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Catastrophe Claims Handling 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.

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  1. When a catastrophe event is declared, which organization typically assigns a CAT code to track claims from that event?

    Answer: ISO (Insurance Services Office)

    ISO assigns catastrophe codes (CAT codes) to qualifying events so insurers can uniformly identify, track, and report losses from the same occurrence.

  2. A homeowner's policy has a named-storm deductible of 2% of dwelling value ($300,000). A hurricane causes $18,000 in damage. What does the insurer owe after the deductible?

    Answer: $12,000

    The named-storm deductible is 2% × $300,000 = $6,000, so the insurer pays $18,000 − $6,000 = $12,000.

  3. In catastrophe operations, what is the primary purpose of a 'loss run' report?

    Answer: To summarize open and closed claims, reserves, and paid losses for a given event or account

    A loss run provides a summary of claim activity—counts, reserves, and payments—used by management to monitor CAT event performance.

  4. Which type of additional living expense (ALE) is NOT typically covered under a standard homeowners policy following a covered catastrophe?

    Answer: Mortgage payments on the damaged home

    ALE covers increased costs of living above normal expenses; mortgage payments are a pre-existing obligation, not an increased living cost caused by the loss.

  5. During a hurricane CAT deployment, an adjuster is assigned a zip-code territory. What is the main reason claims are assigned by geography?

    Answer: To minimize drive time and maximize the number of inspections completed per day

    Geographic territory assignment reduces travel time between inspections, enabling adjusters to handle more claims efficiently during a high-volume event.

  6. A roof covered with 20-year architectural shingles that are 10 years old is destroyed in a tornado. The replacement cost is $10,000. Using straight-line depreciation, what is the actual cash value (ACV) of the roof?

    Answer: $5,000

    With 10 of 20 years used (50% depreciation), ACV = $10,000 × (1 − 0.50) = $5,000.

  7. Which doctrine holds that an insurer who pays a property claim can pursue recovery against the negligent third party who caused the loss?

    Answer: Subrogation

    Subrogation gives the insurer the right to stand in the insured's shoes and recover the amount paid from the responsible third party.