AIC 30: 7-9 Practice Qs

An excess liability claim can arise when the insurer has an opportunity to settle the claim within the policy limits but fails to do so. This opportunity occurs when

A claimant demands the policy limits or an amount within the policy limits to settle the claim.

What is a pretrial discovery tool involving oral examination of a witness to produce a written verbatim statement?

A deposition

Claim representatives should be familiar with three common pretrial motions: motion to dismiss, motion in limine, and motion for summary judgment. Motion in limine is

A pretrial request that certain evidence be excluded from the trial.

From the standpoint of the insurer, if someone files a lawsuit against one of its insureds, this is which one of the following types of lawsuits?

A third-party-lawsuit

During the jury selection process, a defense attorney used all the allotted peremptory challenges to eliminate potential jurors that seemed hostile to the case. Which one of the following statements explains the extent, if at all, that the attorney can still exclude potential jurors?

Additional potential jurors can still be excluded, but the attorney must state the reason for doing so.

What statement about the appeal of a verdict in a civil trial is true?

An appeal may be based on the judge's instructions to the jury.

A litigation budget depends on the type of fee arrangement the defense attorney has with the insurer, which can usually include

An hourly or flat fee.

One aspect of good-faith claim handling is the fair evaluation of the claim. A fair approach to evaluating liability claims is for the claim representative to evaluate them

As if no coverage limit existed.

The losing party on a court of appeals case can appeal the case to the Supreme Court by filing a petition for a writ of centiorari. A writ of certiorari

Asks the Supreme Court to consider a case.

What involves the introduction of evidence in a civil court case?

Calling and questioning witnesses

What statement about the process of referring a lawsuit to defense counsel is true?

Certain insureds have the right in their contracts with the insurer to participate in selection of the defense counsel.

Good claim handling and good documentation can help to establish that insurers acted in good faith. Fair dealing and good documentation are especially important in situations involving

Claim denial and claim representation errors.

A claim negotiation technique that generally should not be used by claim representatives is called trading dollars. Which one of the following sentences best describes a negotiating technique known as trading dollars?

Claim representatives barter on the amount in dispute, not considering the facts of the claim.

Mark reported the theft of his auto to his insurer. Mark failed to keep three appointments with the claim representative investigating the case. The insurer denied the claim after Mark failed to attend the third scheduled meeting. Mark filed a lawsuit, asserting bad faith. Which one of the following defenses should the insurer raise?

Comparative bad faith

The allegation made by a plaintiff in a lawsuit is called a(n)

Complaint

What statement is correct with respect to negotiation styles?

Compromise is not a style of negotiation; rather it is the lack of a clear, dominant style.

Jim believed that he was the rightful beneficiary of the proceeds of a life insurance policy. When the life insurer denied his claim, Jim filed suit and won. The type of damages that were paid under the policy according to the terms of the policy are

Contractual damages.

In addition to compensatory damages, courts can award punitive damages when a plaintiff wins a bad-faith suit. What statement is true regarding factors affecting a court's decision to assess punitive damages?

Courts usually require insurer behavior that is worse than ordinary wrongdoing, such as malicious, fraudulent or oppressive behavior.

What accurately describes excess insurance?

Excess insurance provides insureds with additional coverage over and above the limits provided by the underlying policy.

Congress enacted which one of the following laws to protect the confidentiality and security of customers of financial institutions?

Gramm-Leach-Bliley Act

Actual service is one method of serving legal papers. This type of service involves the use of

Hand delivery

Claim representatives may use the win-lose style of negotiation

In resolving claims that appear to involve fraud.

What is correct with respect to fair evaluation of a claim?

Information about settlements or trial results from similar cases can help claim representatives knowledgably evaluate a claim.

Boulwarism, as a claim negotiation technique,

Invites conflict and prevents collaboration.

A claimant's attorney may use timing in negotiations with a claims adjuster

Knowing that insurers benefit from settling claims before litigation, which avoids additional court and legal costs.

Fatima is dealing with a fire claim submitted by Jessica. Claim negotiations are about to begin. Fatima is determined to settle the claim as quickly as possible, no matter what Jessica has to say. What negotiating style is Fatima going to use?

