ACE Claims Processing & Investigation 3 — Questions and Answers
Question 1: Which claims handling standard requires insurers to acknowledge receipt of a claim within a specified number of days under most US state regulations?
- Unfair Claims Settlement Practices Act (UCSPA) (Correct answer)
- McCarran-Ferguson Act
- Fair Credit Reporting Act (FCRA)
- National Flood Insurance Act
Correct answer: Unfair Claims Settlement Practices Act (UCSPA)
The UCSPA, adopted in various forms by states, mandates timely acknowledgment, investigation, and settlement of claims.
Question 2: In a liability claim, 'comparative negligence' means:
- Only the most negligent party pays all damages
- Damages are allocated based on each party's percentage of fault (Correct answer)
- A claimant receives nothing if found even 1% at fault
- Negligence is compared to industry standards only
Correct answer: Damages are allocated based on each party's percentage of fault
Under comparative negligence, each party's damages are reduced by their percentage of fault in causing the loss.
Question 3: A 'sworn proof of loss' in property claims is a formal document that:
- Authorizes the adjuster to settle the claim on behalf of the insured
- Requires the insured to attest under oath to the details and value of their loss (Correct answer)
- Transfers the insured's subrogation rights to the insurer
- Releases the insurer from further liability after payment
Correct answer: Requires the insured to attest under oath to the details and value of their loss
A sworn proof of loss is a legal document signed under oath by the insured detailing the circumstances, nature, and amount of the claimed loss.
Question 4: Which ACORD form would typically be used to document a general liability bodily injury claim at a retail store?
- ACORD 5 (Commercial Automobile Loss Notice)
- ACORD 4 (General Liability Notice of Occurrence/Claim) (Correct answer)
- ACORD 3 (Property Loss Notice)
- ACORD 2 (Home Business Insurance Application)
Correct answer: ACORD 4 (General Liability Notice of Occurrence/Claim)
The ACORD 4 is the standard form for reporting general liability occurrences or claims, including slip-and-fall incidents at commercial locations.
Question 5: When investigating a suspected arson claim, which evidence type carries the MOST weight in determining origin and cause?
- Neighbor witness statements
- Fire investigator's origin and cause report (Correct answer)
- Insured's recorded statement
- Police department incident report
Correct answer: Fire investigator's origin and cause report
A certified fire investigator's origin and cause report is the most authoritative evidence for determining whether a fire was accidental, natural, or intentional.
Question 6: The 'cooperation clause' in an insurance policy requires the insured to:
- Pay premiums on time to maintain coverage
- Assist the insurer in investigating and defending a claim (Correct answer)
- Accept the insurer's settlement offer without dispute
- Notify authorities before filing any claim
Correct answer: Assist the insurer in investigating and defending a claim
The cooperation clause obligates the insured to provide information, submit to examinations, and otherwise assist the insurer in its claim investigation and defense.
Question 7: In claims handling, 'loss adjustment expenses' (LAE) refer to:
- The total indemnity paid to the claimant
- Costs incurred by the insurer to investigate and settle a claim (Correct answer)
- Premiums returned to the insured after a loss
- The insured's out-of-pocket deductible amounts
Correct answer: Costs incurred by the insurer to investigate and settle a claim
LAE includes adjuster fees, legal costs, expert witness fees, and other expenses related to investigating and resolving a claim.
ACE Claims Processing & Investigation 3
Which claims handling standard requires insurers to acknowledge receipt of a claim within a specified number of days under most US state regulations?