Study 1

Question 1

One who investigates insurance claims, makes recommendations regarding the payment of benefits from insurance policies, and negotiates payments and settlements.

Answer 1

adjuster

Question 2

An insurance claims adjuster representing an insured on a fee basis in a claims settlement.

Answer 2

public adjuster

Question 3

One who adjusts losses on behalf of the insurance companies but is not employed by any one insurance company.

Answer 3

independent adjuster

Question 4

Legal process by which an insurance company, after the payment of a loss, is assigned the rights of the insured to recover the amount of the loss from those who are legally liable for it.

Answer 4

subrogation

Question 5

The remaining value of property after severe damage by fire or other peril. The overall loss is reduced by the salvage value. Undamaged property may be quite saleable, and some property may be only partially damaged, thus repairable and then saleable.

Answer 5

salvage

Question 6

A claims person involved in any aspect of the claims adjusting process. May work for brokers, agents, or insurers. Can perform any duty in the adjusting process including taking the initial report of a loss, adjusting the loss, or handling the salvage or subrogation aspects of claims.

Answer 6

claims handler

Question 7

An employee of an insurance company who directs the investigations of staff adjusters and independent adjusters, reviews their reports, and approves claim settlements.

Answer 7

claims examiner

Question 8

A legal decision that serves as a basis to resolve subsequent disputes in similar cases.

Answer 8

precedent

Question 9

A legal wrong arising from a duty fixed by law. A breach of this duty that causes injury to persons or property is repressible by legal action for damages. Liability for tort involves a private or civil wrong or injury and is distinct from that under contract in that the duty is owed to people, generally, rather than to a specified individual.

Answer 9

tort

Question 10

Relationship that exists between two parties or more by virtue of their having entered into a contract.

Answer 10

privity of contract

Question 11

A loss that occurs by chance. An accidental occurrence.

Answer 11

fortuitous loss

Question 12

A contract that can be affirmed or rejected at the option of the aggrieved party.

Answer 12

voidable contract

Question 13

An illegal contract. In the law, a contract that was never made or never existed. For example, one cannot enter into a contract to commit an illegal act like theft and have it stand up in court. Such a contract is considered a void contract.

Answer 13

void contract

Question 14

The concept that an insured will be reimbursed for her loss (subject only to the policy limit and terms). If there is no loss, there can be no indemnity.

Answer 14

principle of indemnity

Question 15

An interest that the insured must have in the subject matter of the insurance purchased so that if the event insured against occurs, the insured will suffer an economic loss.

Answer 15

insurable interest

Question 16

A legal principle calling for the highest standards of integrity on the part of the insured and the insurer.

Answer 16

utmost good faith

Question 17

Damages in excess of those required to compensate the plaintiff for the wrong done, which are imposed in order to punish the defendant because of the particularly wanton or willful nature of their wrongdoing. Also called exemplary damages.

Answer 17

punitive damages

Question 18

A statement or conduct made to influence an insurer to decide on a risk. The decision includes declining or accepting the risk and deciding the rate and premium to be charged. In insurance, these statements are said to be “material to the risk” and are enough to void a policy ab initio (Latin term meaning “from the beginning”).

Answer 18

representation

Question 19

Incorrect or missing information about a material fact that is offered, or not, by an applicant or insured with or without the intent to mislead.

Answer 19

misrepresentation

Question 20

Those changes that would influence a reasonable and prudent insurer to decide whether to stay on the risk or influence the terms on which the risk is retained. The general context of this condition can, however, encompass a wide range of possible changes.

Answer 20

material change

Question 21

A contract of insurance is based on utmost good faith. An applicant for insurance is required to disclose to the company all material facts that are necessary to underwrite a policy. If the applicant does not disclose all these facts, the applicant is guilty of non-disclosure and may risk having coverage voided from inception.

Answer 21

non-disclosure

Question 22

Statement or stipulation or promise in an insurance contract, the breach of which may nullify the contract.

Answer 22

warranty

Question 23

A promise not only that a fact is presently true but that it will continue to be true during the policy period.

Answer 23

promissory warranty

Question 24

Failure to meet the conditions or warranties contained in a specific policy of insurance.

Answer 24

breach

Question 25

Liability associated with very dangerous actions. Often found in cases involving explosives and in many automobile laws. Negligence does not have to be proven.

Answer 25

absolute liability

Question 26

The loss of a right as a result of the non-performance of some obligation or condition.

Answer 26

forfeiture

Question 27

A formal statement of facts about a loss, attested to by the claimant, in a form specified by the insurer. A proof of loss may need to be notarized. An insurer must respond to a proof of loss after a specified time period with a formal disposition of the claim (approved or denied).

Answer 27

proof of loss

Question 28

The principle that cases be considered in the spirit of fairness and justness, as well as the strictly formulated rules of precedent.

Answer 28

principle of equity

Question 29

The principle that the insurer’s obligations under a policy terminate at a stated point in time.

Answer 29

termination of obligations

Question 30

The intentional and voluntary relinquishment of a known right. A waiver under a policy is required to be clearly expressed and in writing.

Answer 30

waiver

Question 31

A bar created when someone by their action, or lack of it, indicates that they will not exercise a right they have. They stop themself from exercising their right later. For example, if A owns a pen and stands by and watches B sell the pen to C, as if the pen belonged to B, then A cannot later reclaim the pen, arguing that it was his.

Answer 31

estoppel

Question 32

Notification received by the insurance company from the insured that a loss has occurred. Failure to give such notice has been held to be a bar against recovery.

Answer 32

notice of loss

Question 33

The fair market value of property, taking into account factors that might augment or reduce the value of the property in question. Actual cash value (ACV) is usually calculated in one of three ways: (1) cost to repair or replace less depreciation; (2) fair market value; or (3) consideration of all relevant evidence of the value of the damaged property.

Answer 33

actual cash value (ACV)