CA Claims Adjuster cheat sheet

Indemnity principle: a claim payment restores the insured to the approximate pre-loss financial position; no profit is recoverable, which is why actual cash value rather than new-for-old is the default measure.

Insurable interest must exist at the time of loss for property coverage; without a real economic interest the insured has no enforceable claim.

ACV formula: replacement cost − depreciation = actual cash value; the payable amount is the lesser of ACV, the applicable limit, or the insured's insurable interest.

Coinsurance penalty formula: (limit carried ÷ limit required) × loss = recovery; the penalty applies only when the carried limit falls below the required percentage of value.

Four risk management techniques: avoidance (eliminate the exposure), reduction (loss control), retention (deductibles, self-insurance), and transfer (insurance, hold-harmless agreements).

Moral hazard is a dishonest or character-driven incentive to cause or inflate loss; morale hazard is carelessness created by having insurance; physical hazard is a tangible condition such as faulty wiring.

Utmost good faith: a material misrepresentation or concealment in the application or during the claim can void coverage or permit rescission.

Subrogation: after paying a loss the insurer stands in the insured's shoes against the responsible third party; the insured cannot sign a release that impairs that right.

A binder is temporary evidence of coverage, typically written or oral, that is effective until the policy is issued or the binder expires.

The California standard fire policy form (Ins. Code §2071) covers fire, lightning, and removal of property endangered by those perils; suit on the policy must be brought within 12 months of inception of the loss.

Coinsurance applies only when the limit carried is less than the required percentage of value (commonly 80%); at or above the requirement there is no penalty.

Coinsurance math: (insurance carried ÷ insurance required) × loss = covered amount; then subtract the deductible; never exceed the policy limit.

Actual cash value = replacement cost − depreciation; recovery is the lesser of ACV, the limit of liability, or the insured's interest in the property.

Replacement cost coverage pays the cost to repair or replace with like kind and quality without depreciation, and the insurer may hold back depreciation until repair or replacement is actually completed.

Ordinance or law coverage pays extra costs to rebuild to current code plus demolition and the value of the undamaged portion, none of which the unendorsed form owes.

Loss of use / additional living expense pays the necessary increase in living costs plus lost fair rental value for the reasonable time needed to repair or replace, subject to a stated limit.

A mortgagee clause entitles the lender to loss payment to the extent of its interest and to notice of cancellation or nonrenewal; the mortgagee's rights survive acts of the insured that would otherwise void coverage.

Appraisal decides the amount of loss, never coverage: each party selects a competent appraiser, and the two appraisers select an umpire if they disagree.

Occurrence trigger: coverage under an occurrence-form CGL responds to bodily injury or property damage that takes place during the policy period, regardless of when the claim is later reported.

Claims-made trigger: the claim must first be made during the policy period and after the retroactive date; an extended reporting endorsement lengthens the reporting window.

The duty to defend is broader than the duty to indemnify and attaches when alleged facts create a potential for coverage; under the standard CGL, defense costs are paid in addition to limits.

Standard CGL exclusions: expected or intended injury, contractual liability, your work, your product, employee injury (workers' compensation), auto, pollution, and professional services.

Personal and advertising injury covers offenses such as libel, slander, invasion of privacy, wrongful eviction, and infringement of copyright or trade dress in an advertisement.

California follows pure comparative negligence: the plaintiff's damages are reduced by the plaintiff's own percentage of fault, and recovery is allowed even at 99 percent fault.

Proposition 51 (Civil Code §1431) makes liability for non-economic damages several, in proportion to fault, while economic damages remain joint and several.

Workers' compensation is the exclusive remedy of an injured employee against the employer; benefits are paid without regard to fault and bar tort suit except for narrow exceptions.

California is an at-fault tort state for auto liability; uninsured motorist coverage must be offered, and a rejection or a lower limit must be documented in writing.

Coverage before damages: confirm the policy was in force, the loss resulted from a covered peril, no exclusion applies, and conditions were met, before valuing the loss.

Handling sequence: acknowledge and contact, investigate, evaluate coverage and damages, set reserves, document, negotiate, settle or deny, pursue subrogation, then close.

A reservation of rights letter must be timely, in writing, and cite the specific policy provisions and facts that may defeat coverage while the insurer continues to investigate or defend.

Case reserves estimate the expected ultimate cost of each claim and are revised as facts develop; IBNR reserves cover losses incurred but not yet reported.

A proof of loss is the insured's signed sworn statement of the date, cause, and amount of loss; receipt of it typically starts the regulatory decision clock.

Examination under oath and recorded statements are policy conditions of cooperation; an unreasonable refusal to cooperate can support a coverage denial.

Fraud indicators include very recent policy inception, late reporting of a large loss, altered invoices or receipts, prior claim history, and unusual interest in policy limits; refer to the special investigation unit.

Subrogation protection: identify responsible third parties early, preserve evidence, prevent the insured from signing releases, and pursue recovery of the deductible.

After payment of a total loss the insurer may take salvage; salvage proceeds reduce the net cost of the claim.

Cal. Code Regs. tit. 10, §2695.5(b): acknowledge notice of claim, and respond to other claim communications, within 15 calendar days.

§2695.7(b): accept or deny the claim within 40 calendar days after receipt of proof of loss; a denial must be written and cite the policy provisions and facts relied on.

§2695.7(c): if the claim cannot be resolved within the 40-day window, send written status notice every 30 calendar days explaining why more time is needed.

§2695.7(h): pay a settled claim within 30 calendar days after the settlement agreement, and pay any undisputed portion promptly while other parts remain disputed.

Ins. Code §790.03(h) lists unfair claim settlement practices, including misrepresenting policy provisions, failing to investigate, and failing to effectuate prompt settlement once liability is clear.

Claim records supporting each claim must be retained for five years under the fair claims settlement practices regulations.

Public insurance adjusters, who represent insureds for compensation in first-party property claims, must be licensed by the California Department of Insurance (Ins. Code §15000 et seq.); staff adjusters employed by an insurer are not separately state-licensed.

The California FAIR Plan is the residual-market property insurer of last resort; the California Earthquake Authority provides residential earthquake coverage offered through participating insurers.

Residential property insurers must offer earthquake coverage with each policy; the insured signs a waiver when the offer is declined.