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CT Claims Adjuster practice questions

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Question 1Insurance Principles and Concepts

Which principle limits a property claim payment to the amount of the insured's actual financial loss, no more and no less?

  1. Indemnity Correct answer.
  2. Utmost good faith
  3. Subrogation
  4. Contribution

Explanation

Indemnity restores the insured to roughly the same financial position held before the loss, so recovery is capped at the actual loss. It prevents the insured from profiting from a claim and underlies limits, actual cash value, and subrogation.

Question 2Insurance Principles and Concepts

In property insurance, an insurable interest must generally exist at which point?

  1. Only when the claim is paid
  2. Only when the policy is applied for
  3. At any point during the policy term
  4. At the time of the loss Correct answer.

Explanation

In property insurance, insurable interest is tested at the time of loss; the insured must stand to suffer financial loss from the damage. An interest that existed at application but ended before the loss does not support recovery.

Question 3Insurance Principles and Concepts

The duty of utmost good faith in insurance primarily requires the applicant to do which of the following?

  1. Report every claim within 24 hours
  2. Read the entire policy at each renewal
  3. Disclose material facts affecting the risk Correct answer.
  4. Pay the first premium before coverage begins

Explanation

Insurance is a contract of utmost good faith, so the applicant must volunteer material facts that would affect the insurer's decision to accept or rate the risk. Concealment or material misrepresentation can allow the insurer to rescind.

Question 4Insurance Principles and Concepts

After paying an insured for a fire caused by a negligent contractor, the insurer may pursue the contractor for reimbursement under which right?

  1. Abandonment
  2. Salvage
  3. Subrogation Correct answer.
  4. Contribution

Explanation

Subrogation gives the insurer, after paying a covered loss, the insured's legal rights against the responsible third party. It supports indemnity by preventing double recovery and by placing the cost on the party at fault.

Question 5Insurance Principles and Concepts

The core mechanism by which insurers make future losses predictable is best described as which of the following?

  1. Pooling many independent exposure units Correct answer.
  2. Reinsuring every policy with a single reinsurer
  3. Charging every policyholder an identical premium
  4. Investing premiums in the stock market

Explanation

Pooling combines many separate exposure units so that, under the law of large numbers, actual losses approach expected losses. This makes future claim costs more predictable and allows premiums to be set.

Question 6Insurance Principles and Concepts

A policy carries a $1,000 deductible. The insured suffers a covered property loss of $4,500. Ignoring all other provisions, how much will the insurer pay?

  1. $5,500
  2. $1,000
  3. $3,500 Correct answer.
  4. $4,500

Explanation

A deductible is the amount the insured absorbs before the insurer pays. Subtracting the $1,000 deductible from the $4,500 covered loss leaves $3,500 payable.

Question 7Insurance Principles and Concepts

A windstorm knocks down a wall, and the falling wall damages interior contents. In property insurance, the windstorm is generally treated as which of the following with respect to the contents damage?

  1. An excluded cause
  2. A remote cause
  3. A concurrent cause
  4. The proximate cause Correct answer.

Explanation

Proximate cause is the dominant, effective cause that sets a loss in motion without which the loss would not have occurred. Damage from the collapsing wall is part of the windstorm's continuous chain of events, so coverage follows the windstorm.

Question 8Insurance Principles and Concepts

An 80% coinsurance clause applies to a building with a replacement value of $1,000,000. The insured carries $600,000 of coverage and suffers a $100,000 covered loss. Ignoring deductibles, what does the insurer pay?

  1. $80,000
  2. $100,000
  3. $75,000 Correct answer.
  4. $60,000

Explanation

The coinsurance requirement is 80% of $1,000,000, or $800,000. Because the insured carried only $600,000, recovery is ($600,000 divided by $800,000) times $100,000, which equals $75,000.

Question 9Insurance Principles and Concepts

Actual cash value is most commonly calculated as which of the following?

  1. Replacement cost plus depreciation
  2. Original purchase price plus inflation
  3. Replacement cost minus depreciation Correct answer.
  4. Market value of the insured's business

Explanation

Actual cash value is generally replacement cost less depreciation, reflecting the property's value at the time of loss. Policy language or state rules may define the term somewhat differently.

Question 10Insurance Principles and Concepts

Replacement cost coverage differs from actual cash value coverage because it does which of the following?

