2.) ADJUSTING LOSSES QUIZ QUESTIONS

Question 1

Which of the following is NOT a reason why litigation is considered a “last resort” for the insurer?

A. The insurer’s reputation may be at stake.
B. It is an expensive process.
C. It is unpredictable because control is relinquished to a potentially prejudice jury.
D. Courts and laws favor litigation to negotiation.

Answer 1

D. Courts and laws favor litigation to negotiation.

Question 2

Barbara is preparing to negotiate an auto claim on behalf of XYZ Insurance. She knows the circumstances of the loss and has completed the investigation and evaluation. What other piece of information must Barbara know before entering into negotiation with the claimant?

A. The maximum punitive damages the claimant will likely have to pay
B. The amount of the claimant’s monthly premium
C. The maximum amount XYZ Insurance will pay for the claim
D. A good auto body shop to whom she can refer the claimant

Answer 2

C. The maximum amount XYZ Insurance will pay for the claim

Question 3

While at work, Barry suffered a spinal cord injury in a forklift accident. His employer’s insurer settled the claim and paid all of Barry’s initial medical bills, but it also agreed to continue to pay for his weekly visits to the rehabilitation therapist. Which settlement option did Barry receive?

A. Full release
B. Advance payment
C. Partial release
D. Scheduled payment release

Answer 3

D. Scheduled payment release

Question 4

Allen is adjusting an auto claim on behalf of ABC Insurance, which has given Allen $5,000 in draft authority. The total damages in the auto claim come to $7,200. Which of the following is true?

A. Allen can adjust the claim, but ABC Insurance must write the settlement check.
B. Allen can write a check for a half of the damages and ABC Insurance will write another check for the other half.
C. Allen must negotiate with the claimant to reach an agreement on a settlement amount of $5,000 or less.
D. Allen is not allowed to adjust this claim, because the amount of damages exceeds his draft authority.

Answer 4

A. Allen can adjust the claim, but ABC Insurance must write the settlement check.

Question 5

Why might an insurer send a claimant a Reservation of Rights letter?

A. When the insurer has decided not to cover the loss
B. When the insurer needs more information before making a final decision
C. To let the claimant know that the insurer has received all necessary paperwork
D. To let the claimant know that there is a coverage dispute

Answer 5

D. To let the claimant know that there is a coverage dispute

Question 6

Which of the following is NOT a characteristic of a full release settlement?

A. The insurer pays for certain future “incidentals” related to the claim.
B. All damages are paid at once.
C. The claimant signs a Full Release Form.
D. The insurer pays an immediate, single lump sum to the claimant.

Answer 6

A. The insurer pays for certain future “incidentals” related to the claim.

Question 7

Which of the following statements about arbitration is TRUE?

A. An arbitrator tries to get both sides to come together in agreement.
B. An arbitrator plays no role in the outcome of negotiations.
C. An arbitrator makes a legally binding decision based upon the evidence.
D. An arbitrator costs significantly more than a civil trial.

Answer 7

C. An arbitrator makes a legally binding decision based upon the evidence.

Question 8

Which of the following statements is TRUE of a claim dispute litigated in a state that follows the doctrine of Contributory Negligence?

A. The settlement amount will be reduced by the percentage of the defendant’s negligence.
B. If the defendant is found to be at all negligent, she will receive no settlement.
C. If the plaintiff is found to be at all negligent, she will receive no settlement.
D. The settlement amount will be reduced by the percentage of the plaintiff’s negligence.

Answer 8

C. If the plaintiff is found to be at all negligent, she will receive no settlement.

Question 9

Jake is selling insurance policies for XYZ Insurance. Olivia buys a homeowners policy from Jake and asks him to write down on a separate piece of paper all the perils the policy covers so she can show her husband. Jake writes “hail,” but when Olivia’s house is damaged by hail, the adjuster says “hail isn’t covered in your policy.” Olivia produces the piece of paper and threatens to sue XYZ Insurance if they don’t pay. Does she have grounds for a lawsuit? Why or why not?

A. Yes; hail coverage is standard in property policies, and the insurer should have included it in the first place.
B. No; Jake was unaware of the policy’s hail coverage exclusion.
C. Yes; Jake exercised apparent authority when he wrote that Olivia had hail coverage.
D. No; Jake had no authority to promise coverage that was not listed in Olivia’s policy.

