Ethical & Legal Compliance Flashcards
7 cards from real CA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Ethical & Legal Compliance flashcards as text
A reservation of rights letter is sent to the insured primarily to:
Answer: Preserve the insurer's right to contest coverage while investigating
A reservation of rights letter allows the insurer to investigate and defend a claim while reserving the right to deny coverage later.
Under the ethical duty of confidentiality, an adjuster may share claim information with:
Answer: Parties with a legitimate need to know, such as reinsurers or co-insurers
Confidential claim information may only be shared with parties who have a legitimate and legally recognized need, such as reinsurers.
Which of the following constitutes a conflict of interest for a claims adjuster?
Answer: Adjusting a claim where the insured is a close relative
Personal relationships with claimants or insureds create conflicts of interest that require disclosure and recusal.
An adjuster who misrepresents a policy provision to convince a claimant to accept a lower settlement is guilty of:
Answer: Insurance fraud and bad faith
Misrepresenting policy provisions to gain a settlement advantage constitutes both insurance fraud and bad faith claims handling.
When must an adjuster issue a written denial of a claim in California?
Answer: Within the timeframe set by California's Fair Claims Settlement Practices Regulations
California's Fair Claims Settlement Practices Regulations set specific deadlines for written claim decisions including denials.
The principle of utmost good faith (uberrimae fidei) in insurance requires that:
Answer: Both the insurer and insured disclose all material facts
Utmost good faith requires both parties to the insurance contract to fully and honestly disclose all material information.
An adjuster who accepts a kickback from a contractor in exchange for directing claims referrals is subject to:
Answer: Criminal charges, license revocation, and civil liability
Accepting kickbacks constitutes bribery and insurance fraud, leading to criminal prosecution, license revocation, and civil penalties.