Negotiation and Settlement Flashcards
7 cards from real CAIA 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 and Settlement flashcards as text
What is the purpose of an 'independent medical examination' (IME) in a bodily injury settlement negotiation?
Answer: To obtain an objective medical opinion on the nature, extent, and causation of the claimant's injuries
An IME provides the insurer with an independent physician's assessment of the injury's causation, extent, and need for future treatment, informing settlement value.
A claimant's attorney proposes mediation to resolve a disputed liability claim. What is mediation?
Answer: A voluntary, non-binding process where a neutral third party facilitates settlement discussions
Mediation is a voluntary, non-binding process where a neutral mediator helps the parties communicate and explore settlement without imposing a decision.
When is it appropriate to offer a claimant the full policy limits without further negotiation?
Answer: When the damages clearly and substantially exceed the policy limits and liability is reasonably clear
When liability is clear and damages substantially exceed policy limits, tendering limits promptly protects the insured from excess judgment exposure and reduces bad faith risk.
What does 'comparative negligence' mean in the context of auto claim settlement?
Answer: A legal doctrine where the claimant's recovery is reduced by their own percentage of fault
Under comparative negligence, a claimant's damages are reduced proportionally by their percentage of fault; in some states, being more than 50% at fault bars recovery entirely.
A claimant presents medical bills totaling $15,000 for treatment following a minor rear-end accident. The adjuster suspects the treatment was excessive. What is the appropriate response?
Answer: Request medical records, review treatment reasonableness, and consider a peer review or IME if necessary
The adjuster should review medical records for causation and reasonableness, and may order a peer review or IME to evaluate whether all treatment was medically necessary and accident-related.
What is a 'high-low agreement' in the context of auto insurance litigation?
Answer: An agreement where the parties set a minimum payment and a maximum payment regardless of the verdict
A high-low agreement sets a guaranteed floor (minimum) and ceiling (maximum) on the verdict, protecting the claimant from a zero verdict and the insurer from a runaway award.
Which of the following best describes the adjuster's duty of good faith during settlement negotiations?
Answer: To investigate claims thoroughly, evaluate them fairly, and settle meritorious claims promptly for reasonable value
Good faith requires the adjuster to conduct a prompt, thorough, and unbiased investigation and to settle valid claims fairly without unreasonable delay.