Arkansas Adjuster Exam Content Info

Front 1

Loss Evaluations Methods

Back 1

Actual cash value (ACV), Replacement cost (RC)
Functional replacement cost
Market Value
Agreed value
State amount
Valued policy

Front 2

Actual Cash Value

Back 2

The cost of replacement minus depreciation

Front 3

Replacement Cost

Back 3

The current cost to purchase new, the item that was lost, without depreciation

Front 4

Functional Replacement Cost

Back 4

As reasonably close to the replacement of the lost or damaged item as possible

Front 5

Market Value

Back 5

Usually antiques claims are adjusted on the basis of the market value. -the price that the market will support

Front 6

Agreed Value

Back 6

The value to be insured is agreed to by the insured and the insurer. This method is used when the true value cannot accurately be determined

Front 7

Stated Amount

Back 7

An agreed amount of insurance which is shown on the policy and that will be paid in the event of a total loss regardless of the actual value of the property

Front 8

Valued Policy

Back 8

States that in the event of a total loss, a specific amount will be paid, and that is set as the limit of the policy. Generally used to insure fine arts, jewelry and furs.

Front 9

Coinsurance Clause

Back 9

a method of requiring the insured to insure at least 80% of the value of the property in exchange for a premium discount.

Front 10

Binder

Back 10

Insurance binders serve as temporary evidence that coverage is in effect until the policy is issued. Usually oral or written. Some states place restrictions on the length of time a binder can be in force. (30, 60, or 90 days)

Front 11

Primary Insurance

Back 11

In cases where more than one policy is in force, the primary policy pays first

Front 12

Excess Insurance

Back 12

Policy that pays benefits only when coverage under other applicable insurance policies have become exhausted

Front 13

Subrogation Clause

Back 13

Used when the insurer has paid a covered claim on behalf of the insured that is caused by another party. "transfer of right of recovery against others to us" clause

Front 14

Indemnity

Back 14

The principle of indemnity assumes that the claimant should only be restored to the approximate financial condition that existed prior to the loss, no better or no worse

Front 15

Proof of loss

Back 15

form completed by the claimant listing the property that has been either lost or damaged due to a covered loss

Front 16

Domestic Insurer

Back 16

an insurance company formed and domiciled under the laws of a particular state

Front 17

Foreign Insurer

Back 17

an insurance company formed under the laws of the US or a particular state of the US

Front 18

Alien Insurer

Back 18

an insurance company formed under the laws of a country other than the US, its districts, territories, commonwealths, possessions and the Panama Canal Zone.

Front 19

Third Party Provisions

Back 19

Standard mortgage clause
Loss payable clause
No benefit to bailee

Front 20

Standard Mortgage Clause

Back 20

Protects the interest of the financial instn. agnst loss to real property caused by perils insured agnst. Also coverage if the insure intentionally caused the loss. The Instn can also provide proof of loss and pay premiums if the insured does not

Front 21

Liability Losses

Back 21

Occurs when a person or entity is determined to have been responsible, or legally liable, for injury or loss to another person or liable for damage to another's property and the law requires them to make financial resitution

Front 22

Constructive Total Loss

Back 22

Occurs when damage to repair exceeds the value of the risk after repairs have been made

Front 23

Negligence

Back 23

the lack of reasonable care that is required to protect others and/or their property from unreasonable chance of harm.

Front 24

Tort

Back 24

A civil wrong that violates the rights of others. 4 factors: legal duty is owed, breach of legal duty owed, proximate cause, & damages

Front 25

Intervening Cause

Back 25

An independent action that breaks the chain of causation and sets in motion a new chain of events. When this occurs, the intervening cause becomes the proximate cause of loss

Front 26

Absolute Liability

Back 26

Imposed by law on those participating in certain activities that are considered especially hazardous. (Dangerous materials, Hazardous operations, Dangerous animals)

Front 27

Vicarious Liability

Back 27

when a person may be held responsible for the negligent acts of another person. (i.e. company man drive company car and an accident occurs. the employer is responsible)

Front 28

Liability Policy Limits

Back 28

single limit
split limits
aggregate limits

Front 29

Single Limit

Back 29

pays a single amount as the maximum liability of the insurer with respect to any one accident occurrence. there may be 1 single limit for property and another 1 for casualty

