Negotiation & Settlement Techniques 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 Negotiation & Settlement Techniques flashcards as text
In a multi-claimant accident where aggregate damages exceed policy limits, what approach should the adjuster take?
Answer: Prorate policy limits among all claimants to avoid preferential treatment
When multiple claimants compete for insufficient limits, prorating limits equitably among all claimants is the standard approach to avoid bad faith.
What is 'subrogation' and how does it influence settlement strategy?
Answer: The right of the insurer to recover payments from the responsible third party after paying the insured
Subrogation allows the insurer to step into the insured's shoes and pursue recovery from the at-fault party, directly affecting whether and how quickly to settle.
A claimant alleges permanent disability but surveillance shows them performing strenuous activities. How should the adjuster use this information?
Answer: Use the surveillance evidence in negotiations to reduce settlement value or contest the claim
Surveillance evidence legitimately obtained can be used to challenge exaggerated disability claims and reduce settlement value during negotiation.
What is the primary goal of a 'reservation of rights' letter in the context of negotiation?
Answer: To notify the insured that coverage may not apply while the insurer continues to investigate or defend
A reservation of rights letter preserves the insurer's ability to later deny coverage on specific grounds while still providing a defense or continuing the claim investigation.
Which negotiation style involves seeking a solution that satisfies both parties' core interests rather than compromising on positions?
Answer: Interest-based negotiation
Interest-based negotiation focuses on underlying needs and interests rather than stated positions, often producing more durable settlements.
What is 'advance payment' in property claims and how does it affect negotiations?
Answer: A partial payment made early in the claim to help the insured while the full value is determined, not constituting a final settlement
Advance payments provide early financial relief without waiving coverage defenses, and can reduce claimant pressure during negotiations.
Under the Unfair Claims Settlement Practices Act, what is the minimum standard for responding to a written claim communication?
Answer: Within 10 business days of receipt
Most state unfair claims settlement practice statutes require acknowledgment and response to written communications within 10 business days.