Section A 2B What is an Insurance Adjuster? - PowerPoint Presentation

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Uploaded On 2020-01-03

Section A 2B What is an Insurance Adjuster? - PPT Presentation

Section A 2B What is an Insurance Adjuster Adjusting The process of comparing a claimants losses to the promises made in an insurance policy Insurance Adjuster An agent who process insurance claims for a salary a fee or commission ID: 771963

adjuster claim claimant insurer claim adjuster insurer claimant settlement policy insurance claims amount report damages process loss damage release

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Section A 2B

What is an Insurance Adjuster? Adjusting The process of comparing a claimant’s losses to the promises made in an insurance policy Insurance Adjuster An agent who process insurance claims for a salary, a fee, or commission In the insurance business, adjusting refers to the process of comparing the losses of a claimant to the promises made by an insurer in an insurance policy. As we just saw, insurers want to handle claims quickly and efficiently, while remaining faithful to the terms of the policy. Most often, this job is assigned to an adjuster. An insurance adjuster is an agent who, for compensation, processes insurance claims. Adjusters can be salaried employees of an insurer, or they can work on a fee-for-services basis. Sometimes they are paid by commission. It depends on what type of adjusters they are.

Who The Adjuster Works For The Insurance Adjuster works on behalf of: an insurer a private company An adjuster company (an adjusting bureau) The claimant Adjusters can work for the insured or the insurer

Types of Adjusters The Staff Adjuster (Company Adjuster) Employed by only one insurer They are salaried employees Can work either locally, regionally, or nationally Also called “company” adjusters Work for insurer such as State Farm, Nationwide, Humana, and Safe Auto Staff Adjuster Independent Adjuster Public Adjuster Emergency Adjuster

Types of Adjusters The Independent Adjuster Also called “fee adjuster” or “bureau adjuster” Not contracted to any particular insurer Self-employed Processes claims, sometimes for multiple insurers at the same time Paid by fee schedule, daily rate, or time & expenses Sometimes paid on a commission basis (percentage of the final settlement amount) Staff Adjuster Independent Adjuster Public Adjuster Emergency Adjuster Unlike Staff Adjusters, Independent Adjusters are self-employed. They work as contractors for insurers and claims-handling companies (which are sometimes called bureaus or Third Party Administrators - TPA's)

Types of Adjusters The Public Adjuster Hired by policyholder (the claimant) Represents the policyholder in the claim Charges a commission, between 10-30% of settlement Hired when the insured knows the insurer will be making a payment for the claim Helps determine the proper identification and valuation of a loss Specializes in appraising and negotiating claims Staff Adjuster Independent Adjuster Public Adjuster Emergency Adjuster

Types of Adjusters Emergency Adjusters Temporarily licensed by insurance commissioner when there is a catastrophe May be adjusters from other states May be an individual who is temporarily certified by an insurer to adjust claims Only allowed to work on claims related to the disaster Staff Adjuster Independent Adjuster Public Adjuster Emergency Adjuster Emergency Adjusters are individuals who are temporarily licensed to handle claims after natural disasters or other catastrophes. State laws require that these claims be processed as quickly as possible. But the pool of available licensed adjusters may not be large enough to manage all of the claims. To respond to this type of emergency, the Insurance Commissioner allows emergency adjusters to be licensed quickly. These adjusters may hold licenses in other states, or they may be certified to work by an insurer. Emergency adjusters can only work on the disaster for which they are licensed, and the license is temporary, usually lasting for a few months.

What is the title of the insurance professional who processes claims for compensation? Insurance broker Insurance salesman Insurance adjusterInsurance agent

What do you call a self-employed adjuster who works as a contractor for insurers or claims-handling companies ? Public adjuster Independent adjuster Emergency adjuster Staff adjuster

A serve storm rages through OKC, with tornadoes cause multiple square miles worth of damage. All the licensed adjusters in the area are already occupied or deployed to the scene. Who can the insurance commissioner look to for temporary help resolving the rest of the claims from this storm? Emergency adjusters Independent Adjusters Public Adjusters Staff Adjusters

A server storm rages through OKC, with tornadoes cause multiple square miles worth of damage. All the licensed adjusters in the area are already occupied or deployed to the scene. Who can the insurance commissioner looks to for temporary help resolving the rest of the claims from this storm? Emergency adjusters Independent Adjusters Public Adjusters Staff Adjusters

Jane is a salaried employee of drew insurance. Working out of the regional office, Jane is sent to deal with some of the most difficult claims in her area. What kind of adjuster is Jane ? Emergency adjusters Public Adjuster Staff Adjuster Independent Adjuster

Jane is a salaried employee of Drew Insurance. Working out of the regional office, Jane is sent to deal with some of the most difficult claims in her area. What kind of adjuster is Jane? Emergency adjusters Public Adjuster Staff Adjuster Independent Adjuster

After a storm demolished Greg's house, his insurance company sent an adjuster out to adjust his claim. After investigating Greg's claim, the adjuster offered him a settlement which Greg felt was too low. Not knowing much about property insurance, Greg wants a second opinion to make sure he is receiving what he deserves. Who might Greg hire to help with negotiating a fair settlement? An independent adjuster Public Adjuster Staff Adjuster An Insurance Commissioner

After Jeffy pulled the fire alarm, the indoor sprinkler system came on and flooded the offices at Elliot designs, causing thousands of dollars in damage. Elliot designs filed a claim with walker insurance, who dispatched miguel to investigate and process the claim. Who is claimant in this scenario? Elliot Designs Jeffy Miquel Walker Insurance

After Jeffy pulled the fire alarm, the indoor sprinkler system came on and flooded the offices at Elliot Designs, causing thousands of dollars in damage. Elliot Designs filed a claim with Walker Insurance, who dispatched Miguel to investigate and process the claim. Who is claimant in this scenario? Elliot Designs Jeffy Miquel Walker Insurance

Claimant Who is the Claimant? An individual or business that makes a claim for payment after a loss occurs Must believe loss is covered by an insurance policy Claimant’s own policy Policy of a liable partyMust prove the loss to the insurerIf loss is covered, insurer will indemnify claimant When someone suffers a loss that he thinks would be covered under an insurance policy, he may submit a claim to the insurer requesting payment for his loss. At this point he becomes a claimant. However, simply filing a claim does not guarantee indemnification. All it means is that the claimant believes he is entitled to payment under the terms of an insurance policy. Before being paid, he will have to prove the loss to the insurer. Then, if the loss does indeed fall under the terms of the contract, the insurer will accept his claim and indemnify him. This process of handling claims for coverage under an insurance policy is known as the claim function, and it is the primary role of the adjuster.