  1. Pays only after the insured rebuilds at a different location
  2. Pays the original purchase price shown on the insured's receipt
  3. Pays to replace with new property of like kind and quality Correct answer.
  4. Pays the remaining balance owed on the insured's mortgage

Explanation

Replacement cost coverage pays to rebuild or replace with new property of like kind and quality, without deducting depreciation, subject to policy limits. Actual cash value, by contrast, deducts depreciation.

Question 11Insurance Principles and Concepts

A binder issued by an agent provides which of the following?

  1. A permanent policy that cannot be cancelled
  2. Temporary evidence of coverage before the policy is issued Correct answer.
  3. A statement of premium only, with no coverage
  4. A promise to provide coverage only after underwriting is complete

Explanation

A binder is temporary evidence that coverage is in force while the policy is being issued or underwritten. It is subject to the terms of the policy to be issued.

Question 12Insurance Principles and Concepts

In insurance, a warranty is best described as which of the following?

  1. A statement the applicant believes to be true but cannot guarantee
  2. A clause that broadens coverage without additional premium
  3. An oral estimate of the amount of a loss
  4. A promise that a policy condition will be met Correct answer.

Explanation

A warranty is a policy condition that the insured promises to satisfy, such as maintaining a protective system. A material breach can allow the insurer to deny a claim or void coverage, depending on jurisdiction and policy language.

Question 13Insurance Principles and Concepts

A representation in an insurance application is which of the following?

  1. A guarantee that voids the policy if it is untrue
  2. A promise to perform a future act
  3. A statement believed true to the applicant's knowledge Correct answer.
  4. A waiver of the insurer's right to rescind

Explanation

A representation is a statement of fact made by the applicant that is believed true to the best of their knowledge. It is not a guarantee; a material misrepresentation may allow the insurer to rescind.

Question 14Insurance Principles and Concepts

An insurer knowingly accepts late premium payments for several months, then denies coverage when another payment arrives late. Which doctrine most likely prevents the denial?

  1. Indemnity
  2. Subrogation
  3. Coinsurance
  4. Estoppel Correct answer.

Explanation

Estoppel prevents an insurer from asserting a right after its conduct led the insured to rely reasonably to their detriment. Accepting late payments can waive the prompt-payment condition and bar a later denial on that ground.

Question 15Insurance Principles and Concepts

A claims-made liability policy generally covers claims that are which of the following?

  1. Occurring during the policy period, regardless of when reported
  2. Reported during the policy period for acts occurring on or after the retroactive date Correct answer.
  3. Occurring after the policy expires but before the next renewal
  4. Reported during the policy period, regardless of when the act occurred

Explanation

Claims-made coverage is triggered by the claim being reported during the policy period, provided the act occurred on or after any retroactive date. An extended reporting endorsement can lengthen the reporting window.

Question 16Insurance Principles and Concepts

A proof of loss requirement exists mainly to do which of the following?

  1. Transfer the claim to a third party
  2. Require the insured to document the claim in writing Correct answer.
  3. Reduce the insurer's duty to investigate
  4. Extend the policy's expiration date

Explanation

A proof of loss is a sworn written statement documenting the amount and circumstances of the claim. It gives the insurer the information needed to investigate and adjust, and failure to comply can prejudice the claim.

Question 17Insurance Principles and Concepts

When an insurer pays a total loss on damaged property, which of the following generally applies?

  1. The insurer must return all salvage proceeds to the insured
  2. The insurer loses all rights to the damaged property
  3. The insurer may take the salvage, and the insured cannot force abandonment Correct answer.
  4. The insurer must accept any property the insured chooses to abandon

Explanation

Once the insurer pays a total loss, it is entitled to the salvage. The insured cannot simply abandon damaged property to the insurer and demand full payment without the insurer's consent.

Question 18Insurance Principles and Concepts

A moral hazard differs from a morale hazard in that moral hazard involves which of the following?

  1. A change in the insurer's underwriting rules
  2. Unpredictable natural catastrophes
  3. Carelessness arising from the mere existence of insurance
  4. A dishonest intent to cause or exaggerate a loss Correct answer.

Explanation

Moral hazard involves dishonesty, such as intentionally causing or inflating a loss. Morale hazard is carelessness or indifference created by the presence of insurance.

Question 19Insurance Principles and Concepts

Adverse selection is a concern for insurers primarily because of which of the following?

  1. It increases the number of claims filed after a catastrophe
  2. It requires insurers to use coinsurance clauses
  3. It prevents insurers from using deductibles
  4. It tends to attract higher-risk applicants, raising average loss costs Correct answer.

Explanation

Adverse selection occurs when those most likely to have losses are the most likely to seek or keep coverage, so the pool's average risk rises. Insurers counter it with underwriting, exclusions, and experience rating.

