CCP Property Claims Assessment 2 — Questions and Answers
Question 1: A homeowner discovers mold behind drywall after a covered water loss. The adjuster determines the mold existed prior to the loss. How should the adjuster handle the mold remediation costs?
- Cover all mold remediation as part of the water damage claim
- Apportion costs between pre-existing mold and mold caused by the covered loss (Correct answer)
- Deny the entire claim due to pre-existing mold
- Require the insured to hire a public adjuster to resolve the dispute
Correct answer: Apportion costs between pre-existing mold and mold caused by the covered loss
When mold is partially pre-existing and partially caused by a covered loss, costs must be apportioned between covered and non-covered portions.
Question 2: Under the valued policy law applicable in some states, what happens when a total loss occurs on an insured dwelling?
- The insurer pays actual cash value regardless of policy limits
- The insurer pays the face amount of the policy regardless of actual value (Correct answer)
- The insurer pays replacement cost minus depreciation
- The insurer pays the fair market value at the time of loss
Correct answer: The insurer pays the face amount of the policy regardless of actual value
Valued policy laws require the insurer to pay the full face amount of the policy when a total loss occurs, eliminating disputes over actual cash value.
Question 3: A claims professional is assessing roof damage after a hailstorm. The roof is 15 years old with a 20-year expected lifespan. The replacement cost is $10,000. What is the approximate ACV using straight-line depreciation?
- $2,500 (Correct answer)
- $5,000
- $7,500
- $10,000
Correct answer: $2,500
With 15 of 20 years elapsed (75% depreciated), the ACV is 25% of $10,000 = $2,500 using straight-line depreciation.
Question 4: Which doctrine holds that when a loss is caused by two concurrent perils — one covered and one excluded — the insurer is liable for the entire loss?
- Efficient proximate cause doctrine
- Concurrent causation doctrine (Correct answer)
- Anti-concurrent causation clause
- Reasonable expectations doctrine
Correct answer: Concurrent causation doctrine
The concurrent causation doctrine holds that if a covered peril contributes to a loss alongside an excluded peril, the insurer must cover the entire loss.
Question 5: A commercial building suffers fire damage. The insured has a $500,000 policy with an 80% coinsurance clause and the building is valued at $800,000. If the loss is $200,000, how much will the insurer pay?
- $156,250 (Correct answer)
- $200,000
- $160,000
- $187,500
Correct answer: $156,250
Required insurance is 80% × $800,000 = $640,000; insured carried $500,000; penalty ratio = 500/640 × $200,000 = $156,250.
Question 6: What is the primary purpose of a Proof of Loss document in a property claim?
- To authorize the insurer to begin repairs on the damaged property
- To formally document the insured's claim and provide sworn statement of the loss details (Correct answer)
- To establish the market value of the property before the loss
- To release the insurer from further liability once signed
Correct answer: To formally document the insured's claim and provide sworn statement of the loss details
A Proof of Loss is a sworn statement by the insured that formally details the nature, extent, and amount of the claimed loss.
Question 7: When evaluating a business interruption claim, which of the following is NOT typically considered in calculating loss of business income?
- Net income that would have been earned during the restoration period
- Continuing normal operating expenses during the shutdown
- The insured's personal salary if they own the business (Correct answer)
- Extra expenses incurred to resume operations sooner
Correct answer: The insured's personal salary if they own the business
Business interruption coverage addresses net income and continuing operating expenses; the owner's personal salary drawn from the business is generally excluded.
CCP Property Claims Assessment 2
A homeowner discovers mold behind drywall after a covered water loss.
The adjuster determines the mold existed prior to the loss.
How should the adjuster handle the mold remediation costs?