What kind of adjuster represents the insured rather than the insurer? Public adjuster Emergency Adjuster Independent Adjuster Staff Adjuster

Power to Bind – Non-Waiver Agreement Claimant agrees that adjuster’s words and actions do not bind the insurer Insurer then proceeds with the claim investigation Typically used in catastrophe situations (i.e. natural disasters) Allows insurer to inspect damages without relying completely on independent adjuster Non-Waiver Agreement Sometimes, the insurer will keep an independent adjuster from having this authority by requiring the insured to sign a document called a “non-waiver agreement.” A non-waiver agreement is a written document, executed by the insurer and the insured, wherein the insured acknowledges the insurer’s right to deny coverage in the future. This document enables this office to continue to investigate this claim while protecting the Insured’s rights also. This agreement states that the adjuster may investigate the loss, but that any decisions on the claim must come from the insurer directly. In other words, the claimant agrees that any statements or actions of the adjuster are not binding on the insurer. Non-waiver agreements are typically used in catastrophe situations, where the large number of claims makes it impossible for the insurer to oversee every claim carefully, while still getting all the losses inspected in a timely manner.

When is a non-waiver agreement often used? After a claim is paid When an adjuster must negotiate a settlement with a claimant When an independent adjuster is investigating a claim in a catastrophe situation When a policyholder makes a claim that exceeds the policy reserve

Adjuster Reports Initial Report Interim Report Final Report Initial or Preliminary Report Often required after 15 days Also called the “initial report” or “field report” Time-lines and deadlines (expediency issues) Apparent losses Liability issues (when known) Applicable coverages Initial claim reserve An adjuster’s preliminary report is often due within 15 days of receiving a claim. This report, which is also sometimes called the initial report or field report, will list the findings of the adjuster’s initial investigation. It will include the date that the adjuster first contacted the claimant and the timeline of the claim so far, including any deadlines that the insurer must meet. A preliminary report should list any information that is relevant to the claim, such as the apparent losses, the liability of parties involved, when known, and any applicable policy coverages. And finally, an adjuster’s preliminary report should always establish an initial claim reserve. A claim reserve is the amount of money that the insurer sets aside in preparation for paying the claim.

Adjuster Reports Initial Report Interim Report Final Report Interim (a.k.a. Status) Report Update on claim progress Due at set intervals as long as a claim is open New evidence (depositions, statements) Medical information Repair estimates An interim, or status, report is meant to update the insurer on a claim when a certain amount of time has passed without a resolution. Most insurers require an interim report every 30 days that a claim remains open, although some require it as often as every 15 days. This report will list any new or important information, such as depositions being taken, repair estimates, new medical information, special damages, etc.

Adjuster Reports Initial Report Interim Report Final Report Final (a.k.a. Full) Report All facts and evidence of the claim Policy coverages applied Adjusted losses Final claim disposition An adjuster makes a final, or full, report after closing the claim. This report will list all the facts, statements, and evidence of the claim, any policy coverages that were applied, the adjusted loss totals, and the final disposition of the claim.

In which report to the principal would an adjuster include all witness statements and other supporting evidence, in addition to the total settlement amount? Preliminary report Interim report Settlement report Final report

Adjuster Responsibilities An Insurance Adjuster: Acts as the Fiduciary Agent Has the Power to Bind Must Report to the Principal

Adjuster Responsibilities Fiduciary Agent The adjuster acts as a fiduciary agent for the principal (the insurer). In order to be a fiduciary agent, an adjuster must: Have authority granted by an insurer via a contract. Act for, and on behalf of, the principal (the insurer) Protect the principal’s financial and property interests Fiduciary Agent Power to Bind Report to the Principal This means that, when handling claims, the adjuster is responsible for making decisions in place of the insurer and for the insurer's benefit.

Adjuster Responsibilities Being a Fiduciary Agent When the Adjuster is the fiduciary agent for the principal these are their responsibilities: Act in the principal’s best interest with utmost good faith (honesty, fair dealing, and full disclosure) Never act with self-interest (ex. Inflating the cost of a claim to earn more money) Never profit without express permission (ex. Receiving kickbacks in any form) Never act if a conflict of interest exists Fiduciary Agent Power to Bind Report to the Principal

Adjuster Responsibilities The Power to Bind An adjuster has the Power to Bind the principal. This means that the principal must honor any actions and decisions of the adjuster while the adjuster is acting on the principal's behalf. For example, if Alice decides to accept and pay a claim on behalf of the insurer she is working for, the insurer cannot then reverse her decision. It is bound by Alice's decision to accept the claim. Even if Alice made a miscalculation and paid the claimant the wrong amount, the insurer would have to honor her mistaken decision. This means that an adjuster must be very careful when acting on behalf of an insurer. Since the claimant reasonably believes that the adjuster can act on the insurer's behalf, the insurer will be bound by the adjuster's decisions and actions. Fiduciary Agent Power to Bind Report to the Principal This authority: Is granted to adjuster in writing Means the adjuster may act on behalf of the employer Binds the employer

Adjuster Responsibilities Fiduciary Agent Power to Bind Report to the Principal More on the Power to Bind When an insurer gives an adjuster written authority to act as its fiduciary agent, the adjuster's actions are legally considered the actions of the insurer itself. Thus, an adjuster must: Take the utmost care to act ethically and responsibly when performing her duties in relation to a claimant. Take special care when determining the exact value of loss, If an adjuster leads the claimant to believe something is covered, the insurer may be required by law to cover it, even if it turns out that the policy did not technically cover it in the first place. Since the insurer will not be able to alter her valuation. Her decision will bind the insurer. This applies especially to written and verbal communications.

Adjuster Responsibilities Fiduciary Agent Power to Bind Report to the Principal Report to the Principal It is important to define again: who is the principal? The source of authority The contracted employer Insurer And/or whomever contracts the adjuster The third responsibility of an insurance adjuster is to report to the principal. First let's review who the principal is. In the context of insurance adjusting, the principal is the source of the adjuster's authority. This can be the adjuster's employer, an insurer, or anyone who contracts the adjuster to work on their behalf and gives her the authority to do so.

Adjuster Responsibilities Fiduciary Agent Power to Bind Report to the Principal Reporting to the Principal This is How Adjuster Should Provide Good Reporting: Give frequent status and progress reports to the principal Provide private information for the benefit of the principal only "Reporting to the Principal" simply means that the adjuster must give the principal frequent and regular updates of her progress on any given claim. These reports often contain private and confidential information, which should be shared only with the principal.