Lose-lose

What statement is true regarding the legal environment of bad faith in insurance claim transactions?

Most bad-faith law is case law.

Oscar is an insurance company workers compensation claim representative handling a claim for an injured employee, Maria. During a telephone conversation, Oscar informs Maria that the company physician has agreed to release her to full duty in three days and she can return to her job. Maria, who is enjoying time away from her employment, begins arguing with Oscar in an uncontrolled manner. She threatens that if Oscar does not give her three additional weeks off, she will hire an attorney to represent her. Which one of the negotiation pitfalls should Oscar avoid in this situation?

Oscar should avoid personalities to influence a settlement.

What is the most basic level of need according to Maslow's Hierarchy of Human Needs?

Physiological needs

The litigation process begins with which one of the following?

Receipt of the summons and complaint

If the state insurance department finds an insurer guilty of unfair claim settlement practices, based on the NAIC Model Act, it may impose

Revocation of an insurer's license, usually after other penalties have proved ineffective.

In response to the financial and accounting scandals of the 1990s, congress passed a law that required publicly traded companies to meet and certify certain financial disclosure requirements that required insurers and commercial insureds to conduct more intense investigations of claims to ensure legal compliance. The act that was passed for this purpose was the

Sarbanes-Oxley Act.

When an insured assigns rights against the insurer to the claimant because the insured wants to avoid paying the claimant, the claimant generally

Signs a covenant with the insured not to pursue recovery of the excess judgment from the insured.

It is important for a claim representative to determine whether the service of a lawsuit has been done properly. Which one of the following sets out the rules for service of a federal lawsuit?

The Federal Rules of Civil Procedure

What is true regarding the regulation of insurers' claim settlement practices?

The National Association of Insurance Commissioners (NAIC) Model Act allows regulators to suspend or revoke a claim representative's license for violating the act.

During the negotiation process, claimants experience all of the following phases

The crisis phase, the motivation phase, and the bargaining phase

Although rare, an insured and claimant may conspire to allow the claimant to recover an excess judgment and agree to split the proceeds. Such collusion is more likely when

The insured and the claimant are related or are close friends.

A third-party bad-faith suit is one in which

The insured sues his or her insurer for bad faith in handling a claim brought by another person against the insured.

A court can adjust the damages awarded by a jury. This typically happens under which one of the following circumstances?

The jury awards an extraordinarily high judgment that is disproportionate to the damages

A motion is a written proposal for how a dispute should be resolved. Motions are governed by

The rules of civil procedure.

What is the key responsibility of a claim representative after receipt of a summons and complaint?

Timely referring the lawsuit to defense counsel

What statement is correct with respect to the use of the four negotiation styles?

To avoid any inequity and potential bad-faith actions, claim representatives should normally avoid lose-lose negotiations.

In claim negotiations, which one of the following describes a claim representative's settlement offer that changes simply because time passes?

Using decreasing or limited offers

In an attempt to encourage a claimant to settle, a claim representative says, "We are prepared to settle for $5,000, but you have to accept the offer by noon tomorrow. For every day that you delay agreeing to settle, we will deduct $500 from our offer." This is an example of

Using decreasing or limited offers.

The locale in which a lawsuit may be brought is called the

Venue

What statement regarding telephone negotiations is true?

When the claimant and the claim representative are unable to see one another, they may say things they would not say if they were communicating in person.

Juan is trying to settle a claim where the claimant, Sara, disagrees with the amount of the settlement. Sara has filed a lawsuit against Juan and the insurer. The trial date has been set and is approaching fast. Which negotiation style should Juan use to try to settle the claim before trial?

Win-lose

Which one of the following channels of communication may be the least significant aspect of communication?

Words

Dwayne is a claim representative with a heavy caseload. The department supervisor has instructed all the claim representatives to reduce their pending claims by the end of the month. Dwayne should

Work more efficiently to settle claims sooner.

Rose responded to a lawsuit against her by asserting that the lawsuit was not filed within the appropriate statute of limitations. Rose's response is an example of a(an)

Affirmative defense.

