check things out, dig a little deeper and
produce enough facts to make the correct
decision. The laws of every state are different, ranging from the old common law
theory of “contributory negligence” to a
whole variety of “comparative negligence”
rules. When an adjuster’s report (or computer notes) state, “The insured is liable,”
the auditor wants to know why the insured is liable, and whether there are any
defenses to that liability. Otherwise, the
adjuster is guessing or assuming. Knowing that there is liability requires facts, not
just the insured’s or police reports.
How much is pain worth?
In a fire or auto collision claim, determining the amount of damage is pretty much
a mechanical process, but it must be done
carefully and accurately. Then the coverage and liability factors must be applied to
that damage. But not all damage is material. Some claims involve “financial” damage, which may not be covered if it is not
“bodily injury” or “property damage.” The
policy, with perhaps a few exceptions (loss
of use, for example), may cover only direct
damage, or perhaps only indirect loss. But
some claims end up involving both direct
and indirect loss, as in an injury claim.
Here is where documentation (usually
medical, but often supplemental investigation) is crucial. The claimant hurts. It’s
claimable “pain and suffering” or discomfort. But how much is pain worth? That
requires investigation and careful evaluation, which must be detailed enough so
that when it comes time to negotiate the
adjuster has all the accurate information.
Careless documentation can be fatal
to a claim. Next month we’ll move to the
hazard of unclear communication.
Ken Brownlee, CPCU, is a former
adjuster and risk manager based
in Atlanta, Ga. He now authors and
edits claims-adjusting textbooks.
for Adjusters — Part 1
The motto of the mongoose, according to Rudyard Kipling,
is “Go and find out!” It is a good motto for adjusters as well.
To “ferret out a mystery” implies that one digs at the facts until the truth is known. The ferret and the mongoose are related
little animals that scurry around with
their noses to the ground, seeking prey.
Adjusters do the same, seeking the data
of claims: does coverage apply? Is the
insured liable? Are there any defenses?
What are the damages? Any error or
omission can create problems. It’s called
“professional liability,” and adjusters are
just as vulnerable to E&O as any attorney, physician or other professional.
Over the last 36 years this column
has discussed the hazards that lead to
adjusters’ (or any other profession’s)
malpractice several times. There are six
basic hazards that lead to the kind of errors that at best cause overpayment and
at worst lead to litigation. (These are in
addition to the hazard of laziness, which
afflicts any job.) The first of these horrible hazards is careless documentation.
Every aspect of an adjuster’s file must be
accurate. The first steps in any adjustment are investigation, evaluation and
resolution of coverage. How does one
accurately investigate coverage?
Over the years of supervising and
The assumption theory
managing claims I have read thousands
of adjusters’ files. Most were accurately
documented. But about one in five con-
tained missing, misleading, inaccurate
or insufficient documentation. Many of
these errors were coverage-related. Too
many adjusters seem to proceed on the
basis of “Well, there’s a policy, so there
must be coverage!” The fact that a policy
is in force is only a hint that the policy ap-
plies to the loss. That must be investigated
and evaluated. Does the wording of the
policy actually fit the claim? If all one ever
investigates is auto fender-benders or sto-
len bicycle claims, perhaps a whole lot of
coverage investigation isn’t needed. But
there are hundreds of different types of
policies that insurers (or self-funding en-
tities) offer, and each is entirely different.
A common phrase in many adjusters’
files reads, “The agent confirmed coverage.” Really? That is not the agent’s or
broker’s job! The agent may confirm that
a policy has been issued and that it has
this or that endorsement. But it is the adjuster who must confirm that the coverage applies to the claim, not the agent.
Most are familiar with the saying that
describes the word “assume.” Adjusters cannot assume anything. They must