An adjuster who acts as a fiduciary agent for an insurer must: Have authority granted by the insurer through a contract Deal with the insurer's lawyer instead of directly with the insurer. Represent the policyholder in her interactions with the insurer Be a salaried employee of that insurer

Julie works as an insurance adjuster for Drew Insurance. While adjusting a claim, she determines that the claimant is covered by his insurance contract and issues him a settlement check for $5000. The insured cashes the check and performs the repairs. Two months later, the insurer reviews the file and realize that the claimant's damages were not covered by the policy. The insurer demands the settlement money back. Which of the following best explains why the claimant will most likely not have to return the money? Julie had the power to bind the insurer to her decision to pay the claim Julie issued the settlement based on guaranties provide by the claimant. Subrogation does not allow the insurer to recover paymentThe settlement payment was a warranty

Julie works as an insurance adjuster for drew insurance. While adjusting a claim, she determines that the claimant is covered by his insurance contract and issues him a settlement check for $5000. The insured cases the check and performs the repairs. Two months later, the insurer reviews the file and realize that the claimant's damages were not covered by the policy. The insurer demands the settlement money back. Which of the following best explains why the claimant will most likely not have to return the money? Julie had the power to bind the insurer to her decision to pay the claim Julie issued the settlement based on guaranties provide by the claimant. Subrogation does not allow the insurer to recover paymentThe settlement payment was a warranty

An adjuster who has just taken witness statements for a claim she is currently investigating, but is not yet ready to close the claim, may submit to the insurer a/an: Interim report Witness deposition report Preliminary report Full report

An adjuster acts as agent for the insurer. As such, it is essential that the adjuster understand: Her duty to check-in daily with the insurance company That she must always offer a settlement favorable to the claimant Her duty to profit from every claim investigation That her words or actions may bind the insurance company

Review: Adjuster Responsibilities In review, an adjuster has three major responsibilities. First, he acts as a fiduciary agent. He has the authority to act on behalf of the principal, and he must act in the principal's best interests, rather than his own. Second, an adjuster has the power to bind. Since his words and actions count as those of the principal, they can end up requiring the principal to act in a certain way. Third, an adjuster must report to the principal, providing detailed information about the claim and what progress he has made. Fiduciary Agent The adjuster acts on behalf of principal and must protect the principal’s interests 2. The Power to Bind The principal may have to honor the adjuster’s decisions, even when made in error. 3. Report the Principal The adjuster must give the principal detailed information on how each claim is going

Review: Adjuster Responsibilities Remember: An adjuster’s preliminary report should list any information pertinent to the claim so far, including any investigation results, the timeline of the claim, and the initial claim reserve. Interim, or status, reports update the insurer on the progress of a claim after a set amount of time. They will include any new information that affects the claim. An adjuster’s final report will list all the results of the investigation, any facts and evidence in the case, the loss totals, and details regarding how the claim was resolved Preliminary Initial investigation results, timeline of claim, initial claim reserve 2. Interim Update on progress of claim due at set intervals 3. Final Full details of claim investigation, evidence, loss totals, and final claim resolution

Section B 2C

The Claim Claim An insurance claim is a formal request to an insurance company for coverage or compensation for a covered loss or policy event. Claimant must prove the loss and submit the total to insurer Insurer sends an adjuster, who must decide whether claimant has adequately proven the loss While most policyholders do not file a claim, if an injury or damage occurs to a covered property or person the insured has the duty to file a claim with the insurer. When a claimant submits a claim to an insurer, it is the claimant’s job to prove the damages, if necessary. To do this, she may compile what she believes is proof of her damages and submit it to her insurer. From a legal standpoint, the total damages that she presents for payment is her formal request to settle for an amount she believes is due under the terms of the policy. Once the insurer receives the claim, it sends an adjuster to investigate it and determine if the claimant has adequately proven the loss.

The Steps of the Claims Process Acknowledge the claim Establish lines of communication Prepare necessary paperwork Determine insurer’s liability in the claim Investigate the lossesDetermine the time & cost of repairsApply all policy coverages and provisionsNegotiate a settlementPrepare final reports 2) Open Lines of CommunicationMake sure there is a way to communicate with claimantProvide current business address & phone numberRespond to the claimant’s communications promptly Answer any questions Simply acknowledging that the insurer has received the claim is only the first step. After this, the adjuster must work to maintain open communication with the claimant throughout the entire claim process. This is because part of being an adjuster is acting as the liaison between the insurer and the claimant. In other words, the adjuster is the main point of contact for both sides. The adjuster must make himself available to the claimant at any time by providing his current business phone number and business address and responding quickly to any questions from the claimant. He must also make sure that the claimant knows the limits and rules of her policy, and that the insurer stays informed about the claimant's losses

The Steps of the Claims Process Acknowledge the claim Establish lines of communication Prepare necessary paperwork Determine insurer’s liability in the claim Investigate the lossesDetermine the time & cost of repairsApply all policy coverages and provisionsNegotiate a settlementPrepare final reports 3) Prepare All Necessary PaperworkDetermine the type of claim it isPrepare the necessary paperwork to process the claimMake sure the claimant receives and understands how to complete the required paperwork. Proof of Loss forms Help insurer begin its investigation Often due within 60 days Promptly follow up with additional paperwork, if required After making contact with the claimant, the adjuster will move the claim forward by preparing any necessary paperwork. He should determine what type of claim it is and make sure that the claimant understands which forms she needs to submit to the insurer, when they are due, and any other obligations she has. For example, the claimant usually has to submit a proof of loss form to the insurer. This form provides the basic information the insurer needs to begin the investigation and determine its liability under the contract. A proof of loss form is often due within 60 days of the loss. As the claim progresses, the adjuster is also responsible for following up with any additional forms or documentation required and promptly providing them to the claimant.

Of the following adjuster duties, which would be first? Assess the damages Investigate liability Prepare adjustment reports Open lines of communication

The Steps of the Claims Process Acknowledge the claim Establish lines of communication Prepare necessary paperwork Determine insurer’s liability in the claim Investigate the lossesDetermine the time & cost of repairsApply all policy coverages and provisionsNegotiate a settlementPrepare final reports 4) Determine Insurer’s Liability in the ClaimFourth, does the claimant have a history of similar claims? This is important, because it not only helps determine how much coverage the policy has left, but it also can identify potentially fraudulent activity. Fifth, are there any other insurance policies that will also cover the loss? When this is the case, the policy provisions often describe how much of the loss each policy should cover. Sixth, has the insured complied with all policy conditions, including what to do after a loss? Most policies will not apply to losses when the insured fails to follow the conditions of the contract. If the adjuster determines that the damages are covered by the policy, he can move forward with the claim investigation. But, if answering these questions makes it clear that there is no coverage for the claim, he will deny the claim and provide an explanation for the denial.

