a business for damages to, and damages by, boilers, machinery, motors, generators, and a variety of other electrical devices and appliances. 4-H

Aviation Aviation

insurance combines hull insurance for the aircraft and liability insurance for any damage to others' property or to people who are not passengers.5-F

Compensatory Damages - Genera

lMoney awarded for the emotional losses of the plaintiff that will continue after the trial date. These are a subjective value and are determined by the court. 1-L