Most policyholders have never been educated on what their property insurance adjuster should do after a hurricane loss. Most policyholders never read their policy before the hurricane. Their attempts to read the jargon and understand the post-hurricane policy usually result in failure. They shouldn’t feel bad because adjusters spend weeks and even months in training, with experts explaining what the policy wording means.
Consequently, after suffering a hurricane loss, the policyholder is often vaguely aware of the insurance benefits and obligations to be performed. Policyholders are largely dependent on the professionalism and passionate performance of a property insurance claims adjuster hired by the insurance company. So, what are these duties?
The answer is in an article I co-authored and presented to the Windstorm Conference, Why can̵7;t we just get along? A Critical Examination of the Professional Conduct of Persons Engaged in Insurance Adjustments and Disputes. Portions of the paper are now cited, often without attribution, by others as part of their educational seminars and in Facebook adjustment groups. I recently saw a speaker steal a photo that I have used since the original presentation to emphasize how claims disputes can become irrational. If it is so good for others to cite, I suggest that the essay is more relevant than ever despite being written nearly 20 years ago.
The paper makes this important point:
One must know the obligations insurance company adjusters … must follow during a property insurance adjustment. These “adjustment rules” are usually found not in court cases, but in treatises and other insurance adjustment reference sources. For the same reason that a judge would not read medical malpractice cases to determine the proper procedures a surgeon would take, the duties and procedures that those involved in the adjustment must follow should be learned through authoritative references and in appropriate context.
Allstate’s slogan “You’re In Good Hands,” travelers’ motto “Under the Umbrella,” the fireman’s symbol of protection under the “Fireman’s Hat,” and State Farm’s slogan “Like a Good Neighbor, State Farm is there,” show 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 the “trust,” “good faith,” and/or “confidence” expected after a loss.
Claims adjusters and claims handlers fulfill the duty and trust by promptly investigating coverage, evaluating claims, and promptly paying what is owed. Doing the job right and doing the job quickly is good claims control.
One of the papers cited in the paper said:
The claims department, and more specifically the claims representative, is responsible for assisting people with presenting their claims to the insurance company.
It is outside the insurance requirements but within the professional claims agent’s obligations to promptly provide all benefits awarded to the policyholder under the terms of the contract, provided there is no evidence of fraud. For example, a claims adjuster who has been through a burned home knows the importance of keeping the promise of an insurance policy. Even if a proof of loss is not yet complete, the claims adjuster should provide the homeowners with an outline to cover the family’s immediate needs for shelter, clothing and food. Doing so may exceed the express policy requirements, but a claims attorney who does not advance the money does not really understand the profession or its moral imperatives. This may be one of several fires the claims agent has recently been assigned, but it is probably the only fire the insured will have in their lifetime.
The insured or injured party needs the claims agent’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 claims agents to acquire expertise in the areas that the insured or injured party needs in the event of an injury. For some time after a loss, people often experience a period when rational decision-making is impaired. They may forget policy obligations, such as damage reduction or rescue operations. The professional injury attorney should be there to help.
The reputation and public image of the insurance industry is largely governed by how well claims agents carry out their responsibilities. From the public’s point of view, claims work defines the performance of insurance companies. However, the claims adjuster must do his job by working with people who neither understand the claims process nor know exactly what constitutes a compensable loss. The customer only knows that he or she paid for the insurance, that an injury has occurred and that he or she wants to be paid. Fulfilling this expectation is the essence of injury work.
I often teach that the adjuster’s job is to investigate the facts of the coverage and evaluate the full extent of the loss so that all insurance benefits go from the insurance company’s tax to the policyholder as quickly as possible. It is not a one-way street, where the policyholder has to decide this unilaterally. The insurer has an obligation in good faith to do this promptly, honestly and in the best interest of the insured customer, who is entitled to the insurer fulfilling the insurance promise made at the point of sale.
Whether Hurricane Ian policyholders will be treated this way is certainly questionable based on how 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 blatant late and low claims payments which happened more often than not.
My book Pay! has an entire chapter dedicated to policyholders with significant claims, teaching them how to develop a team to help them navigate the claims process and avoid a second disaster with their insurance company.
Discretion is the perfection of reason and a guide for us in all the duties of life.
– Walter Scott