Roger is an insurance adjuster. He has just arrived at the claimant's home with an engineer in order to determine the exact repair costs of repairing the home's foundation that was damaged in an earthquake. Which step of the claim process is roger currently engaged in? Claims management Reporting Investigation Negotiation

At what point in the claims process might a Reservation of Rights letter be sent? At the end of the claims settlement process At the beginning of the investigation When a witness statement contradicts the adjuster's evaluation When the investigation is complete

When an insurer assigns an adjuster to a claim, which of the following best describes the adjuster's role in relation to the claimant The adjuster collects the premiums from the claimant The adjuster agrees to get the claimant the highest possible insurance settlement The adjuster acts as a liaison between the claimant and the insurer The adjuster agrees to represent the claimant in court

Why might an insurer send a claimant a Reservation of Rights Letter? When the insurer needs more information before making a final decision When the insurer has decided not to cover the loss To let the claimant know what the insurer has received all necessary paperwork To let the claimant know that there is a coverage dispute

An insurance claim is essentially: A formal request to repair the damage A formal requisition to settle the damage A formal offer to repair the damage A formal explanation of insurance coverage

Bobby is an adjuster with Diaz Insurance and is currently working on a claim. He has already called the claimant and has just finished preparing all the paperwork needed to move forward with the claim. What is the next step for Bobby? Open a line of communication with the claimant Determine the insurer's liability Begin negotiations Investigate the claim

For a bodily injury liability claim, the adjuster must determine all of the following, EXCEPT: The type of injury The severity of the injury The amount of punitive damages requested The presence of any pre-existing conditions

Jim is working on a claim. Currently, he is apply all financial provisions of the policy, including the policy limits, coinsurance, valuation, and deductibles. In which stage of the claims process is Jim currently working Evaluation Negotiation Investigation Reporting

The Steps of the Claims Process Acknowledge the claim Establish lines of communication Prepare necessary paperwork Determine insurer’s liability in the claim Investigate the lossesDetermine the time & cost of repairsApply all policy coverages and provisionsNegotiate a settlementPrepare final reports Investigation: Written StatementsWitness statements can be useful for:Revealing new informationPainting claim picture from different viewpoints Disputing account given by claimant or other witness Impeaching witness credibility if he changes his story in court A written statement should include three parts. Introduction The introduction lists the names of the interviewer and person making the statement, as well as the location, date, and time of the interview. Body The main content of the statement should center around gathering as many details about the occurrence as possible. This includes the time and place of the loss, a description of the scene and how the loss occurred, and a list and description of any injuries. In the case of car accidents, the interviewer should also record the make and model of the car or cars involved, the purpose of the trip, where the driver started out, and where she was heading. It should also describe any pertinent details from the events after the accident, such as accusations, conversations, police and ambulances involved, and hospitalizations, etc. Conclusion After finishing the statement, the person being interviewed must read it over and agree in writing that everything in the statement is true. The signature belongs below the conclusion, on the right side of the page, leaving room for a witness’ signature on the left

The Steps of the Claims Process Acknowledge the claim Establish lines of communication Prepare necessary paperwork Determine insurer’s liability in the claim Investigate the lossesDetermine the time & cost of repairsApply all policy coverages and provisionsNegotiate a settlementPrepare final reports Investigation: Recorded StatementsMany adjusters take recorded statements over the phone. This approach brings its own set of guidelines. Introduction First the interviewer must identify everyone on the recording, including their names and current locations. The person being interviewed must also verify his age and address, spelling out any difficult sounding words, and give his permission for the interview to be recorded. The recording must be continuous. Any interruptions or pauses in the conversation must be explained. Body As with written statements, the interviewer should ask questions geared towards gathering as many facts about the occurrence as possible. She must be careful to stay objective. She can do this by keeping her opinions to herself, avoiding any leading or argumentative questions, and being careful not to show excessive sympathy. This is also not the time to discuss insurance coverage or settlements. That step comes later. Conclusion When finished, the interviewee must have a chance to add or correct any details, and he must verify that he understood all the questions and answered them to the best of his knowledge. In conclusion, the interviewer must state again that the interview was recorded.

A Witness has had a recorded interview: Must do so under oath Must have a chance to correct anything that is incorrect Is taken more seriously Must have a lawyer present during the interview

The Steps of the Claims Process Acknowledge the claim Establish lines of communication Prepare necessary paperwork Determine insurer’s liability in the claim Investigate the lossesDetermine the time & cost of repairsApply all policy coverages and provisionsNegotiate a settlementPrepare final reports Investigation: Other Kinds of EvidenceDocumentary/Visual Evidence Examples:The adjuster may also collect documentary and visual evidence, such as deeds or leases to property involved in the loss, diagrams, sketches, and pictures of the damaged property, X-rays of injuries, and any contracts or agreements that relate to the loss, especially construction or repair contracts . If a claim includes lost wages, the adjuster should verify the loss by checking the employer’s records. Industry Experts: It can also be helpful to consult trustworthy industry experts, such as doctors, medical examiners, car inspectors or mechanics, engineers in the field involved, actuaries, handwriting experts , or any specialist in a particular aspect of the claim. Professionals like these can help answer questions or explain industry practices that the adjuster may not fully understand.

Dex is currently working on a property damage claim, gathering evidence, reviewing police reports, and interviewing witnesses. In which stage of the claim adjusting process is Dex currently working Resolution Evaluation Negotiation Investigation

The Steps of the Claims Process Acknowledge the claim Establish lines of communication Prepare necessary paperwork Determine insurer’s liability in the claim Investigate the lossesDetermine the time & cost of repairsApply all policy coverages and provisionsNegotiate a settlementPrepare final reports Negotiation and ResolutionGoal: to find a settlement amount that is fair and equitable for all partiesThe adjuster proposes a settlement to the claimantIf the claimant doesn’t accept the amount, the adjuster will need to negotiate a sum they both find acceptable After calculating an estimated indemnity amount, the adjuster can move on to the eighth step in the claims process: negotiation. The goal of this step is to find a settlement which is fair and equitable for both the claimant and the insurer. Usually, the adjuster will start by presenting an initial settlement offer to the claimant. If the claimant agrees to that amount, then the adjuster can simply issue payment, close the claim, and prepare his final report. But, if the claimant does not accept the adjuster’s first offer, then the two of them must work together to find a settlement that they both think is fair. This is probably the most challenging aspect of an adjuster's job.

The Steps of the Claims Process Acknowledge the claim Establish lines of communication Prepare necessary paperwork Determine insurer’s liability in the claim Investigate the lossesDetermine the time & cost of repairsApply all policy coverages and provisionsNegotiate a settlementPrepare final reports NegotiationsNegotiation can be extremely complex:Liability issues Multiple coverages Unclear causes of damage Disputed damages Legal issues Uncooperative claimants The adjuster must qualify the settlement: Explain the reasons for the settlement amount Step-by-step justification for decision There are many factors that can make negotiating difficult. For example, claims that involve liability issues are usually more complex than others. The process can also be challenging if there are multiple insurance policies that apply to the losses, if the cause of damage is unclear, or if the insurer and the claimant disagree on the extent of covered damages. In addition, the situation can become even more difficult if legal issues arise, or if the claimant becomes uncooperative. Despite these challenges, it is the adjuster’s job to qualify the settlement to the claimant. This means explaining in clear terms why he reached a particular settlement amount, and providing step-by-step justification for his decision. In the next two chapters, we will go over the different settlement options available and explore the negotiation process in more detail.

