Claims and Loss Settlement Flashcards
6 cards from real Property And Casualty Insurance License practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Claims and Loss Settlement flashcards as text
What is a 'reservation of rights' in insurance claims?
Answer: The insurer's notice that it will handle the claim but reserves the right to deny coverage based on a policy issue
A reservation of rights letter allows the insurer to investigate and defend a claim without waiving any policy defenses, protecting its right to later deny coverage if warranted.
What is 'diminution in value' as a measure of damages?
Answer: The reduction in market value of a vehicle or property after it has been repaired following a loss
Diminution in value is the difference between the market value of a vehicle before a loss and its value after repair, even when properly repaired.
What is 'structured settlement' in liability claims?
Answer: A settlement paid out in periodic installments over time rather than as a lump sum
A structured settlement pays the claimant in periodic payments, often funded by an annuity, providing long-term income instead of a single lump-sum payment.
What is 'subrogation against a co-insured' and why is it generally prohibited?
Answer: Subrogation against a co-insured is generally not permitted because the co-insured is also protected by the policy
An insurer typically cannot subrogate against a co-insured (someone also covered under the same policy) because doing so would effectively take back what the policy provided.
What is an 'interpleader' action in insurance?
Answer: A legal procedure where the insurer deposits disputed funds with a court and lets competing claimants resolve who is entitled to them
Interpleader allows an insurer that owes money to multiple competing claimants to deposit the funds with a court, avoiding multiple liabilities while the court determines entitlement.
What does 'innocent co-insured' doctrine protect?
Answer: A co-insured who did not participate in or know about intentional acts committed by another insured that caused a loss
The innocent co-insured doctrine protects a blameless co-insured (such as a spouse) from having their coverage voided because the other insured intentionally caused the loss.