Insurance Claims Adjusting

I.) The Insurance Adjuster

1.) Company adjuster- an adjuster representing the interests of the insurer, including independent contractors & salaried employees of the insurer.

2.) Public Adjuster- an independent contractor representing solely the financial interests of the insured named in the policy. insured, not insurance company, pays adjuster

1.) Fiduciary Agent- adjuster shouldn't deal in any way w/ the principal's property w/ motices of self interest.

2.) Power to Bind- insured or claimant has a right to assume the adjuster has power to ascertain the amount of the loss & to settle it.

II Claim Filing Process

Duties of the Insured

II Claim Filing Process

Duties of the Insured (additional duties required)

1.)Proof of loss- formal statement made by insured to insurance company regarding a loss. Purpose is to place before the company sufficient info concerning the loss to enable them to determine liabiltiy

2.) Special requirements/production of books & records/ abandonment- insured must fully cooperate w/ insurance company by offering testimoney or other evidence

1.) Investigation- duty of insurance company to perform on behald of the insured & to also protect the interest of the company. Duties are found in the insuring agreement.

2.) Claim file documentation- records must be kept in such a form to present to an insurance examiner should the occasion arise.

1.) Acknowledgment of notices of claim- every insurer, upon receiving notification of claim, within a specified # of working days, acknowledge the receipt of such notice unless payment is made within such a period of time.

2.) Answer inquires from insurance department- every insurer, within a specific # of days furnish the department with a response to the inquiry.

3.) Replies to other pertinent communcations- insurer shall reply within a specified # of working days to all other pertinent communcations from a claimant.

4.)Provisions of assistance to first party claimants- every insurer, upon receiving notification of a claim, shall provide necessary forms, instructions, & reasonable assistance so 1st party claimants can comply w/ policy

1.) Investigation of claims- every insurer shall establish procedures to commence an investigation of any claim filed by a claimant or by a claimants authorized representative within a specified # of working days of receipt.

2.) Offer of settlement- in any case where there is no dispute as to coverage or liability, duty of insurer to offer claimants amounts which are fair & reasonable.

3.) Denial of claims- no insurer shall deny a claim on the grounds of a specifc policy provision, condition, exclusion unless reference is included in denial. Must be in writing

4.) Records of all claims that have been denied- if denial claim is made by any other means than writing, appropriate notation shall be made in the claim file of the insurer.

5.) Notice of necessary delay in investigating claims- if insurer needs more time to determine whether a 1st party claim should be accepted or denied, it shall notify the 1st party claimant in writing within a specified # of working days after receipt of the proof of loss.

6.) Liability of others- insurers shall not fail to settle 1st party claims on the basis that responsibility for payment should be assumed by others except as may otherwise be provided by policy provisions.

7.) Denail of claims for failure to exhitibit property- no insurer shall deny a claim for failur to exhibit the insured property without proof of demand by the insurer & refusal by the claimant to exhibit said property.

8.) Separation of claims- in any case where there is no dispute as to 1 or more elements of a claim, payment for such elements shall be made notwithstanding the existence of disputes as to other elements of the claim where such payments can be made.

9.) Time for payment of claims- every insurer shall pay any amount finally agreed upon in settlement of all or part of any claim not later than a specified # of working days from the receipt of such agreement

10.) Notice of applicable time limitations- no rep. of insurer shall negotiate for settlement w/ a claimant or the claimants attorney w/o giving claimant written notice of claimants rights

11.) Avoidance of payment- where liability & damages are reasonably clear, no person shall recommend that 3rd party claimants make claim under their own policies soley to avoid paying claims under an insurer's insurance policy.

12.) Unreasonable travel- no person shall require a claimant to travel unreasonably either to inspect replacement motor veh., to obtain a repair estimate or to have the veh. repaired at a specific repair shop.

III Adjusting losses

ch 23 pg 6 full list

Certain steps taken by adjuster in the initial process of adjusting a property loss. Some of these are:

-verify effective date of coverage

-verify coverage & proximate cause of loss to determine if coverage applies

-determine if there are other entites having insurable interest in the property such as a mortgagee, a loss payee

-determine if other insurance will apply

-determine if loss was caused by 3rd party

-verify insured has complied with their obligations under the policy

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III Adjusting losses

1.) Determining Loss

III Adjusting losses

1.) Determining Loss

1.) Depreciation- depending on the type of coverage the insured has purchased, some insurance forms allow for depreciation of the damaged property. If insured carries replacement cost coverage, and is insured to value, then depreciation would not apply.

2.) Salvage- unless otherwise agreed to, salvaged property belongs to insurance company when they pay the loss.

