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AMF Claims Adjuster (Quebec) study materials
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AMF Claims Adjuster (Quebec) practice questions

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Question 1Claims adjustment fundamentals and the adjuster's role

Under Quebec's claims-adjuster framework, which activity is reserved for a licensed claims adjuster?

  1. Advising a client on which coverage limit to purchase
  2. Estimating repair costs for a body shop's internal pricing
  3. Selling home insurance policies to new clients
  4. Negotiating a settlement of an insurance claim on behalf of the insurer Correct answer.

Explanation

The adjuster's reserved activity is the investigation and settlement of claims, including negotiating settlements, on behalf of an insurer or an insured. Activities such as selling policies or setting repair prices fall outside that reserved field. Licensing exists precisely to keep claim settlement in qualified hands.

Question 2Claims adjustment fundamentals and the adjuster's role

An insured calls the adjuster and asks whether a particular loss is covered. What is the adjuster's most appropriate first step?

  1. Deny coverage until the insurer's underwriter is consulted
  2. Gather the policy wording and the facts of the loss before expressing a coverage position Correct answer.
  3. Refer the insured to a lawyer for a coverage opinion
  4. Confirm coverage immediately to reassure the insured

Explanation

A coverage position must rest on the actual policy wording applied to established facts. Committing to an answer before reading the contract and verifying the circumstances risks an erroneous admission or denial. The adjuster therefore gathers the policy and the loss facts first.

Question 3Claims adjustment fundamentals and the adjuster's role

What does the duty to act in good faith primarily require of a claims adjuster toward the insured?

  1. To settle every claim at the amount first demanded
  2. To prioritize the insurer's financial result in every file
  3. To treat the insured honestly and fairly, including timely and reasoned communication Correct answer.
  4. To avoid contacting the insured until liability is fully determined

Explanation

Good faith requires honesty, fairness, and transparency in handling the claim, including explaining decisions and avoiding unreasonable delay. It does not mean favouring either party's financial interest. It also does not require paying a demand that the evidence does not support.

Question 4Claims adjustment fundamentals and the adjuster's role

An adjuster receives a claim and notices a potential conflict of interest because a relative is the insured. What is the correct course of action?

  1. Proceed without mention because the relationship is distant
  2. Ask the insured to confirm in writing that they waive any objection
  3. Declare the conflict to the insurer so the file can be reassigned or managed Correct answer.
  4. Proceed but disclose the relationship only if the claim is denied

Explanation

A conflict of interest must be disclosed promptly to the principal so that appropriate measures, usually reassignment, can be taken. Disclosure only on denial or a private waiver by the insured does not protect the integrity of the process. Transparency is the adjuster's professional obligation.

Question 5Claims adjustment fundamentals and the adjuster's role

Which document typically establishes the adjuster's authority to act on a specific file for an insurer?

  1. The adjuster's appointment or mandate from the insurer Correct answer.
  2. The insured's proof of loss form
  3. The police report of the incident
  4. The contractor's repair estimate

Explanation

The adjuster acts under a mandate or appointment conferred by the insurer, which defines the scope of authority on the file. The proof of loss, police report, and estimates are evidence, not sources of authority. Without a mandate the adjuster has no standing to bind the insurer.

Question 6Claims adjustment fundamentals and the adjuster's role

What is the primary purpose of the adjuster's initial contact with the insured after a loss?

  1. To obtain a signed release of all claims
  2. To record a formal statement under oath
  3. To determine the final settlement amount on the spot
  4. To identify the loss, confirm coverage details, and explain the process Correct answer.

Explanation

The initial contact establishes the facts of the loss, confirms policy details, and sets expectations about the steps ahead. It is not the moment for final numbers, releases, or sworn examinations. Early clarity reduces disputes and delay later in the file.

Question 7Claims adjustment fundamentals and the adjuster's role

Which of the following best describes the principle of indemnity in claims adjustment?

  1. The insured should profit from the loss to discourage underinsurance
  2. The insured receives the policy limit regardless of the actual loss
  3. The insured should be restored to approximately the pre-loss financial position, no better Correct answer.
  4. The insurer may choose any amount within the policy limit

Explanation

Indemnity means the insured is restored to roughly the financial position held before the loss, without gain. This principle underpins limits, deductibles, and actual-cash-value calculations. It explains why the policy limit is a ceiling rather than an automatic payout.

