Chapter 1 Part 1

Clear, concise, and accurate file status notes are essential because:

A claim file must speak for itself.

For example:

A kitchen fire may have occurred because of a defective coffee maker.

This notification of the loss might be done through:

A loss notice form that includes basic information about the loss, by phone, through an agent or broker, or through an app that allows the insured to include photos of damaged property.

Most often, the independent adjuster receives the assignment by:

A phone call that is followed with any special handling instructions, relevant policy data, and other pertinent claims documents.

Nonwaiver agreement:

A signed agreement indicating that during the course of investigation, neither the insurer nor the insured waives rights under the policy.

File status notes must:

Accurately reflect and document investigations, evaluations, coverage decisions, and settlement details.

Preliminary reports do this:

Acknowledge receipt of the assignment, inform the insurer about initial activity on the claim, suggest reserves on certain coverages, advise the insurer of coverage questions, and request assistance and guidance from supervisors.

Regardless of the applicable coverage, the claims handling process involves six main activities:

Acknowledging and assigning the claim. Identifying the policy. Contacting the insured. Investigating and documenting the claim. Determining cause of loss, liability, and loss amount. Concluding the claim.

The first activity in the claims handling process is:

Acknowledging receipt of the claim and assigning it to an adjuster.

The adjuster sets the proper tone for the handling of the claim with:

Advice, explanation, and assistance throughout contacts with the insured.

If the claim has been assigned to an independent adjuster, the insurer's claims supervisor/assigned adjuster must:

Advise the independent adjuster of the coverage.

Some states require claim files to contain:

All notes and work papers in enough detail to facilitate reconstruction of the pertinent file events and dates.

The notes should contain:

All the pertinent activities undertaken, and present them in chronological order.

A denial letter must usually state:

All the reasons for the claim denial, quote specific policy language, and relate the policy provisions to the facts of the loss.

Letters and attachments sent and received concerning claim file matters are:

Also considered part of the claim file and need to be retained.

An alternative to file status notes is:

An activity log.

Insurers have time requirements for the assignment and acknowledgment of claims that follow state requirements. For example:

An insurer may require that claims be assigned within one business day of their report.

A public adjuster is:

An outside organization or person hired by an insured to represent the insured in a claim in exchange for a fee.

Before denying a claim, the adjuster must:

Analyze the coverage carefully, investigate the loss thoroughly, and evaluate the claim fairly and objectively.

The adjuster should also explain:

Any possible policy violations, exclusions, or limitations that could affect coverage because withholding that information can be considered a breach of the adjuster's or insurer's duties.

Insurers generally have:

Approved lists of experts that have been previously vetted.

For example, if an insured suffers a significant home fire loss, the adjuster can utilize expert services to:

Arrange temporary living accommodations, temporary board up, cleaning, restoration, and personal property inventory identification evaluation.

Coverage reviews should occur throughout the course of investigation:

As new information is learned.

In some cases, claims management may:

Assign the loss to an independent adjuster.

Then the adjuster should take these actions:

Assist the insured in protecting the property by arranging for board-up, storage, and restoration and cleaning firms. Make emergency advance payments to the insured for clothing, living expenses, food, or other expenses, and obtain an appropriate receipt for the payment.

The denial letter is sent:

By certified mail with a return receipt requested.

The Office of Foreign Asset Control, U.S. Department of the Treasury, requires all claims payers to:

Check the master list of potential terrorists and drug traffickers before making a claim payment.

Claim payments can be made by:

Check, draft, or electronic funds transfer.

The sixth activity in the claims handling process is:

Concluding the claim.

If the cause of loss is uncertain, the adjuster may:

Confer with someone in the claims department or hire an expert to aid in determining the cause of loss.

The third activity in the claims handling process is:

Contacting the Insured.

The adjuster usually reviews the policy before:

Contacting the insured and inspecting the loss.

A claim may conclude with:

Denial.

The fifth activity in the claims handling process is:

Determining cause of loss, liability, and loss amount.

It's the adjuster's responsibility to:

Direct and coordinate the use of experts.

As adjusters perform activities in their investigation, they must:

Document what was done to investigate, adjust, settle, and otherwise resolve the claim.

File documentation also consists of other documentation, which includes:

Emails or texts between the insured and the insurer. Letters and attachments sent and received concerning claim file matters.

The typical adjuster may not have the expertise to make such determinations, but an expert can:

Expedite the coverage decision.

Then the adjuster should take these actions:

Explain potential coverage questions or policy limitations or exclusions and obtain a nonwaiver agreement when necessary. Be prepared to tell the insured what additional investigation is needed to resolve potential coverage issues. Explain the time involved to process and conclude the claim.

Most insureds do not fully understand the details of their insurance policies. The adjuster must:

Explain the policy and its meaning in relation to the loss.

At the initial meeting, the adjuster should explain the adjustment process and take these actions:

Explain what inspection, appraisal, and investigation the adjuster will conduct. Tell the insured what is required to protect the property and to present the claim. Supply the insured with blank inventory forms, a blank proof of loss form, and any necessary written instructions.

File status notes should be:

Factual, fair, and balanced.

File documentation consists of the following types of documents:

File status notes, reports, other documentation.

Experts can be employed to:

Gather and preserve evidence, to analyze and report on the cause of loss, and to testify if needed.

Some insurers' systems will assign the loss to an adjuster based on:

Geographic territory, type of claim, size of claim, need for an on-site inspection, or adjuster availability.

The adjuster must be careful to avoid:

Giving the insured or claimant the impression that a claim will be paid when there may be grounds to deny the claim.

Other insurers:

Have the claims supervisor or manager make the assignment according to the skill level of their adjusters.

After receiving the assignment, the adjuster:

Identifies the policy in force on the date of the loss and reviews the policy.

