CAP Claims Processing & Investigation 2 — Questions and Answers
Question 1: What is the primary purpose of a recorded statement taken from a claimant during the investigation phase?
- To lock the claimant into a version of events early in the process (Correct answer)
- To determine the claimant's attorney of record
- To establish premium payment history
- To verify the policy renewal date
Correct answer: To lock the claimant into a version of events early in the process
Recorded statements capture the claimant's account of the loss while details are fresh and establish a baseline that can be compared against other evidence.
Question 2: Which of the following documents serves as the insured's formal notice to the insurer detailing the scope and value of a covered loss?
- Declaration page
- Proof of loss (Correct answer)
- Reservation of rights letter
- Subrogation waiver
Correct answer: Proof of loss
A proof of loss is the insured's sworn statement describing the circumstances, nature, and dollar amount of the claimed loss.
Question 3: When an adjuster identifies a claim that may fall outside policy coverage, the appropriate immediate action is to:
- Deny the claim outright without further investigation
- Issue a reservation of rights letter while continuing the investigation (Correct answer)
- Request that the insured retain private counsel
- Close the file and notify underwriting
Correct answer: Issue a reservation of rights letter while continuing the investigation
A reservation of rights letter protects the insurer's right to deny coverage while allowing the investigation to continue without waiving coverage defenses.
Question 4: In property claims, 'actual cash value' (ACV) is most commonly calculated as:
- Replacement cost minus policy deductible
- Replacement cost minus depreciation (Correct answer)
- Original purchase price plus inflation adjustment
- Fair market value plus consequential damages
Correct answer: Replacement cost minus depreciation
ACV equals the cost to replace the damaged property with a like kind and quality item, reduced by accumulated depreciation.
Question 5: An independent adjuster (IA) differs from a staff adjuster primarily because the IA:
- Has authority to bind coverage on behalf of the insurer
- Is employed directly by the policyholder
- Is contracted per-claim rather than employed by the insurer (Correct answer)
- Cannot issue payments above a set threshold
Correct answer: Is contracted per-claim rather than employed by the insurer
Independent adjusters are third-party contractors hired on a fee-per-claim basis, giving insurers flexible surge capacity without adding permanent staff.
Question 6: Which ISO database is most commonly used by claims professionals to identify potential fraud through cross-insurer claim matching?
- CLUE (Comprehensive Loss Underwriting Exchange)
- ClaimSearch (Correct answer)
- MVR (Motor Vehicle Record)
- NICB (National Insurance Crime Bureau) HotSheet
Correct answer: ClaimSearch
ISO ClaimSearch aggregates claim data from thousands of insurers, allowing adjusters to identify duplicate claims, prior losses, and suspicious patterns across carriers.
Question 7: Subrogation in insurance claims refers to the insurer's right to:
- Increase the premium after a paid claim
- Pursue a third party responsible for the insured's loss after paying the claim (Correct answer)
- Cancel the policy following repeated claims
- Require the insured to submit to an independent medical examination
Correct answer: Pursue a third party responsible for the insured's loss after paying the claim
Subrogation allows the insurer, after compensating its insured, to step into the insured's shoes and recover that payment from the negligent third party.
CAP Claims Processing & Investigation 2
What is the primary purpose of a recorded statement taken from a claimant during the investigation phase?