Question 8Claims adjustment fundamentals and the adjuster's role

An insured refuses to provide any documentation supporting the claimed amount. What should the adjuster do?

  1. Close the file as fraud without further inquiry
  2. Pay the claim in full to avoid a complaint
  3. Transfer the file to the police immediately
  4. Explain the documentation requirement and the consequence of non-compliance, documenting the exchange Correct answer.

Explanation

The insured has a duty to substantiate the claim, and the adjuster should clearly explain that requirement and record the communication. Non-cooperation may ultimately affect the claim, but only after a documented opportunity to comply. Immediate payment or an unfounded fraud finding are both improper.

Question 9Claims adjustment fundamentals and the adjuster's role

During an investigation, the adjuster learns facts suggesting the insured may have exaggerated the loss. How should the adjuster proceed?

  1. Ignore the suspicion because the amount is small
  2. Confront the insured aggressively and demand an immediate admission
  3. Continue a neutral investigation, document findings, and reserve the insurer's rights Correct answer.
  4. Deny the entire claim at once and close the file

Explanation

Suspicion of misrepresentation calls for a thorough, neutral investigation with documented findings and a clear reservation of rights. Accusation without proof exposes the insurer to bad-faith allegations. Ignoring the issue also fails the duty to the insurer.

Question 10Claims adjustment fundamentals and the adjuster's role

What is the function of a reservation of rights letter?

  1. It informs the insured that the insurer is investigating while preserving its right to deny coverage later Correct answer.
  2. It releases the insured from the deductible
  3. It transfers the file to another insurer
  4. It confirms that the insurer will pay the claim in full

Explanation

A reservation of rights tells the insured that the insurer is proceeding with investigation or defence without waiving any coverage position. It protects the insurer from later allegations of waiver. It is not a promise to pay or a transfer of the claim.

Question 11Claims adjustment fundamentals and the adjuster's role

An adjuster is handling a claim where liability is disputed between two insured parties. What approach best reflects sound adjustment practice?

  1. Defer entirely to the insured who reports first
  2. Split the loss equally without analysis
  3. Rely solely on the first statement obtained
  4. Assess all available evidence, including independent sources, before allocating liability Correct answer.

Explanation

Liability determinations must rest on a balanced review of all evidence, including independent witnesses and documents. Relying on a single statement or on reporting order is arbitrary. Equal splitting without analysis substitutes convenience for reasoned judgment.

Question 12Claims adjustment fundamentals and the adjuster's role

Which statement best describes subrogation in the claims context?

  1. The insurer's right to recover from the party responsible after paying the insured Correct answer.
  2. The insured's right to cancel the policy after a loss
  3. The insurer's obligation to pay before investigation
  4. The adjuster's authority to increase policy limits

Explanation

Subrogation allows the insurer that has indemnified its insured to step into the insured's shoes and pursue the responsible third party. It supports the indemnity principle by preventing double recovery. It does not alter limits or create an obligation to pay early.

Question 13Claims adjustment fundamentals and the adjuster's role

An insured submits an estimate from a contractor who is a friend of the insured and whose prices are well above market. What should the adjuster do?

  1. Accept the estimate because it is signed
  2. Reject the claim entirely
  3. Pay the estimate minus a fixed percentage
  4. Obtain an independent estimate or expert opinion to test reasonableness Correct answer.

Explanation

The adjuster must verify that claimed amounts are reasonable and necessary, and an independent estimate is the standard tool where the submitted document is questionable. A signature alone does not establish fair value. Blanket rejection or arbitrary reduction lacks an evidentiary basis.

Question 14Claims adjustment fundamentals and the adjuster's role

What distinguishes an examination under oath from an ordinary recorded statement?

  1. It is a formal sworn proceeding provided for by the policy, with legal consequences for false answers Correct answer.
  2. It is optional and has no evidentiary value
  3. It replaces the need for any documentary evidence
  4. It is conducted by the insured's lawyer

Explanation

An examination under oath is a formal, sworn process typically authorized by the policy, and false answers can carry serious consequences. An ordinary recorded statement is informal and unsworn. Neither process eliminates the need for documents.

Question 15Claims adjustment fundamentals and the adjuster's role

An adjuster discovers the loss occurred before the policy's inception date. What is the correct conclusion?

  1. The claim must be paid because the insured reported it promptly
  2. The claim is payable if the premium was paid on time
  3. The loss falls outside the policy period and is not covered unless another provision applies Correct answer.
  4. The claim is payable because the policy was later renewed

Explanation

Coverage applies to losses occurring within the policy period, so a pre-inception loss is outside coverage absent a specific provision. Prompt reporting and premium payment do not extend the period. Renewal does not retroactively cover earlier events.

