AIC 30 Segment A - Assignment 2 - The Claim Handling Process

A. A hospital patient slips on a wet floor in her room but is not injured. Correct. A hospital patient slips on a wet floor in her room but is not injured.

An example of a record-only claim would be Select one: A. A hospital patient slips on a wet floor in her room but is not injured. B. A claim where coverage is denied by the insurer. C. An insured reports a theft of belongings from his automobile. D. A claim where insurance fraud is suspected.

B. Comparative negligence Correct. In a contributory negligence state a person who has contributed to damages cannot recover damages.

Under which one of the following types of negligence principles do both parties to a loss share the financial burden of the bodily injury or property damage according to their respective degrees of fault? Select one: A. Contributory negligence B. Comparative negligence C. Negligence per se D. Negligence based on strict liability

C. Contractual liability Correct. Under contractual liability, one party agrees to assume financial responsibility for liabilities imposed by law on another party.

What type of liability is assumed when, as a condition of a written agreement, one party agrees to assume financial responsibility for liabilities imposed by law on another party? Select one: A. Assumed liability B. Strict liability C. Contractual liability D. Imputed liability

A. Comparative negligence. Correct. Comparative negligence requires both parties to a loss to share the financial burden of the bodily injury or property damage according to their respective degrees of fault.

A common law principle states that if an injured party's own negligence contributed to a loss, the damages that injured party may recover are reduced in proportion to his or her degree of negligence. This principle is referred to as Select one: A. Comparative negligence. B. Contributory negligence. C. Strict negligence. D. Proportional negligence.

B. Identifying the policy Correct. Of these four activities, identifying the policy is normally performed earliest.

Activities in the claim handling process include documenting the claim; determining the cause of loss; identifying the policy; and contacting the insured. Of these four activities, which one is normally performed earliest? Select one: A. Contacting the insured B. Identifying the policy C. Determining the cause of loss D. Documenting the claim

B. Large loss report Correct. Large loss reports may be required for claims with large reserves. They summarize all the file status information for management and are updated as additional information is received or on a timetable set by the insurer.

Bonita, a senior claim representative with Green Grass Insurance Company, is handling a death claim and has set the bodily injury reserve at $525,000. Which one of the following reports will she use? Select one: A. Captioned report B. Large loss report C. Claim manager report D. Excess reserve report

B. The loss of his merchandise and damage to the store. Correct. A direct loss is a reduction in property value resulting immediately and proximately from damage caused by a covered cause of loss. An indirect loss is a loss arising as a result of damage to property, other than the direct loss to the property. Property damage to the store and to the merchandise is a direct loss. Income loss is an indirect loss.

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 Select one: A. The loss of income while he replenishes his stock. B. The loss of his merchandise and damage to the store. C. There is no direct loss in this example. D. The loss of customers who go to his competitors.

C. Punitive. Correct. For liability claims, the insured may be liable for compensatory damages and punitive damages.

For liability claims, damages for which the insured may be found liable include compensatory and Select one: A. Negligence. B. Liability. C. Punitive. D. Specific.

C. Center for Medicare and Medicaid Services Correct. The Center for Medicare and Medicaid Services must approve the settlement if the claimant is a Medicare beneficiary and the settlement amount is at least $250,000.

Lanny, a claim representative with Babbling Brook Insurance Company, is ready to settle a serious bodily injury claim with Freda. He notices that Medicare is listed as payer on her hospital bill of $75,000. He and Freda have agreed to settle her claim for $255,000. Since Freda has been enrolled in Medicare for four years, which one of the following entities must approve the settlement? Select one: A. Department of Social Services B. Medicare and Medicaid Payment Coordination Division C. Center for Medicare and Medicaid Services D. Medicare and Medicaid Payer Program

D. The individual must provide the systematic framework for coverage to the claim representative. Correct. The individual must provide the systematic framework for coverage to the claim representative.

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: Select one: A. The individual must suffer a financial loss as a result of a covered occurrence. B. The individual must fall within the definition of "insured" under the policy. C. The individual must have an insurable interest in the damaged or destroyed property. D. The individual must provide the systematic framework for coverage to the claim representative.

A. Mediation. Correct. The most common ADR techniques are mediation, arbitration, appraisals, mini-trials, summary jury trials, and pretrial settlement conferences. In mediation, disputing parties use a neutral outside party to examine the issues and develop a mutually agreeable settlement.

One of the most common alternative dispute resolution methods is Select one: A. Mediation. B. Settlement negotiations. C. Trials. D. Summary trials.

D. Loss notice acknowledgment and assignment. Correct. The first step in the claims process is the loss notice acknowledgment and assignment.

