Last week I explained the carrier’s obligation to treat its policyholders’ interests at least equal to its own. Insurance adjusters also have an obligation to assist the policyholder. This duty to assist the policyholder includes informing the policyholder of additional coverage that may be available, even if not being claimed.

Section 2695.4(a) of California’s Code of Regulations is a codified version of this duty and states:

When additional benefits might be reasonably payable under an insured’s policy upon receipt of additional proofs of claim, the insurer shall immediately communicate this fact to the insured and cooperate with and assist the insured in determining the extent of the insurer’s additional liability.

Two common violations of this principle come to mind. First, many insurance adjusters fail to conduct a full and complete investigation and do not pay for damages that are not visible to the naked eye. In my depositions, I refer to this type of adjusting as “adjusting the claim with one eye closed.” When a policyholder reports a claim, he or she expects the insurance professional to fully adjust the loss. Adjusters that fail to assist in “seeking” the damages from the reported loss are failing to comply with their duties under the policy and fail to adequately “assist” the policyholder.

The second example that often occurs is the adjuster failing to notify the policyholder of additional coverages under the policy resulting from the loss. Just yesterday morning I met with my client, a business owner, in Chicago, Illinois. Prior to my involvement, my client reported his vandalism claim that caused substantial damages. The adjuster scoped the property damage claim; however, he failed to notify or “assist” my client in understanding all coverages that might be reasonably payable under his policy. Clearly, the adjuster should have immediately notified this insured of a potential Business Income claim and requested the necessary documentation to substantiate the claim. Instead, the adjuster failed to meet his obligation and assist the insured.

If you keep up with this blog series, you will note simple principles that used to be the standard. Today, these obligations are violated so often that you may not even notice them anymore. I hope this series reestablishes what we should expect from all insurance companies and how they treat all of our clients.