Study 1: Claims and the Law - Key terms Flashcards
Adjuster
One who investigates insurance claims, makes recommendations regarding the payment of benefits from insurance policies, and negotiates payments and settlements
Public adjuster
An insurance claims adjuster representing an insured on a fee basis in a claims settlement
Claims handler
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.
Claims examiner
An employee of an insurance company who directs the investigations of staff adjusters and independent adjusters, reviews their reports, and approves claim settlements.
Privity of contract
Relationship that exists between two parties or more by virtue of their having entered into a contract.
Fortuitous loss
A loss that occurs by chance. An accidental occurrence.
Voidable contract
A contract that can be affirmed or rejected at the option of the aggrieved party.
Void contract
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.
Principle of indemnity
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.
Insurable interest
An interest that the insured must have in the subject mater of the insurance purchased so that if the event insured against occurs, the insured will suffer an economic loss.
Utmost good faith
A legal principle calling for the highest standards of integrity on the part of the insured and the insurer.
Punitive damages
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 his or her wrongdoing. Also called exemplary damages.
Representation
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”).
Warranty
Statement or stipulation or promise in an insurance contract, the breach of which may nullify the contract.
Promissory warranty
A promise not only that a fact is presently true but that it will continue to be true during the policy period.
Breach
Failure to meet the conditions or warranties contained in a specific policy of insurance.
Proof of loss
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).
Principle of equity
The principle that cases be considered in the spirit of fairness and justness, as well as the strictly formulated rules of precedent.
Termination of obligations
The principle that the insurer’s obligations under a policy terminate at a stated point in time.
Waiver
The intentional and voluntary relinquishment of a known right. A waiver under a policy is required to be clearly expressed and in writing.
Estoppel
A bar created when someone by his action, or lack of it, indicates that he will not exercise a right he has. He stops himself from exercising his 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.
Notice of loss
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.
Subrogation
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.