Front 30

Split Limits

Back 30

there may be a limit rep. the max payable for each person injured per occurrence for bodily injury and another limit applicable to the claims of all persons injured in the accident or occurrence

Front 31

Aggregate Limit

Back 31

represents the total amount for all claims paid during the policy period. It can be found in the general liability and garage liability policies. Once the Aggregate has been met the insured is without coverage

Front 32

Principle of Indemnity

Back 32

The contract must restore the insured to the financial position previously held before the loss. Also known as indemnification

Front 33

Breach of Warranty

Back 33

An incorrect statement by the insured (a breach of warranty) may void coverage

Front 34

Misrepresentation

Back 34

Untrue statement or statements made by the insured, usually at the time when application is made. Some are material because the insurer may have declined the application for insurance had the information been known

Front 35

Concealment

Back 35

The failure of the insured to reveal relevant facts known to the insured when applying for insurance

Front 36

Fraud

Back 36

An intentional act to deceive and induce another party to part with something of value

Front 37

Warranty

Back 37

something that becomes part of the contract and is a statement that is considered to be a guarantee

Front 38

Reasonable Expectations

Back 38

Doctrine of reasonable expectations states that a policy includes coverages that an average person would reasonably expect it to include, regardless of what the policy actually provides

Front 39

Waiver

Back 39

The voluntary or intentional relinquishment of a known right. (i.e. insured who fails to report a claim in a timely manner. they could give up their rights of coverage under the policy.

Front 40

what are the 2 types of waivers?

Back 40

Expressed waiver occurs when the insurer or its representatives purposely gives up a known right under the contract.

Implied waiver may result from some kind of neglect on the part of the agent or adjuster.

Front 41

Specific Basis

Back 41

A separate limit per insured item applies. i.e. A separate limit on the building and/or one for the contents

Front 42

Blanket Basis

Back 42

One limit that applies to both building and contents, usually more than 1 location is insured under a single limit.

Front 43

Reporting Form

Back 43

allows the insured to report values to the company (usually monthly basis) of the insured contents. Pays coverage for what is reported to the company. requires 100% coinsurance clause

Front 44

No Benefit to Bailee

Back 44

An insured's property insurance policy protects the insured and not a bailee of the insured's property

Front 45

Contributory Negligence

Back 45

Common law defense against negligence states that if an individual contributes to his or her own loss in any way, then another cannot be held liable for the loss

Front 46

Comparative Negligence

Back 46

Law that allows an injured party to collect from another party for a loss, even when the injured party contributed to his or her own loss

Front 47

Assumption of Risk

Back 47

Applies when a person knowingly exposes themselves to danger or injury. Often associated with injuries incurred by fans at sporting events

Front 48

Statute of Limitations

Back 48

States have enacted laws as to when certain types of lawsuits must be filed

Front 49

Peril

Back 49

A potential cause of loss.

Accident, fire, and theft are common perils

Front 50

Hazard

Back 50

Anything that increases the seriousness of a loss or increases the likelihood that a loss will occur

Front 51

Direct Loss

Back 51

A loss that is a result of a particular peril. Fire damage to an apartment building is an example of a direct loss

Front 52

Indirect Loss

Back 52

A loss that is a result of a covered peril but is not caused directly and immediately by that peril. The loss of rental income as a result of the fire to the apartment building is an indirect loss

Front 53

Salvage

Back 53

If the insurer pays a loss on behalf of the insured, the insurer is entitled to the salvage to reduce the claim

Front 54

Abandonment

Back 54

The insured cannot simply abandon the property to the insurance company in exchange for the full-insured value

Front 55

Pair or Set Clause

Back 55

A loss settlement condition that appears in many property insurance contracts including inland marine. If part of a pair or set is lost or damaged, the loss will be valued as a fair proportion of the total value of the set.

Front 56

Deductible

Back 56

The self-insured part of an insured loss. Usually applies to first party claims, i.e. property claims, auto physical damage claims. Insured bears the loss

Front 57

Assignment

Back 57

Insurance policy cannot be assigned to another party without the consent of the insurance company

Front 58

Arbitration Clause

Back 58

usually in automobile policies to resolve disputes for uninsured/underinsured motorist claims for bodily injury. Also used to settle disputes involving 3rd party liability claims

Front 59

Other Insurance Clause

Back 59

If the insured has other sources of recovery for a covered claim, this clause is activated. Some are primary and some are excess. Some are paid on a pro-rata approach

Front 60

Transacting Insurance

Back 60

Any person who has contact with an insured involving insurance matters should be licensed. Personnel that quote, sell, service, offer advice, explain coverage, or adjust claims

Front 61

Proximate Cause of Loss

Back 61

An unbroken chain of events that causes a loss. An event that, in a natural and continuous sequence, produces a loss.

