CALA Claims Handling Procedures & Ethics 3 — Questions and Answers
Question 1: An insured submits a theft claim but the police report does not match the timeline provided in the sworn statement. What should the adjuster do first?
- Pay the claim because police reports are not always accurate
- Deny the claim immediately based on the inconsistency
- Request a recorded statement to clarify the discrepancy before making a coverage decision (Correct answer)
- Refer the case directly to law enforcement for prosecution
Correct answer: Request a recorded statement to clarify the discrepancy before making a coverage decision
Inconsistencies should be explored through additional investigation, including a recorded statement, before making a coverage determination.
Question 2: What does the principle of 'utmost good faith' (uberrimae fidei) require of an adjuster during claims handling?
- Maximizing claim payments to maintain customer satisfaction
- Honest, transparent, and fair dealing in all aspects of the claims process (Correct answer)
- Following insurer internal policies even when they conflict with state law
- Settling claims as quickly as possible regardless of investigation completeness
Correct answer: Honest, transparent, and fair dealing in all aspects of the claims process
Utmost good faith requires both parties—insurer and insured—to deal honestly and transparently without concealment or misrepresentation.
Question 3: During a bodily injury claim, an adjuster receives a demand letter from the claimant's attorney that exceeds policy limits. What is the adjuster's priority obligation?
- Immediately accept the demand to avoid bad faith exposure
- Notify the insured that the demand exceeds policy limits so they can seek personal counsel (Correct answer)
- Reject the demand without further communication
- Request a 90-day extension before responding
Correct answer: Notify the insured that the demand exceeds policy limits so they can seek personal counsel
When demands exceed policy limits, the adjuster must promptly notify the insured of potential personal exposure so they can retain independent counsel.
Question 4: An adjuster is offered a gift by a contractor who frequently works on insured properties. The most ethical course of action is to:
- Accept small gifts under $25 as customary business courtesies
- Decline the gift to avoid any actual or perceived conflict of interest (Correct answer)
- Accept the gift but disclose it to the supervisor
- Refuse future assignments involving that contractor
Correct answer: Decline the gift to avoid any actual or perceived conflict of interest
Accepting gifts from contractors can create conflicts of interest that compromise objectivity; the ethical standard is to decline entirely.
Question 5: A claimant speaks limited English and is having difficulty understanding settlement terms. What is the adjuster's ethical responsibility?
- Proceed with settlement because the claimant signed the release
- Arrange for translation or interpreter services to ensure informed consent (Correct answer)
- Deny the claim because communication is the claimant's responsibility
- Reduce the settlement amount due to the communication difficulty
Correct answer: Arrange for translation or interpreter services to ensure informed consent
Fair claims handling requires that claimants fully understand settlement terms, which may require providing translation or interpreter assistance.
Question 6: Under most state laws, once a proof of loss is submitted, within how many days must an insurer accept or deny a claim?
- 10 days
- 15 days
- 30 days (Correct answer)
- 90 days
Correct answer: 30 days
Most state regulations require insurers to accept or deny a claim within 30 days after receiving a complete proof of loss.
Question 7: Which documentation is most critical for an adjuster to obtain when closing a property damage claim?
- A verbal agreement from the insured
- A signed proof of loss and signed release or settlement agreement (Correct answer)
- An email confirmation from the adjuster's manager
- A contractor's preliminary estimate
Correct answer: A signed proof of loss and signed release or settlement agreement
Signed proof of loss and a signed release or settlement agreement create the legal record that the claim has been properly resolved.
CALA Claims Handling Procedures & Ethics 3
An insured submits a theft claim but the police report does not match the timeline provided in the sworn statement.
What should the adjuster do first?