Successful insurers follow a systematic approach to handling claims. The first step in the claims process is the Select one: A. Initial assessment. B. Coverage determination. C. Obtaining statements. D. Loss notice acknowledgment and assignment.

B. This is an actual loss notice because losses can be reported by mail. Correct. Not all losses are reported using a loss notice. Some notices of loss may be by letter or lawsuit. Not all details of the loss must be contained in the notice of loss.

The claim representative received a letter from an insured claiming damage to his property under a homeowners policy. Which one of the following statements about the letter is true? Select one: A. This can be an actual loss notice only if it contains all of the information concerning the loss and its causes. B. This is an actual loss notice because losses can be reported by mail. C. This is not an actual loss notice because the producer must submit an special form by mail, e-mail or fax. D. This is not an actual loss notice because an actual loss notice must follow a standardized format and be submitted electronically.

C. Many insureds do not understand the details of their insurance coverage and require explanations of coverages, limitations, and possible exclusions.

When speaking with an insured, claim representatives must realize that Select one: A. Many insureds understand the details of their insurance coverages and use this try to get more money. B. Most insureds understand and can read the details of their insurance policy and may find the adjuster's explanations to be boring and sometimes even insulting of their intelligence. C. Many insureds do not understand the details of their insurance coverage and require explanations of coverages, limitations, and possible exclusions. D. Many insureds have never had a claim and do not care about the policy details.

D. It allows lawyers to present an abbreviated version of a trial to a panel who give feedback on the strengths and weaknesses of a case. Correct. At mini-trial lawyers present an abbreviated version of a trial to a panel or an advisor who poses questions and offers opinions on the outcome of a trial. A mini-trial enables parties to test the validity of their positions and continue negotiations. Parties can terminate the process at any time.

A mini-trial is a cost-effective alternative to a jury trial because Select one: A. It allows lawyers to present a trial to a jury with time limits of one business day thereby, saving expenses for the insurer and plaintiff. B. It allows lawyers to present a full trial to a jury without using expensive exhibits or experts, thus saving on expenses for the plaintiff. C. It allows lawyers to present a case valued at less than $25,000 to a six-person jury in an expedited fashion, thus saving expenses. D. It allows lawyers to present an abbreviated version of a trial to a panel who give feedback on the strengths and weaknesses of a case.

A. George is correct. There is a reasonable expectation that the claimant will obtain Medicare benefits within 30 months. Correct. The Center for Medicare and Medicaid Services (CMS) must approve a proposed settlement if a claimant is a Medicare beneficiary, or who has reasonable expectations of Medicare enrollment within thirty months of settlement, and when the settlement is $250,000 or more.

George settled a claim with a claimant who is 63 years of age. The claimant is not receiving Medicare benefits at the time of settlement. George feels that he is required to advise the Center for Medicare and Medicaid Services about the payment. Which one of the following statements is true in this situation? Select one: A. George is correct. There is a reasonable expectation that the claimant will obtain Medicare benefits within 30 months. B. George is correct. Once the settlement is paid, the claimant may apply for Medicare benefits. C. George is incorrect. The Center for Medicare and Medicaid Services need only be advised if the claimant is currently receiving Medicare benefits. D. George is incorrect. The payment from insurance claims is exempt from any Medicare set aside agreements.

B. That John suffered damages Correct. John would have to show that he suffered damages. If there is no injury, then no liability for negligence exists.

John slipped and fell on the steps to Mary's home while delivering a package. During the process of determining whether there was any negligence on Mary's part, it was found that there was a defect in the steps and that the defect did cause John to fall. Which one of the following would have to be shown in addition to these facts before John would be able to collect from Mary? Select one: A. That Mary was unaware of the defect B. That John suffered damages C. That John was guilty of contributory negligence D. That Mary intentionally injured John

D. A draft gives the insurer opportunity to verify that the payment is proper when the draft is presented to the bank. Correct. rer must confirm that the draft was authorized. This delay in disbursing funds allows the insurer to confirm that the payment is proper. Checks can be presented to the insurer's bank for immediate payment and would not allow the insurer to confirm that payment is proper

The main reason an insurer would pay claims using a "draft" rather than a check is that Select one: A. A draft allows the insurer to earn interest for several days while funds clear. B. A draft clears faster in the banking system thus allowing for easier record keeping. C. A draft is the only legal method of paying claims for out of state insurers. D. A draft gives the insurer opportunity to verify that the payment is proper when the draft is presented to the bank.

D. Reservation of rights letter Correct. A reservation of rights letter reserves the insurer's and policyholder's rights under the policy.

Which one of the following documents reserves the insurer's and policyholder's rights under the policy? Select one: A. Policy condition B. Waiver agreement C. Proof of loss D. Reservation of rights letter

D. An experienced claim representative licensed in the state where the loss occurred. Correct. The goal is to assign the claim to the claim representative who possesses the appropriate skill to handle it. Licensing requirements must also be considered.

