IN Claims Adjuster common mistakes
IN Claims Adjuster · Understand the traps and how to avoid them.
Treating 'indemnity' as 'full replacement of the loss' and writing answers that restore the insured to a better position than before the loss.
Candidates memorise the word 'indemnity' but not its financial meaning, so they confuse it with 'reinstatement' or 'new for old' and lose marks on principle questions.
What to do instead
Learn the four ways indemnity is delivered (cash, repair, replacement, reinstatement) and, for each, state explicitly whether the insured ends up better, worse, or the same. Practise phrasing: indemnity restores the insured to the pre-loss financial position, no more and no less.
Confusing the three insurable-interest tests (pecuniary, common-law, statutory) and applying the wrong one to a life versus property versus marine scenario.
The tests overlap in everyday language, and candidates learn one definition and reuse it everywhere instead of mapping test to context.
What to do instead
Build a three-row table: test, what it requires, and the classic scenario it governs. Then answer by first naming the context (life, property, marine) and only then selecting the test. State the consequence of failing the test (contract void or unenforceable).
Mixing up the doctrines of subrogation, contribution, and salvage, and applying them in the wrong order or to the wrong party.
All three deal with recovery after a loss, so candidates blur them and write that the insurer 'subrogates the other insurer' or that salvage applies to double insurance.
What to do instead
Anchor each doctrine to one question: subrogation - who can the insurer pursue after paying? contribution - how do two insurers share one loss? salvage - what happens to recovered property? Write a one-line trigger for each and check your answer names the correct parties and the correct sequence (pay first, then subrogate).
Describing the claims process as a single linear list without distinguishing notification, investigation, assessment, and settlement, and without stating who does what at each stage.
Candidates learn the stages as headings and reproduce them without content, so answers read as a table of contents rather than an explanation of duties and decisions.
What to do instead
For each stage state the trigger, the adjuster's action, the evidence required, and the output (e.g. notification triggers a loss report and reservation of rights; investigation produces a cause-of-loss finding). Practise writing each stage in two sentences with a named actor.
Ignoring policy conditions and warranties when assessing whether a claim is payable, treating them as background rather than as conditions precedent.
Candidates focus on the peril and the loss amount and skip the conditions section, missing that breach of a condition precedent can entitle the insurer to decline regardless of the loss.
What to do instead
Adopt a fixed checklist for every claims scenario: cover, exclusions, conditions precedent, warranties, duties after loss, fraud. Answer in that order and state the effect of any breach (declinature, or prejudice-based remedy where statute applies).
Applying average (underinsurance) mechanically without checking whether the policy is subject to average, whether the sum insured is a declared value, or whether the basis is reinstatement versus indemnity value.
Average is a memorable formula, so candidates apply it to any underinsured loss, including policies where it does not apply or where the sum insured is agreed.
What to do instead
Before calculating, state three checks: is there an average or coinsurance clause, what is the basis of settlement, and is the sum insured agreed or declared. Only then apply the formula and show the arithmetic with the claim amount, sum insured, and value at risk labelled.
Omitting consequential loss (business interruption) elements in a fire claim, or including them without confirming the policy extension and the indemnity period.
Fire damage is visible and candidates stop at the physical loss, forgetting that the same event may trigger loss of profits, increased cost of working, and continuing fixed costs.
What to do instead
After quantifying material damage, run a separate BI checklist: is BI insured, what is the indemnity period, what is the gross profit or turnover basis, what increased costs were incurred to avoid or reduce the loss, and are savings deducted. Present the two heads of claim separately.
Treating marine perils, sue and labour, and general average as interchangeable, and failing to identify which of the three a given expense falls under.
All three involve money spent because of a sea casualty, and candidates memorise labels without the test that distinguishes them.
What to do instead
Learn the distinguishing test for each: a peril is a cause of loss; sue and labour is a reasonable cost to avert or minimise an insured loss; general average is a voluntary sacrifice or expenditure for the common safety of the adventure, apportioned across cargo, ship, and freight. Classify the expense by asking who benefited and whether the act was voluntary.
Ignoring the marine duty of the assured to act as a prudent uninsured and to give prompt notice, or assuming the insurer is liable for unreasonable expenses incurred after the loss.
Candidates focus on the peril insured against and forget that the assured's post-casualty conduct is itself a condition of recovery in marine policies.
What to do instead
State the duty explicitly in every marine answer: the assured must take reasonable measures to avert or minimise loss and the insurer bears properly incurred sue and labour costs even if the sum insured is exhausted. Then test each expense against reasonableness and causation.
Answering with generic insurance theory instead of applying the principle to the specific facts, so the response never states what the insurer should pay, decline, or investigate.
Under time pressure candidates write what they know rather than what the question asks, and they are reluctant to commit to a conclusion.
What to do instead
Use a fixed answer structure: issue, rule, application to the facts, conclusion with a figure or a decision. Practise ending every answer with one sentence beginning 'Therefore the insurer should…' and check it names an amount, a declinature, or a specific further enquiry.