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Personal Lines Claims

Personal Lines Property Loss Adjusting—Achieving Excellence

Elise Farnham | October 1, 2008

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Adjustment of personal lines property claims is more challenging than ever. Balancing efficiency with accuracy, fairness, and effectiveness requires skill, knowledge, and discipline. What is the adjuster's primary job? To close files! Getting to closure involves many steps, any one of which can throw the process awry and delay or sabotage closure.

There are four key areas that have direct impact on the success of the property loss adjuster:

  • The loss adjustment process
  • Loss documentation
  • Coverage analysis and interpretation
  • Claims management

The Loss Adjustment Process

It is important to create an organized process for loss adjustment. Necessary in times of ordinary claim volume and imperative when catastrophes strike, the skill with which the adjuster is able to organize the work will be a key to success in closing files.

Every adjuster needs to have a logical process for handling claims as they are assigned. Knowing that the damage must be inspected and analyzed, that field notes must be sufficient and complete, that estimates must be written, and that judgment calls are necessary to determine repair versus replacement—these will assist the adjuster in developing a process for completing each step. The process soon becomes second nature; when the adjuster picks up any file, the next process step is evident.

Loss Documentation

The second key area is development of competencies in loss documentation: scope, diagram, and photos. File documentation is most easily obtained on first call, and the skill the adjuster portrays in conducting the initial inspection will be the basis for the ongoing relationship with the insured as well as accuracy in the loss adjustment of the file. Subprocesses are necessary here. For instance, in diagramming a residence, start at the front elevation; work around to the left, then the roof, then repeat the process on the interior damage. Utilizing a Wi-Fi connection, diagrams can be drawn directly into the estimating software while at the premises, saving time and ensuring accuracy. Printing a copy onsite for the homeowner will ensure everyone is in agreement as to the scope.

Interviewing the homeowner during the initial inspection will ensure that all of the damage is located, inspected, and included. Reaching agreement as to scope on the initial visit will put the adjuster much closer to the goal of file closure and prevent supplements or disagreements that can arise later. This initial interview is also a great opportunity for the adjuster to establish rapport with the insured, gaining trust and agreement long before loss figures are discussed. It is a time for giving proper direction to the insured as related to mitigation of damage, a discussion of damage not covered, and seeing that all the terms and conditions of the policy are met.

This is also the opportunity for the adjuster to develop information regarding subrogation or other recovery opportunities and obtaining substantiation from the insured, or at least directing the insured on what documentation will be necessary to pursue a third-party action.

Coverage Analysis and Interpretation

Coverage analysis and interpretation is the third key process step. This step assumes that the adjuster is familiar with the policy provisions, terms, and conditions, as well as the intent of the underwriter. In future columns, we will be visiting misunderstood and problematic areas of personal lines coverages to provide assistance in interpreting policy language. It is important to remember that the policy is taken as a whole, and coverage that is afforded in one area can be taken away in another. If the policy is silent on a given aspect, courts will usually find in favor of the insured. Since the insurer wrote the policy, the insured is at a disadvantage in the contract relationship.

Coverage analysis requires extreme discipline, interpretative skills, and understanding of language and its usage.

Claims Management

Finally, excellent adjusters know how to manage their claim portfolios more effectively. They understand how long it takes to achieve success points and excel in moving the entire portfolio forward, not just a few "screamer" files. The skill in doing this will benefit the adjuster in a myriad of ways—fewer phone calls from irate insureds, contractors, and agents; a reduction in litigated cases; quicker "churn" of the caseload; and faster closure.

More experienced adjusters work out a process following these steps that is graduated based on category of loss, i.e., one process for small losses, one for medium losses, and one for large losses. For them, the size of the loss will dictate the extent of investigation and key aspects of that investigation. For instance, on a small loss, adjusters may accept repair estimates from the insured's contractors rather than write an estimate; on a medium loss, the adjusters would write their own estimates and then obtain contractor agreement as to scope and cost.

In adjusting, there is first the textbook answer. Beginning adjusters rely on what they've learned in claims training and textbooks to lead them on the path to claim closure. They've been taught to analyze losses and coverage from a specific standpoint, and without experience as a guide, use the only one available to them—the textbook.

As adjusters gain experience, they rely less and less on the textbook, and more and more on their personal experience and judgment. More experienced adjusters know that there is a practical solution to every claim, a lesson learned at a point where the adjuster knew the textbook answer but did not get the textbook response. When this realization is made, the adjuster sees that under a specific set of circumstances, a more practical approach is required. This is the point of development when the adjuster knows the policy provisions, and under the circumstances, has the ability to step back, identify alternatives, and apply them appropriately.


Excellent adjusters work at a higher level of competence in which they know the textbook answer, know the "practical" approach, and most importantly, know what actually happens when certain actions are taken. These adjusters know the policy, the contract, the textbook answers, and they know alternatives in a variety of situations—the "practical" answers. They know what is supposed to happen when you push the right buttons, and they know what actually happens when those buttons are pushed.

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