ASSOCIATE IN CLAIMS FREQUENTLY TESTED ACTUAL
EXAM QUESTIONS WITH CORRECT ANSWERS
Question 1.
Representational documents
ANSWER
Photographs, maps, diagrams, and video footage that are useful as a means to document evidence
for a file.
Question 2.
Bad Faith
ANSWER
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.
Question 3.
Compensatory Damages
ANSWER
A monetary compensation to a victim for harm actually suffered, including lawyers' fees, court costs,
and interest. Can include contractual damages, consequential damages, a/or emotional damages.
Question 4.
Contractual Damages
ANSWER
The amount payable under the contract according to the contract's terms.
Question 5.
Consequential Damages
ANSWER
Damages awarded by a court to indemnify an injured party for losses that result indirectly from a
wrong such as a breach of contract or a tort.
Question 6.
Emotional Damages
ANSWER
Damages for mental suffering without physical injury.
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,Question 7.
Punitive Damages
ANSWER
Damages imposed in order to punish the wrongdoer. The standard for awarding punitive damages
varies by jurisdiction but generally requires proof of insurer behavior that is worse than ordinary
wrongdoing, such as malicious, fraudulent, or oppressive behavior. right to sue (lack of standing),
reliance on lawyers' advice, insured's collusion with the claimant, debatable reasonable basis,
statutory defenses, fair dealing and good documentation, comparative bad faith, and contributory
negligence.
Question 8.
Statute of Limitations
ANSWER
A statue that requires the plaintiff to file a lawsuit within a specific time period after the cause of
action has accrued, which is often when the injury occurred or was discovered.
Question 9.
Summary Judgment
ANSWER
A judgment granted by the court when it determines that no factual issue exists.
Question 10.
Good Faith
ANSWER
Broadly defined as consideration given to the insured's interests that is at least equal to that given to
the insurer's interests in handling the claim.
Question 11.
Gramm-Leach-Bliley Act of 1999 (GLB)
ANSWER
Enacted by Congress to protect the security and confidentiality of customers of financial institutions
such as banks, securities firms, insurers, etc.
Question 12.
Sarbanes-Oxley Act
ANSWER
This act requires publicly traded companies to meet and certify certain financial disclosure
requirements.
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, Question 13.
Fair Credit Reporting Act
ANSWER
Enacted by Congress in 1970 to promote accuracy and privacy of personal information assembled by
credit reporting agencies. The act requires reporting agencies to follow "reasonable procedures" to
protect the confidentiality and privacy of personal information.
Question 14.
Courts hold insurers to higher standard of conduct
ANSWER
To discourage them from abusing their position of power. Insurers create the contract and are in a
superior position of knowledge and power.
Question 15.
Equitable Subrogation
ANSWER
Describes a situation in which an excess insurer has the same rights as the insured to bring a suit
against the primary insurer.
Question 16.
Elements of good faith claims management
ANSWER
Consistent supervision, thorough training, and manageable caseloads.
Question 17.
Bad Faith Claims - What do they arise from?
ANSWER
Claim denial, excess liability claim, statutory bad faith, and violations of unfair claims settlement
practices act.
Question 18.
Regulation of insurers' claim settlement practices
ANSWER
Many states base their unfair claims settlement practices laws on Model Act, but not all of them.
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EXAM QUESTIONS WITH CORRECT ANSWERS
Question 1.
Representational documents
ANSWER
Photographs, maps, diagrams, and video footage that are useful as a means to document evidence
for a file.
Question 2.
Bad Faith
ANSWER
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.
Question 3.
Compensatory Damages
ANSWER
A monetary compensation to a victim for harm actually suffered, including lawyers' fees, court costs,
and interest. Can include contractual damages, consequential damages, a/or emotional damages.
Question 4.
Contractual Damages
ANSWER
The amount payable under the contract according to the contract's terms.
Question 5.
Consequential Damages
ANSWER
Damages awarded by a court to indemnify an injured party for losses that result indirectly from a
wrong such as a breach of contract or a tort.
Question 6.
Emotional Damages
ANSWER
Damages for mental suffering without physical injury.
1
,Question 7.
Punitive Damages
ANSWER
Damages imposed in order to punish the wrongdoer. The standard for awarding punitive damages
varies by jurisdiction but generally requires proof of insurer behavior that is worse than ordinary
wrongdoing, such as malicious, fraudulent, or oppressive behavior. right to sue (lack of standing),
reliance on lawyers' advice, insured's collusion with the claimant, debatable reasonable basis,
statutory defenses, fair dealing and good documentation, comparative bad faith, and contributory
negligence.
Question 8.
Statute of Limitations
ANSWER
A statue that requires the plaintiff to file a lawsuit within a specific time period after the cause of
action has accrued, which is often when the injury occurred or was discovered.
Question 9.
Summary Judgment
ANSWER
A judgment granted by the court when it determines that no factual issue exists.
Question 10.
Good Faith
ANSWER
Broadly defined as consideration given to the insured's interests that is at least equal to that given to
the insurer's interests in handling the claim.
Question 11.
Gramm-Leach-Bliley Act of 1999 (GLB)
ANSWER
Enacted by Congress to protect the security and confidentiality of customers of financial institutions
such as banks, securities firms, insurers, etc.
Question 12.
Sarbanes-Oxley Act
ANSWER
This act requires publicly traded companies to meet and certify certain financial disclosure
requirements.
2
, Question 13.
Fair Credit Reporting Act
ANSWER
Enacted by Congress in 1970 to promote accuracy and privacy of personal information assembled by
credit reporting agencies. The act requires reporting agencies to follow "reasonable procedures" to
protect the confidentiality and privacy of personal information.
Question 14.
Courts hold insurers to higher standard of conduct
ANSWER
To discourage them from abusing their position of power. Insurers create the contract and are in a
superior position of knowledge and power.
Question 15.
Equitable Subrogation
ANSWER
Describes a situation in which an excess insurer has the same rights as the insured to bring a suit
against the primary insurer.
Question 16.
Elements of good faith claims management
ANSWER
Consistent supervision, thorough training, and manageable caseloads.
Question 17.
Bad Faith Claims - What do they arise from?
ANSWER
Claim denial, excess liability claim, statutory bad faith, and violations of unfair claims settlement
practices act.
Question 18.
Regulation of insurers' claim settlement practices
ANSWER
Many states base their unfair claims settlement practices laws on Model Act, but not all of them.
3
