Different insurers have their ways of assigning cases to adjusters. The insurer itself may assign the adjuster, and, in some cases, an insurance company may also hire private adjusters on a contractual basis to handle certain claims. A property insurance adjuster is a person who an insurance company has hired to handle loss claims.
Property insurance adjusters can be either full-time employees or general agents. The insurer empowers an adjuster to investigate and settle the loss claim on behalf of the insured person. An adjuster’s duties may include inspecting the property and obtaining estimates for repairing or replacing damaged parts. They also have to work with contractors, appraisers, and engineers on behalf of the claimant to substantiate the loss and arrive at an agreed amount with the insured person.
An adjuster may sometimes incorrectly estimate damages regarding property loss or destruction. To make matters worse, if the adjuster is not careful and follows the guidelines of current laws, this can lead to a significant liability resulting in further financial losses. The work of an insurance adjuster involves public trust, so an insurance adjuster must act in a manner that is above reproach and adhere to the policies and procedures of the company. Every adjuster is entitled to the presumption of good faith when reviewing claims. Unfortunately, some insurance adjusters do not adhere to proper practices and sometimes end up committing a malicious tort that involves an enormous amount of damage.
Public policy requires an insurance company to make good its policy promises, even if the original estimate was in error. It is not the place of the court, nor should it be of the jury, to say that one policy requires coverage in a certain amount while another requires a lesser amount. In making this determination, the jury must ignore the fact that a particular insurance company is under no obligation to raise its estimates in response to a rate increase. The jury is asked to decide how much damage would have been suffered had the policy been written at a higher level. The jury must decide whether the company’s policy was correctly written.
The following are the types of damages an insurance adjuster can estimate:
- Physical Damage: Damages to property caused by an uninsured or underinsured peril.
- Accidental Damage: Accidental damage to the property resulted from an event not within the ordinary course of business.
- Comprehensive Damage: Any loss to property caused by a natural disaster, such as a flood or fire.
- Collateral Damage: Indirect or consequential loss resulting from the insured peril.
- Inflation: If a policy has been in place for an extended period, an insurance adjuster may use an inflation factor if it would have been used at the time the original policy was written.
- New Property: If a new property is purchased, an insurance adjuster may include a factor to recognize the cost of depreciation less any physical depreciation that the insured has taken into account.
- Miscellaneous Expenses: Any expense, such as moving fees and storage costs, that are incidental to the loss.
- Personal Property: Any loss to personal belongings in the damaged property.
- Diminution in Value: The effect of the insured peril on the total value of the property, including replacement costs and physical depreciation.
- Indirect Costs: Any expense that is of economic benefit to the property that has been damaged.
- Extra Expenses: Expenses incurred by the owner of the property in addition to expenses usually incurred during maintenance or upkeep.
- Counsel fees: Any cost of obtaining legal representation.
- Loss of Business: An expense in the operation of the business, such as rent on the premises and food expenses.
Following the above considerations, an insurance adjuster should struggle to balance making just and reasonable assessments of the actual value of a loss while simultaneously fulfilling their duty to the insured and their employer (the insurance company). When an adjuster commits malpractice, it may result in significant financial losses that can be traced directly to the malpractice. The adjuster’s interests should fall below those of the insured. If an adjuster commits a malicious tort, it may result in financial loss to the injured party. If a plaintiff can prove that the tort was committed with malice, they should be entitled to punitive damages. Malicious torts are called malicious misdemeanors, while malicious torts that did not cause any damage are referred to as opposing offenses. A distinction must be made between the two. The difference is that a malicious misdemeanor is committed to causing harm, which means that it can be proved in the words of the law. In contrast, an opposing offense is not executed with the intent to do damage, so it cannot be easily verified by law.
