Damage Evaluation and Settlement Procedures Flashcards

Under the principle of indemnity, what is the maximum amount an insured should receive from a property insurance settlement?

Answer: An amount that restores the insured to the same financial position as before the loss

The principle of indemnity limits recovery to the amount that restores the insured to their pre-loss financial position, preventing profit from insurance.

An adjuster is evaluating a roof claim where half the shingles are damaged. The insurer's policy pays replacement cost value. What issue may arise regarding undamaged portions?

Answer: The insurer must replace the entire roof to ensure matching appearance

Many states and policies require matching of undamaged materials when replacement of damaged portions results in a visually inconsistent appearance, obligating full roof replacement.

What is the role of an independent medical examination (IME) in a bodily injury claim?

Answer: To provide the insurer with an objective medical opinion on the nature, extent, and causation of claimed injuries

An IME is conducted by a physician selected by the insurer to provide an independent assessment of the claimant's injuries, causation, and required treatment.

In property claims, what does 'betterment' refer to?

Answer: A deduction applied when repairs result in the damaged property being in better condition than before the loss

Betterment is a reduction in settlement when repairs or replacements leave the property in a superior condition to its pre-loss state, preventing the insured from profiting.

Which of the following best describes a structured settlement in a personal injury claim?

Answer: A series of periodic payments made over time rather than a single lump sum

A structured settlement provides the claimant with periodic payments over an agreed schedule, often tax-advantaged, instead of a single lump-sum payment.

When an adjuster uses the 'cost approach' to value commercial property, what three components are combined?

Answer: Land value, building replacement cost, and accumulated depreciation

The cost approach values property by adding land value to the depreciated replacement cost of improvements (replacement cost minus accumulated depreciation).

A liability claim involves multiple injured parties whose total damages exceed the policy limits. How should an adjuster handle fund allocation?

Answer: Consult with legal counsel and potentially interplead the funds with the court for equitable distribution

When policy limits are insufficient to cover multiple claimants, adjusters should consult legal counsel and may use interpleader to let a court equitably distribute available funds.