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JimF
USA
1014 Posts |
 Posted - 01/07/2003 : 22:06:27
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I am starting this thread to have a discussion about insurance policy endorsements, and what adjusters should know about them.
This thread can also serve to answer questions from adjusters new and old regarding the "how to's" of providing coverage for coverage gaps in the homeowners and commercial policies.
I want to start the thread by asking some questions for your feedback and discussion, before diving into an indepth discussion of various endorsements and when, where, and under what circumstances they are used and what they mean to us, as adjusters.
My questions to you are these:
(1) When you are handling a claim, do you ever ask yourself if you can spot 'coverage gaps' which an insured has but which could be closed by the addition of certain or specific policy endorsements? And if you are not doing this, why not?
(2) Do you ever notice perils or hazards which an insured does not have covered under their existing un-endorsed or under-endorsed policies? (As an example, you note a basement or sump pump but no sewer back-up endorsement. Or you notice high value items subject to sub-limits without an inland marine floater. Or you notice an in-home business without proper endorsements to protect property and liability exposures). If so, do you bring these perils or hazards to the attention of the insured? Do you note these uncovered hazards and perils in your file documentation and closing report to your insurance carrier? If not, why not?
(3) Do you review with an insured their insurance policy and endorsements attached and coverages afforded? Do you discuss available endorsements which are not attached with an insured to point out potential coverage gaps which could be financially ruinous to an insured under some losses? If not, why?
(4) Do you review the Loss Notice, checking for endorsement coverages and coverage gaps, prior to inspecting a loss and discussing coverages with your insureds? If not, why not?
(5) If you did not answer YES to each of the above 4 questions, do you believe that you have or have not increased your own personal E&O exposure from such omission?
After we get some feedback, we will start digging deeper into a subject which doesn't get much attention but which is vitally important to understand, pre and post loss, for insureds and adjusters alike. |
Edited by - JimF on 01/07/2003 22:16:54 |
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KileAnderson
USA
875 Posts |
Posted - 01/07/2003 : 22:31:14
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Let me see:
1. Generally, no. When I'm trying to turn 6 or more a day I don't have time to do an agent's job. If someone asks me I will mention that coverage is available with an endorsement and advise them to contact their agent.
2. Yes, no, and yes. Same reasons as above. I'm an adjuster, not a salesman. If an insured asks me about coverage for something not involved in the claim I will answer their questions to the best of my ability and explain to them that I am not an agent and an agent would be more knowledgeable about the endorsements available in their area. If their is an underwriting issue I will note it in the file and refer it to underwriting.
3. Yes and no. I discuss coverages as they apply to the loss. I'm not licensed to sell insurance and that isn't what I get paid for. If someone has a sump back up and no SDB endorsement I mention to them that it is available and they should speak to their agent about adding it. Unfortunately this often leads to angry insureds damanding to know why their agent didn't offer this in the first place in which case I once again explain that is between the insured and the agent. I only enforce it. I don't write it and I don't sell it.
4. Yes, I always check the loss notice and see if there is coverage and if there are possible gaps, I make sure to ask specific questions while speaking to the insured on the inititial contact to nail down what exactly happened to that I can make a coverage determination.
5. No, as I said over and over, I'm not an agent. It isn't my job or my place to sell insurance. I determine coverage and the scope of the damage and then I translate that into a number which is the settlement. If I'm working a roof claim for hail damage it isn't my business if Mrs. Insured's 3 carat diamond ring and her full length mink stole are under insured. I feel I would be a little bit more than uncomfortable asking such questions since I'm there to look at the roof anyway.
Please, everyone else, chime in. |
Edited by - KileAnderson on 01/07/2003 23:07:41 |
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JimF
USA
1014 Posts |
Posted - 01/07/2003 : 22:42:49
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Memo to Kile:
Out of curiosity, what is your answer or opinion to Question # 5 which I posed as well?
And Kile, who in the insurance 'process' do you feel should have the greater working knowledge of policies and endorsements: the agent or the adjuster? Why? |
Edited by - JimF on 01/07/2003 22:45:11 |
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KileAnderson
USA
875 Posts |
Posted - 01/07/2003 : 23:20:24
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Jim,
I edited my previous answer to include all five questions. I think that agents and adjusters should have the same working knowledge of policies, agents should have somewhat of an edge on endorsements because many of them are state specific and it would be very dificult for a cat adjuster to know every endorsement used by every carrier in every statIn practice, however, I have found the majority of agents not only don't know what endorsements are available, but don't know what the policy says, but that doesn't keep them from telling the insured that their particular loss is covered.
