Seminar on Insurance Issues given by Jared Stolz, Esq.

The insurance claims adjuster must always ascertain that the owner of the property is the person insured and that the person insured has an interest the property.  Failure to do so could result in payment to the wrong person.

The Declarations Page

The declaration page tells the adjuster the name of the insured(s), the effective dates of insurance, the policy limits, the location of the property, the different policy forms applicable, the identities of morgagees and others with an interest, whether the policy is new or a renewal, and deductibles and/or coinsurance provisions applicable.  The adjuster must read all of the words in the policy, keeping in mind the information, description, and limitations shown in the declarations.

What is a “direct physical loss”?

A simple rule for determination of “direct physical loss” – was the property damaged in some way?  Is the answer is “Yes”, there is a direct physical loss.

Processing  A Claim

The first person an insured meets with when he or she suffers a loss is the adjuster (or a Public Adjuster).  The claims adjuster will help the insured prove the loss to the insurer and get the indemnity promised by the insurer.  The adjuster will investigate the loss, interpret the policy wording, and apply the policy wording to the facts discovered in the investigation.

Property

Read the Policy

To understand a first party property policy of insurance the adjuster must read and analyze the policy in a logical and thorough manner.  The adjuster must know what coverage is available to the insured, the limits of the policy, and the exclusions, conditions, and endorsements attached.

Read the Loss Notice

The loss notice is one of the most important documents the adjuster will see.  It is the starting point of all claims.  It tells the adjuster:

When the loss occurred
The type of coverage the insured has
The type of Loss
The insured’s name, address, and telephone number
The agent’s name and address
The location of the loss
Who to contact and how to contact him or her; and
Whether there is anything to which the adjuster should give special attention.

Meet With the Insured and Witnesses

Once the adjuster has completed this basic preparation, he or she should arrange to meet or have another adjuster meet with the insured and witnesses.  The adjuster should explain to the insured that the policy required the insured to prove his or her loss to the insurer.  The insurer, in order to provide the best service possible and to act in good faith to its insureds, hires the adjusters to help the insured prove his or her loss.  The adjuster can not prove the loss for the insured, he or she is only present to help the insured.  To act in good faith the adjuster must not do, or fail to do, anything that will deprive the insured of the benefits of the policy of insurance.

If applicable, obtain a Recorded Statement with regards to the cause of the loss.  The adjuster needs to have answers to the most important questions: who, what, where, why, when and how, with regard to the policy and the loss.

Establish the Amount of the Loss and Claim

The Scope of Loss

To aid the insured in his or her obligation to prove the loss, the adjuster must, on the first visit, establish the insured’s exact scope of loss.  This means that the adjuster and the insured (or PA) must walk through the insured’s house or business and agree to exactly what was damaged and destroyed as a result of the peril insured against.
The adjuster can get this agreement orally with a tape recorder or write it down on paper.  The scope of loss must be detailed.  Descriptions, including room dimensions; materials, like moldings, flooring, wall coverings, and fixtures; and information about special features, openings, casements, detailing moldings, and other architectural features must be part of the scope of loss.  The scope of loss must be complete.

The adjuster must never:

Take a quick look around and ask the insured to fill out a property loss form at his convenience
Leave the insured with blank forms, except for supplemental items learned of after the initial scope was completed
Take a partial scope and attempt to do the rest later
Rely on the expertise of the insured’s public adjuster; or
Rely on a contractor to establish the scope

The adjuster must walk through the entire scene of the loss with the insured and obtain an agreed scope of loss.  He or she must advise the insured that the adjuster will be retaining experts in the valuation and repair of the type of property that is involved.  These experts will bid on the repair and replacement from the agreed scope.  The adjuster must present the insured with a copy of the agreed scope, and inform him that he may, if he wishes, obtain similar opinions based on the same agreed scope.

Contact Authorities
 
Contact must be made with the official investigating officers, either police or fire arson investigators.  Personal contact is necessary to gain more than cursory information from a report.  The prudent adjuster cultivates a relationship with official investigators.  If the adjuster shows an interest in their work and an inclination to help, the investigator will more readily share information with the adjuster.  The adjuster who demands information from a police or arson investigator will invariably be met with a refusal to comment.  The adjuster should collect as many investigation reports as are available and may purchase photographs taken by the official agency.  When an arson fire happens, both the arson unit and the local police force will be on hand and both will be taking pictures.
On a large fire loss, a cause and origin expert should be brought in immediately to investigate.