Chapter 5 - Insurance Claims Adjusting

Unofficial Reports

1. Newspaper accounts

Claim settlement options

A. Repair the property. B. Replace the property with like kind and quality C. Replace the property w/ new D. Fair value for damaged property

Company Adjuster

Adjuster representing the interests of the insurer, including independent contractors and salaried employees of the insurer.

Agreed Price

Amount agreed to by the insurer ad the insured or their representatives as to the reasonable cost to repair damages to the motor vehicle resulting from the loss without considering and decibels/ other deductions

Public Adjuster

An independent contractor representing solely the financial interests of the insured named in the policy. The insured, and not the insurance company pays the adjuster.

Multiple licensing

An individual may be licensed concurrently under separate licenses as a company and public adjuster but may not act as both types of adjuster with respect to the same claim.

Insurance Adjuster

Any individual who, for compensation, fee or commission, investigates and settles claims arising under property, casualty or surety contracts on behalf of the insurer or insured.

Determining Value of Loss

Burden of proof is the responsibility of the insured to prove the value and cause of lapse under a named peril policy. Under an open peril form the burden of proof is sometimes left up to the company to prove the loss is excluded. The insured is also obligated to produce estimates of loss and to separate the damaged property from the undamaged property.

Claims settlement options

Claims settlement options For liability claims include lost wages, disfigurement, loss of consortium and loss of use. Categorized under SPECIAL and GENERAL Damages.

DEPRECIATION

Depending on type of coverage, some insurance forms allow for depreciation of the damaged property. If the insured carries replacement cost coverage and is insured to value then depreciation would not apply.

Claim file Documentation of events

Each company has its own claim procedures and methods of documentation. Records must be kept in such a form to present to an insurance examiner shoulder the occasion arise. Such files must contain all notes and paperwork pertaining to the claim in such detail that pertinent events and dates of such events can be reconstructed.

A. Investigation of claims

Every insurer must establish procedures to commence an investigation of any claim filed by a claimant or by a claimants authorized representation within a specified number of working days of receipt of notice of claim. Every insurer will provide to every first party claimant/representation, a notification of all items, statements, forms, if any, that the insurer reasonably believes will be required of the claimant within a specified number of working days of receiving notice of claim. A claim filed with an agent of an insurer will be deemed to have been filed with the insurer unless such agent notifies the person filing the claim that the agent is not authorized to receive notices of the claim.

Time for payment of claims

Every insurer must pay an amount finally agreed upon in settlement of all or part of any claim not later than a specified number of working days from the receipt of such agreement by the insurer or from the date of the performance by the claimant of any condition set by such agreement, whichever is later.

Negotiation of settlement

For successful negotiation adjuster must be knowledge of: 1. The contracts issued by the insurer and coverage provided by these contracts. 2. Characteristics of various kinds of property insured, typical types of losses, circumstances in which property can be repaired rather than replaced and typical repair/replacement costs 3. Our legal system and basic concepts of contact law and legal liability 4. Insurers claims handling goals and the professional standards the adjuster is expected to maintain

Appraisal Clause

Found in property insurance contracts and physical damage coverage in auto policies. Uprise is to allow the insured and the insurer to arrive at an agreed upon amnt of the value of the property damaged. Appraiser umpire situation

Scheduled Payment Release or Opened Ended Release

General damages, as well as special damages incurred to date, are paid immediately. The claim is left "Open" for payment of future "Specials" such as an additional visit to the physician

Structured settlement

Generally reserved for large settlements, claimant receives payments in set installments instead of a lump sum. May call for part or full amnt to be paid as a lump sum.

D. Records of all claims that have been denied

If a denial of a claim is made by any other means than writing, and appropriate notation must be made i the claim file of the insurer

H. Separation of Claims

In any case where there is no dispute as to one or more elements of a claim, payment for such elements must be made notwithstanding the existence of disputes as to other elements of the claim where such payment can be made without prejudice to either party

F. Liability of Others

Insurers may not fail to settle first party claims on the basis that responsibility for payment should be assumed by others except as may otherwise be provided by policy provisions.

