IN Claims Adjuster cheat sheet

Insurable interest: the insured must stand in a legal relation to the subject matter such that loss or damage causes pecuniary disadvantage; required at inception for life, at inception and at time of loss for property.

Indemnity restores the insured to pre-loss financial position, no better; applies to property, liability and most marine claims, but not to life or personal accident benefits.

Utmost good faith (uberrimae fidei) obliges both parties to disclose material facts; materiality is judged by whether the fact would influence a prudent underwriter's rating or acceptance decision.

Proximate cause: the dominant, effective cause of loss determines cover; remote or incidental causes are disregarded even if they precede the loss.

Subrogation transfers the insured's recovery rights against third parties to the insurer after payment, capped at the amount paid; the insured cannot prejudice those rights by settling with the wrongdoer.

Contribution applies where two or more policies cover the same interest, same peril, same subject matter and same insured; each pays rateably, typically independent liability method for non-concurrent policies.

Utmost good faith remedies for non-disclosure vary by jurisdiction: avoidance ab initio, damages, or proportional reduction of claim; careless versus deliberate non-disclosure is often distinguished.

Average (underinsurance): claim payment = loss x (sum insured / value at risk); applies where the policy is subject to average condition.

Warranty is a condition precedent to liability; breach suspends or discharges cover from the date of breach, unlike a representation which only affects inducement.

Policy structure: recital, operative clause, exclusions, conditions, schedule, and endorsements; the schedule prevails over printed wording where they conflict.

Sum insured is the insurer's maximum liability per policy period (or per occurrence if reinstatement applies); it is not automatically the market value of the property.

Deductible/excess reduces each claim; franchise means no payment at all if loss is below the stated amount.

Co-insurance clause requires the insured to insure to a stated percentage of value (commonly 80-90%); failure triggers average on the shortfall.

Reinstatement (new-for-old) cover requires the insured to actually rebuild or replace; otherwise settlement reverts to indemnity value.

Material facts for commercial risks include trade, turnover, claims history, construction, protection, hazardous processes, and previous declinature.

Premium adjustment: deposit premium plus adjustable rate; audit at expiry adjusts to actual turnover or wages.

Cancellation terms: pro rata refund if insurer cancels, short-period refund if insured cancels, unless statute or policy provides otherwise.

Endorsements override conflicting policy wording; they must be signed and dated and referenced in the schedule to be enforceable.

Claim lifecycle: notification, registration, coverage verification, investigation, loss assessment, reserve setting, settlement, recovery, subrogation, and closure.

First notice should capture date/time, location, cause, injuries, witnesses, police report reference, and immediate mitigation steps taken.

Reserves are set at probable ultimate cost including defence and adjustment expense; review at defined intervals and document the rationale.

Onus of proof: the insured must show the loss occurred and falls within the insuring clause; the insurer must prove any exclusion or condition breach.

Fraud indicators: late reporting, inconsistent statements, prior claims pattern, altered documents, and absence of third-party witnesses; refer to special investigation unit.

Salvage and subrogation recoveries reduce net claim cost; obtain a signed subrogation receipt and preserve evidence chain.

Reservation of rights letter preserves the insurer's position while investigation continues; it must state the specific policy provisions in question.

Limitation periods run from the date of loss or denial depending on jurisdiction; diarise to avoid time-bar.

Third-party liability claims: establish duty, breach, causation and quantum; handle without prejudice and avoid admissions before cover is confirmed.

Standard fire perils: fire, lightning, explosion of gas used for domestic purposes; extended perils (storm, flood, impact, malicious damage) require specific extension.

Fire requires actual ignition, accidental origin, and not a fire intentionally lit in a place where it ought to be (the 'hostile versus friendly fire' test).

Consequential loss (business interruption): gross profit = net profit + standing charges; rate of gross profit = gross profit / annual turnover.

Increased cost of working is recoverable only to the extent it reduces the loss that would otherwise be payable; the economic limit applies.

Indemnity period runs from date of damage until business returns to normal; choose it to cover the maximum probable interruption, not the expected repair time.

