CA Ethical & Legal Compliance 2 — Questions and Answers
Question 1: A claimant offers an adjuster a gift card after a favorable settlement. What is the ethical obligation of the adjuster?
- Accept it as a token of appreciation
- Decline it to avoid any appearance of impropriety (Correct answer)
- Report it to the claimant's attorney
- Accept it only if the value is under $25
Correct answer: Decline it to avoid any appearance of impropriety
Adjusters must decline gifts from claimants to avoid conflicts of interest and maintain impartiality.
Question 2: Under the Unfair Claims Settlement Practices Act, which action is explicitly prohibited?
- Requesting a proof of loss form
- Delaying acknowledgment of a claim beyond 10 days (Correct answer)
- Referring a claimant to a preferred contractor
- Requiring a recorded statement
Correct answer: Delaying acknowledgment of a claim beyond 10 days
The UCSPA requires insurers to acknowledge claims promptly, typically within 10 days of receipt.
Question 3: When handling a liability claim, an adjuster learns the insured was intoxicated during the incident. What must the adjuster do with this information?
- Share it publicly to warn other insurers
- Keep it confidential but include it in the claim file (Correct answer)
- Disclose it immediately to opposing counsel
- Ignore it as irrelevant to the claim
Correct answer: Keep it confidential but include it in the claim file
Sensitive information must remain confidential within the claim file and shared only on a need-to-know basis per privacy laws.
Question 4: Which principle requires adjusters to treat similarly situated claimants with the same degree of fairness?
- Subrogation equity
- Consistency in claims handling (Correct answer)
- Comparative negligence
- Proximate cause doctrine
Correct answer: Consistency in claims handling
Consistency in claims handling prevents discriminatory treatment and ensures all claimants receive equal consideration.
Question 5: An adjuster discovers that a colleague submitted a falsified estimate. The adjuster's first step should be to:
- Confront the colleague directly and demand correction
- Report the misconduct through appropriate internal channels (Correct answer)
- Ignore it to avoid workplace conflict
- Contact the claimant directly about the discrepancy
Correct answer: Report the misconduct through appropriate internal channels
Fraud and misconduct must be reported through proper internal channels such as a supervisor or compliance department.
Question 6: Under HIPAA, when can an adjuster legally obtain a claimant's medical records without a signed authorization?
- When the claim involves bodily injury
- Never; a signed authorization is always required (Correct answer)
- When the claimant has filed a lawsuit
- When approved by the insurer's legal department
Correct answer: Never; a signed authorization is always required
HIPAA requires a signed authorization from the individual before releasing protected health information for insurance claim purposes.
Question 7: Which ethical standard requires an adjuster to disclose all relevant coverage information to a claimant, even if not asked?
- Duty of good faith and fair dealing (Correct answer)
- Principle of indemnity
- Rule of estoppel
- Doctrine of subrogation
Correct answer: Duty of good faith and fair dealing
The duty of good faith and fair dealing obligates adjusters to proactively inform claimants of all coverage that may apply to their loss.
CA Ethical & Legal Compliance 2
A claimant offers an adjuster a gift card after a favorable settlement.
What is the ethical obligation of the adjuster?