AL Claims Adjuster flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Principle of indemnity

Indemnity restores the insured to the approximate financial position held before the loss, so a property claim cannot produce a profit; recovery is capped at the actual amount of loss.

Insurable interest

A financial stake in the subject matter such that loss causes the insured pecuniary harm; property insurance requires it at the time of loss, life insurance at policy inception.

Aleatory contract

An insurance contract in which the amounts exchanged by the parties are unequal and depend on a chance event, because the insured pays a fixed premium while the benefit is contingent.

Moral hazard

A condition of character or conduct, such as an intent to defraud, that increases the likelihood or severity of loss, which underwriters control through deductibles, limits, and investigation.

Declarations page

The policy section that identifies the named insured, policy period, covered property or exposures, limits, and deductibles, and serves as the starting point for coverage analysis.

Coinsurance clause

A property condition requiring insurance equal to a stated percentage of value; if the limit carried is lower, payment is reduced by the ratio of carried insurance to required insurance.

Waiver and estoppel

Waiver is the voluntary relinquishment of a known right; estoppel prevents an insurer from asserting a right when the insured reasonably relied on the insurer's contrary conduct.

Other insurance clause

A provision that determines how two or more policies respond to the same loss, typically making one policy primary and the other excess or sharing the loss pro rata.

Open perils coverage

A cause-of-loss form that covers all risks of direct physical loss except those specifically excluded, placing the burden on the insurer to prove an exclusion applies.

Business income coverage

Coverage that pays the net income the business would have earned plus continuing normal operating expenses during the period of restoration following a covered loss.

Mortgagee clause

An endorsement giving the lender the right to receive loss payments and to sue the insurer, with the lender's interest protected even if the insured's acts void the policy.

Replacement cost valuation

A valuation method that pays the cost to repair or replace damaged property with new materials of like kind and quality, without deducting depreciation from the payment.

Duty to defend

The insurer's obligation to provide a legal defense for claims potentially within coverage; this duty is broader than the duty to indemnify and applies even to groundless suits.

Occurrence

An accident, including continuous or repeated exposure to substantially the same general harmful conditions, that results in bodily injury or property damage during the policy period.

Claims-made policy

Liability coverage that responds to claims first made during the policy period, subject to a retroactive date and usually an extended reporting period for later claims.

Respondeat superior

A legal doctrine making an employer vicariously liable for the negligent acts of an employee committed within the scope of employment.

Split limits

Separate dollar limits for bodily injury per person, bodily injury per accident, and property damage per accident, such as 25/50/25 in Alabama.

Underinsured motorist coverage

Coverage that pays the insured's damages beyond the amounts collected from an at-fault driver whose liability limits are insufficient, up to the underinsured motorist limit.

Newly acquired auto

A vehicle the insured acquires during the policy period; coverage is automatic for a limited period, commonly 14 days for liability, and continues if it replaces a listed auto.

Combined single limit

One total dollar limit that applies to all bodily injury and property damage arising from a single accident, instead of separate per-person and per-accident limits.

Exclusive remedy

The principle that workers compensation benefits are the employee's only recovery against the employer for a work-related injury, barring most negligence suits.

Average weekly wage

A calculation of the injured worker's gross earnings, usually over the 52 weeks before the injury, used to set the amount of disability benefits.

Going-and-coming rule

The general rule that injuries during an employee's commute to and from work are not compensable because they do not arise out of and in the course of employment.

Permanent partial disability

Benefits paid when a work injury leaves a permanent impairment but the worker can still work; scheduled awards apply to listed body parts and non-scheduled awards to the whole body.

Reservation of rights

A letter that accepts a claim's defense while preserving the insurer's right to deny coverage later, protecting the insurer against waiver while the investigation continues.

Proof of loss

A sworn statement from a first-party claimant detailing the date, cause, and amount of loss, and often a condition precedent to payment.

Case reserve

The adjuster's estimate of the ultimate cost of a specific claim, including expected indemnity and defense expense, reviewed and revised as facts develop.

Subrogation recovery

Money the insurer recovers from a liable third party after paying the insured, which offsets the claim cost; pursuit must occur within the statute of limitations.

Alabama contributory negligence

Alabama is one of the few states where a plaintiff's own negligence, even slight, completely bars recovery, rather than reducing damages in proportion to fault.

AEMLD

Alabama's Extended Manufacturer's Liability Doctrine imposes strict liability on a manufacturer or seller for a defective product that is unreasonably dangerous and causes injury.

Alabama wrongful death

Alabama's wrongful death statute is punitive in purpose, so damages punish the defendant rather than compensate the estate; there is no separate survival claim for pre-death suffering.

Alabama UM requirement

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