CA 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

Restores the insured to approximately the same financial position held before the loss and prevents profit from insurance; it is the basis for actual cash value settlement of most property claims.

Insurable interest

An actual, substantial economic interest in the property or person insured, such that the insured would suffer a financial loss if the insured event occurred.

Moral hazard

A condition of dishonesty or character in the insured that increases the likelihood a loss will be intentionally caused or exaggerated to collect insurance money.

Morale hazard

Carelessness or indifference toward loss created by the presence of insurance, such as leaving a building unlocked or unmaintained because a policy is in force.

Utmost good faith

The mutual duty of honesty between insurer and insured requiring disclosure of material facts; breach by concealment or misrepresentation may allow the insurer to rescind the policy.

Subrogation

The insurer's right, after paying a loss, to pursue the responsible third party in the insured's place; the insured may not take action that impairs that right.

Coinsurance clause

A property provision requiring the insured to carry insurance equal to a stated percentage of value; if not, recovery is reduced by the fraction of limit carried over limit required.

Actual cash value

Replacement cost of the damaged property minus depreciation; it measures the value of the property immediately before the loss and is the default valuation method for property claims.

Replacement cost coverage

Pays the cost to repair or replace damaged property with new material of like kind and quality without deducting depreciation, and usually requires the insured to complete the repair first.

Ordinance or law coverage

Pays the extra cost of rebuilding in compliance with current building codes, plus demolition costs, which the unendorsed policy excludes because it insures only the damaged portion.

Mortgagee clause

Gives the lender the right to loss payments to the extent of its interest and to notice of cancellation or nonrenewal, and protects the lender even when the insured's acts void coverage.

Appraisal provision

A dispute-resolution method for the amount of loss, not for coverage questions, in which each party selects a competent appraiser and an umpire resolves their differences.

Vacancy provision

Most property forms restrict or suspend certain coverage when a building has been vacant beyond a stated period, typically sixty consecutive days, because unattended buildings present greater risk.

Occurrence policy

A liability policy that responds to injury or damage that takes place during the policy period, no matter how many years later the injured party brings the claim.

Claims-made policy

Covers claims first made during the policy period and after any stated retroactive date; an extended reporting endorsement can be purchased to cover claims made later.

Duty to defend

The insurer's obligation to pay for defense of a suit alleging a potentially covered claim; it is broader than the duty to indemnify and can exist where no damages are ultimately owed.

Pure comparative negligence

The California rule that an injured plaintiff's damages are reduced by the plaintiff's own percentage of fault, allowing recovery even when the plaintiff is more at fault than the defendant.

Proposition 51

A California law making defendants jointly liable only for economic damages, while non-economic damages are several and allocated in proportion to each defendant's share of fault.

Exclusive remedy

The rule that workers' compensation is the injured employee's sole remedy against the employer, barring tort suits in exchange for benefits paid without regard to fault.

Reservation of rights

A written notice telling the insured the insurer will investigate or defend while reserving the right to deny coverage later, citing the specific policy provisions and facts in question.

Proof of loss

A signed and sworn statement from the insured setting out the date, cause, and amount of the loss, which the policy may require as a condition of payment.

Examination under oath

Formal recorded questioning of the insured, conducted under oath as a policy condition, to verify the facts of the claim and detect fraud; unreasonable refusal can bar recovery.

Case reserve

The adjuster's estimate of the expected ultimate cost of a single claim, established when the claim is first reported and revised as the investigation develops.

Incurred but not reported

Reserves for losses that have occurred but were not yet reported to the insurer by the close of the accounting period, estimated actuarially by line of business.

Salvage

Damaged property the insurer takes after paying a total loss; the insurer may sell it, and the recovery offsets the amount paid on the claim.

Fraud indicators

Red flags such as very recent policy inception, late reporting, altered invoices, prior claim history, or unusual interest in policy limits that warrant referral to a special investigation unit.

15-day acknowledgment

Under the California fair claims regulations, an insurer must acknowledge notice of a claim within fifteen calendar days and respond to other claim communications within the same period.

40-day decision rule

Under California claims regulations, an insurer must accept or deny a claim within forty calendar days after receiving proof of loss, unless a written extension notice is sent.

30-day status letters

If a California claim cannot be resolved within the forty-day period, the insurer must send written status updates every thirty calendar days explaining why more time is needed.

Unfair claims practices

Acts listed in California Insurance Code section 790.03, including misrepresenting policy provisions, failing to investigate promptly, and failing to affirm or deny coverage within a reasonable time.

Record retention

California's fair claims settlement practices regulations require licensees to keep the records supporting each claim for at least five years after the claim is closed.

Public insurance adjuster

A person licensed by the California Department of Insurance who represents the insured for compensation in negotiating a first-party property claim; staff adjusters employed by insurers are not separately licensed.