Claims Adjuster flashcards

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

Actual cash value

ACV equals replacement cost minus depreciation; it indemnifies the insured for the present value of the damaged property rather than the cost of buying new property of like kind.

Insurable interest

A financial stake in the property or person insured such that the insured suffers genuine economic loss from damage; required at policy inception for life insurance and at the time of loss for property.

Principle of indemnity

The insured is restored to approximately the same financial position held before the loss, never better; this principle caps recovery at the amount of the actual loss.

Coinsurance clause formula

Payment equals (insurance carried divided by insurance required) times the loss, where insurance required equals the coinsurance percentage multiplied by the property's value at the time of loss.

Occurrence policy trigger

Coverage applies to injury or damage that takes place during the policy period, regardless of when the claim is later reported, so the loss date controls.

Claims-made policy trigger

Coverage applies when a claim is first made during the policy period, subject to a retroactive date and any extended reporting period the insured purchases.

Utmost good faith

Both parties must disclose material facts; the insurer's usual remedy for an applicant's concealment or material misrepresentation is rescission of the policy or denial of the claim.

First notice of loss

The initial report of a loss; record the date and time received, location, parties, policy number, and reported cause verbatim before discussing coverage.

Reservation of rights letter

Written notice that the insurer is still investigating and may deny coverage, preserving its coverage defenses while it continues to defend the insured.

Examination under oath

A policy condition requiring the insured to answer sworn questions from the insurer; an unjustified refusal can bar recovery even for an otherwise covered loss.

Proof of loss

A sworn, itemized statement of the amounts claimed, usually due within a set number of days after the insurer's written request for it.

Fraud indicators

Red flags including coverage purchased or increased shortly before loss, financial distress, prior similar claims, missing records, and refusal to provide documentation.

Chain of custody

A documented chronological record of everyone who handled physical evidence, used to prevent challenges to authenticity, integrity, or contamination at later proceedings.

Suit limitation condition

Policy conditions and statutes set a deadline, commonly one to three years after the loss, for filing suit against the insurer.

Burden of proof allocation

The insured must show the loss falls within the insuring agreement, the insurer must prove an exclusion applies, and the insured must prove any exception restoring coverage.

Contra proferentem

The rule that genuinely ambiguous policy wording is construed against the party who drafted it, which is usually the insurer, resolving the doubt in favor of coverage.

Efficient proximate cause

When a covered peril and an excluded peril combine to cause damage, the dominant or initiating cause determines coverage in jurisdictions following this doctrine.

Ensuing loss clause

A clause restoring coverage for resulting damage from a specified cause even though the event that initiated the sequence is excluded under the policy.

Additional insured status

Coverage for a third party limited to liability arising out of the named insured's operations or premises, as defined by the endorsement and the underlying policy.

Defense within limits

A policy form in which defense costs are paid out of the liability limit, so legal fees erode the amount available to settle the claim.

Replacement cost valuation

Pays the cost to repair or replace with new material of like kind and quality without deducting depreciation, often conditioned on the repairs being completed within a stated time.

Depreciation

The reduction in value caused by age, wear and tear, and obsolescence; computed as age divided by useful life, multiplied by replacement cost.

Business income loss formula

Net profit plus continuing normal operating expenses, minus expenses that cease during the shutdown, measured over the period of restoration.

Period of restoration

The reasonable time needed to repair or replace damaged property with due diligence, ending when the business could resume at the described premises.

Additional living expense

The necessary increase in living costs above normal expenses while the residence is uninhabitable, limited to the reasonable time required to repair or replace.

Vehicle total loss valuation

Based on actual cash value derived from comparable local market listings plus taxes and transfer fees, less salvage value if the insured keeps the vehicle.

Settlement authority

The maximum dollar amount an adjuster may pay without supervisory approval; exceeding it without approval creates liability for the adjuster and the insurer.

Full release

A document in which the claimant gives up all claims arising from the incident in exchange for payment, ending the insurer's further liability.

Accord and satisfaction

Acceptance of a check tendered as full and final payment for a disputed claim; cashing it generally discharges the debt and ends the dispute.

Concession pattern

Open near the reservation price with a documented basis, then make progressively smaller concessions so the claimant can see the offer is nearing its ceiling.

Time-limited policy demand

A claimant's offer to settle within policy limits if accepted by a deadline; an unreasonable refusal can expose the insurer to an excess judgment.

Bad faith exposure

Unreasonable denial or delay, failure to investigate, or offers with no factual basis can produce extra-contractual damages beyond the policy limit.