After receiving a notice of loss where the damages are severe, the claim manager should assign the claim to Select one: A. An experienced claim representative regardless of licensing requirements. B. A claim representative with a smaller workload, regardless of experience level. C. A claim representative seeking experience with a license pending in the state where the loss occurred. D. An experienced claim representative licensed in the state where the loss occurred.

A. Creating loss runs Correct. All listed are among the six activities in the claim handling process, EXCEPT creating loss runs.

All of the following are among the six activities in the claim handling process, EXCEPT: Select one: A. Creating loss runs B. Contacting the insured's representative C. Determining the loss amount D. Concluding the claim

C. By civil authorities Correct. All listed are common ways a loss is reported to an insurer, EXCEPT by civil authorities.

All of the following are common ways a loss is reported to an insurer, EXCEPT: Select one: A. Through a lawsuit B. Through an insurance agent C. By civil authorities D. By telephone

B. Waiver Correct. When Matthew told Georgio to repair the damage to the concrete building over the phone, he waived the insurer's right to deny the claim later.

Georgio, an adjuster for Grounded Insurance Company, is handling a windstorm loss for his insured, Matthew, who has an unendorsed HO-3 policy. He tells Matthew by phone to go ahead and repair all the roof damage on his home and his concrete building. When Georgio arrives at Matthew's home, he finds that Matthew has repaired the roof on the home and also the roof on his concrete building where his painting contracting business is located. There is no coverage for the concrete building since business is conducted there. Which one of the following principles describes the reason that Georgio cannot now deny the roof claim for the concrete building? Select one: A. Bad faith B. Waiver C. Barring of rights D. Reservation of rights

B. Subrogation Correct. Subrogation is an insurer's right to recover payment from a negligent third party who caused a property or liability loss that the insurer has paid to or on behalf of an insured.

Glenda recently had her brakes repaired on her 1972 Ford at Go's Garage. Glenda left the garage and drove into a tree. Glenda claimed her brakes failed. She submitted a claim for the damage to her car to her auto insurer. Glenda's claim representative may need to consider which one of the following types of investigation? Select one: A. Arbitration B. Subrogation C. Legal D. Negotiation

D. Criminal liability arises from laws that apply to wrongful acts that society deems harmful to the public welfare. Correct. Civil law, not criminal law, is based on the rights and responsibilities of citizens and civil law governs liability for civil wrongs against people, entities or property.

In which of the following ways is legal liability different from criminal liability or criminal responsibility? Select one: A. In Civil law, the government usually initiates legal action on behalf of the state. B. Criminal law governs liability for moral wrongs against people, entities, or property which include negligent acts, intentional acts, and strict liability. C. Legal liability encompasses the entire realm of criminal responsibility, civil rights, contractual law and moral law. D. Criminal liability arises from laws that apply to wrongful acts that society deems harmful to the public welfare.

A. Arbitration Correct. Arbitration, an ADR method by which the disputing parties use a neutral outside party to examine the issues and develop a settlement that can be final and binding.

Johnson has a PAP through Peaceful River Insurance Company for his 2007 Ford. He also has coverage with Aim Straight Insurance Company for his 2007 Ford. Both policies have the same effective dates. Johnson hits a tree and totals his Ford. Which one of the following alternative dispute resolution methods should the companies use to determine who should pay and how much? Select one: A. Arbitration B. Appraisal provision C. Intercompany agreement D. Mini-trial

C. Proximate causation Correct. Proximate cause, or a casual connection between the negligent act and the harm or injury, must be present.

Liability based on negligence must be established by four elements. Which one of the following describes one of those elements? Select one: A. Plaintiff's legal duty to use due care, owed to the defendant B. No breach of the duty of care C. Proximate causation D. No comparative negligence on the part of the injured party

D. Mini-trial Correct. In a mini-trial a case undergoes an abbreviated version of a trial before a panel or an adviser who poses questions and offers opinions on the outcome of a trial, based on evidence presented.

Which one of the following alternative dispute resolution methods enables parties to test the validity of their positions and continue negotiations? Select one: A. Mediation B. Appraisal provision C. Arbitration D. Mini-trial

D. Workers compensation statutes impose strict liability on the employer to pay specified benefits to injured workers. Correct. Workers compensation statutes impose strict liability on the employer to pay specified benefits to injured workers.

