Adjuster Pro - Insurance adjuster test latest 2023 already passed

Adjuster Pro - Insurance adjuster test latest 2023 already passed What is insurance? ✔✔protection against financial loss what is a premium ✔✔a scheduled amount to be paid for an insurance policy. What are premiums us ...

Adjuster Pro - Insurance adjuster test latest 2023 already passed What is insurance? ✔✔protection against financial loss what is a premium ✔✔a scheduled amount to be paid for an insurance policy. What are premiums used for ✔✔premiums are collected into a "pool" or "reserve to pay out claimants when needed. how can insurance companies afford to pay for an individuals catastrophic loss? ✔✔the insurer collects premiums from all policy holders and uses them to pay out the claims of a few. what is Indemnity ✔✔payment for damages, that is not more or less than the amount caused by the damage. principle of idemnity ✔✔insurance will pay no more or less than the actual financial loss suffered indemnification may also include ✔✔repairs to property reimbursement for additional living expenses rental cars and hotels costs directly associated with a loss 4 Parts of Legal Contract ✔✔1. Agreement 2. Consideration 3. Competent Parties 4. Legal Purpose legal contract - agreement ✔✔mutual intent by offeror and offeree six special characteristics of insurance contracts ✔✔1. Personal 2. adhesion 3. utmost good faith 4. aleatory 5. unilateral 6. conditional what kind of contract is an insurance policy? ✔✔Personal contract what is a contract of adhesion ✔✔the insured must accept the entire contract with all of its terms and conditions Utmost Good Faith ✔✔An obligation to act in complete honesty and to disclose all relevant facts. Aleatory Contract ✔✔a contract where the values exchanged may not be equal but depend on an uncertain event Unilateral Contract ✔✔insurance agrees that they must pay in event of a claim. the insured can stop paying premiums at any point. only the insurer has promised to perform an action. Conditional Contract ✔✔A type of an agreement in which both parties must perform certain duties and follow rules of conduct to make the contract enforceable. Acronym for the four sections of an Insurance policy ✔✔DICE D - declarations page I - Insuring Agreement C- Conditions E - Exclusions Decelerations section ✔✔Always the first section - establishes the following Names of both parties Policy number Location and description of insured item Dates of the policy Amount and limit of coverage Deductible Premium Definitions section ✔✔Defines terms used to write policy including "collusion" "decay" "like kind and quality" Includes important language for adjusters to know Insuring agreement section ✔✔What is covered and how Which causes of loss are covered Any services provided Any exclusions to coverage The maximum limit of policy coverage in dollars Conditions section ✔✔Insurer specifies any limits or qualifications the policy holder must meet Exclusions section ✔✔losses for which the insured is not covered for Endorsements ✔✔Provision that modifies the coverage of the original contract Add or subtract coverage Synonyms - rider, addendum, attachment Certificate of Insurance ✔✔A legal document that indicates that an insurance policy has been issued, and that states both the amounts and types of insurance provided. Characteristics of social insurance ✔✔Non profit Mandatory participation Benefits prescribed by law Designed to meet needs of public Government has monopoly Private Insurers ✔✔Sell insurance based on needs and preferences Wide variety of products Exist to generate a profit Insured party voluntarily participate Stock Insurance Companies ✔✔Always for profit Publicly traded Stockholder provide capital and participate in profit or losses "Non participation" insurers - no dividends go to policy holders Mutual Insurance Company ✔✔No shareholders Policy holders elect board of directors "Participating" insurers - policy holders participate in dividends Re-insurer ✔✔Provides insurance for insurers to reduce exposure to loss Pays percentage of insurers loss or any loss over a certain amount Reciprocal Insurers ✔✔Unincorporated Non profit Operated by attorney in fact Members pay into individual accounts Cost of claims shared by whole groups Fraternal Benefit Societies ✔✔Also called fraternal associations Non profit mutual aid organizations Engage in charitable activities Provide some type of insurance to members Typically consist of people with similar religion, ethnicity or occupation Fraternal Benefit Societies insurance ✔✔Used to fund altruistic activities Must be assessable by law Members are both providers and recipients If claims payment ability is impaired, members help pay the difference captive insurers ✔✔Created by businesses in order to retain risk Exist to provide insurance for their "parent" All profit belongs to parent company Permitted in some states Risk retention groups ✔✔Authorized by the federal liability risk retention act of 1986 Owned by their members Provide commercial liability RRG Requirements ✔✔Members must be involved in similar business endeavors Don't need to be licensed in multiple states Classification based on location ✔✔Domestic Insurer - adhere to law of a state, located in that state Foreign insurer - adhere to laws in the US but can be located elsewhere Alien insurer - obey laws of another country all together Risk ✔✔Potential for financial loss An insured item Two types of risk ✔✔Pure and Speculative Speculative risk ✔✔No certainty of gain or loss Made knowingly, by conscious choice Cannot be insured Pure risk ✔✔Risk with no chance of gain Can only result in either loss or no loss Can be insured Exposure ✔✔Extent to which an item, person, or organization is open to damage or loss Evaluating exposure ✔✔Expressed in dollars or units Determining factor in issuing a policy and setting a premium Hazard ✔✔A condition increasing the likelihood or severity of a loss Peril ✔✔The actual cause of loss or damage Insurable risk ✔✔Adequate premiums Definable risk Unexpected losses Substantial loss Exclusions Law of large numbers Adequate Premiums ✔✔Potential loss can't be too much for insurer to pay Insurer must b able to cover claims and expenses If premiums must be set too high, the risk is not insurable Difneable risk ✔✔Insurer can define exact conditions under which the item is covered by the policy Item it's self is defineable Item has precise value Unexpected loss ✔✔Unforeseeable Unexpected Reasonably unpreventable Random in nature Substantial loss ✔✔Must cause substantial economic hardship Exclusions ✔✔Insurer must be able to exclude large scale disasters and catastrophic events Law of large numbers ✔✔Insurer must be able to cover large numbers of similar risks Spreads risk across more policies Helps insurers predict losses more accurately Similar risks can mean, cars houses, persons lives, similar business etc Adverse Selection ✔✔when someone buys health insurance because they know they will probably file a claim 4 risk management techniques ✔✔Avoidance Reduction Transference Retention Risk avoidance ✔✔Eliminates risk by not taking action that involves risk Risk reduction ✔✔Taking measures to reduce risk that is involved Also called risk mitigation Risk Transference ✔✔Management of sever risk by transferring risk to someone else Most common example is Insurance Risk retention ✔✔Acknowledging the risks and preparing to handle the unexpected losses as they occur Policy Period ✔✔The time frame, beginning with the inception date to the expiration date, during which insurance coverage applies. Binder ✔✔Providing temporary coverage until the policy is issued Blanket coverage vs specific coverage ✔✔Blankets cover more than one property, type of property, or coverage under a single limit Specific limits - limits that apply to on specific type of property Representation ✔✔Statement of fact Missrepresentation ✔✔A false, distorted or deceptive statements Warranty ✔✔Promise or garuntee certain conditions are met Warranties are found on the conditions page If policy holder breaks up warranty the insurer can deny coverage Concealment ✔✔Concealment is hiding the truth Deliberately withholding information Waiver ✔✔Voluntarily surrender of a right, claim, or privilege Expressed waiver ✔✔In writing or signed Implied waiver ✔✔assumed based on actions Estoppel ✔✔Legal principle that prevents an insurer from denying coverage if the insured has reasonably come to believe that he has such coverage based on insurers practices Types of hazards ✔✔Physical, Moral, Morale, legal Moral hazard ✔✔Results from the policy holders deliberate decision Involves reckless behavior because of the financial security offered by insurance Is a type of behavioral hazard Morale hazard ✔✔Occur when someone exhibits risky behavior because of having insurance. Physical hazard ✔✔Physical conditions that increase the chance of loss. Types of physical hazards ✔✔Environmental - pot holes in road Material - asbestos in a old house Operational - poorly managed engine Occupant - working in a coal mine Legal hazard ✔✔Increased chance of loss because of legal action fraud ✔✔Deceiving an insurer to profit from an insurance policy Hard and soft fraud ✔✔Hard fraud - planning or faking a loss Soft fraud - exaggerating a claim to inflate the indemnity proximate cause ✔✔Unbroken chain of events between an occurrence and a loss - then that occurrence is the proximate cause of the loss occurrence ✔✔An event, incident, or