CAIA Negotiation and Settlement 4

Question 1

An insured has a $1,000 deductible. A third party's vehicle sustained $3,500 in damage. The insured is 100% at fault. How much does the insured's liability insurer pay the third party?

Accepted Answer

$3,500 — deductibles do not apply to liability payments

Answer

$2,500 after applying the deductible

Answer

$1,000 as the maximum liability deductible payment

Answer

$3,500 minus comparative fault percentage

Question 2

What is 'subrogation' and how does it affect the settlement process?

Accepted Answer

It gives the insurer the right to recover payments made to its insured from a negligent third party

Answer

It allows the claimant to sue the adjuster personally after settlement

Answer

It allows the insured to collect twice — once from their insurer and once from the at-fault party

Answer

It is the process of transferring title of a total loss vehicle to the insurer

Question 3

During a multi-party accident negotiation, one claimant settles but another does not. What document protects the insurer when settling with just one claimant?

Accepted Answer

A partial release or individual release with specific language protecting the insurer's rights as to non-settling claimants

Answer

A global release covering all claimants simultaneously

Answer

A reservation of rights letter sent to the settling claimant

Answer

A letter of protection from the claimant's medical provider

Question 4

A claimant demands payment for 'loss of use' while their vehicle is being repaired. What does this typically cover?

Accepted Answer

Rental car expenses or the daily value of being without the vehicle during covered repairs

Answer

The cost of replacing the claimant's lost wages during the repair period

Answer

The loss of resale value due to the accident history

Answer

Any decrease in the vehicle's ACV during the repair period

Question 5

What is the significance of a 'Mary Carter agreement' in the context of multi-defendant litigation?

Accepted Answer

A secret settlement agreement between a plaintiff and one defendant that keeps the settling defendant in the suit

Answer

An agreement where Mary Carter's law firm negotiates on behalf of all defendants

Answer

A mandatory mediation agreement required in some states before trial

Answer

A government settlement formula used in federal auto liability cases

Question 6

If a claimant signs a release and later discovers additional injuries, can they typically re-open the claim?

Accepted Answer

Generally no, because a properly executed release extinguishes all claims, known and unknown, unless fraud or mistake is proven

Answer

Yes, all injury claims can always be re-opened within 3 years

Answer

Yes, but only if the additional injuries require surgery

Answer

No, but they may file a separate new claim for the same accident

Question 7

An adjuster uses 'anchoring' during negotiations. What does this technique involve?

Accepted Answer

Presenting an initial offer or number first to influence the reference point for the entire negotiation

Answer

Tying settlement value to the insured's premium payment history

Answer

Refusing to move from an initial offer regardless of new information

Answer

Linking settlement of property damage to resolution of bodily injury simultaneously