Which one of the following is correct with respect to statutory liability? Select one: A. If common law covers a particular situation, statutory law cannot amend the rights of injured parties in that situation. B. Laws that impose liability to ensure adequate compensation for injuries, but cause lengthy disputes over who is at fault. C. "No-fault" laws eliminate the need to prove fault in order to sue the other party in an auto accident. D. Workers compensation statutes impose strict liability on the employer to pay specified benefits to injured workers.

A. Before the claims investigation begins. Correct. A basic identification of the policy should occur before the claims investigation begins.

A basic identification of the policy should occur Select one: A. Before the claims investigation begins. B. Before the claim is acknowledged. C. Before the claim is reported. D. Before the claim is assigned.

C. That the claim was received and provide the name of the claim representative, his or her telephone number and the claim number. Correct. The purpose of the acknowledgement is to advise the insured that the claim has been received and the name and contact information of the assigned claim representative and claim number.

A claim representative acknowledging receipt of a claim should advise Select one: A. The insured that the claim is covered and should begin taking steps to get the claim paid. B. That the claim representative received the claim, coverage was verified and the claim representative will call to take a statement. C. That the claim was received and provide the name of the claim representative, his or her telephone number and the claim number. D. That the claim was received and a follow up call will be made within the next twenty days.

C. General damages. Correct. 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 general damages.

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 Select one: A. Compensatory damages. B. Special damages. C. General damages. D. Punitive damages.

B. Send Josie a reservation of rights letter. Correct. Hannah's next step in handling the claim should be to send Josie a reservation of rights letter to reserve the insurer's and policyholder's rights under the policy.

Hannah received a claim assignment for her insured, Josie, who had lost control of her vehicle and totaled her car injuring two passengers. Josie's premium check had been returned for insufficient funds. Coverage may not be available for Josie, depending on the results of Hannah's investigation into whether a proper cancellation occurred. Hannah's next step in handling the claim should be to Select one: A. Provide a status report to file. B. Send Josie a reservation of rights letter. C. Contact the passengers in Josie's car. D. Do an appraisal on Josie's vehicle.

A. Puerto Rico Correct. The personal auto policy defines policy territory as the U.S., its territories or possessions, Puerto Rico, and Canada.

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 personal auto policy includes which one of the following locations in the definition of policy territory? Select one: A. Puerto Rico B. Europe C. Mexico D. Bermuda

B. The policy language, location of the language, and facts supporting the decision. Correct. Once claim management gives authority to deny a claim, the denial letter should be issued as soon as possible. The denial must adhere to jurisdictional legal requirements and contain the specific reasons for denial. Specific policy language should be provided, as well as the location of the language in the policy. An insured should be invited to submit additional information if he/she disagrees with the denial.

A claims representative determined that a claim for a water damage property loss is not covered under the policy and must send a denial letter to the insured. The denial letter must include? Select one: A. Specific information on how to file a state insurance department complaint and the state time frame to do so. B. The policy language, location of the language, and facts supporting the decision. C. Information on how coverage would apply under differing circumstances, along with a specific time period in which the insured may resubmit the claim. D. The facts supporting the decision only. The insured has a policy and can refer directly to it.

B. Investigate the prior accidents and injuries to determine if the insurer has legal liability. Correct. Prior claim investigations help prevent paying for property damage or bodily injury that has been paid through prior claims by the same or other insurers. The claims representative should investigate the claim history.

Database information on a claimant reveals that the claimant's current injury is the same injury reported on three other accidents within the last five years. The appropriate next step for the claims representative is to Select one: A. Investigate the accidents to determine if the current claim can be denied as the claimant was injured previously. B. Investigate the prior accidents and injuries to determine if the insurer has legal liability. C. Advise the claimant that the past accidents may preclude any claim payments, because pre-existing conditions are not covered. D. Ignore past accidents and injuries as they will have no impact on the current claim. The claims representative should investigate as though this was a new injury claim.

A. To participate in the development of a litigation strategy to ensure proper defense of the insured and to control litigation expenses Correct. To participate in the development of a litigation strategy to ensure proper defense of the insured and to control litigation expenses.

In the event that litigation cannot be avoided to resolve a claim, which one of the following describes the claim representative's role? Select one: A. To participate in the development of a litigation strategy to ensure proper defense of the insured and to control litigation expenses B. To attack every aspect of the claimant's case from liability to damages, to mitigate the claim against the insured, and to encourage the claimant to settle out of court C. To coach the insured on how to best answer questions asked by the claimant's lawyer D. To provide a method by which disputing parties participate in the actual trial

D. The cause of loss, liability for the loss, and the amount of loss. Correct. Concurrent to the determination of the cause of loss and the liability for the loss, the claim representative may determine the amount of the loss.

Information gained during the investigation of a claim helps the claims representative to determine Select one: A. The violated civil statutes and the appropriate plaintiff counsel. B. The amount of punitive damages that may be assessed. C. The likely jury award amount and the insured's fault. D. The cause of loss, liability for the loss, and the amount of loss.

