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● For insurance purposes, a claim is a demand by a person or business seeking to recover from an insurance company for a loss that might be covered by an insurance policy.

● A claim representative, also called an adjuster, is a person responsible for investigating, evaluating and settling claims.

● A claimant is anyone who submits a claim to an insurance company.

● The First Party ● The Second Party● The Third Party (Third Party-Claimant)

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● Responsibilities of the Claim RepresentativeThe adjuster or the claim representative has the following responsibilities in the processing of a claim which are as under:-

● To respond promptly to the submitted claim● To obtain adequate information

● Reservation of Rights Letter● To properly evaluate the claim● To treat all parties fairly

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● Types of Claim RepresentativesSeveral different types of people participate in claim handling, depending on the circumstances. They are: -

● Staff Claim Representatives (inside and outside)● Independent Adjusters● Agents - Draft Authority ● Public Adjusters

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● Internal Claim Administration●A Self Insurance Plan

● Internal Claim Departments● Third Party Administrators (TPA’s)

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● Claim Handling ProcessThere are three steps that are involved in processing most claims: -

● Investigation● Valuation● Negotiation and Settlement

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● Claim Handling Process● Property Insurance Claims● Step 1: Investigation

● Determining the cause of loss and assessing damage● Verifying Coverage

Following are the checklist of questions which forms part ofverifying the coverage: -● Does insured has an insurable interest in the property?● Is damaged property covered under the policy?● Is the cause of loss covered under the policy?● Do any additional coverages, endorsements or limitations on

coverage apply?

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● Claim Handling Process● Property Insurance Claims● Step 2: Valuation

For a claim representative the valuation of loss can be most difficult aspect of settling property insurance claims. In order to indemnify the insured according to the policy provisions, the claim representative must be able to answer two questions: -

● How does the policy specify that the property be valued?● Actual Cash Value● Replacement Cost● Agreed Value

● Based on that specification, what is the value of the damaged property? ● Personal Property ● Real Property

● Square footage of the property● Quality of construction● Construction cost per square foot

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●Claim Handling Process● Property Insurance Claims● Step 3: Negotiation and Settlement

After the valuation process is complete, the final part is to arrive at a claim amount which shall be mutually negotiated and settled between the parties to the insurance contract.

● The two other factors that can affect insurer’s cost for property claims: -

● Subrogation● Salvage rights - Constructive Total Loss

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●Claim Handling Process● Liability Insurance Claims ● Step 1: Investigation

● Determining how the loss has occurred and assessing the situation

● Verifying Coverage● Step 2: Valuation

● Damage● Compensatory Damage

● General Damages● Special Damages

● Punitive Damage

● Step 3: Negotiation and Settlement

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● Establishing Loss Reserves● Unfair Claim Practices Laws

These laws are state laws that specify claim practices that are illegal. The prohibited claims practices usually include

● Misrepresentation of pertinent facts or insurance policy provisions relating to the coverage at issue in a claim.

● Failure to acknowledge and promptly respond to communications with respect to the claims arising out of insurance.

● Actions that compelled an insured to sue to recover amounts due under insurance policies by offering amounts that are substantially lower than the amounts ultimately recovered in legal actions brought by such insureds.

● Refusing to pay claim without first conducting reasonable investigation based on all available information.

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