Adjusters Duties And Practices Flashcards
The claims handler has been called an “adjuster” for centuries because he or she is capable of adjusting to different situations. The adjuster must be capable of:
Working with various people under multiple difficult situations, determining the dispute, and resolving it in a manner that is acceptable to the insured or claimant and the insurer for which the adjuster works.
In modern practice, an adjuster is the person knowledgeable in insurance retained by an insurer for the purpose of:
Assisting the insured in proving a loss to the insurer. This person expresses to the insured the fidelity and good faith of the insurer.
It is the obligation of the adjuster to determine the amount of loss, the cause of the loss, and the:
-Final settlement value after all factors have been considered.
-The world of claims is rarely black and white in terms of clear-cut decisions and clear-cut facts.
-In most situations, shades of gray predominate, because the claims adjuster possesses imperfect knowledge.
It may be debatable whether a loss is covered, what damaged property is worth, whether the policyholder is legally liable, or how much of the damages are directly attributable to a policyholder’s negligence. In such cases, it is not unusual for adjusters to attempt to negotiate some type of compromise resolution of a claim. This is where a process of give-and-take, back and forth, occurs.
The property adjuster has a duty to:
-Help the insured prove the loss to the insurer.
-Help the insured understand the terms and conditions of the policy.
-Conduct a thorough investigation to determine whether a third person is responsible for the loss so that subrogation can be instituted to recover, in addition to the money paid by the insurer, the deductible or other non-covered portions of the loss that must otherwise be absorbed by the insured.
The role of the liability adjuster is slightly different from that of the property adjuster. The liability adjuster represents the:
Insurer and deals directly with the insured.
The liability insurance adjuster has a three-fold duty:
-To the insured, to protect him or her against exposure to liability to third parties as a result of an accidental tort that falls within the definition of “occurrence.”
-To the claimant, to treat him or her fairly and, if liability exists, to resolve the claim promptly without ignoring the duty to the insured.
-To the insurer, before agreeing to resolve a claim, to establish that coverage exists for the loss under the terms and conditions of the policy, that the insured is liable to the third party, and that the most reasonable resolution of the claim has been achieved.
Liability adjusters may negotiate with the:
-Policyholder/insured in first-party claims.
-Third-party claimants in liability claims.
-Attorney who represents either a policyholder or a third-party claimant.
If negotiations are successful, the claim is resolved and closed. If negotiations are not successful, however, litigation may:
Ensue.
The courts of many states have created a tort called:
“Bad faith conduct of insurance contract requirements” (the “tort of bad faith”).
Although bad faith is grounded in contract principles, it is treated as a tort for the purpose of assessing damages. To understand the tort remedies available for bad faith conduct, the adjuster must understand a fundamental principle of contract law:
-That every contract imposes on each party a duty of good faith and fair dealing in its performance and its enforcement.
The adjuster:
-Provides the service promised by the insurance company.
-Is the living embodiment of the insurance company.
-Is the person the insured meets when he or she faces a loss and needs help.
-Along with the help he or she gives the insured, that is the essence of the promise made by the insurer when the policy is issued.
-Without this service, insurance becomes meaningless.
If the adjuster is not professional and does not provide the service promised by the insurer, the promise made by:
The policy is broken and the insurer will first lose customers and ultimately fail.
-Claims that are owed must be paid promptly and with good grace.
-To do otherwise would be to ignore the purpose for which insurance exists: to provide service, protection, and security to the insureds.
The adjuster must be flexible and ready to work within the confines of the contract of insurance:
-The covenant of good faith and fair dealing.
-Simple good manners to work as a partner with the insured or claimant to resolve the claim to the satisfaction of both.
-If a claim is properly adjusted, litigation between insurers and insureds and claimants is unlikely.
An adjuster settles insurance claims. This typically involves investigation of the loss and a determination:
-Of the extent of coverage. In the context of first-party (such as property) insurance, the adjuster negotiates a settlement with the insured.
-In liability insurance, the adjuster coordinates the insured’s defense and participates in settlement negotiations.
Adjusters may be employees of the insurer (staff adjusters) or of independent adjusting bureaus (independent adjusters) that represent:
-Insurers and self-insureds on a contract basis.
-Public adjusters are consultants who specialize in assisting insureds in presenting claims to insurance companies in a manner that will maximize their recovery.
