Chapter 11 Adjusters and the Claims Process Flashcards
What are the TWO (2) types of losses insurers face?
i. First Party - losses occur to the property insured by the policy. Own damage or direct damage claims.
ii. Third Party - is known as liability coverage, arise out of the insured’s responsibility to others at law.
Who is responsible for proving the amount of a loss?
Adjusters
Who reports a loss, and to whom do they report it?
Insureds or Third Party report it to broker/agent or directly to the insurance company.
What is the first thing that an insurer does before taking any action concerning a reported loss?
Coverage must be confirmed by checking loss details. An insurer could prejudice its position by acting without first checking that the policy applies and is in force.
What is the second step an insurer takes concerning a reported loss?
A decision must be made on how claim is to be handled. It will depend on the type of a claim, its complexity and the insurer’s standard procedures.
What is a “proof of loss”.
Is a document completed and signed by insureds making a formal claim against their insurer. Includes details of the policy and the loss, how much is claimed, and to whom it should be paid. It releases the insurer of further obligations relating to the loss.
How do insurers determine who investigates a loss?
If a claim seems straightforward and uncomplicated, it will be assigned to a telephone adjuster who will deal with all aspects of settlement over the phone. The appointment of staff adjusters or independent adjusters are dependent on the insurer’s policy on the use of adjusters. Some insurers investigate losses in greater detail. Some insurers are hesitant about being too aggressive in claims investigations. Insurance fraud is a factor that will affect the insurer’s decision on how to handle a particular claim.
What are some subtle ways insureds may perpetrate insurance fraud?
i. Overstating settlement values
ii. Claiming for items that never existed
iii. Claiming for damage that was never intended to be covered by insurance.
What is an estoppel and how can it arise?
Is a doctrine of law which precludes a person from denying the truth of a statement formerly made by him or the existence of a series of facts which has caused someone to draw a certain logical conclusion. It arises when a person is forbidden by law to speak against his own act or deed. A man’s own act or acceptance stops or closes his mouth to prevent him from arguing the opposite.
What is prescription and how is it determined?
Prescription, in insurance, is the time after which a claim may not be brought. When a policy has a limitation of one year (set out in the Statute of Limitations), an insured must present a claim within that period of time. If the claim is not settled or in active state of negotiation by the prescription date, the insured will lose the right of recovery.
What is a statement of claim?
It is a written statement by a plaintiff detailing the facts which support the claim against the defendant and the relief sought.
What is a waiver?
Is a voluntary relinquishment of a known right.
What is the difference between a non-waiver agreement and a reservation of rights letter?
Non-waiver agreement states that although the insurer is investigating the loss, it is not voluntarily relinquishing or waiving its rights, possibly to deny liability, under the contract.
Reservation rights letter states that the insurer is investigating the loss without prejudicing its position and is used if a non-waiver agreement cannot be arranged.
Why is an adjuster’s first report so important?
Because it includes an estimate of the damages and the first indication of the potential cost of the claim. A loss reserve must be established as quickly as possible.
What are loss reserves and what is their purpose?
Consists of funds set aside to cover all of an insurer’s outstanding claims. They are based on the insurer’s estimate of the amount it expects to pay for all reported losses plus those losses not yet reported.
