Negotiation & Settlement Processes Flashcards
7 cards from real CA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Negotiation & Settlement Processes flashcards as text
What is the significance of an 'Stowers doctrine' demand in Texas liability claims?
Answer: It requires the insurer to settle within policy limits when a reasonable opportunity exists, or risk excess judgment liability
Under the Stowers doctrine, if a claimant makes a demand within policy limits that a reasonable insurer would accept, failing to settle can expose the insurer to the full excess judgment.
When settling a workers' compensation claim with Medicare Set-Aside (MSA) provisions, what is the purpose of the MSA?
Answer: To fund future medical expenses related to the work injury so Medicare does not become primary payer
A Medicare Set-Aside allocates a portion of the settlement to cover future injury-related medical costs, protecting Medicare from paying for expenses it should not be responsible for.
Which of the following best describes 'concession patterning' in negotiation strategy?
Answer: Making large early concessions and smaller concessions over time to signal that you are near your limit
Declining concession sizes signal to the other party that you are approaching your bottom line, psychologically preparing them to accept a final offer.
A claimant files a bad faith lawsuit against an insurer after settlement negotiations fail. What is typically the first affirmative defense the insurer raises?
Answer: The insurer's conduct was reasonable under the totality of the circumstances
The primary bad faith defense is that the insurer acted reasonably, meaning its investigation, evaluation, and negotiation met the standard of a reasonable insurer.
What is a 'consent to settle' clause and how does it affect the adjuster's negotiation authority?
Answer: It requires the insurer to obtain the insured's approval before settling a third-party claim
A consent to settle clause prevents the insurer from settling a claim without the insured's agreement, which can complicate or delay negotiations.
In the context of bodily injury settlements, what does 'general damages' refer to?
Answer: Non-economic losses such as pain, suffering, and loss of enjoyment of life
General damages compensate for subjective, non-economic harms like pain and suffering, which cannot be calculated from bills or receipts.
What is the adjuster's obligation when they identify a potential excess exposure during active negotiations?
Answer: Notify the insured and document the potential excess verdict so the insured can retain personal counsel
When a case has potential to exceed policy limits, the adjuster must promptly notify the insured of the excess exposure so they can seek independent representation.