Washington Adjuster Practice Test: Washington law, Part 2

Correct answer: D. Improper, since there is no proof of a demand and unfounded refusal

WAC 284-30-350(3) prohibits denying a claim for failure to exhibit the property without proof that the insurer demanded to see it and the claimant refused without good reason. Insurers may require inspection, since exhibiting property is a common duty after loss, but the file must show the demand and the refusal. Citing the policy condition in the denial letter does not replace that proof.

Reference: WAC 284-30-350(3)

Correct answer: B. $350

WAC 284-30-390(7) limits betterment and depreciation deductions to parts normally replaced during a vehicle's life, such as tires, and caps the deduction at the lesser of the increase in the vehicle's actual cash value or the value of the part's expired life. Expired life is 30,000 / 40,000 = 75% of $800, or $600. The lesser amount is the $350 increase in actual cash value.

Reference: WAC 284-30-390(7)

Correct answer: A. Include the taxes and fees of buying the vehicle just before the loss

WAC 284-30-391(4)(e) requires the settlement to include all applicable government taxes and fees the claimant would have incurred buying the vehicle just before the loss, whether or not the claimant keeps or transfers it. Dealer quotes and advertised comparables must come from within a reasonable distance, not over 150 miles, of where the vehicle is principally garaged, and current data means within 90 days before or after the loss.

Reference: WAC 284-30-391(2)(b) and (4)(e); WAC 284-30-320(4)

Correct answer: C. Notify the insured by phone or in writing, then allow 5 calendar days

Before denying storage costs, WAC 284-30-394 requires the insurer to advise the claimant by phone or in writing, document the contact in the claim file, and allow reasonable time to move the vehicle. Five calendar days is considered reasonable unless the claimant agrees to less. The insurer must also pay all reasonable towing charges unless the policy provides otherwise. The insured's consent is not required.

Reference: WAC 284-30-394

Correct answer: C. $800

WAC 284-30-393 requires the insurer to include the deductible in its subrogation demand and to allocate recoveries first to the insured's deductible, less the insured's comparative fault. Ana's 20% fault reduces her $1,000 deductible reimbursement to $800. No collection expense may come out of it because no outside attorney was retained. The insurer must also update her within 60 days and at least every 180 days.

Reference: WAC 284-30-393

Correct answer: A. Give the insurer and the OIC written notice 20 days before filing

RCW 48.30.015(8) requires a first party claimant to give written notice of the basis for the claim to both the insurer and the Office of the Insurance Commissioner 20 days before filing. Notice is deemed received three business days after mailing, the statute of limitations is tolled during the 20 days, and if the insurer does not resolve the matter the claimant may sue without further notice.

Reference: RCW 48.30.015(8)

Correct answer: D. $120,000

Under RCW 48.30.015(2), after finding an unreasonable denial or a violation of the listed claims rules (WAC 284-30-330, 350, 360, 370 or 380), the court may increase damages to no more than three times actual damages: 3 x $40,000 = $120,000. Subsection (3) separately requires the court to award reasonable attorney fees and litigation costs, including expert witness fees, to a prevailing first party claimant.

Reference: RCW 48.30.015(2), (3) and (5)

Correct answer: B. A class C felony, because the claim exceeds $1,500

RCW 48.30.230 makes it unlawful to knowingly present a false or fraudulent claim or proof, or to prepare a false document such as an invoice or proof of loss for use in support of a claim. A violation is a gross misdemeanor, but it becomes a class C felony when the claim exceeds $1,500. Marta's $2,200 claim crosses that threshold, and the crime does not depend on the insurer paying.

Reference: RCW 48.30.230

Correct answer: A. A body shop that regularly pays its customers' collision deductibles

RCW 48.30A.015(2) makes it unlawful for a service provider, which under RCW 48.30A.010 includes motor vehicle body and repair shops, to regularly waive, rebate or pay all or part of a claimant's property or casualty deductible. Paying or accepting money for claimant referrals is also prohibited. Trafficking is a gross misdemeanor for a single violation and a class C felony for each later one. An insurer applying its own policy terms is not covered.

Reference: RCW 48.30A.010 and 48.30A.015

Correct answer: B. $50,000

RCW 46.29.090 sets Washington's minimums at $25,000 for bodily injury to one person, $50,000 for bodily injury to two or more people in one accident, and $10,000 for property damage (25/50/10). Even with the $30,000 claim capped at $25,000, the claims total $60,000, so the $50,000 per accident limit controls. The at-fault driver remains personally exposed for the other $15,000 of bodily injury damages.

Reference: RCW 46.29.090(1); RCW 46.30.020(1)(a)

Correct answer: C. Insurers must offer PIP; a named insured may reject it only in writing

RCW 48.22.085 requires PIP to be offered with every new or renewal auto liability policy, and only a written rejection by a named insured removes it; that rejection binds all insureds and later renewals. The minimum package under RCW 48.22.095 is $10,000 medical and hospital, $2,000 funeral, $10,000 income continuation at up to $200 a week, and $5,000 loss of services. Higher limits, including $35,000 medical, are offered on request.

Reference: RCW 48.22.085, 48.22.095 and 48.22.100

Correct answer: B. It is reported to police within 72 hours and backed by other evidence

RCW 48.22.030(8) treats a no-contact vehicle as a phantom vehicle only if the facts are corroborated by competent evidence other than the testimony of the insured or anyone else with an underinsured motorist claim from the accident, and the accident is reported to law enforcement within 72 hours. The policy may apply a property damage deductible of up to $300 for hit-and-run and phantom vehicle claims.

Reference: RCW 48.22.030(7) and (8)

Correct answer: C. $1,500

A covered claim under RCW 48.32.030(4) includes a claim for unearned premium. RCW 48.32.060(1)(a) obligates the association only for the part of each covered claim above $100 and below $300,000, never more than the policy limit, so the policyholder receives $1,500. Claims existing before liquidation, or arising within 30 days after the order (sooner if the policy expires or is replaced), are covered.

Reference: RCW 48.32.030(4); RCW 48.32.060(1)(a)

Correct answer: D. A resident's auto claim against an insolvent admitted insurer

The association covers direct property and casualty lines other than life, title, surety, disability, credit, mortgage guaranty, workers' compensation (other than longshore and harbor workers' coverage) and ocean marine (RCW 48.32.020). Under RCW 48.32.030, the insolvent insurer must have been authorized in Washington, which excludes surplus line insurers, and amounts owed to reinsurers or insurers through subrogation are not covered claims. Life and disability policies fall under a separate association in chapter 48.32A RCW.

Reference: RCW 48.32.020; RCW 48.32.030(4) and (5)

Correct answer: A. 15 working days after receiving the notice

WAC 284-30-920(1) requires an insurer to begin investigating its records, including computer records, within 15 working days after receiving written notice of a lost policy relating to an environmental claim, and to promptly investigate the terms if it finds the policy. Both sides must share known facts and documents, and WAC 284-30-940 requires good faith participation in nonbinding mediation when the insured requests it.

Reference: WAC 284-30-920(1); WAC 284-30-940