Interim Report

Interval reports on the status of the claims, Could include taking depositions, getting estimates, additional medical info, determining additional damages etc.

Adjustment of total losses - Subdivision 1 - Insurer makes a cash settlement

Must use the "official used car guide" approved by the insurance commissioner/department and uniformly used by the company. And deviation downward and must be documented why.

G. Denial of claims for failure to exhibit property

No insurer may deny a claim for failure to exhibit the insured property without proof of demand by the insurer and refusal by the claimant to exhibit said property.

C. Denial Of Claims

No insurer may deny a claim on the grounds of a specific policy provision, condition or exclusions unless reference to such provision, condition or exclusion is included in the denial. The denial must be given to the claimant in writing or as otherwise provided by law.

I. Unreasonable travel

No person may require a claimant to travel unreasonably either to inspect replacement motor vehicles, to obtain a repair estimate or to have the motor vehicle repaired at a specific repair shop.

J. Notice of applicable time limitations

No representative of the insurer may negotiate for settlement with a claimant or the claimants attorney without giving the claimant written notice that the claimants rights may be affected by a statute of limitations or a policy or contract time limit. Such notice must be given to first and third party claimants within a specified number of days before the date on which such time limit may expire.

Power to Bind

Once and adjuster is appointed, the claimant/Insured has the right to assume the adjuster has the power to ascertain the amount of the loss and settle it. If there are any limitations on the authority of the adjuster the insured is not bound unless there is knowledge of said limit of authority. While an adjusters power to bind an insurer to an agreement made w/ a claimant varies by type of adjuster, the adjuster is considered the agent of the insurer and is empowered to make agreements regarding value and loss on its behalf.

Arbitration Clause

Policy condition in which the purpose is to settle disputes between insurer and insured. Generally found in uninsured motorist coverage in auto policies. An arbitrator is appointed by both parties to consider the facts then pass them on.

Advanced payment

Relieves the financial burden on the claimant by making certain payments to the claimant even before the claim can be negotiated. These payments are subtracted from final settlement

Full release settlement

Results in immediate payment when the claimant signs a release relinquishing their right to sue.

Initial (Field) report

Results of the initial investigation

Mediation

The act of the third person in intermediating between two contending parties with a view to persuading them to adjust or settle their dispute

Fiduciary Agent

The adjuster is a Fiduciary Agent. This relationship must maintain a high degree of fidelity and loyalty to the interest of the principal (Insurer) whether or not the adjuster is a direct employee. As a fiduciary agent of the principal, the adjuster should not deal in any way with the principals property with motives of self-interest. The adjuster should not represent interests that are averse to those of the principal and should not profit or seek to profit from any outside source.

The Adjusters investigation

The adjusters investigation could be as simple as verification of bills and estimates, or expanded to included taking photos, interviewing witnesses, or recording statements as required. Also facts obtained during the initial investigation must be transferred into evidence for if and when the claim goes to suit so allegations made can be substantiated.

No Release or Walk-Away

The bills presented are paid with no attempt to obtain a separate release, although the wording on the draft or check may also serve as a form of release. After a certain amnt of time has passed w/ not further contact from the claimant the file is considered closed

Special requirements/ Production of Books & records/ Abandonments

The insured must fully cooperate w/ the insurance company by offering testimony or other evidence including the production of book/records. The insured must separate the damaged from the undamaged property. The insured cannot simply abandon the property to the insurance company.

Payment and discharge

The payment of a claim in exchange for a release indicating that the claim was paid as a result of a settlement agree to by all parties.

Full Report

This is the final report containing all the facts, evidence and disposition of the calim

Competitive estimates

To avoid oerpayment of claims, the adjuster may ask for more than one estimate of the damaged property

Salvage

Unless otherwise agreed to the salvaged property belongs to the insurance company when they pay the loss.

1. Intro

Will include items such as date, time and location of the statement, identification of the interviewee and so on

Types of Liability policies

1. Auto Liability 2. Commercial General Liability 3. Personal Liability 4. Professional Liability (Including medical and non-medical) 5. Aircraft, boat, ocean marine.