Just as an example, on the last storm I worked, I realised that I was near a neighborhood for which I had the homeowner's association policy claim so I figured I would drive over and have a look. They had several trees down on paved jogging paths and some on fences. They had several endorsements listed in the claim jacket that I did not recognize and it was an hour back to the office. Luckily for me, or so I thought, there was an agents office right across the street. I stopped in and asked the agent if she had a copy of these endorsements. Not only did she not have any of the endorsements I was looking for, she told me that she didn't have any policys on hand and she never kept any copies of the endorsements in the office because the corporate office mailed them directly to the insured when the policy was issued. Could someone please tell me how you can sell policy's and endorsements if you don't even know what they are or what they cover? |
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CCarr
Canada
1200 Posts |
Posted - 01/07/2003 : 23:58:30
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Kile, since you were 1st to the plate, I've got some comments on that, that I revised after your edit. Please take them in a general context.
I think you have a fuzzy picture of just what the agent's 'job' is and their legal obligations and 'duty'. You are not their to sell coverage as you elude to in Q2, to me some comments on your observations at site provides a 'value added' purpose to your visit, it is not a sales initiative. Regarding Q3, what is it you are paid to do? Is it not to establish the "3Cs"?
I'm not blaming you Kile by any stretch, nor is my intent to center your comments in my opinion, but, 'cat work' is very detached from regular or day to day claims work; the review and investigation elements of it seem to be gone. Maybe that is why a lot of 'cat adjusters' now just characterize their 'work' as 'inspect and estimate'. Those two things alone, do not create a claims adjustment. But chew on that as I offer that 'cat work' has not been a big part of my insurance claims career. I loved the challenge and the pressures from my stints at it, but I never tried to 'turn 6 a day' or any other number, I just tried to do as much as I could each day for as long as I could stay awake; clearly knowing I was closing less than the average person on average per day.
Anyway,
(1) Yes, before I read Q2 I was going to say I do that more so in commercial claims than residential. I think you always have to think where the gaps may occur (distinct from where they are, i.e. think ahead) so as they don't 'slap you' if the gap becomes an obstacle to coverage and you are not properly prepared to pro-actively discuss it; as opposed to defensively relying on it.
(2) Yes, from a claims handler's perspective, you have to tread these waters cautiously, as you bring these things up with an insured. If I'm dealing with a kitchen fire, sure, if when I'm in the basement and I notice a sump pump and know there is no SBU endorsement, I'll suggest its use and value. However, if I am there for a SBU claim that I deny because there is no SBU endorsement, depending on how receptive I may feel the insured will be, I'll either review it with them what an SBU endorsement would do for them after showing them where in their standard wording it didn't provide coverage; or I'll call the agent later and very clearly tell them that this denial was avoidable and why.
I believe it is an obligation for the field adjuster regardless of type - staff, IA, cat - to advise through their reporting of the types of things you mention and of any 'hazards' that are identified, and of any apparent changes in the risk that appear to fall outside the norm or are not shown in the policy details on the FNOL. This could be the 'weekend garage mechanic' doing cash jobs from his home garage, or the basement being rented out to tenants, etc. In fact, every carrier that I am aware of have forms for adjusters to fill out for just this type of thing, that gets passed to underwriting for consideration. Also, any carrier I have done work for as an independent contractor, the vendor has made me aware of this same thing to watch for and report on the form provided by the carrier to the vendor.
When I'm in a risk - whether residential or commercial - on a loss control inspection assignment, to me that is a 'value added' service that I personally provide to the insured for my client the carrier. I go out of my way to recognize, address and explain to the insured any coverage gaps or exposure hazards that I can find; as opposed to just trying to fill paper with technical recommendations for the carrier to address in a perhaps colder corporate way.
(3) Yes, this is part of Q1 in a way. I think you have to bring this into the discussion. The insured is the main 'medium' through which you are establishing the "3Cs". Therefore, you can not just deal with them on cause and cost and leave coverage out of the discussion. Again though, caution is exercised, it's hard for me to explain in writing. You have to consider the people you are dealing with and their capacity and interest to hear much about the coverage past the basics I feel you are required to tell them, or in how it might make a denial more of a rub in the face to them. You don't know what the agent has or has not tried to sell them, and what the insured's knowledge or interest in the agent's effort (or lack of) may have been.
