Los Angeles Claims Adjuster Property and Causality Practice Exam

What is the purpose of a non-waiver agreement in claims handling?

1. To settle claims without payment

2. To clarify the insurer's rights

3. To ensure future payments are larger

4. To preserve coverage without dispute

The correct answer is: To preserve coverage without dispute

A non-waiver agreement is designed to preserve coverage without dispute during the claims handling process. It allows the insurer to investigate the claim while simultaneously protecting its right to deny coverage later if warranted. By having this agreement in place, both the insurer and the insured understand that the investigation does not imply acceptance of the claim or that the insurer is waiving any rights regarding coverage. This is critical because it ensures that if the insurer eventually decides that the loss is not covered, the prior investigation and interaction do not undermine that right. The other responses do not accurately reflect the primary function of a non-waiver agreement. Settling claims without payment implies a different approach focused on resolution rather than maintaining coverage rights. Similarly, clarifying the insurer's rights may occur, but it is not the main purpose of the agreement. Ensuring that future payments are larger relates to payment amounts and the negotiable aspects of claims but does not concern the foundational purpose of the non-waiver agreement regarding coverage.