Maja, a claim representative, was having difficulty settling a small theft claim with Julio. In exasperation, and hoping for a final resolution, Maja said, "Julio, I've offered you a settlement of $5,000. However, if we settle this claim today, I'm willing to increase that offer to $7,500. Which one of the following negotiation techniques best describes the technique Maja is using?

Bidding against oneself

The time in which to file a lawsuit allowed by statutes of limitation varies depending on whether the lawsuit alleges bad faith as a tort or

Breach of contract.

Insurers and their representatives are called upon to handle claims with utmost good faith. However, allegations of bad faith in insurance claims remain one of the most troublesome and controversial issues for insurers and claim representatives. Which one of the following statements related to bad-faith in the insurance arena is true?

Claim representatives must be familiar with the bad-faith laws in jurisdictions in which they handle claims.

A brick fell off scaffolding at a construction site and injured Mehmet. Mehmet filed a lawsuit against defendants Contractors Ltd., Brick Layers Inc., and the manufacturers of the scaffolding. Contractors Ltd. then filed a lawsuit against the defendant Brick Layers Inc. alleging that their negligence caused the brick to fall. The claim by Contractors Ltd. against Brick Layers Inc. is a

Cross-claim.

Finetta's insurer has denied claim payment because of a coverage issue, and she has sued her insurer in a bad-faith lawsuit. The insurer is claiming that the damage done resulted from concurrent causation, which is excluded under the policy. A defense that the insurer could use, asserting that the coverage questions were not necessarily in bad faith and that there was a justifiable reason for denying the payment of the claim is

Debatable reasonable basis.

An automatic judgment against a party who fails to appear in court is referred to as a(n)

Default judgment.

One of the functions served by a complaint is to give notice of who the parties are and where and why the lawsuit was filed. When a claim representative receives such notice, he or she should first do which one of the following?

Determine whether coverage exists under the applicable policy.

A party can gain significant power in a claim negotiation by

Determining any deadlines that may affect the other party.

Because insurers control how claims are resolved, courts reason that insurers should be responsible for the outcome of their claim handling if they have acted in bad faith. Therefore, courts hold insurers to a higher standard of conduct to

Discourage insurers from abusing their position of power.

Many of the activities in a litigation plan concerning the management of litigation expenses and who should perform certain activities, the claim representative or the attorney, relate to

Discovery

If a plaintiff wins a bad-faith suit, the court may award compensatory damages, which include

Emotional distress damages

The amount of a punitive damage award can be influenced by a variety of factors. Insurers generally support which one of the following as a limitation on punitive damages?

Evidence supporting punitive damages must be specific to the harm suffered by the plaintiff.

Bad faith claims are not the only risk insurers face from handling claims improperly. They may also face

Extracontractual claims.

Store-All Warehousing purchased $500,000 all-risk building coverage for its warehouse. When fire in an adjacent building spread to Store-All's warehouse, the building was seriously damaged, and Store-All submitted a claim to its insurer. The insurer intentionally postponed settling Store-All's claim for 18 months while it attempted to obtain a settlement contribution from the insurer of the adjacent building in which the fire originated. Store-All sued its insurer, launching a

First-party bad-faith suit.

What statement is correct with respect to techniques claim representatives can use when negotiating with claimants' representatives?

For many claims, the best time to settle with a claimant's attorney is just before the claim becomes a lawsuit.

Claim representative Timothy is reviewing legal bills associated with a bad-faith lawsuit. He has matched phone call times with the claim log and ensured that only authorized work was included in the billing. One additional item Timothy should remember is that

Itemized incremental billing should be based on a reasonable time for the specific activity billed.

Jose is in the midst of negotiating a theft claim with Rodrigo. Jose has advised Rodrigo that he is prepared to offer a settlement of $10,000. Rodrigo responds that he believes the settlement should be $15,000. Jose advises that he needs to discuss this amount with his manager. What negotiation technique is Jose using?

Limited negotiation authority

In the civil trial process, what must a plaintiff do to satisfy the burden of proof?

Prove all the essential elements of the case by a preponderance of evidence.

What describes how a plaintiff might recover lawyers' fees in a bad-faith claim?

Recovery might be allowed by statute or common law.

