CCP Claims Settlement & Negotiation 3 — Questions and Answers
Question 1: Which element is NOT typically required to establish a valid release in claims settlement?
- Competent parties
- Consideration
- Notarization (Correct answer)
- Meeting of the minds
Correct answer: Notarization
While consideration, competent parties, and mutual agreement are required contract elements, notarization is generally not required for a valid release.
Question 2: In workers' compensation claims, a 'compromise and release' settlement differs from a 'stipulated award' in that it:
- Requires court approval in all states
- Fully and finally resolves all past and future benefits in exchange for a lump sum (Correct answer)
- Only applies to permanent disability benefits
- Cannot include future medical treatment
Correct answer: Fully and finally resolves all past and future benefits in exchange for a lump sum
A compromise and release settles all workers' compensation benefits—including future medical—for a lump sum, closing the claim entirely.
Question 3: What is the primary purpose of a 'reservation of rights' letter in the claims process?
- To deny the claim outright
- To preserve the insurer's right to deny coverage while investigating (Correct answer)
- To demand arbitration
- To notify the claimant of the policy limit
Correct answer: To preserve the insurer's right to deny coverage while investigating
A reservation of rights letter allows the insurer to investigate and defend the claim without waiving potential coverage defenses.
Question 4: In bodily injury negotiations, 'special damages' refer to:
- Pain and suffering compensation
- Punitive damages awarded by juries
- Quantifiable out-of-pocket losses like medical bills and lost wages (Correct answer)
- Emotional distress not supported by medical records
Correct answer: Quantifiable out-of-pocket losses like medical bills and lost wages
Special damages are economic losses that can be calculated precisely, such as medical expenses, lost earnings, and property damage.
Question 5: An adjuster settling a minor's claim must typically:
- Accept a signed release from the minor directly
- Obtain court approval of the settlement (Correct answer)
- Wait until the minor reaches 18 before settling
- Settle only through the minor's school district
Correct answer: Obtain court approval of the settlement
Settlements involving minors require court approval via a guardian ad litem proceeding to protect the minor's interests.
Question 6: Which mediation style involves the mediator offering a non-binding opinion on the merits of the case?
- Facilitative mediation
- Evaluative mediation (Correct answer)
- Transformative mediation
- Narrative mediation
Correct answer: Evaluative mediation
Evaluative mediation involves the mediator assessing the case strengths and weaknesses and providing an opinion on likely outcomes.
Question 7: The 'economic loss rule' in tort claims generally prevents recovery of:
- Medical expenses following physical injury
- Pure financial losses unaccompanied by physical injury or property damage (Correct answer)
- Lost wages from documented disability
- Property repair costs after an accident
Correct answer: Pure financial losses unaccompanied by physical injury or property damage
The economic loss rule bars tort recovery for purely economic damages when there is no accompanying physical injury or property damage.
CCP Claims Settlement & Negotiation 3
Which element is NOT typically required to establish a valid release in claims settlement?