CAIA Negotiation and Settlement 5

Question 1

What is the purpose of an 'independent medical examination' (IME) in a bodily injury settlement negotiation?

Accepted Answer

To obtain an objective medical opinion on the nature, extent, and causation of the claimant's injuries

Answer

To provide free medical treatment to the claimant during litigation

Answer

To determine whether the claimant qualifies for health insurance benefits

Answer

To permanently terminate the claimant's treating physician relationship

Question 2

A claimant's attorney proposes mediation to resolve a disputed liability claim. What is mediation?

Accepted Answer

A voluntary, non-binding process where a neutral third party facilitates settlement discussions

Answer

A binding arbitration process where an arbitrator decides the outcome

Answer

A court-ordered hearing where a judge evaluates liability

Answer

A formal negotiation process where both parties must accept the mediator's recommendation

Question 3

When is it appropriate to offer a claimant the full policy limits without further negotiation?

Accepted Answer

When the damages clearly and substantially exceed the policy limits and liability is reasonably clear

Answer

Whenever the claimant demands policy limits

Answer

Only after a lawsuit has been filed and the first court date passes

Answer

Whenever the insured requests that the adjuster settle the claim quickly

Question 4

What does 'comparative negligence' mean in the context of auto claim settlement?

Accepted Answer

A legal doctrine where the claimant's recovery is reduced by their own percentage of fault

Answer

Comparing the negligence of multiple insurers involved in the claim

Answer

The process of comparing industry standards to determine adjuster negligence

Answer

Comparing a claimant's negligence to that of an average driver

Question 5

A claimant presents medical bills totaling $15,000 for treatment following a minor rear-end accident. The adjuster suspects the treatment was excessive. What is the appropriate response?

Accepted Answer

Request medical records, review treatment reasonableness, and consider a peer review or IME if necessary

Answer

Pay the full $15,000 without review to avoid a bad faith claim

Answer

Deny all medical bills since they appear excessive

Answer

Only pay bills from the first 30 days post-accident

Question 6

What is a 'high-low agreement' in the context of auto insurance litigation?

Accepted Answer

An agreement where the parties set a minimum payment and a maximum payment regardless of the verdict

Answer

An agreement to pay all damages above the low limit and below the high limit

Answer

A tiered payment structure based on the severity of the claimant's injuries

Answer

A settlement agreement that adjusts based on inflation between accident and trial

Question 7

Which of the following best describes the adjuster's duty of good faith during settlement negotiations?

Accepted Answer

To investigate claims thoroughly, evaluate them fairly, and settle meritorious claims promptly for reasonable value

Answer

To minimize every payout regardless of the strength of the claim

Answer

To strictly follow only the written policy language and deny anything ambiguous

Answer

To prioritize the insurer's financial interests over all other considerations