Claims Handling Procedures & Ethics Flashcards
7 cards from real CALA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Claims Handling Procedures & Ethics flashcards as text
An adjuster is handling a workers' compensation claim and suspects the injured employee is working another job while collecting benefits. What is the appropriate action?
Answer: Conduct a covert investigation and document findings before taking any action
Suspected fraud requires a documented, lawful investigation before benefits are altered, ensuring due process and legal compliance.
When handling a liability claim involving multiple claimants and limited policy limits, how should the adjuster prioritize payments?
Answer: Coordinate with legal counsel to ensure equitable distribution that avoids bad faith exposure
Interpleader actions or coordinated legal strategy ensure policy limits are distributed fairly and minimize bad faith exposure when limits are insufficient for all claims.
A claimant's attorney sends a 30-day demand letter threatening litigation if settlement is not reached. The adjuster believes the claim value is lower than demanded. What is the best approach?
Answer: Respond within the deadline with a counter-offer supported by documented valuation
Responding with a documented counter-offer demonstrates good faith negotiation and prevents bad faith allegations from missing the deadline entirely.
An adjuster is asked by a supervisor to settle a claim for less than its known value to meet quarterly budget targets. The correct ethical response is to:
Answer: Refuse and document the directive, escalating to compliance or legal if necessary
Settling claims below known value for financial reasons violates state unfair claims practices laws and adjuster ethical obligations; refusal and escalation is required.
When calculating actual cash value (ACV) for a damaged vehicle, which factor is NOT typically considered?
Answer: Cost of repairs needed before the loss
ACV is based on pre-loss fair market value accounting for depreciation, not on repairs the vehicle needed before the loss event.
A claimant presents a medical bill that includes treatment unrelated to the covered accident. How should the adjuster handle this?
Answer: Pay only the portion of the bill related to the covered accident after documented review
Adjusters must review medical bills to pay only for treatment causally related to the covered loss, documenting the basis for any reductions.
Which of the following best describes the concept of 'bad faith' in claims handling?
Answer: An insurer unreasonably denying, delaying, or underpaying a claim without proper basis
Bad faith occurs when an insurer acts unreasonably or without proper basis in denying, delaying, or underpaying valid claims, exposing the insurer to extracontractual damages.