Types of insurance Adjusters

1. Company Adjuster 2. Public Adjuster

Visual Evidence

1. Diagrams or sketches of the scene of the accident 2. Engineering plats 3. X-rays 4. Photographs

Expert evidence

1. Report of company medical examiner 2. Automobile inspector or appraiser 3. Engineer or chemist 4. Actuaries 5. Handwriting expert

Methods used for current model vehicles - Total Loss

1. The insurer must pay the insured the reasonable purchase price on the date of loss of a substantially similar vehicle, less any applicable deductible and an allowance for depreciation in accordance with and official car guide 2. The insurer must furnish the insured w/ a substantially similar replacement vehicle and charge the insured for any applicable deductible and for depreciation in accordance with "Offical Used Car Guide"

Adjusters duties in liability losses.

1. Verify Coverage 2. Determine liability 3. Physical evidence 4. Witness statements 5. Determine physical damages 6. Determine the special damages (medical expenses, loss of wages, and other expenses) 6. Determine the general damages (Intangible such as pain and suffering) 7. Determine if litigation is eminent and estimate defense costs and probability of success in lawsuit. 8. Determine if other parties to the loss contributed through their negligence 9. Determine the value of the salvage in case payment is made

Claims investigation

A duty performed by the insurance company to perform on behalf of the insured and to also protect the interest of the insurance company. Each insurance policy contains a clause that outlines the duties of the insurance company. This is found in the insuring agreement in most liability policies. State laws requires that the claim be handled "Promptly"

Proof of Loss

A formal statement made by the insured to the insurance company regarding a loss. The purpose is to provide sufficient info concerning the loss to enable it to determine liability under the policy/bond.

Substantially similar vehicle

A motor vehicle of the same make, model, year and substantially the same conditions including all major options of the insureds vehicle. Mileage must not exceed the insureds vehicle by more than 4k miles unless agreed by both insurer and insured.

Standards for the Acknowledgement of Pertinent Communications

A. Acknowledgment of Notices of Claim. B. Answer of Inquiries from Insurance Department C. Replies to Other Pertinent communications D. Provision of Assistance to first party claimants

B. Offers of Settlement

In any case where there is no dispute as to coverage or liability, it will be the duty of every insurer to offer claimants or their authorized representatives, amounts that are fair and reasonable as shown by its investigation of the claim, providing the amounts so offered are within policy limits and in accordance with the policy provisions.

Special Damages

Includes medical expenses and loss of wages or costs of other known expenses

General Damages

Includes: Pain and suffering, punitive damages, loss of consortium, disfigurements and disability claims. In the case of general damages, costs aren't immediately known and are negotiated or determined in a court of law. These are intangible damages and most difficult to determine in case of a loss

Duties of the insured

Insured is required to report a claim to the company as soon as practical. The insured usually reports to their agent who provides the claim forms. The insured use also preserved the undamaged property to the best of their ability to avoid additional loss.

The evaluation process

Involves establishing a dollar value on the claim. In anticipation of the negotiation process, the evaluation for bodily injury and uninsured motorists claims will involve setting a settlement range rather than a single dollar amnt. At one end of the range is lowest dollar amnt they will fairly reimburse the claimant for the loss and fulfill policy obligations. The top end of the range is the highest ant the insurer will settle for before allowing claim to go to trial.

Payment of Physical damage, Bodily Injury Pending

Is used in a claim where there is both bodily injury and property damage. Because bodily injury claims are typically more complex and take longer to negotiate, the insurer relieves the claimants financial burden somewhat by agreeing to pay the property damage claim wile leaving the bodily injury claim open to be negotiated.

Draft Authority

Most claims adjusters are given draft authority by the insurers to expedite the payment of claims. The insurer will normally limit the draft authority in terms of the limit that can be paid and the lines of insurance to which it applies. The larger more complicated claims would normally be handled by senior Claims management and payment made at that level.

