Claims Handling and Loss Adjustment
What this domain tests
The claim lifecycle: notice, investigation, proof of loss, settlement, salvage and subrogation, and dispute resolution.
Core rules
- Notice. The insured must give prompt notice; unreasonable delay can prejudice the insurer and bar or reduce the claim.
- Investigation. The insurer verifies coverage, cause and amount, may appoint a licensed adjuster, and may inspect the risk.
- Proof of loss. A sworn statement and supporting documents (invoices, police report, fire report) are usually conditions precedent.
- Settlement. The insurer pays the indemnity less deductible, salvage and recoveries. Under the Insurance Code, payment is generally due within 30 days after proof of loss, subject to investigation.
- Salvage and subrogation. After payment the insurer owns salvage and may pursue third parties; subrogation is limited to the amount paid.
- Dispute resolution. Negotiation, mediation, arbitration or litigation; unfair claim practices can lead to regulatory action.
Worked example
A fire destroys stock insured for PHP 5 million. The adjuster finds PHP 200,000 of salvage and a third party negligently caused the fire. The insurer pays the insured PHP 5 million less the PHP 200,000 salvage value and any deductible, takes the salvage, and subrogates against the third party up to the amount paid. If the insured had already recovered PHP 100,000 from the third party, that amount reduces the claim to avoid double recovery.
Traps
Do not let the insured retain both the full indemnity and salvage; do not allow subrogation beyond payment; do not ignore late-notice prejudice; and do not treat abandonment of property as automatic in non-marine policies. Check whether the policy requires appraisal or arbitration.