Joey is currently working on a liability claim, and has completed his investigation. He present his findings to the claimant, who disagrees with the settlement offer. Into which stage of the adjusting process is Joey about to enter? Negotiation and resolution Determining liability Claim evaluation Claim reporting

The Steps of the Claims Process Acknowledge the claim Establish lines of communication Prepare necessary paperwork Determine insurer’s liability in the claim Investigate the lossesDetermine the time & cost of repairsApply all policy coverages and provisionsNegotiate a settlementPrepare final reports Evaluation, Step 2: Apply Policy Coverages and ProvisionsRelevant deductiblesCo-insurance penalty, if applicablePolicy limits Policy valuation: is depreciation a factor? Coverage exclusions or extensions Other policies that may cover the same losses The next step of the evaluation process is to apply all of the financial terms of the policy. These can include the policy deductible; the level of co-insurance, if any; possible coverage by other insurance policies; the policy limits; and any special exclusions or extensions of coverage specific to the policy at hand. The adjuster should also be sure to follow any valuation provisions in the policy. Recall that, for actual cash value (ACV) coverage, depreciation is subtracted from the cost of replacing damaged property. Replacement cost and valued policies usually do not consider depreciation. Using all of this information, the adjuster calculates the proper amount of indemnification due to the claimant.

The Steps of the Claims Process Evaluation, Step 2: Deductible Absorption Jamie’s Policy Limit: $75,000; Deductible: $1,000 Example 1 Partial Loss Amount of covered loss: $25,000 Minus the deductible: ($1,000) Settlement amount: = $24,000 (within policy limit of $75,000) Example 2 Loss Above Policy Limit Amount of covered loss: $85,000 Minus the deductible: ($1,000) Total: $84,000 Minus policy limit: ($75,000) (Maximum settlement amount) Uncovered remainder:$9,000 Here’s an example: Jamie has a $75,000 limit on his homeowner’s policy and a $1,000 deductible. When Jamie’s home sustains $25,000 in fire damage, the adjuster comes out to adjust his claim. The settlement calculation would look like Example 1 here. Easy, right? But, what happens when the loss is more than the policy limit? Say Jamie’s house completely burns to the ground, and the adjuster determines that it will cost $85,000 to rebuild it. The settlement calculation would look like the second example here. In this case, Jamie’s settlement check will be $75,000-the full policy limit-and his deductible is absorbed into the amount of the loss that is above the policy limit, which the policy doesn’t cover. Jamie will have to pay the remaining $10,000 to rebuild his house-the $1,000 deductible plus the $9,000 that exceeded the policy limit.

The Steps of the Claims Process Acknowledge the claim Establish lines of communication Prepare necessary paperwork Determine insurer’s liability in the claim Investigate the lossesDetermine the time & cost of repairsApply all policy coverages and provisionsNegotiate a settlementPrepare final reports Evaluation, Step 2: Common Settlement OptionsProperty Claims:Repair property Replace with like kind and quality Replace with new Pay fair value for damaged property Liability Claims: Special Damage – objective expenses like medical bills, repair bills, lost wages, etc. General damages – intangible losses like pain and suffering, loss of use, etc. Often determined by court. Punitive damages typically not covered – but state law may allow To calculate a fair indemnity, the adjuster will have to decide between several different settlement options, which depend on the type of claim it is. For most property claims, the adjuster can: 1. Pay for repairs to the damaged property; 2. Pay to replace the property with “like kind and quality”; 3. Pay to replace the property with a new product just like it; or 4. Simply pay the actual cash value of the damaged property, letting the claimant decide how to replace it. Often, the insurance policy will indicate which option to use for which coverage.

The Steps of the Claims Process Acknowledge the claim Establish lines of communication Prepare necessary paperwork Determine insurer’s liability in the claim Investigate the lossesDetermine the time & cost of repairsApply all policy coverages and provisionsNegotiate a settlementPrepare final reports Evaluation, Step 2: Common Settlement OptionsProperty Claims:Repair property Replace with like kind and quality Replace with new Pay fair value for damaged property Liability Claims: Special Damage – objective expenses like medical bills, repair bills, lost wages, etc. General damages – intangible losses like pain and suffering, loss of use, etc. Often determined by court. Punitive damages typically not covered – but state law may allow When paying liability claims, the adjuster must distinguish between two types of expenses. First, special damages are any losses that are quantifiable, that is, they have a set dollar amount. Examples include medical bills, the cost of repairs to damaged property, or lost wages. Since these damages are objective and tangible, it is not hard to determine how much to pay for them. By contrast, general damages are intangible losses, such as pain and suffering, loss of use, or loss of reputation. It is difficult to assign a set dollar value to these losses, so they are most often determined by a court of law.

The Steps of the Claims Process Acknowledge the claim Establish lines of communication Prepare necessary paperwork Determine insurer’s liability in the claim Investigate the lossesDetermine the time & cost of repairsApply all policy coverages and provisionsNegotiate a settlementPrepare final reports Negotiation and ResolutionGoal: to find a settlement amount that is fair and equitable for all partiesThe adjuster proposes a settlement to the claimantIf the claimant doesn’t accept the amount, the adjuster will need to negotiate a sum they both find acceptable After calculating an estimated indemnity amount, the adjuster can move on to the eighth step in the claims process: negotiation. The goal of this step is to find a settlement which is fair and equitable for both the claimant and the insurer. Usually, the adjuster will start by presenting an initial settlement offer to the claimant. If the claimant agrees to that amount, then the adjuster can simply issue payment, close the claim, and prepare his final report. But, if the claimant does not accept the adjuster’s first offer, then the two of them must work together to find a settlement that they both think is fair. This is probably the most challenging aspect of an adjuster's job.

