C110 ESSENTIALS OF LOSS ADJUSTING

Transcription

1 CIP PROGRAM EXAMINATION IMPORTANT The time allowed for this exam is 3 hours. Total marks: 200 You must hand in this paper and any paper used for rough work to the supervisor when you leave the examination room. Failure to do so may result in disqualification. Section A: Multiple-Choice Questions Question 1. For the following multiple-choice questions, fill in the circle of the letter that identifies the most correct answer. DO NOT MARK THE ANSWERS ON THESE PAGES. USE THE FIRST PAGE OF YOUR ANSWER BOOK. 1. Insurable interest can be described as one s interest in the (A) property owned by others. (B) total dollar payment upon a sale. (C) property being borrowed. (D) property being claimed. Page 1 of 8

2 -2-2. In loss adjustment relationships, who would be considered as parties to the insurance contract? (A) Independent adjuster and public adjuster (B) Insurer and insured (C) Insurer and Independent adjuster (D) Examiner and public adjuster 3. After hearing the insured s story, the adjuster felt sorrow and a feeling of loyalty towards the insured. This feeling can be described as (A) sympathy. (B) caring. (C) objective. (D) indifference. 4. The purpose of the Canadian Independent Adjusters Association is to (A) assist in raising awareness of fraud within the industry. (B) supervise the operation of the Canadian Inter-Company Arbitration Agreement. (C) provide leadership to members through advocacy, education, and recognized professional standards. (D) promote public confidence in insurance companies. 5. Civil law is concerned with (A) protecting and enforcing existing laws. (B) the proper administration of laws. (C) the private rights of individuals. (D) clarifying, changing and deleting laws. 6. An adjuster has informed the insured to rent a car after an accident. The insured proceeds to rent the car. Later that day the adjuster realizes that the insured does not have rental coverage. This is an example of (A) estoppel. (B) non disclosure. (C) material fact. (D) concealment. 7. Under the Civil Code of Québec, a contract may be absolutely null. The common law equivalent of this concept is a (A) renewed contract. (B) void contract. (C) voidable contract. (D) expired contract. Page 2 of 8

3 -3-8. Representation can best be described as (A) a promise by the insured that certain facts will remain the same throughout the term of the policy. (B) a legal defence in a claim. (C) a statement of fact made by the insured about the risk to be insured. (D) the hiring of a person to handle the insurance claim. 9. A contract of adhesion is a contract (A) where both parties agree to the terms. (B) that is not valid. (C) where the terms are not disclosed. (D) where one person controls the wording. 10. Which of the following best describes a named perils policy? (A) The coverage is determined by the exclusions. (B) The coverage is determined by the insuring agreements. (C) The coverage is defined by the perils insured. (D) The coverage is defined in the standard wording. 11. Contra Proferentem literally means (A) against the offeror. (B) the remote cause of the loss. (C) adherence to the contract. (D) affirmed or rejected at the option of the aggrieved party. 12. Which type of listening skill lets people know we understand their feelings? (A) Supportive Listening (B) Empathetic Listening (C) Sympathetic Listening (D) Active Listening 13. Cultural norms are derived from (A) education and schooling. (B) home and work environment. (C) religious and ethnic values of society. (D) heredity and subconscious behavior. 14. When required, who must supply a blank proof of loss? (A) The broker (B) The insurer (C) The insured (D) The vendor Page 3 of 8

4 Real evidence consists of (A) sworn and unsworn statements presented by a witness at trial that is the knowledge of the person giving it. (B) tangible items and experiments from which the court can make observations and draw conclusions. (C) exceptions to the Hearsay Rule which allows certain types of testimony to be heard. (D) what was actually seen by a witness. 16. A reservation of rights letter (A) is a statutory declaration of oath. (B) confirms payment of a loss. (C) allows the insurer to investigate the loss while preserving its options. (D) must be signed by the insured to avoid creating an estoppel. 17. When conducting an interview, in order to take a statement, the adjuster should begin by asking (A) direct questions. (B) indirect questions. (C) leading questions. (D) open-ended questions. 18. Insurance losses are often settled on an actual cash value basis which means (A) the fair market value of the item at the time of the loss. (B) the market value of the item. (C) competitive pricing. (D) scientific judgment. 19. Limitation periods, when established by statute, (A) include the time when repairs must be started. (B) include the prescribed time period in which the plaintiff is able to bring a legal action. (C) include time required to enter into a contract. (D) can be waived if the contract is breached. 20. The plaintiff is (A) an independent business person. (B) a legal representative of the insured. (C) the wronged party bringing an action against the defendant. (D) the alleged causer of the damages. Page 4 of 8

