CALA Adjuster Professional Ethics 5 — Questions and Answers
Question 1: An adjuster is handling a total loss claim and realizes the actual cash value they calculated is higher than the company's reserve. The adjuster should:
- Adjust the ACV downward to match the reserve without disclosing the change
- Report the accurate ACV calculation and update the reserve accordingly (Correct answer)
- Split the difference between the reserve and the calculated ACV
- Delay the claim until the reserve can be increased without scrutiny
Correct answer: Report the accurate ACV calculation and update the reserve accordingly
Adjusters must report accurate valuations regardless of reserve implications; manipulating calculations to match reserves is fraudulent.
Question 2: A claimant who is elderly and appears confused is attempting to negotiate their own settlement. Ethically, the adjuster must:
- Proceed with negotiations since the claimant legally consented to handle the claim
- Ensure the claimant understands the process and consider recommending they seek assistance from a trusted family member or advisor (Correct answer)
- Expedite settlement to protect the claimant from a prolonged process
- Require the claimant to obtain a guardian before proceeding
Correct answer: Ensure the claimant understands the process and consider recommending they seek assistance from a trusted family member or advisor
Adjusters must ensure vulnerable claimants genuinely understand the claims process and their options without exploiting cognitive limitations.
Question 3: Which of the following constitutes 'bad faith' conduct by an automotive loss adjuster?
- Taking 30 days to complete a complex multi-vehicle investigation
- Knowingly misrepresenting the policy's coverage to avoid a valid payment (Correct answer)
- Requesting additional documentation to verify a large loss claim
- Scheduling a re-inspection when initial photographs are unclear
Correct answer: Knowingly misrepresenting the policy's coverage to avoid a valid payment
Intentionally misrepresenting policy terms to avoid a valid payment obligation is a textbook example of insurance bad faith.
Question 4: An adjuster who is also a licensed contractor provides unsolicited repair advice to a claimant and then recommends specific contractors. This situation raises concerns about:
- Unauthorized practice of the contracting trade
- Conflicts of interest and potential steering violations (Correct answer)
- The adjuster's competence to evaluate automotive losses
- Violation of the insured's right to privacy
Correct answer: Conflicts of interest and potential steering violations
Using professional expertise outside one's adjuster role to recommend specific contractors may create undisclosed financial conflicts and steering issues.
Question 5: When an insured and a third-party claimant make competing claims about how an accident occurred, the adjuster's ethical responsibility is to:
- Automatically favor the insured since they are the paying customer
- Conduct an impartial investigation and base findings solely on evidence (Correct answer)
- Favor the third party to avoid bad faith allegations
- Settle both claims equally to avoid making a liability determination
Correct answer: Conduct an impartial investigation and base findings solely on evidence
Adjusters must evaluate all claims impartially based on evidence, with no inherent bias toward either the insured or third-party claimants.
Question 6: What is the purpose of an adjuster maintaining detailed, contemporaneous claim notes?
- To create a record that can be edited later if the claim becomes disputed
- To document all actions, communications, and decisions transparently and accurately (Correct answer)
- To provide a basis for denying claims if the insured cannot disprove the notes
- To satisfy internal productivity metrics required by most insurers
Correct answer: To document all actions, communications, and decisions transparently and accurately
Accurate contemporaneous notes create a transparent record of the claims process and demonstrate good faith handling to regulators and courts.
Question 7: An adjuster who discovers their insurer has a blanket policy of automatically denying all claims over $50,000 pending litigation should:
- Follow the policy since company directives supersede ethical obligations
- Refuse to implement the policy and report the practice to the state insurance department if internal remedies fail (Correct answer)
- Apply the policy only to claimants who have retained attorneys
- Request a written directive before implementing the policy
Correct answer: Refuse to implement the policy and report the practice to the state insurance department if internal remedies fail
Systematic claim denial practices that violate good faith obligations must be reported to regulators when internal remedies are exhausted.
CALA Adjuster Professional Ethics 5
An adjuster is handling a total loss claim and realizes the actual cash value they calculated is higher than the company's reserve.
The adjuster should: