Adjusting Practices and Claims Handling
What this domain tests
The claim lifecycle: acknowledgment, investigation, coverage analysis, damage evaluation, reserving, negotiation, settlement, and recovery.
Core practices
- Acknowledge and set expectations: contact the insured or claimant promptly and explain the process.
- Investigate: statements, photographs, estimates, police and fire reports, medical records, and scene inspection. Separate facts from opinions.
- Coverage first: compare the loss facts to the insuring agreement, exclusions, conditions, and endorsements before committing to payment.
- Document: every contact, decision, and authority request in the claim file. A claim file should explain the “why,” not just the “what.”
- Reserve: set and adjust reserves based on exposure, not on the claimant’s demand.
- Evaluate damages: apply valuation method, deductible, limits, other insurance, and salvage or subrogation.
- Negotiate and settle: use authority; confirm settlement terms in writing; issue payment promptly.
- Recovery and fraud: preserve subrogation rights and refer suspicious indicators to special investigation.
Worked example
A kitchen fire claim has a $50,000 dwelling limit, $5,000 deductible, and $20,000 in repair estimates. The insured also claims $4,000 for temporary lodging. The adjuster confirms the fire is a covered peril, reviews the policy’s loss-of-use limit, and obtains receipts. Repair payment is $20,000 − $5,000 = $15,000 if no other insurance applies. Lodging is paid under the loss-of-use coverage, subject to its own limit and time restrictions. The adjuster documents the coverage path before issuing payment.
Traps that cost marks
Paying before coverage is confirmed; missing a proof-of-loss or suit deadline; failing to document a denial; settling without authority; and overlooking subrogation against a defective appliance manufacturer.