MI 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 financial relationship with the subject matter such that a loss causes measurable economic harm. It must exist at the time of loss for property coverage and at inception for life coverage.

Proximate Cause

The dominant, efficient cause that sets in motion an unbroken chain of events producing loss. Coverage applies when this cause is a covered peril, even if the final event is excluded.

Coinsurance Formula

Recovery equals the limit carried divided by the limit required, multiplied by the loss, capped at the policy limit. The required limit is a stated percentage of replacement cost.

Subrogation

The insurer's right, after paying a claim, to pursue recovery from the negligent third party responsible for the loss. It prevents the insured from collecting twice.

Utmost Good Faith

Both parties must disclose material facts affecting the risk. Concealment or material misrepresentation by the insured can allow the insurer to rescind the policy.

McCarran-Ferguson Act

Federal law providing that state regulation of insurance is not preempted by federal antitrust statutes. Federal law applies only where states fail to regulate the business.

Appointment

The authorization by which an insurer empowers a licensed producer to act on its behalf. Insurers must file appointments and terminations with the state regulator.

Fiduciary Duty

A producer holding premium or claim funds for an insurer must keep them separate and remit on schedule. Commingling these funds with personal or agency money is prohibited.

Twisting

Inducing a policyholder to lapse or surrender a policy through misleading comparisons or false statements, in order to sell replacement coverage. It is an unfair trade practice.

Unfair Claim Settlement Practices

Acts such as misrepresenting policy provisions, failing to investigate promptly, offering unreasonable settlements, or delaying payment without justification. States may impose penalties and bad faith liability.

Named Peril vs Open Peril

Named peril pays only for causes specifically listed; open peril pays for all causes except those excluded. Open peril shifts the burden to the insurer to prove an exclusion applies.

Actual Cash Value

Replacement cost minus depreciation, or fair market value where more appropriate. It reflects the property's value in its pre-loss condition rather than new-for-old replacement.

Replacement Cost Coverage

Pays to repair or replace damaged property with new property of like kind and quality, without deducting depreciation. Payment is limited by the policy limit and any special caps.

Functional Replacement Cost

Pays to replace obsolete or ornate construction with modern materials that restore equivalent function rather than identical appearance. It commonly applies to older or historic dwellings.

Ordinance or Law Exclusion

Excludes costs to repair, rebuild, or demolish per building codes. Coverage is added by endorsement and often includes increased cost of construction and demolition debris.

Vacancy Condition

Reduces or voids coverage when a building is vacant beyond a stated number of days. Vacancy means no occupants and no contents, unlike mere unoccupancy.

Occurrence vs Claims-Made

Occurrence coverage responds when the injury or damage happens during the policy period. Claims-made coverage responds when the claim is made and reported while the policy is in force.

Comparative Negligence

Damages are reduced in proportion to the claimant's share of fault. Under modified rules, a claimant may recover only if fault is below a statutory threshold.

General Liability Coverage B

Covers personal and advertising injury, including libel, slander, wrongful eviction, and infringement of copyright in an advertisement. It is separate from bodily injury and property damage coverage.

Certificate of Insurance

A document evidencing that coverage exists on a given date. It does not amend, extend, or create coverage and confers no rights on the holder.

Additional Insured Endorsement

Extends liability coverage to another party, typically a landlord or general contractor. Coverage is often limited to liability arising from the named insured's operations.

Reservation of Rights Letter

A written notice preserving the insurer's right to deny coverage later while investigation continues. It does not itself deny the claim or waive any policy defense.

Proof of Loss

A sworn statement from the insured detailing the amount, date, and circumstances of loss. The policy may require it before payment, and it must be signed and timely.

Bad Faith Exposure

Liability arising when an insurer denies a claim without reasonable basis or fails to settle within policy limits. Damages may include the excess judgment and extra-contractual amounts.

Salvage and Subrogation

Salvage is the residual value of damaged property retained or sold by the insurer; subrogation is recovery from a responsible third party. Both reduce the insurer's net loss.

Split Liability Limits

Separate maximums for bodily injury per person, bodily injury per accident, and property damage per accident. A combined single limit instead caps all damages in one amount.

Uninsured Motorist Coverage

Pays the insured's damages when an at-fault driver has no insurance or is a hit-and-run. Underinsured motorist coverage applies when the at-fault driver's limits are insufficient.

Personal Injury Protection

No-fault coverage paying medical expenses, lost wages, and related costs regardless of fault. It applies in states with no-fault laws and often carries a tort threshold.

Named Driver Exclusion

An endorsement removing coverage when a specified person operates the insured vehicle. It typically bars all coverage for that driver, including liability and physical damage.

HO-3 Special Form

Covers the dwelling and other structures on an open-peril basis and personal property for named perils. It is the most common homeowners form for owner-occupied dwellings.

Loss of Use Coverage

Pays additional living expenses when the dwelling is uninhabitable due to a covered loss. Coverage lasts for the shortest time needed to repair or relocate, up to the stated limit.

Business Income Coverage

Pays lost net income and continuing normal operating expenses during the period of restoration after a covered loss. It requires a direct physical loss to covered property.