Settlement Negotiation Tactics Flashcards
7 cards from real CCP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Settlement Negotiation Tactics flashcards as text
What is the significance of 'Stowers doctrine' in settlement negotiation for a liability insurer?
Answer: It imposes a duty on the insurer to accept a reasonable policy-limits demand to protect the insured from excess judgment
The Stowers doctrine requires liability insurers to accept reasonable settlement demands within policy limits when an excess judgment is reasonably foreseeable, or face liability for the full judgment.
A claims professional is negotiating a commercial property claim and the insured presents a Sworn Statement in Proof of Loss (SPOL). What is the insurer's next obligation?
Answer: Review the SPOL, investigate the claimed amounts, and accept or deny within the timeframe required by policy and state law
The insurer must review and respond to a SPOL within policy-specified and state-mandated timeframes, conducting any necessary investigation before accepting or disputing the claimed amount.
In negotiating a subrogation recovery, which factor MOST affects the settlement percentage a subrogating insurer can realistically recover?
Answer: The comparative fault attributed to the insured in the underlying loss
In comparative fault jurisdictions, the insured's percentage of fault directly reduces the subrogation recovery, since the insurer steps into the insured's shoes.
What is an 'Gallagher release' (or 'covenant not to execute') used for in multi-defendant settlement scenarios?
Answer: To allow a plaintiff to settle with one defendant while preserving the right to pursue remaining defendants
A Gallagher release (covenant not to execute) lets the plaintiff settle with and release one defendant's personal liability while keeping the lawsuit alive against remaining defendants.
Which of the following BEST describes 'anchoring bias' and its impact on settlement negotiations?
Answer: The tendency to accept the first offer made regardless of its reasonableness, skewing final outcomes toward that initial number
Anchoring bias causes negotiators to rely too heavily on the first number introduced, which is why experienced practitioners make deliberate, strategic first offers.
When a claimant is a minor, what additional step is typically required to finalize a settlement?
Answer: Court approval of the settlement to protect the minor's interests
Most jurisdictions require a court to review and approve settlements on behalf of minors to ensure the amount is fair and that funds are protected.
A claims professional suspects a claimant is inflating a soft-tissue injury claim. Which investigative tool is MOST effective and legally defensible for documenting activity inconsistent with claimed limitations?
Answer: Commissioning an Independent Medical Examination (IME) and conducting a properly authorized surveillance investigation
An IME provides an objective medical opinion while properly authorized surveillance of public activity is legally defensible evidence of functional capacity.