What is Adjusting?

Question 1

Define claimant

Answer 1

individual or business that makes a claim for payment after a loss occurs.

Question 2

Define insurance adjusting

Answer 2

The process of comparing a claimant’s losses to the promises made in an insurance policy.

Question 3

Define adjuster

Answer 3

An agent who processes (investigates, evaluates, and negotiates) insurance claims for a salary, fee or commission.

Question 4

3 types of adjusters

Answer 4

1. ) Staff (aka company adjuster)
2. ) Independent Adjuster (aka fee adjuster, or bureau adjuster)
3. ) Public adjuster
4. ) Emergency adjuster

Question 5

Staff adjuster characteristics

Answer 5

• employed by one insurer (ex.: State Farm, Nationwide Insurance, Aetna)
• salaried
• can work locally, regionally, or nationally

Question 6

Independent adjuster characteristics

Answer 6

• 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 and expense.
• Sometimes paid on a commission basis (% of final settlement amount)

Question 7

Public adjuster characteristics

Answer 7

• hired by policyholder (claimant)
• Represents the policyholder in the claim
• Charges a commission (usually about 10% of settlement)
• Hired when insured knows insurer will be making payment for claim
• helps determine proper identification and valuation of a loss
• specializes in appraising and negotiating claims

Question 8

List the 3 responsibilities of an insurance adjuster

Answer 8

1. ) Act as the Fiduciary Agent
2. ) Power to Bind
3. ) Report to the Principal (usually the insurer)

Question 9

The two main goals of the claim function are:

Answer 9

• to 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.

Question 10

Who all (4) can the adjuster work for?

Answer 10

• insurer
• private company
• adjusting company (adjusting bureau)
• claimant

Question 11

Emergency adjuster characteristics

Answer 11

• Temporarily licensed by insurance commissioner when there is a catastrophe
• May be adjuster 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.

Question 12

To be a Fiduciary Agent, an adjuster must

Answer 12

• 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.

Question 13

Fiduciary agent’s responsibilities

Answer 13

• 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

Question 14

The power to bind (3 traits)

Answer 14

• authority that is granted to adjuster in writing
• means the adjuster may act on behalf of the employer
• binds the employer

Question 15

Who is the principal in report to the principal?

Answer 15

• source of authority
• contracted employer
• insurer
• and/or whomever contracts the adjuster

Question 16

What does reporting to the principal mean?

Answer 16

• giving frequent status and progress reports to the principal
• providing private information for the benefit of the principal only

Question 17

Essential elements of a loss report (8)

Answer 17

• dates of loss or occurrence
• ID of all parties involved in claim
• full description of loss
• Tort and tortfeasors (if applicable)
• policy inception and expiration dates
• policy form and policy number
• policy coverages
• policy deductibles

Question 18

Adjuster report process

Answer 18

1. ) Initial or preliminary
2. ) Interim report
3. ) Final report

Question 19

Initial (aka field) report details (6)

Answer 19

• due within 15 days of receiving the claim usually
• timelines and deadlines (expediency issues)
• apparent losses
• liability issues (when known)
• applicable coverages
• initial claim reserve

Question 20

Interim (aka status) report (5)

Answer 20

• update on claim progress
• due at set intervals as long as a claim is open
• New evidence (depositions, statements)
• Medical information
• Repair estimates

Question 21

Final (aka full) report (4)

Answer 21

• All facts and evidence of the claim
• policy coverages applied
• adjusted losses
• final claim disposition

Question 22

Fiduciary agent summary

Answer 22

Adjuster acts on behalf of principal and must protect the principal’s interests.

Question 23

Power to Bind summary

Answer 23

Principal may have to honor the adjuster’s decisions, even when made in error.

Question 24

Report to the principal summary

Answer 24

adjuster must give the principal detailed information on how each claim is going.

Question 25

Preliminary report summary

Answer 25

initial investigation results, timeline of claim, initial claim reserve

Question 26

Interim report summary

Answer 26

update on progress of claim due at set intervals

Question 27

Final report summary

Answer 27

full details of claim investigation, evidence, loss totals, and final claim resolution