2-C ADJUSTING THE CLAIM

Question 1

The Claim

Answer 1

A formal request to settle the damage

● Claimant must prove the loss and submit the total to insurer
● Insurer sends an adjuster, who must decide whether claimant has adequately
proven the loss

Question 2

The Steps of the Claims Process

Answer 2

1. Acknowledge the claim
2. Establish lines of communication
3. Prepare necessary paperwork
4. Determine insurer’s liability in the claim
5. Investigate the losses
6. Determine the time and cost of repairs
7. Apply all policy coverages and provisions
8. Negotiate a settlement
9. Prepare final reports

Question 3

Acknowledge the Claim

Answer 3

● Respond within required amount of time
● Contact via letter or phone call
● Keep track of the date of first contact
● Adjuster: liaison between claimant and insurer

Question 4

Open Lines of Communication

Answer 4

● Make sure ​there is a way to communicate with claimant
● Provide current business address & phone number
● Respond to the claimant’s communications promptly
● Answer any questions

Question 5

Prepare All Necessary Paperwork

Answer 5

● Determine the type of claim it is
● Prepare the necessary paperwork to process the claim
● Make sure the claimant receives and understands how to complete the
required paperwork
● Proof of Loss forms:
○ help insurer begin its investigation
○ often due within 60 days
● Promptly follow up with additional paperwork, if required

Question 6

Preparing Paperwork: The Claim File

Answer 6

● Organized source of documentation for all claim details
● Copies of all communications
● Evidence from investigation, such as:
○ photos/sketches of property
○ copies of medical bills
○ copies of all claim forms
○ witness statements
● Claim file must reconstruct the loss and how it was handled

Question 7

Determine Insurer’s Liability in the Claim

Answer 7

● Was the policy active at the time of loss?
● Does the claimant have insurable interest?
○ do any other parties have insurable interest (mortgage company, etc.)? ● Does the policy cover the type of damage or injury being claimed?
○ does the policy cover the proximate cause of the loss?
● Is there a history of similar claims? If so, have they reduced the policy limit
available for this loss?
● Will any other policies cover this loss?
● Has the insured met all requirements of the contract?
○ if covered, move on to next step
○ if NOT covered, deny the claim with a full explanation

Question 8

Reservation of Rights

Answer 8

Tells claimant the insurer will start the claim, but might deny it

Used when:
● There is a coverage dispute
● The claimant took too long to report claim

Question 9

Investigation: Property Claims

Answer 9

● Inspect damages
● Take photos
● Interview claimant and witnesses
● Review police report
● Consult with professionals

Question 10

Investigation: Liability Claims

Answer 10

Bodily Injury

Other Liability Claims

Question 11

Bodily Injury:

Answer 11

● Type of injury
● Copies of all medical bills and receipts
● Documentation of lost wages
● How severe is the disability, impairment, or disfigurement?
● Are general damages covered?
● Did any pre-existing condition contribute to injury?

Question 12

Other Liability claims:

Answer 12

● Is policyholder liable?
● Is anyone else partially responsible?
● Is a lawsuit imminent?
● How much would defending a lawsuit cost?
● What is the probability of winning?

Question 13

Investigation: Critical Evidence

Answer 13

● Examine scene of loss or damage
● Photograph damage
● Sketch the property
● Take statements from claimant and the at-fault party (if applicable)
● Inspect and photograph the damaged cars
● Document skid marks to help determine point of impact

Question 14

Investigation: Official Reports

Answer 14

● Police reports
● Fire department reports
● Death certificates
● Autopsy reports
● Coroner’s inquests
● Medical reports
● Weather reports from the time of the loss
● School records
● Court records from previous crimes
● Birth and marriage certificates
● Coast guard reports (boating incidents)
● Civil Aircraft Board (C.A.B) reports (aircraft)

Question 15

Additional reports helpful for auto claims:

Answer 15

● State reports filed by the people involved in the accident
● Motor vehicle inspections
● Traffic court proceedings
● Hack bureau reports if the accident involved a taxi
● Reports from the Interstate Commerce Commission (ICC) for trucking accidents

Question 16

Investigation: Other Kinds of Evidence

Answer 16

• Documentary/Visual Evidence

- Industry Experts

Question 17

Documentary/Visual Evidence:

