TX Claims Adjuster flashcards

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

Indemnity principle

Insurance restores the insured to approximately the same financial position held before the loss, neither better nor worse, preventing the insured from profiting from a loss.

Insurable interest

A financial stake in the property such that the insured would suffer a monetary loss if it were damaged; for property insurance it must exist at the time of loss.

Subrogation

After paying a covered loss, the insurer acquires the insured's legal right to recover those damages from the responsible third party, and the insured may not impair that right.

Actual cash value

The cost to repair or replace damaged property with like kind and quality, less depreciation; it reflects the property's value immediately before the loss occurred.

Coinsurance formula

Payment equals insurance carried divided by insurance required, multiplied by the amount of loss; the result is capped at the policy limit before the deductible is applied.

Pure risk

A risk involving only the chance of loss or no loss with no possibility of gain; pure risks are insurable, while speculative risks offering gain generally are not.

Texas Department of Insurance

The state agency that regulates insurers, agents, and adjusters in Texas, enforces the Insurance Code, and issues licenses and administrative penalties.

Adjuster license term

A Texas adjuster license is issued for a two-year term and expires on the licensee's birthdate; renewal requires meeting continuing education and fee requirements.

Prompt payment deadlines

Under Insurance Code Chapter 542 the insurer must acknowledge a claim within 15 days, accept or deny within 15 days after receiving all required items, and pay within 5 business days of acceptance.

Prompt payment penalty interest

An insurer that delays payment in violation of Chapter 542 owes the claimant interest at 18 percent per year on the claim amount, plus reasonable attorney fees.

Texas valued policy law

When a building insured against fire or windstorm suffers a total loss, the insurer must pay the full policy amount covering the structure rather than depreciated actual cash value.

Texas Windstorm Insurance Association

TWIA is the residual market insurer providing windstorm and hail coverage for property in designated coastal catastrophe areas when the voluntary market will not write it.

Public insurance adjuster

A licensed person who, for compensation, represents the insured in negotiating a first-party property claim and may not act as a company adjuster on that same claim.

HO-3 policy form

A homeowners form insuring the dwelling and other structures on an open-peril special basis while personal property is covered for named perils only.

Coverage C personal property

Homeowners coverage for the insured's personal belongings, typically limited to 50 to 70 percent of the Coverage A dwelling limit, subject to special category sub-limits.

Loss of use coverage

Pays the increase in living expenses or lost fair rental value when a covered loss makes the residence uninhabitable, commonly 20 to 30 percent of Coverage A.

80% coinsurance clause

A commercial property condition requiring the insured to carry at least 80 percent of the property's replacement value, with a lower limit reducing the loss payment proportionally.

Replacement cost coverage

Pays to repair or replace damaged property with new property of like kind and quality without deducting depreciation, usually only after the property is actually repaired or replaced.

Flood exclusion

Homeowners and most property policies exclude flood and surface water damage; coverage must be purchased separately through the National Flood Insurance Program or a private flood insurer.

Windstorm percentage deductible

A deductible stated as a percentage of the dwelling limit, commonly 1 to 5 percent, applied to hurricane, windstorm, or hail losses instead of the flat dollar deductible.

CGL Coverage A

Commercial general liability coverage that pays sums the insured becomes legally obligated to pay as damages because of bodily injury or property damage to others.

Occurrence policy trigger

Coverage applies to injury or damage that occurs during the policy period regardless of when the claim is reported, in contrast to a claims-made policy.

Duty to defend

The liability insurer's obligation to provide and pay for a lawyer to defend the insured against potentially covered suits, which is broader than the duty to indemnify.

Texas minimum auto limits

Texas requires liability coverage of at least $30,000 per person and $60,000 per accident for bodily injury, plus $25,000 for property damage.

Uninsured motorist coverage

Texas insurers must offer UM/UIM coverage, which the insured may reject only in writing, and which pays damages the at-fault uninsured or underinsured driver cannot pay.

Proportionate responsibility

Texas law bars a claimant whose own negligence is greater than 50 percent; otherwise damages are reduced in proportion to the claimant's percentage of fault.

Reservation of rights

A written notice to the insured that the insurer will investigate or defend while reserving the right to deny coverage later based on specific policy provisions.

Proof of loss

A sworn statement from the insured detailing the amount, date, and circumstances of the loss, usually required within a policy period such as 60 days.

Examination under oath

A formal recorded questioning of the insured under oath, permitted by the policy, used to verify facts, ownership, and damages in a suspicious or complex claim.

Claim file documentation

The adjuster's contemporaneous record of contacts, inspections, estimates, statements, coverage analysis, and the rationale for each payment or denial decision.

Fraud red flags

Indicators such as late reporting, missing proof of ownership, prior similar claims, altered receipts, staged damage, or pressure for quick settlement that warrant further investigation.

Conflict of interest

An adjuster must not hold a personal financial interest in the outcome of a claim and must keep claimant personal information confidential.