Claims Adjusting Practices and Ethics
The adjuster's duties
Investigation, evaluation, negotiation and documentation are the mechanics; good faith is the standard running through all of them. That means acknowledging notice promptly, contacting the insured within the statutory or company timeframe, investigating before denying, explaining coverage positions in writing, and never misstating policy provisions - including limits, which a claimant is entitled to know when liability is reasonably clear.
Documents that protect the file
- A coverage letter or reservation of rights issued as soon as a coverage question arises, so the insurer is not later accused of waiver or estoppel.
- A dated activity log, inspection photos, recorded or written statements, and a damages worksheet showing the estimate, deductible and depreciation withheld.
- A written explanation for any reduction or denial, quoting the exact policy language relied on.
Worked example
An unrepresented claimant asks the adjuster, "What are your limits?" The correct answer discloses the applicable limits and clarifies that the insurer's evaluation depends on documented damages; the improper answer is to imply the limits are lower than they are to induce a cheap settlement. Suppressing or misstating limits is a classic unfair claims practice and a bad-faith exposure.
Ethical pressure points
Conflict between the insurer's interest and the insured's exposure above limits; settling a clear liability claim for less than fair value because the claimant is unsophisticated; handling a claim in a state where you are not licensed; using a public adjuster's fee arrangement to justify a lower payment. Document the reasoning in each case, because the file is the defense.
Traps
Letting a reservation-of-rights letter lapse into a denial without analysis; missing a subrogation or salvage referral deadline; recording a conversation in a state requiring consent.