Adjusting Practices and Claims Handling
What this domain tests
This domain tests the claim lifecycle: notice, acknowledgment, investigation, coverage analysis, damage evaluation, documentation, negotiation, and settlement. Montana-specific questions focus on fair claim settlement practices and the adjuster’s duty to investigate promptly and explain decisions.
Core rules and concepts
- Claim triage: record the date and time of loss, cause, location, contacts, and immediate mitigation. Acknowledge the claim promptly and set expectations.
- Investigation: inspect, photograph, measure, obtain statements, police or fire reports, weather data, and estimates. Separate coverage questions from damage questions.
- Coverage analysis: compare facts to the insuring agreement, exclusions, conditions, limits, and deductibles. If coverage is uncertain, issue a written reservation of rights.
- Damage evaluation: build a scope, then price it. ACV applies depreciation; RCV may require repair or replacement. Document betterment, salvage, and subrogation potential.
- Montana fair claims rules: insurers must acknowledge and act with reasonable promptness, conduct reasonable investigations, affirm or deny coverage within a reasonable time, and give reasonable explanations for denials. Unfair claims settlement practices are prohibited under Montana law.
- Proof of loss and payment: obtain a sworn proof of loss when required; pay undisputed amounts promptly; do not withhold undisputed benefits to pressure settlement of disputed ones.
Worked example
A burst pipe damages flooring and cabinets. The adjuster finds the pipe failed from freezing, not flood. The policy covers accidental discharge but excludes freezing damage unless the insured used reasonable care to maintain heat. The insured was away and shut off the heat, so the exclusion applies. The adjuster documents thermostat records, explains the denial in writing, and pays nothing. If the insured had maintained heat and the pipe simply failed, the water damage would be covered and the exclusion would not apply.
Traps that cost marks
Do not confuse the cause of loss with the type of damage. Do not deny without a written explanation. Do not accept a contractor’s estimate as the scope without verifying quantities. Do not ignore Montana’s promptness and communication requirements.