Question 20Insurance Principles and Concepts

Two policies cover the same loss on the same primary basis with equal limits, and one insurer pays the full claim. Contribution allows that insurer to do which of the following?

  1. Seek a proportionate share from the other insurer Correct answer.
  2. Recover the entire payment from the insured
  3. Cancel the other policy retroactively
  4. Deny the claim because another policy exists

Explanation

Contribution lets an insurer that paid more than its share recover proportionate amounts from other insurers covering the same loss at the same level. It prevents one insurer from bearing a burden shared by several.

Question 21Connecticut Insurance Law and Adjuster Regulation

Which entity licenses and supervises insurance adjusters in Connecticut?

  1. The Connecticut Superior Court
  2. The Connecticut Insurance Department Correct answer.
  3. The Connecticut Department of Consumer Protection
  4. The National Association of Insurance Commissioners

Explanation

The Connecticut Insurance Department, headed by the Insurance Commissioner, issues adjuster licenses and enforces the state's insurance statutes and regulations. The NAIC is a voluntary association of state regulators that drafts model laws but has no licensing authority over individual adjusters.

Question 22Connecticut Insurance Law and Adjuster Regulation

A licensed public adjuster in Connecticut is retained by, and represents the interests of:

  1. the insurer that issued the policy
  2. the mortgagee named on the policy
  3. the Insurance Commissioner
  4. the policyholder, who pays the adjuster's fee Correct answer.

Explanation

A public adjuster is hired by and works for the insured, preparing and negotiating the claim in exchange for a fee paid by the insured. Company and independent adjusters, by contrast, are retained by insurers to investigate claims on the insurer's behalf.

Question 23Connecticut Insurance Law and Adjuster Regulation

As of 2023, what are the minimum automobile liability limits required for a private passenger vehicle registered in Connecticut?

  1. $25,000 per person / $50,000 per accident bodily injury; $25,000 property damage Correct answer.
  2. $20,000 per person / $40,000 per accident bodily injury; $10,000 property damage
  3. $15,000 per person / $30,000 per accident bodily injury; $5,000 property damage
  4. $50,000 per person / $100,000 per accident bodily injury; $50,000 property damage

Explanation

Connecticut raised its compulsory automobile liability minimums to $25,000 per person and $50,000 per accident for bodily injury, with $25,000 for property damage, effective January 1, 2023. The older $20,000/$40,000/$10,000 figures were the prior statutory minimums.

Question 24Connecticut Insurance Law and Adjuster Regulation

Connecticut law requires that uninsured and underinsured motorist coverage be written in an amount:

  1. the statutory minimum only, no matter how high the bodily injury liability limits are set
  2. the same as the bodily injury liability limits unless the insured rejects it in writing Correct answer.
  3. set annually by the Insurance Commissioner for all private passenger autos
  4. the same as the policy's property damage limit

Explanation

Connecticut requires that uninsured/underinsured motorist coverage be offered in an amount equal to the bodily injury liability limits of the policy. The named insured may request lower limits in writing, but coverage cannot be reduced below the compulsory minimum.

Question 25Connecticut Insurance Law and Adjuster Regulation

Under Connecticut's unfair claim settlement practices law, an insurer must:

  1. obtain the Insurance Commissioner's written approval before denying a claim
  2. acknowledge and act on communications about a claim with reasonable promptness Correct answer.
  3. pay every reported claim within twenty-four hours of first notice
  4. assign a public adjuster to every claim that is disputed

Explanation

Connecticut's unfair insurance practices statute lists failing to acknowledge and act with reasonable promptness on claim communications as a prohibited claim practice. Insurers must also adopt reasonable investigation standards and affirm or deny coverage within a reasonable time.

Question 26Connecticut Insurance Law and Adjuster Regulation

The Connecticut Insurance Commissioner holds office by:

  1. selection by a vote of licensed insurers
  2. statewide election to a four-year term
  3. election by the General Assembly
  4. appointment by the Governor Correct answer.

Explanation

Connecticut's Insurance Commissioner is an executive branch official appointed by the Governor to head the Insurance Department. The Commissioner is not chosen by voters, by the legislature, or by the industry.

