When one has a claim, it is useful to have some basic knowledge about the claims process. The more one knows about the processes, the better chance they have of getting a fair and timely settlement. I've written this article to give the layman some basic information as it regards the claims adjusting process.
First let us define the main two types of claims that we will be dealing with, first party claims, and third party claims. A first party claim means that the insurance policy which is supposed to cover the claim is the policy of the person making the claim. If you are getting paid by your insurance company, then you have a first party claim. In third party claims, the insurance policy which is supposed to cover the claim is the policy of the person that caused the claim. So if you are getting paid by someone else's insurance company, you have a third party claim. It gets a little more complicated when you get into workers compensation claims and healthcare claims, but for this article we'll stick with private property damage claims. Let me also say that there may be multiple adjusters assigned to any one claim depending on the scope of the claim, so the following rules apply to the claims adjusting process in general. Okay, so here are the basic rules.
First party claims:
1. Coverage determination - The adjuster must first determine whether or not there is a valid policy. This may seem simple, but there are many factors that can affect coverage. If the policy is an auto policy, there may be excluded drivers on the policy, or the vehicle may be a work vehicle, or the policy may be a brand new policy and there are questions as to the time that payment was made. The adjuster will have to gather driver information, the date and time of the policy inception, and numerous other factors that could potentially affect the coverage on the policy. As the claim progresses, if new information is obtained that could affect the coverage, the adjuster should put the claim on hold until the coverage question is resolved.
2. Damage assessment - After coverage is confirmed, the adjuster will have to figure out how much damage there is. Normally, there is an adjuster (the guy behind the desk), and an appraiser (the guy that goes and takes pictures of damages and writes an estimate). To determine damages, an appraiser will most likely use a software program that allows him/her to punch in information about damages. After the appraiser has listed the type of property and the elements of the property that are damaged, the software will generate a dollar amount reflective of the cost to repair the damages. The software that an appraiser uses is very sophisticated and incorporates the "going rate" for labor and also houses a database of parts supplies, both new and used parts. The software that is available on the market today is very effective at determining the amount of labor needed and automatically finding the cheapest parts available.
3. Payment - After the adjuster has a damage report, he/she will have to determine if it is acceptable and then issue the appropriate payment. On first party claims, there is almost always a deductible, so provided the estimated damages are in line with what the policy covers, the adjuster will simply request a payment for the damages minus the deductible amount and will send the payment to the owner of the property or the policy holder if they are the same party.
4. Supplemental issues - After the damage payment has been issued, the claim should be complete, but many times the damages that are reflected in the estimate are not completely accurate and when the property is being repaired, the cost begins to increase due to items that were not on the estimate, or other issues such as weather related delays (when Houston flooded, many collision repair facilities were without power for a while) which may increase the time needed for repair. Additionally, if there are additional costs that are covered by the insurance policy, then those will have to be addressed as well. One of these additional costs could be rental car coverage, or in the case of a homeowner's claim there could be temporary cost of living expenses that have to be adjusted. In any event, the final stage of any first party claim is the supplemental stage where the adjuster confirms the claim is complete or completes the adjustment of the claim by the supplemental charges. Another item to note is that if a supplement arises due to a repair facility stating that there are more damages than are on the estimate, it is likely that the adjuster will send the appraiser back out to inspect the property and this can take from hours to days, so just be prepared for some delays if you are not using a facility that works with your insurance company all the time. Insurance companies do not trust anyone, hehe.
Third Party Claims
1. Coverage determination - this first step is always the same. If there is not a valid policy the adjuster can just close the claim down right off the bat, so the first step is always to gather the appropriate facts surrounding the claim to determine the five "w's", you know, who, what, when, where and why, except that why is usually replaced with how.
2. Liability assessment - so remember we are talking about someone else's policy that is paying you, and therefore this extra step is involved. Liability can be terribly complex and many times the insurance company will have a little more experienced adjuster handling claims that involve liability. In simple terms, liability just means "who is at fault". The adjuster will have to review the facts of the claim and interview all the parties to the claim as well as witnesses. Additionally, depending on the complexity of the claim scenario, the adjuster may have to get specialty reports such as a cause and origin report, or complete a scene investigation, or any number of other factors that could affect "who is at fault".
3. Damage assessment - this is the same as in first party claims with one big exception; fault! The adjuster not only has to determine the damage that is visible, they also have to figure out any other related costs or "intangible" damages that have occurred as a result of the
"negligence" or "fault" of their policy holder. This can be complicated if injuries exist, and even more complicated depending on the severity of the injuries and even the location where the accident occurred. What most adjusters won't say is that there are different views in different areas of the country and depending on what area an accident occurred in, some of the damages that can't be documented (like pain and suffering or mental anguish) will have a substantially different value. For example, in New Orleans Parish, LA, it is customary to pay auto accident victims large amounts of money for pain and suffering and mental anguish even if the accident wasn't that bad and there is not much documentation to show the person incurred an injury. In the alternative, in Dallas County, TX it is much more conservative and if there is a minor injury, there is not going to be a large pain and suffering and mental anguish award.
4. Payment and supplements - the processes are the same on third party claims as they are on first party claims when it comes to making payments. Adjusters have monitor repairs and make sure all the related damages are paid for. On a third party claim, one can expect a little more scrutiny when it comes to supplemental payments. The adjuster on a third party claim will review very closely whether or not any additional damage is actually related to the accident in question and will almost always require a re-inspection if damages can't be repaired for the initial amount that was written on the estimate.
That's the basics! I would like to make the point that whether you have a first party claim, or a third party claim, you have the right to question any damage assessment if it doesn't seem reasonable. Keep in mind that if you challenge the damage amount as assessed by the insurance company, you will have to pay for another independent or public adjuster to assess the damages for you. A body shop can only negotiate damages based on actual repairs, but a licensed and trained adjuster can write a report that reflects differences of opinion which will force the matter into discussion. On first party claims, look in your policy for a section related to disputing damages (sometimes called the "umpire" clause).
Good luck!
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