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Claims 101:
Forming a Dream Team With Your Adjuster
By Kevin M. Quinley CPCU, AIC, ARM

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During one of this century’s most celebrated trials, we heard about “The Dream Team,” a gathering of high-priced criminal defense lawyers. When pro basketball players were first allowed to compete in the Olympics, they were called the “Dream Team” of hoop stars.

Few people think of insurance as a realm where one can assemble a dream team. An insurance adjuster who works with you on a claim will never grab the headlines or the fortune of a Johnny Cochran or Michael Jordan. However, when there is a loss, you can partner with your insurance adjuster to learn the basics of Claims 101 and to make the experience as painless and rewarding as possible. Instead of viewing the insurance adjuster as an adversary, view him or her as a business partner with whom you can form a productive and professional relationship. By doing so, you can save time, money and heartburn.

Let’s look at some specific and time-tested techniques you can employ in order to form a Dream Team with your insurance adjuster.

Report claims fast. Quickly report all claims to your insurance company. This is required by your insurance policy. Further, failure to do so may cause the insurance company to contest coverage or quibble about it. Prompt claim reporting to the insurance company lets it get out of the starting blocks early, to investigate while the trail is still warm, before memories fade or witnesses move away. This can help lay the foundation of a successful claim defense.

Don’t forget about reporting incidents Some businesses think that they don’t need to report incidents or “near misses” to their insurance company. This belief is often wrong, though. Many insurance policies require the policyholder to report all occurrences that may develop into a claim. This includes so-called incidents: events which do not (yet) produce a claim but which could. An example would be a customer slip and fall with no apparent injury, where the customer says nothing about wanting compensation.

The problem is that sometimes people change their minds. Further, injuries which initially seemed minor can turn out to be more serious, prompting people to seek medical treatment. Big trees grow from little acorns; sizeable claims can arise from seemingly minor or innocuous events. Moral: report incidents as well as claims to your insurer. First, it will likely comply with the insurance policy. Second, it gives the insurance adjuster a chance to discretely investigate and nail down the facts before too much time passes. Third, there is an insurance maxim that frequency augurs severity, so insurers may view incidents as a predictive weather-vane for future claim patterns.

Another reason looms below the surface, deterring policyholders from reporting incidents to their insurance company. Some policyholders fear that their insurance rates will rise if they report lots of incidents. This is rarely true, however. If the incidents involve no payout, this is unlikely to brand you as a costly account. If, however, you forego reporting incidents and your insurer later finds that you have suppressed loss reporting in order to make yourself look more attractive, the insurer may then exact a higher penalty and quite a higher price. Moral: not reporting incidents can – in the long run – be more expensive than reporting them. Do not refrain from reporting a loss or claim because of what you think an insurer might do to your pricing of coverage down the road.

Be wary of “internal” investigations. Once you learn of an accident, there is a temptation to go out an investigate it yourself. This may or may not be a good idea. It is definitely something that you should discuss with your insurance company representative or the adjuster assigned to your case. Well-intention attempts to investigate may backfire. If your solo investigation turns up damning facts, it may be “discoverable” by claimants and not protected by attorney-client privilege.

If, by contrast, you investigate after you have a lawyer or after the insurer has hired one for you, the fruits of that investigation cannot be mined by the opposing side or used against you. Claim adjusters are schooled in investigating claims. Let them do their jobs. To you, investigating a claim is a sideline at best. To an adjuster it is his or her bread and butter. Moral: before getting too deep into a do-it-yourself investigation, call in your insurance company and consider asking them to appoint counsel for you so that the investigation might be privileged.

Disclose all information, even if it’s unfavorable. Tell your adjuster all the facts about the accident, even those which may undermine your liability position. If there are some bad facts or documents, be candid in disclosing this to the claims adjuster. Better he find out early on than to be surprised and blindsided down the road.

Take time to work with your insurance adjuster. You have an accident, report the matter to your insurance company, and then wash your hands of the whole matter, right? Wrong! Successful handling of a claim involves a partnership between you and your insurance adjuster. While you have a business to run, you will likely need to invest time working with your claims adjuster.

If you take the attitude that you’re too busy to attend to the details involved in processing a claim, a number of bad things can happen. First, it may delay the processing of your claim. Second, it may hamstring the defense of a claim against you, causing a loss to be paid or overpaid. Third, any attitude of non-cooperation could give the insurance company reason to threaten to deny coverage, based on a breach of the “cooperation condition” in your insurance policy. Fourth, even if this doesn’t jeopardize your insurance coverage, the adjuster could tell the underwriters that you are a “difficult account.” Adjusters may load a surcharge to your renewal coverage, thus hiking the cost of your insurance protection.

