Settlement Procedures Flashcards

An adjuster discovers the claimant's vehicle was already damaged prior to the reported accident. The best course of action is to:

Answer: Document pre-existing damage separately and settle only for the new loss

Adjusters must identify and document pre-existing damage to ensure the settlement covers only the loss attributable to the covered event.

What is the purpose of a 'proof of loss' form in the settlement process?

Answer: It is a sworn statement by the insured detailing the loss and claimed amount

A proof of loss is a formal, sworn document the insured submits to substantiate the claim amount and circumstances.

When a claimant refuses to accept an ACV offer for a total loss, the adjuster should:

Answer: Explain the ACV calculation methodology and consider obtaining a second valuation

Transparency about the valuation methodology and willingness to review the calculation helps resolve ACV disputes fairly.

A subrogation waiver in a settlement agreement means the insurer:

Answer: Gives up its right to pursue recovery from a third party

Waiving subrogation means the insurer forfeits its right to recover the paid claim amount from the responsible third party.

Which document formally transfers ownership of a total-loss vehicle to the insurer?

Answer: Title assignment or certificate of title

The certificate of title, properly assigned, transfers vehicle ownership to the insurer as part of the total loss settlement.

An insured has a $500 collision deductible. The repair estimate is $3,200. How much does the insurer pay the shop?

Answer: $2,700

The insurer pays the repair cost minus the deductible: $3,200 − $500 = $2,700.

What is 'betterment' in the context of automotive claim settlements?

Answer: A deduction applied when new parts replace worn components, improving the vehicle's condition beyond pre-loss state

Betterment deductions prevent the insured from profiting from a claim by receiving brand-new parts that replace significantly worn ones.