Adjusters tip # 14

Adjusters Need To Read And Digest
by Robert Carper
Information is the life blood of successful adjusting. We obtain this valuable commodity via a variety of ways. Most often it is from voracious reading. Reading what? Well, there’s the policy, claims best practices, case law, company provided data, repair estimates and accompanying reports, email, industry publications and the list goes on. The ability to read and comprehend is of paramount importance. Reading seems so simple but very few do it effectively and efficiently. If we don’t read and grasp the necessary facts properly then bad decisions and bad results will likely follow. An effective adjuster must not only be able to read and understand an insurance policy, forms, endorsements etc., he or she must also actually intelligently read many documents. This sounds simple, but many adjusters simply don't take the time. They will say” oops, I missed that on the report”, or “oh no, I glanced at the case law and missed that supporting documentation” etc. With good intent but with huge demands on our time the aforementioned has happened to all of us. Effective reading goes a long way in addressing these potential shortcomings.

Aside from the huge amount of information on the internet that will help resolve claims, there’s the claims technical material that has to be read and digested. Moreover, just as a mechanic from twenty years ago can’t knowledgably work on a new model car without reading and self educating, the adjuster will need to read and learn from a variety of sources to remain effective. Reading is important. Digesting what you read is all the more important.

Next up – Adjuster listening skills

Thoughts on "CAUSE & ORIGIN"

The development of NFPA 921, Guide for Fire and Explosion Investigation, and recent court decisions pertaining to the reliability of scientific evidence and expert opinions such as Kumho Tire Co. v. Carmichael and Daubert v. Merrell Dow Pharmaceuticals, Inc., continue to change the rules of fire investigation. These changes have advanced the profession by requiring that investigators use the scientific method and base their opinions and conclusions on science and not on experience alone.

Fire cause & origin determination is the applied science of finding out where, how, and why a fire has started. By carefully observing and accurately interpreting smoke, heat, and fire effects on combustibles and other materials like metals, an investigator is guided to what is known as the "area of origin" of a fire.

So what should ask to get the investigation started right?

• What caused the fire in this case?
• Could the fire be the result of a manufacturer’s defect or improper service/repair work? What was the condition of the engine and transmission prior to the fire?
• Is there a likelihood of arson?
• Can subrogation be successfully pursued in this case?
  Typically, we need to determine the area where the fire began, and the investigator then sorts through it in search of potential ignition sources, examining each closely.
  

Once all the potential ignition sources are found, the weeding out process begins, and an ignition source which best fits the fire's circumstances is finally identified as the others are ruled out. This methodology applies to just about any fire scene, whether it be at a car, a boat, a house, or a factory.

Questions typically asked:

Isn't investigating a fire the fire department's job?

The fire department has a lot of jobs, and determining a general fire cause is usually one of them. But although firefighters are trained in fighting fires, few fire departments have investigators specifically trained in chemistry, electricity, and other technical aspects of fire causation investigation.
Mainly for statistical purposes, fire department reports typically list the suspected fire cause in more or less general terms (i.e., electrical, smoking, etc.) if the cause was accidental. If the fire was intentional, the fire marshal must prove a crime was committed, but only rarely are criminal charges actually filed - mainly because 84% of arson cases remain unsolved.

Who else investigates fires?

Forensic engineers (and some private investigators who typically have law enforcement or fire service backgrounds) also determine the origin and cause of fires.
These investigators are usually independent contractors who mainly work for insurance companies, but sometimes also investigate fires or a fire's affects for attorneys, private individuals and companies. Origin and cause investigations are usually conducted with the cooperation of the local fire department and municipal investigators.
The forensic engineers' investigations are typically more technical in nature and more detailed, and are especially useful for potential "subrogation" cases and fires of a technical nature (electrical failures, for example).

What's a "forensic" engineer?

Just about any type of occupation can become a "forensic" one. There are forensic pathologists ("Quincy"), forensic engineers, even forensic accountants. "Forensics" deals with arguing your case, whatever your expertise may be, in court.
Engineers are technically trained in physical sciences, and many also become qualified through further experience and training to argue about fires and accidents.
What's "subrogation"?If an appliance fails and causes a fire, or if a repairman does shoddy work and a fire results, insurance companies will occasionally demand reparation for the ensuing damages in an action known as subrogation, and many times they'll use an independent forensic engineer's report to convince the other insurance company that their insured was responsible for the fire.

