Claims Handling, Investigation, and Settlement Practices
The claim lifecycle
Notice of loss → acknowledgment → investigation → coverage determination → damage evaluation → negotiation → payment and closing. Each stage has a document trail, and the trail is what a market-conduct examiner or a bad-faith plaintiff will read.
Investigation essentials
- Secure the facts: recorded statements (with consent), photographs, scene inspection, police or fire reports, medical records, and financial records where motive is at issue.
- Obtain a sworn proof of loss when the policy requires one, and an examination under oath when facts are inconsistent or suspicious.
- Issue a reservation of rights letter when coverage is uncertain; it preserves the insurer's positions while the investigation continues.
- Identify subrogation potential early, preserve evidence, and put third parties on notice before spoliation occurs.
- Investigate damages separately from liability and coverage; never blend the three.
- Refer suspected fraud to the insurer's special investigation unit and, where appropriate, Nevada fraud authorities (NRS 686A.291).
- Respect statutory and regulatory timeliness; NAC 686A.660 et seq. impose concrete deadlines for acknowledging, investigating, and communicating decisions, so memorize the day counts your employer's manual applies.
Worked example
A homeowners claim arrives with a two-month delay, and the cause is disputed. Reasoning: acknowledge in writing, open a reservation of rights, and investigate the cause of loss before any payment or denial. If the insured refuses the examination under oath, document the refusal and its effect on the insurer's ability to determine coverage. Issue a written decision that states the specific policy language relied on. Silence is the violation, not the delay itself.
Traps that cost marks
Denying a claim without citing the policy language. Settling before establishing coverage. Letting a reservation-of-rights letter slip past the file's early stage. Losing subrogation by releasing the tortfeasor or discarding evidence.