Ch 4 Flashcards
After a catastrophe, how long do insurers strive to be operational in?
2-3 days
When is adjusting hail losses especially challenging?
When the damage is minor to moderate.
What is the first step to investigation a commercial theft claim?
Determine if theft is covered under the policy.
Who denies a flood claim?
Only NFIP personnel
What is the toughest part of an insurer handling a catastrophe?
Having enough staff.
What is the least credible document used in theft investigations?
photo copies of original bill or receipt
Dollar threshold for PCS to deem an event a “catastrophe?”
$25M
What does every insured fire loss require?
A scope
How is mold growth identified?
Careful visual inspection
What is the most destructive type of catastrophe in terms of widespread damage?
Floods
Why is a notarized statement from a repair person attesting to lightning damage a good practice?
It helps to ensure the statement’s veracity.
What are the 3 components of a fire investigation report?
1) Document with photos, video, diagrams
2) narrative reconstruction of cause of fire with visual illustration
3) discussion of alternative causes and ignition sources
If an appliance is the cause of a fire where should it be sent?
testing lab
If a storeowner wants to resume operations ASAP what should the adjuster discuss with him?
Options for relocating, retooling, and obtaining products from other sources to meet delivery deadlines.
What causes heavy smoke?
Lack of oxygen
Difference between hot and cold smoke damage?
Hot smoke permeates surfaces making cleaning impractical.
Why do items such as ceramic, aluminum, and steel have to be cleaned of smoke residue ASAP?
Residue is acidic and can damage metals and ceramic.
What are the steps to confirm lightning as a cause of loss?
1) Confirm that lightning was in the area
2) Physically inspect for evidence of burning, scorching, melting, arcing
3) If necessary, have an expert inspect.
When construction crews are blasting what is the principal complaint in terms of damage?
Cracked plaster.
Compare damage from loaded trucks close to. Houses with damage from blasting operations.
These trucks produce greater vibrations in the earth and shock waves to nearby houses than do blasting operations at reasonable distances from houses.
What are some questions to ask a witness to confirm and explosion?
- Was there evidence of sudden and rapid combustion?
- Was there a violent expansion of the air?
- Was there a report of a loud noise?
- Was there a sudden and violent outbreak of physical forces?
- Was there a sudden or violent bursting or breaking up from an internal force?
Name 2 index bureaus.
NICB - thefts of property
ISO ClaimSearch - marine, property, BI
National Equipment Register - contractor’s equipment
Art Loss Register - fine art losses
In the event of a stolen item, why should an adjuster always advise the law enforcement agency when a payment is made?
So law enforcement knows to contact the insurer if property is recovered. Also, the court may order restitution.
How can a theft loss be verified if someone doesn’t have documentation?
warranty cards, instruction manuals, photos of the room that show the stolen property.
Challenges in hail loss.
minor or moderate hail raises two issues: Does the property need to be repaired at all, and did the claimed damage exist before the loss?
Challenges in hurricane losses
Affect large number of insureds at once, essential services disrupted, repair material in short supply, difficult to tell wind from flood damage
Challenges in earthquakes
Affect large number of insureds at once, essential services disrupted, repair materials in short supply, structural engineers needed to determine scope.
Challenges in fires
Can obliterate all evidence of the property, making it difficult for the property owner to document his or her loss or rebuild the structure.
Challenges in riots
Occur in commercial areas and can provide the perfect cover for arson.
How does geographic concentration affect claim settlement?
Causes all services needed for recovery to be in short supply, requiring such services to be brought in from outside the affected area.
How do interruptions or shortages of service affect claim settlement?
Delays in recovery, including claim adjusting. Prices of services and supplies are likely to be high and stay above normal for an extended period.
How does political sensitivity affect claim settlement?
Public officials will be under stress but have to cooperate with the insurance industry to help the community recover. Some might become inappropriately involved in claim settlement issues.
What kinds of equipment and services should prearranged to facilitate the handling of catastrophic claims l?
office supplies, office equipment, computers, phones, cell phones, licenses, agreements with rental companies, hotels, phone providers, prearranged prices/services with contractors, salvage companies, replacement services, engineering/architectural firms, independent adjusters
What are some problems communicating with insureds following a catastrophe?
