Settlement Procedures Flashcards
7 cards from real CALA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Settlement Procedures flashcards as text
In a multi-vehicle accident where liability is shared, a state using 'pure comparative negligence' would:
Answer: Allow recovery reduced by the claimant's percentage of fault, regardless of degree
Under pure comparative negligence, a claimant can recover even if 99% at fault, but the award is reduced proportionally.
When multiple insurers cover the same loss, the principle that determines which pays first is called:
Answer: Coordination of benefits / other insurance provisions
Coordination of benefits rules and 'other insurance' policy provisions determine primary vs. excess insurer obligations.
An adjuster closes a claim with payment. The insured later discovers additional related damage. Can they reopen the claim?
Answer: Yes, if a signed release was not obtained and the damage is clearly related to the original loss
Without a signed release, a claimant may reopen a claim if supplemental damage is discovered and tied to the original event.
What is the key difference between a 'release' and a 'covenant not to sue'?
Answer: A release extinguishes the claim entirely; a covenant not to sue preserves the right to sue but promises not to exercise it
A release fully discharges the claim, while a covenant not to sue retains the underlying right but contractually bars its exercise.
A claimant is represented by an attorney. The adjuster should:
Answer: Direct all communications through the attorney and not contact the claimant directly
Once a claimant is represented, ethical and legal standards require the adjuster to communicate exclusively through the attorney.
What is 'loss of use' coverage designed to compensate?
Answer: The cost of a rental vehicle while the insured's car is being repaired
Loss of use coverage reimburses the insured for rental car expenses during the reasonable repair period.
When calculating rental reimbursement for a total loss, payment typically ends when:
Answer: The insured purchases a replacement vehicle or a reasonable replacement period expires, whichever comes first
Rental reimbursement on a total loss ends when the insured buys a replacement or after a reasonable time period, usually 3–5 days after ACV payment is made.