CAIA - Certified Automotive Insurance Adjuster Negotiation and Settlement Questions and Answers

Question 1

An adjuster is negotiating a third-party bodily injury claim with an unrepresented claimant.
The claimant, who has fully recovered from minor soft-tissue injuries, is demanding a settlement amount that is five times the total of their documented medical bills.
Which of the following is the most appropriate initial action for the adjuster to take?

Accepted Answer

Systematically review the documented special damages and explain the basis for the company's valuation, while seeking to understand the claimant's perspective on their general damages.

Answer

Immediately offer the policy limits to avoid a potential bad faith claim.

Answer

Advise the claimant that they are required to hire an attorney to proceed.

Answer

Cease all communication until the claimant's demand becomes more reasonable.

Question 2

When a claimant signs a 'full and final release' as part of a settlement agreement for an auto accident, what is the primary legal effect of this document?

Accepted Answer

It prevents the claimant from pursuing the at-fault party or their insurer for any and all claims, including unknown future complications, arising from that specific incident.

Answer

It only settles the property damage portion of the claim, leaving the bodily injury portion open.

Answer

It serves as a receipt for payment but does not prevent future lawsuits for the same incident.

Answer

It allows the claimant to reopen the claim if their medical condition worsens within one year.

Question 3

An insured's vehicle causes an accident resulting in injuries to three people. The insured has bodily injury liability limits of $50,000 per person / $100,000 per accident. The total value of the three injury claims is determined to be $150,000. What is the adjuster's primary duty in this settlement situation?

Accepted Answer

Attempt to negotiate a global settlement with all claimants that allocates the $100,000 per-accident limit in a fair manner to protect the insured from excess liability.

Answer

Pay the first claimant who submits their demand up to the $100,000 per-accident limit.

Answer

Settle with each claimant for one-third of the per-accident limit, regardless of their individual damages.

Answer

Advise the claimants that the policy has been exhausted and no payments can be made.

Question 4

In California, which of the following actions is required to finalize the settlement of a significant bodily injury claim on behalf of a minor?

Accepted Answer

The settlement must be approved by a court in a process known as a 'minor's compromise.'

Answer

The minor must personally sign the settlement release.

Answer

The settlement check must be made payable directly to the minor's parents.

Answer

A second medical opinion must be obtained and submitted to the insurer.

Question 5

Under the California Fair Claims Settlement Practices Regulations, once liability has been accepted and a settlement amount has been agreed upon, within how many days must the insurer generally make payment?

Accepted Answer

30 calendar days

Answer

15 calendar days

Answer

40 calendar days

Answer

60 business days

Question 6

Which of the following actions by an insurer would most likely be considered an act of 'bad faith' in the settlement of a claim?

Accepted Answer

Unreasonably delaying payment on a valid, clear liability claim where damages are known and undisputed.

Answer

Requesting medical records and bills to substantiate a bodily injury claim.

Answer

Conducting a recorded statement with the claimant to understand the facts of the loss.

Answer

Offering a settlement amount that is lower than the claimant's initial demand.