Adjusting Practices and Claims Handling
Domain 3: Adjusting Practices and Claims Handling
This domain tests the claim lifecycle: acknowledging the loss, investigating coverage and damages, documenting the file, communicating with the insured, and resolving the claim. Questions often present a fact pattern and ask what the adjuster should do next or which payment is correct.
Investigation and file discipline
Open the claim promptly, confirm the policy period, named insured, location, and reported cause. Inspect the risk when possible, photograph and diagram the damage, obtain recorded or written statements, and request documents such as receipts, inventories, bank records, and prior maintenance records. Preserve evidence and avoid spoliation. Send a reservation-of-rights letter when coverage is uncertain; do not deny before the investigation is complete. A proof of loss is a sworn statement of the amount claimed; it does not by itself establish coverage.
Coverage and damages
Analyze the policy in order: insuring agreement, exclusions, exceptions, conditions, limits, deductible. Determine whether the peril is covered, whether an exclusion applies, and whether an exception restores coverage. Measure the loss using ACV, RCV, or the policy valuation clause. Consider additional living expense, business income, debris removal, ordinance-or-law, salvage, subrogation, and other coverage extensions. Use qualified experts for cause-and-origin, engineering, accounting, or restoration scope.
Connecticut claim standards
Connecticut's Unfair Insurance Practices Act, Conn. Gen. Stat. § 38a-816(6), makes it an unfair claim settlement practice to misrepresent policy provisions, fail to acknowledge a claim with reasonable promptness, fail to investigate, refuse to pay without a reasonable basis, fail to explain a denial, or fail to affirm or deny within a reasonable time after a completed proof of loss. The adjuster should document every contact, keep the insured informed, and state the factual and policy basis for any partial payment or denial.
Worked example
An insured reports water on the floor near a bathroom. The adjuster inspects and finds a failed supply line, but also long-term seepage staining and mold. The supply-line burst is a sudden accidental discharge and is covered; the seepage and mold may fall under a repeated-seepage exclusion and a mold sublimit. The adjuster separates the sudden-loss damage from the excluded long-term damage, prices each, applies the deductible to the covered loss, and issues a written explanation for the excluded portion. This avoids both overpayment and a bad-faith denial.
Traps
- Accepting the reported cause without inspecting for maintenance or long-term damage.
- Missing additional living expense or business income in a property loss.
- Applying the deductible to each item rather than once per occurrence.
- Making a settlement promise before coverage is confirmed.
- Failing to document telephone calls, inspections, and denial reasoning.