CAADE Insurance and Legal Procedures 2

Question 1

Under which legal doctrine can an insurer who pays a claim then pursue the at-fault third party for reimbursement?

Accepted Answer

Subrogation

Answer

Subrogation allows the insurer to step into the insured's legal shoes and recover paid claim amounts from the responsible third party.

Question 2

A vehicle owner disputes the insurer's total loss valuation. The most common contractual mechanism to resolve this without litigation is:

Accepted Answer

Appraisal clause invocation

Answer

Most auto policies include an appraisal clause that allows both parties to hire independent appraisers whose umpire decision is binding.

Question 3

Which federal law requires insurers to provide written explanations when denying or partially paying auto insurance claims?

Accepted Answer

Unfair Claims Settlement Practices Act

Answer

The Unfair Claims Settlement Practices Act (UCSPA) mandates that insurers communicate claim decisions in writing with clear explanations.

Question 4

When a claimant signs a release of liability in exchange for a settlement check, this document is legally known as:

Accepted Answer

A full and final release

Answer

A full and final release extinguishes all claims related to the loss once the claimant accepts the settlement payment.

Question 5

An insurer issues a 'reservation of rights' letter when:

Accepted Answer

It is investigating a claim where coverage may not apply

Answer

A reservation of rights letter notifies the insured that the insurer is handling the claim while preserving its right to deny coverage if a policy exclusion applies.

(CAADE) Certified Automotive Appraisal and Damage Estimator Practice Test

(CAADE) Certified Automotive Appraisal and Damage Estimator Practice Test

CAADE Insurance and Legal Procedures 2