Claims Settlement & Negotiation Flashcards

A 'walk-away number' in claims negotiation refers to:

Answer: The maximum amount the insurer will pay before abandoning settlement

The walk-away number is the insurer's upper limit—beyond which it is preferable to litigate rather than settle.

Under the 'collateral source rule,' a defendant's liability is generally:

Answer: Not reduced by benefits the plaintiff received from independent sources

The collateral source rule prevents defendants from reducing damages because the plaintiff received compensation from independent sources like health insurance.

In third-party claims, which party directly initiates a lawsuit against the insured?

Answer: The claimant (injured party)

In third-party claims, the injured claimant brings suit against the insured, not directly against the insurer.

A 'nuisance value' settlement is made primarily to:

Answer: Avoid the cost of defending a weak or frivolous claim

Nuisance value settlements pay a small amount to resolve meritless claims when defense costs would exceed the settlement figure.

Which document formally concludes a liability claim by preventing the claimant from pursuing further legal action?

Answer: Release of all claims

A release of all claims is a legal document the claimant signs extinguishing all present and future claims arising from the incident.

In negotiation, 'anchoring bias' can most damage an adjuster's effectiveness by:

Answer: Causing over-reliance on an initial offer figure that skews the settlement range

Anchoring bias causes negotiators to fixate on the first number introduced, which can distort subsequent offers away from fair value.

Which factor would most likely increase an adjuster's evaluation of a claimant's general damages?

Answer: Objective MRI findings corroborating complaints of pain

Objective diagnostic evidence like MRI findings that corroborate subjective pain complaints significantly strengthens and increases a general damages evaluation.