2/B - What is Adjusting? Flashcards
Who is a Claimant?
Claimant
An individual or business that makes a claim for payment after a loss occurs
- Must believe loss is covered by an insurance policy
a. claimant’s own policy
b. 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 contract 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.
What is an Insurance Adjusters?
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
Whom do Adjusters work for?
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 or the insurer.
Staff Adjuster (Company Adjuster)
- 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 insurer to adjust claims
- Only allowed to work on claims related to the disaster
Three Responsibilities of an Insurance Adjuster
An Insurance Adjuster:
- Acts as the Fiduciary Agent
- Has the Power to Bind
- Must Report to the Principal
Fiduciary Agent
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 in 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 if a conflict of interest exists
Power to Bind
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
Report to the Principal
It is important to define again: Who is the principal?
- The source of authority
a. the contracted employer
b. insurer
c. and/or whomever contracts the adjuster
Reporting to the Principal
Good reporting means:
- Giving frequent status and progress reports to the principal
- Providing private information for the benefit of the principal only
Essential Elements of a Loss Report
- Policy inception and expiration dates
- Date of the occurrence, or loss
- Identification of all parties involved in the claim
- Full description of the loss
- Tort and tortfeasors (if applicable)
- Policy form and policy number
- Policy coverages
- Policy deductibles
