Unit 2 - The Role of the Insurance Adjuster Flashcards
Should REPUTATION matter to an adjuster?
YES… An adjuster should never engage in any activity where his/her reputation could be called into question, even though it may be legal (e.g. if an adjuster is assigned her own claim to handle, she must ask for it to be reassigned).
** NOTE: Always avoid the mere APPEARANCE of impropriety.
What relationship do adjusters have to the legal profession?
Adjusters must see that the contractual promises that have been made to the policyholders are honored promptly, fairly, and accurately. THIS RESPONSIBILITY IS IMPOSED BY LAW.
What acts are most unfair claims settlement practice laws based on?
They are based on the National Association of Insurance Commissioners (NAIC)…
1) UNFAIR CLAIMS SETTLEMENT PRACTICES ACT for adjusters
2) UNFAIR TRADE PRACTICES ACT for agents
What are some of the ways the Texas legislature defines unfair claims?
1) Failing to promptly acknowledge communications of claimant (15 days is acceptable)
2) Acting in BAD FAITH… Not attempting in GOOD FAITH to have PROMPT, FAIR, and EQUITABLE settlement of a claim in which liability has become reasonably clear (a breach of GOOD FAITH is aka BAD FAITH).
3) LOW-BALLING claimant/policyholder… Compelling policyholders to sue because they cannot recover amounts due by offering substantially less than the amounts ultimately recovered.
4) Not attempting to act in good faith to settle claims where liability is reasonably clear to influence settlement under other portions of the policy (always pay promptly, don’t delay!).
5) Failing to promptly provide the policyholder with a REASONABLE EXPLANATION of the basis in the insurance policy for DENIAL OF A CLAIM or for the offer of a COMPROMISED SETTLEMENT.
6) Refusing to offer settlement, failing to offer settlement, or unreasonably delaying offer of settlement under 1ST PARTY COVERAGE on the basis that other coverage may be available.
7) Refusing to pay claims without conduction a reasonable investigation (WORST UNFAIR PRACTICE THAT CAN BE COMMITTED).
Is a 3rd party party to the contract?
NO… Neither the insurance company nor the adjuster has a contractual duty to the claimant.
Under contract law, what is implied in every contract?
A covenant of GOOD FAITH & fail dealing. Utmost good faith is a contractual requirement for disclosure to all parties.
When is a breach of contract on the part of the insurance company considered BAD FAITH by the court system?
If there is no reasonable explanation for the breach, it is considered in BAD FAITH. When the insurer does not abide by the terms and spirit of the policy. The courts could award monetary damages to the insured.
When must an adjuster send an EXCESS LETTER to the insured?
Any time an adjuster believes the exposure is greater than the applicable policy limit.
** NOTE: Policy limit/face amount/limit of liability all mean the same thing.
Can adjusters render legal determinations?
NO… Only courts can render legal determinations. Adjusters render DECISIONS based on PRECEDENT.
Once an adjuster receives the NOTICE OF CLAIM from the insurer, what must he/she do next within 15 CALENDAR DAYS?
1) Acknowledge receipt of the claim.
2) Commence any investigation of the claim.
3) Request from claimant all items, statements, and forms that the insurer reasonably believes, at that time, will be required from the claimant. One important form to request is the PROOF OF LOSS claim form.
Once an insurer receives all items, statements, and forms required by insurer to secure final proof of loss, how many days does that insurer have to notify claimant in writing of the acceptance or rejection of a claim.
No later than 15 business days after the insurer receives all the required documentation.
Once the insurance company agrees to pay a claim, how many days does it have to send the check to the claimant?
5 business days.
