Arizona Adjuster Practice Exam

Which method is NOT used by an insurer to settle a property claim?

1. Payment of money to the insured

2. Replacement with similar or equivalent property

3. Referral to mediation

4. Repair of the damaged property

The correct answer is: Referral to mediation

The method typically not used by an insurer to settle a property claim is referral to mediation. In the context of property claims, insurers generally engage directly with the insured to resolve the claim through established settlement methods such as financial compensation, replacement of the property, or repairs to the damaged items. Mediation is often a step in the disputes that may arise during the claims process, but it is not a standard method for settling claims. While mediation can be useful for resolving conflicts that arise after a claim decision, insurers primarily rely on methods directly addressing the specifics of the claim, such as offering payment to the insured or restoring the property to its pre-loss condition. Understanding these conventional settlement methods helps highlight that mediation is more of a conflict resolution tool rather than a direct means of settling a property claim.