Question 27Connecticut Insurance Law and Adjuster Regulation

When a Connecticut court finds a genuine ambiguity in a standardized insurance policy, the ambiguity is ordinarily:

  1. construed in favor of the insured Correct answer.
  2. resolved in the insurer's favor because the insurer drafted the policy
  3. treated as grounds for voiding the entire policy
  4. submitted to the Insurance Commissioner for an official interpretation

Explanation

Connecticut follows the common rule that ambiguous language in a standardized policy drafted by the insurer is construed against the drafter and in favor of the insured's reasonable expectations. The ambiguity does not void the policy or shift decision-making to the regulator.

Question 28Connecticut Insurance Law and Adjuster Regulation

Compared with the duty to indemnify, an insurer's duty to defend a liability claim is:

  1. broader, triggered by allegations potentially within coverage Correct answer.
  2. the same in scope
  3. limited to claims brought against named insureds
  4. narrower, arising only after a judgment has been entered against the insured

Explanation

The duty to defend is measured by the allegations of the complaint and arises whenever the claimed damages could potentially fall within coverage, even if some allegations are groundless. The duty to indemnify, by contrast, is determined by the actual facts and the ultimate outcome.

Question 29Connecticut Insurance Law and Adjuster Regulation

An insurer defends its insured under a reservation of rights in a case where resolution of the coverage question creates a conflict of interest. The insurer must generally:

  1. permit the insured to choose independent counsel, with the insurer paying the fee Correct answer.
  2. require the insured to sign a nonwaiver agreement before any defense is provided
  3. deny coverage and file a declaratory judgment action instead of defending
  4. withdraw from the defense and leave the insured to pay for its own lawyer

Explanation

When the insurer's reservation of rights creates a conflict between the insurer's coverage position and the insured's defense, Connecticut law entitles the insured to independent counsel selected by the insured at the insurer's expense. The insurer remains responsible for defending until coverage is finally determined.

Question 30Connecticut Insurance Law and Adjuster Regulation

Connecticut applies modified comparative negligence. A plaintiff's recovery is barred when the plaintiff's own negligence:

  1. is greater than the combined negligence of all defendants Correct answer.
  2. contributes to the injury in any degree
  3. is at least one percent
  4. equals or exceeds the negligence of any single defendant

Explanation

Under Connecticut's comparative responsibility statute, damages are reduced in proportion to the plaintiff's own negligence, but recovery is barred only if the plaintiff's negligence is greater than the combined negligence of all defendants. A 50/50 split still permits a reduced recovery.

Question 31Connecticut Insurance Law and Adjuster Regulation

The Connecticut statute of limitations for a personal injury lawsuit arising out of an automobile accident is:

  1. three years
  2. one year
  3. two years Correct answer.
  4. six years

Explanation

Connecticut imposes a two-year limitations period on actions for personal injury caused by negligence. A claimant who does not sue within that period generally loses the right to bring the tort action.

Question 32Connecticut Insurance Law and Adjuster Regulation

When a Connecticut employee is injured in the course and scope of employment, the employee's exclusive remedy against the employer is generally:

  1. a common-law negligence action in Superior Court
  2. a claim for workers' compensation benefits Correct answer.
  3. an action under the Connecticut Unfair Insurance Practices Act
  4. a direct suit against the employer's liability insurer

Explanation

Connecticut's workers' compensation system is the exclusive remedy for workplace injuries that arise out of and in the course of employment, and it applies regardless of fault. The trade-off is that the employee gives up the tort action but need not prove negligence.

Question 33Connecticut Insurance Law and Adjuster Regulation

When an insurer denies a claim, Connecticut's unfair claim settlement practices rules require the insurer to give the claimant:

  1. a full refund of the premiums paid for the policy
  2. only a telephone call within thirty days
  3. a copy of the adjuster's license and examination scores
  4. a written statement of the factual and policy reasons for the denial Correct answer.

Explanation

Connecticut's unfair claim practices provisions require an insurer that denies a claim to explain the basis for denial, including the policy provision relied upon, so the claimant can evaluate the decision. A bare denial without explanation is itself a prohibited practice.

Question 34Connecticut Insurance Law and Adjuster Regulation

A public adjuster's contract to adjust a Connecticut insured's loss must be:

  1. approved by the insurer before it takes effect
  2. filed with the Insurance Department before work begins
  3. in writing and signed by the insured Correct answer.
  4. oral, if it is confirmed afterward by email

Explanation

Public adjusters must use a written agreement signed by the insured that sets out the services and the compensation arrangement. The insurer is not a party to that contract and does not approve it.