Question 16Claims adjustment fundamentals and the adjuster's role

Which behaviour best demonstrates the adjuster's duty of confidentiality?

  1. Posting general claim information on social media
  2. Retaining personal data indefinitely for convenience
  3. Sharing file details with a neighbour who inquires about the fire
  4. Discussing the claim only with parties who have a legitimate need to know Correct answer.

Explanation

Confidentiality limits disclosure of claim information to those with a legitimate need, such as the insurer, experts, and counsel. Casual sharing, public posting, or indefinite retention of personal data breaches that duty. Adjusters must also respect data-protection rules on retention.

Question 17Claims adjustment fundamentals and the adjuster's role

An insured's building is damaged and the adjuster must choose between repair cost and actual cash value. Which consideration is most relevant?

  1. The policy's valuation clause and the loss-settlement conditions it contains Correct answer.
  2. The age of the insured
  3. The adjuster's usual practice on similar files
  4. The insured's personal preference alone

Explanation

The basis of settlement is determined by the policy's valuation and loss-settlement provisions, which may provide replacement cost, actual cash value, or another measure. Personal preference, habit, or irrelevant personal facts cannot override the contract. The adjuster applies the wording to the evidence.

Question 18Claims adjustment fundamentals and the adjuster's role

A claimant asks the adjuster for a copy of the policy under which the loss is being handled. What is the appropriate response?

  1. Provide it or direct the claimant to the insurer, since the insured is entitled to the contract terms Correct answer.
  2. Provide only the declarations page
  3. Charge a fee before releasing any information
  4. Refuse because the policy belongs to the insurer

Explanation

The insured is entitled to know the terms of the contract governing the claim, and transparency supports good-faith handling. Refusing access or releasing only fragments obstructs fair dealing. Any fee practice must follow applicable rules and cannot justify withholding the terms.

Question 19Claims adjustment fundamentals and the adjuster's role

What is the adjuster's proper role when a claim involves both covered and excluded damage?

  1. Deny the whole claim because part is excluded
  2. Ask the insured to choose which part to claim
  3. Separate the covered from the excluded portions and indemnify only the covered loss Correct answer.
  4. Pay the whole claim because part is covered

Explanation

The adjuster must apportion the loss, paying only the damage attributable to covered perils and excluding the rest. Whole-claim denial or payment both misapply the policy. The insured does not choose which contractual provisions apply.

Question 20Claims adjustment fundamentals and the adjuster's role

An adjuster is asked to handle a claim where the amount exceeds their delegated authority. What should they do?

  1. Refer the file to a higher authority for approval before committing Correct answer.
  2. Ask the insured to reduce the claim to the authorized limit
  3. Approve the amount and inform the insurer afterward
  4. Split the payment into smaller amounts to stay within authority

Explanation

Delegated authority sets the ceiling of what the adjuster may commit, and amounts above it require approval from a higher level. Approval after the fact or artificial splitting defeats the control. Pressuring the insured to shrink a valid claim is improper.

Question 21Claims adjustment fundamentals and the adjuster's role

Which practice best supports a defensible claim file if the settlement is later challenged?

  1. Keeping contemporaneous notes of contacts, evidence reviewed, and reasoning for decisions Correct answer.
  2. Storing only documents favourable to the insurer
  3. Recording only the final amount paid
  4. Relying on memory and reconstructing the file at the end

Explanation

A contemporaneous record of contacts, evidence, and the reasoning behind each decision shows that the claim was handled fairly and rationally. Minimal or one-sided records leave the insurer unable to justify the outcome. Reconstructing a file later invites inconsistency and credibility problems.

Question 22Claims adjustment fundamentals and the adjuster's role

An insured threatens to complain to the regulator unless the claim is paid within 24 hours. How should the adjuster respond?

  1. Explain the remaining steps and timelines, and continue handling the file diligently Correct answer.
  2. Suspend the file until the threat is withdrawn
  3. Pay immediately to prevent the complaint
  4. Inform the insured that complaints will delay the claim

Explanation

A complaint threat does not change the merits or the process; the adjuster should communicate realistic timelines and keep the file moving diligently. Paying under pressure rewards coercion and may breach the duty to the insurer. Suspending the file or retaliating is improper.

