What is Adjusting? Flashcards
Define claimant
individual or business that makes a claim for payment after a loss occurs.
Define insurance adjusting
The process of comparing a claimant’s losses to the promises made in an insurance policy.
Define adjuster
An agent who processes (investigates, evaluates, and negotiates) insurance claims for a salary, fee or commission.
3 types of adjusters
- ) Staff (aka company adjuster)
- ) Independent Adjuster (aka fee adjuster, or bureau adjuster)
- ) Public adjuster
- ) Emergency adjuster
Staff adjuster characteristics
- employed by one insurer (ex.: State Farm, Nationwide Insurance, Aetna)
- salaried
- can work locally, regionally, or nationally
Independent adjuster characteristics
- 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)
Public adjuster characteristics
- 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
List the 3 responsibilities of an insurance adjuster
- ) Act as the Fiduciary Agent
- ) Power to Bind
- ) Report to the Principal (usually the insurer)
The two main goals of the claim function are:
- 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.
Who all (4) can the adjuster work for?
- insurer
- private company
- adjusting company (adjusting bureau)
- claimant
Emergency adjuster characteristics
- 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.
To be a Fiduciary Agent, an adjuster must
- 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.
Fiduciary agent’s responsibilities
- 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
The power to bind (3 traits)
- authority that is granted to adjuster in writing
- means the adjuster may act on behalf of the employer
- binds the employer
Who is the principal in report to the principal?
- source of authority
- contracted employer
- insurer
- and/or whomever contracts the adjuster
What does reporting to the principal mean?
- giving frequent status and progress reports to the principal
- providing private information for the benefit of the principal only
Essential elements of a loss report (8)
- 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
Adjuster report process
- ) Initial or preliminary
- ) Interim report
- ) Final report
Initial (aka field) report details (6)
- 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
Interim (aka status) report (5)
- update on claim progress
- due at set intervals as long as a claim is open
- New evidence (depositions, statements)
- Medical information
- Repair estimates
Final (aka full) report (4)
- All facts and evidence of the claim
- policy coverages applied
- adjusted losses
- final claim disposition
Fiduciary agent summary
Adjuster acts on behalf of principal and must protect the principal’s interests.
Power to Bind summary
Principal may have to honor the adjuster’s decisions, even when made in error.
Report to the principal summary
adjuster must give the principal detailed information on how each claim is going.
Preliminary report summary
initial investigation results, timeline of claim, initial claim reserve
Interim report summary
update on progress of claim due at set intervals
Final report summary
full details of claim investigation, evidence, loss totals, and final claim resolution
