Most policyholders have never been educated about what their property insurance adjuster is supposed to do following a hurricane loss. Most policyholders never read their insurance policy before the hurricane. Their attempt to read the verbiage and understand the policy after the hurricane usually results in failure. They should not feel bad since adjusters spend weeks and even months in training, with experts explaining what the policy wording means.

Accordingly, after suffering a hurricane loss, the policyholder is often vaguely aware of the insurance policy benefits and duties to be performed. Policyholders are largely dependent upon the professionalism and passionate performance of a property insurance claims adjuster hired by the insurance company. So, what are those duties?

The answer is found in a paper I co-authored and presented to the Windstorm Conference, Why Can’t We Just Get Along? A Critical Review of Professional Conduct of Those Engaged in Insurance Adjustments And Disputes. Parts of the paper are now found quoted, often without attribution, by others as part of their claims training seminars and in Facebook adjuster groups. I recently saw a speaker steal a photo I have been using since that original presentation to emphasize how claims disputes can become irrational. If it is that good for others to quote, I suggest the paper is more relevant than ever despite being written almost 20 years ago.

The paper makes this important point:

One has to know the duties insurance company adjusters… must adhere to during a property insurance adjustment. These adjustment “rules” are not typically found in legal cases, but in treatises and other references sources of insurance adjustment. For the same reason a judge would not read medical malpractice cases to determine the proper procedures a surgeon would take, the duties and procedures those involved in adjustment must follow should be learned through authoritative references and in the appropriate context.

Allstate’s slogan “You’re In Good Hands”, Travelers’ motto “Under the Umbrella”, Fireman’s symbol of protection beneath the “Fireman’s Hat”, and State Farm’s slogan “Like a Good Neighbor, State Farm is there,” demonstrate the industry’s own efforts to portray themselves as a repository of trust and confidence when people most need their help. These companies recognize that their obligations go far beyond the policy language, which never discusses “trust,” “good faith,” and/or “confidence” expected following a loss.

Claims adjusters and claims management fulfill the obligation and the trust by promptly investigating coverage, evaluating damages, and paying promptly what is owed. Doing the job right and doing the job quickly is good claims adjustment.

One of the treatises cited in the paper stated:

The claim department, and specifically the claim representative, is responsible for assisting people in presenting their claims to the insurance company.

It is beyond policy requirements but within the duties of the professional claim representative to provide promptly all benefits due to the policyholder under the terms of the contract, provided there are no indications of fraud. For example, a claim representative who has walked through a burned home knows the importance of delivering on the promise contained in an insurance policy. Even though a proof of loss is not yet complete, the claim representative should hand to the owners of the house a draft to cover the family’s immediate needs of shelter, clothing, and food. Doing so may exceed the explicit policy requirements, but a claims representative who does not advance the money does not really understand the profession or its moral imperatives. This may be one of several fires to which the claim representative has been recently assigned, but it is probably the only fire the insured will have in his or her lifetime.

The insured or claimant needs the claims representative’s expertise and guidance. Claims representatives see hundreds, if not thousands, of losses in a career without being personally involved in them. Their profession enables claim representatives to gain expertise in the areas insureds or claimants need upon the occurrence of a loss. For a time following a loss, people often experience a period during which rational decision making is impaired. They may forget about policy obligations, such as damage reduction or salvage operations. The professional claim representative should be there to help.

The insurance industry’s reputation and public image are substantially controlled by how well claim representatives perform their responsibilities. From the public’s point of view, claim work defines insurance company performance. Yet the claim representative must accomplish his or her work through the cooperation of people who neither understand the claim process nor know what precisely what constitutes a recoverable loss. The client only knows that he or she paid for insurance, that a loss has occurred, and that he or she wants to be paid. Meeting this expectation is at the core of claim work.

I often teach that the property claims adjuster’s job is to investigate facts of coverage and evaluate the full extent of loss so that all policy benefits go from the treasury of the insurance company to the policyholder as promptly as possible. It is not a one-way street, with the policyholder having to determine this unilaterally. The insurer has an obligation of good faith to do this promptly, honestly, and in the best interests of the insured customer, who has a right to the insurer’s performance of the insurance promise made at the point of sale.

Whether Hurricane Ian policyholders will be treated this way is certainly questionable based upon the manner the insurance industry recently handled many Hurricane Michael and Irma claims. Florida’s insurance commissioner seemed more concerned about the insurance companies rather than the insurance adjusters taking care of the policyholders. Not one insurance company or adjuster was called out for their flagrant delayed and lowballed claims payments that occurred more often than not.

My book PayUp! has an entire chapter devoted to policyholders with significant damages, teaching them how to develop a team to help them navigate the claims process and avoid a second disaster with their insurance company.

Thought For The Day

Discretion is the perfection of reason, and a guide to us in all the duties of life.
—Walter Scott