Question 23Claims adjustment fundamentals and the adjuster's role

An adjuster suspects a claim may be fraudulent but the evidence is inconclusive. Which course best balances the competing duties?

  1. Report the insured to the police before any further inquiry
  2. Deny the claim outright and state fraud as the reason
  3. Pay the claim in full to avoid litigation risk
  4. Continue investigating, document the concerns, and communicate a reserved position Correct answer.

Explanation

When fraud is suspected but unproven, the adjuster should keep investigating, record the concerns, and preserve the insurer's position without making an unfounded allegation. Outright denial on suspicion risks bad faith, while unconditional payment ignores the insurer's interest. Premature police referral without a factual foundation is also inappropriate.

Question 24Claims adjustment fundamentals and the adjuster's role

Two policies cover the same loss, and one contains a pro rata clause while the other contains an excess clause. What is the soundest adjustment approach?

  1. Pay the full amount under each policy so the insured recovers twice
  2. Pay nothing until the insured sues one insurer
  3. Ignore both clauses and split the loss equally
  4. Apply the policy wordings together, often resulting in the pro rata policy responding first and the excess policy above it Correct answer.

Explanation

Overlapping policies are reconciled by reading their other-insurance clauses together, and a pro rata clause paired with an excess clause commonly produces a primary and excess response. The insured is indemnified once, not twice. Ignoring the clauses or forcing litigation is not sound practice.

Question 25Claims adjustment fundamentals and the adjuster's role

An adjuster realizes a coverage denial was issued based on a misread exclusion. What is the professionally correct response?

  1. Wait for the insured to appeal before acting
  2. Promptly correct the error, inform the insured and the insurer, and reassess the claim Correct answer.
  3. Maintain the denial to preserve consistency
  4. Adjust the file quietly without telling anyone

Explanation

Professional integrity requires prompt correction of an erroneous denial, with disclosure to the insured and the insurer and a fresh assessment of the claim. Preserving consistency or waiting for an appeal prolongs an unjustified refusal. Silent correction conceals the error from those affected.

Question 26Claims adjustment fundamentals and the adjuster's role

Which of the following is the best description of the adjuster's duty of good faith toward the insured?

  1. The adjuster must always pay the amount the insured first requests.
  2. The adjuster must avoid communicating with the insured until coverage is confirmed.
  3. The adjuster must defer all decisions to the insurer's underwriting department.
  4. The adjuster must act honestly, fairly and promptly in investigating and settling the claim. Correct answer.

Explanation

Good faith requires the adjuster to treat the insured honestly and fairly throughout the claim, including prompt investigation, clear communication and objective evaluation of coverage and quantum. It does not require automatic payment of the amount demanded, nor does it justify withholding information from the insured.

Question 27Claims adjustment fundamentals and the adjuster's role

What is the main purpose of documenting each step of a claim in the file as it happens?

  1. To satisfy the insured's request for a written settlement offer.
  2. To transfer responsibility for the claim to the underwriter.
  3. To create a contemporaneous record that supports the decisions taken. Correct answer.
  4. To reduce the amount of correspondence the insurer must retain.

Explanation

Contemporaneous notes and records allow the adjuster, the insurer and any later reviewer to reconstruct what was known and decided at each stage. This supports defensibility if the settlement is challenged and demonstrates that the investigation was reasonable.

Question 28Claims adjustment fundamentals and the adjuster's role

An insured reports a loss and asks the adjuster whether the policy will respond. The adjuster has not yet reviewed the policy wording. What is the most appropriate response?

  1. Confirm coverage immediately to reassure the insured.
  2. Decline the claim until the insured provides a legal opinion.
  3. Explain that coverage will be assessed after reviewing the policy and the facts, without promising an outcome. Correct answer.
  4. Refer the insured to the broker and close the file.

Explanation

The adjuster should neither promise nor deny coverage before reviewing the policy wording and the facts of the loss. Explaining the process and setting expectations preserves objectivity and avoids creating an estoppel-like expectation of payment.

Question 29Claims adjustment fundamentals and the adjuster's role

Which of these activities is generally considered part of the adjuster's investigation rather than a coverage decision?

  1. Interviewing witnesses and obtaining a fire department report Correct answer.
  2. Deciding whether a reservation of rights letter is needed
  3. Determining the applicable policy limit
  4. Interpreting an exclusion clause in the policy

Explanation

Gathering evidence such as witness statements and official reports is fact-finding that feeds into the coverage analysis. Interpreting exclusions, deciding on reservations of rights and identifying limits are legal or coverage determinations that follow from the facts.

