MT Public Adjuster key terms

The value of damaged property calculated as replacement cost minus depreciation, or fair market value where that method fits better. Montana policies usually default to this method unless replacement cost is stated.

The amount needed to repair or rebuild damaged property with new materials of like kind and quality, without deducting for age or wear. Paid only when the policy provides that coverage and the insured repairs or replaces.

The reduction in value of property from age, wear and tear, obsolescence, or market change. Adjusters apply it when computing actual cash value and must be able to justify the percentage or dollar amount used.

A property policy provision requiring the insured to carry insurance equal to a stated percentage of the property's value. Falling short reduces the claim payment proportionally, even when the loss is below the limit.

The relationship between the policy limit and the actual cost to rebuild or replace the insured property. Underinsurance exposes the insured to coinsurance penalties, deductibles, and out-of-pocket shortfalls.

An optional property provision in which the insurer waives coinsurance after the insured and insurer agree on the property's value at policy inception. A total loss then pays the agreed amount without depreciation.

The amount of a covered loss the insured must absorb before the insurer pays. It may be a flat dollar figure, a percentage of the dwelling limit, or a separate wind or hail deductible.

A policy that covers only the causes of loss specifically listed, such as fire, lightning, windstorm, hail, and explosion. The insured bears the burden of showing the loss resulted from a listed peril.

A policy covering risks of direct physical loss unless the cause is specifically excluded. The insurer bears the burden of proving an exclusion applies, which makes this form broader than named peril coverage.

A policy provision that removes specified causes of loss, property, or situations from coverage. Common examples include earth movement, flood, intentional acts, ordinance or law, and neglect.

A situation where a covered and an excluded peril combine to produce one loss, such as wind-driven rain entering through storm damage. Courts and policy language determine whether the covered portion is payable.

Policy wording stating that loss caused by an excluded peril is not covered even if a covered peril contributes to the loss. It is commonly attached to water damage and earth movement exclusions.

Endorsement that pays the extra cost of rebuilding to current building codes, including demolition of undamaged portions and increased construction costs. Base property forms typically exclude these costs.

Coverage that pays necessary increases in living costs, such as temporary housing and meals, while the dwelling is uninhabitable because of a covered loss. It is usually subject to a time or dollar limit.

Coverage that replaces net income and continuing normal operating expenses during the period a business cannot operate because of a covered loss. It typically requires a period of restoration and may include extra expense.

The time reasonably required to repair or replace damaged property with similar quality and resume normal operations, beginning when the loss occurs. It sets the duration of business income payments.

The insured's obligation under the policy to assist the insurer with the claim, including submitting documents, allowing inspections, and appearing for examination under oath. Breach can jeopardize coverage.

The insured's obligation to take reasonable steps to prevent further damage after a loss, such as tarping a roof or drying water. Reasonable mitigation costs are generally reimbursable under the policy.

A sworn statement, usually on a form the insurer supplies, detailing the amount, date, and circumstances of the loss. It is often a policy condition precedent to payment and must be signed and timely submitted.

A formal, recorded interview of the insured or other policyholder conducted under oath during a claim investigation. It is a policy condition, and the insured's answers can be used in later proceedings.

The amount an insurer pays on a covered claim after applying the deductible, policy limits, coinsurance, and depreciation. It may be issued as an advance, a partial payment, or a final settlement.

The calculation that converts a covered loss into a payment: covered damage, less deductible, less depreciation where applicable, subject to policy limits and any coinsurance adjustment. Documenting each step supports a defensible settlement.

Improvements made by a tenant or owner that increase property value beyond original construction. Adjusters must determine whether these are covered and how they affect valuation and depreciation.

A valuation method paying the cost to replace damaged property with functionally equivalent but less costly materials or design, such as modern building techniques instead of obsolete ones. It is used by endorsement on older buildings.

Property that remains after a loss and still has value, which the insurer may take, sell, or allow the insured to keep. Salvage value can reduce the net claim payment.

The insurer's right to recover claim payments from a third party whose negligence caused the loss, after paying the insured. The insured must not impair this right and may need to cooperate with recovery efforts.

A false statement on an application or claim that would have influenced the insurer's decision to issue coverage or pay a claim. It can lead to rescission of the policy or denial of the claim.

The principle that both insurer and insured must deal honestly and disclose material facts. It underlies policy conditions like the duty to cooperate and supports rescission or denial when either side deceives the other.

A financial stake in property such that the insured benefits from its survival and suffers loss from its damage. Montana law requires it at the time of loss for property coverage to be valid.

The core insurance concept that a claim payment should restore the insured to approximately the financial position held before the loss, no better and no worse. It explains why ACV, limits, and deductibles exist.

An insurance policy drafted by the insurer and accepted or rejected by the insured without negotiation. Ambiguities in such contracts are generally construed against the insurer under Montana law.

An interpretive principle under which coverage may be found where an insured's objectively reasonable expectations of coverage were frustrated, even by clear policy language. Montana courts have applied it in some cases.

The state official who regulates insurers, producers, and adjusters in Montana and enforces the insurance code. The office investigates consumer complaints and takes disciplinary action against licensees.

The body of Montana statutes governing insurance, found in Title 33 of the Montana Code Annotated. It sets licensing, policy content, claims conduct, and enforcement requirements for insurers and adjusters.

A licensed person who, for compensation, represents an insured in negotiating or settling a first-party property claim. Montana law imposes licensing, contract, and conduct requirements on anyone acting in that role.

The written agreement between a public adjuster and an insured setting out services, fees, and cancellation rights. Montana requires specific disclosures and a right to rescind within a stated period.

The requirement that a public adjuster clearly state the fee or percentage to be charged and how it is calculated before the insured signs. Undisclosed or contingent fees can violate adjuster regulations.

The obligation to act in the insured's best interest and handle claim funds honestly. A public adjuster must not commingle client funds, misrepresent coverage, or take advantage of an insured's distress.

Prohibited conduct in insurance, such as misrepresenting policy terms, unreasonable claim delays, coercion, or unfair settlement offers. Montana law authorizes penalties and license discipline for these acts.

A claim containing intentionally false or inflated information submitted to obtain payment not owed. It can result in denial, policy rescission, criminal referral, and loss of the adjuster's license for participation.