Property Damage Assessment 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 Property Damage Assessment flashcards as text
A landlord's policy covers a rental dwelling damaged by a tenant's cooking fire. The tenant is found negligent. Can the insurer subrogate against the tenant?
Answer: It depends on the policy — some landlord policies waive subrogation rights against tenants
Some landlord policies include a waiver of subrogation against tenants, treating them as implied insureds; others preserve the insurer's right to pursue the negligent tenant — the policy language controls.
When does a 'concurrent causation' issue arise in a property damage claim?
Answer: When both a covered peril and an excluded peril contribute to the same loss
Concurrent causation occurs when a covered peril and an excluded peril combine to produce a single loss, creating a coverage dispute that state courts and anti-concurrent causation clauses address differently.
An adjuster identifies mold behind damaged drywall during a water loss inspection. What is the most appropriate next step?
Answer: Document the mold and determine whether the policy includes or excludes mold remediation coverage
The adjuster must document the mold, verify whether the policy provides mold coverage or has a mold exclusion or sublimit, and then handle remediation costs accordingly.
Which of the following describes 'functional obsolescence' when depreciating a structure?
Answer: A loss in value due to outdated design, layout, or features that reduce utility
Functional obsolescence reduces a property's value due to outdated features (e.g., low ceilings, poor floor plans) that make it less desirable even if it is physically sound.
A fire destroys inventory in a retail store. The business owner has a commercial property policy with a coinsurance clause of 80%. The building was insured for $400,000 but its replacement cost was $600,000. How does the coinsurance clause affect a $100,000 inventory loss?
Answer: The insured collects only a proportionate share: ($400k / $480k) × $100k
The coinsurance formula is (Amount Carried ÷ Amount Required) × Loss; required insurance = 80% × $600k = $480k, so the insured recovers ($400k ÷ $480k) × $100k ≈ $83,333.
A claim involves damage to a historic home's plaster walls. Standard drywall would be cheaper but would not match the original construction. What should the adjuster consider?
Answer: Consider the policy's obligation to restore like kind and quality, which may require plaster repair
Most policies require restoration to 'like kind and quality'; for a historic home with plaster walls, this standard may obligate the insurer to cover the higher cost of proper plaster repair.
What is the primary function of a 'reservation of rights' letter sent by an insurer to an insured?
Answer: To notify the insured that the insurer is investigating the claim while reserving the right to deny based on potential coverage issues
A reservation of rights letter allows the insurer to continue investigating and even defending a claim without waiving its right to later deny coverage if a policy exclusion or condition applies.