A. Marvin may follow the appraisal provision in the policy to settle the dispute over the value of the damaged property. Correct. An appraisal provision is a policy condition that provides appraisal as a mechanism for resolving disputes between insureds and insurers over the amount owed on a covered loss.

Marvin suffered a fire loss at his residence. The claim representative valued several antiques at a very low price. Marvin refuses to settle his claim with his insurer. Which one of the following describes Marvin's recourse? Select one: A. Marvin may follow the appraisal provision in the policy to settle the dispute over the value of the damaged property. B. Marvin may obtain a quote from a certified antique dealer to determine the value the insurer must pay. C. Marvin's only recourse is to sue the insurer for coverage and damages to the property. D. Marvin may choose to arbitrate the value of the antiques before a judge.

C. Frances should advise her supervisor of the mistake and seek permission to pay the claim as she has waived the company's right to deny coverage. Correct. A claim representative can waive a right contained in a policy, condition, or exclusion by telling an insured that the loss is covered before confirming that by checking the policy. The claim representative has likely waived the insurer's right to deny the claim if the facts later prove that there is no coverage.

Prior to reviewing the policy, Frances advises the insured that payment will be made. Based on this advice, the insured incurs expenses and disposes of damaged items. Later, Frances realizes that an exclusion in the policy applied, and the claim should not be paid. Which one of the following is the most appropriate response given this background? Select one: A. Most likely, Frances will place the claim on a long diary until the issue resolves itself. B. Frances should deny the claim and try to persuade the insured not to file an Insurance Department complaint. C. Frances should advise her supervisor of the mistake and seek permission to pay the claim as she has waived the company's right to deny coverage. D. Frances should deny the claim and wait to see what the insured does.

C. Is to let the insured know it has been received. Correct. Is to let the insured know it has been received.

The purpose of an insurer acknowledging a claim Select one: A. Is to get it on the insured's books for accounting purposes. B. Is to create a reserve for the claim. C. Is to let the insured know it has been received. D. Is to toll the statute of limitations as to any defenses.

B. State databases for delinquent child support payments Correct. Claim representatives must check various databases to ensure that the claim payment complies with federal and state laws.

Which one of the following databases should a claim representative review prior to issuing a claim payment? Select one: A. State databases for traffic violations B. State databases for delinquent child support payments C. State databases for pending lawsuits D. National databases for escheat payments

A. Reservation of rights letter Correct. Representatives commonly use a reservation of rights letter to avoid waiver and estoppel.

Which one of the following describes a tool that claim representatives commonly use to avoid waiver and estoppel? Select one: A. Reservation of rights letter B. Waiver agreement C. Authorization to investigate D. Good-faith agreement

C. It arises when someone's rights under a contract's terms are violated. Correct. t arises when someone's rights under a contract's terms are violated.

Which one of the following is correct with respect to contractual liability? Select one: A. Insurance generally covers damages from breach of contract. B. It can arise only out of a written contract, not from a verbal or implied contract. C. It arises when someone's rights under a contract's terms are violated. D. Insurance does not apply to claims involving assumptions of liability or warranties stated in the contract.

A. Tort Correct. Tort is the term used for a wrongful act or omission, other than a breach of contract, that violates a person's private rights and might lead to a civil lawsuit for damages.

Which one of the following is the term used for a wrongful act or omission, other than a breach of contract, that violates a person's private rights and might lead to a civil lawsuit for damages? Select one: A. Tort B. Liability C. Negligence D. Intentional act

A. Nature and extent of the injury Correct. The claim representative should try to obtain information on the nature and extent of any injury.

Which one of the following pieces of information is most important for a claim representative to obtain upon first contact with a liability claimant? Select one: A. Nature and extent of the injury B. Claimant's medical history C. Claimant's sources of additional income D. Claimant's accident history

B. They are not always undertaken sequentially. Correct. They are not always undertaken sequentially.

Which one of the following statements is true concerning the six activities in the claim handling process. Select one: A. Activities cannot be repeated for a particular claim. B. They are not always undertaken sequentially. C. Not all activities are performed in every claim. D. Only one activity should be performed at a time

B. The witness statement can support or refute the insured's version of the incident. Correct. A witness is any person who has personal, firsthand knowledge of the incident that resulted in the claim. A witness can support or refute an insured's version of the incident, affecting the liability determination.

Which one of the following is true regarding witness statements? Select one: A. The witness statement is only credible if taken at the accident scene. B. The witness statement can support or refute the insured's version of the incident. C. The witness statement is not necessary for the overall determination of liability. D. The witness statement can only be taken if the witness is an impartial stranger.

