Chapter 11 – Adjusters and the Claims Process Summary Notes Download
Chapter 11 - Quiz view
Terms | Definitions |
|---|---|
 What are the TWO (2) types of losses insurers face? | first party and third party |
| Who is responsible for proving the amount of a loss? | The onus of proof is on the insured. |
| Who reports a loss, and to whom do they report it? | a loss is reported by an insured or thirty party who reports it to a broker/agent or directly to an insurance company. |
| What is the first thing that an insurer does before taking any action concerning a reported loss? | they must confirm coverage by checking the loss details against a hard copy |
| What is the second step an insurer takes concerning a reported loss? | it routes the claim |
| What is a proof of loss? | a document that is completed and signed by insureds making claims against their own insurer. It also releases the insurer of further obligations relating to that loss and transfers title to any useful salvage to the insurer. |
| How do insurers determine who investigates a loss? | It depends on the type of claim, its complexity and the insurer's standard procedures. |
| What are some subtle ways insureds may perpetrate insurance fraud? | - overstating settlement values -claiming items that never existed - claiming for damage that was never intended to be covered by insurance |
| What is an estoppel and how can it arise? | it is a doctrine of law which precludes a person from denying the truth of a statement formerly made by him. It arises when a person is forbidden by law to speak against his own act or dded. |
| What is prescription and how is it determined? | It is the time after which a claim cannot be made. It is determined by the statute of limitations. |
| What is a statement of claim? | it is a written statement by a plaintiff detailing the facts which support the claim against the defendant and the relief sought |
| What is a waiver? | it is the voluntary relinquishment of a known right. |
| What is the difference between a non-waiver agreement and a reservation of rights letter? | a non-waiver agreement recognizes that there is a possible right (e.g. deny liability) whereas a reservation of rights does not have it. |
| Why is an adjuster's first report so important? | It includes an estimate of the damages and the first indication of the potential cost of the claim. |
| What are loss reserves and what is their purpose? | it consists of funds set aside to cover all of an insurer's outstanding claims. |
| What is onus of proof and on whom does it rest? | Onus of proof is the responsibility of proof. It rests with the insured. |
| Define proximate cause. | It is the immediate and effective cause of the loss or damage. |
| What is the difference between an immediate cause and a remote cause? | the immediate cause is the last link in the chain of events whereas the remote cause is a cause that is not the proximate cause. e.g. Squib cases - immediate cause was last stall owner throwing firecracker that unintentionally hit the plaintiff in the face, a remote cause is the 2nd stall owner throwing firecracker into last owner's stall. |
| What is the purpose of a release? | A release is a document in which one party (who has suffered damages or injuries) releases another party (who allegedly caused the damages or injuries or is responsible for the) from all further claims arising out of the incident in return for a sum of money paid for the damages or injuries suffered. |
| Explain the concept of salvage. | Salvage is what is left of property after a loss. It may be undamaged property or partially damaged property that still has some value. |
| Identify and describe FOUR (4) types of adjusters. | telephone - salaried employees, large volume, no face to face interview, straightforward losses. staff adjusters - salaried employyes, investigate negotiate and settle claims, have authority to commit insurer to a settlemnt, no licenses in QU & NB Independent - independent bus. ppl, accepts assignments from many insurers, require licenses, less latitude to settle claims Public - indep. bus. ppl, hired by insureds to rep. their int. during a claim, paid by insured, usually a % of the claim recovered. |
| Discuss the concept of subrogation and how it affects the claims process? | it is the right of an insurer after settling a claim to assume the rights of the insured to recover this loss from a responsible party. |
More terms and definations
Terms | Definitions |
|---|---|
| Name & Define the 2 types of Losses an Insured can face? | First Party - A loss experienced by the insured. Involves the insured, the insurer & a lien holder/mortgagee. Third Party- (aka liability coverage) A loss by a person who is not a listed member on the policy. |
| Who is responsible for proving a loss? Who can report a loss, and to who? | The insured is responsible for proving a loss. Either an insured or a third party can report a loss to the broker or insurance company directly |
| What is the first thing than an insurer does before taking any action concerning a reported loss? What is the second an insurer takes concerning a reported loss? | First - Confirm that coverage exists on the policy Second - Open claim & assign claim number, determine how a claim needs to be handled. |
| What is a proof of loss, and what does it contain? | A proof of loss is a document completed & signed by insureds making a claim against their own insurer. It releases the insurer of further obligations relating to that loss and transfers title to any useful salvage to the insurer. It contains the following: policy details, loss details, how much is being claimed, who will the claim be paid to. |
| How do insurers determine who investigates a loss? | They appoint an adjuster to investigate the loss. Whether they assign a staff appraiser or a independent appraiser depends on the amount being claimed, and the possibility of fraud in the claim. |
| What are some subtle ways insureds may perpetrate insurance fraud? | -Overstating settlement values -Claiming for items that never existed -Claiming for damage that was never intended to be covered by insurance |
