CALA Legal & Regulatory Compliance in Auto Insurance 2

Question 1

Under the Fair Claims Settlement Practices Act, what is the maximum number of days an insurer typically has to acknowledge receipt of a claim after notification?

Accepted Answer

10 days

Answer

Most state fair claims settlement regulations require insurers to acknowledge receipt of a claim within 10 days of notification.

Question 2

Which federal law prohibits insurers from using race, color, religion, or national origin as factors in underwriting or claims handling?

Accepted Answer

Civil Rights Act of 1964

Answer

The Civil Rights Act of 1964 prohibits discrimination based on race, color, religion, sex, or national origin, which applies to insurance claims handling.

Question 3

When a claimant alleges bad faith against an auto insurer, which element is typically NOT required to be proven?

Accepted Answer

The insurer acted with intent to defraud

Answer

Bad faith does not require proof of intent to defraud; unreasonable denial with knowledge of the lack of reasonable basis is sufficient in most jurisdictions.

Question 4

What does the McCarran-Ferguson Act of 1945 primarily establish regarding insurance regulation?

Accepted Answer

State primacy in regulating the insurance industry

Answer

McCarran-Ferguson grants states the primary authority to regulate insurance, limiting federal intervention unless state law does not adequately address the matter.

Question 5

A loss adjuster discovers that a claimant's attorney sent a demand letter but the insurer has not responded within the state's required timeframe. This exposes the insurer to:

Accepted Answer

Extra-contractual damages

Answer

Failure to respond to settlement demands within required timeframes can expose insurers to extra-contractual damages, including bad faith liability beyond policy limits.

(CALA) Certified Automotive Loss Adjuster Practice Test

(CALA) Certified Automotive Loss Adjuster Practice Test

CALA Legal & Regulatory Compliance in Auto Insurance 2