Chapter 5 First Notice of Loss

Question 1

Jane applies for property insurance but fails to declare that she runs a hair salon from the basement of her home. What can this be described as?

a. Non-disclosure of a material fact

b. Memory lapse on Jane’s part

c. Not a problem because many people run salons in their homes

d. Material change in risk

Answer 1

a. Non-disclosure of a material fact

Question 2

Jin buys a car but borrows funds from ABC Bank to purchase the car. Who has insurable interest in this case?

a. Jin only

b. Jin and ABC Bank

c. ABC Bank only

d. No one has insurable interest in this case.

Answer 2

b. Jin and ABC Bank

Question 3

Should a potential coverage issue be pointed out to an insured early in the claims process?

a. No, it is not a good idea because it may lead to an argument between the insured and broker.

b. No, because it may cause problems dealing with the insured.

c. Yes, but should only be done by the adjuster.

d. Yes, because it is the right thing to do, whether it is done by a broker, claims handler, or adjuster.

Answer 3

d. Yes, because it is the right thing to do, whether it is done by a broker, claims handler, or adjuster.

Question 4

What should a claims intake person do when a loss involves multiple policies with different insurers?

a. Ask which policy the insured is reporting the claim under

b. Select the relevant policy and check that the loss falls within the policy period

c. Reject the report of the claim.

d. Pay the claim and subrogate

Answer 4

b. Select the relevant policy and check that the loss falls within the policy period

Question 5

Who typically is best to provide first notice of loss?

a. Claimant

b. Insured

c. Broker

d. Insurer

Answer 5

b. Insured

Question 6

What are body shops best referenced as in the claims process?

a. Supporting service providers

b. Repair facilities

c. Appraisers

d. Retail service centres

Answer 6

a. Supporting service providers

Question 7

Who determines if there is coverage for a claim?

a. Broker

b. Adjuster

c. Insured

d. Underwriting department

Answer 7

b. Adjuster

Question 8

When more than one policy has been issued to insure a given risk, a loss must be divided equitably among the various policies. According to their amount and terms, each “contributes” its share of the loss.

Answer 8

contribution

Question 9

A claimant under a liability policy, so called because that party is not one of the two parties (insured and insurer) who has entered into the insurance contract that pays the claim.

Answer 9

third party

Question 10

(1) The agent/broker negotiating insurance or reinsurance contracts for another. (2) Any party representing another party, in negotiation with a third party.

Answer 10

intermediary

Question 11

An enterprise that introduces innovative technology and business models to the insurance sector.

Answer 11

insurtech

Question 12

The first party is who

a. The insurer
b. The insured
c. intermediaries
d. A person with the most insurable interests

Answer 12

b. The insured

Question 13

An example of an Intermediaries is

a. the vender
b. the adjuster
c. the agent
d. the insured

Answer 13

c. the agent

Question 14

What the the 4 key functions within the claims process for the adjuster

Answer 14

Investigate gather the required information
Evaluating the amount of damages
Negotiating and agreeing upon the value of the damaged
Settling the loss

Question 15

Policy condition

Answer 15

The insured must report the loss promptly
The insured has a duty to cooperate
The insured must provide details of the loss
The insured must advise of other insurance policies
The insured must minimize the damage
The insured must notify the insurer of changes in risk
Any change to the risk that has happened since the policy was insured, and that was within the knowledge of the insured, must be reported to the insurer.

Question 16

What is a loss adjuster likely to do first when assigned to a claim?

a. Investigate the loss

b. Negotiate settlement

c. Pay the claim

d. Verify coverage

Answer 16

d. Verify coverage

Question 17

What must the claims professional consider when managing claims expectations?

a. How much premium the insured is paying

b. Whether the insured is a student or actively employed

c. Conveying a realistic timeline for things to happen through the life cycle of the claim.

d. How many other claims the insured has had

Answer 17

C. Conveying a realistic timeline for things to happen throughout the life cycle of the claim.

Question 18

Monique has started operating a daycare in her home but does not alert her insurer of it. An accidental fire erupts from the controls for her hot tub in the backyard, which is not used as part of the daycare operation. The fire causes extensive damage to the home. Will the loss be covered?

a. Yes, but only for the damage to the hot tub.

b. No, because she failed to disclose that she was running a daycare at her home.

c. No, because she failed to report a material change in the risk.

d. Yes, for the damage to her home and contents subject to any limits applicable.

Answer 18

d. Yes, for the damage to her home and contents subject to any limits applicable.

Question 19

What steps are involved in the claims process?

Answer 19

Insured reports loss to broker, agent or insurer
Claims handler records prelim info and asks for details, insured may complete questionnaire
Claims info is reviewed by claims handler or AI software; which policy or policies apply to the property or incident? Does the policy period cover the loss? Is the cause of loss potentially covered?
Claims handler identifies possible coverage issues that will require investigation/review
If broker is involved, may accept loss report and pass this along to insurer of record
Loss adjuster is assigned the claim and proceeds

Question 20

What steps does the loss adjuster follow once taking over the claims process?

Answer 20

Verifies coverage
Investigates the loss
Evaluates and assesses damage
Negotiates as necessary or denies the claim
Arrives at a settlement
Recommends payment
Pays the claim

Question 21

What are other key functions of the claims process? NISE

Answer 21

Investigate to gather required info and document the loss
Evaluate the amount of damage
Negotiate and agree upon the value of the insured damage
Settle the loss

Question 22

Supporting service providers may be involved in the claim transaction to accomplish what

Answer 22

assess the damage
determine the cause of loss
establish the cost of repairs and carry them out
supply product and services
assist in resolving claim disputes

Question 23

What are some examples of supporting service providers?

Answer 23

Appraisers, estimators, surveyors, restoration contractors, automobile body shops, forensic accountants, police, firefighters, witnesses, doctors, rehabilitation service providers, private investigators, lawyers, arbitrators and mediators

Question 24

What are some examples of info the insured must provide in writing if requests?

Answer 24

How and why did the loss originate?
Did the insured intentionally cause the loss?
Where was the property at the time of the loss?
What are the damage items and the details of purchase, age and value?
Is there another policy that provides coverage for the loss?
What are the details of any such policy?
Who owns or has an interest in the property?
Supply a detailed inventory of undamaged property
Complete a proof of loss form and if requested, have it notarized
Submit documentary evidence such as invoices, warehouse receipts or books of account