Question 30Claims adjustment fundamentals and the adjuster's role

An insured asks the adjuster to recommend a specific contractor to repair the damage. How should the adjuster respond?

  1. Refuse to discuss repairs and insist the insured find a contractor alone.
  2. Decline to recommend and explain that the insured may choose any qualified contractor. Correct answer.
  3. Recommend a contractor only if the adjuster receives a referral fee.
  4. Provide the name of a contractor owned by a relative to keep costs low.

Explanation

The adjuster should avoid steering the insured to a particular contractor, which can create a conflict of interest and undermine the independence of the repair estimate. Informing the insured that they are free to select any qualified contractor protects both parties.

Question 31Claims adjustment fundamentals and the adjuster's role

What does the term 'quantum' refer to in claims adjustment?

  1. The period during which the policy remains in force
  2. The amount of the loss to be indemnified Correct answer.
  3. The number of parties claiming under the policy
  4. The legal basis on which coverage is accepted or denied

Explanation

Quantum concerns the measurement of the loss, that is, how much is payable once coverage is established. Coverage and quantum are analysed separately, because a covered loss still requires accurate valuation before settlement.

Question 32Claims adjustment fundamentals and the adjuster's role

Which of the following best explains why an adjuster should keep the insured informed of the claim's progress?

  1. It helps manage expectations and reduces the risk of complaints or bad-faith allegations. Correct answer.
  2. It allows the adjuster to avoid issuing written decisions.
  3. It reduces the insurer's obligation to investigate the loss.
  4. It guarantees that the insured will accept the final settlement.

Explanation

Regular communication keeps the insured aware of what is happening, what is outstanding and when a decision is expected. This transparency reduces frustration and the likelihood of complaints or allegations of unfair handling.

Question 33Claims adjustment fundamentals and the adjuster's role

Which record is most useful to an adjuster in establishing the date and cause of a fire loss?

  1. The insured's original application for the policy
  2. The broker's commission statement
  3. The fire department's incident report Correct answer.
  4. The insurer's annual financial statements

Explanation

A fire department incident report is an independent, contemporaneous record of when the fire occurred and what the responders observed. Such third-party documentation carries more evidentiary weight than internal insurer documents for establishing the facts of the loss.

Question 34Claims adjustment fundamentals and the adjuster's role

An insured reports a theft but cannot recall the exact date it occurred. What should the adjuster do first?

  1. Pay the claim at the policy limit to avoid delay.
  2. Deny the claim because the date is uncertain.
  3. Assume the loss occurred outside the policy period.
  4. Ask the insured to narrow the timeframe using receipts, bank records and travel records. Correct answer.

Explanation

The adjuster should help the insured establish the timeframe through objective records such as purchase receipts, banking activity and travel history. Confirming the date is essential to determine whether the loss falls within the policy period and whether notice was prompt.

Question 35Claims adjustment fundamentals and the adjuster's role

An insured has a policy with a deductible and the loss is clearly covered. How should the adjuster apply the deductible when calculating the indemnity?

  1. Deduct it from the total loss before applying any policy limit. Correct answer.
  2. Ignore it if the insured asks for full payment.
  3. Apply it only when the loss exceeds the policy limit.
  4. Add it to the settlement so the insured receives the full loss amount.

Explanation

The deductible is the portion of each loss retained by the insured and is subtracted from the covered loss before the policy limit is applied. The insured therefore bears the deductible amount, and the insurer pays the balance up to the limit.

Question 36Claims adjustment fundamentals and the adjuster's role

During an investigation, the adjuster finds that the insured's inventory records were prepared months after the loss. How should the adjuster treat this evidence?

  1. Accept the records as conclusive proof of the inventory.
  2. Ask the insured to destroy the records to avoid confusion.
  3. Disregard all evidence and deny the claim outright.
  4. Give the records appropriate weight while seeking independent corroboration. Correct answer.

Explanation

Records created after the loss may be less reliable than contemporaneous documents, so the adjuster should weigh them accordingly and look for corroboration such as suppliers' invoices or tax filings. This preserves objectivity without automatically rejecting the evidence.

Question 37Claims adjustment fundamentals and the adjuster's role

An adjuster learns that the insured has filed a related claim with another insurer for the same loss. What is the most appropriate step?

