chapter 9- Claims Flashcards
Which of the following is an example of an automobile claim being prejudiced?
A. The insured reports the claim promptly to the insurer.
B. The insured reports the claim promptly to the broker, who then reports it to the insurer.
C. The insured delays reporting the claim and tries to settle the claim “under the table” with the third party.
D. The insured’s father reports the claim promptly to the insurer because the insured is injured in the car accident and is unable to report the claim herself.
C. The insured delays reporting the claim and tries to settle the claim “under the table” with
the third party.
Rationale: For automobile claims, delays in reporting can prejudice insurers’ claims investigations.
What type of loss results in damage or loss of the insured property itself?
A. Direct loss
B. Indirect loss
C. Moral loss
D. Consequential loss
A. Direct loss
Direct loss is damage to or loss of the insured property itself.
Which of these claims is a third-party claim?
A. Wind blows a tree down and it lands on the insured’s car, damaging the insured’s personal items that are in the car
B. The insured stays at a hotel after a fire damages the insured’s house
C. A child spills paint on the insured’s carpet
D. The insured accidently hits a neighbour’s car with the snowplough while ploughing the driveway
D. The insured accidently hits a neighbour’s car with the snowplough while ploughing the driveway
The neighbor suffering the damage to his car is a third party to the contract: a party outside the contract who claims the insured is liable for her loss.
Coinsurance is mostly applied to which of the following types of insurance contracts?
A. Commercial property
B. Professional liability
C. Personal property
D. Personal liability
A. Commercial property
Coinsurance is applied mostly to contracts covering commercial property. It is suitable where
the risk of a total loss is relatively remote when compared with the risk of partial loss.
Why is an adequate amount of insurance so important?
A. It allows brokers to earn the maximum commission possible.
B. It allows insurers to earn the highest investment income on reserve funds.
C. Rates in fire insurance are based on the assumption that total values (or almost total values) are insured.
D. Rates in property insurance are discounted if the property is insured to value.
C. Rates in fire insurance are based on the assumption that total values (or almost total values) are insured.
An adequate amount of insurance is important because it allows insureds to be fully reimbursed for losses, and rates in fire insurance are based on the assumption that total values (or almost total values) are insured.
What is salvage?
A. It is the process of taking steps to reduce the amount of a loss.
B. It is the sharing of a loss between two or more insurance companies.
C. It is the deductible that an insured must pay before being compensated for a loss by the insurance policy.
D. It is total loss where no residual value remains
A. It is the process of taking steps to reduce the amount of a loss.
Salvage is the process of taking steps to reduce the amount of a loss; for instance, an insurer that paid for a total loss claim for an item can sell the property and retain the proceeds as salvage and thus reduce its loss.
What is included in the adjuster’s function of investigating a claim?
A. Only the insured can report the claim to the insurer.
B. It is up to the insurer to prove the loss after the insured reports it.
C. If the loss is not covered, the insurer has 30 days to deny.
D. There must exist utmost good faith when the policy was written for the claim to be valid.
D. There must exist utmost good faith when the policy was written for the claim to be valid.
Information can surface that shows the insured was not truthful when the policy was written.
Which task is the duty of a broker in a claims situation?
A. Assist clients in reporting their losses to their insurers
B. Write a cheque for the claim amount
C. Investigate the loss
D. Make repairs to damaged property
A. Assist clients in reporting their losses to their insurers
In claims situations, brokers assist clients in reporting their losses to the insurers.
Which type of adjuster consists of salaried employees of insurers who investigate, negotiate, and settle claims for their employers?
A. Staff adjusters
B. Public adjusters
C. Independent adjusters
D. Claims examiners
A. Staff adjusters
Staff adjusters are salaried employees of insurers who investigate, negotiate, and settle claims for their employers.
Which type of adjuster usually handles small straightforward losses that do not require the adjuster to see the damaged article or to visit the loss location?
A. Claims examiners
B. Telephone adjusters
C. Independent adjusters
D. Remote adjusters
B. Telephone adjusters
Staff adjusters usually handle small straightforward losses that do not require the adjuster to see the damaged article or to visit the loss location.
What is the purpose of prescription periods in insurance claims?
Purpose of prescription periods
• To allow a person to make a claim at any time after an event has occurred would be unjust and would produce chaos
• Many actions could be started long after the parties concerned and witnesses have disappeared
• Delayed claims would be difficult to investigate, prove, or disprove a claim
• The outcome of the action would virtually be determined by the whims of the court system
• Therefore, there must be a set time within which persons must make a claim if they are going to do so
Outline the key characteristics of a coinsurance clause in the context of an insurance claim
Coinsurance clause
• Each coinsurance clause contains a provision stating when adequate insurance is considered to exist
• This may be expressed either as a percentage of the value of the property or as a specifically stated amount
• The percentage required is mainly governed by the type of property covered, and 100 percent, 90 percent, 80 percent, or 50 percent are usual
• When a dollar amount is stipulated or a value is attested or given by sworn statement, it is called a stated amount coinsurance clause
• If at the time of loss the insured is carrying an amount of insurance that is less than the policy coinsurance requirement, the coinsurance penalty will apply
What are the key steps followed by the adjuster in a claim
. Key steps in the claims process
• The claims handler records the preliminary information and will follow up for details of the incident
• The claim information will then be reviewed to see if the policy will cover the loss
• The claims handler will identify any issues that require further investigation and review, and let the policy holder know about any concerns
• The adjuster can then accept the loss report and pass it along to the insurer of record
• Then, a loss adjuster will be assigned to the claim and proceed to the next steps of determining the settlement of the claim
What is the roll of a Broker in a claim process
Role of broker in the claim process
- HA will assist PH in reporting the loss to the insurer
- HA is also responsible for explaining the claim process to reduce anxiety
- HA must set realistic expectations
- HA will also monitor the progress of the claim on PH’s behalf
- However, HA will also advocate for the insurance carrier when needed
HA = handling adjuster
PH = policyholder
What are the steps of a loss adjuster in a claim?
Steps of the loss adjuster
• Verify the policy coverage
• Investigate the loss
• Evaluate and assess damage
• Negotiate as necessary or deny the claim
• Arrive at a settlement and pay the claim