Front 62

Contribution by Equal Shares

Back 62

Type of "Other Insurance" condition found in liability policies. Calls for all insurers to contribute equally up to the limit of the policy having the smallest limit, whereupon that company stops paying...until the loss is paid in full or policy limits are exhausted.

Front 63

Nonconcurrency

Back 63

Situation that exist when the same property is covered by more than one policy, but the policies are not identical as to the extent of coverage provided.

Front 64

Duties of the Insurance Commissioner

Back 64

Monitoring the financial solvency of insur. companies
Monitoring the conduct of indiv. insur. agents
Reviewing and approving rates, policies and forms
Assuring the public of insuarnce availability

Front 65

Cease and Desist orders

Back 65

the Insurance commissioner has powers to conduct hearings in regard to possible unlawful acts in the performance of agents, adjusters, and companies. May suspend, revoke or fine the offender.

Front 66

General requirements for licensing adjusters

Back 66

1) 18 years 2) must be a resident of the state 3) satisfies the commissioner/insurance department, that the applicant is trustworthy 4) No felony or a revoke license in another state 5) Satisfies the requirement of obtaining a license

Front 67

Maintenance of adjuster licenses

Back 67

1) Must file the complete address of his/her principle place of business and the complete address of residence 2) must notify the insurance commissioner of a change of address

Front 68

Unfair Trade & Claims settlement practices

Back 68

1) rebating 2) twisting 3) defamation 4) misrepresentation & false advertising 5) unfair claim settlement practice 6) fiduciary 7) coercion, boycott, intimidation 8) excessive charges 9) unfair discrimination

Front 69

DP-1 (Dwelling Property basic)
(Dwelling, other structures, & personal property)

Back 69

Fire

Lightning

Internal Explosion

Front 70

Optional for DP-1 only

Back 70

Extended Coverage (EC Perils)

Vandalism & Malicious Mischief (VMM)

Front 71

EC Perils

Back 71

Windstorm
Civil Commotion

Smoke
Hail
Aircraft
Vehicles
Volcanic Eruption
Explosion
Riot

Front 72

Broad Perils

Back 72

Burglary Damage
Ice and snow weight
Glass breakage

Accidental discharge, water or team overflow
Falling objects
Freezing of pipes
Electrical damage
Collapse
Tearing apart, cracking, burning, bulging

Front 73

DP-2
(dwelling, other structures & personal property)

Back 73

automatically includes all of the DP-1 perils, the EC perils and VMM

Plus the Broad Perils (BIG AFFECT)

Front 74

DP-3 (Special)

Back 74

Open Perils (Dwelling & other structures)

Provides broad form perils for personal property

Front 75

HO-2
(broad form)

Back 75

Fire, lightning

WC SHAVVER (volcanic erruption pre 2000)

VMM (unless vacant for 60 or more consecutive days)

Front 76

HO-3
(special form)

Back 76

Dwelling is Open Peril

Contents (personal property)- WC SHAVVER, VMM, fire, lightning

Front 77

HO-4
(contents broad form also known as "Tenants Form")

Back 77

For tenants living in a non-owned structure. Can be an apartment or a dwelling. The form does not provide coverage except for the improvements and betterments that the tenant may have made to the structure

Front 78

HO-5
(comprehensive form)

Back 78

open peril coverage on both buildings and their contents

Front 79

HO-6
(condominium unit-owners form)

Back 79

Covers the structural portion of the condo owned by the insured as well as his or her contents plus any improvements and betterments.

Like the HO-4, property is covered by the broad perils

Front 80

HO-8
(modified coverage form)

Back 80

Provides very basic peril coverage and was designed to cover dwellings in which replacement cost value is less than "market value". Coverage for both buildings and contents are considered on an actual cash value basis only

Front 81

General exclusions for HO policies

Back 81

War, nuclear hazard, earth movement, neglect, ordinance or law, flood, off-premises power shortages, intentional acts