Catastrophe Claims Handling Flashcards

A CAT adjuster working in Texas after a hailstorm must comply with state-specific prompt payment laws. Under the Texas Insurance Code, within how many days must an insurer acknowledge receipt of a claim?

Answer: 15 days

Texas Insurance Code §542 requires insurers to acknowledge a claim within 15 days of receipt, with additional deadlines for acceptance or denial.

After a major earthquake, an insured's home is red-tagged by the city as unsafe to occupy. The home is structurally repairable but prohibited from re-entry. Which coverage pays for the insured's temporary housing?

Answer: Additional living expenses (ALE) under the homeowners policy, because the civil authority order resulted from a covered loss

When a civil authority prohibits use of a dwelling as a direct result of a covered peril, ALE coverage applies to pay increased living costs during the repair period.

A CAT adjuster suspects fraud after noticing that a claimed swimming pool never existed based on satellite imagery taken before the hurricane. What is the first step the adjuster should take?

Answer: Document the finding thoroughly and refer the claim to the Special Investigations Unit (SIU)

Suspected fraud should be referred to the SIU for a formal investigation; the adjuster must document findings but not conduct or conclude the fraud investigation independently.

Under the 'ordinance or law' coverage endorsement, which of the following additional costs would be covered after a covered CAT loss?

Answer: The cost to bring undamaged portions of the structure up to current building codes during required reconstruction

Ordinance or law coverage pays the incremental cost to rebuild or repair to current code standards, covering the undamaged portions that must be upgraded when reconstruction is triggered.

A homeowner disputes the adjuster's scope of loss after a tornado. The policy contains an appraisal clause. Which statement correctly describes the appraisal process?

Answer: Each party selects a competent appraiser; the two appraisers select an umpire, and agreement by any two of the three determines the amount of loss

The standard appraisal clause uses a two-appraiser/one-umpire panel where a majority (two of three) must agree on the loss amount, making the award binding.

A commercial property insured under a Business Owner's Policy (BOP) suffers tornado damage. The insured has a $1,000 deductible and $500,000 building limit. Covered damage totals $475,000. What does the insurer owe for the building?

Answer: $474,000

The insurer pays the covered loss minus the deductible: $475,000 − $1,000 = $474,000, which is within the policy limit.

Which document serves as the primary record of a field adjuster's inspection findings, damage scope, and cost estimate during a catastrophe claim?

Answer: The Xactimate or similar estimating software report, which itemizes all line items of damage and cost

Xactimate and similar platforms are the industry-standard tools adjusters use to document damage scope and generate itemized repair cost estimates that become the basis for settlement.