Question 35Connecticut Insurance Law and Adjuster Regulation

A Connecticut adjuster finds strong evidence that a claimant staged a theft. The adjuster should:

  1. report it to the insurer's SIU and the Connecticut Insurance Fraud Bureau Correct answer.
  2. demand that the claimant repay all premiums paid on the policy
  3. deny the claim without any explanation and permanently close the file
  4. personally file criminal charges against the claimant in Superior Court

Explanation

Suspected insurance fraud is referred to the insurer's special investigation unit and may be reported to the Connecticut Insurance Fraud Bureau, which coordinates with law enforcement. The adjuster documents the evidence and continues to handle the claim according to the policy and unfair claim practices rules.

Question 36Connecticut Insurance Law and Adjuster Regulation

After an insurer pays a covered property loss caused by a negligent third party, the insurer's right to recover that amount from the third party is:

  1. coinsurance
  2. contribution
  3. salvage
  4. subrogation Correct answer.

Explanation

Subrogation lets the insurer step into the insured's shoes and pursue the responsible third party after paying the loss, preventing double recovery by the insured. The insured must generally cooperate and avoid impairing that right.

Question 37Connecticut Insurance Law and Adjuster Regulation

A standard property policy's appraisal provision is designed to resolve disagreements about:

  1. which claimant is entitled to the proceeds
  2. whether the insurer properly cancelled the policy
  3. the amount of the loss Correct answer.
  4. whether the policy covers the cause of loss

Explanation

Appraisal is a contractual method for resolving a dispute over the value of the loss or the cost of repair when the parties agree coverage exists. Coverage disputes and policy interpretation questions are resolved by the courts, not by appraisers.

Question 38Connecticut Insurance Law and Adjuster Regulation

For a Connecticut property claim to be payable, the insured must have had at the time of the loss:

  1. an insurable interest in the property Correct answer.
  2. a mortgage on the property
  3. continuous occupancy for at least one year
  4. a recorded deed to the property

Explanation

Insurance requires an insurable interest: the insured must stand to suffer a financial loss from damage to the property. The interest may arise from ownership, leasehold, or another economic relationship and need not be a recorded title.

Question 39Connecticut Insurance Law and Adjuster Regulation

A third-party claimant who believes a Connecticut insurer has committed unfair claim settlement practices generally:

  1. has no private right of action under CUIPA itself Correct answer.
  2. may sue the insurer directly under CUIPA and recover punitive damages
  3. may sue the individual adjuster in Superior Court for bad faith
  4. may file a claim with the Connecticut Insurance Guaranty Association

Explanation

Connecticut courts have held that CUIPA does not create a private cause of action; enforcement rests with the Insurance Commissioner. An insured sometimes may pursue a CUTPA claim premised on CUIPA violations, but that requires showing a pattern of misconduct rather than a single disputed claim.

Question 40Connecticut Insurance Law and Adjuster Regulation

An insurer discovers that an applicant materially misrepresented a fact on which the insurer relied in issuing a Connecticut policy. The insurer may generally:

  1. increase the premium retroactively but not rescind coverage
  2. cancel the policy only prospectively with ten days' notice
  3. rescind the policy for material misrepresentation Correct answer.
  4. assess a statutory penalty against the insured

Explanation

A material misrepresentation that induced the insurer to issue the policy permits rescission, because the policy was obtained without the honest disclosure the insurer was entitled to rely upon. The misstatement must be material and actually relied upon by the underwriter.

Question 41Connecticut Insurance Law and Adjuster Regulation

In a Connecticut personal injury trial, evidence that the plaintiff's medical bills were paid by the plaintiff's own health insurance is:

  1. admitted after the verdict, and the court may reduce the award by those amounts Correct answer.
  2. never admissible for any purpose
  3. sufficient by itself to defeat the plaintiff's claim entirely
  4. presented to the jury during the plaintiff's case

Explanation

Connecticut modified the collateral source rule by statute: after the jury returns a verdict, the court receives evidence of collateral source payments and may reduce the economic damages award accordingly, with adjustments for premiums the plaintiff paid. The jury does not hear the collateral source evidence during trial.

Question 42Connecticut Insurance Law and Adjuster Regulation

In Connecticut, an insurer seeking to deny coverage on an occurrence-based liability policy because the insured gave late notice must show that it:

  1. had already reserved its rights in writing
  2. received notice more than sixty days after the occurrence
  3. sent the insured a written reminder of the notice deadline
  4. was prejudiced by the delay Correct answer.

Explanation

Connecticut applies a notice-prejudice rule to occurrence-based liability policies: late notice excuses the insurer only if the delay materially prejudiced its ability to investigate or defend. The burden of proving prejudice rests with the insurer.

