Adjusting Practices and Claims Handling
The claim file, step by step
A defensible file follows a repeatable order: acknowledge the claim; verify coverage and the named insured; investigate (recorded statements, photographs, scene inspection, experts); analyze coverage against the form and endorsements; document damages; negotiate and pay. Every decision should be traceable to a document - that is what survives a market-conduct review or bad-faith challenge.
Coverage tools
- Reservation of rights: tells the insured the insurer is investigating a specific coverage issue while it continues to defend. It is not a denial, and it must not promise coverage.
- Non-waiver agreement: signed acknowledgment that investigation does not waive a policy defense.
- Proof of loss, examination under oath, appraisal, and salvage/subrogation clauses are conditions the insured must satisfy; failure can bar the claim.
- Preserve subrogation: retain evidence and watch limitations - three years for most Michigan negligence claims, one year for no-fault PIP actions.
Worked example
A fire file shows both an electrical fault and evidence of an accelerant. The adjuster issues a reservation-of-rights letter citing the intentional-loss exclusion, keeps investigating, and pays the undisputed contents portion rather than withholding the entire claim. When the fire marshal confirms arson, the file supports a denial with a documented timeline and no waiver argument.
Traps
Denying before reading every endorsement; burying a coverage concern instead of reserving rights; settling a subrogated loss without protecting the carrier's interest; using a proof-of-loss date that does not match the 60-day interest clock under MCL 500.2006; documenting conclusions without the underlying statements and photos.