Answer 17

● Deeds/leases
● Diagrams
● Sketches
● Photos
● X-rays
● Contracts for construction or repair
● Employer records for wage loss claims

Question 18

Industry Experts:

Answer 18

● Doctors and medical examiners
● Car inspectors
● Engineers in the field (mechanical, structural, electrical, etc.)
● Actuaries
● Handwriting Experts

Question 19

Investigation: Written Statements include:

Answer 19

● Introduction
● Body
● Conclusion

Question 20

● Introduction:

Answer 20

○ identify interviewer and interviewee

○ date, time, and place of interview

Question 21

● Body:

Answer 21

○ where, when, how the loss occurred
○ description of injuries
○ make and model of cars involved
○ where the driver started out, was headed, and why
○ what happened after the accident (conversations, police, ambulance,
hospitals, etc.)

Question 22

● Conclusion:

Answer 22

○ interviewee verifies in own handwriting that the statement is true
○ signature below conclusion on right of page
○ witness signs on left

Question 23

Investigation: Recorded Statements Include:

Answer 23

● Introduction
● Body
● Conclusion

Question 24

● Introduction:

Answer 24

○ state names and locations of everyone on recording

○ age and address of interviewee

Question 25

● Body:

Answer 25

○ same goal as written interview
○ recording must be continuous: explain any interruptions
○ stay objective: no leading or argumentative questions
○ avoid excessive sympathy
○ don’t discuss insurance or settlements

Question 26

● Conclusion:

Answer 26

○ interviewee has a chance to add or change any details
○ interviewee must verify that he understood all questions and answered
honestly
○ interviewer states again that conversation was recorded

Question 27

Evaluation Step 1:

Answer 27

Determine Time and Cost of Repairs

● Cost to repair or replace damaged property
● Additional expenses caused by the loss
● Any applicable medical bills
● Lost wages
● Time-frame of repairs

Question 28

Competitive Estimates:

Answer 28

● Claimant gets additional repair estimates from different mechanics
● Insurer compares estimates to come up with fair settlement
● Estimates must be based on physical inspection, not pictures or descriptions

Question 29

Evaluation Step 2:

Answer 29

Apply Policy Coverages and Provisions

● Relevant deductibles
● Co-insurance penalty, if applicable
● Policy limits
● Policy valuation: is depreciation a factor?
● Coverage exclusions or extensions
● Other policies that may cover the same losses

Question 30

Evaluation Step 2: Deductible Absorption Example

Answer 30

Tom has a $100,000 limit on his homeowner’s policy and a $1,000 deductible. When Tom’s home sustains $25,000 in fire damage, the adjuster comes out to adjust his claim. The settlement calculation would look like Example 1 here. Easy, right? But, what happens when the loss is more than the policy limit? Say Tom’s house completely burns to the ground, and the adjuster determines that it will cost $110,000 to rebuild it. The settlement calculation would look like the second example here. In this case, Tom’s settlement check will be $100,000—the full policy limit—and his deductible is absorbed into the amount of the loss that is above the policy limit, which the policy doesn’t cover. Tom will have to pay the remaining $10,000 to rebuild his house—the $1,000 deductible plus the $9,000 that exceeded the policy limit.

Question 31

Evaluation Step 2: Common Settlement Options

Answer 31

Property Claims

Liability Claims

Question 32

Common Settlement Options

Property Claims:

Answer 32

1. Repair property
2. Replace with like kind and quality
3. Replace with new
4. Pay fair value for damaged property

Question 33

Common Settlement Options

Liability Claims:

Answer 33

● Special damages – objective expenses like medical bills, repair bills, lost
wages, etc.
● General damages – intangible losses like pain and suffering, loss of use, etc.
Often determined by court
● Punitive damages typically not covered – but state law may allow

Question 34

Negotiation and Resolution

Answer 34

● Goal: to find a settlement amount that is fair and equitable for all parties
● The adjuster proposes a settlement to the claimant
● If the claimant doesn’t accept the amount, the adjuster will need to ​negotiate​ a sum they both find acceptable

Question 35

Sometimes negotiations are not necessary if the____ of the insured item is pre-established.

Answer 35

value