tractors, suppliers or even the architect.
Subcontractor A’s employee injures subcontractor B’s employee. There may be
workers compensation, but chances are
B’s employee will involve a lawyer and the
owner, architect, developer, the general
contractor and their spouses will be sued.
It’s the adjuster’s job to figure out who’s
covered and who isn’t.
No easy answers
“A” owns a truck which he rents to “B,”
who loans it to “C” for a specific purpose,
and “C” injures “D “while using the truck
for reasons other than that for which “B”
loaned it to him. Can you “assume” that
“A’s” coverage applies?
Joe leases a house from Sam. Unknown
to Sam, Joe sublets a bedroom to Bill, who
is a smoker. Bill accidently sets Joe’s house
on fire. Joe has a Dwelling policy. Does
the adjuster need to review the rental
John and Jane Smith live in a wooded
canyon; a wildfire spreads and the Smiths
and their neighbors are ordered to evacuate. They go to a hotel at $200 a night, but
it takes six weeks for the fire department
to get control of the fire. The Smith neighborhood was undamaged. Will the insurer pay for the additional living expense
under the “governmental action” clause in
Smith’s policy? The answer may depend
on whether the state of origin recognizes
the “efficient proximate cause” rule in insurance, or the interpretation of the “Civil
Authority Prohibits Use” clause.
It takes intelligent investigation of all
the factors of coverage, liability and damages to determine the correct answers. It
ethically requires accurate information.
Ken Brownlee, CPCU, is a former adjuster
and risk manager based in Atlanta, Ga. He
now authors and edits claims-adjusting
textbooks. Opinions expressed are the
Adjuster Ethics Require Accurate
While none of them are dumb, the Central Intel- ligence Agency does not select their operatives
solely on the basis of IQ. Lots of supersmart people have little common sense
and would make terrible spies. The CIA
isn’t about “intelligence quotient,” it’s
about information. Intelligence is needed
to obtain, evaluate and act upon information, but the key is accuracy. Bad intelligence gets people killed or insurers sued.
The same is true for claims adjusters.
We may be super smart, an A+ graduate,
or we may be an intellectual drop-out. It is
how we gather the information about the
claims we are assigned that determines if
the settlement or denial will be ethical. Information needed for a claim can involve
coverage, liability or damages. Each of
these must first be investigated, then evaluated, and finally negotiated or resolved.
First must be the investigation of cov-
erage. Does “the who, where, when, why,
what and how much” of the claim match
the policy? If not, liability doesn’t matter,
nor do damages. Liability may result from
a tort or a contract or a statute. If there
is no liability, then there is no claim. It’s
a simple formula, but lawsuit after law-
suit across the nation involving insurance
companies shows that getting it right isn’t
easy. In reviewing court cases, some situ-
ations seemed so obvious one wonders
why either a proper denial was not nego-
tiated, or why the insurer refused to pay.
Assumption and trust
In auditing claim files one often reads,
“The agent confirmed that there was coverage.” Really? Was that the agent’s responsibility? Perhaps the agent confirmed
that a policy was in effect, but that does
not confirm that the coverage applies to
the claim at hand. That must be investigated, evaluated and even negotiated by
the adjuster. Adjusters cannot trust someone else’s word on coverage, and cannot
“assume” that coverage applies without
investigation. The same is true for liability,
regardless of the type involved. Both personal and commercial insurance policies
are complex and confusing.
Anyone studying them for years may
still have to look at the policy itself to see
what is and is not covered. Consider a
construction claim involving some form
of general liability coverage which may or
may not be applicable to the owner, the
developer, general contractor, subcon-Editor’s Note: This is the second article in a six-part series on adjuster ethics.