CALA Legal & Regulatory Compliance in Auto Insurance 4

Question 1

Which legal principle requires a loss adjuster to treat all similarly situated claimants consistently to avoid discrimination claims?

Accepted Answer

Equal treatment obligation

Answer

Insurers must apply consistent standards to similarly situated claimants; differential treatment without justification can constitute unlawful discrimination.

Question 2

A claimant submits a fraudulent repair invoice for auto damage. Under most state insurance fraud statutes, this constitutes:

Accepted Answer

Insurance fraud, which is a criminal offense

Answer

Submitting a fraudulent insurance claim is a criminal offense under state insurance fraud statutes, punishable by fines and imprisonment.

Question 3

What is the legal significance of an 'Examination Under Oath' (EUO) clause in an auto insurance policy?

Accepted Answer

The insured is obligated to submit to questioning, and refusal can void coverage

Answer

An EUO is a contractual condition precedent to coverage, and an insured's refusal to comply can be grounds for denial of the claim.

Question 4

Under what circumstance can an insurer exercise the right of subrogation after paying an auto claim?

Accepted Answer

When a negligent third party caused the loss, allowing the insurer to recover from that party

Answer

Subrogation allows an insurer that paid a claim to step into the insured's shoes and pursue recovery from the at-fault third party responsible for the loss.

Question 5

Which provision in an auto insurance policy allows an insurer to void the policy from inception if the insured made material misrepresentations on the application?

Accepted Answer

Rescission

Answer

Rescission voids the policy ab initio (from the beginning) when the insurer proves material misrepresentation on the application, as if the policy never existed.

(CALA) Certified Automotive Loss Adjuster Practice Test

(CALA) Certified Automotive Loss Adjuster Practice Test

CALA Legal & Regulatory Compliance in Auto Insurance 4