AL Claims Adjuster cheat sheet

Indemnity restores the insured to approximately the pre-loss financial position; a property recovery cannot exceed the actual amount of loss, so the insured cannot profit from a claim.

Actual cash value = replacement cost minus depreciation. Replacement cost pays to repair or replace with new property of like kind and quality without a depreciation deduction.

Insurable interest is a financial stake such that loss causes pecuniary harm. Property insurance requires it at the time of loss; life insurance requires it at policy inception.

Utmost good faith means a material misrepresentation or concealment of a fact that would have changed the insurer's underwriting decision can support rescission of the policy.

An insurance policy is an aleatory contract: the premium is fixed and known, while the benefit is contingent and unequal in value, depending on a fortuitous event.

A peril is the cause of loss (fire, wind, collision). A hazard increases the chance of loss: physical (icy stairs), moral (intent to defraud), or morale (carelessness, leaving keys in a car).

Risk management techniques are avoidance, retention, loss reduction, and transfer. Insurance transfers pure risk to a pool; speculative risk (business, investment) is not insurable.

Subrogation lets the insurer step into the insured's legal rights against a responsible third party after payment, preventing double recovery and supporting indemnity.

The law of large numbers lets insurers predict aggregate losses from a large, similar exposure pool; adverse selection is the tendency of worse-than-average risks to seek or retain coverage.

A policy is organized into declarations, insuring agreement, conditions, exclusions, and definitions; the insuring agreement states the core promise to pay.

Conditions precedent to first-party coverage commonly include prompt notice of loss, a sworn proof of loss, protection of damaged property, and cooperation in the investigation.

Limits may be per person, per occurrence, per item, or aggregate, with sublimits for specific coverages; whether defense costs are inside or outside the limit depends on the form.

Other insurance clauses allocate loss among concurrent policies as primary, excess, or pro rata; the insured's own policy is typically primary for a non-owned exposure.

Cancellation return premiums are pro rata when the insurer cancels and short rate when the insured cancels mid-term; short-rate retention reflects the insurer's unrecovered expense.

Waiver is the voluntary surrender of a known right; estoppel bars the insurer from asserting a right when the insured has detrimentally relied on the insurer's contrary conduct.

A binder is temporary evidence of coverage pending policy issuance; an agent acting within apparent authority can bind the insurer even before the policy is written.

Assignment of a property or liability policy requires the insurer's written consent because coverage follows the insured and the insured's conduct, not merely the property.

Appraisal resolves disputes about the amount of loss, not coverage: each party selects a competent appraiser, and the appraisers may choose an umpire to break a deadlock.

Cause-of-loss forms are basic (named perils), broad (named perils plus extended perils such as water damage and falling objects), and special (open perils, with the insurer bearing the burden of proving an exclusion).

Coinsurance payment = (insurance carried / insurance required) x loss, where insurance required = coinsurance percentage x value at risk; the payment never exceeds the policy limit.

Business income coverage pays lost net income plus continuing normal operating expenses during the period of restoration; extra expense pays costs incurred to avoid or minimize shutdown.

Standard property exclusions include flood, earth movement, ordinance or law, neglect, intentional loss, and constant or repeated seepage of water over 14 days or more.

The mortgagee clause gives the lender a separate right to receive loss payments and to sue the insurer, and the lender's interest is not voided by the insured's acts or neglect.

Replacement cost pays repair or replacement with new material of like kind and quality; actual cash value deducts physical deterioration, functional obsolescence, and economic obsolescence.

If a building is vacant beyond 60 consecutive days, most forms suspend or restrict coverage for perils such as vandalism, water damage, and glass breakage.

The pair-and-set clause pays the difference between the value of the complete pair or set and its value after the loss when a damaged item cannot be replaced singly.

Debris removal, preservation of property, collapse, and increased cost of construction are commonly provided as additional coverages subject to stated sublimits.

CGL Coverage A pays sums the insured becomes legally obligated to pay as damages because of bodily injury or property damage caused by an occurrence in the coverage territory.

Occurrence-triggered policies respond when the injury or damage happens; claims-made policies respond when the claim is first made, subject to a retroactive date and extended reporting period.

The duty to defend is broader than the duty to indemnify: the insurer must defend a suit with any potential for coverage, even if the allegations are groundless or false.

CGL limits include each occurrence, general aggregate, products-completed operations aggregate, personal and advertising injury, and damage to premises rented to you.

Negligence elements are duty, breach, actual and proximate causation, and damages; Alabama applies contributory negligence as a complete bar to recovery.

Common CGL exclusions include expected or intended injury, contractual liability, pollution, your product, your work, and professional services.

An additional insured endorsement extends coverage to a landlord, general contractor, or vendor, but its scope depends on the endorsement wording (for example, negligence arising from the named insured's work).

Respondeat superior makes an employer vicariously liable for an employee's negligent acts within the scope of employment; a non-delegable duty cannot be avoided by hiring a contractor.

Damages are special (economic, such as medical bills and lost wages) or general (non-economic, such as pain and suffering); punitive damages punish, and Alabama's wrongful death statute is punitive in nature.