Answer 9

C. Yes; Jake exercised apparent authority when he wrote that Olivia had hail coverage.
Jake exercised apparent authority because he was acting in accordance with accepted practices that are considered to be within the scope of his express authority, although not specifically stated in his contract.

Question 10

A/An ____________ plays an advisory role in the negotiation process, working from a neutral position to assist the opposing parties to come to an equitable resolution.

A. adjuster
B. mediator
C. arbitrator
D. judge

Answer 10

B. mediator

Question 11

An adjuster acts as an agent for the insurer. As such, it is essential that the adjuster understand:

A. her duty to profit from every claim investigation.
B. that she must always offer a settlement favorable to the claimant.
C. her duty to check-in daily with the insurance company.
D. that her words or actions may bind the insurance company.

Answer 11

D. that her words or actions may bind the insurance company.

Question 12

An insurance claim is essentially:

A. a formal offer to repair the damage.
B. a formal request to settle the damage.
C. a formal explanation of insurance coverage.
D. a formal request to repair the damage.

Answer 12

B. a formal request to settle the damage.

Question 13

What do you call a self-employed adjuster who works as a contractor for insurers or claims-handling companies?

A. Independent adjuster
B. Emergency adjuster
C. Staff adjuster
D. Public adjuster

Answer 13

A. Independent adjuster

Question 14

Which item would NOT belong in an adjuster’s initial report on a claim?

A. The date that the adjuster first contacts the claimant
B. A list of all known circumstances surrounding the claim
C. The final settlement amount
D. A detailed list of the damages being claimed

Answer 14

C. The final settlement amount

Question 15

For a bodily injury liability claim, the adjuster must determine all of the following, EXCEPT:

A. the severity of the injury.
B. the amount of punitive damages requested.
C. the type of injury.
D. the presence of any pre-existing conditions.

Answer 15

B. the amount of punitive damages requested.

Question 16

What kind of adjuster represents the insured rather than the insurer?

A. Staff adjuster
B. Emergency adjuster
C. Public adjuster
D. Independent adjuster

Answer 16

C. Public adjuster

Question 17

A lightning strike causes one of the storage buildings on John’s farm to burn to the ground, aided by the fuel tanks he kept in the building. John knows he wasn’t supposed to store any fuel in the building, so he keeps that piece of information to himself when he files a claim. John’s insurer may deny his claim based on his:

A. liberalization.
B. hard fraud.
C. concealment.
D. arson.

Answer 17

C. concealment.

Question 18

A witness who has had a recorded interview:

A. is taken more seriously.
B. must have a lawyer present during the interview.
C. must have a chance to correct anything that is incorrect.
D. must do so under oath.

Answer 18

C. must have a chance to correct anything that is incorrect.

Question 19

Melanie’s $300,000 home suffers $90,000 in damage from a fire. The adjuster finds the home’s value since 2008 has depreciated 25%, making the ACV loss $67,500. Although Melanie’s policy covers repairs at their replacement cost, she receives $67,500 at the time of loss. Repairs to her home end up totaling $79,500. How much, if any, further indemnification may Melanie receive from the loss?

A. $10,500
B. $0
C. $12,000
D. $22,500

Answer 19

C. $12,000

Question 20

Tina has two policies (Policy X and Policy Y) that cover the same risk on a pro rata basis. Policy X has a limit of $100,000 and Policy Y has a limit of $25,000. When Tina suffers a loss totaling $75,000, how will the two policies respond?

A. Policy X will pay $37,500 and Policy Y will pay $25,000
B. Policy X will pay $60,000 and Policy Y will pay $15,000
C. Policy X will pay $50,000 and Policy Y will pay $25,000
D. Policy X will pay $75,000 and Policy Y will pay nothing

Answer 20

B. Policy X will pay $60,000 and Policy Y will pay $15,000

Question 21

Which of the following statements is NOT true of an insurance adjuster?

A. An insurance adjuster who settles claims on behalf of an insurer has the power to bind that insurer, even if she makes a mistake.
B. An insurance adjuster receives her authority to sell products on behalf of the insurer through a written contract.
C. An insurance adjuster is an agent.
D. An insurance adjuster must always use reasonable judgement for both the insurer and the claimant.

Answer 21

B. An insurance adjuster receives her authority to sell products on behalf of the insurer through a written contract.

Question 22

Which of these is NOT an essential detail for an adjuster to include in a loss report?

