CCA Laws, Regulations, and Ethics 2 — Questions and Answers
Question 1: Under most state insurance codes, what is the maximum number of days an insurer has to acknowledge receipt of a claim after it is filed?
- 5 days
- 10 days (Correct answer)
- 15 days
- 30 days
Correct answer: 10 days
Most state unfair claims settlement practice acts require acknowledgment of a claim within 10 days of receipt.
Question 2: Which federal law prohibits insurance companies from using race, color, religion, sex, or national origin as a basis for discriminatory claims handling?
- McCarran-Ferguson Act
- Civil Rights Act of 1964 (Correct answer)
- Fair Housing Act
- Equal Credit Opportunity Act
Correct answer: Civil Rights Act of 1964
The Civil Rights Act of 1964 prohibits discrimination in insurance services based on protected characteristics.
Question 3: A claims adjuster who inflates repair estimates to earn higher commissions is committing:
- Misrepresentation
- Twisting
- Insurance fraud (Correct answer)
- Rebating
Correct answer: Insurance fraud
Inflating estimates for personal financial gain constitutes insurance fraud, a criminal offense.
Question 4: The principle requiring adjusters to handle similarly situated claims in a consistent and uniform manner is known as:
- Good faith
- Equity doctrine
- Consistent claims handling (Correct answer)
- Proximate cause rule
Correct answer: Consistent claims handling
Consistent claims handling ensures that comparable claims are processed with the same standards to avoid discriminatory treatment.
Question 5: When an insurer denies a claim, which of the following must typically be provided to the claimant?
- A verbal explanation only
- A written denial with the specific policy provisions relied upon (Correct answer)
- A denial without explanation to avoid waiver
- An offer to renegotiate the premium
Correct answer: A written denial with the specific policy provisions relied upon
State regulations generally require written denial letters citing the specific policy language or exclusions supporting the decision.
Question 6: Which doctrine holds that an insurer may be legally responsible for claims paid to a third party that the insured has already paid, if the insurer failed to timely accept a settlement within policy limits?
- Subrogation doctrine
- Excess judgment doctrine (Correct answer)
- Collateral source rule
- Made whole doctrine
Correct answer: Excess judgment doctrine
The excess judgment doctrine exposes insurers to judgments exceeding policy limits when they unreasonably refuse to settle within limits.
Question 7: A claimant alleges an adjuster promised a settlement amount but later reduced the offer. The adjuster may face liability for:
- Promissory estoppel (Correct answer)
- Comparative negligence
- Contributory negligence
- Subrogation
Correct answer: Promissory estoppel
Promissory estoppel holds a party to a promise when another party has reasonably relied on it to their detriment.
CCA Laws, Regulations, and Ethics 2
Under most state insurance codes, what is the maximum number of days an insurer has to acknowledge receipt of a claim after it is filed?