Adjusting Property and Liability Claims

Question 1

Depreciation

Answer 1

The reduction in value caused by the physical wear and tear or a technological or economic obsolescence of property

Question 2

Broad evidence rule

Answer 2

A court ruling explicitly requiring that all relevant factors be considered in determining actual cash value

Question 3

Agreed amount

Answer 3

A method of valuing property in which the insurer and the insured agree on the property’s value at the time the policy is written and that states the amount in the policy declarations as the amount the insurer will pay in the event of a total loss to the property

Question 4

Sublimit

Answer 4

A policy provision that imposes smaller limited for certain kinds of property or lines of insurance

Question 5

Prospective settlements

Answer 5

Settlements made before property has been repaired

Question 6

Retrospective settlements

Answer 6

Settlements made after property has been repaired and the policyholder has resumed operations

Question 7

Business income

Answer 7

Sum of (1) net profit or loss that would have been earned or incurred if the suspension had not occurred and (2) normal operating expenses, including payroll, that continue during the suspension

Question 8

Period of restoration

Answer 8

The period during which business income loss is covered under the BIC forms; it beings 72 hours after the physical loss occurs and ends when the property is (or should have been) restored to use with reasonable speed. (With regard to extra expense coverage, it begins immediately after the physical loss occurs.)

Question 9

Bill of lading

Answer 9

A document acknowledging receipt of goods from the shipper, given by the carrier which includes the terms of the contract of carriage for the goods

Question 10

Released bill of lading

Answer 10

A bill of lading that limits the carrier’s liability for cargo loss in return for charging a lower freight rate than would be charged for carrying the cargo subject to full valuation

Question 11

Proximate cause

Answer 11

A cause that, in a natural and continuous sequence unbroken by any new and independent cause, produces an event and without which the event would not have happened

Question 12

Assumption of risk

Answer 12

A defense to negligence that bars a plaintiff’s recovery for harm caused by the defendant’s negligence if the plaintiff voluntarily incurred the risk of harm

Question 13

Comparative negligence

Answer 13

A common-law principle that requires both parties to a loss to share the financial burden of the bodily injury or property damage according to their respective degrees of fault

Question 14

Contributory negligence

Answer 14

A common-law principle that prevents a person who has been harmed from recovering damages if that person’s own negligence contributed in any way to the harm

Question 15

Pain and suffering

Answer 15

Compensable injuries that are difficult to measure, sic as physical and mental distress and inconvenience associated with a physical injury

Question 16

Bad-faith claim

Answer 16

A claim that implies or involves actual or constructive fraud, a design to mislead or deceive another, or a neglect or refusal to fulfill some good-faith duty or some contractual good-faith obligation

Question 17

Structured settlement

Answer 17

An agreement in settlement of a claim involving specific payments made over a period of time

Question 18

Advance payment

Answer 18

A payment made to a claimant following a loss to cover the immediate expenses resulting from that loss

Question 19

Walk-away settlement

Answer 19

A settlement that involves lump-sum payments made by insurers to settle claims and that does not require a release from the claimant

Question 20

Constructive total loss

Answer 20

A loss that occurs when the cost to repair damaged property plus its remaining salvage value equals or exceeds the property’s pre-loss value

Question 21

Warranty

Answer 21

A written or oral statement in a contract that certain facts are true

Question 22

Express warranty

Answer 22

An explicit statement about a product by the seller that the buyer or other user may rely on and that provides a remedy in the event the product does not perform as claimed

Question 23

Preferred provider organization (PPO)

Answer 23

An administrative organization that meets the common needs of healthcare providers and clients and that identifies networks of providers and contracts for their medical services at discounted rates

Question 24

Medical management

Answer 24

A medical expense control measure that involves directing and coordinating efforts of healthcare providers to meet patient and insurer needs