condition that causes damage Occurrence as proximate cause ✔✔The original occurrence causes damage that leads to more damage Direct loss ✔✔Physical harm to tangible property Indirect loss ✔✔Economic loss that results from the direct or physical loss Insurance claims ✔✔Demand for payment in accordance with terms of the policy First party claims ✔✔Claim filed by a policy holder against his or her own insurance policy Third party claims ✔✔Claim filed against an insurance policy by a third party not named on that policy acknowledgement ✔✔Insurer require by law to respond Begin investigating all pertinent facts and issues Investigation ✔✔Finding the proximate cause of the loss Examining all damages Noting circumstances Taking witness statements Determining liability Deciding wether claim is valid Evaluation ✔✔Consider policy limit and deductibles Calculating lender interest Determining the value of the loss Applying all financial provisions of the policy Adjustment ✔✔If a claim is accepted, the insurer must pay promptly after notifying that the claim will be paid If claim is denied the insurer must explicitly state reasons for denial Insurable Interest ✔✔Only parties with insurable interest can insure a property or person You can only insure something that has some financial interest to you Lender interest ✔✔A lenders financial stake in an insured item Lender Interest Provisions ✔✔Allow the lender to be listed as a payee on the policy Endure the lender is notified if the policy is canceled, reduced, or expires Provide compensation for the lender in the event of an act or an omission by insurer party Permit lender to pay premiums to maintain coverage Limits on lender provisions ✔✔Lender may only collect up to its financial interest in a property Lender may never change or cancel an insurance policy Actual Cash Value ✔✔Same as fair market value and depreciation value ACV offers lower premiums for less coverage Formula: replacement cost minus depreciation Depreciation formula ✔✔allocation of original costs over the estimated useful life of a tangible asset 3 Types of Deductibles ✔✔Fixed Percentage Franchise Fixed deductible ✔✔Specific set amount percentage deductible ✔✔Insured party pays a percentage of the total cost, insurance pays rest Franchise Deductible ✔✔Policy kicks in only after a loss exceeds a predetermined amount If losses are above the deductible then insurance pays 100% broad evidence rule ✔✔ACV does not simply come down to RC minus depreciation Takes into account any evidence available to determine value Coinsurance ✔✔ Valuation ✔✔Process of estimating an items worth Replacement cost policy ✔✔No depreciation. Based on replacement cost at the time of loss Higher premiums Used on home insurance mostly Replacement cost ✔✔Cost to replace at today's market value Actual Cash Value (ACV) ✔✔Replacement cost minus accumulated depreciation Annual Depreciation ✔✔Replacement cost divided by items useful life span Accumulated Depreciation ✔✔An items annual depreciation Multiplied by its age Valued Policy ✔✔Assigns a set value to each insured item Co-insurance penalty ✔✔If property is underinsured, the insurer will only cover a percentage of partial losses If multiple partial losses occur, the low premiums are not enough for the insurer to cover all the damages Calculating co insurance penalty ✔✔Had / should X the loss Negligence ✔✔Failure to use a reasonable degree of care in a particular situation- includes both wrongful acts and acts of omission 4 elements of negligence ✔✔1. Defendant had a legal duty to act or not act in a prescribed manner 2. The defendant failed to act accordingly 3. The plaintiff suffered actual loss or injury due to the defendants action or inaction 4. The loss or injury to the plaintiff was a direct result of the breach of duty of the defendant Degrees of Liability ✔✔Full liability- the insured party is 100% at fault for damages to a third party Partial liability - the insured party is only partially at fault, or shares fault, with a third party. The third party had some parts in his own damages No liability - the insured party has 0% or no liability Assumption of risk ✔✔Claimant knew he had the potential to experience damage Contributory Negligence ✔✔A legal defense that may be raised when the defendant feels that the conduct of the plaintiff somehow contributed to any injuries or damages that were sustained by the plaintiff. Comparative Negligence ✔✔A theory in tort law under which the liability for injuries resulting from negligent acts is shared by all parties who were negligent (including the injured party), on the basis of each person's proportionate negligence. Dangerous Instrumentality Doctrine ✔✔States that anyone involved in the use of inherently