The second activity in the claims handling process is:

Identifying the policy.

Insurers often have expedited assignment processes if:

If the loss involves significant damage to the point that the insured business must cease operations, or the home is not livable.

The fourth activity in the claims handling process is:

Investigating and documenting the claim.

For example:

Is a theft claim being filed under a named-perils policy that doesn't include theft. Is the insured a tenant who is claiming building damage under a personal property form.

When a covered claim is settled through negotiation or other means, the adjuster must:

Issue a claim payment.

If an expert is not hired:

It's the adjuster's duty to gather and preserve the evidence.

The adjuster should examine:

Limitations and exclusions.

The adjuster can also:

Make an appointment to inspect the loss site or advise the insured of who will inspect the site.

This conversation can help the adjuster:

Make some preliminary decisions about the need for outside vendors, such as a restoration company, to assist with the loss adjustment.

The adjuster should communicate to the insured in writing when:

Making requests for documentation and compliance with policy conditions.

Insurers often have strict guidelines for denying a claim that include:

Management's approval to issue the denial.

At this time, this often occurs:

Negotiations as to the extent of the loss.

The investigation's focus should be on:

Obtaining information that will help determine the cause of loss, the associated damages, applicable coverages, and the amount of the covered loss.

The adjuster concludes the claim by either:

Payment or denying the claim.

Status reports can be filed:

Periodically, generally every fifteen to thirty days following assignment.

Some insurers also send a copy by regular mail, marked:

Personal and confidential, in case the certified mail is not claimed.

A nonwaiver agreement may be necessary if:

Policy violations are known, such as late reporting or discarding of the damaged property before inspection.

The three types of reports most commonly used are:

Preliminary, status A K A interim, and summarized A K A captioned.

Many insureds:

Probably consider the loss a major disruption and may never have made a property insurance claim before.

The basis of every claim settlement is:

Proper investigation.

The adjuster might have to direct the insured to:

Protect the property from further damage, such as instructing the insured to board up windows following a serious fire.

The adjuster should:

Read the applicable policy forms carefully, mindful of coverage questions.

Property losses range in complexity and can even:

Require a team of experts to perform specialized tasks.

During this initial contact, the adjuster may also learn that the insured has:

Retained a public adjuster or an attorney.

Emails or texts between the insured and the insurer should be:

Retained and made part of the claim file in accordance with the insurer's procedures.

The amount claimed under the policy is determined by:

Reviewing the policy for coverage limits and extensions, deductibles, coinsurance or other insurance-to-value conditions, and the loss payment condition.

If an expert is needed, the adjuster should:

Schedule the first meeting with the insured so that the expert can attend.

The adjuster's initial contact with the insured often:

Sets the tone for the adjustment process.

These reports inform the insurer of a claim's progress:

Status reports.

Also, the insured is invited to:

Submit additional information that would give the insurer cause to reevaluate the claim.

Adjusters are asked to determine liability for:

Subrogation potential.

The process by which an insurer can, after it has paid a loss under the policy, recover the amount paid from any party, other than the insured, who caused the loss or is otherwise legally liable for the loss:

Subrogation.

These are detailed narrative reports that follow an established format.

Summarized reports.

If the coverage verification and review can't be completed before contacting the insured, the adjuster must:

Take care not to say or do anything that might waive any policy defenses.

The adjuster's investigation can determine:

That a third party is potentially legally liable for the loss.

After the cause of loss has been established:

The adjuster can determine whether the policy covers the loss.

During the initial conversation:

The adjuster learns essential facts about the loss and the extent of damage.

When the investigation reveals that coverage is not provided under the policy or when an insured fails to meet a policy condition:

The adjuster must make a timely claim denial.

In the cases where the insured has retained a public adjuster or an attorney:

The adjuster should discuss claim-related issues with the public adjuster or attorney.

The investigation establishes:

The amount of the loss.

The adjuster sometimes must consult with an expert to determine issues such as:

The cause of loss.

Adjusters must also check various databases to ensure that:

The claim payment complies with federal and state laws.

After the loss notice is received, the insurer begins:

The claims handling process.

The property policy lists specific actions that the insured must perform during the investigation. These are called:

The insured's duties after a loss.

The claims handling process is triggered when:

The insurer is notified of the loss.

During this step:

The insurer sends the insured an acknowledgement notice informing the insured that the claim has been received.

Summarized reports are used when:

The loss size or settlement authority exceeds a set amount, when coverage might be denied, and where arson or insurance fraud is suspected and requires further review.

When issuing a claim payment, the adjuster must ensure that:

The proper parties are paid, such as a mortgage holder on the insured building.

The insurer has a right to seek reimbursement of its payment from:

The responsible third party.

The adjuster documents:

The value of the property, the amount of loss to the property, and the amount claimed under the policy.

Some insurers acknowledge the claim when:

They receive the loss notice, and other insurers acknowledge the claim after the adjuster has been assigned.

Once authority has been given to deny a claim, the adjuster:

Timely prepares a denial letter for review by management for compliance with jurisdictional requirements.

As an example, for serious fire losses, it's common for adjusters to:

Use the services of an origin-and-cause expert.

For example, a computer network broke down shortly after a thunderstorm, and the adjuster must determine:

Whether it was damaged by lightning, which is a covered peril under the policy, or suffered a coincidental mechanical breakdown, excluded by the policy.

The adjuster should determine whether:

Whether the claimant is an insured under the policy, whether the loss occurred at a covered location and within the policy period, and whether the policy covers the type of loss reported.

Preliminary reports are usually filed:

Within the first 24 hours or up to seven days following assignment of the claim.

When are summarized reports usually filed:

Within thirty days of the assignment's date.

Unless they suspect fraud or lack of coverage for the loss, adjusters should:

Work with insureds to accomplish those duties.