| What is estoppel and how can it arise? | Estoppel is a doctrine of law which precludes a person from denying the truth of a statement formerly made by him or the existence of a series of facts which has caused someone to draw a certain logical conclusion. It can be created by conduct as well. (example - not advising insured upfront of coverage issues) |
| What is prescription and how is it determined? | Prescription, in law, is a time after which a cause of action ceases. In insurance, it is the time after which a claim may not be brought. |
| What is a statement of claim? | A statement of claim is a written statement by a plaintiff detailing the facts which support the claim against the defendant and the relief sought. |
| What is a waiver? | The voluntary relinquishment of a known right. |
| What is the difference between a non-waiver agreement & a reservation of rights letter? | A non-waiver is an agreement between insured & insurer recognizing that there is a possible right to deny liability but in the interest of both parties, a note will be made of it and the matter will be allowed to proceed without prejudice to either party. A reservation of rights letter states that the insured is investigating the loss without prejudicing it's position. If the insurer cannot get an insured to sign a non waiver, it will send out a reservation of rights letter. |
| Why is an adjusters first report so important? | It is important because it contains the estimate of the damages and the potential cost of the claim. From this information an adjuster can adjust it's reserves. |
| What are loss reserves and what is their purpose? | Loss reserves are funds set aside to cover an insurer's outstanding claims. They are based on the insurer's estimate of the amount it expects to pay for all reported losses plus those losses not yet reported. |
| What is onus of proof and on whom does it rest? | The onus of proof is the responsibility of proof,and it rests upon the insured. |
| Define Proximate Cause | Proximate cause is the immediate and effective cause of the loss or damage, not necessarily the last event of occurrence which in a chain of circumstances leads naturally & directly in the ordinary course of events to the loss. |
| What is the difference between an immediate cause and a remote cause? | A remote cause is a cause that is not the proximate cause. An immediate cause is the last cause in a chain of events |
| What is the purpose of a release? | To excuse the person responsible for causing damage from any other financial responsibilities |
| What is salvage? | What is left of property after a loss. It may be undamaged and still have some value. |
| What is Subrogation? | The right of the insurer, after paying a loss or agreeing to pay it, to assume the rights of the insured to recover this loss from the responsible party. |
| What are some types of fraud committed by Tradespeople (trades people within insurance)? | -inflating estimates -including items that don't need replaced -aggravate the damage on the vehicle. |
| First party losses are settled based on | The wording of the insurance contract |
| An adjuster processes high volumes of claims over the telephone is a | telephone adjuster |
| Joe lent Maria one of his favorite CD's. After she had it for a couple of months Maria forgot that it belonged to Joe and decided to sell it in a garage sale. Joe helped Maria with the garage sale & saw his CD for sale,but didn't mention anything to Maria about it. What term best describes Joe's actions? | Estoppel |
| The case of Scott vs.Sheppard established the precedent for the determining | Proximate cause |
| When Mike & Kelly's roof collapsed after a heavy rainstorm,they imeadiately called their insurance company. which sent out a forensic engineer to examine the damage. The investigation revealed that the damage was the result of faulty roof construction by a contractor who had put an addition on the home the previous year. The insurer paid the claim but Mike & Kelly signed their legal right to recover the cost of the claim from the contractor over to the insurer. This is an example of: | Subrogation |
| Identify & describe 4 types of adjusters | Telephone Adjusters- Salaried employees of insurers who process a high volume of claims that do not require face-to face interviews with insureds. Contact insured to obtain necessary details of the loss. Rely on experts to quote on the type & amount of damage. Staff Adjusters - Salaried employee of insurance who investigates claims & negotiates settlements. Have authority to commit to a specific limit. Independent Adjusters - Operate as independent business people.Accept assignment from as many insurers as choose to use their services. Public Adjusters - operate as independent business people who act on behalf of insureds who hire them. Paid by insured based on a percentage of claim recovered. they are only allowed to be used in some provinces. |
| Discuss the concept of subrogation & how it affects the claims process | Subrogation is the right of the insurer Applies to after the insurer pays for a loss or agrees to pay for it. All contracts of indemnity contain the right to subrogation The amounts recovered help reduce the amount of the insurer's loss |
| You are a CEO of a large insurance company. Outline the steps that your staff would typically follow to settle claims, fill out a loss report & report claims statistics. | -Insured reports a loss -Insurer confirms coverage -Claim is routed to appropriate person for handling -POL may be requested -Adjuster is appointed -Adjuster investigates loss -Adjuster reports details to insurer -Adjuster tries to detect & prevent fraud -Verify Damage occurred & and it occurred in manner reported -Adjuster keeps claims department informed -Claims department must be aware of important dates -Insured signed appropriate documentation -Adjuster's reports are analyzed -Loss reserves are set -Insured must prove loss. -Amount of loss is established -Insured decides whether to pay or deny claim. -Insurer provides settlement to insd -insured signs a release -Insurer investigates methods of recovery if applicable -Insured reports claim statistics. |