A. The policy limit
B. The policy deductible
C. The policy number
D. The policy premium

Answer 22

D. The policy premium
That’s right! The policy premium (as long as it has been paid according to the contract) has no bearing on how the policy will respond to a claim, so it is not an important detail for an adjuster to include in a loss report.

Question 23

Which of the following does not apply to the adjuster’s responsibility of reporting to the principal?

A. The reports should include information that would benefit the principal.
B. The reports should include any pertinent information about investigations the adjuster has performed.
C. The reports should include advice on how to get out of paying covered claims.
D. The reports should be frequent and detailed.

Answer 23

C. The reports should include advice on how to get out of paying covered claims.

Question 24

Which of the following is NOT one of the typical duties of the insured after a loss?

A. Provide a loss estimate from an appraiser.
B. Cooperate with the adjuster’s investigation.
C. Protect the property from further losses.
D. Sign a sworn proof of loss.

Answer 24

A. Provide a loss estimate from an appraiser.

Question 25

Which of these is NOT typically excluded from coverage in a property insurance policy?

A. Lightning
B. Nuclear events
C. Civil confiscation
D. Off-premises power failure

Answer 25

A. Lightning

Question 26

Which of the following activities would most likely not be a useful negotiation technique?

A. Lengthening your silence to an uncomfortable point
B. Making minor changes to the offer that still fall within the insurer’s parameters
C. Producing a backup offer if the first offer is completely rejected by the claimant
D. Conceding to a claimant’s point that is an obvious ploy

Answer 26

D. Conceding to a claimant’s point that is an obvious ploy

Question 27

This agent works for only one insurer, and supervises and trains other agents.

A. Captive Agent
B. General Agent
C. Exclusive Agent
D. Direct Writer

Answer 27

B. General Agent

Question 28

In a declaratory judgment action:

A. the court’s decision about the legal rights of the parties is not binding.
B. the court decides the legal rights of both parties.
C. the court makes a judgment about the insurer’s unfair settlement practices.
D. the court resolves the case.

Answer 28

B. the court decides the legal rights of both parties.

Question 29

Of the following adjuster duties, which would be first?

A. Investigate liability
B. Open lines of communication
C. Assess the damages
D. Prepare adjustment reports

Answer 29

B. Open lines of communication

Question 30

Which of the following is NOT a duty of a captive agent?

A. Negotiating settlements
B. Servicing policies
C. Representing the insurer
D. Selling insurance policies

Answer 30

A. Negotiating settlements

Question 31

When we say that a claims file is “discoverable,” we mean that:

A. the insurer has the right to review the file weekly.
B. the adjuster must keep a copy of the file for at least 10 years.
C. the file can be used as evidence in a court case.
D. the insured is entitled to a copy of the entire file.

Answer 31

C. the file can be used as evidence in a court case.

Question 32

When an insurer assigns an adjuster to a claim, which of the following best describes the adjuster’s role in relation to the claimant?

A. The adjuster agrees to get the claimant the highest possible insurance settlement.
B. The adjuster agrees to represent the claimant in court.
C. The adjuster collects the premiums from the claimant.
D. The adjuster acts as a liaison between the claimant and the insurer.

Answer 32

D. The adjuster acts as a liaison between the claimant and the insurer.

Question 33

In a civil trial, the jury makes their decision based upon which of the following?

A. Preponderance of the evidence
B. Proof beyond a reasonable doubt
C. Recommendation of the presiding judge
D. Conference decision

Answer 33

A. Preponderance of the evidence

Question 34

Dennis was injured when Ruby rear-ended his car while he was stopped at a red light. Which of the following would NOT be a duty that Ruby’s liability insurer may require of Dennis?

A. Provide proof of the accident
B. Submit to a physical examination
C. Promptly report the occurrence to his insurer
D. Authorize access to his medical records

Answer 34

C. Promptly report the occurrence to his insurer
That’s right! Ruby is liable for Dennis’ damages, so her insurer may not make Dennis report the accident to his own insurer.

Question 35

After her business suffered damage in a fire, Jane filed a claim with Acme Insurance, which dispatched Bob to adjust it, even though he was not allowed to adjust commercial claims. He investigated Jane’s losses and submitted his estimate to Acme Insurance, which issued her a settlement check based on that estimate. Bob had _______ because Acme Insurance accepted his estimate and paid Jane’s claim.

A. express authority
B. expert authority
C. apparent authority
D. agency authority

Answer 35

C. apparent authority