(4) Yes, but again related to Q1. You have to review the FNOL, you have to get a picture in your mind of what you are going to be confronted with (i.e. the claimed loss on the FNOL and the coverages stated on the FNOL) so you can plan even the most basic or preliminary approach before you hit their door.
(5) Sure, what is the 'duty' of an adjuster? Is it not embedded in establishing the "3Cs"? I think you have to take positive 'yes' steps in each of Q1 to Q4. Sometimes it is to varying degrees, and sometimes the communication of these issues is to the insured, and / or the agent, and / or the carrier. |
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JimF
USA
1014 Posts |
Posted - 01/08/2003 : 08:10:12
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A couple of observations based on the posts to date.
Once the endorsement is attached to an insurance policy, it becomes a vital part of that policy. In fact, it is as much a part of the policy as the Sections, Preambles, Conditions, Exclusions, etc. provisions of the underlying policy.
If an adjuster knows or is to know the policy, then it is incumbent for the adjuster to know the totality of the policy to include why an endorsement is attached, and how that endorsement changes coverage provisions within the underlying policy.
Policy endorsements are used to expand or limit coverage basically. Endorsements can increase or decrease sub-limits, and increase or decrease perils. They can be utilized to provide very specific coverages for unusual risks or loss exposures.
Thus when an adjuster does not have an understanding of policy endorsements, that adjuster does not have an understanding of the insurance policy.
Similarly, when an adjuster does not know and understand when, where, why and how to handle or apply the provisions of an attached endorsement, then that adjuster does not know how to handle any fair adjustment under the policy.
While minor variances in endorsement language may occur from state to state, by and large, endorsements read, mean, and have the same intent and effect regardless of the location of the loss.
Kile, out of curiosity, how many endorsements would you as a residential adjuster be comfortably familiar with, to include a working knowledge of properly handling the policies modified by such endorsements, to provide fair and competent service to the insured?
What about the rest of you; how many endorsements would you be familiar with and be able to properly handle in a loss situation?
If anyone wants to weigh in from the commercial claims handling side, that would be of interest and benefit as well.
And can anyone think of any homeowners policy endorsements, as Kile suggests, which would be inherently limited to just any one state, and if so, what are they? |
Edited by - JimF on 01/08/2003 08:19:02 |
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CCarr
Canada
1200 Posts |
Posted - 01/08/2003 : 09:35:28
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Jim, regarding the last paragraph of your 08.10 post. I'll leave it to others regionally in the States to comment on that, but up here there are several regionally specific endoresements; and maybe by touching on them it will make others think of those situations unique to their areas.
In Alberta hail is an annual event in the Calgary - Edmonton corridor; the only puzzle is whether it will occur twice or three items in the same area, in the same 90 day period between June and August. Some years ago, carriers managed to get 'hail' taken out of some of their HO policies and / or the loss settlement wording changed specific to hail claims. The result was endorsements that could be purchased that would basically reinstate the previous standard cover and loss settlement provisions, or a more limiting endorsement with hail cover but a more restrictive loss settlement provision.
In addition, Alberta does not use any kind of 'salt' solution on their streets and highways in the winter - when not blessed with a Chinook, the weather is too cold and dry to allow salt to melt road ice. Therefore, they thickly spread a small pea gravel. Well you guessed it, broken windshields are as common as a fella wearing a ball cap, spitting tobacco and driving a Ford truck, or as common as flyfishing in the Bow River. Ten or more years ago, auto carriers had enough of that and excluded broken winshields from the auto policies, but offered an endorsement at a cost to bring it back in.
Regarding endorsements, although I concede it is difficult to be 'comfortably familiar' with all or most of them; I do strongly believe we must be able to put our hands on any that is noted in an FNOL - and become familiar with it - before we knock on the insured's door.
I have two fairly large 3 ring binders, and unfortunately have to start a 3rd, of Canadian carrier endorsements. There is just more and more of them all the time, and seems more so in commercial; and overall quite an increase in the last 2 or 3 years. I'm lucky, I've got my princess that feeds me all new carrier 'paper' and a few other sources for some specialty writers endorsements or wordings.
