09. What Is Adjusting? Flashcards
Claimant
An individual or business that makes a claim for payment after a loss occurs.
- must believe loss is covered by an insurance policy
( claimant’s own policy )
( policy of a liable party ) - must prove the loss to the insurer
- if loss is covered, insurer will indemnify claimant
The Claim Function
The part of the insurance that lets the insurer fulfill its promises to the insured
Two main goals:
- comply with the terms of the contract
- support the insurer’s financial stability
An adjuster must get claimants the indemnity they deserve while protecting the insurer from fraud and making sure not to pay more than the contract allows
Adjusting
The process of comparing a claimant’s losses to the promises made in an insurance policy
Insurance Adjuster
An agent who processes insurance claims for a salary, a fee, or commission
Q: whom does the adjuster work for?
A: the insurance adjuster works on behalf of:
- an insurer
- a private company
- an adjusting company (an adjusting bureau)
- the claimant
( adjusters can work for the insured of the insurer )
Staff Adjusters ( types of adjusters )
- employed by only one insurer
- they are salaried employees
- can work either locally, regionally, or nationally
- also called “company” adjusters
- work for insurers such as State Farm, Nationwide Insurance, and Aetna
Independent Adjuster
- also called “fee adjuster” or “bureau adjuster”
- not contracted to any particular insurer
- self employed
- processes claims, sometimes for multiple insurers at the same time
- paid by fee schedule, daily rate, or time + expense
- sometimes paid on a commission basis ( percentage of the final settlement amount )
Public Adjuster
- hired by policyholder (the claimant)
- represents the policyholder in the claim
- charges a commission, usually about 10% of settlement
- hired when the insured knows the insurer will be making a payment for the claim
- helps determine the proper identification and valuation of a loss
- specializes in appraising and negotiating claims
Emergency Adjuster
- temporarily licensed by insurance commissioner when there is a catastrophe
- may be adjusters from other states
- may be an individual who is temporarily certified by an adjuster to adjust claims
- only allowed to work on claims related to the disaster
Fiduciary Agent ( aspect of adjuster )
the adjuster acts a fiduciary agent for the principal (the insurer)
In order to be a fiduciary agent, an adjuster must:
- have authority granted by an insurer via a contract
- act for, and on behalf of, the principal (the insurer)
- protect the principal’s financial and property interests
Being a Fiduciary agent
Adjuster’s responsibilities as fiduciary agent for the principal:
- always act on the principal’s best interests with utmost good faith (honesty, fair dealing, and full disclosure)
- never act with self interest
- never profit without express permission
- never act as if a conflict of interest exists
The Power to Bind ( aspect of adjuster )
The principal is bound by the adjuster’s decisions and actions:
This authority:
- is granted to adjuster in writing
- means the adjuster may act on behalf of the employer
- binds the employer
More on the Power to Bind
The adjuster is expected to:
- take the utmost care in written and verbal communications
- take special care with determining the exact value of loss
Non-Waiver Agreement ( on power to bind )
- claimant agrees that adjuster’s words and actions do not bind the insurer
- insurer then proceeds with the claim investigation
- typically used in catastrophe situations
- allows insurer to inspect damages without relying completely on independent adjuster
Report to the Principal
It is important to define again: who is the principal?
- the source of authority
- the contracted employer
- insurer
- and/or whomever contracts the adjuster