5 Under the Civil Code of Québec, the limitation period for property losses is (A) 1 year from the date the right of action arises. (B) 2 years from the date the right of action arises. (C) 3 years from the date the right of action arises. (D) 6 years from the date the right of action arises. 22. In litigation, party and party costs (A) are the costs that each person pays to each other. (B) are fees paid by the defendant to his lawyer. (C) are fees and costs awarded to the defendant. (D) may be recovered by the successful party in court. 23. Negligence is (A) the failure to do something that a reasonable person would do under the same circumstances. (B) a wrong arising from an unreasonable use of property causing discomfort to another. (C) the duty of care owed to a passer-by. (D) being unable to fulfill an obligation due to frustration. 24. Res ipsa loquitur literally means (A) act of God. (B) the thing speaks for itself. (C) voluntary assumption of risk. (D) on the face of it. 25. General Damages include (A) pain and suffering, future expenses. (B) out of pocket expenses. (C) an award for reprehensible behavior. (D) repair costs to property. 26. The common law doctrine of scienter applies to (A) dangerous things. (B) domestic animals. (C) regulations of contracts. (D) leasing contracts. 27. The legal and claims issue of grow ops centres around (A) the legalization of marijuana. (B) the growth of business operations. (C) the defacing of property resulting from the illegal growing of marijuana. (D) the accidental damage caused by extreme humidity in sealed premises. Page 5 of 8

6 Some homeowners policies pay to replace buildings even if the cost exceeds the amount of insurance purchased. This basis of settlement is known as (A) Replacement Cost. (B) Actual Cash Value. (C) Guaranteed Replacement Cost. (D) Market Replacement. 29. When provided under the automobile policy, the Loss of Use endorsement entitles the insured to (A) be reimbursed for replacement transportation while the vehicle is being repaired. (B) be reimbursed for the full value of the vehicle. (C) be reimbursed for damages to the vehicle. (D) family protection for all drivers. 30. The appraiser s role in an automobile accident is to (A) investigate, negotiate and settle the claim. (B) assess the damage, prepare a quote and agree to a repair cost. (C) assess the damage and issue a payment. (D) assess the damage and commence the repairs. (2 marks each = 60 marks) Section B: Narrative Questions Question 2. (a) Describe the basic principles that govern subrogation including the adjuster s role in the process. (b) Contrast average cost reserving with individual reserving. Question 3. (a) What are the factors that the loss adjuster must consider when determining whether the insured had an insurable interest in the property insured when a loss occurs? (b) Explain the doctrine of proximate cause. (c) An insured advised that their premises was broken into and several large items were taken. The insured states that many of the items were obtained overseas and for cash. You are the adjuster appointed to this loss and note that there are several coverage issues. Describe how you would investigate this claim using the Decision Tree Model. Page 6 of 8

7 -7- Question 4. (a) Describe THREE (3) forms of body language and explain why the interpretation of non-verbal communication is important to adjusters. (b) Effective communication is having two people understand each other clearly. What are the basics of good speech that can reduce the chances of being misunderstood by others? (12 marks) (8 marks) Question 5. For each of the following types of residential property loss, discuss the coverages that apply and any special exclusions which would affect the adjustment of the claim: (a) Water escape claim (b) Frozen water pipe claim (c) Windstorm claim (d) Theft claim Section C: Application Question Question 6. Question 7. (a) Murano Contracting recently experienced a large building loss. During the adjustment of the claim there has been a disagreement in the values of the property and the overall amount of the loss. Murano Contracting has mentioned to you, their adjuster, that the issue might be resolved through mediation, but they are unsure of the process. How would you describe the process and the possible benefits of mediation to your insured? (b) Lolita is a micro-biologist who recently suffered a head injury as a result of a serious motor vehicle accident. She has been off work for over six months and will never fully recover from her injuries. Disputes between her and the insurance company have been without resolution. Arbitration has been recommended to resolve the issues. Describe the arbitration process and the benefits to Lolita and explain how the process differs from mediation. (a) Mr. & Mrs. Black have suffered a major water damage claim. They have spent the evening extracting water from their basement and attempting to clean up. Mr. Black had purchased an all risk policy. Today, Mr. Black contacts his insurance company to present a claim for sewer backup. You are the adjuster appointed to the loss. During your initial investigation, you notice that there is no coverage for sewer backup on the policy. Describe the process you will undertake to deliver the denial message to Mr. and Mrs. Black that ensures the denial is legal and effective. (b) Based on the scenario in (a), what important conflict management skills will you need to handle the denial effectively? (12 marks) (8 marks) Page 7 of 8

8 -8- Question 8. Larry recently purchased a new gas barbeque from Windjammer BBQ Company, a well-known manufacturer that includes installation and training on all products sold. Over the long weekend, Larry invited his friends over for a backyard cook-out. While barbequing, the unit caught fire and the fire spread to the house. Several guests were injured. You are an independent adjuster. You have received an assignment from Larry s homeowners insurer. They advise that they will be handling the direct damage claim in-house and want you to investigate the possible personal liability claim. Describe how you will proceed with your investigation, starting with the steps you take to confirm that the occurrence could form the basis of an actionable tort. Include any defences that might be applicable. (20 marks) Page 8 of 8