Negotiation & Settlement Processes Flashcards
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Read the first 7 Negotiation & Settlement Processes flashcards as text
What is the primary purpose of a 'proof of loss' form in the settlement process?
Answer: To formally document the insured's sworn statement of claimed damages
A proof of loss is a sworn, signed statement by the insured detailing the loss, which triggers formal claim processing and can affect settlement timelines.
An insured disputes the adjuster's valuation of a total loss vehicle. What process is typically available under an auto policy?
Answer: Appraisal process where each party selects an independent appraiser
Auto policies commonly include an appraisal clause allowing each party to hire their own appraiser, with an umpire resolving disagreements.
What is 'negotiation anchoring' and how does it affect settlement outcomes?
Answer: Setting an initial reference number that disproportionately influences the final settlement
The first number introduced in negotiation serves as an anchor; research shows final settlements tend to cluster around this initial figure.
Which document typically accompanies a settlement payment to release the insurer from further liability?
Answer: General release or release of all claims
A general release, signed by the claimant upon receiving payment, extinguishes the claimant's right to pursue additional claims for the same loss.
A claimant has a Medicare lien against their personal injury settlement. What must the adjuster consider before finalizing payment?
Answer: The Medicare lien must be satisfied or protected before or at settlement to avoid federal liability
Under the Medicare Secondary Payer Act, failing to satisfy Medicare's conditional payments can expose the insurer to double damages and federal penalties.
What is the role of a 'special master' in complex claim settlements?
Answer: A court-appointed neutral who oversees distribution of settlement funds in mass tort cases
In large or mass tort settlements, a court-appointed special master manages fund distribution and ensures equitable treatment among claimants.
Which statement best describes the concept of 'trading across issues' in insurance negotiation?
Answer: Conceding on one point in exchange for a gain on another issue within the same negotiation
Trading across issues, or logrolling, creates value by leveraging items each party values differently, enabling agreement where pure positional bargaining would fail.