Section C 2D

Settling The Claim Claim Claim = Formal Request to Settle When a claimant submits an offer, the adjuster can: Accept the request and pay the claim Reject the request and deny the claim Negotiate a settlement with claimant Use an alternative dispute resolution method As we stated earlier, when a claimant submits a claim, he is making a formal request for compensation according to the terms of the insurance policy. The adjuster then gives one of four possible responses. This response will depend on what he finds throughout his investigation. He can: one, accept the request and pay the claim; two, reject the request by denying the claim; three, negotiate a settlement with the claimant; or four, turn to one of several dispute resolution methods to come to a decision on the claim. Let's look at these options in more detail

Settling The Claim Accept the request and pay the claim Reject the request and deny the claim Negotiate a settlement with claimant Use an alternative dispute resolution method Claimant has proven damages Adjuster determine settlement amount based on investigation If amount is close to claimant’s offer, adjuster comes to agreement with claimant and issues settlement check Small differences should be settled in favor of the claimant The first option is to accept the request and pay the claim. Once the claimant has proven all of his losses, the adjuster will conduct a thorough investigation and evaluation of the claim. Then she must determine what she believes to be an adequate settlement figure. If the settlement figure is close to the claimant's request, the adjuster can work right there to settle the differences between them and come to a final settlement. Minor differences should be resolved in favor of the claimant. She will then write the claimant a settlement check and the case is closed.

Settling to the Claim Accept and Pay Refuse and Deny Negotiate Is Negotiation Possible? Dispute ResolutionDraft Authority: Some insurers give their adjusters draft authority, which means that the adjusters are allowed to write claim settlement drafts, or checks, on the insurer’s behalf. Draft authority is often limited to relatively small amounts and only for particular types of claims. For example, Marge is an adjuster working for XYZ Insurance and has draft authority for 1st-party property claims with a limit of $5,000. Marge has just finished writing up an estimate for William, who hit a deer in the road and caused $3,500 in damage to his pick-up truck. Because the type of claim and the settlement amount fall within Marge’s draft authority, she writes William a check for $3,500 and submits her report and supporting documentation to XYZ Insurance. If Marge did not have draft authority, she would have to submit her report and documentation to XYZ Insurance, and William would wait to receive a check directly from the insurer. Adjuster can settle directly with claimants and write checks for the insurer Often limited to a certain amount (e.g. $5,000) Without draft authority, adjuster must submit settlement for approval

Responding to The Claim Accept the request and pay the claim Reject the request and deny the claim Negotiate a settlement with claimant Use an alternative dispute resolution method Reject the Request and Deny the Claim Some reasons why an adjuster may deny a claim: The damages aren’t covered The claim is fraudulent The claimant can’t prove damages The loss occurred outside the policy period The second option is to reject the request and refuse to pay the claim. There are several reasons an adjuster might reject a claim. She may determine that the claimant had no coverage for the damages; the claimant may have submitted a fraudulent claim; or perhaps the claimant cannot prove the damages he is claiming. Another possibility is that the loss occurred outside of the policy period. Regardless, if the adjuster denies the claim, she must do so in writing with a full explanation as to why the claim was denied.

Responding to The Claim Accept the request and pay the claim Reject the request and deny the claim Negotiate a settlement with claimant Use an alternative dispute resolution method Negotiate with the Claimant Damage is covered Claimant is asking for more than insurer is willing to pay Adjuster must negotiate to find an amount that will settle the claim Sometimes a claimant asks for more than the insurer is willing to pay. However, the insurer cannot simply deny the claim, since the damages are covered under the policy. Instead, it becomes the adjuster's job to negotiate a settlement that the insurer is willing to pay. This third option, negotiation, is one of the adjuster’s most important and difficult roles.

Responding to The Claim Accept the request and pay the claim Reject the request and deny the claim Negotiate a settlement with claimant Use an alternative dispute resolution method Is Negotiation Possible No negotiations: When dollar amount difference is too small When dollar amount difference is too great For punitive damages Adjusters must know the exact amount that the insurer is willing to pay to settle prior to investing time in the negotiation process The adjuster must enter into negotiations with a solid understanding of the maximum amount of indemnification the insurer is prepared to offer to settle a case. If the claimant’s demands are much higher than the insurer's range and he is not willing to lower it to an acceptable amount, the adjuster is wasting valuable time trying to negotiate, and the case should proceed to dispute resolution or the court. On the other hand, if the claim is very close to the adjuster’s estimate, no negotiations are needed; the adjuster can just cut a check and settle. Adjusters must also understand that they cannot offer, discuss, or agree to “punitive” damages, an issue only determined by a court of law.

Responding to The Claim Accept the request and pay the claim Reject the request and deny the claim Negotiate a settlement with claimant Use an alternative dispute resolution method Dispute Resolution Only works when both parties are motivated to settle Easiest, lowest-cost negotiation option Adjuster/Claimant Negotiation Alternative Dispute Resolution Methods Arbitration Mediation Appraisal Declaratory judgment Litigation (letting the claim go to court) Direct adjuster/claimant negotiation only works when all parties involved have a strong desire to come to an equitable conclusion quickly, compromising as needed. This is the simplest and least expensive way to settle differences, but it is not the only way. If negotiations do not work, the adjuster has several options to turn to for help resolving the case. The most common methods are arbitration, mediation, appraisal, and declaratory judgment action. “Last Resort!” The last option, litigation, or letting a court of law decide the case, should only be used as a last resort when no other methods are working. This is because settling a claim in court can be extremely expensive and unpredictable.

when responding to a claim, the adjuster's primary motivation should be: Find a way to deny the claim Settle the claim for the least possible amount Negotiate effectively Settle the claim quickly and fairly without litigation

Whitney suffered some property damage to her home. She makes a claim with her insurer based on a damage estimate of $12,000 she received from a contractor. The adjuster inspects the damages as well and comes up with an estimate of $11897. What is the best solution to resolve this claim? Accept the claim, since the damage has been proven and the total is very close Negotiate the claim until the claimant and the adjuster come up with closer settlement amounts Allow a court to decide a proper settlement amount, since the two estimates are different Reject the claim, since the claimant's offer is higher than the adjuster's estimate

From a legal standpoint, when a policy holder files a claim against her insurance policy, she is essentially submitting a/an: Bill for damage repairs Indemnification Order for damage repairs Formal request to settle the damage

A/an _______________ plays an advisory role in the negotiation process, working from a neutral position to assist the opposing parties to come to an equitable resolution. Arbitrator Mediator Judge Adjuster

Allen is adjuster an auto claim on behalf of Monroe Insurance, which has given Allen $5000 in draft authority. The total damages in the auto claim come to $7200. Which of the following is true? Allen must negotiation with the claimant to reach an agreement on a settlement amount of $5000 or less Allen can adjust the claim, but Monroe Insurance must write the settlement check Allen is not allowed to adjuster this claim, because the amount of damages exceeds his draft authority Allen can write a check for a half of the damages and Monroe Insurance will write another check for the other half

