Claims Handling and Loss Adjustment
Claims process
Know the sequence: notification, registration, verification of cover, investigation, loss assessment, reserving, settlement, and recovery. The insurer must check the policy was in force, the peril is covered, exclusions do not apply, and conditions such as notice and proof of loss were met. Good faith and prompt, fair handling are central, and claimants must be treated fairly and kept informed.
Loss adjustment
Understand indemnity, betterment, salvage, subrogation, and contribution. Adjusters assess cause, quantum, and policy response. Distinguish total loss from partial loss and know how underinsurance and average reduce payment. Reserving should reflect expected ultimate cost, including defence and adjustment expenses. Fraud indicators must be investigated but not assumed.
Traps in questions
Watch the difference between repudiation (denial of liability) and ex gratia payment (goodwill without admission). Do not confuse salvage (remaining value of damaged property) with subrogation (right to recover from a third party). Deductibles are usually applied before coinsurance or average in some wordings, so follow the policy order. Late notification may prejudice the insurer but is not automatically a denial.
Worked example
A shop insured for 90,000 with a 100,000 sum insured and no average clause suffers a 30,000 loss. The claim is paid in full less the excess because the sum insured exceeds the loss. If average applied and the sum insured were 60,000 against 100,000 value, payment would be 60,000/100,000 × 30,000 = 18,000. Rule of thumb: establish the policy response before calculating quantum.