North Carolina Adjuster Practice Exam 2025 - Free Adjuster Practice Questions and Study Guide

An insurer must avoid using an application that has been altered without the insured's knowledge because this can lead to significant ethical and legal issues. When an insurer alters documentation without the insured's consent, it undermines the integrity of the claims process and violates the trust that forms the foundation of the insurer-insured relationship. Such actions can be perceived as deceptive and may result in allegations of bad faith, potentially damaging the insurer’s reputation and exposing it to legal liability.

Maintaining transparency and communication regarding the conditions and terms of a policy is vital in ensuring that both the insurer and the insured have a mutual understanding and agreement on the claims process. An altered application that the insured is unaware of disrupts this transparency and can skew the settlement in ways that are not aligned with the policyholder's original intentions or understanding. Therefore, it's crucial for insurers to operate with full disclosure and integrity during the settlement of claims. This approach not only upholds ethical standards but also fosters trust and cooperation between the parties involved.