The discovery process usually begins with

Requests for production of documents

Luke, a claim representative, was investigating a liability law suit filed against the insured Yusuf, by Sophia. Sophia fell on the steps leading into Yusuf's house. She sued for an injury and for a trip, including air fare and hotel, to New York to replace a damaged pair of shoes. Under his homeowners' policy, the injury could be a covered loss, but Sophia's trip to New York is not covered. To protect the insurer during the investigation, Luke sent Yusuf which one of the following documents reserving the insurer's right to withdraw the defense should facts place the allegations outside the policy coverage?

Reservation of rights

When insurers are required to pay fines for violations of the NAIC Model Act, the fines are paid to the

State Department of Insurance

Lawyers who defend the insured should be selected based on their experience, knowledge of the law, and

Success in the courtroom

EXCEPT

The adversarial

Claim representatives can adopt one of four distinct negotiation styles during claim negotiations with a claimant. The choice of style used is determined by the negotiator's concern for obtaining

The best outcome while achieving rapport.

Following a verdict in a civil trial, which one of the following parties is usually responsible for making payment of a judgment owed by an insurer?

The claim representative

Which one of the following is correct pertaining to a claim representative negotiating with an unrepresented claimant?

The claim representative should collect and use extraneous information to use in settling the claim.

What statement describes what the relationship should be between the claim representative and the assigned attorney after a claim has been referred to defense counsel?

The claim representative should work with the assigned attorney to develop an appropriate litigation plan.

Claim representatives should ask claimants at the first contact whether they have ever filed a claim. The answer to this question helps the claim representative determine the claimant's experience in filing insurance claims and may provide clues to

The claimant's motivation and how the claim will proceed.

Claim representatives should understand the subjective interpretation of negligence and gross misconduct. The difference between negligence and gross misconduct is determined by

The court's or jury's interpretation of the facts.

In a bad-faith lawsuit, claimant Jerry alleges improper conduct on the part of claim representative,Twila, who works for a large insurance company. As is generally the case in such bad-faith allegations, which one of the following parties would be the defendant?

The insurer

Claim representative Barbara finds the claimant in a complex case difficult to resolve. The claimant complains and is adversarial in their discussions. Barbara wants to reach a fast resolution with the least time spent with the claimant. Even though this will likely result in unfair treatment to the insured, Barbara is oblivious of the outcome. Barbara is using which one of the following negotiation styles?

The lose-lose negotiation style can be used.

What styles of negotiation is best used when it is highly likely that the party suffering a loss will hire an attorney or other representative to help resolve the issue?

The lose-win negotiation style

What style of negotiation is best used when it is highly likely that the party suffering a loss will hire an attorney or other representative to help resolve the issue?

The lose-win negotiation style is best used when it is highly likely that the party suffering a loss will hire an attorney or other representative to help resolve the issue.

Claimant Andy is upset with his insurer because his claim representative Sally does not return his phone calls or keep him apprised of the status of his claim. Andy has been so frustrated over the past few weeks that he has actually inflated the amount of the loss to compensate for what he considers unfair treatment. This shift in Andy's motivation is directly related to

The time it takes Sally to contact Andy.

What statement about interrogatories is true?

They allow each side to discover the other side's position about the facts of a case.

What statement about pretrial conferences is true?

They are called at the judge's discretion in an effort to settle a case or resolve certain issues.

An insurer sometimes issues an excess letter to an insured as a result of an allegation in the claim litigation process. What is a typical purpose of such a letter?

To provide the insured with the option of hiring separate defense council to work with the insurer's defense counsel when damages sought are in excess of policy limits

A liability claim representative negotiated a settlement with a claimant who fell inside a department store. The claims representative valued the case at $5,000. When she approached the claimant with the offer, the claimant felt the case was worth $10,000. Without any facts of the case changing, the representative then counteroffered $7,500 to the claimant. What negotiation pitfall is this?

Trading dollars

Mary is negotiating settlement of an auto theft claim with an insured. The standard industry reference book used in auto theft losses indicates the value of the insured's vehicle, given its age and condition at the time of the loss, is between $7,500 and $9,500. Mary offers a settlement amount of $8,500. The insured makes a counter-offer of $12,500. Mary counters with an offer of $10,500. This is an example of

Trading dollars