Claims Adjuster cheat sheet

Indemnity caps recovery at the insured's actual financial loss: ACV = replacement cost − depreciation, and in no event may a claimant recover more than the policy limit.

Insurable interest must exist at policy inception for life insurance and at the time of loss for property insurance; without it the contract is void.

Coinsurance formula: (insurance carried ÷ insurance required) × loss, where insurance required = coinsurance percentage × value at the time of loss; the result is then reduced by the deductible and capped at the limit.

Occurrence-form policies respond to injury or damage that takes place during the policy period; claims-made forms respond only to the date the claim is first made, bounded by any retroactive date and extended reporting period.

A material misrepresentation is one that would have affected the insurer's decision to issue the policy or the rate charged; it supports rescission or denial.

Subrogation places the insurer in the insured's shoes against a negligent third party after payment; the insured may not recover twice for the same damage.

Standard policy architecture: declarations (who, what, how much), insuring agreement (what is covered), conditions (duties of the parties), exclusions (what is not covered), and definitions (which control word meanings throughout).

A deductible is subtracted per occurrence and does not reduce the policy limit; a self-insured retention is borne by the insured before any insurer obligation attaches, including the duty to defend.

Proximate cause rule: when a covered peril and an excluded peril combine to produce the loss, the dominant or efficient cause determines whether coverage applies.

Record the first notice of loss with date and time received, location, parties, policy number, and the reported cause in the claimant's own words before discussing any coverage position.

A reservation of rights letter must cite the specific policy provisions at issue and be issued promptly; it preserves coverage defenses without waiving the duty to defend.

A proof of loss is a sworn, itemized statement of the amounts claimed, commonly due within the period stated in the policy (often 60 days) after the insurer's written request; unjustified late filing may bar the claim where the insurer is prejudiced.

Refusal to submit to an examination under oath, a policy condition, can bar recovery even where the loss is otherwise covered.

Loss-history index searches reveal prior claims at the same address or by the same parties and support referral to a special investigation unit.

Physical evidence must follow a documented chain of custody from collection through storage; gaps undermine admissibility and the weight of expert opinions.

Common fraud indicators: coverage or limits increased shortly before the loss, financial distress, prior similar losses, missing records, and reluctance to provide documentation.

Witness and third-party statements should be recorded separately and early, before memories fade and before accounts are aligned between interested parties.

Fair-claims-practice rules set deadlines for acknowledging the notice of loss, beginning the investigation, and communicating a coverage decision; missed deadlines create regulatory exposure independent of coverage.

Burden-of-proof sequence: the insured proves the loss fits the insuring agreement, the insurer proves an exclusion applies, and the insured proves any exception to that exclusion restores coverage.

Ambiguity is construed against the drafter (contra proferentem), but only where the wording is genuinely susceptible to two reasonable readings after plain meaning, context, and purpose are considered.

Efficient proximate cause doctrine: where a covered and an excluded peril combine, the dominant cause governs; other jurisdictions instead apply concurrent-causation analysis and may deny coverage entirely.

An ensuing-loss clause restores coverage for resulting damage even though the event that initiated the sequence is excluded.

Additional insured status is limited to liability arising out of the named insured's operations or premises; a certificate of insurance is evidence of coverage but is not the policy itself.

Defense-within-limits erodes the liability limit, while defense-outside-limits does not; the inside-limits form can exhaust coverage through legal fees alone.

Late notice defeats coverage only where the insurer was prejudiced in most modern jurisdictions; older forms treat prompt notice as a strict condition precedent.

The 'your work' exclusion bars damage to the insured's own completed work, but the subcontractor exception restores coverage for work performed by independent subcontractors.

Intentional-act exclusions require that the insured expected or intended the resulting injury; the act may be deliberate while the resulting harm is not.

ACV = replacement cost − depreciation; depreciation = (age ÷ useful life) × replacement cost, adjusted for condition and obsolescence.

Replacement cost coverage pays new-for-old but typically withholds depreciation until repairs or replacement are completed within the policy's stated time limit.

Business income loss = net profit + continuing normal operating expenses − expenses that cease during the shutdown, measured over the period of restoration.

Period of restoration is the reasonable time needed to repair or replace with due diligence; it ends when the business could resume at the described premises, not when revenue fully recovers.

Additional living expense = necessary increase in living costs − normal expenses the insured no longer incurs, subject to a time limit and any percentage sublimit in the policy.

Total-loss vehicle valuation uses local comparable market data plus applicable taxes and transfer fees, minus salvage value where the insured retains the vehicle.

Many homeowners forms pay full replacement cost without depreciation only when the insured carries at least 80% of the dwelling's replacement cost; below that threshold settlement is depreciated.

General damages are non-economic (pain and suffering); special damages are documented economic losses such as medical bills and lost wages and require supporting records.

Workers' compensation indemnity is generally a state-set percentage (often about two-thirds) of the average weekly wage, bounded by statutory maximum and minimum benefits.

Settle only within granted authority; any amount above the authority level requires documented supervisory approval before the offer is communicated to the claimant.

A full release extinguishes all claims arising from the incident, while a partial release preserves specified claims and must state its scope explicitly.

Cashing a check tendered as full and final payment on a disputed claim generally creates accord and satisfaction and ends the dispute.

Concession strategy: open near the reservation price with a documented basis, then make progressively smaller concessions to signal that the ceiling is near.

A time-limited policy-limits demand must be evaluated promptly on liability, damages, and coverage; unreasonable refusal exposes the insurer to an excess judgment.

Bad-faith exposure arises from unreasonable denial or delay, failure to investigate, and offers unsupported by the file; damages may exceed the policy limit.

The appraisal provision resolves disputes over the amount of loss only - each party selects a competent appraiser and an umpire decides remaining differences; coverage disputes belong in court.

Statutes of limitations and policy suit-limitation clauses fix the deadline to sue the insurer, and written demands or continued claim activity may toll the period in some jurisdictions.

Before payment, eliminate duplicate recovery: deduct salvage, prior recoveries, and other valid insurance, and preserve subrogation rights with a signed subrogation receipt.