Suggestion: do not view the claims-handling process to be a “turn-key” operation, where you turn the loss over to the adjuster and expect never to be bothered thereafter. Your involvement is key. This participation may take the form of:

spending time giving a statement to the adjuster
returning phone calls from the adjuster
producing records – often hard to locate – regarding the accident which is the subject of a claim
completing forms, such as a Proof of Loss, needed by the insurance company to process a claim
producing documentation regarding damaged or lost property in the event of first-party claims where you want reimbursement
spending time helping identify and locate witnesses to an accident
completing forms and paperwork needed by the adjuster to process the claim
giving a deposition in connection with a lawsuit and possibly even testifying at trial.
The author recalls one commercial insured on a product liability policy who often complained that we didn’t take enough cases to trial, that we needed to get into court and slug it out in defending claims. He felt we were too pro-settlement. Finally, we got a case ready for trial for this particular insured in Chicago. When our defense attorney told him that we might need him in trial for about a week, he went ballistic. No way he could do this! He was too busy and had a business to run! We just rolled our eyes and bit our tongue, doing the best we could with lukewarm support.

Moral: You can’t have it both ways – expect the adjuster to fight like crazy for your cause and expect that you won’t have to lift a finger to help. You may have to lift – not only a finger – but lots of them, and lend a helping hand to the defense of your case. The best policyholders commanding the lowest premium quotes are often the ones who have cultivated a reputation as a cooperative account. (Of course, it also doesn’t hurt if you are loss free!)

Protect your damaged property from further loss. Do not alter the condition of any property damaged by an insured event. On the other hand, you will need to take steps to protect it from further damage by making emergency repairs. Most insurance policy language requires that you take such steps to mitigate your own damage. If you fail to do this – on the basis of “that’s why I have insurance” – your adjuster may balk at paying for a large chunk of the damage. It may also needlessly bog down the speed of the claim process because you have now created a coverage question which drops all sorts of flares within a claims department. These flares are akin to speed bumps on your road to a smooth claims experience.

Turn the claims experience into a free “consult” aimed at safety and loss prevention. The accident is investigated. The adjuster settles the claim and gets a signed Release. The case – and the claim – is not closed. You can move on to other things. Right?

Wrong!! Of course, this scenario is typical. Humans don’t like to dwell on unpleasant things like insurance claims. If you let the file close without any kind of post-mortem, though, you’re shortchanging yourself.

When a claim closes, you should ask yourself and the adjuster:

What “lessons” can I learn here in order to keep this from happening again?
What could have been done differently to prevent the accident giving rise to a claim?
Have I done anything differently to keep this kind of loss from recurring?
Focus on root causes. It’s always tempting to think you can “fix” some problems by firing the offending employee who disregarded a safety regulation, for example. Most causes are deeper-seated. As a result of subjecting a claim to a post-mortem with your insurance adjuster, you may discover a number of needed loss prevention needs, such as:
improved sprinkler and fire suppression systems
new types of floor wax to prevent slips and falls
improved driver training to reduce accidents among your fleet of trucks and cars
improved warming labels on products to prevent accidents or to make claims more defensible
a “no-lift” environment on the factory floor to reduce lumbar sprains, strains and herniated discs which inflate your workers comp premiums
You are doing more than just making the adjuster’s life easier. (Speaking as an adjuster, though, let me say there’s nothing wrong with that!) A number of benefits flow to commercial policyholders who implement these straightforward principles:
more effective claim defense
swifter reimbursement from your insurance company on first-party claims
identifying indefensible claims earlier
avoiding litigation
packaging yourself as an attractive risk to insurers
tuning up your risk management program
Claims collaboration is anything but an auto-pilot operation. Once you understand this, you have just graduated from the real-life course of Claims 101. Passing this may mean you will not have to endure a “School of Hard Knocks” when it comes to having an insurance claim.

Relationships between adjusters and commercial policyholders must be managed and tweaked in ways that benefit both parties. You and your claims adjuster may make no headlines and win no gold medal but – in the area of claims collaboration – you truly are a Dream Team! Implement these principles and go for the gold!






Kevin M. Quinley CPCU, AIC is Senior Vice President, MEDMARC Insurance Company, Fairfax, VA. He can be reached at kquinley@prodigy.net.

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