IN Claims Adjuster flashcards

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

Insurable interest

A legal and pecuniary relationship between the insured and the subject matter such that loss or damage causes financial detriment; required at inception for life and at loss for property.

Indemnity principle

The insured is restored to the same financial position as before the loss, no better and no worse; it does not apply to life or personal accident benefits.

Utmost good faith

Both parties must disclose all material facts and refrain from misrepresentation; breach can allow the insurer to avoid the contract or reduce a claim.

Proximate cause

The dominant and effective cause of a loss determines whether the policy responds; remote causes are disregarded even if they contributed indirectly.

Subrogation

After paying a claim, the insurer acquires the insured's rights to recover from the third party responsible, limited to the amount paid and subject to the insured's full recovery.

Contribution

Where two or more policies cover the same interest, peril and subject matter, each insurer pays a rateable share so the insured does not recover more than the loss.

Average clause

If the sum insured is less than the value at risk, the claim is reduced proportionally: payment equals loss multiplied by sum insured divided by value at risk.

Warranty

A policy term that must be complied with exactly; breach suspends or discharges cover from the date of breach, even if the breach is unrelated to the loss.

Sum insured

The maximum amount the insurer will pay under the policy; it may be less than the actual value of the property and is not automatically the market value.

Policy excess

The first amount of each claim that the insured bears; it reduces every claim payment and is agreed at inception as part of the rating.

Reinstatement cover

Settlement on a new-for-old basis, allowing replacement or rebuilding without depreciation, provided the insured actually rebuilds and the sum insured is adequate.

Co-insurance clause

A condition requiring insurance to a stated percentage of value, commonly 80 or 90 percent; failure applies average to the shortfall on any loss.

Endorsement

A written amendment to the policy, signed and dated, that alters or overrides the printed wording; it prevails in the event of conflict.

Deposit premium

An initial premium based on estimated turnover or wages, later adjusted by audit at expiry to reflect the actual exposure during the policy period.

Material fact

Information that would influence a prudent underwriter's decision to accept, decline, or rate a risk, including claims history, trade, and protection details.

Reservation of rights

A letter confirming the insurer is investigating a claim while preserving the right to decline cover later; it should identify the specific policy provisions in question.

Claim reserve

The estimated probable ultimate cost of a claim, including defence and adjustment expenses, reviewed periodically and documented in the claim file.

Onus of proof

The insured must show the loss falls within the insuring clause; once established, the insurer bears the burden of proving an exclusion or condition breach applies.

Salvage recovery

Proceeds from the sale or disposal of damaged property that reduce the net cost of the claim to the insurer after settlement.

Limitation period

The statutory time limit within which a claim or legal action must be brought, running from the date of loss or denial depending on jurisdiction.

Fraud indicator

A warning sign such as late reporting, inconsistent statements, altered documents, or an unusual prior claims pattern that warrants referral to special investigation.

Hostile fire test

Fire cover applies only where the fire was accidental or hostile, meaning it escaped from where it was intended to burn; friendly fires are excluded.

Gross profit formula

Gross profit equals net profit plus standing charges; the rate of gross profit is gross profit divided by annual turnover.

Indemnity period

The period during which business interruption cover applies, running from the date of damage until the business returns to its pre-loss level of activity.

Increased cost of working

Additional expenditure to maintain business operations during interruption, recoverable only to the extent it reduces the loss that would otherwise be payable.

Savings in standing charges

Expenses that cease or reduce during the interruption and must be deducted from the gross profit loss claimed under a business interruption policy.

Proof of loss

A formal statement, often sworn, supported by inventory and books of account, detailing the extent of damage and the amount claimed under a fire policy.

ICC (A) cover

Institute Cargo Clauses (A) provide all-risks cover for cargo, subject to stated exclusions such as inherent vice, delay, and insufficient packing.

General average

A sacrifice or expenditure intentionally and reasonably made for the common safety of ship and cargo, apportioned among the parties by their arrived values.

Sue and labour clause

A marine clause obliging the assured to take reasonable steps to avert or minimise loss, with those costs recoverable in addition to the sum insured.

Inchmaree clause

A hull clause covering loss from negligence of the master, crew, or pilots and latent defects in machinery, provided due diligence was exercised by the owner.

Constructive total loss

A loss where repair or recovery cost exceeds insured value, or the assured is irretrievably deprived of the property; notice of abandonment follows.