Delaware Property Adjuster Practice Test: Delaware law, Part 2

Correct answer: A. Give her written notice of the statute of limitations

Section 3914 requires an insurer, during the pendency of any claim under a casualty policy, to give the claimant prompt and timely written notice of the applicable statute of limitations for an action for damages. In Delaware a personal injury action must generally be filed within 2 years of the injury (10 Del. C. 8119), so the notice protects claimants who are negotiating without a lawyer.

Reference: 18 Del. C. 3914; 10 Del. C. 8119

Correct answer: B. Make payment conditional on using a particular glass shop

Section 3916 makes it an unfair trade practice for an insurer, agent or employee to require that automobile glass repair or replacement be done by a particular facility, person or business as a condition of paying the claim. Inspecting the damage, suggesting a shop on request and applying the policy deductible are all permitted. Regulation 602 section 5.0 similarly bars an appraiser from requiring repairs at a specified shop.

Reference: 18 Del. C. 3916; 18 DE Admin. Code 602, section 5.0

Correct answer: C. Carmen may require an appraisal based on a personal inspection

Section 4.0 of Regulation 602 lets an appraiser work from a personal inspection or from photos, video or digital images, but an insurer may not require the owner to submit images, and an owner unhappy with an image-based appraisal may require the insurer to obtain one based on a personal inspection. Section 7.1.5 requires appraisers to inspect within 6 working days of assignment unless circumstances such as a catastrophe make that impossible.

Reference: 18 DE Admin. Code 602, sections 4.0 and 7.1.5

Correct answer: D. The insurer must notify the Bureau, with immunity if it acts without malice

Section 2408 requires any insurer with a reasonable belief that insurance fraud is being or has been committed to send the Delaware Insurance Fraud Prevention Bureau the information on the Bureau's form. Section 2409 protects people who report or share fraud information without malice from libel, slander and other civil claims, absent fraud or bad faith. No conviction is needed before reporting, and reports go to the Bureau rather than the Attorney General.

Reference: 18 Del. C. 2408 and 2409

Correct answer: A. $23,000

Section 2411(b) allows an administrative penalty of up to $10,000 for each act of insurance fraud, so two acts allow $20,000. Section 2411(d) adds an assessment for the Bureau's costs equal to 15% of each penalty: 15% of $20,000 is $3,000, for a total of $23,000. The Commissioner may also order restitution of fraudulently obtained payments under 2411(e), and criminal prosecution remains possible under 2413.

Reference: 18 Del. C. 2411(b), (d) and (e)

Correct answer: C. A $20,000 bond; the insured may cancel through the third business day

Section 1752 requires a $20,000 surety bond in favor of the State, and the license terminates automatically if the bond lapses. Section 1756 requires a written contract on a Commissioner-approved form and gives the insured the right to cancel until midnight on the third business day after signing; a written cancellation is effective when mailed. On a canceled commercial loss contract, the public adjuster may recover reasonable compensation for work already done.

Reference: 18 Del. C. 1752 and 1756(a), (b)

Correct answer: B. Prohibited, regardless of disclosure or which jobs the company takes

Section 1758(b)(6) flatly prohibits a public adjuster from having any direct or indirect interest in a home improvement, restoration, construction, salvage, appraisal, loss mitigation, cleaning or environmental restoration business operating in Delaware. Written disclosure addresses a different rule, collecting fees from service providers under 1758(b)(3), not ownership. A violation is an unfair trade practice under 1758(c) and may also constitute insurance fraud under 2407.

Reference: 18 Del. C. 1758(b)(3), (b)(6) and (c)

Correct answer: A. Liability of 25/50/10 plus PIP of $15,000 per person and $30,000 per accident

Title 21 section 2902(b) sets liability limits of $25,000 per person and $50,000 per accident for bodily injury and $10,000 for property damage, and 2118(a)(2) requires personal injury protection of at least $15,000 per person and $30,000 per accident. PIP cannot be rejected, although the owner may elect filed deductibles or other reductions that apply to the owner and household members.

Reference: 21 Del. C. 2118(a) and 2902(b)

Correct answer: D. $15,000

Under 21 Del. C. 2118(a)(2), PIP covers occupants of the insured vehicle for reasonable medical expenses, net lost earnings and extra expenses for personal services the injured person would have performed. Her expenses total $9,800 + $4,700 + $1,100 = $15,600, but the minimum limit is $15,000 per person, so PIP pays $15,000. Leaving out the chore help gives the tempting but wrong $14,500.

Reference: 21 Del. C. 2118(a)(2)a. to c.

Correct answer: B. They increase 1.5% a month for days 31 to 60, then 2% a month

Section 2118B(c) gives the insurer 30 days after receiving a written request and documentation to pay or explain a denial in writing. After that, unpaid benefits increase at a monthly rate of 1.5% from day 31 through day 60, 2% from day 61 through day 120 and 2.5% after day 121. Bad faith matters only for attorney's fees under 2118B(d), and the 1% per day penalty applies to late claim forms under 2118B(b).

Reference: 21 Del. C. 2118B(b) to (d)

Correct answer: C. $3,350

Section 3902(a)(2) subjects uninsured vehicle property damage coverage to a $250 deductible per accident unless the insured and insurer agree in writing to a different one, and it defines property damage to include loss of use. The covered loss is $3,400 + $200 = $3,600, less $250, or $3,350. Delaware auto policies must include uninsured vehicle coverage unless a named insured rejects it in writing.

Reference: 18 Del. C. 3902(a)(1) to (3)

Correct answer: A. She may request arbitration in writing within 90 days of the offer

Regulation 901 requires homeowners and auto insurers without an approved exemption to arbitrate covered claims. A homeowners request must be in writing and mailed to the Commissioner within 90 days of the offer or denial (section 5.3). A three-member panel decides, each party pays a $50 filing fee, and an appeal goes to Superior Court within 90 days for homeowners claims or 30 days for auto claims.

Reference: 18 DE Admin. Code 901, sections 2.0, 5.3, 9.0, 12.0 and 13.0; 18 Del. C. 331(d)

Correct answer: D. 1 year from the date of the denial

Title 10 section 8106(b) says a property insurance contract covered by subchapter III of 18 Del. C. chapter 41, which includes policies on owner-occupied homes of up to four units and household contents, may not require a lawsuit to be filed less than 1 year from the date the insurer denies the claim. The policy may allow longer, but a clause running from the date of loss could cut the insured's time below that floor.

Reference: 10 Del. C. 8106(b); 18 Del. C. 4120

Correct answer: C. $500,000

Section 4208(a)(1) obligates the Association to pay covered claims up to $500,000 per claimant, except that workers' compensation claims are paid in full and unearned premium refunds are capped at $10,000 per policy. It never pays more than the insolvent insurer owed under the policy. Covered claims must exist before the liquidation order or arise within 30 days after it, and they generally must be filed within 24 months of the order.

Reference: 18 Del. C. 4208(a)(1)

Correct answer: B. A first-party claim by a business with a net worth over $10 million

Section 4205(6)b. excludes any first-party claim by an insured whose net worth, combined with its affiliates, exceeded $10,000,000 on December 31 of the year before the insurer became insolvent, as well as punitive or bad faith damages and amounts owed to reinsurers or other insurers. Workers' compensation benefits are paid in full, unearned premium up to $10,000 per policy, and other covered claims up to $500,000 per claimant.

Reference: 18 Del. C. 4205(6) and 4208(a)(1)