Iran Loss Adjuster Exam key terms

A mutual duty on insurer and insured to disclose all material facts relevant to the risk, without being asked. Breach by the insured can allow the insurer to avoid the policy from inception.

A financial or legal relationship by which the insured benefits from preservation of the subject matter and suffers loss if it is damaged. Its existence is required for a valid indemnity insurance claim.

The rule that property and liability insurance restores the insured to the financial position held before the loss, no better and no worse. It limits payment to the actual loss, subject to sum insured and policy terms.

Any information that would influence a prudent insurer's decision to accept a risk or set its terms and premium. Examples include prior claims, hazardous occupancies, and previous declinatures.

Failure by a proposer to reveal a material fact the insurer needed to assess the risk. Depending on the law and the proposer's intent, the remedy may be avoidance, re-rating, or proportional reduction of a claim.

A false or misleading statement of fact made during proposal or renewal that induces the insurer to accept the risk on terms it would not otherwise have chosen. It may be innocent, negligent, or fraudulent.

The dominant, effective, and efficient cause of a loss, the one that sets the chain of events in motion without a new intervening force. Claim liability is decided by this cause, not by the last event.

A specific event or hazard listed in the policy as covered, such as fire, lightning, explosion, or theft. Losses must be traced to a named peril to fall within the grant of cover.

A policy provision that removes specified perils, property, or circumstances from cover, such as war, nuclear risk, wear and tear, or deliberate acts. Exclusions are read strictly against the party relying on them.

A policy term that the insured promises to satisfy exactly, for example an alarm maintenance or storage condition. Breach may suspend or terminate cover depending on the applicable law and wording.

A policy requirement that must be fulfilled before the insurer's liability arises or before a claim is payable, such as prompt notification, duty to mitigate, or providing records.

The maximum amount the insurer will pay under a policy or section for a single loss or in total. It represents the declared value of the insured interest at inception and caps all settlement calculations.

A condition applying when the sum insured is less than the value at risk, so that claims are reduced in the same proportion as the shortfall. The insured then bears part of every loss.

The cost of replacing or rebuilding damaged property with new materials of like kind and quality, without deduction for depreciation, where the policy provides this basis instead of indemnity value.

The reduction in value of property due to age, wear, use, or obsolescence. Adjusters deduct it when settling on an indemnity basis, unless the policy provides reinstatement or new-for-old cover.

Remaining property that retains value after a loss, which the insurer may take over or sell to reduce the claim. Salvage value is deducted from the gross loss to reach the net payable amount.

The insurer's right, after paying a claim, to stand in the insured's shoes and recover the loss from the third party responsible. It prevents double recovery and supports the indemnity principle.

The right of an insurer that has paid a claim to recover a proportionate share from other insurers covering the same interest against the same peril. It applies to indemnity policies, not to life cover.

The situation where the same insured interest is covered by more than one policy against the same risk. Each insurer contributes rateably, and the insured cannot recover more than the actual loss.

The remedy by which an insurer treats a policy as never having existed, usually because of fraudulent misrepresentation, non-disclosure, or breach of a fundamental term. Premium treatment follows the applicable law.

Legal liability owed to persons other than the insured for bodily injury or property damage, covered under liability sections of motor, general, or professional policies up to the stated limit.

Mandatory cover required for vehicles, paying compensation to injured third parties for bodily injury and, where specified, property damage. Insurers must handle such claims under the governing road traffic rules.

Optional motor cover that indemnifies the policyholder for accidental damage to or loss of the insured vehicle, subject to deductible, sum insured, and policy conditions.

The first amount of each loss that the insured must bear before the insurer pays, or a percentage of the loss. It reduces small claims, shares risk, and is deducted from the assessed amount.

A loss where the property is destroyed or damaged beyond economic repair. In motor claims, a constructive total loss occurs when repair cost exceeds the vehicle's pre-loss value.

A liability imposed by law, including negligence, contract, or statute, that a court or settlement establishes. Liability policies respond only where the insured is legally obliged to pay damages.

A breach of a duty of care owed to another person that causes foreseeable loss. It is established by showing duty, breach, causation, and damage, and it underpins most third-party liability claims.

Liability cover for professionals against claims arising from errors, omissions, or negligent advice in the course of their practice. It usually responds on a claims-made basis with a retroactive date.

A policy trigger under which cover responds to claims first made or reported during the policy period, regardless of when the act occurred, subject to any retroactive date.

A policy trigger under which cover responds to injury or damage that occurs during the policy period, even if the claim is reported years later. It is common in general liability and engineering cover.

Engineering cover for construction or erection projects, protecting works, materials, and plant against damage during the contract period, often with maintenance and third-party liability extensions.

Engineering cover for sudden and unforeseen mechanical or electrical failure of insured plant and machinery, typically excluding wear and tear, gradual deterioration, and damage from faulty design.

Indirect financial loss flowing from damage, such as lost profit, rent, or business interruption. It is not covered unless a specific extension or separate policy provides for it.

Cover that indemnifies lost gross profit and continuing fixed costs when an insured peril interrupts the business, measured over an indemnity period from the date of damage.

The insured's prompt report of a loss to the insurer, giving date, cause, and circumstances. Delay can prejudice the insurer's investigation and may breach a condition precedent.

The adjuster's structured inquiry into a claim, covering policy validity, cause, extent of damage, quantum, and any third-party recovery. It gathers evidence before any settlement recommendation.

The technical and financial evaluation of loss, including measurement, repair scope, pricing, and allowance for depreciation or salvage, producing the quantum on which settlement is based.

Observable warning signs suggesting a claim may be exaggerated or fabricated, such as recent inception, missing documents, inconsistent statements, or loss timing that conflicts with evidence.

A formal statement, often supported by invoices, inventories, and expert reports, in which the insured substantiates the amount and circumstances of the claim. It may be a policy condition.

The complete evidentiary file for a claim, including policy copies, notification, photographs, reports, invoices, correspondence, and the adjuster's notes. It supports the settlement decision and audit.

The adjuster's written recommendation to the insurer setting out coverage analysis, cause, quantum, deductions, and the proposed settlement amount, with reasoning and supporting evidence.

The insured's obligation to take reasonable steps to limit loss after an event, such as salvage, temporary repairs, or securing premises. Costs reasonably incurred are usually reimbursed.

A situation where an adjuster's personal, financial, or other interest could improperly influence the claim decision. It must be disclosed and avoided to protect independence and impartiality.

The professional duty to assess claims objectively and impartially, free from pressure by insurers, insureds, or repairers, basing conclusions only on evidence and policy terms.

The standards of honesty, competence, confidentiality, and fair dealing expected of loss adjusters in their work, including transparent reporting and refusal of instructions that would compromise integrity.

The official body that licenses insurers and intermediaries, sets solvency and market-conduct rules, approves policy wordings and tariffs, and supervises claim handling in the jurisdiction.

The minimum excess of assets over liabilities that an insurer must maintain to absorb unexpected losses and meet obligations to policyholders, as required by insurance regulation.

Insurance purchased by an insurer to transfer part of its risk to another insurer, protecting solvency and capacity. It does not change the original insurer's duty to pay its insured.