How claims are handled by insurance adjusters
There is no “typical” office of a claims adjuster. Claims offices differ depending upon the size of the company, location, and corporate philosophy. It is fair to say that there are major differences between the large national insurance carriers that you see on television all the time and the smaller companies that you seldom see in advertising.
Large national carriers take conservative approaches especially to small and medium cases. In the first place, they are not afraid to try these cases because they frequently win them. In the second, they are not afraid to lose because when they do, it may be by only a few thousand dollars anyway.
The smaller and generally more reasonable carriers are not necessarily giving away money willey-nilley. But they are easier to deal with during the negotiation process.
Claims managers and supervisors
The office of a large national carrier is usually run by a claims manager. The claims manager has usually been an employee for many years. The claims manager keeps a close eye on settlements, claims practices, and litigation in the local claims office. In some states, there may be several to many claims offices with only a few claims managers. The hierarchy of a national claims office is similar to that of the military, with a definite chain of command.
Claims managers are extremely loyal to their corporate leaders and are very powerful in terms of the amount of dollars they handle in a given year. They are given substantial authority in small to medium cases.
Claims supervisors report directly to the managers and usually supervise several to a dozen or more claims personnel, who are referred to as adjusters, claims technicians, or other similar names. Claims supervisors do not have the authority of claims managers and are closely scrutinized in most national offices.
In more regional and local carriers, the claims manager may report only to a vice president or a general claims manager of the entire company. Such claims managers have substantial authority because there are fewer adjusters. The office of a large carrier may have as many as 20 adjusters or more while a small local/regional carrier will employ only a few.
When a claim comes into the office, it is initially assigned, usually by territory or by size, to a claims adjuster. Accident attorneys in small states with populations of 2 million people or less will probably get to know most of the adjusters for both the national and local carriers. In larger states, there will be a significant turnover of adjusters. In fact, your case may be handled by two or more adjusters over the course of time.
Adjusters check their files regularly and also try to “diary” their cases to move them in a timely fashion. An average adjuster may have as many as 100 to 200 files going at any one time and is usually able to spend only a few minutes per week on the average claim.
An adjuster’s performance is measured by how many cases she can settle within or significantly below his or her settlement authority. Raises, bonuses, and performance evaluations take into consideration the speed with which an adjuster can settle a case, the amount of in-office resources used, and of course, the amount of money spent to accomplish and resolve the case.
Secretaries and clerks
Each claims office also has several claims secretaries and claims clerks. Because they are often at the bottom of the totem pole with little or no authority or responsibility, they are the ones most likely to be blamed for any errors. Each document that comes into the claims office is usually date stamped by a secretary or clerk and then, hopefully, referred to the appropriate adjuster.
Regional offices and home offices
Each claims office has a regional or zone office controlling the activities of the local office. Each major carrier has a home office with a general claims manager or vice president in charge of claims. These offices usually hold the ultimate authority of the company with respect to coverage, policy limit cases, and other important questions. Adjusters often tell attorneys that a case has been referred to the “home office.” This usually means that your case is getting special attention—which may or may not be to your benefit.
The home office is where decisions on such things as internal company policy, training classes, claims manuals, and other policies are made. If there is a coverage question in your case—non-payment of premium, driver with no permission from the owner, or other coverage question—the home office will likely decide the issue. The local adjuster usually does not have authority to decide coverage questions.
If the question is money, your adjuster will usually get authority in increments of a few to several thousand dollars from the supervisor, claims manager or regional office. In a large policy-limits case, the authority usually comes from the home office. Asking for policy limits is a big thing. When your accident attorney is seriously asking for policy limits in your case, the local adjuster will need time to go through the chain of command and bureaucracy. A period of 30 days is usually the minimum amount necessary to proceed through the bureaucracy.
Insurance defense counsel
Insurance companies retain law firms to represent them in cases that go to court. The relationship between claims managers, supervisors, and adjusters with their defense counsel can be very intimate, ranging from social friendship to sincere admiration. Claims offices keep accurate records of the wins and losses of defense counsel, and defense counsel are hired time after time based upon their success. Success is judged by the number of cases they win, the amount of low settlements they obtain, and their compliance with claims offices procedures. Defense counsel are required to report regularly on active cases and often give telephone advice to the insurer on a daily basis. Because long-term relationships with large carriers are such an important source of revenue a defense firm, defense counsel will rarely make any negative references to their employers and will fight hard for the insurance company because they want to retain the business.
The adjuster’s investigation
Once a claim is assigned to an adjuster, an investigation of the claim is begun. Coverage is the first element of concern—who was the responsible party, are they properly insured, have premiums been paid, and are there any reasons to deny coverage?
