CA Claims Adjuster key terms

The principle that insurance restores an insured to roughly the financial position held before a loss, no better and no worse. It prevents profiting from loss and underlies policy limits, deductibles, and actual cash value.

A genuine financial stake in the person or property insured, such that the insured would suffer a real economic loss if the loss occurred. Property insurance requires it when the loss happens.

The mutual duty of insurer and insured to deal honestly and to disclose material facts. An applicant's breach may allow rescission, while an insurer's breach can support a bad faith claim.

A contract drafted by one party, the insurer, and offered to the other on a take-it-or-leave-it basis. Courts generally resolve ambiguities against the drafter in favor of the insured.

A contract in which the values exchanged are unequal because performance depends on chance. The insured may pay modest premiums and collect a large sum, or collect nothing at all.

The insurer's right, after paying a loss, to step into the insured's shoes and pursue recovery from the party who caused the loss. It supports indemnity by preventing double recovery.

The tendency of people most likely to suffer a loss to seek or keep insurance more eagerly than lower-risk applicants. Insurers counter it with underwriting, pricing, and policy conditions.

The actual cause of a loss, such as fire, windstorm, theft, or collision. Policies list the perils they cover and exclusions that remove specified causes from coverage.

A condition that increases the chance or the severity of a loss from a peril, such as oily rags, an icy stairway, or a careless attitude toward safety.

The dominant, efficient cause that sets in motion an unbroken chain of events producing a loss, without which the loss would not have happened. It is used to decide coverage.

The amount of each loss the insured must absorb before the insurer pays anything. It reduces small claims and premium and is subtracted when the claim payment is calculated.

The value of damaged property at the time of loss, commonly calculated as replacement cost minus depreciation. Because California policies may define it differently, the policy language controls.

The cost to repair or replace damaged property with new property of similar kind and quality, with no deduction for depreciation. It is often capped at a percentage of the dwelling limit.

A property provision requiring the insured to carry limits equal to a stated percentage of the property's value; if the insured carries less, the payment is reduced proportionally.

Coverage for the extra cost of rebuilding to current building codes, and for the lost value of an undamaged portion of a structure that must be demolished after a covered loss.

Coverage that pays the extra cost of temporary housing, meals, and similar necessities while the residence cannot be lived in because of a covered loss, usually subject to a time limit.

A provision giving the lender rights under the policy, including notice of cancellation and payment of the loss up to its interest, so that the lender's security is protected.

The failure to use the degree of care a reasonable person would use under similar circumstances. A liability claim requires a duty, a breach of that duty, causation, and damages.

California's rule reducing an injured plaintiff's recovery by that plaintiff's own share of responsibility, even where it exceeds the defendant's share, so a partly at-fault plaintiff may still recover something.

Liability imposed without any proof of negligence, as with defective products or certain abnormally dangerous activities. The injured party need only show the injury and its cause.

Liability of one party for the acts of another, such as an employer's responsibility for an employee who acts within the scope of employment.

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

The maximum total amount the insurer will pay for all covered claims under a policy during the policy period, regardless of how many separate claims arise.

The insurer's obligation to provide and pay for legal counsel to defend the insured against claims that potentially fall within coverage. It is broader than the duty to pay damages.

Coverage for the insured's damages from an accident caused by a driver who has no insurance or by a hit-and-run driver. California requires it unless the insured rejects it in writing.

A written notice in which the insurer agrees to defend a claim while stating that coverage may not apply, preserving its right to deny coverage after the facts are developed.

A formal, usually sworn statement from the insured describing the date, cause, and amount of the loss, submitted within the deadline set by the policy or by regulation.

A claim made by the insured against their own insurer under their own policy, such as a homeowners claim for fire damage to the dwelling.

A claim brought by someone who is not the insured, seeking payment for injury or damage the insured allegedly caused. The insurer owes the insured a defense against it.

Damaged property that the insurer takes over after paying a total loss, then sells to recover part of the payment and reduce the net cost of the claim.

A policy procedure for resolving a disagreement over the amount of a loss, in which each side selects a competent appraiser and the two appraisers choose an umpire.

An insurer's unreasonable or dishonest handling of a claim, such as denying without a proper investigation. It can expose the insurer to damages beyond the policy limit.

California rules in Title 10, section 2695 that set deadlines and standards for claims handling, including duties to respond, investigate, accept or deny within 40 days, and pay promptly.

Acts listed in Insurance Code section 790.03(h), such as misrepresenting policy provisions, failing to investigate promptly, or offering far less than a claim is worth, enforced by the Department of Insurance.

Insurance placed with a nonadmitted insurer when no admitted insurer will accept the risk. The broker must first search the admitted market and disclose the nature of the placement.

The state-created association that pays covered claims of insolvent admitted property and casualty insurers, up to statutory limits, so policyholders and claimants are not left unprotected.

A 1988 California initiative that made insurance rates subject to prior approval by the Insurance Commissioner and imposed rules on rating factors, underwriting, and cancellation.

California's requirement that drivers carry liability insurance of at least $15,000 per person, $30,000 per accident, and $5,000 for property damage, or otherwise prove ability to pay.

A publicly managed, privately funded entity that offers residential earthquake insurance in California through participating insurers, separate from the standard homeowners policy.