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AIC 302 6 and 7 Questions with
Detailed Verified Answers
An insurance policy is often construed to be a contract of adhesion. This
means that:
a. The insured can make changes to the policy wording before the effective
date of the policy.
b. The policy is offered to insureds on a take-it-or-leave-it basis.
c. The policy cannot be assigned to another without the insurer's consent.
d. The policy coverage follows the vehicle. Ans: Most policies are contracts of
adhesion, meaning that the insurer, in most cases, offers the insurance policy
to insureds on a take-it-or-leave-it basis.
Claims representatives should take these steps after reviewing the facts of a
claim: Ans: - Review and apply the relevant law
- Determine the legal obligations and defenses that apply to the facts
- Determine what choices, if any, the claimant might have in applying the law
- Determine what category liability falls into—clear, probable, questionable, or
doubtful
- Review the facts and determine whether other potentially liable parties have
been overlooked
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Compensatory damages Ans: A payment awarded by a court to reimburse a
victim for actual harm.
Special damages Ans: 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 Ans: A monetary award to compensate a victim for losses,
such as pain and suffering, that do not involve specific, measurable expenses.
Remittitur Ans: This occurs when a judge uses his or her discretion to reduce
an excessive jury verdict award.
Additur Ans: Occurs when a judge uses his or her discretion to increase a jury
verdict award that is deemed insufficient.
Collateral source rule Ans: A legal doctrine that provides that the damages
owed to a victim should not be reduced because the victim is entitled to
recover money from other sources, such as an insurance policy.
Mitigation of damages Ans: A duty owed by an injured party to a claim to
take reasonable measures to minimize or avoid additional injury or loss.
These are some issues to consider regarding permanent injuries: Ans: Have
job, family, and recreation been affected for the worse as a result of this
permanent injury?
Does chronic pain accompany the injury?
Does disability or disfigurement accompany the injury?
Has the person's personality been affected?
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One of the greatest contributors to large monetary awards in bodily injury
claims is the possibility that an injury will Ans: cause permanent impairment
for the plaintiff.
Hedonic damages (loss of enjoyment damages) Ans: Damages associated
with the loss of physical and intellectual gratification and other lifestyle losses.
Diminished earning capacity occurs when permanent injuries or disabilities
prevent claimants from Ans: working in the same capacity as they did before
the loss occurred. Calculation of these damages is not a simple task, even for
experts.
Loss of consortium Ans: The loss of benefits that one spouse is entitled to
receive from the other, including companionship, affection, and sexual
relations resulting from the injury or death of a spouse.
Claims reps should consider these factors in calculating diminished earning
capacity: Ans: Occupation and wages of claimant
Age of claimant
Expected work life of claimant
Life expectancy of claimant
Education and training of claimant
Previous job history of claimant
Death claims fall into two categories: Ans: survival actions and wrongful death
actions. To evaluate the loss potential, claims representatives need to know
the elements of each.
AIC 302 6 and 7 Questions with
Detailed Verified Answers
An insurance policy is often construed to be a contract of adhesion. This
means that:
a. The insured can make changes to the policy wording before the effective
date of the policy.
b. The policy is offered to insureds on a take-it-or-leave-it basis.
c. The policy cannot be assigned to another without the insurer's consent.
d. The policy coverage follows the vehicle. Ans: Most policies are contracts of
adhesion, meaning that the insurer, in most cases, offers the insurance policy
to insureds on a take-it-or-leave-it basis.
Claims representatives should take these steps after reviewing the facts of a
claim: Ans: - Review and apply the relevant law
- Determine the legal obligations and defenses that apply to the facts
- Determine what choices, if any, the claimant might have in applying the law
- Determine what category liability falls into—clear, probable, questionable, or
doubtful
- Review the facts and determine whether other potentially liable parties have
been overlooked
,2|Page
Compensatory damages Ans: A payment awarded by a court to reimburse a
victim for actual harm.
Special damages Ans: 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 Ans: A monetary award to compensate a victim for losses,
such as pain and suffering, that do not involve specific, measurable expenses.
Remittitur Ans: This occurs when a judge uses his or her discretion to reduce
an excessive jury verdict award.
Additur Ans: Occurs when a judge uses his or her discretion to increase a jury
verdict award that is deemed insufficient.
Collateral source rule Ans: A legal doctrine that provides that the damages
owed to a victim should not be reduced because the victim is entitled to
recover money from other sources, such as an insurance policy.
Mitigation of damages Ans: A duty owed by an injured party to a claim to
take reasonable measures to minimize or avoid additional injury or loss.
These are some issues to consider regarding permanent injuries: Ans: Have
job, family, and recreation been affected for the worse as a result of this
permanent injury?
Does chronic pain accompany the injury?
Does disability or disfigurement accompany the injury?
Has the person's personality been affected?
, 3|Page
One of the greatest contributors to large monetary awards in bodily injury
claims is the possibility that an injury will Ans: cause permanent impairment
for the plaintiff.
Hedonic damages (loss of enjoyment damages) Ans: Damages associated
with the loss of physical and intellectual gratification and other lifestyle losses.
Diminished earning capacity occurs when permanent injuries or disabilities
prevent claimants from Ans: working in the same capacity as they did before
the loss occurred. Calculation of these damages is not a simple task, even for
experts.
Loss of consortium Ans: The loss of benefits that one spouse is entitled to
receive from the other, including companionship, affection, and sexual
relations resulting from the injury or death of a spouse.
Claims reps should consider these factors in calculating diminished earning
capacity: Ans: Occupation and wages of claimant
Age of claimant
Expected work life of claimant
Life expectancy of claimant
Education and training of claimant
Previous job history of claimant
Death claims fall into two categories: Ans: survival actions and wrongful death
actions. To evaluate the loss potential, claims representatives need to know
the elements of each.
