CCP Claims Investigation & Evaluation 3 — Questions and Answers
Question 1: Which method is most appropriate for determining the Actual Cash Value (ACV) of a damaged personal property item?
- Original purchase price minus applicable depreciation (Correct answer)
- The highest retail price found on any website
- The insured's emotional valuation of the item
- Replacement cost plus taxes and delivery fees
Correct answer: Original purchase price minus applicable depreciation
ACV is generally calculated as replacement cost minus depreciation based on the item's age, condition, and useful life.
Question 2: A claimant submits receipts for items allegedly destroyed in a fire, but the receipts appear to be altered. The adjuster should:
- Accept the receipts without question to avoid bad faith
- Document the suspected alterations and refer to the SIU for forensic document examination (Correct answer)
- Immediately deny the claim and send a denial letter
- Pay 50% of the claimed amount as a compromise
Correct answer: Document the suspected alterations and refer to the SIU for forensic document examination
Suspected document fraud should be referred to the Special Investigations Unit for professional forensic analysis before any coverage decision is made.
Question 3: In a workers' compensation claim, what does 'maximum medical improvement' (MMI) signify?
- The point at which the injured worker refuses further treatment
- The point where the worker's medical condition has stabilized and is unlikely to improve further with treatment (Correct answer)
- The maximum dollar amount payable under the policy
- The date the worker returns to full duty
Correct answer: The point where the worker's medical condition has stabilized and is unlikely to improve further with treatment
MMI is the medical determination that the worker's condition has plateaued, after which permanent impairment ratings and future benefits are assessed.
Question 4: Which of the following best describes 'subrogation' in the context of claims?
- The insured's right to cancel coverage mid-policy
- The insurer's right to pursue a third party responsible for causing a covered loss (Correct answer)
- A discount applied when the insured has multiple policies
- The process of reinsuring high-value claims
Correct answer: The insurer's right to pursue a third party responsible for causing a covered loss
Subrogation allows the insurer to 'step into the shoes' of the insured and recover paid claim amounts from the at-fault third party.
Question 5: An adjuster notices that a claimant filed a nearly identical property loss claim with the same insurer two years prior. What is the most appropriate action?
- Ignore the prior claim as irrelevant
- Review the prior claim file for patterns and consider SIU referral if indicators of fraud are present (Correct answer)
- Deny the current claim based solely on the prior claim
- Contact the claimant's neighbors without authorization
Correct answer: Review the prior claim file for patterns and consider SIU referral if indicators of fraud are present
Prior similar claims are a recognized fraud indicator and should prompt a deeper review; however, a denial requires substantive evidence, not merely a prior claim.
Question 6: When investigating a commercial general liability (CGL) claim, which coverage trigger doctrine applies to most CGL policies?
- Claims-made trigger
- Occurrence trigger based on when the bodily injury or property damage occurred (Correct answer)
- Manifestation trigger based on when damage is first discovered
- Exposure trigger based on when the hazardous substance was introduced
Correct answer: Occurrence trigger based on when the bodily injury or property damage occurred
Standard CGL policies use an occurrence trigger, meaning coverage is determined by when the bodily injury or property damage actually happened, not when it was discovered or claimed.
Question 7: What is the significance of a 'reservation of rights' letter in a liability investigation?
- It guarantees the claim will be paid
- It notifies the insured that the insurer is investigating while preserving the right to deny coverage later (Correct answer)
- It transfers the claim to a different insurer
- It waives the insurer's right to request additional documentation
Correct answer: It notifies the insured that the insurer is investigating while preserving the right to deny coverage later
A reservation of rights letter protects the insurer from waiver or estoppel by allowing investigation to proceed without prejudicing the right to deny coverage.
CCP Claims Investigation & Evaluation 3
Which method is most appropriate for determining the Actual Cash Value (ACV) of a damaged personal property item?