If a hair dryer catches fire, such as the one pictured at left, the forensic engineer must determine not only that the dryer caused the fire, but he must also be able to explain the technical details of how the hair dryer failed and why. Based on the report, the manufacturer's insurance company will then be asked by the homeowner's insurance company to pay for the damages.
The manufacturer's insurance company will typically retain its own fire expert to review the other's report, and the case is then settled or argued later in court.

What about intentionally-set fires?After an intentionally-set fire (popularly known as "arson") is investigated by the fire department or fire marshal, the case may or may not get the support of the district or state attorney, depending on the strength of the evidence.

If it does go to criminal trial, the evidence presented to a jury must be able to overcome the "reasonable doubt" concept which applies to innocence or guilt. This isn't always possible with a clever fire-setter who starts a fire to collect insurance money. The conviction rate nationwide remains consistently at a paltry 2%.

If such a fire was intentionally-set but no charges are filed or the arsonist walks, forensic engineers can often provide the insurance company with an extra safety net. Based on the investigator's report and the background information their own internal SIU (Special Investigations Unit) provides, an insurance company can deny the insurance claim of losses resulting from the fire.

In such a case, though, a civil trial can result and the insurance company must prove that it had reason to believe that the fire was intentionally-set for insurance fraud - and the independent fire investigator is then called upon to argue his position.

THE CLAIMS FIRST CONTACT

The successful claim outcome is dependent upon how the claims professional starts the process. Paramount is the “first contact” with those involved in the claim. In order to guide the claim process to a proper resolution you will want to begin with the following steps:

Review of the initial claim facts
Review and assessment of all parties involved
Retrieval of support documentation
Initial determination of cause or at fault party
(This may change as facts reveal themselves)
Formulate an interview guide (questions to ask) to secure the facts

Secure the following:
What happened?
When did it happen?
Where did it happen?
Who was involved?
Why did it happened
Who witnessed it
Review contributing factors etc.

Once the aforementioned has been secured, then you should have your core content to move forward with the first contact process. Depending on the claim type, (property or casualty) you will move your investigation in the direction that extracts the facts you seek and need. Important questions like “why” mean a lot. Opened ended questions that encourage discussion will lead to more claim information. Effective probing offers many opportunities. Know how to probe comes with experience and the proverbial “gut feeling”. I will write a blog update on this topic in the coming weeks. Think of the aforementioned on your next first contact. Seeya

Robert Carper

What is Proof of Loss?

Why do we ask our insureds to provide a Proof of loss? Well, a a Proof of loss is documentation that your insurance company requires to support your claim.

The property insurance proof of loss usually is for the purpose of providing the insurer with the formal claim including:

•The amount

•The parties claiming under the policy

•Those with an interest

•The date and cause of loss

• Some supporting documents of the amount of the loss

Typically, the policy usually requires that the proof of loss be sworn to as truthful and a notarized signature by the insured The insurer will look at this documentation to determine its liability under your policy. Depending on the type of policy, proof of loss might consist of a claim form, written estimates, receipts, sworn statements, police reports, and other evidence.

Proof of loss details the insured losses such as the property involved, what caused the damage, the extent of the damage, and the estimated dollar amount of the damage. For example, if your home is destroyed by fire, your proof of loss is your official communication with the insurance detailing the damaged property. This form will be extensive due to the nature of the loss.
For exAMPLE, An auto collision claim’s proof of loss will likely contain information about where the accident occurred, the parties involved, a copy of the police report, and written estimates.
On the other hand, if you are dealing with a life insurance policy, the proof of loss will be less extensive. You’ll need to provide the insurance company with a death certificate proving that the insured has passed away before the death benefit is paid to the beneficiary.

WHAT IS BAD FAITH?
Often we adjusters are threatened with "Bad Faith". In order to avoid and prevent bad faith exposure, we must train ourselves on what exactly it is. In keeping with our "to the point" knowledge tools approach, coveragejet has put together the following "quick learn"on bad faith. Example: When an insured/claimant files an insurance claim with an insurance company, by law, in any state, that company owes you a duty to act in good faith. Simply put, this means that the insurance company must not look for ways to escape its obligation to investigate the claim or to pay you. Doing so would constitute bad faith. Bad faith claims and lawsuits may stem from one or more of a number of actions or inactions by the insurance company from denial of coverage to failure to negotiate a settlement. Here are some of the typical reasons insurance companies get sued for bad faith:

Unwarranted denial of coverage
Failure to communicate pertinent information to the claimant
Failure to conduct a reasonable investigation of the claim
Refusal to pay the claim without investigating
Failure to deny or pay the claim within a reasonable period of time
Failure to confirm or deny coverage within a reasonable period of time
Failure to attempt to come to a fair and reasonable settlement when liability is clear
Offering substantially less money to settle than the true value of the claim
Failure to promptly provide a reasonable explanation for denial of a claim
Failure to enter into any negotiations for settlement of the claim
Failure to respond to a time-limit demand
Failure to disclose policy limits