  1. Contact the other insurer to coordinate the investigation and avoid double recovery. Correct answer.
  2. Immediately deny the claim for misrepresentation.
  3. Advise the insured to withdraw the other claim.
  4. Ignore the other claim because it is outside the adjuster's mandate.

Explanation

Where more than one insurer may respond to the same loss, coordination helps establish the facts and prevents the insured from recovering twice for the same damage. The adjuster should also review any other-insurance clause to determine how the loss is shared.

Question 38Claims adjustment fundamentals and the adjuster's role

Which of the following best describes the adjuster's obligation when the insured is represented by legal counsel?

  1. Refuse to speak with counsel until the insurer's lawyer authorizes it.
  2. Communicate only with counsel on matters concerning the claim, unless the insured consents otherwise. Correct answer.
  3. Ask the insured to dismiss counsel before the claim can proceed.
  4. Continue dealing directly with the insured to speed up the process.

Explanation

Once the insured is represented, the adjuster should direct substantive communications to counsel to avoid interfering with the professional relationship. Direct contact with the insured may still occur with consent or for purely administrative matters.

Question 39Claims adjustment fundamentals and the adjuster's role

An adjuster receives an anonymous tip alleging that a claimant staged a slip-and-fall. What is the appropriate first step?

  1. Close the file and refer the matter to the police without further review.
  2. Confront the claimant with the accusation and demand a confession.
  3. Deny the claim immediately based on the tip.
  4. Treat the tip as a lead and gather objective evidence before drawing conclusions. Correct answer.

Explanation

An anonymous tip is unverified information that may justify further inquiry but cannot by itself support a denial. The adjuster should seek objective evidence, such as surveillance, witness statements or medical records, before reaching any conclusion.

Question 40Claims adjustment fundamentals and the adjuster's role

What is the purpose of a proof of loss form?

  1. To notify the broker that the claim has been opened.
  2. To transfer the insured's rights against third parties to the insurer.
  3. To record the adjuster's internal coverage analysis.
  4. To provide a sworn statement of the claimed amount and supporting particulars. Correct answer.

Explanation

A proof of loss is a formal, usually sworn, statement in which the insured sets out the amount claimed and the circumstances of the loss. It anchors the claim and provides a basis for the adjuster's verification.

Question 41Claims adjustment fundamentals and the adjuster's role

An insured's building is damaged by water, and the adjuster must decide whether the cause is a sudden pipe burst or long-term seepage. Why does this distinction matter?

  1. Because water losses are always excluded from property policies.
  2. Because the insurer's obligation depends on the building's age only.
  3. Because policies commonly cover sudden accidental escape of water but exclude repeated seepage over time. Correct answer.
  4. Because the deductible differs depending on the insured's payment history.

Explanation

Property policies typically cover sudden and accidental water damage, such as a burst pipe, while excluding damage from continuous or repeated seepage that the insured had time to discover and prevent. The adjuster must therefore establish the mechanism and duration of the water intrusion.

Question 42Claims adjustment fundamentals and the adjuster's role

An adjuster is assigned a claim in a region where they have a personal friendship with the insured. What should they do?

  1. Handle the claim but offer the insured a more generous settlement.
  2. Ask the insured to confirm in writing that the friendship will not influence the outcome.
  3. Disclose the relationship to the insurer and request reassignment if objectivity could be affected. Correct answer.
  4. Proceed with the claim and disclose the relationship only if asked.

Explanation

A personal relationship can compromise real or perceived objectivity, so the adjuster should disclose it promptly and let the insurer decide whether reassignment is appropriate. Transparency protects the integrity of the claim and the adjuster's professional standing.

Question 43Claims adjustment fundamentals and the adjuster's role

Which of the following best reflects the adjuster's role in subrogation?

  1. The adjuster preserves evidence and identifies the responsible third party so the insurer can pursue recovery after payment. Correct answer.
  2. The adjuster negotiates the insured's tort claim against the third party before paying the insured.
  3. The adjuster collects the subrogation recovery and remits it to the insured.
  4. The adjuster waives the insurer's recovery rights to settle the claim quickly.

Explanation

Subrogation allows the insurer, after indemnifying the insured, to step into the insured's shoes against the responsible party. The adjuster supports this by documenting the loss, preserving evidence and identifying the third party, while avoiding any release that would extinguish the insurer's rights.

Question 44Claims adjustment fundamentals and the adjuster's role

An insured disputes the adjuster's valuation of damaged stock. What approach best supports a fair resolution?

