NJ Public Adjuster flashcards

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

Indemnity principle

The insured is restored to the same financial position held before the loss, never better; recovery is capped at the actual amount of loss regardless of the policy limit.

Insurable interest

A financial stake in the property or life insured such that the insured suffers economic loss from its damage; required for the contract to be enforceable and not a wager.

Actual cash value

Replacement cost minus depreciation, reflecting the pre-loss value of the damaged property. Many policies define it as replacement cost less physical deterioration and obsolescence.

Replacement cost value

The cost to repair or replace damaged property with new materials of like kind and quality, without deduction for depreciation, subject to policy limits and replacement conditions.

Coinsurance formula

Payment equals carried insurance divided by required insurance, multiplied by the loss, capped at the policy limit. A penalty applies only when coverage is under the requirement.

Named peril versus open peril

A named-peril policy covers only perils listed; an open-peril or all-risk policy covers all causes of loss except those specifically excluded, shifting the burden to the insurer.

Subrogation

After paying a claim, the insurer acquires the insured's right to recover from the negligent third party, preventing double recovery and spreading loss to the responsible party.

Proximate cause

The dominant, unbroken cause that sets a loss in motion without which the damage would not have occurred, used to resolve concurrent causation disputes.

Percentage wind deductible

A deductible calculated as a percentage of the dwelling Coverage A limit rather than of the loss amount, common in coastal windstorm endorsements.

Public adjuster compensation

The public adjuster is paid by the insured, usually a percentage of the settled amount, and represents only the insured rather than the insurance carrier.

First notice of loss

The initial report of a claim to the insurer, documented with date, time, claim number, and representative name to rebut later late-notice defenses.

Proof of loss

A sworn statement itemizing the amount claimed, usually due within sixty days of the insurer's written request unless the policy or a written agreement extends it.

Scope of loss

An itemized written estimate listing quantities, unit costs, labor, materials, and depreciation for each damaged item, forming the basis of the adjuster's claim demand.

Additional living expense

Coverage for the increase in living costs needed to maintain the household's normal standard of living while the dwelling is uninhabitable; receipts are required.

Appraisal provision

A policy mechanism where each side selects a competent appraiser and the two choose an umpire; it resolves the amount of loss, not questions of coverage.

Replacement cost holdback

The insurer initially pays actual cash value and releases withheld depreciation only after the insured repairs or replaces the property within the policy's stated period.

Claim diary

A chronological log of every contact, document sent, offer received, and deadline in the claim file, supporting diligence and protecting against disputes.

Betterment exclusion

Insurers do not pay for improvements that make property better than before the loss; depreciation adjustments and like-kind replacement rules implement this limitation.

New Jersey public adjuster license

A credential issued by the Department of Banking and Insurance that is required before soliciting, negotiating, or settling first-party claims for compensation.

Written adjuster contract

An agreement signed by the insured stating the compensation rate and terms; the insured holds a statutory right to rescind within the cancellation window.

Fee cap

The statutory maximum percentage a public adjuster may charge of the amount recovered, which cannot be exceeded even by agreement.

Emergency solicitation restriction

Public adjusters may not solicit business at a loss scene during a declared state of emergency, protecting distressed insureds from immediate pressure.

Continuing education requirement

Credits in approved courses that must be completed each renewal period to keep the public adjuster license active in New Jersey.

Unfair claim settlement practice

Conduct such as misrepresenting policy provisions, failing to acknowledge communications, unreasonable delay, or offering substantially less than the amount ultimately recovered.

Recordkeeping obligation

Claim transaction records must be retained for the period set by regulation and produced to the Department of Banking and Insurance on examination.

Misrepresentation of authority

Holding oneself out as an insurer representative, government official, or contractor to induce an insured to sign is prohibited and grounds for discipline.

Fiduciary handling of funds

Settlement drafts and claim funds held for the insured are trust property, kept segregated, accounted for, and disbursed only as the insured authorizes.

Written disclosure

Before engagement the adjuster discloses compensation method, referral fees, contractor relationships, and that only the insured is represented.

Confidentiality duty

Claim details, financial records, and personal data may be shared only with the insured's consent or as required by law or a regulator.

Conflict of interest

A personal or financial interest that could bias the adjuster's work, such as ownership in a repair contractor, which must be avoided or disclosed in writing.

Claim inflation fraud

Deliberately overstating damage, altering evidence, or concealing material facts in a claim submission, exposing the adjuster to license revocation and criminal liability.

Informed settlement authorization

The adjuster must present each offer to the insured and obtain informed approval before accepting a settlement on the insured's behalf.