CAP Claims Processing & Investigation 3 — Questions and Answers
Question 1: Under most state unfair claims settlement practice statutes, an insurer is required to acknowledge receipt of a claim within:
- 10 business days
- 30 calendar days
- A reasonable time, typically 10 to 15 working days (Correct answer)
- 60 days or upon policy renewal
Correct answer: A reasonable time, typically 10 to 15 working days
Most state statutes require prompt acknowledgment, generally within 10 to 15 working days, to prevent delay tactics that harm claimants.
Question 2: An Examination Under Oath (EUO) differs from a recorded statement primarily because an EUO:
- Is conducted by the claimant's attorney only
- Is voluntary and can be refused without consequence
- Is a contractual right of the insurer and refusal may void coverage (Correct answer)
- Requires a court order to compel participation
Correct answer: Is a contractual right of the insurer and refusal may void coverage
Most policies grant the insurer the right to require an EUO as a condition of coverage; the insured's refusal to comply can result in a denial of the claim.
Question 3: When an insurer's investigation reveals comparative negligence by the claimant in a liability claim, the most likely outcome is:
- Full denial of the claim regardless of degree of fault
- Reduction of the settlement proportional to the claimant's share of fault (Correct answer)
- Transfer of the entire liability to the third-party tortfeasor
- Automatic referral to the Special Investigations Unit
Correct answer: Reduction of the settlement proportional to the claimant's share of fault
Under comparative negligence systems, damages are apportioned based on each party's percentage of fault, reducing (but not eliminating) the claimant's recovery.
Question 4: A 'coverage opinion' issued during claims handling is best described as:
- The insurer's public announcement of claim settlement terms
- A legal analysis evaluating whether a specific loss triggers policy coverage (Correct answer)
- A premium adjustment document sent to the insured
- The adjuster's estimate of repair costs
Correct answer: A legal analysis evaluating whether a specific loss triggers policy coverage
A coverage opinion analyzes policy language, applicable law, and the facts of the loss to advise the insurer on whether the claim is covered.
Question 5: In the context of bad faith insurance litigation, the insurer's conduct most likely to trigger liability is:
- Requesting additional documentation before issuing payment
- Denying a claim after conducting a thorough investigation
- Failing to settle a claim within policy limits when liability is reasonably clear (Correct answer)
- Assigning the claim to an independent adjuster
Correct answer: Failing to settle a claim within policy limits when liability is reasonably clear
Refusing to settle within policy limits when liability is clear exposes the insured to excess judgment, which courts have consistently held constitutes bad faith.
Question 6: When investigating a fire loss, which document is typically the first requested to establish the insured's ownership interest in the damaged property?
- Utility bills
- Deed or mortgage statement (Correct answer)
- Tax return
- Insurance binder
Correct answer: Deed or mortgage statement
A deed or mortgage statement confirms the insured's insurable interest in real property, which is a prerequisite to any valid property insurance claim.
Question 7: In liability claims, 'damages' are categorized into compensatory and punitive. Punitive damages are awarded primarily to:
- Reimburse the claimant for medical expenses
- Compensate for lost future earnings
- Punish the defendant for egregious or malicious conduct (Correct answer)
- Cover attorney fees in excess of policy limits
Correct answer: Punish the defendant for egregious or malicious conduct
Punitive damages serve a deterrent function, punishing defendants whose conduct is found to be intentional, malicious, or recklessly indifferent to others' rights.
CAP Claims Processing & Investigation 3
Under most state unfair claims settlement practice statutes, an insurer is required to acknowledge receipt of a claim within: