Claims Processing & Documentation Flashcards

An adjuster has a coverage concern but needs to keep investigating a claim. Which document lets the insurer investigate without giving up its right to deny coverage later, and only takes effect once the insured signs it?

Answer: Nonwaiver agreement

A nonwaiver agreement is a bilateral contract signed by both insurer and insured, preserving the insurer's coverage defenses during investigation.

What is the main advantage of a reservation of rights letter over a nonwaiver agreement?

Answer: It does not need the insured's signature to take effect

A reservation of rights letter is unilateral, so the insurer can send it without the insured agreeing.

An insured gives a sworn, formal statement before the insurer's attorney, with a court reporter present, as the policy conditions require. What is this called?

Answer: Examination under oath

An examination under oath (EUO) is a policy condition that requires the insured to answer questions under oath, usually with counsel and a court reporter.

When taking a recorded statement, what should an adjuster do first after starting the recording?

Answer: State the date, time, and location, and confirm the person consents to being recorded

Opening with the identifying details and the speaker's consent makes the statement admissible and properly documented.

Which entry in a claim file log best reflects good documentation practice?

Answer: 10/14 2:15pm: Spoke with insured J. Smith; confirmed water loss date 10/12; requested plumber invoice by 10/21

Good file notes are dated, specific, objective, and include next steps and deadlines.

An adjuster sets a reserve well below the likely cost of a claim and then raises it many times as the claim develops. What is this pattern called?

Answer: Stair-stepping

Stair-stepping means repeatedly raising an inadequate reserve, which distorts loss reporting and the insurer's financial picture.

Under most state Unfair Claims Settlement Practices Acts, which of these is a prohibited practice?

Answer: Making the insured file a lawsuit to recover amounts that are clearly owed

Forcing insureds to sue to collect amounts that are clearly due is listed as an unfair claims practice in the NAIC model act.