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Claims Commandmeant i – You must confirm coverage

Watch the full video at https://rumble.com/v1qcsuk-claims-commandments.html and at https://youtu.be/I96bU0kKmd4

How to confirm coverage

When I was a young adjuster, I worked at the Fireman’s Fund insurance company. Sometimes confused policyholders and brokers reported to the Fireman’s Fund a claim intended for Fireman’s Insurance of Newark. The claim would often be adjusted and paid before anyone realized a mistake had been made.

Cancellation provisions in insurance policies fulfill the important function of enabling the insurer to conduct a prompt and thorough investigation of the insured’s claim. American States Insurance Co. v. National Cycle, 260 ill. App. 3d 299, 310-11, 631 NE2d 1292, 197 Ill.Dec. 833 (1994); Twin City Fire Insurance Co., 266 ill. App. 3d at 7.

When an injury or damage is reported to an insurance company, the first task required of the insurer and its claims staff is to confirm the existence of insurance. The task today is much simpler than it was when I was an adjuster where we had to pull the actual insurance file and review the daily report. Now coverage can be confirmed by computer.

If the insurer’s computer system shows that a policy was in effect at the time the insured reported a loss occurred, the first step to confirm coverage was completed. Next, if available digitally, the entire policy must be accessed including the declaration page and all policy wording, all recommendations and changes to standard policy language.

The claimant must have a copy of the policy available as it would have been delivered to the insured so that the claimant can read, review and understand the promises made by the policy to enable the claimant to explain the available policies to the insured(s).

If the entire policy is not available electronically or cannot be reproduced by the underwriting department, the agent or broker should be directed to provide a complete copy of the policy to the adjuster. If the agent or broker does not have it, a copy must be obtained from the insured. Modern insurers now deliver policies to their insureds electronically in Adobe .pdf format which can be attached to an email from the insured at the request of the claimant.

Once the policy is obtained and available for review, the claimant must read and understand the coverages and compare them to the wording of the policy to confirm that one of the coverages promises to indemnify the insured against the risk of loss of the type reported. .

For example:

  1. If the policy is property insurance that insures the insured against the risk of loss of a home through fire, lightning, windstorm and hail and nothing more and the insured files a claim for damage caused by an earthquake, the existence of insurance is confirmed, but the existence of coverage is not.
  2. If the policy is a liability policy such as a Commercial General Liability (CGL) policy and the insured reports that the mailman was bitten by the insured’s pit bull terrier during the policy period, coverage is confirmed. However, if the policy contains an exclusion for losses caused by dog ​​bites or pit bulls, coverage is confirmed with an exclusion that may apply.
  3. If the policy is a CGL and the insured reports he was sued for defamation by a business competitor during the policy period, coverage is affirmed and defenses are available under the “Personal Injury” coverage section.
  4. If a policy is a national flood policy that is in effect at the time a water main breaks and floods the insured’s house, the coverage is confirmed that the policy exists, and a decision must be made to determine whether the loss falls within the terms of the policy.
  5. If a policy is a CGL and the insured reports being sued for intentionally punching a business competitor in the nose, coverage is confirmed that the policy was in effect, but questions must be answered to determine if there is evidence to suggest there was none intentional insurance. act or that the insured acted in an emergency, or any other unintentional act.

What these examples show is that the existence of insurance can be confirmed, and it can easily be confirmed that it existed at the time of the loss. What cannot be determined from the claim report and the insurance text is whether the coverage applies to the reported damage.

Communication with the insured

Once coverage is confirmed, the claimant must read the policy and the first written contact with the insured should inform the insured of any benefits, coverage, time limits or other provisions of an insurance policy issued by that insurer that may be applicable to the claim presented by an insured.

The letter should include, at a minimum, information such as the policy’s liability limits, any deductibles or self-insured retentions, advice regarding specific exclusions or conditions that may apply to the facts established in the notice of loss, a written note that a proof of loss is required within 60 days following the letter with an attached proof of loss form, a requirement to produce necessary documents, a reservation of rights (if required due to a potential coverage issue such as an exclusion that may apply), and any other information the insured needs to to prove his, her or his claim.

The indemnifier should also be prepared to supplement the initial letter whenever he or she becomes aware of different facts or additional insurance available to the policyholder or insured.

Failure to properly and in writing inform the insured of the policy provisions, the document requirement, the issues with coverage based on the initial claim, may place a claimant in unintended violation of the state’s fair claims settlement practices, statutes and regulations and expose the insurer to bad faith claims handling litigation.

More is required

Confirmation of coverage requires more than just checking a computer. It requires an understanding of the policy wording, the facts of the loss, and the law of the jurisdiction to determine whether coverage for a particular loss is available to the insured. Just reading the notice of loss, allegations in a lawsuit, and the policy is never enough.

The injured party’s first and foremost obligation is to confirm the existence of coverage by the insurer agreeing to insure the claimant. It is the beginning of the claims process and cannot on its own fulfill the obligation to confirm coverage before the adjustment begins because the applicability of the coverage may be affected by the claims investigation.

(c) 2022 Barry Zalma & ClaimSchool, Inc.

Barry Zalma, Esq., CFE, now limits his practice to serving as an insurance consultant specializing in insurance coverage, insurance claims management, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims attorney and more than 54 years in the insurance industry. He can be reached at http://www.zalma.com and zalma@zalma.com. Subscribe and receive videos limited to Excellence in Claims Handling subscribers at locals.com https://zalmaoninsurance.locals.com/subscribe.Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome.

Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published on https://zalma.substack.com. Go to the Zalma On Insurance podcast at https://anchor.fm/barry-zalma; Follow Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos on Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to Insurance Claims Library – https://zalma.com/blog/insurance-claims-library




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