CCP Property Claims Assessment 3 — Questions and Answers
Question 1: An insured submits a property claim for stolen jewelry worth $8,000. The homeowners policy has a $1,500 sublimit for jewelry theft. The insured has a separate scheduled personal property floater with $7,000 jewelry coverage. What is the total recovery?
- $8,000 from the homeowners policy only
- $7,000 from the floater only
- $8,000 total using both policies with no duplication (Correct answer)
- $8,500 from both policies combined
Correct answer: $8,000 total using both policies with no duplication
The floater covers $7,000 and the homeowners policy contributes the remaining $1,000 under its sublimit, totaling $8,000 with no duplication of recovery.
Question 2: What distinguishes 'replacement cost' coverage from 'actual cash value' coverage in property claims?
- Replacement cost pays market value; ACV pays face value of the policy
- Replacement cost pays to repair/replace without depreciation; ACV deducts depreciation (Correct answer)
- ACV pays more than replacement cost for older items
- Replacement cost only applies to commercial properties
Correct answer: Replacement cost pays to repair/replace without depreciation; ACV deducts depreciation
Replacement cost coverage pays the full cost to repair or replace damaged property without deducting depreciation, while ACV subtracts depreciation from that amount.
Question 3: A property adjuster discovers that the insured's contractor estimate includes items that are not damaged and were pre-existing conditions. What is the appropriate action?
- Accept the estimate since contractors are experts
- Adjust the estimate to include only items directly related to the covered loss (Correct answer)
- Deny the entire claim based on contractor fraud
- Request a second estimate from another contractor and average the two
Correct answer: Adjust the estimate to include only items directly related to the covered loss
The adjuster must ensure the claim payment is limited to damages directly caused by the covered loss, excluding pre-existing or unrelated items.
Question 4: Under a standard homeowners policy, which of the following losses would most likely be covered under Coverage A (Dwelling)?
- A detached garage destroyed by fire
- Interior walls damaged by a burst frozen pipe (Correct answer)
- Landscaping destroyed by a windstorm
- Personal property stolen from the home
Correct answer: Interior walls damaged by a burst frozen pipe
Coverage A covers the dwelling structure including permanently attached fixtures, so interior wall damage from a burst pipe is covered under the dwelling coverage.
Question 5: What is 'functional replacement cost' as used in some property insurance policies?
- The cost to replace with an identical new item regardless of price
- The cost to replace with a less expensive but functionally equivalent material (Correct answer)
- The market value of the property at the time of loss
- The depreciated value using age-life tables
Correct answer: The cost to replace with a less expensive but functionally equivalent material
Functional replacement cost allows the insurer to replace damaged property with materials that serve the same purpose but may be less expensive than the original.
Question 6: Which condition in a property insurance policy requires the insured to take reasonable steps to protect property from further damage after a loss?
- Subrogation clause
- Duties after loss / Preservation of property condition (Correct answer)
- Concealment and fraud condition
- Pro rata liability clause
Correct answer: Duties after loss / Preservation of property condition
The duties after loss condition (including preservation of property) requires the insured to protect property from further damage, such as tarping a damaged roof.
Question 7: A fire destroys a commercial building's inventory. The insured claims $500,000 in inventory loss but cannot produce purchase records or sales receipts. What is the most appropriate next step for the adjuster?
- Pay the claim as submitted since proof of purchase is not required
- Deny the claim entirely due to lack of documentation
- Request alternative documentation such as tax returns, bank statements, or supplier invoices (Correct answer)
- Refer the claim to the SIU immediately without further investigation
Correct answer: Request alternative documentation such as tax returns, bank statements, or supplier invoices
When primary documentation is unavailable, adjusters should request alternative forms of financial documentation to substantiate the claimed inventory value.
CCP Property Claims Assessment 3
An insured submits a property claim for stolen jewelry worth $8,000.
The homeowners policy has a $1,500 sublimit for jewelry theft.
The insured has a separate scheduled personal property floater with $7,000 jewelry coverage.
What is the total recovery?