Practice Test Geeks(CAIA) Certified Automotive Insurance Adjuster Practice Test
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Legal & Ethical Considerations in Insurance Adjusting Flashcards

7 cards from real CAIA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Legal & Ethical Considerations in Insurance Adjusting flashcards as text

  1. Which document establishes the minimum standards for fair claim settlement practices in most US states?

    Answer: National Association of Insurance Commissioners (NAIC) Model Unfair Claims Settlement Practices Act

    The NAIC Model Unfair Claims Settlement Practices Act is the foundation for most states' unfair claims practices statutes.

  2. An adjuster settles a minor's injury claim without court approval. This settlement is:

    Answer: Potentially voidable when the minor reaches majority

    Settlements involving minors typically require court approval; otherwise the minor may disaffirm the release upon reaching majority.

  3. The principle of indemnity in auto insurance means that:

    Answer: The insured is restored to their pre-loss financial position, no more

    Indemnity prevents the insured from profiting from a loss by limiting recovery to restoring the pre-loss financial condition.

  4. An adjuster is handling a claim in a comparative negligence state where the insured is found 40% at fault. How is the insured's recovery affected?

    Answer: The insured's recovery is reduced by 40%

    Under comparative negligence, each party's recovery is reduced in proportion to their percentage of fault.

  5. A claimant signs a full and final release without understanding its terms due to a language barrier. This release may be challenged on grounds of:

    Answer: Lack of mutual assent / contract of adhesion

    A release signed without genuine understanding may lack mutual assent, making it voidable for failure of a required element of contract formation.

  6. When an adjuster discovers that an insured committed arson on their own vehicle, the adjuster's duty is to:

    Answer: Deny the claim and file a fraud report with appropriate authorities

    Arson is a criminal act that voids coverage; the adjuster must deny the claim and report the fraud to the SIU and applicable state insurance fraud bureau.

  7. Which statute generally limits the time within which a claimant must file a lawsuit against an insurer for breach of contract?

    Answer: Statute of limitations

    The statute of limitations sets the deadline for filing suit; missing this deadline typically bars the claimant's legal remedy.