B. Medical documentation helps to determine the costs of treatment and the amount of pain and suffering that resulted from the injury or accident.

Which one of the following is true with respect to a claims representative's need to conduct a medical investigation in bodily injury or disability claims? Select one: A. Medical documentation is required under HIPPA statutes and must be kept confidential. B. Medical documentation helps to determine the costs of treatment and the amount of pain and suffering that resulted from the injury or accident. C. Collecting medical documentation of injuries gives the insurer more time to prepare negotiation tactics and make lower settlement offers. D. Medical documentation is not necessary when evaluating a clear liability claim and /or when the injuries are

D. Send the insured a nonwaiver agreement or reservation of rights letter. Correct. A nonwaiver agreement or reservation of rights letter advises the insured that any action taken by the insurer in investigating the cause of loss, or in ascertaining the amount of loss, is not intended to waive or invalidate any policy conditions.

A claims representative is beginning to investigate a claim and wants to be sure not to waive the company's rights to deny coverage at a later date. The representative should Select one: A. Advise the insured that the claim is likely to be paid but without promising any payment. B. Continue to investigate the loss and hope that the claim will be resolved within 90 days. C. Hire an outside investigator who does not have the same need for disclosure. D. Send the insured a nonwaiver agreement or reservation of rights letter.

A. Investigate the damages and resolve the claim. Correct. Claim representatives must know when sufficient information is obtained to make a claims decision. Investigation should be geared to obtain information that will determine cause of loss, amount of loss and liability. Once sufficient information is obtained to make a reasonable determination, the claim representative does not need to continue the investigation, unless the decision is disputed.

A claims representative is investigating a property damage claim submitted under an HO3 policy. Coverage was verified and the cause of loss was determined; no exclusions apply. Which one of the following describes the next steps that the representative should take? Select one: A. Investigate the damages and resolve the claim. B. Re-verify the cause of loss, wait an additional 20 days and re-open the claim. C. Advise the insured that the claim is covered and issue payment. D. Continue to investigate the cause of loss in case the loss is fraudulent.

A. Send a nonwaiver agreement to the insured, as the insured is not complying with the policy conditions of cooperation and inspection. Correct. A nonwaiver agreement is usually used when the claim representative is concerned about investigating a claim, before the insured has substantially complied with policy conditions, or when there appears to be a specific coverage problem or defense. Both parties must sign the agreement.

A claims representative is investigating a tort claim where the insured is reluctant to allow the carrier to inspect the site. Thinking that coverage may be an issue, the representative should Select one: A. Send a nonwaiver agreement to the insured, as the insured is not complying with the policy conditions of cooperation and inspection. B. Assign an outside investigator to inspect the site at night and use this information to adjust the claim. C. Initiate suit against the insured without advising the insured of the policy conditions. D. Advise the insured that the investigation is delayed and wait until the insured complies with the policy conditions.

C. Advise the homeowner of the policy exclusions in writing. Make an appointment to inspect the loss and make a final determination as to coverage. Correct. The claim representative should explain to the insured what additional investigation is needed to resolve any potential coverage issues. The claims representative should give clear instructions if the insured is to provide any additional information.

A claims representative speaks to a homeowner about a water damage claim in the basement of the premises. He advises that the claim is probably not covered under the unendorsed HO-3 policy. The homeowner advises that the basement window was broken by wind which caused the water to enter. Which one of the following describes what the representative should do? Select one: A. Advise the homeowner that the HO-3 is very clear on water damage exclusions and advise the insured to speak with his or her agent, who can explain the coverages under the policy. B. Advise the homeowner of the policy exclusions and deny the claim in writing. C. Advise the homeowner of the policy exclusions in writing. Make an appointment to inspect the loss and make a final determination as to coverage. D. Advise the homeowner that fraudulent statements will void coverage under the HO-3 and potentially subject the insured to criminal prosecution. An inspection is not required. Close the file.

A. Not advisable because a third-party claimant has no obligations under the policy. Correct. Reservation of rights, like nonwaiver agreements, can only be used with the insured on any type of first-party claim. They are not sent to third-party claimants because third-party claimants have no obligations under the policy, unless required by state law.

A representative investigating a third-party claim is very concerned about waiving any rights under the policy. She decides to send a reservation of rights letter to the third-party claimant. Generally, this action is Select one: A. Not advisable because a third-party claimant has no obligations under the policy. B. Not advisable because a nonwaiver agreement is the appropriate vehicle for third-party claimants. C. Advisable because a reservation of rights letter will prevent a claimant from incurring expenses if they think that there may be no insurance. D. Advisable because under the agency principle, she must act to protect the company's rights.