The personal auto policy has Part A liability, Part B medical payments, Part C uninsured/underinsured motorists, Part D damage to your auto, Part E duties after an accident, and Part F general provisions.

Alabama minimum liability limits are 25/50/25: $25,000 per person and $50,000 per accident for bodily injury, and $25,000 per accident for property damage.

Split limits apply separately to each injured person, each accident, and property damage; a combined single limit provides one total limit for all damages from one accident.

Uninsured motorist coverage pays for injury caused by an uninsured or hit-and-run driver; underinsured motorist coverage pays the gap when the at-fault driver's limits are below the insured's damages.

PAP exclusions include intentional damage, racing, use as a public livery or delivery vehicle, vehicles furnished for regular use, and vehicles owned by the insured but not listed.

A newly acquired auto is covered automatically for a limited period (commonly 14 days for liability) and remains covered to the end of the policy period if it replaces a listed vehicle.

Total loss settlement is based on actual cash value plus applicable taxes and transfer fees, less the deductible and any retained salvage value.

Alabama requires insurers to offer uninsured motorist coverage, and the named insured must reject it in writing for the coverage not to apply.

Physical damage coverage follows the vehicle, so a person operating the named insured's covered auto generally qualifies as an insured for collision and other-than-collision losses.

Workers compensation is a no-fault statutory system: benefits are paid for work-related injury or disease regardless of employer fault, and the exclusive remedy bars most employee negligence suits against the employer.

Benefit categories are medical, temporary total and temporary partial disability, permanent partial and permanent total disability, death benefits, and vocational rehabilitation.

Alabama requires employers with five or more employees to secure workers compensation coverage under Title 25, Chapter 5 of the Alabama Code; certain agricultural and casual labor is exempt.

Average weekly wage is computed from gross earnings, usually over the 52 weeks before injury; disability benefits are a statutory percentage (often two-thirds) of that wage, capped by a state maximum.

The compensability test is that the injury arises out of and occurs in the course of employment; the going-and-coming rule usually excludes ordinary commuting injuries, with exceptions for special errands and travel required by the job.

Waiting periods of about 3 to 7 days delay disability payments, and benefits are paid retroactively if disability extends beyond a set period (Alabama: 3-day wait, retroactive after 21 days).

When a negligent third party causes the injury, the employer or insurer holds a statutory lien or subrogation right against the employee's third-party recovery.

Occupational disease and repetitive trauma claims accrue at injury or last exposure and carry state-specific filing deadlines; Alabama's workers compensation limitations period is two years.

The experience modification factor adjusts premium for the employer's loss history relative to the class average; a factor below 1.00 reflects better-than-average losses.

Claim handling sequence: acknowledge and set up the claim, investigate, determine coverage, evaluate damages, set reserves, negotiate, settle, and document each step in the file.

A reservation of rights letter accepts the defense while preserving coverage defenses; a non-waiver agreement is signed by the insured and achieves a similar result.

Proof of loss is a sworn statement of the amount claimed; where the policy makes it a condition precedent, failure to submit it can bar the claim.

Reserves consist of case reserves set claim by claim plus incurred-but-not-reported (IBNR) estimates; reserves estimate ultimate indemnity, defense, and adjustment cost, not the amount already paid.

Subrogation steps: identify third-party liability early, preserve evidence, put responsible parties on notice, and file suit within the statute of limitations before the claim is settled and closed.

Fraud red flags include late reporting, a prior claims history, treatment inconsistent with the injury, inflated or unrelated medical bills, altered documents, and no identifiable witnesses.

A general release extinguishes all claims against the released party; a limited release may preserve claims against other parties, and a covenant not to execute is not a release.

Bad faith exposure arises from unreasonable denial or delay, failure to investigate, failure to attempt prompt settlement within limits, and failure to explain the basis for a denial.

Medicare, Medicaid, and workers compensation liens must be identified and resolved before settlement, and liability Medicare set-asides may be required for future medical costs.

The Alabama Department of Insurance, headed by a Commissioner appointed by the Governor, regulates insurers, producers, and adjusters under Title 27 of the Alabama Code.

Alabama's Unfair Claims Settlement Practices Act prohibits misrepresenting policy provisions, failing to acknowledge claim communications with reasonable promptness, and failing to conduct a reasonable investigation.

Alabama requires producers to complete 24 hours of continuing education every two years, including at least 3 hours of ethics.

Alabama minimum auto liability limits are 25/50/25, and uninsured motorist coverage must be offered and may be rejected only in writing by the named insured.

Alabama is a contributory negligence state: a claimant whose own negligence contributes to the injury is completely barred from recovery, rather than having damages reduced proportionally.

Alabama's wrongful death statute (Ala. Code section 6-5-410) is punitive in purpose, so the personal representative recovers punitive damages rather than compensation for the decedent's pre-death suffering.

Alabama's Extended Manufacturer's Liability Doctrine (AEMLD) imposes strict liability when a product was defective and unreasonably dangerous when it left the manufacturer's control and the defect caused injury.

Alabama recognizes both normal bad faith (unreasonable failure to pay a covered claim) and abnormal bad faith (intentional or reckless conduct in denying coverage).

Alabama's personal injury statute of limitations is two years, and the workers compensation limitations period is two years from the date of the accident.