Property And Casualty Insurance License Claims and Loss Settlement 2 — Questions and Answers
Question 1: What is an 'independent adjuster' (IA)?
- An adjuster employed full-time by an insurance company
- A freelance claims professional hired by insurers on a per-claim basis (Correct answer)
- A public adjuster representing policyholders
- A state-appointed claims arbitrator
Correct answer: A freelance claims professional hired by insurers on a per-claim basis
Independent adjusters are self-employed or work for IA firms and are contracted by insurers to handle claims, particularly during catastrophes when staff adjusters are overwhelmed.
Question 2: What is a 'first-party' claim?
- A claim filed by an injured third party against the insured
- A claim filed by the policyholder against their own insurance policy (Correct answer)
- A claim involving the insurer and a reinsurer
- A claim filed by a government entity
Correct answer: A claim filed by the policyholder against their own insurance policy
A first-party claim is made by the insured directly to their own insurer, such as a collision claim or a homeowners contents claim.
Question 3: What is 'comparative negligence' and how does it affect claims?
- Each party pays their own damages regardless of fault
- Damages are reduced proportionally based on each party's percentage of fault (Correct answer)
- The party more than 50% at fault receives no recovery
- Damages are split equally between all parties involved
Correct answer: Damages are reduced proportionally based on each party's percentage of fault
Under comparative negligence, a claimant's recovery is reduced by their percentage of fault; for example, if 20% at fault, they recover 80% of their damages.
Question 4: What is a 'coverage opinion' letter in liability claims?
- A marketing letter explaining coverage options to prospects
- A legal analysis by coverage counsel determining whether a policy covers a specific claim (Correct answer)
- A letter from the insured asking for claim status
- A rate quote for adding coverage to a policy
Correct answer: A legal analysis by coverage counsel determining whether a policy covers a specific claim
A coverage opinion is a formal written analysis, typically prepared by an attorney, that evaluates whether a liability policy's terms apply to a specific claim or lawsuit.
Question 5: What does 'excess judgment' mean in liability insurance?
- A judgment awarded in excess of what the plaintiff asked for
- A court judgment against the insured that exceeds the policy's liability limits (Correct answer)
- Additional compensation awarded for punitive damages only
- An overturned judgment from a lower court
Correct answer: A court judgment against the insured that exceeds the policy's liability limits
An excess judgment is a court verdict against the insured for an amount greater than the policy's liability limit, leaving the insured personally responsible for the difference.
Question 6: What is the 'right and duty to defend' in a liability policy?
- The insured's right to choose their own attorney at the insurer's expense
- The insurer's obligation to provide legal defense for covered claims, even if groundless (Correct answer)
- The insured's duty to file a legal response to all lawsuits
- The insurer's right to settle claims without the insured's consent
Correct answer: The insurer's obligation to provide legal defense for covered claims, even if groundless
Liability policies obligate the insurer to defend the insured against covered claims, including paying attorney fees, and this duty applies even to frivolous lawsuits.
Property And Casualty Insurance License Claims and Loss Settlement 2
What is an 'independent adjuster' (IA)?