CAIA Legal & Ethical Considerations in Insurance Adjusting 3

Question 1

An adjuster receives a gift from a body shop owner who regularly receives referrals. Accepting the gift most likely violates which ethical principle?

Accepted Answer

Conflict of interest / impartiality

Answer

Accepting gifts from vendors creates a conflict of interest that can compromise the adjuster's impartiality in claim handling and vendor selection.

Question 2

A claimant with a legitimate total-loss claim is offered a settlement far below fair market value. Under which legal theory could the insurer face extra-contractual damages?

Accepted Answer

First-party bad faith

Answer

First-party bad faith occurs when an insurer unreasonably refuses to pay a valid claim, potentially exposing the insurer to damages beyond policy limits.

Question 3

When an adjuster suspects staged accident fraud, what is the most appropriate immediate action?

Accepted Answer

Refer the matter to the Special Investigations Unit (SIU)

Answer

Suspected fraud must be referred to the SIU for investigation rather than acted on unilaterally by the line adjuster.

Question 4

An insured's policy lapses due to non-payment two days before an accident. The insured later pays the premium. What coverage determination applies?

Accepted Answer

No coverage exists because the policy was lapsed at the time of loss

Answer

A lapsed policy provides no coverage for losses occurring during the lapse period; reinstatement generally applies prospectively unless the policy states otherwise.

Question 5

Which of the following best describes the legal concept of 'material misrepresentation' in an auto insurance application?

Accepted Answer

A false statement that would have affected the insurer's decision to issue or price the policy

Answer

A material misrepresentation is a false statement about a fact that would have influenced the insurer's underwriting decision, potentially voiding the policy.

(CAIA) Certified Automotive Insurance Adjuster Practice Test

(CAIA) Certified Automotive Insurance Adjuster Practice Test

CAIA Legal & Ethical Considerations in Insurance Adjusting 3