But, when we get a claim, or an armful of claims, be it at a distant storm office or at our home office, and one or more FNOL's mention some type of endorsement; the adjuster is lost if he/she doesn't clearly know the wording of that endorsement or can not quickly put their hands on one - prior to attending to the claim. How can anyone adjust a claim otherwise? To not have a copy of that endorsement, but to 'hope or feel' they understand the intent of the endorsement - just doesn't cut it. It is an unforgiving world when the reported on adjustment is turned in and the endorsement was not applied correctly. There is no excuse for that - none. It is bad enough the trouble our community has on agreeing on wordings - be they policy or endorsements - let alone not having the benefit of the 'paper' to study fully. |
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KileAnderson
USA
875 Posts |
Posted - 01/08/2003 : 10:44:56
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Just a couple of examples Jim off the top of my head.
In Pensylvania, there is an endorsement that adds a $150 limit for tree debris cleanup on the premises even when no covered property has been damaged and that limit is further increased to $500 if the governor declares a disaster.
A second case I have run into, when working claims in the Maryland/Delaware area. It has been a few years, but at that time Maryland had the old Sewage backup endorsement that basically gave the same coverages as the regular HO policy, but in Delaware they had the new one going into effect that was limited to Cov. A items only with a $1000 ded and 10,000 limit. Also, when working in Pennsylvania and West Virginia and probably Viginia and Kentucky too, you will find Mine Subsidence endorsements, something that we don't have a whole lot of down here in Louisiana and Texas.
There are others that I just can't recall very clearly at the moment. As far as the answer to your first question. I'm not really sure how many endorsements the average adjuster is fully familiar with. What I do is go through my files when I get them and look at the endorsements. Usually, when dealing with HO policies, 80% of them in an area will have the same endorsements. Then I make a list of the endorsements that I am not familiar with or don't recognize and get copies of those from the claims office. |
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Newt
USA
657 Posts |
Posted - 01/08/2003 : 13:18:21
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1. A COVERAGE GAP MAY SAVE THE INSURED GRIEF AT A LATER DATE, However this is a tip toe subject, I don't think if I denied a claim, I wouldn't bring up "If you had this indorsement", that reflects on the company ie agent/carrier.
2. Again, bringing up hazards is one tool we can use to help the insured and carrier. Bringing up hazards that have become a peril, judgement would have to be used. I would say never give the impression that the agent did not do his job to the insured, only do this in rare instances to the carrier. You should try to keep everything negative in house. The same goes for bad mouthing a competitor.
3. Some states require that you explain the policies when you work a claim, yes, I think I would do it within reason. If I found coverage or and indorsement I thought they may need in a future claim, I would point this out. And have them contact their agent for further information.
4. Yes if that information were available, I would certainly do a little home work. Approach the job prepared with the proper tools.
5. I don't think it would become a problem, because the claim would be done to policy and indorsement as they were written, I had nothing to do with that, what I tell the client must be for hazards and possible future claims.
These answers are my opinion, if I need correcting, lets have it.
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CCarr
Canada
1200 Posts |
Posted - 01/08/2003 : 14:38:29
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Newt, there are some things in your 13.18 post that I take exception to in my opinion, or that perhaps should be clarified.
(1) You said, ".... I wouldn't bring it up .... that reflects on the company/ ....". A coverage gap does not reflect poorly on a carrier whose distribution system is the independent agent.
(2) 'Hazards' become risks, not 'perils'. Keep everything negative in whose house? Again, it is your obligation to advise the carrier whom you represent of any hazards you discovered; whether they relate to the loss or not. I do agree that 'bad mouthing' does not belong in the claims picture at all.
(4) You can not accomplish your stated goal, ".... approach the job prepared with the proper tools", if you limit that 'approach' to, ".... if that information was available .... do a little homework". You must get the information required and do all the required homework; before knocking on the insured's door.
(5) I think you missed the point, which lies in the body of the other 4 questions.
There seems to be a rather slanted view of what the role and responsibility of an agent is, i.e. their duty.
An agent's 'duty' to their clients (prospects and insureds) can be summarized as follows.
(a) to provide coverage best suited to a client's needs
> uninfluenced by commissions or other compensation
> not taking advantage of a client's experience, lack of education, lack of sophistication, or lack of business skills
(b) to hold in strict confidence all information regarding the affairs of a client
> unless authorized or required by law to divulge
> other than necessary to do so in negotiating coverage with underwriters on the client's behalf
(c) to be competent to perform the services undertaken on the client's behalf
(d) to serve clients in a conscientious, diligent and efficient manner
The agents 'duty' to Insurers can be summarized as follows.
