North Carolina Adjuster Practice Exam

When Ed assures Adeline that her claim will be covered even after his investigation, what authority does Ed hold?

1. He is a senior adjuster

2. He has binding authority to make coverage decisions

3. He is acting on behalf of the company’s legal team

4. He can negotiate settlements

The correct answer is: He has binding authority to make coverage decisions

The assertion that Ed holds binding authority to make coverage decisions is accurate because binding authority refers to the power an adjuster has to make final decisions regarding insurance claims, particularly in matters of coverage. This means that once Ed communicates to Adeline that her claim will be covered, his assurance is definitive and cannot be overturned by further review or discussion within the company. Adjusters with binding authority are typically responsible for evaluating claims, applying policy provisions, and ultimately making decisions that obligate the insurer to provide coverage as stated. This is a critical function in the claims process, as it allows for effective resolution of claims and provides policyholders with clarity and confidence regarding their coverage. While other roles such as being a senior adjuster, acting on behalf of a legal team, or having the capacity to negotiate settlements are important in the claims process, they do not specifically indicate the ability to make binding coverage decisions like the authority Ed exercises in this scenario. This distinction is vital in understanding the nature of authority held by adjusters in the context of handling and concluding insurance claims.