K. Avoidance of Payment

Where liability and damages are reasonably clear; No person may recommend that third party claimants make claim under their own policies solely to avoid paying claims under an insurers insurance policy or insurance contract.

2. Body.

Will include accident data such as the date, time, location of the accident, vehicle identification, physical description of scene, accident description and injury info.

Format of written statement

1. Intro 2.Body 3. Closing/ Conclusion

C. Replies to Other Pertinent communications

Every insurer,The insurer must reply within a specific number of working days to all other pertinent communications from a claimant that reasonably suggest that a response is expected.

E. Notice of Necessary delay in investigating claims

If the insurer needs more time to determine whether a first party claim should be accepted or denied, it must so notify the first party claimant in writing writhing a specified number of working days after receipt of proof of loss. If the investigation remains incomplete, the insurer must send to claimant within a specific number of calendar dates from the date of initial notification and a specified number of called are days thereafter, a letter setting forth reasonable additional time needed for investigation. If there is reasonable basis revised by superintendent/insurance department that the claim was fraudulently caused by arson this does not apply but claimant must be notified of denial within a reasonable time for full investigation.

Appraisal process

In cases of losses involving property, it is often necessary t obtain estimate of the damaged property before payment can be made, Appraisals involve all types of property losses such as autos, structures and their contents. Special appraisers or estimators may be required for fine arts, stained glass or other items that requires higher level of expertise

3. Closing

Includes a closing statement by the interviewee in which he/she states "I have read the above () pages and () Lines and they are tue" where required there should be a brief acknowledgment by the intervieweee that he or she has received a copy. Closing should also include interviewees signature and the signature should be witnessed.

Rehabilitation

Includes provisions for rehabilitative treatment of the calimant

Duties of the insurer - Investigation

It is the responsibility of the insurer to provide a thorough investigation of the claim and to keep adequate documentation of the investigation

Relationship to the Legal Profession

Once the claimant has hired the services of an attorney, the adjuster may no longer contact the claimant w/o the consent/presence of said attorney. Often the adjuster must negotiate with an attorney towards the final disposition of the claim. Attorneys representing the insurance company prepare releases for processing by adjusters.

Reservations of Rights Letter

SHould an insured fail to report a claim in a timely fashion, and it is determined that the company's ability to properly investigate the merits of the claim have been compromised; The company will issue a reservation of rights letter. Purpose is to advise the insured that the insurer will go ahead and investigate the claim but MAY deny coverage if it determines that its position on the claim has been damaged due to late reporting.

Recorded statement Guidelines

1. All parties involved in interview must be identified, along w/ date, time and location. Identity of the interviewee must be included. Must be clear in the recording that the interviewee is aware of recording and done w/ permission. 2. Proper names, unusual sounding locations and other not clear words must be spelled out 3. Interruptions must be explained, and continuity of recording is necessary. 4. Interview must deal w/ all aspects of applicable and pertinent facts surrounding loss/accident 5. At end of interview, interviewee must be asked whether the questions were understood and whether answers were given to the best of their knowledge 6. Interviewee must again be notified they're being recorded.

Alternative dispute resolutions

1. Appraisal Clause 2. Arbitration Clause 3. Competitive Estimates 4. Mediation

Rules for Taking Signed Statements

1. At top right of first page, note date, time and place statement being taken at. 2. Number and date each consecutive page 3. No margins, paragraphs or indentations should be used. 4. No gaps should be left on any page 5. No erasures should be made - all errors should be struck through and correction inserted above, interviewee should initial. 6. No Abbreviations 7. Statements taken in ink or indelible pencil 8. Use language of person being interviewed in the statement (including slang) 9. Make the statement clear, concise, chronological, legible and complete. The statement should flow and lead up to the happening step by step. 10. Interviewee should read the statement and certify they read and understand the statement 11. Interviewee should sign at the end of the statement and at the bottom of each page of the statement

Documentary evidence

1. Deeds or ownership of land 2. Leases 3. Contracts and agreements, especially contracts for construction, alterations and repair, as well as hold harmless agreements

Mistakes when recording statements

1. Don't refer to insurance during the interview 2. Don't ask leading questions 3. Don't ask argumentative questions which tend to create an adverse/hostile environment 4. Don't give your opinions 5. Don't express excessive sympathy 6. Don't invite a settlement demand during the interview 7. Don't use legalistic words/phrases.