Question 43Connecticut Insurance Law and Adjuster Regulation

Which of the following is within the Connecticut Insurance Commissioner's authority?

  1. Setting the premium rate for every policy sold in the state
  2. Deciding disputed tort liability in Superior Court in place of a jury
  3. Issuing criminal convictions for insurance fraud
  4. Examining insurers' records and holding hearings on alleged violations Correct answer.

Explanation

The Commissioner may examine the books and records of insurers and adjusters, conduct investigations, hold administrative hearings, and impose penalties for violations of the insurance laws. Rate review is not the same as setting every premium, and criminal matters belong to prosecutors and courts.

Question 44Connecticut Insurance Law and Adjuster Regulation

The Connecticut statute of limitations for a lawsuit to enforce a written insurance contract is:

  1. three years
  2. two years
  3. six years Correct answer.
  4. four years

Explanation

Connecticut allows six years to sue on a written contract, which covers most insurance policy disputes, including first-party coverage actions. Shorter periods apply to tort claims and to oral contracts.

Question 45Claims Handling Practices, Investigation, and Ethics

An adjuster is assigned a newly reported first-party property claim. Which action best reflects proper initial claims handling?

  1. Wait for a completed proof of loss before contacting anyone about the claim.
  2. Acknowledge receipt of the claim promptly and begin the investigation. Correct answer.
  3. Transfer the file to subrogation before any coverage review is performed.
  4. Deny the claim until the insured supplies every document the adjuster can think of.

Explanation

Claims handling begins with prompt acknowledgment and a timely, good-faith investigation. Delay in contact or premature denial before coverage is evaluated undermines the insurer's obligations and the defensibility of the file.

Question 46Claims Handling Practices, Investigation, and Ethics

What is the primary purpose of a sworn proof of loss in a first-party claim?

  1. To release the insurer from any further duty to investigate the loss.
  2. To provide the insurer with the insured's sworn statement of the amount and details of the claim. Correct answer.
  3. To establish the insurer's subrogation rights against a responsible third party.
  4. To transfer ownership of the damaged property to the insurer.

Explanation

A proof of loss is the insured's formal, sworn submission detailing the amount claimed and the circumstances of the loss. It gives the insurer a documented basis for evaluation and can be required by the policy as a condition of payment.

Question 47Claims Handling Practices, Investigation, and Ethics

After paying a total loss on a vehicle, the insurer obtains title to the salvage. What is the usual purpose of this step?

  1. To satisfy the deductible owed by the insured.
  2. To recover part of the claim cost by selling the remaining value. Correct answer.
  3. To prevent the insured from purchasing a replacement vehicle.
  4. To return the vehicle to the insured at no cost.

Explanation

When an insurer pays a total loss, it typically takes ownership of the salvage so it can be sold and the proceeds applied against the claim cost. This recovery reduces the net amount the insurer ultimately spends on the loss.

Question 48Claims Handling Practices, Investigation, and Ethics

Which claim characteristic most commonly warrants referral to a special investigation unit?

  1. A policy purchased years before the loss date with no changes since.
  2. A loss reported the same day it occurred.
  3. A loss occurring shortly after policy inception, supported by documents that appear altered. Correct answer.
  4. An insured who cooperates fully with the adjuster's requests.

Explanation

Losses occurring soon after coverage begins, combined with altered or suspicious documentation, are recognized fraud indicators that call for specialized investigation. Referral protects both the insurer and legitimate claimants.

Question 49Claims Handling Practices, Investigation, and Ethics

Which practice best supports the defensibility of a claim file?

  1. Recording only the final settlement amount and the payment date.
  2. Keeping investigation notes in a personal notebook separate from the file.
  3. Logging contacts and decisions in the file as they occur. Correct answer.
  4. Reconstructing the whole file summary from memory at closing.

Explanation

Contemporaneous notes showing who was contacted, what was learned, and why each decision was made create a reliable record. Files built on memory or incomplete entries are difficult to defend in a complaint, audit, or litigation.

Question 50Claims Handling Practices, Investigation, and Ethics

An adjuster concludes a claim is worth more than the settlement authority granted to the adjuster. What is the proper action?

  1. Refer the file with a recommendation to someone holding sufficient authority. Correct answer.
  2. Pay the demand and notify the supervisor afterward.
  3. Delay the claim indefinitely until authority levels change.
  4. Split the payment across two claim numbers to remain within authority.

Explanation

Authority limits exist to ensure that larger payments receive appropriate review. The adjuster documents the evaluation and forwards the file with a recommendation to a person with the required authority.