Dispute Resolution Arbitration Arbitration Mediation Appraisal Declaratory judgment Litigation (letting the claim go to court) Arbitrator is a neutral third party Arbitrator’s decision is legally binding Costs less to taxpayers than a court of law Less formal atmosphere allows more evidence Arbitrators often have more expertise than juries Arbitration is a legal technique used to resolve disputes outside a court of law. In arbitration, the opposing parties agree on a neutral third party, called an arbitrator. Each side submits their evidence, and the arbitrator reviews both positions and makes a final and legally binding decision on the case, based upon the evidence presented. Due to the tremendous financial cost of litigating matters in a court of law, many insurers choose to enter into arbitration to resolve insurance cases. This not only provides significant cost savings, but also provides a much less formal atmosphere where the relaxed rules of arbitration may allow evidence to be presented which would not be allowed in a courtroom trial. In addition, professional arbitrators tend to be more knowledgeable, thorough, and objective than the members of a civil jury

Dispute Resolution Mediation Arbitration Mediation Appraisal Declaratory judgment Litigation (letting the claim go to court) Mediator is a neutral third party Mediator only advises in the negotiation Mediator’s decision is not legally binding Settlement is only legally binding if both parties agree to it Either arty may “walk away” Mediation is similar to arbitration in that it uses a neutral third party. In mediation however, the mediator’s decision does not bind the opposing parties. Rather, the mediator plays an advisory role, trying to help the two parties reach a swift, mutually agreed upon solution. In some jurisdictions, a court judge may order the opposing parties in an insurance dispute into mediation. The case will be assigned, by the court, to a mediation firm, whose fees will be split between all of the parties involved in the dispute. If the parties cannot agree, they can walk away without settling (called an impasse). The parties can then proceed to litigation if necessary. However, if the parties sign an agreement, that agreement is immediately binding on the insurer. The claimant, however, often is given a window of time to back out if he has "buyer's remorse," after which time it becomes mutually binding.

Dispute Resolution Mediation Arbitration Mediation Appraisal Declaratory judgment Litigation (letting the claim go to court) Consequences for failure to appear at mediation: Severe for the insurer – contempt of court and/or penalties Mild for the plaintiff – no penalty or minor penalty Insurers will often specify in their policies which method should be used to resolve disputes. Property claim disputes commonly go to either arbitration or appraisal, whereas mediation is often used to resolve tort action before taking a case to court. Mediation is sometimes used to resolve property claims, however. An example of this is the mediation centers that were setup in Florida to help resolve disputes over hurricane claims. If a court orders that disputing parties go into mediation, a representative of the insurer must appear, and must have the authority to negotiate and agree to a settlement on behalf of the insurer, up to a reasonable level. If the insurer does not comply with the order, it and the insured defendant may be held in contempt of court. If the plaintiff does not appear for a mediation session, the consequences are rarely as severe

Dispute Resolution Appraisal Arbitration Mediation Appraisal Declaratory judgment Litigation (letting the claim go to court) A definite disagreement must exist prior to appraisal Each side chooses an appraiser Both appraisers agree on an umpire Agreement by any two of the three is binding Appraisal only decides settlement amount, not whether coverage exists in the first place Many policies include an appraisal condition or "clause," outlining how disputes should be handled. According to this clause, both the claimant and insurer select an appraiser. Then, the two appraisers agree upon a third person, called an umpire. In some cases a court will appoint the umpire, if the appraisers cannot agree. The appraisers then work together to determine a mutually-acceptable settlement. If they cannot agree, the umpire steps in. Agreement by any two of the three is binding. Like the other resolution methods, the appraisal process does not determine whether a claim is covered; it only determines the proper loss payment amount for a claim that is already acknowledged as covered. Also note that neither the claimant nor the insurer may properly demand an appraisal until after an actual disagreement has occurred. In other words, both parties must make a genuine effort to settle the claim through direct negotiation before appraisal becomes an option.

Dispute Resolution Declaratory Judgment Action Arbitration Mediation Appraisal Declaratory judgment Litigation (letting the claim go to court) Court declares the legal rights of both parties Court does NOT decide how to resolve the case Disputing parties then use the court’s decision to come to settlement Sometimes, a court of law can help disputing parties reach an agreement without actually deciding the case for them. This is called a declaratory judgment action. In a declaratory judgment, a court will consider the case and issue a binding decision about the rights of the different parties, but it will not order any action or damages. The decision simply clarifies the legal relationship of the disputing parties, which can help them reach a settlement on their own. Insurance disputes sometimes rely on declaratory judgment to clarify the legal meaning of policy coverages. Once the rights of the insurer and claimant have been declared by a court, the solution often becomes clear from there.

Dispute Resolution Litigation Arbitration Mediation Appraisal Declaratory judgment Litigation (letting the claim go to court) Last resort method of claim resolution Taking a claim to court can be Expensive Unpredictable Possible even after binding negotiations The final way to resolve a claim dispute is through litigation, that is, letting a civil court decide the case. Litigation should be a last resort, used only when all other options fail. The expense, time, and unpredictability of court cases make them very risky for insurers, so an adjuster should avoid taking a case to court if possible. It is important to note that it is usually still possible for the insured to sue the insurer if he is not satisfied with his settlement after arbitration, appraisal, and mediation, even when these are binding. Therefore, we should only consider litigation after trying all of the established negotiation avenues first. We will discuss litigation further in a later section

Review: Responding to a Claim – 4 Options Let's recall what we covered in this chapter. An adjuster typically follows nine steps to resolve a claim: first, he will acknowledge the claim and establish open lines of communication with the claimant. Then he will prepare any paperwork needed for the claim and send all required forms to the claimant. The adjuster will then check to make sure that the policy in question applies to the damages being claimed. If it does, he will research and investigate the losses to collect as much information about the occurrence as possible. Next, the adjuster will calculate the time frame and total cost of all injuries and repairs, and then apply the policy’s coverages and provisions in order to calculate a settlement offer that is fair and equitable to all parties. If the claimant disagrees with this amount, the adjuster will have to negotiate with the claimant until they can agree on a fair settlement. Once this is complete, the adjuster must wrap up the claims process by preparing final adjustment reports for both the insurer and the claimant. Accept the request and pay the claim Reject the request and deny the claim: requires written explanation Negotiate a settlement: when claimant’s offer is within a reasonable range of the insurer’s offer Dispute Resolution

When a storm rolled through town a month ago, john's home suffered substantial damage. He filed a claim, but his insurer has offered a settlement much lower than john feels is fair. Both john and his insurer has each select an appraiser, who in turn have agreed on an umpire, to help settle the claim. What type of dispute resolution is this? Mediation Litigation Arbitration Appraisal

Which of the following statements about arbitration is True? An arbitrator costs significantly more than a civil trial An arbitrator tries to get both sides to come together in agreement An arbitrator makes a legally binding decision based upon the evidence An arbitrator plays no role in the outcome of negotiations

Settlement Options Settlement When two parties in a dispute reach an agreement The insurer and the claimant agree on: How much will be paid. Terms & conditions of payment When a settlement is reached the claimant: Gives up her right to seek any further damages Gives up the right to sue --as long as the insurer follows the terms of the settlement When two parties in a dispute reach an agreement, it is called a settlement. This occurs when the insurer and the claimant agree on how much the claimant will be paid, as well as the terms and conditions of that payment. In turn, the claimant gives up her right to seek any further damages and her right to sue, as long as the insurer follows the terms of the settlement. Let's go over some of the most common settlement techniques that insurers use to resolve claims.