Verification evidence

1. Employers records to show wage loss 2. Index Bureau reports 3. Workers comp claims made by an injured employee, arising out of the same accident.

Medical Reports

1. Hospital records 2. Attending physician report and records 3. Medical or hospital reports covering preexisting injury or disease

Written statement captions

1. ID of date, time and location of statement 2. ID of the interviewee - should be immediately identified. ID should include age, address, phone #, marital status, occupation etc. 3. Date, time location of accident 4. Vehicle ID 5. Background and origin and destination of trip - including identities of passengers, activity of driver and passengers before the accident and whether drugs or drinking were involved 6. Physical description of scene including wether conditions and road conditions 7. accident and injury description 8. Event after the accident (accusations, conversations, witnesses, police, Identity of ambulance driver, hospital, doctors etc. 9. Conclusions 10. Signature

Types of Adjuster reports

1. Initial (Field) Report 2. Interim Report 3. Full report

Adjustment of Partial losses - Subdivision 1

1. Insurers must include the insured's deductible, if any, in subrogation demands. Subrogation recoveries must be shared on a proportionate basis w/ the insured, unless the deductible amount has been otherwise recovered. No deduction for Spenser's can be made from the deductible recovery unless an outside attorney is retained to collect such recovery. The deduction may then be for only a pro rata share of the allocated loss adjustment expense.

Basic Activities in handling claims - Adjuster

1. Investigate to establish coverage, determine legal liability and verify if the alleged damages qualify the losses for payment 2. Evaluation to determine the fair payment in accordance w/ the contract and applicable law 3. Negotiation of a quality settlement based on facts discovered during the evaluation process

Official reports

1. Police reports 2. State motor vehicle reports filed to parties involved in accident 3. Fire department reports 4. Reports of state motor vehicle inspectors 5. Traffic court proceeding reports 6. Arraignment in magistrate court 7. Death certificates 8. Autopsy reports 9. Coroners inquest transcript 10. Birth and marriage certificates 11. Weather reports 12. School records 13. Certified copies of court records showing prior convictions of crimes 14. Hack bureau reports 15. C.A.B reports (aircraft) 16. I,C.C reports (interstate Truckers) 17. Coast Guard reports (Boats)

Critical Evidence

1. Statement of adverse driver (if auto) 2. Statement of claimant if other than auto claim 3. Statement of the claimant(s) in order of severity of injuries. 4. Photos of the accident scene, showing skid marks and other evidence of accident. 5. Examination of said photos and vehicles involved showing damage and point of impact (Auto) 6. The product itself/instrumentality causing the injuries 7. The premises or operations causing the claim

Fact Evidence

1. Statements of disinterested witnesses 2. Statements of the insured, his driver or employees having knowledge of the accident, the instrumentality causing accident or the parts of the premises in which the accident is alleged to have occurred 3. Negative statements from persons who were in a position to have seen the accident or have some knowledge of its occurrences but who dent having such knowledge

Damage Elements considered during bodily injury claim evaluations

1. The amount of medical expenses 2. Type of injury 3. Claimants wage loss or loss of earning capacity because of the injury 4. Pain and suffering resulting from the injury 5. Extent of disability and impairment 6. Claimants loss of enjoyment from an injury 7. Disfigurement resulting from injury 8. Whether persisting conditions contributed to the injury

Certain steps taken by the Adjuster in initial process of adjusting a property loss. 1-6

1. Verify effective date of the coverage 2. Verify coverage and proximate cause of loss to determine if coverage applies 3. Verify the insurable interest of the named insured in the property. Did they have an insurable interest at the time? 4. Determine if there are other entities having insurable interests in the property such as mortgages, a loss payee or other insureds. 5. Determine if other insurance will apply 6. Determine if the loss was caused by a third party in case subrogation against the 3rd party can be pursued

