Claims Adjuster Academy Chapter 3 Demo

Another defense can be found in the statutes of limitations enacted in various states. Such laws provide that certain types of lawsuits must be filed within a specified time of the occurrence to be valid under the law. Types of Damages Compensatory- Compensatory damages reimburse the injured party only for losses that were actually sustained. Punitive Damages- Intended to punish the defendant and make an example out of him or her to discourage others from behaving the same way. Absolute Liability- Absolute liability is imposed by law on those participating in certain activities that are considered especially hazardous. Strict Liability- Strict liability is most commonly applied in product claims. If a claimant can prove that a product was defective and that the defect caused the injury, the manufacturer can be held strictly liable. Vicarious Liability- There are times when a person may be held responsible for the negligent act of another person. This is called vicarious liability, or imputed liability. Cause of Loss (Perils)

* A peril is the cause of loss *

Direct loss- Direct loss means actual physical damage, destruction, or loss of property. Fire damage and stolen merchandise are examples of direct physical damage or loss.

Consequential or Indirect loss- Indirect losses are those that result from direct losses and occur as a consequence of direct loss.

Loss Valuation Actual Cash Value

Many losses are reimbursed on an actual cash value basis. Actual cash value (ACV) is usually calculated by determining the item’s replacement cost (what it would cost to buy a replacement) and subtracting an amount for depreciation. Here is what it looks like written as a formula: ACV = REPLACEMENT COST – DEPRECIATION Replacement Cost- The replacement cost for covered losses, with no allowance for depreciation.