Settlement Options Full Release Settlement Also called “Full Release of All Claims and Settlement Agreement” All damages paid at once Most common settlement option Insurer pays immediate, single ‘lump sum’ to claimant Claimant signs Full Release Form that releases the insurer from additional claims The Full Release Settlement is the most common settlement option. It is often called a Full Release of All Claims and Settlement Agreement. A Full Release Settlement involves two simple steps. The insurer cuts a check for the amount of the claim, and the claimant signs a Full Release Form stating that she has received the payment. By signing the Release Form, the claimant releases the insurer from additional claims connected to this agreement. This will further discharge all claims against the insurer and relinquish the claimant's right to sue the insurer.

Settlement Options Scheduled Payment Release Also called “Open-ended Release” or “rehabilitation settlement” Insurer agrees to pay all Compensatory damages (both special and general) up to the point of settlement Insurer also pays for certain future “incidentals” related to the claim Most commonly used in Workers Comp claims A scheduled payment release, or "open-ended release", is a settlement technique whereby the insurer agrees to pay all special damages and general damages accumulated by the claimant up until the point of the settlement. In addition, the insurer agrees to provide indemnification for future "incidentals" or "special circumstances" accrued by the claimant, which are very specifically outlined in the settlement contract. "Incidentals" can include ongoing physical rehabilitation costs or visits to a physician's office. The future payments relate only to special damages, whereby the claimant must provide documentable verification of expenditures to the insurer. Scheduled Payment Release is most often used in workers’ compensation claims. It is sometimes called Rehabilitation Settlement, because it is often used when bodily injury requires ongoing rehabilitation.

Settlement Options Partial Release Payment of Property Damage; Bodily Injury Pending Involves claims that have property damage and bodily injury Insurer indemnifies all property damage while it awaits the proper indemnification for bodily injury The Payment of Property Damage; Bodily Injury Pending option is helpful for claims that seek damages for both property damage and bodily injury. Property damages are easier to quantify than bodily injury damages, and therefore much easier to negotiate. In this settlement option, the insurer agrees to indemnify the claimant for all property damages first, but the claim is left pending until damages for bodily injury can be negotiated. The payment of property damage settlement option offers some financial relief to the claimant, while not yet fully settling the claim. The claimant must be fully capable of understanding this settlement option. Obviously, if the claimant is still under severe mental duress due to pain or injury, or mentally incapacitated by injury, insurers cannot employ the payment of property option.

Settlement Options Advance Payment Settlement Used when the claimant’s damages are mostly bodily injury and the claimant is unable to work Involves a series of partial payments that will be subtracted when the final settlement amount is determined Decreases chances of lawsuit The Advance Payment Settlement allows the insurer to make partial payments to the claimant before the total final settlement amount is reached. This technique is most often used when a claimant suffers bodily injury and has mounting medical bills or other financial responsibilities. Since the claimant likely has been unable to work due to her injuries, an advanced payment settlement can help the claimant cover necessary costs while injured. Once the parties negotiate a final settlement, the amount of the advance payments is then subtracted from the final figure. The advance payment settlement option also reduces any antagonistic feelings the claimant may have toward the insurer, decreasing the chances of a lawsuit. Of course, the insurer must also ascertain the terms of the advance payment settlement, so the costs of the advance payments do not exceed the potential final settlement amount.

Settlement Options No Release Settlement Also called “walk-away” Settlement Insurer pays the bills submitted by the claimant Signing and cashing a check substitutes for the release form In a No-Release, or “Walk-away” Settlement, the insurer simply pays the bills submitted by the claimant, but the claimant does not sign a release form to verify the payment. Usually, the checks issued to indemnify the claimant act as a substitute for a release form. In this type of settlement, special check wording is usually required by the insurer that makes cashing the claim check equivalent to signing a release. For example, the back of an indemnification check may state: "By endorsement, the payee on this check agrees to release XYZ Insurance from all further payments ... " After a certain amount of time passes with no contact by the claimant, the file is closed.

Settlement Options Structured Settlement Series of smaller payments over time Reserved for largest claims Insurer often must pay a portion up front A Structured Settlement breaks the claimant’s indemnification up into a series of smaller payments over a set period of time, instead of paying it all out at once. Structured settlements are typically reserved for claims involving a very large settlement amount, and the insurer often has to pay some of the amount in a lump sum up front.

Review: Settlement Options Full Release Insurer writes one check to cover all damages; claimant signs a full release form Scheduled Payment Release Insurer pays all compensatory damages and agrees to pay certain future “incidentals” Payment of Property Damage, Bodily Injury Pending Insurer indemnifies for property damage first; then bodily injury, when the amount is availableAdvance PaymentInsurer makes multiple partial payments until the final settlement is agreed uponNo Release FormInsurer cuts a check for the amount of the damages, but the claimant is not required to sign a release formStructured SettlementBreaks up the indemnity into a series of smaller payments

While at work, Serena suffered a spinal cord injury in a forklift accident. Her employer's insurer settled the claim and paid all of her Weekly visits to the rehabilitation therapist. Which settlement option did Serena receive? Full release Partial release Advance Payment Scheduled Payment release

Which of the following is true about the partial release settlement option? It's also called "Payment of Property Damage; Bodily Injury Pending" It's also called an "Open-Ended Release" Once the property damage settlement is made, the claim is closed. Its also called a "rehabilitation Settlement

Which of the following is NOT a characteristic of a full release settlement? All damages are paid at once The claimant signs a full release form The insurer pays an immediate single lump sum to the claimant The insurer pays for certain future "incidental" related to the claim

Marilyn was severely injured in a car accident and now cannot work as a result. Even though she filed her claim promptly, her insurer is taking a long time to decide on a final settlement amount. What kind of settlement option would be most convenient for both her and the insurer? Advance payment settlement No release settlement Full release settlement Scheduled payment release

Cooper's automobile was struck by another driver, Peggy. Cooper's files a claim with Peggy's insurer, who accepts the claim. Cooper signs a release form and is issued a check that covers the damage to his car. Which settlement type world this fall under? Full release no release settlement Advance Payment Partial release settlement

Section A 2B What is an Insurance Adjuster? - PowerPoint Presentation

Section A 2B What is an Insurance Adjuster? - PPT Presentation

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