C. The comment is inappropriate because it is not an objective comment about the insured. Correct. File status notes must accurately reflect and document investigations, evaluations of claims and decisions to decline coverage or decisions to settle the claims. The documentation must reflect the following: • Clear, concise and accurate information • Timely claim handling• Fair and balanced investigation • Objective comments about the insurer, insured or other parties • A thorough, good faith investigation

After an interview, a claims representative documented a claim file with the following comment, "My insured is a disreputable businessman and is lying through his teeth." Which one of the following is true regarding the comment? Select one: A. The comment, if accurate, is appropriate for the claim status note. B. The comment is appropriate for the file status notes as it reflects the thinking of the claims representative. C. The comment is inappropriate because it is not an objective comment about the insured. D. The comment is appropriate to help establish a case for fraud later.

A. A claimant investigation should be conducted to determine how the injury was caused, who is responsible, and the extent of the injury. Correct. A claimant investigation, usually performed by taking a statement from the claimant, will allow the claims representative to better determine the value of the injury or damage, how it was caused, and who is responsible.

Alisha was injured while waiting tables at work. Which one of the following describes the type of investigation that should be conducted? Select one: A. A claimant investigation should be conducted to determine how the injury was caused, who is responsible, and the extent of the injury. B. No investigation is necessary because Alisha was injured while at work. She will collect statutory benefits. C. An investigation into the underwriting file should be conducted to determine the safety history of the employer. D. An investigation using a nonwaiver agreement should be conducted to protect the insurer.

B. Because a reasonably prudent person would repair the porch, and because Dan's failure to do so was the proximate cause of the letter carrier's injuries, Dan would be considered negligent and therefore liable for those injuries in accordance with his degree of fault. His insurer would provide coverage under the liability portion of Dan's homeowners policy. Correct. Because a reasonably prudent person would repair the porch, and because Dan's failure to do so was the proximate cause of the letter carrier's injuries, Dan would be considered negligent and therefore liable for those injuries in accordance with his degree of fault. His insurer would provide coverage under the liability portion of Dan's homeowners policy.

Dan lives in an old home that always seems to need repair. He has known for months that several of the boards on his front porch are rotten, but he has not replaced them. He and his family avoid the porch and use the back door instead. One day the rotten boards collapse under the weight of the letter carrier who is delivering Dan's mail. The letter carrier suffers a broken leg, a sprained wrist, and contusions. Comparative negligence is followed in Dan's state, and the ordinary standard of care for liability based on negligence applies as to mail carriers delivering to residences. Which one of the following best describes liability in this situation? Select one: A. Because the rotten boards made the porch dangerous, Dan would be held strictly liable for any injuries related to the porch, even if those injuries were the result of contributory or comparative negligence on the part of the letter carrier. Dan's insurer would pay under the liability portion of his homeowners policy. B. Because a reasonably prudent person would repair the porch, and because Dan's failure to do so was the proximate cause of the letter carrier's injuries, Dan would be considered negligent and therefore liable for those injuries in accordance with his degree of fault. His insurer would provide coverage under the liability portion of Dan's homeowners policy. C. Because Dan was aware of the rotten boards in the porch and chose not to repair them, this omission would be considered an intentional tort. Dan would be responsible for the letter carrier's injuries, but his insurer would not provide any coverage since intentional torts are excluded. D. Because a reasonably prudent person should have seen that the porch was in bad repair, but the letter carrier continued to deliver Dan's mail to the front door, the letter carrier would be considered to be contributorily negligent. As a result, the letter carrier cannot recover for his injuries, and neither Dan nor his insurer is obliged to pay anything.

C. Improper as Edmund cannot promise payments until all coverage questions are resolved and the investigation is complete. Correct. Until coverage issues are resolved, the claim representative and insurer must avoid any conduct that would lead the insured or claimants to believe that the claim will be paid. The claims representative must act in good faith as the insurance policy is a contract of utmost good faith.

Edmund is speaking with an insured about a claim prior to confirming coverage. He promises to resolve the claim within ten days. Edmund's behavior may be categorized as Select one: A. Improper as most state insurance regulations forbid time estimates of claim resolution. B. Acting in good faith, as Edmund is trying to give the insured the benefit of the doubt before gathering information. C. Improper as Edmund cannot promise payments until all coverage questions are resolved and the investigation is complete. D. Good customer service as Edmund is reassuring the insured and claimants that their claims will be resolved.

A. The insurer is estopped from denying the claim. The insurer cannot assert the policy conditions, as the representative told the insured not to keep the damaged items. Correct. Estoppel is a legal bar to asserting certain contractual conditions because of a party's actions or words to the contrary.

