Claims Handling, Investigation, and Damage Evaluation
Domain 6 - Claims Handling, Investigation, and Damage Evaluation
This domain tests the working method: acknowledge, investigate, document, quantify, and communicate - in that order, with evidence behind every number.
Investigation
- Confirm coverage and the policy period before discussing dollars.
- Interview the insured, obtain a recorded statement where appropriate, and secure a signed proof of loss when required.
- Inspect the risk; photograph and measure; diagram the affected area.
- Determine cause and origin, especially on fire losses, using a qualified expert when the cause is contested.
- Preserve evidence and document chain of custody.
Quantifying the loss
- Build a room-by-room or trade-by-trade scope with quantities, unit prices, and line-item justification.
- Apply depreciation consistent with age, condition, and expected life; show the formula.
- Address code upgrades, matching of undamaged materials, debris removal, and permit costs explicitly.
- For business income, verify gross earnings, continuing expenses, and the restoration period.
- Identify salvage, subrogation potential, and any recoverable depreciation.
Communication
Send a reservation of rights when coverage is uncertain. Explain denials in writing with the policy language quoted. Keep a diary of every contact. Offer appraisal when the dispute is only about amount.
Worked example
A rooftop HVAC unit has a replacement cost of $12,000 and a 20-year expected life; it is 8 years old. Straight-line depreciation is 8 ÷ 20 = 40%, or $4,800, so ACV is $7,200. The insured receives $7,200 less the deductible, and the $4,800 recoverable depreciation is released only after documented replacement.
Traps that cost marks
- Estimating from photographs without measuring.
- Using replacement cost when the form pays ACV first.
- Ignoring ordinance-or-law exposure on older structures.
- Failing to document the causation chain for a contested loss.