Documentation & Reporting Standards Flashcards

Under the NAIC Unfair Claims Settlement Practices Act model, failure to maintain adequate claim documentation can constitute:

Answer: An unfair claims settlement practice subject to regulatory penalties

Inadequate documentation is recognized under NAIC model acts as a potential unfair claims practice, which can trigger regulatory investigations and fines.

When preparing a marine cargo claim report, the adjuster must document:

Answer: The bill of lading, survey findings, cause of damage, and extent of loss to cargo

Marine cargo reports require the bill of lading to establish ownership and value, plus a survey documenting condition and cause, to support the claim under the marine policy.

In a total loss vehicle claim, which document establishes the insurer's right to take ownership of the salvage vehicle?

Answer: A signed title transfer or salvage certificate issued to the insurer

After paying a total loss, the insurer receives the vehicle title or salvage certificate, documenting the transfer of ownership needed to legally dispose of the salvage.

A 'loss run report' in the context of commercial insurance documentation is:

Answer: A multi-year history of claims showing dates, amounts paid, and loss types for an insured account

Loss runs provide a historical claims record used to evaluate risk, price renewals, and identify patterns — they are key documentation in commercial account management.

When subrogation potential exists in a claim, what documentation step is critical at the time of initial investigation?

Answer: Preserve all evidence of the third party's negligence and document the liable party's identity and insurance information

Early preservation of evidence and documentation of third-party liability information is essential to protect the insurer's right to subrogate after paying the claim.

When setting initial reserves on a new claim, the adjuster's reserve documentation should reflect:

Answer: The best estimate of ultimate liability based on known facts at the time, documented with supporting rationale

Reserves must be documented with factual support and represent the adjuster's honest estimate of ultimate exposure — both under-reserving and over-reserving are problematic practices.

Which of the following is the BEST practice when an adjuster must correct an error in a claim file entry?

Answer: Strike through the error with a single line, add the correction, date it, and initial it — never obliterate the original

Proper error correction preserves the original entry while making the correction visible, maintaining the integrity of the claim record and avoiding the appearance of alteration.