In the usual claims office, the adjuster performs his or her own investigation, usually by telephone but often in person. In fact, the adjuster may even drop in on claimants unannounced Adjusters take statements from witnesses and keep accurate notes of practically every conversation.
In most insurance adjustment offices, a specific chain of events occurs during the investigation process. In small to medium cases, the carrier looks for red flags, such as pre-existing injuries, low impact collisions, chiropractic treatment, and soft tissue complaints that are merely subjective. Adjusters also check in the so-called “claim index,” a computer generated research file that usually indicates all prior claims made by a claimant.
In small to medium cases, the files often go through what is referred to as a medical audit. In such cases, an independent evaluator puts a value range on the injury that is consistent with other claims of the same nature; however, such audits do not take into consideration individual facts. For example, a claimant with a sprained finger would be considered in the same group as all others with a sprained finger even though he or she is a concert pianist.
When the claims office assigns a normal case to an adjuster, the investigation usually begins very quickly because the first issue is whether or not property damage (in auto cases) in going to be paid. The adjuster obtains the insured’s statement of the case. Insureds very often color their statement to suit themselves. Virtually every potential defendant worries about policy premiums being increased, policies being canceled, and other concerns which lead them to give false information or information which helps their aspect of the claim.
The adjuster then obtains a statement from you. Ideally, you should wait until you have retained a personal injury attorney before giving a statement. Be sure to tell your attorney if the adjuster requests a statement from you. Your attorney will want to be present when your statement is taken.
The adjuster then investigates the scene, usually in person, and in serious cases, takes photos and diagrams. Police reports are then obtained, usually within days of the accident unless it is a very serious case. While police reports are usually not admissible in court, they have great weight in the assessment of liability.
Adjusters then look for and obtain statements from as many witnesses as possible especially those who favor the defendant’s side of the case. An appraiser is usually assigned to look at and compare the vehicle and repair estimates. All of these events occur within days of the incident.
Discussion of the case
Adjusters discuss their cases with each other and their supervisors just like attorneys do. Some cases receive “round table” discussion, but not every file gets committee attention. When an adjuster refers to a case being evaluated by a claims committee, they often mean merely themselves and a supervisor.
Because adjusters handle all kinds of claims from frivolous to catastrophic, they are rarely impressed by statements that your low back complaints or neck problems are ruining your life. Adjusters are most impressed with hard numbers—how much are the medical bills, how many physical therapy treatments, how many chiropractic visits, and how much documented loss of income that is supported by a doctor’s note. They are least impressed by rhetoric such as how a sprained ankle made you client cry at night or how your husband had to wash dishes for nine weeks.
When the case is ready for settlement, the insurance adjuster must obtain authority from either a supervisor or claims manager. In large national companies, authority is given in small increments, usually a few hundred to a few thousand dollars, so when an adjuster with those companies tells you that she needs to get authority to move from $18,000 to $21,000, it is most often true.
During the negotiation process, an adjuster will spend more time on a file than just a few minutes. If the claim is particularly difficult, they will spend even more time, but usually adjusters do not have a great deal of time to review their cases on a daily basis.
What your personal injury attorney should do
- Obtain a copy of the police report and a copy of your report to the Secretary of State or other state reporting agency.
- Obtain pictures of the car showing all damage inside and out.
- Obtain the names of witnesses, especially objective witnesses, who are not involved with either party.
- Call or meet with witnesses as soon as possible and obtain statements from them or have an interview with them about the facts of the case. The insurance adjuster will obtain statements in a manner that is most favorable to the insurance carrier’s side of the case. Estimates of speed, distance, fault, comparative negligence, and other factors are very important. The adjuster is looking for any potential testimony or statements that improve the potential defendant’s case. The first person to interview or reach a witness will have a distinct advantage.
- Visit the scene as soon as possible. Take photos or a videotape because the time of year with appropriate conditions such as snow, leaves, darkness, etc. is of importance if the case should proceed to trial. The closer the pictures or video tapes are to reality, the more admissible they become.
- Establish a positive relationship with the adjuster in the first telephone call. Treat the matter with priority status for the first few weeks because the adjuster will be getting a first impression of the efficiency of your office.
- In more serious cases approaching $50,000 to $100,000, talk to the investigating police officer. Most attorneys will not do this because it takes time and effort. However, the police officer may be a potential trial witness (with respect to statements made to him, damage to vehicles at the scene, your client’s condition, etc.). By meeting the police officer, your attorney will maximize the possibility that the officer’s testimony will be favorable to you. Your personal injury attorney should instruct the police officer to keep a copy of his or her notes and obtain a copy to put in the file.
- Instruct you not to give a statement to the adjuster while you are recuperating in the hospital.
- Make note of any statements by the insurance adjuster that deal with liability or damages, such as “Well, liability certainly seems clear in this case” or “I note that your client said that he was perfectly okay at the scene of the accident.”