Unfair Claims Settlement Practices Acts apply mainly to claims for personal injury, property damage (home or car), medical bills and disability but they vary from state to state. In some states, the acts may not apply to surety, malpractice or workers compensation claims.
Claims practices that are prohibited will be similar from state to state because they are based on a model act developed by the National Association of Insurance Commissioners (NAIC). Most states use the NAIC model as a basis for their individual state acts but many tweak it. To find out more about how the law works in your state, contact your state's insurance department.

When it comes to car insurance claims, most state laws make a distinction between a car insurance company's own customers and a third-party claimant. For example, if you cause an accident, you would file a claim with your own insurance company. But if another driver damages your car, you would file a claim with their insurance company — and in that case, you are the third-party claimant. Generally, an insurance company has more of an obligation to its own customers.









Can't misrepresent your policy
Under most Unfair Claims Settlement Practices Acts, an insurance company may not knowingly misrepresent material facts or relevant policy provisions in connection with a claim. It may not attempt to enforce policy provisions that were altered by the company without notice to you or without your knowledge or consent.


Can't influence other policy settlements
Typically, the company may not drag out the settlement of a claim under one portion of your policy where liability and the amount of the loss are reasonably clear, so as to influence settlements under a different portion of your policy. For example, your auto insurer can't refuse to pay your bills under the medical coverage in your policy so that you'll settle your uninsured motorist claim. Usually, this prohibition only applies if you're filing a claim under your own policy, not if you're pursuing a third-party action against someone.


Must acknowledge your claim
An insurance company must acknowledge and act promptly in response to your communications about your claims. In some states, the insurance company must respond within a certain time frame, such as 15 days.


Must process your claim promptly
Insurers must implement standards for promptly investigating and processing claims. Otherwise, an unethical insurance company could endlessly stonewall you by saying it is still investigating your claim.


No delays for extra forms
An insurer may not delay an investigation or payment of claims by requiring unnecessary or repetitive reports and proof-of-loss forms.


Can't force you to sue

A company may not force you to go to court in order to recover amounts due under an insurance policy by offering substantially less than the money ultimately recovered. Otherwise, an insurance company with lots of lawyers on the payroll could just say, "Sue us!" and make you go to court. Obviously, that would discourage many individuals with small claims.



Can't appeal lots of claims

Similarly, an insurance company may not exploit the legal system by appealing almost all of the arbitration awards in favor of policyholders as a way to force a settlement or compromise of claims. The insurance company is allowed to appeal, but appeals can't be a standard business practice aimed at forcing you to take less than you're owed on a claim.



Can't refuse or delay claims without a good reason
An insurance company may not refuse to pay your claim or delay payment without a valid reason. It must promptly provide you with a reasonable explanation why your claim was denied or why a compromise settlement was offered. The insurer is required to make a good faith attempt to process a prompt, fair, and equitable settlement of claims in which liability is reasonably clear.

HOW CLAIMS PEOPLE CAN SAY NO NICELY

1. "No." Sometimes, the best way to refuse is politely, but directly. If someone in your life is constantly asking you to do things they could easily handle themselves, a firm "no" is the only way to get them to stop. Another approach to problematic people with frequent requests is to tell them, "I know you'll do a great job handling it on your own."

2. "I'm in the middle of several other projects/commitments right now." Don't be afraid to tell people when you're busy. Most will respect your schedule and find another way to fulfill their requests for help. You shouldn't be expected to drop tasks you've already committed to in order to complete new ones.

3. "I need to focus on [my career, my family, my personal life] at the moment." If you're going through a difficult time in another area of your life that requires your attention, don't hesitate to refuse taking on extra requests. You don't necessarily have to explain your specific reasoning for taking a pass; just indicate that you

4. "I don't feel I'm the best person to handle that task." When you don't feel qualified to handle something requested of you, say so. Explain that you don't want to do a poor job, because you know this task is important to the person asking you to do it. Chances are, they want the task done well, too.

5. "I can't do it, but I know someone else who can." Only use this "no" form if you truly know someone who can not only handle the task, but has the time to do it. It's nice to be able to offer alternative help, but only if you can follow through on your offer. Referring people to someone else who won't be able to help either will be viewed as a brush-off; the person who originally came to you will think you never actually wanted to help them in the first place.