Catastrophe Adjusting & Disaster Response Flashcards

A CAT adjuster arrives at a property where the insured has already signed a contract with a contractor for repairs. The adjuster should:

Answer: Review the contractor's scope and pricing against policy coverage and industry standards before authorizing payment

The adjuster must independently verify that the contractor's scope and pricing align with covered damages and fair market rates regardless of pre-signed contracts.

In CAT claims, 'like kind and quality' (LKQ) means the insurer must restore the property using:

Answer: Materials of equivalent quality, type, and function to what existed before the loss

LKQ requires replacement materials to be equivalent in quality and type to the pre-loss condition, not superior or inferior.

During a widespread CAT event, why is 'demand surge' significant for claims adjustment?

Answer: It refers to elevated material and labor costs due to high post-disaster demand, affecting replacement cost estimates

Demand surge occurs when post-disaster demand for contractors and materials drives costs significantly above pre-disaster levels, impacting accurate estimates.

When a property suffers both wind damage (covered) and flood damage (excluded under HO policy), the adjuster's primary challenge is to:

Answer: Allocate and apportion damages between the covered wind cause and the excluded flood cause

The adjuster must segregate wind-caused damage from flood-caused damage, paying only for the covered wind portion under the HO policy.

A 'proof of loss' form in a CAT claim serves what primary purpose?

Answer: It is a sworn statement by the insured documenting the amount claimed and circumstances of the loss

A proof of loss is a formal sworn document submitted by the insured specifying the claimed amount, which is required by most property policies.

In a post-hurricane CAT scenario, 'matching' issues most commonly arise when:

Answer: Undamaged portions of a structure must be replaced or updated to match repaired sections that required new materials

Matching disputes arise when new replacement materials cannot be matched to existing undamaged materials, raising questions about whether undamaged portions must also be replaced.

Which of the following BEST describes the role of an 'independent adjusting firm' in a catastrophe response?

Answer: A third-party company contracted by insurers to provide additional adjusting capacity during high-volume CAT events

Independent adjusting firms are third-party vendors contracted by insurers to supplement their staff capacity during catastrophes when claim volumes exceed in-house resources.