Study 1: Claims and the Law Flashcards
What is an adjuster?
One who investigates insurance claims, makes recommendations regarding the payments of benefits from insurance policies, and negotiates payments and settlements.
May be called loss adjuster, claims adjuster, claims representative, or some other term unique to particular company or region. Term used may be affected by:
- Usage in corporate environment
- Local usage
- Legislation
- Specific licensing regulations
Who is not considered an adjuster?
Legislation excludes certain persons, who although involved in handling claims, are not meant to be covered by the licensing requirement. These can include:
- Barrister or solicitor acting in usual course of their occupation
- Trustee or agent of property insured
- Salaried employee of a licensed insurer while acting on behalf of such insurer in the adjustment of losses
What are the different classes of adjusters? (3)
Some loss adjusters operate as salaried employees of an insurance company, while others operate as independent adjusters, typically for independent adjusting firms that pursue contracts with licensed insurers. In either case, the adjuster represents the insurance company.
A public adjuster, by contrast, is an adjuster who represents an insured on a fee basis in the claim settlement process.
Which loss adjusters need to be licensed?
Independent and public adjuster must be licensed. Most loss adjusters employed by companies do not need to be licensed, except in Quebec, NB, NL, and PEI. This requirement is meant to instill trust and confidence in consumers by ensuring the appropriate level of knowledge and expertise for loss adjusters.
Definition of claims handler and claims examiner
Claims handler - A claims person involved in any aspect of the claims-adjusting process. May work for brokers, agents, or insurers. Can perform any duty in the adjusting process, including taking the initial report of loss, adjusting the loss, etc.
Claims examiner - an employee of an insurance company who directs the investigations of staff adjusters, and independent adjusters, reviews their reports, and approves claim settlements.
*These terms will be used more often because of the variation of titles across the industry.
What are the two systems in Canada used for Civil law? (2)
Common law system- Legal precedent forms the basis for dealing with court cases in the common law provinces and territories. Judges use facts from previous similar cases to get a decision for their current case.
Civil Code of Quebec - courts rely on the formal written code to interpret the law. Although judges may look to previous decisions for guidance, the law does not mandate that the reasoning be followed
What is joint and several liability?
When several people are involved in committing a wrongful act, they are jointly and severally liable. In other words, the injured party could recover from any one of the liable parties, even if one of the liable parties are held only 2% at fault.
Contract law
Knowledge of contract law is useful to loss adjusters when they must analyze policy wordings or assess hold harmless agreements, lease agreements, releases, and other contracts to determine whether the policy will respond.
What is privity of contract? Can people not insured under the policy bring an action to the insurer?
Relationship that exists between two parties or more by virtue of their having entered into a contract.
As a rule, underwriters will not permit an insured to assign an insurance policy to someone else, unless by death, bankruptcy or operation of law.
When a person who is not insured under the policy has a direct financial interest in damaged property, the privity of contract rule typically prevails, however certain provinces have enacted legislation that gives those who will benefit from a policy the right to pursue an insurer directly. (ex: TP suing insurer of plaintiff directly)
What are the essential elements of a contract under common law? (5)
- *GLACC**
- Genuine intent
- Legality of object
- Agreement
- Consideration
- Capacity to contract
Agreement (4)
- There must be an agreement between the contracting parties. To form a contract one party must make a definite offer to another party, and then the other party must accept it as offered.
- An invitation to transact is not an offer (Ex: application for insurance)
- If new terms are introduced in the offer, it becomes a counter offer.
- Both offer and acceptance must be clearly communicated orally, in writing, or in some other recognized manner. A lack of action or silence is not considered consent.
Capacity to Contract
Each party must be legally able to enter into contracts. (No minors, vulnerable people, etc)
Consideration
One party must give consideration in exchange for the act or promise of another party (Ex: a fee in exchange for services such as premium for protection from insurer)
Genuine Intention
There must be intent between the parties to create a legally enforceable agreement and fulfill the contract.
Legality of object
- The purpose for which the contract is formed must be legal. A contract cannot be established for a purpose that violates a civil statute, criminal law, or public policy.
- For insurance claims, loss must be fortuitous, which occurs by chance and is accidental, claim not valid if loss caused by intentional acts