dangerous products or machines is held 100% liable for their own damages. strict (absolute) liability ✔✔liability is imposed regardless of negligence or fault Policy limit ✔✔The maximum amount the insurance company will pay for covered losses Single limits ✔✔Establishes maximum payout for liability damages caused by the policy holder Split limits ✔✔Establishes 3 different limits on how much the policy will pay out 1. Maximum payout for bodily injury for each person injured 2. Maximum payout for multiple persons 3. Maximum payout for property damage Aggregate limits ✔✔2 limits 1. Max payout for damage or injury per occurrence 2. Maximum payout amount the policy will pay per term Res Ipsa ✔✔Means "the thing speaks for itself" and is only applied n rare instances when no one knows how exactly the accident happened Statutory law ✔✔Based on written laws Common law ✔✔Based on court decisions and customs when statutory law does not provide an answer Tort ✔✔Any civil wrongdoing, whether intentional or unintentional Tort law ✔✔Body of law that addresses and provides remedies for any civil wrongdoing performed on another party. Tortfeasor (defendant) ✔✔person who commits a tort Joint Tortfeasors ✔✔two or more people who join together in committing a tort Intentional tort ✔✔A premeditated act that causes injury to a third party Negligent tort ✔✔A negligent act that causes unintentional injury to a third party Reservation of rights letter ✔✔Must include - insurers name, policy number, and event or loss - clearly explain the situation, especially that the policy holder may not receive compensation or may have to defend himself in court - inform the policy holder about potential consequences Non-waiver agreement ✔✔- Also used when the insurer thinks coverage may not apply to a claim - allows insurer to keep its right to deny coverage - must be signed by the policy holder (but insurer may not force a policy holder to sign) Two types of damages ✔✔punitive and compensatory Compensatory Damages ✔✔Money awarded for tangible and intangible economic losses Special damages - money awarded for tangible losses - proven by medical bills etc General damages - awarded for non quantifiable damages Punitive damages - money awarded to punish egregious misconduct The Statute of Limitations ✔✔Law limiting time an injured party has to file a complaint after an occurrence Wrongful death act ✔✔when someone dies because of a negligent act, allows family to sue Workers compensation ✔✔Restrict right of an employee to sue his employer for injuries that occurred on the job Automobile no fault laws ✔✔Restrict an individual's rights to sue the driver of a motorized vehicle Breach of product warranty ✔✔If a product is not suitable for its intended purpose and causes injury or damage. Waiver of Sovereign Immunity ✔✔Allows individuals to sue gov entities in certain cases Agent ✔✔One who receives the authority to act on behalf of someone else Sales agent ✔✔Contracted to sell and service insurance policies on behalf of the insurer Adjusters ✔✔Contracted to settle claims that arise against the insurer Power to bind ✔✔What the agent says or does can bind the insurer Agents should take the utmost care in what they say and do Even if the agent makes mistakes, the insurer may have to accept them Responsibilities of an agent ✔✔Adhere to or follow the contract Use reasonable judgement Provide all necessary information and documentation to the insurer Three types of authority ✔✔express, implied, apparent Express Authority ✔✔Authority directly granted to an agent via the contract -sell polices -collect premiums -issue binders - offer discounts - cancel insurance Implied Authority ✔✔A form of indirect authority The authority that the public reasonably believes the agent to have - portraying self as a representative - wearing a name tag with a company logo - handing out company business cards - words and actions that go hand in hand with express authority and are usual in order to perform an agents duties Apparent Authority ✔✔When the insurer does not correct its agent even when the agent may be acting in error - granted when the insurer does not act - by not correcting the agent, the insurer implies consent Types of sales agents ✔✔Independent agent Exclusive agent General agent Direct writer Independent agent ✔✔Self employed Offer insurance form more than one company at a time They can compare and give rate quotes from different companies. Find a policy that suits the customer Exclusive agent ✔✔Also called a captive agent - commissioned - represents only one insurer and only their policies General agent ✔✔Works for one insurance company Trains and supervises agents for that company Direct writer ✔✔Salaried employee Works for one company