CAIA Legal & Ethical Considerations in Insurance Adjusting 4

Question 1

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

Accepted Answer

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

Answer

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

Question 2

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

Accepted Answer

Potentially voidable when the minor reaches majority

Answer

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

Question 3

The principle of indemnity in auto insurance means that:

Accepted Answer

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

Answer

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

Question 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?

Accepted Answer

The insured's recovery is reduced by 40%

Answer

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

Question 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:

Accepted Answer

Lack of mutual assent / contract of adhesion

Answer

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

(CAIA) Certified Automotive Insurance Adjuster Practice Test