A thorough claims investigation includes a review of coverage, negligence and damages, according to Barbara J. Mandell, an experienced California insurance defense attorney and Ken Oswald, regional vice president of claims for Access General Insurance Company, Inc.
“The Insuring agreement is your bible,” said Oswald, during a presentation on the subject at the Combined Claims Conference held recently in Long Beach, Calif.
The coverage investigation should include the following:
- Comparison of the policy term versus date of loss;
- Analysis to determine if the vehicle, driver, property, home or building location is insured by the policy;
- Evaluation that the risk/peril is not excluded.
Adjusters should document their investigation to find coverage in their claims file, and send timely status letters once proof of a claim is received if their coverage investigation has still not been completed.
The panelists also discussed some potential reservation of rights (ROR) triggers, including permissive use, unlisted drivers, unlisted vehicles, negligent entrustment, resident relative and intentional acts.
RORs must be timely, in writing, directed to the insured and should indentify the specific basis for the reservation.
Mandell outlined some tools helpful to coverage investigations:
- Applicable case law
- Insurance policy language
- Applicable statutes
- Consulting with coverage counsel
When denying coverage the panelists recommended doing so in writing with specific reasons for the denial and advising the insured and third party that additional information will be considered.
“Think about how that letter looks, blown up on a board at trial,” Mandell said, offering up an example of what could happen if a bad faith case was later filed, questioning the basis for a denial or the timeliness of an investigation.
As far as negligence, both panelists recommended adjusters consider the duty owed, the breach, damages and proximate cause related to the loss.
“Some companies forget to teach that to incoming adjusters,” Oswald said.
Mandell and Oswald also discussed a variety of issues relative to when to retain defense and coverage counsel, conducting examinations under oath and third party liens during the program.
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