Claims Adjuster Test Claims Investigation and Settlement Questions and Answers

Question 1

An insured's building is damaged in a storm. To prevent further water damage from an impending rainstorm, the insured pays a contractor for emergency tarping of the roof before the adjuster has inspected the property. Which of the following policy duties has the insured performed?

Accepted Answer

Duty to Mitigate Damages

Answer

The insured has a duty to take reasonable steps to protect the covered property from further damage after a loss. In this scenario, paying for emergency tarping is a direct action to mitigate, or lessen, the potential for additional water damage.

Question 2

An adjuster is investigating a liability claim where coverage is questionable under the policy. To proceed with the investigation without admitting liability, the insurer sends a letter to the insured explaining the potential coverage issue and stating that the investigation will continue while it reserves its right to deny the claim later. What is this letter called?

Accepted Answer

A Reservation of Rights Letter

Answer

A Reservation of Rights letter is a unilateral notice from the insurer to the insured that it will proceed with investigating a claim, but reserves the right to deny coverage later based on policy terms and conditions. It prevents the insured from later claiming the insurer waived its right to deny by investigating.

Question 3

In a third-party liability claim, which category of damages is intended to compensate a claimant for quantifiable monetary losses, such as medical bills and lost wages?

Accepted Answer

Special Damages

Answer

Special damages, also known as economic damages, are awarded to compensate for specific, quantifiable monetary losses. This includes medical expenses, lost income, and property repair costs.

Question 4

An insured is involved in a hit-and-run accident. The at-fault driver cannot be identified. The insured files a claim with their own insurance company for their bodily injuries, as they would have against the at-fault driver. Which type of coverage would respond to this claim?

Accepted Answer

Uninsured Motorist Coverage

Answer

Uninsured Motorist (UM) coverage is designed to cover bodily injury (and in some states, property damage) for the insured when they are injured by a driver who has no insurance or by a hit-and-run driver who cannot be identified.

Question 5

During settlement negotiations, an adjuster's primary objective is to:

Accepted Answer

Reach a fair and equitable settlement based on the facts of the loss and the terms of the policy.

Answer

The core duty of a claims adjuster is to investigate the claim, evaluate the damages against the policy, and negotiate a settlement that is fair to the claimant while adhering to the obligations and limits outlined in the insurance contract.

Claims Adjuster Test Practice Test

Claims Adjuster Test Practice Test

Claims Adjuster Test Claims Investigation and Settlement Questions and Answers