Catastrophe Adjusting & Disaster Response Flashcards

A policyholder in a declared disaster area submits a claim for Additional Living Expenses (ALE). The adjuster should verify that:

Answer: The home is uninhabitable due to covered damage and the ALE expenses are reasonable and necessary

ALE coverage requires that the home be uninhabitable due to a covered loss and that the claimed expenses be both reasonable and necessary.

During a CAT deployment, an adjuster discovers a property where the insured has filed claims with both their homeowners insurer and NFIP. The adjuster should:

Answer: Coordinate with the NFIP adjuster to ensure no overlap in payments for the same damaged items

When both a homeowners policy and NFIP policy are in force, adjusters must coordinate to ensure damages are properly allocated and not paid twice.

An insured's home is condemned by local authorities after an earthquake. Under most homeowners policies, the insurer's obligation is to pay:

Answer: The cost to repair or replace the covered physical damage, not the value attributed to the condemnation order itself

The insurer pays for the physical damage caused by the covered peril; loss of value due to condemnation is generally not a covered loss under standard property policies.

In a mass CAT event, triage of claims by severity is important primarily because:

Answer: It ensures the most severely displaced and vulnerable policyholders receive priority attention and faster payments

Claim triage prioritizes total losses and displaced families, ensuring those in greatest need receive faster response while managing adjuster resources efficiently.

When adjusting a business interruption claim after a natural disaster, 'period of restoration' refers to:

Answer: The time required to repair or replace damaged property with reasonable speed, during which lost income is covered

The period of restoration is the time it should reasonably take to repair or replace damaged property, which defines the covered business income loss period.

A CAT adjuster encounters a property with pre-existing damage unrelated to the current disaster. The proper approach is to:

Answer: Document and segregate pre-existing damage from damage caused by the current covered event

Adjusters must carefully document and exclude pre-existing damage from the current claim, paying only for losses caused by the covered event.

Under the NFIP, the 'Increased Cost of Compliance' (ICC) coverage helps policyholders pay for:

Answer: The cost to bring a substantially damaged structure into compliance with current floodplain management ordinances

ICC coverage under NFIP helps pay the added cost of rebuilding a substantially damaged home to meet current local floodplain ordinance requirements.