Claims Handling, Investigation, and Damage Evaluation
Domain 2 - Claims Handling, Investigation, and Damage Evaluation tests the claim from first notice to payment: acknowledging and investigating promptly, determining cause and origin, separating covered from uncovered damage, documenting the loss, and building a defensible repair estimate. Hawaii expects good-faith handling and a written basis for denial; the exam favors people who investigate before they conclude.
Investigation sequence
Open the claim, identify the policy and insured, confirm the date of loss and whether notice was timely. Protect the property from further damage. Obtain recorded statements, photographs, measurements, receipts, maintenance records, and prior claim history. Determine cause and origin-fire patterns, water-source testing, HVAC inspection, meteorological data-before applying exclusions. For water losses, distinguish a sudden discharge from long-term seepage; for wind versus flood, document the sequence. Preserve evidence and note chain of custody. If coverage may be excluded, say so in writing with the policy language.
Building the damage number
Scope first, then quantity, then price. A repair estimate should separate labor, materials, equipment, overhead and profit, sales tax, permits, and debris removal. Apply depreciation to arrive at ACV; hold back recoverable depreciation until completion. Code-required upgrades need ordinance-or-law coverage. Matching of undamaged materials, betterment, salvage, and subrogation all affect the net number. Business interruption is measured by net income plus continuing expenses, not gross revenue.
Worked example
A condominium water heater bursts and damages the unit's drywall, flooring, and cabinets; the unit below has staining. The policy covers sudden accidental discharge but excludes repeated seepage. The adjuster tests the heater, confirms a single rupture, and dates the loss. The estimate is $28,000: drying $3,000, drywall $4,000, flooring $9,000, cabinets $10,000, permits and tax $2,000. The deductible is $2,500. ACV payment is $25,500 minus $4,000 depreciation = $21,500; the $4,000 is recoverable after repair. The adjuster also notifies the association and preserves subrogation against the manufacturer.
Traps
Do not deny because damage looks old; test it. Do not miss ensuing-loss exceptions after an excluded peril. Do not lump covered and noncovered damage into one number. In condominiums, identify the unit owner's policy, the association master policy, and any loss-assessment coverage. Do not overlook business interruption or additional living expense. Do not destroy evidence before the insurer or an expert can inspect it.