The tort of accounting requires an insurance adjuster to report a just and reasonable value for an insurance claim by disclosing all relevant information to the insured. Many states have adopted the following accounting rules: Disclosure of all facts must be made if they might reasonably influence the person’s conduct regarding the transaction. If a person makes partial disclosure of material facts, this is regarded as equivalent to non-disclosure. It is considered a misrepresentation if a person does not disclose material facts. Suppose a person makes a partial disclosure of material facts with knowledge of their significance, and the others are reasonably ignorant of the facts. In that case, it is regarded as equivalent to non-disclosure. When an insurance claim is adjusted, the insurance company must disclose all relevant information to the insured, who is entitled to know the amount of coverage initially advised when they purchased the policy. Suppose an insurance adjuster loses a file, which includes the insured’s original statement of the claim. In that case, they must supply a duplicate of all relevant information without the insurance company being required to do so. The insured can make the following omission claims if they feel that the adjuster has grossly undervalued them:
- Failure to Maintain Appropriate Coverage
The adjuster-client relationship is based on trust. The insured is to have faith that the adjuster will act in their best interest and that they will provide them with an accurate claim appraisal. When an adjuster fails to maintain appropriate coverage in the event of a claim, they are breaching the implied contract between them and their client. In response, the client is entitled to bring a claim for breach of contract against the insurance adjuster. In some states, the client has a right to recover three times the actual damages caused by the adjuster’s breach of contract.
For this reason, insurance adjusters must be very careful in their review of each claim and make sure that they are thoroughly documenting every aspect of said appraisal. As their work requires insurance adjusters to have excellent interpersonal skills, different specialties have emerged within the insurance industry.
- Administrative Error
An adjuster can make mistakes, especially when using different software. In cases of administrative error, the adjuster has not acted negligently but instead made an error in their appraisal, which can be corrected without more significant damage to the client. This can include situations where the adjuster fails to read through a policy or claim details and cannot remember the insurance limit. In these cases, correcting the omission and making a compensation claim is possible. It is important to remember that the client will still be liable for damages unless the adjuster can prove that they made an honest mistake.
- Failure to Communicate
The primary function of an insurance adjuster is to communicate with the insured and their insurance company. They need to explain to the insurance company why they have made an appraisal and how they reached the figure. The adjuster can make a mistake in their communication that fails to disclose all relevant information fully. Home insurance claims provide a perfect example of this. It is typical for claims for homeowners insurance to be undervalued due to an adjuster not communicating the facts of the claim.
A claimant who has unfairly been undervalued for the damage caused to their property is entitled to make the following follow-up actions.
- Review your Adjuster
In the case of an unfair evaluation, the claimant can review their adjuster so that follow-up actions can be made against the adjuster. Various online platforms give the provision checking insurance adjusters. It is possible to post any grievances against the adjuster on these platforms. Sometimes, it is possible to work out a settlement with the adjuster if they feel they have been unfairly critiqued. Adjuster reviews give prospective clients an insight into the work and conduct of the adjuster.
In this sense, anyone seeking to hire an insurance adjuster can learn about their history before agreeing to take on their services. It is often the case that adjusters will have good reviews from past clients.
- Rate your Adjuster
Rating an adjuster is not just a review of their work but also an opportunity to grade them based on performance. An adjuster’s rating can be updated by the client so that the adjuster knows how they are doing. Through this kind of feedback, an adjuster will be able to improve their work and improve their rating.
- Find your Adjuster
The claimant can find their adjuster and confront them about their appraisal. The adjuster will be required to explain to the claimant why their insurance claim has been undervalued and rectify this as quickly as possible.
- Sue your Adjuster
Suing an adjuster is the most extreme response to an unfair insurance claim. However, this option allows the client to take all of their grievances against the adjuster and do what they wish with these actions. If the adjuster has acted negligently, they can be sued in a court of law. The claimant can then seek compensatory damages for the pain and suffering caused by the adjuster’s negligence. If the courts find that the adjuster has acted with negligence, they may be held strictly liable for all of the claimant’s damages.
Conclusion
It is imperative for insurance agents and adjusters to comply with statutory regulations. Failure to follow these regulations could result in several severe consequences. For example, it is illegal for an adjuster to operate in an unlicensed state. The consequences for this can include being sued for all of a claimant’s damages.
Fairness during evaluation is an imperative that should be taken seriously by insurance companies and adjusters. Adjusters need to follow the rules and regulations set by the government. They also need to be transparent in their conduct, so they don’t breach the rules set by the company or state they work in. In the event of unfair treatment by the adjuster, the insured has the right to seek legal recourse.