Adjustment of Partial losses - Subdivision 2

2. If an insurer prepares an estimate of the cost of the motor vehicle repairs, such estimate must be in an amount for which it may be reasonably expected the damage can be satisfactorily repaired. The insurer must give a copy of the of the estimate to the insured and may furnish to the insured one or more conveniently located repair shops that will fervor the repairs for the amnt tendered in the settlement of the claim

Adjustment of total losses - Subdivision 2

2. If the insurer elects to REPLACE the vehicle, the replacement vehicle must be immediately available, substantially similar vehicle that is furnished and paid for by the insurer, subject to the deductible if any

Adjustment of total losses - Subdivision 2

3. If the insured vehicle is a private passenger auto of the current model year, the insure must utilize one of two methods in the settlement of loss

Adjustment of Partial losses - Subdivision 3

3. If the insureds motor vehicle is repaired at a repair shop of the insurers choice, for a sum estimated by the insurer as the reasonable cost to repair the vehicle and recommended repair shop does not satisfactorily repair the vehicle, the insurer must, at no adtnl cost to the claimant and within a reasonable time, cause the damaged vehicle to be restored to the condition prior to loss.

Adjustment of Partial losses - Subdivision 4.

4. Deductions for betterment and or depreciation are permitted for parts normally subject to repair/replacement during the useful life of the insured motor vehicle. Deductions for betterment during the and or depreciation are limited to an amnt equal to the proportion that the expired life of the part to be repaired or replaced bears to the normal useful life of that part. Calculations for betterment, depreciation and normal use must be included in the insurers claim file

Adjustment of total losses - Subdivision 4 - Salvage

4. If the insurer, in the process of adjusting a total loss, makes a deduction for the salvage value of the insured vehicle, the insurer must furnish the insured w/ the name and address of a salvage dealer who will purchase the salvage for the amnt deducted.

Adjustment of Partial losses - Subdivision 5

5. Deductions for previous damage or prior condition of the motor vehicle must be measurable, discernible, itemized and specified as to dollar amount and such deductions must be detailed in the claim file.

Adjustment of Partial losses - Subdivision 6.

6. If the insurer does not perform its own physical inspection it is nevertheless bound by all the applicable requirements

Certain steps taken by the Adjuster in initial process of adjusting a property loss. 7-13

7. Verify that the insured has complied with their obligations under the policy such as protecting the property from further loss. 8. Assist the insured in mitigating the loss by providing assistance and guidance 9. Are there any special policy provisions/deductibles that apply? 10. Is part of the damaged property subject to policy limitations as regards limits or peril coverage? 11. Is the property insured in compliance with a coinsurance clause? 12. Is the property covered on an actual cash value basis, replacement cost basis or a valued or agreed amount basis? 13. Determine the extent of salvage if any, and its value.

Designated representative

A person designated to the insured to represent him/her in negotiations with the insurer in an attempt to settle the claim. Such Designated representative may be a member of the insureds immediate family of any other party named by the insured who may legally act on their behalf and acts w/o any compensation of any kind.

A. Acknowledgment of Notices of claim

Every insurer, upon receiving notification of a claim must, within a specific number of working days, acknowledge the receipt of such notice unless payment is made within such period of time. If an acknowledgement is made by means other than writing and appropriate notation of such acknowledgment must be made in the claim file of the insurer and dated. Notification given to an agent of an insurer will be considered notification to the insurer.

B. Answer of Inquiries from Insurance Department

Every insurer, upon receiving notification of a claim must, within a specific number of working days, furnish the department with a response to the inquiry

D. Provision of Assistance to first party claimants

Every insurer, upon receiving notification of a claim, must promptly provide necessary claim forms, instructions and reasonable assistance so that first party claimant can comply with the policy conditions and the insurers reasonable requirements

Types of Liability Claims

Except for non-medical professional liability claims, liability losses usually involve bodily injury and property damage claims. Claim representatives evaluating bodily injury claims should consider damage elements.