Insureds might be in shock. Phone service may be down. Insureds may be living in temporary housing without leaving contact info.
2 mistakes commonly made by adjusters when prices skyrocket in a catastrophe area
1) Refuse to settle at the higher amount and insist that normal prices prevail.
2) Pay any amount just to close the file.
Why might many files need to be reopened following a catastrophe?
Many claims are settled for ACV and then reopened for replacement cost settlement when repairs are complete. Also, many settlements are hasty and hidden damage appears only after repairs are begun.
Provide an example of breach of a promissory warranty?
Not maintaining burglar alarm.
Provide an example of denial due to an excluded cause of loss.
Earthquake.
Provide an example of a denial due to breach of a policy condition following the loss.
File sworn statement proof of loss.
Distinguish fraud from concealment and misrepresentation.
Fraud is any act intended to deceive. Concealment is withholding information by someone who has a duty to disclose it. Misrep is a statement of something as a fact that is false.
What makes misrepresentation material?
If knowledge of the truth would have made a difference to the underwriter in issuing a policy at all or in the price at which to issue it or if the knowledge would have made a difference in a claims investigation or in settlement.
How can a legitimate loss become an opportunity for soft fraud?
May exaggerrate claim or claim items they never owned.
Steps that should be taken to prepare for catastrophe.
Arrange transportation, supplies, temporary housing/office, telecommunications, cars, laptops, cells, first-aid supplies, contracts with contractors, salvors, etc.
Adjusters will need to be rotated out.
Spokesperson due to political sensitivity.
Guidelines need to be prepared to assists adjusters in settling. What kind of documentation or verification can be waived to speed things up.
How does NFIP meet the need for flood insurance?
Makes flood insurance available to property owners who could not obtain coverage in the private market
What agency administers NFIP?
FIMA (of FEMA)
NFIP limit for single family?
$250k
NFIP limit for 2-4 family
$250k
NFIP limit for other residential building besides single or 2-4 family.
$250k
NFIP limit for nonresidential building
$500k
NFIP limit for residential contents
$100k
NFIP limit for nonresidential contents
$500k
NFIP definition of flood
Temporary condition of partial or complete inundation by water of two or more acres of normally dry land or two or more properties caused by any of the following:
- The overflow of inland or tidal waters
- The unusual and rapid accumulation of runoff of surface waters from any source.
- Mudflow, which is defined as a river of liquid and flowing mud on the surfaces of normally dry land, as when earth is carried by a current of water.
- Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining cause by waves or currents of water exceeding anticipated cyclical levels that result in a flood.
Property covered by NFIP dwelling form coverage A
Dwelling, extensions/additions, detached garages, building materials and supplies, certain described fixtures.
Explain NFIP replacement cost
Must be single-family principal residence and must be 80% ITV (or be the maximum coverage offered). Losses exceeding $1,000 or 5% of the limit of liability are not paid until actual repair or replacement is complete.
Explain NFIP ACV
Can elect ACV coverage. Otherwise, ACV is paid if not 80% ITV and is less than maximum amount available under NFIP
Explain NFIP special loss settlement
Used when the dwelling is a principle residence manufactured or mobile home or travel trailer (at least 16’ wide and 600 sq ft. If totaled, settlement is lesser of rc, 1.5* ACV, or the limit of liability.
How do insurers typically set loss reserves for catastrophes?
In bulk
What are the three most frequent causes of catastrophes?
hail, wind, and tornadoes
Determining the type and cause of an explosion can be difficult at times and insurance adjusters must often arrive at a logical conclusion by ….
Using the process of elimination
What type of water comes from a broken aquarium
Gray water
What happens if an independent adjuster doesn’t have NFIP authorization to handle losses?
They can’t be paid.
How long does it take for wet drywall to be covered with millions of mold spores per square inch?
a week or two
An insurer will make a settlement without waiting for further damage to occur when a loss due to lake flooding occurs and ____ days have passed without the water receeding?
90
What are the four elements to a fire investigation report?
Documents damage patters
Eliminates other sources of ignition
Shows the ignition mechanism
Reconstructs the scene