(a) to abide by the terms of the Agency Agreement
(b) to adhere to the binding authority granted by an Insurer
(c) to deal honestly with monies held in trust for the Insurer
(d) to disclose to the insurer all material facts about a risk location, even if such information might jeopardize the placement of a client's insurance needs
Relative to claims problems that commonly develop from the breakdown of this 'duty', it is normally the duty (a) to the client that falters due to duty (c) to the client, along with non-compliance of duty (d) to the insurer.
Sound familiar, if you replaced coverage with claims, and replaced agent with adjuster? |
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Newt
USA
657 Posts |
Posted - 01/08/2003 : 15:56:04
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| Clears up a lot, and I always have been one to do my home work, if at all possible. My approach in advising the client will be altered from the way I thought. |
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JimF
USA
1014 Posts |
Posted - 01/08/2003 : 16:13:31
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Newt, at this stage of your education and training, it seems to me that you could clearly benefit from riding along with an experinced adjuster to see how they deal with insureds. There is likely little that is more frightening for the new adjuster than calling on an insured for the first time alone, and one of the best ways to counter this fear for a new adjuster, is to have served as an apprentice with an experienced competent adjuster for at least some short period of time, in order to learn what is said and what is not said in adjuster-insured negotiations. Book learning and classroom training, no matter how good, can never replace this vital resource to keep the new adjuster from creating an estoppel situation (thus triggering an E&O event) and putting their foot in their mouth.
I think all of us here would prefer that you not find or place yourself in the category of the new adjuster who is an accident waiting to happen! :>)
Let me know what you think. |
Edited by - JimF on 01/08/2003 16:18:42 |
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Newt
USA
657 Posts |
Posted - 01/09/2003 : 07:00:14
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I agree Jim, I have never considered my self an adjuster, until I do get a little hands on experience with someone who has experience. That is my plan and has been for some time.
I will first try either a carrier or vendor as a "HEY boy", I even may help an IA. That has worked for me in the past in other endeavors.
In the business I was in, you had to be careful what you said or didn't say to the client. One slip and it could be very costly. When you inspected and graphed a home or a business, there was no room for error, I was the insurer, inspector and the doer. Missing damage and you may and probably would have to buy the house or structure. It was a very unforgiving business just as I figure the insurance business is.
If you try doing this with the EPA and Department of Agriculture looking over your shoulder it is enough to make you not trust any employee to do work in your name. `
I agree with a lot Clayton had to say, and I don't know if he understood what I was refering to when I was talking about the hazard or risk, when not bring it up. You don't twist the tigers tail when he is PO'd. If you just denied a claim you may or may not get away with reccommening an indorsement, you cross that bridge when you get to it and evaluate the situation.
I have dealt with people enough to know, you gotta evaluate them first. You cannot have a patent method in dealing with a person who is on the other end of a disaster. You can try to follow customs and guidelines, but you need to be flexable also. |
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JimF
USA
1014 Posts |
Posted - 01/09/2003 : 07:07:54
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Newt, adjusters NEVER deny claims.
Adjusters make recommendations to a carrier, and when denial is appropriate, carriers deny the claim.
Again, adjusters never DENY claims!
Is that clear to you now Newt? |
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Newt
USA
657 Posts |
Posted - 01/09/2003 : 07:23:36
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I don't know where my head was at, must be the strong coffee.
I do have the crud and for the past couple of days felt like road kill. |
Edited by - Newt on 01/09/2003 07:32:53 |
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JimF
USA
1014 Posts |
Posted - 01/09/2003 : 07:33:23
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Newt, strong coffee or not, there are just some 'rules' in insurance that an adjuster cannot or should not ever forget, no matter their mental state.
Bad habits are created when an adjuster uses such phrases in every day vernacular, even if only among other adjusters.
Phrases such as:
"I denied a claim today" (that's the carrier's function)
"I paid a claim today" (adjusters don't pay claims, carriers pay claims)
"I am going to pay you for your carpet or roof" (to an insured). Again carriers pay for carpet and roofs. Adjusters only make recommendations to the carrier to pay or not pay a claim.
should not be part of an adjuster's working vocabulary, and remove them from your thinking now, in order to break a bad language habit now before it starts.
I am sure there are dozens of other such phrases which adjusters sometimes use automatically without thinking, and they only serve to get the adjuster into trouble or create misunderstandings and confusion.
Think about this and I hope it helps. |
Edited by - JimF on 01/09/2003 07:47:05 |
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How Do I Handle? (Endorsements)
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