Adjusting Losses

2.) Claim Settlement Options

1.) Repair of property

2.) Replace the property with like kind and quality

3.) Replace the property with new

4.) Fair value for damaged property

Adjusting Losses

3.) Payment & discharge

Liability Losses

In liability losses, adjuster must do most of the following in the investigation of the claim:

a. verify coverage

b. determine liability

c. physical evidence

d. witness statements

e. determine the physical damages

f. determine special damages (medical, loss wages)

g. determine general damages (intangibles such as pain)

h. determine if litigation is eminent

i. determine value of salvage in case payment is made

Liability Losses

Types of liability policies

a. auto liability polices

b. commerical general liability

c. personal liability

e. peronal liability

f. professional liability

g. aircraft, boat, ocean marine

Liability Losses

Types of Liability claims

-liability losses usually involve BI and PD claims

-claim reps. evaulating BI claims should consider the following damage elements:

a. amount of medical expense

b. type of injury

c. claimant's wage loss

d. pain & suffering resulting from injury

e. extent of disability

Liability Losses

Claims Settlement Options

include lost wages, disfigurment, loss of consortium, and loss of use

a.) Special damages- includes medical expenses & loss of wages or costs of other known expenses

b.) General Damages- include pain & suffering, punitive damages, loss of consortium, disfigurment, disability claims.

Adjusting Automobile Losses

1.) Agreed Price

2.) Designated Representative

3.) Substantially similar veh

1.) amount agreed to by insurer & insured or their representatives as to the reasonable cost to repair damages to the motor veh resulting from loss w/o considering any deductible

2.) person designated by insured to represent him or her in negotations w/ insurer in an attempt to settle the claim. Representative can be any member of insure's immediate family or any other person named by insured

3.) veh of same make, model, year., mileage must not exceed veh by more than 4,000 miles

-insurers shall include deductible in any subrogration demands. Subrogation recoveries shall be shared on a proportionate basis w/ insured unless deductible amount has been otherwise recovered.

-if insurer prepares an estimate of the cost of veh. repairs, estimate shall be in an amount for which it may be resonably expected the damage can be satisfactorily repaired.

-deductions for betterment/depreciation are permitted only for parts normally subject to repair & replacement during the useful life of the veh.

-deductions for previous damage or prior condition of veh. must be measurable, discernible, itemized, & specified as to dollar amount and must be detailed in file.

-if insurer doesn't perform its own phyiscal inspection, it is nevertheless bound by all applicable requirements

Adjustment of total loss

the following subdivisions shall govern the conduct of insurers in the adjustment of TL

a.) if insurer elects to make a cash settlement

-must use most recent publication of an "official used car guide" appvoed by commisioner. any deviation downward from guide's retail valuation must be documented.

- if retail value is not published in guide, company must secure dealer quotations on the retail value of similar veh. & base the settlement upon them.

-state applicable sales tax must be added

Adjustment of total loss

the following subdivisions shall govern the conduct of insurers in the adjustment of TL

Adjustment of total loss

the following subdivisions shall govern the conduct of insurers in the adjustment of TL

-if insured veh. is a private passenger automobile of the current model year

a. insurer shall pay to the insured the reasonable purchase price on the date of loss of a substantially similar vehicle

b. insurer shall furnish the insured w/ a sustantially similar replacement veh

Non-waiver: retention of a right. waiver may be intentional, unintentional, direct or indirect. EX: if an insurer sends out a renewal policy by mistake, it has waived its right to deny renewal for any reason.

Declaratory judment- binding judement issued by the court that defines the legal relationship between the parties & their rights w/ respect to the matter before the court.

Claims Adjustment Procedures

Settlement Options/Releases

1.) Full Release Statement- results in immediate payment when the claimant signs a release relinguishing their right to sue

2.) Schedule payment release or open-ended release- general damages as well as special damages incurred to date, are paid immediately. Claim is left "open" for payment of future "specials".

3.)Payment of PD, BI, BI pending- used in a claim where there is both BI & PD. insurer agrees to pay PD while leaving BI claim open until it can be negotiated.

4.) No Release or walk-away: bilsl presented are paid w/ no attempt to obtain a separate release.

Claims Adjustment Procedures

Settlement Options/Releases

1.) Advanced Payments: relieves the financial burden of the claimant by making certain payments to the claimant even before the claim can be negotiated. Advanced payments are subtracted from final settlement.

2.) Draft Authority: most adjusters are given draft authority of the insurers to expedite the payment of claims. Usually limits as to amount and insurance types it applies to.

3.) Execution of releases:

4.) Subrogation releases: if there is a right to recover damages from a 3rd party the right is transferred to the insurer to the extent the payment of the claim has been made.

1.) Appraisal clause- found in property insurance contracts. purpose is to allow the insured & the insurer to arrive at an agreed amount of the value of the PD.

2.) Arbitration clause- generally found in the uninsured motorist coverage in automobile policies. when an award is brougth down by any of the arbitrators, it is binding & final & both parties must accept.

3.) Competitve estimates: to avoid over payment of claims, the adjuster may ask for more than 1 estimate of the DP

4.) Mediation- act of a 3rd person in intermediating between 2 contending parties w/ a view to persuading them to adjust or settle their dispute.