Savings in standing charges during interruption must be deducted from the gross profit loss.

Average for BI: claim reduced by (sum insured on gross profit / gross profit that would have been earned in the indemnity period).

Proof of loss under fire policies requires a sworn/proof of loss statement, inventory of damaged and undamaged stock, and books of account.

Reinstatement memorandum: settlement on rebuilding cost, subject to sum insured adequacy and the insured actually rebuilding within the stated period.

Institute Cargo Clauses (A) cover all risks of loss or damage except those excluded; (B) and (C) are named-perils lists, with (C) narrower than (B).

Marine perils: perils of the seas, fire, explosion, collision, jettison, piracy, barratry of master or crew, and discharge at a port of distress.

General average: sacrifice or expenditure intentionally and reasonably made for the common safety; contributions apportioned by arrived values (ship, cargo, freight).

Particular average is partial loss borne by the individual cargo owner; particular charges (sue and labour) are recoverable in addition to the sum insured.

Sue and labour clause obliges the assured to take reasonable steps to avert or minimise loss; those costs are recoverable even if the loss is otherwise excluded.

Inchmaree clause covers loss from negligence of master, crew, or pilots and latent defects in machinery, provided due diligence was exercised by the owner.

Cargo claims: check bill of lading terms, Incoterms risk transfer point, seaworthiness, and Hague-Visby package limitation.

Constructive total loss: cost of repair or recovery exceeds insured value, or the assured is deprived of the subject matter and recovery is unlikely within a reasonable time; notice of abandonment follows.

Hull claims: new-for-old deductions apply to unrepaired damage; claims payable on the basis of the insured value where the policy is a valued policy.

Insurable interest in property must exist at the time of loss; in life insurance it must exist at inception.

Indemnity limits recovery to actual financial loss; valued policies are an agreed exception.

Material facts must be disclosed; non-disclosure may allow avoidance of the contract.

Proximate cause determines whether a loss is covered by the policy.

Subrogation allows the insurer to recover from the third party after indemnifying the insured.

Contribution apportions loss between concurrent policies covering the same interest.

Utmost good faith applies to both insurer and insured.

Average formula: loss x (sum insured / value at risk).

Warranty breach suspends cover; representation only affects inducement.

Schedule prevails over printed policy wording.

Sum insured is the maximum liability, not necessarily market value.

Excess reduces each claim; franchise means no payment below the threshold.

Co-insurance clause triggers average on shortfall.

Reinstatement cover requires actual rebuilding or replacement.

Endorsements override conflicting wording when signed and dated.

Deposit premium is adjusted at expiry by audit.

Cancellation refunds differ for insurer versus insured cancellation.

Material facts include trade, turnover, claims history, and protection.

Claim lifecycle runs from notification to closure.

Insured proves the loss falls within cover; insurer proves exclusions.

Reserves reflect probable ultimate cost including expenses.

Fraud indicators include late reporting and inconsistent statements.

Reservation of rights preserves the insurer's position.

Limitation periods must be diarised.

Salvage and subrogation reduce net claim cost.

Liability claims require duty, breach, causation, and quantum.

Mitigation steps taken by the insured must be documented.

Fire requires ignition, accident, and hostile origin.

Gross profit = net profit + standing charges.

Rate of gross profit = gross profit / annual turnover.

Increased cost of working is limited by the economic limit.

Indemnity period should cover maximum probable interruption.

Savings in standing charges are deducted from the loss.

BI average: sum insured / gross profit for the indemnity period.

Proof of loss requires inventory and books of account.

Reinstatement memorandum requires actual rebuilding.

ICC (A) is all risks; (B) and (C) are named perils.

General average contributions are apportioned by arrived values.

Sue and labour costs are recoverable in addition to the sum insured.

Inchmaree clause covers crew negligence and latent defects.

Constructive total loss requires notice of abandonment.

Cargo claims depend on bill of lading terms and Incoterms.

Hull claims on valued policies pay the insured value.

Particular average is borne by the individual cargo owner.

Due diligence by the owner is a condition of the Inchmaree cover.