AL Claims Adjuster common mistakes
AL Claims Adjuster · Understand the traps and how to avoid them.
When an item describes an insured who burns property for the payout, the candidate answers "morale hazard"; when an item describes an insured who skips roof maintenance because insurance will pay, the candidate answers "moral hazard."
The two terms differ by one letter and are usually memorized as one blended definition instead of being tied to a described behavior, and exam items deliberately swap the scenarios.
What to do instead
Attach one anchor example to each term and recite it before answering: moral hazard = dishonest intent to create or exaggerate a loss (arson, staged theft, inflated inventory); morale hazard = indifference to loss because insurance exists (carelessness, deferred maintenance). Ask "is the person acting dishonestly or merely indifferently?" and answer from that test, not from the word's sound.
The candidate treats "occurrence" and "claims-made" coverage triggers as interchangeable, so on a claims-made liability item the candidate answers using the date of the injury rather than the date the claim was reported, and ignores the retroactive date.
Both triggers are memorized as isolated definitions but never connected to the reporting requirements and retroactive date that determine whether a claims-made policy responds at all.
What to do instead
Build a three-column drill for every policy form studied: date of loss, date of claim, and retroactive date. For claims-made items, first mark the retroactive date, then ask whether the claim was made and reported during the policy period or an extended reporting period; for occurrence items, ask only whether the injury or damage happened during the period. Practicing this on unfamiliar fact patterns makes the trigger question automatic.
The candidate reads only the base policy form and answers without checking whether an endorsement changes the limit, adds an exclusion, or broadens coverage, and separately denies a claim for missing proof of loss as though that were an exclusion.
Study material presents the base form first and endorsements as an afterthought, and candidates do not distinguish among definitions, exclusions, and conditions because all three can defeat or reduce a payment.
What to do instead
Adopt a fixed reading order that you use on every item: declarations, then endorsements, then base form, then conditions. Label the provision in front of you as definition (what a term means), exclusion (what is not covered), or condition (what the insured must do). A missed proof-of-loss deadline is a condition problem that often permits a cure, not an exclusion that automatically bars the claim; answer accordingly.
On a property item with an 80% coinsurance clause, the candidate computes required insurance as limit times 80% instead of value times 80%, or applies the deductible before the coinsurance penalty instead of after, producing a different payable figure than the item's answer choices.
Coinsurance is learned as a formula string rather than as a ratio, and the order of operations (loss, then penalty, then deductible) is rarely practiced with actual numbers under time pressure.
What to do instead
Write the ratio once in words: did they carry at least the stated percentage of the property's value at the time of loss? Required amount = value x percentage; penalty = limit / required amount; payable = loss x penalty, then subtract the deductible. Work five numeric examples with round values until the sequence is automatic, and sanity-check the result: a penalty can only reduce, never increase, the payment.
The candidate answers that an insurer owes indemnity whenever it owes a defense, or refuses to defend because the suit's allegations look groundless or fraudulent.
"Defend" and "indemnify" are studied in the same paragraph, and the broader scope of the defense duty, which extends to suits with any potential for covered damages even if false or groundless, is easy to overlook.
What to do instead
Separate the two duties on a comparison card. Defense is triggered by potential coverage based on the allegations; indemnity is triggered only by actual coverage of a covered loss after facts develop. For every CGL item, first ask "is there any allegation that, if true, falls within coverage?" If yes, the defense duty attaches regardless of whether the insured ultimately wins or the allegations are untrue.
On an auto claim item, the candidate applies the third-party liability limits to the insured's own medical bills, or answers that an uninsured motorist claim is paid under the liability part of the policy without checking the UM/UIM coverage and its limits.
Auto policies bundle several coverages that all respond to the same accident, and candidates memorize limits without memorizing which coverage is first-party, which is third-party, and which applies only when the at-fault driver has no or insufficient insurance.
What to do instead
Draw the auto policy as four boxes before studying details: liability (pays others the insured harms), medical payments or PIP (pays the insured's own people regardless of fault), UM/UIM (steps in when the other driver is uninsured or underinsured), and physical damage (pays the vehicle). For each item, name the claimant and the alleged at-fault party first, then choose the box, then apply that box's limit and deductible.
The candidate denies a workers' compensation claim because the injured employee was careless, was violating a safety rule, or was somewhere the supervisor did not expect, rather than testing whether the injury arose out of and in the course of employment.
Every other liability domain taught on the exam turns on fault, so the candidate carries comparative and contributory fault reasoning into a no-fault benefit system where the employee's own negligence generally does not bar benefits.
What to do instead
Use a two-step workers' compensation filter that excludes fault entirely: did the injury arise out of the employment (work-related cause) and occur in the course of the employment (time, place, and activity)? Only after both are satisfied move to the benefit computation: average weekly wage, the statutory compensation rate, and the scheduled or disability benefit. Treat employer safety-rule violations as a separate issue, not as an automatic bar.
The candidate recommends outright denial or immediate payment while a coverage question is still open, and never recommends a reservation-of-rights letter, or recommends one only after liability has been determined.
Study sequences present coverage, liability, and damages as separate chapters, so candidates do not internalize the required order and do not know what to do when a claim sits between clearly covered and clearly excluded.
What to do instead
Memorize one workflow and apply it to every scenario item: coverage, then liability, then damages, then subrogation and recovery. When coverage is uncertain, the correct move is to investigate while sending a reservation-of-rights letter that states the policy provisions in question and preserves the insurer's position, and to obtain a non-waiver agreement where appropriate. Answer items with that middle step in mind rather than choosing the all-or-nothing option.
The candidate accepts the claimant's repair estimate, medical specials, or total-loss valuation at face value and describes the claim as ready to pay without noting what was verified, what was inspected, or what remains outstanding in the file.
Case-study items present a tidy fact pattern that feels complete, and documentation is studied as administrative filler rather than as the evidence that supports every payment decision.
What to do instead
Treat every scenario as an incomplete file until proven otherwise. For each item, list what the adjuster must independently confirm (damage inspection or independent estimate, medical records supporting causation and treatment, valuation source for a total loss, proof of ownership) and what the file must show (contact log, statements, photographs, reserve changes, payment rationale). Choose answers that describe verification and documentation steps rather than those that skip straight to issuing payment.
The candidate answers Alabama items using rules remembered from general study guides or from other states, such as proportional comparative negligence or a customary claim-acknowledgment deadline, without checking whether Alabama follows that rule or what the Alabama regulation actually requires.
Most national prep material is written for a generic audience, so state-specific rules are either omitted or presented as universal, and candidates assume familiar numbers and doctrines carry over.
What to do instead
Keep a separate Alabama page and put every state-specific rule there only after confirming it in the current Alabama licensing manual or the Alabama Department of Insurance regulation text, including the regulation number. Note that Alabama's negligence doctrine for liability claims differs from the majority rule, and that flood coverage is a federal program rather than a state-regulated line. When an item cites a deadline or doctrine you cannot place in Alabama, mark it for review instead of guessing.