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49 Cards in this Set

  • Front
  • Back

First-party claim

A demand by an insured person or organization seeking to recover from its insurer for a loss that its insurance policy may cover.

Third-party claim

A demand against an insured by a person or organization other than the insured or the insurer, seeking to recover damages that may be payable by the insured's liability issuance.

Claimant

A party that makes a claim and that can be either a first-party claimant or a third-party claimant.

Constructive Total Loss

A loss that occurs when the cost to repair damaged property plus its remaining salvage value equals or exceeds the property's pre-loss value.


Basically, if the insurer can spend less money by calling it a total loss and paying that and then selling and salvaging the damaged property than they can by giving them money to repair it, it's a constructive total loss.


Value: $10,000


Repairs: $9,000


Salvage value:$1,500


10,000 - 1,500 = $8,500 (less than repair costs)

Bad Faith

An insurance company's unreasonable and unfounded(though not necessarily fraudulent) refusal to provide coverage in violation of the duties of good faith and fair dealing owed to an insured. Bad faith often involves an insurer's failure to pay the insured's claim or claim brought by a third party.

Claim Activities

-Acknowledge and assign the claim


-Identify the policy and setting reserves


-Contacting the insured or the insured's representative


-Investigating the claim


-Documenting the claim


-Determining the cause of loss, liability, and the lid amount


-Concluding the claim

Property insurance claim activities

-Verify coverage


-Determining the amount of loss


-Concluding the claim and exercising subrogation and salvage rights.

Liability insurance claim activities

-Verify coverage


-Determining the cause of loss


-Determining the amount of damages


-Concluding the claim

Good-faith claims handling

-Thorough, timely, and unbiased investigation


-Compete and accurate documentation


-Fair evaluation


-Good-faith negotiation


-Regular and prompt communication


-Competent legal advice


-Effective claims management

Claims representative

A person responsible for investigating, evaluating, and settling claims.

Third-party administrator (TPA)

An organization that provides administrative services associated with risk financing and insurance.

Independent adjuster

An independent claims representative who handles claims for insurers for a fee.

Public adjuster

An outside organization or person hired by an insured to represent the insured in a claim in exchange for a fee.

Nonwaiver agreement

A signed agreement indicating that during the course of the investigation, neither the insurer nor the insured waives rights under the policy. (Has to do with claims investigations)

Reservation of rights letter

An insurer's letter that specifies coverage issues and informs the insured that the insurer is handling a claim with the understanding that the insurer may later deny coverage should the facts warranty it.

Subrogation

The process by which an insurer can, after it has paid a loss under the policy, recover the amount paid from any party (other than the insured) who caused the loss or is otherwise legally liable for the loss.

Mediation

An alternative dispute resolution (ADR) method by which disputing parties use a neutral outside party to examine the issues and develop a mutually agreeable settlement.

Arbitration

An alternative dispute resolution (ADR) method by which disputing parties use a neutral outside party to examine the issues and develop a settlement, which can be final and binding.

Appraisal

A method of resolving disputes between insurers and insureds over the amount owed on a covered loss.

Mini-trial

An alternative dispute resolution (ADR) method by which a case undergoes an abbreviated version of a trail before a panel or an adviser who poses questions and offers opinions on the outcome of a trial, based on the evidence presented.

Summary jury trail

An alternative dispute resolution (ADR) method by which disputing parties participate in an abbreviated trial, presenting the evidence of a few witnesses to a panel of mock jurors who decide the case.

Insurable interest

An interest in the subject of an insurance policy that is not unduly remote and that would cause the interested party to suffer financial loss if an insured event occurred.

Actual cash value (ACV)

Cost to replace property with new property of like kind and quality less depreciation.

Depreciation

The reduction in value caused by the physical wear and tear or technological obsolescence of property.

Replacement cost

The cost to repair or replace property using new materials of like kind and quality with no deduction for depreciation.

Agreed value method

A method of valuing property in which the insurer and the insured agree, at the time the policy is written, on the maximum amount that will be paid in the event of a total loss.

Salvage rights

The insurer's rights to recover and sell or otherwise dispose of insured property on which the insurer had paid a total loss or a constructive total loss.

Damages

Money claimed by, or a monetary award to, a party who had suffered bodily injury or property damage for which another party is legally responsible.

Compensatory damages

A payment awarded by a court to reimburse a victim for actual harm.

Special damages

A form of compensatory damages that awards a sum of money for specific, identifiable expenses associated with the injured person's loss, such as medical expenses or lost wages.

General damages

A monetary award to compensate a victim for losses, such as pain and suffering, that do not involve specific, measurable expenses.

Punitive damages

A payment awarded by a court to punish a defendant for a reckless, malicious, or deceitful act to deter similar conduct; the award need not bear any relation to a party's actual damages.

Criminal law

The branch of the law that imposes penalties for wrongs against society.



Wrongful acts that society deems so harmful to the public welfare that the government takes the resistibility for persecuting and punishing the wrongdoers.

Civil law

A classification of law that applies to legal matters not governed by criminal law and that protects rights and provides remedies for breaches of duties owed to others.



Deals with the rights and responsibilities of citizens with respect to one another. Disputes between private parties.

Tort

A wrongful act or an omission, other than a crime or a breach of contract, that invades a legally protected right.



Any wrongful act committed by one party against another.

Tort law

The branch of civil law that deals with civil wrongs other than breaches of contract.

Negligence

The failure to exercise the degree of care that a reasonable person in a similar situation would exercise to avoid harming others.

Proximate cause

A cause that, in a natural and continuous sequence unbroken by any new and independent cause, produces an event and without which the event would not have happened.

Tortfeasor

A person or organization that has committed a tort.

Vicarious liability

A legal resistibility that occurs when one party is held liable for the actions of a subordinate or an associate because of the relationship between the two parties.

Intentional tort

A tort committed by a person who foresees (or should be able to foresee) that his or her act will harm another person.

Assault

The threat of force against another person that creates a well-founded fear is imminent harmful or offensive contact.

Battery

Intentional harmful or offensive physical contact with another person without legal justification.

Defamation

A false written or oral statement that harms another's reputation.

Slander

A defamatory statement expressed by speech.

Libel

A defamatory statement expressed in writing.



However, libel can take place through any medium, such as radio, television, film, or the internet.

False arrest

The seizure or forcible restraint of a person without legal authority.

Invasion of privacy

An encroachment on another person's right to be left alone.

Strict liability (absolute liability)

Liability imposed by a court or by a statute in the absence of fault when harm results from activities or conditions that are extremely dangerous, unnatural, ultrahazardous, extraordinary, abnormal, or inappropriate.