  1. Refer the matter to the regulator for a binding decision.
  2. Review the valuation method with the insured and consider independent evidence such as invoices and market data. Correct answer.
  3. Maintain the original figure without explanation to preserve authority.
  4. Increase the settlement to the amount demanded to end the dispute.

Explanation

A valuation dispute is best resolved by transparently explaining the method used and reviewing it against objective evidence such as purchase invoices and current market prices. This may confirm or correct the figure and demonstrates good faith.

Question 45Claims adjustment fundamentals and the adjuster's role

An adjuster is handling a claim where the insured has failed to mitigate the damage after a burst pipe. What is the correct treatment of the resulting additional damage?

  1. The insurer may reduce indemnity for damage that the insured could reasonably have prevented. Correct answer.
  2. The insurer pays all damage, including the portion that could have been avoided.
  3. The insurer pays the additional damage but not the original loss.
  4. The insurer denies the entire claim, including the original burst pipe damage.

Explanation

Insureds are expected to take reasonable steps to limit further damage after a loss, and policies commonly allow the insurer to reduce payment for avoidable aggravation. The original covered damage remains payable, while the consequences of the failure to mitigate may be excluded or reduced.

Question 46Claims adjustment fundamentals and the adjuster's role

An insured provides a receipt for a television that appears to have been altered. What should the adjuster do?

  1. Confront the insured, request the original receipt and verify with the retailer. Correct answer.
  2. Accept the receipt because it is the only document provided.
  3. Forward the receipt to the police without further inquiry.
  4. Silently reduce the settlement and say nothing to the insured.

Explanation

Where a document appears altered, the adjuster should seek the original and verify it with the issuing retailer or bank before relying on it. This gives the insured an opportunity to explain while protecting the insurer against a potentially inflated claim.

Question 47Claims adjustment fundamentals and the adjuster's role

An adjuster must decide whether to settle a small claim quickly or investigate further. Which principle best guides this decision?

  1. The adjuster should always settle immediately to reduce administrative costs.
  2. The adjuster should investigate every claim to the same maximum extent.
  3. The adjuster should investigate in proportion to the complexity and value of the claim. Correct answer.
  4. The adjuster should defer the decision to the insured.

Explanation

Proportionality means the depth of investigation should match the value, complexity and risk indicators of the claim. A small, straightforward loss may not warrant extensive inquiry, while larger or suspicious claims require more thorough examination.

Question 48Claims adjustment fundamentals and the adjuster's role

An adjuster discovers that the insured's broker provided incorrect information at underwriting that materially affected the risk. How should the adjuster proceed?

  1. Amend the policy retroactively to reflect the correct information.
  2. Deny the claim immediately without further review.
  3. Ignore the underwriting issue because the adjuster's role is limited to the loss.
  4. Document the finding and refer it to the insurer for a coverage assessment while continuing the loss investigation. Correct answer.

Explanation

Material misrepresentation at underwriting may affect coverage, but that determination belongs to the insurer and may require legal review. The adjuster's role is to document the finding, refer it appropriately and continue investigating the loss without prejudging the outcome.

Question 49Claims adjustment fundamentals and the adjuster's role

A claimant submits two estimates that differ substantially in price for identical repairs. What analytical approach best serves the adjustment?

  1. Select the lower estimate because it is more favourable to the insurer.
  2. Compare the scope, quantities and unit prices in each estimate to identify the reason for the difference. Correct answer.
  3. Average the two estimates and settle at the midpoint.
  4. Reject both estimates and require a third from a contractor chosen by the insurer.

Explanation

A price difference may reflect different scopes of work, quantities, materials or labour rates rather than mere overpricing. Comparing the components allows the adjuster to determine which estimate reflects the actual damage and reasonable repair cost.

Question 50Claims adjustment fundamentals and the adjuster's role

An adjuster suspects that a claimant and a witness know each other and may have coordinated their accounts. What is the most rigorous investigative step?

  1. Interview each person separately and compare details against independent evidence. Correct answer.
  2. Reject both statements because of the suspected relationship.
  3. Ask the claimant to confirm the witness's statement in writing.
  4. Accept both statements because they are consistent with each other.

Explanation

Separate interviews reduce the opportunity for accounts to be aligned, and comparing the details with independent evidence tests reliability. Consistency alone does not prove truthfulness, nor does a relationship automatically discredit a witness.