Following a water loss, a claim representative advised an insured to prevent further damage to property and to dispose of the damaged items. Later, the insurer considered denying coverage because the damaged items were not available for inspection. Which one of the following statements is true? Select one: A. The insurer is estopped from denying the claim. The insurer cannot assert the policy conditions, as the representative told the insured not to keep the damaged items. B. Insurers can never deny claims without inspecting damaged property and determining amount of loss. C. The insurer can deny coverage because the insured must be familiar with all policy conditions. D. The insurer can deny coverage because the claims representative does not have the authority to waive any policy conditions.

D. Pain and suffering and out-of-pocket expenses claimed up to the policy limit. Correct. Punitive Damages are meant to punish a wrongdoer and to deter similar conduct. Most policies do not offer coverage punitive damages.

Liability policies cover insureds for compensatory damages an insured owes to a third party. Compensatory damages normally covered by the policy include Select one: A. General damages within the policy limit and all special damages. B. Damages from deceitful or malicious acts of an insured. C. Punitive Damages and legal expenses. D. Pain and suffering and out-of-pocket expenses claimed up to the policy limit.

D. The insurer may pursue Mary to pay the amount that the insurer could have collected from the liable third party. Correct. If an insured breaches the subrogation agreement, the insurer has the right to collect from the insured the amount that could have been recovered from the responsible third party.

Mary refuses to give testimony to assist her insurer in a subrogation claim against the liable third party involved in her auto accident. Which one of the following describes the recourse that may be available to the insurer? Select one: A. The insurer may cancel Mary's coverage. B. The insurer may decide to delay its subrogation claim until Mary decides to cooperate. C. The insurer may not do anything because the insurer paid first party benefits to the insured, Mary. D. The insurer may pursue Mary to pay the amount that the insurer could have collected from the liable third party.

C. Plaintiff and defendant may choose to mediate the claim, using a neutral mediator to point out weaknesses in each argument and help reach a compromise. Correct. Mediation is an ADR method by which disputing parties use a neutral mediator, to examine issues and develop a mutually agreeable solution. Each party presents his case to the mediator. The mediator will point out weaknesses in each argument or in the evidence presented, propose solutions, and help the parties reach a mutually agreeable solution. Mediation is non-binding.

Mediation is an ADR method used to help resolve disputes without going to court. Which one of the following statements is true with respect to this form of ADR? Select one: A. Plaintiff may choose to mediate the claim separately to determine strength and weakness of the claim to support the demand. B. Plaintiff and defendant may choose to mediate in order to allow a third party to determine coverage, liability, and damages. C. Plaintiff and defendant may choose to mediate the claim, using a neutral mediator to point out weaknesses in each argument and help reach a compromise. D. Defendant may choose to mediate the claim separately to determine the appropriate value of the offer.

B. Identify the policy, contact the insured, investigate, and document the loss. Correct. To ensure that every claim is handled in good faith, the claim representative should follow a systematic claim handling process which includes acknowledging the claim, identifying the policy, contacting the insured or insured representative, investigating and documenting the claim, determining cause of loss and loss amount and concluding the claim.

Once a claim is acknowledged, a claim representative should Select one: A. Contact the insured, determine the amount that the insured is seeking, and then pay the claim. B. Identify the policy, contact the insured, investigate, and document the loss. C. Identify the policy, investigate the loss details, pay the claim, and then establish the claim reserve to ensure claim reserve. D. Determine the loss amount and pay the claim.

D. The file status notes must contain concise and accurate information documenting claim file decisions. Correct. Clear, concise and accurate file status notes are essential, because a claim file must speak for itself. The notes should be a chronological account of the claim representative's activities.

Which one of the following statements is true regarding file status notes? Select one: A. The file status notes must be written with abbreviations to protect the confidentiality of the claimant. B. The file status notes should be written in eloquent language so that if it is read aloud at trial it will come across as sophisticated and impressive. C. The file status notes should recount the subjective thinking of the claims adjuster so that regulators will understand the mindset of the adjuster in making claim decisions. D. The file status notes must contain concise and accurate information documenting claim file decisions.

C. In some states, no-fault laws were enacted to reduce the number of lawsuits resulting from auto accidents. Correct. All states have a workers compensation statute that eliminates the employee's right to sue the employer for most work-related injuries. Workers receive benefits specified in the laws and as long as the injury is work-related, the employer pays the benefits regardless of who is at fault.

Which one of the following statements is true regarding liability based on statute? Select one: A. No-fault laws and workers compensation laws are examples of contractual liability. B. Employers in all 50 states are allowed the use of common law defenses for work-related injuries. C. In some states, no-fault laws were enacted to reduce the number of lawsuits resulting from auto accidents. D. A workers compensation statute helps facilitate an employee's right to sue the employer for most work-related injuries.