Title: What Do Insurance Adjusters Look For? An Inside Look
As a bad faith insurance lawyer who has represented over 6,000 clients in first-party insurance claims, I've seen firsthand how insurance companies and their adjusters operate when evaluating property damage claims. Whether it's damage from a catastrophic event like Winter Storm Uri or an explosion, or a more routine claim for a leaking roof or broken pipe, insurance adjusters are trained to scrutinize every detail of a claim to minimize the amount the insurer has to pay out. In this post, I'll give you an inside look at what insurance adjusters look for when investigating a claim and provide some tips on how you can put your best foot forward if you need to file a claim.
The Insurance Adjuster's Mindset
First, it's important to understand the insurance adjuster's perspective and what their job entails. An insurance adjuster's primary responsibility is to investigate insurance claims and determine how much the insurance company should pay for the loss. While adjusters are supposed to be fair and objective, at the end of the day, they work for the insurance company. The insurance company's goal is to remain profitable, which means paying out as little as possible on claims.
This creates an inherent conflict of interest. The adjuster's job performance is likely evaluated on how much money they can save the company. They may receive bonuses or other incentives based on keeping claim payouts low. So while an ethical adjuster should be fair and impartial, the reality is that they are under pressure to err on the side of the insurance company, not on the side of the policyholder.
With this context in mind, here are some of the key things insurance adjusters look for when evaluating a property damage claim:
Coverage and Policy Exclusions
One of the first things an adjuster will do is review your insurance policy to determine if the damage you are claiming is actually covered. Property insurance policies can be complex contracts full of various exclusions, conditions, and limitations on coverage.
For example, most standard homeowner's insurance policies exclude flooding and earthquake damage. Many policies in coastal areas exclude wind damage from named storms. Some policies have caps on certain items like jewelry or art. There may also be general exclusions for things like deterioration, wear and tear, mold, insect damage, or construction defects.
The adjuster will look for any angle to deny coverage based on the wording of your policy. They will also check to make sure you have paid your premiums and that your policy was in force at the time the damage occurred. Even a short lapse in coverage could be used to deny your entire claim.
This is why it's so important to carefully read and understand the details of your insurance policy before a loss occurs. Don't wait until you have a claim to try to figure out what is and isn't covered. If you have questions, ask your agent for clarification in writing.
Extent of the Damage
Assuming your claim is covered under the policy, the next thing the adjuster will assess is the extent of the damage. They will want to inspect the property in person to observe the damage firsthand. The adjuster will take lots of photos and measurements to document the damage for the claim file.
If there was a specific incident like a fire or explosion, the adjuster may work with forensic engineers and other experts to determine the cause and origin of the damage. They will be on the lookout for any evidence of a pre-existing issue or owner negligence that may have contributed to the damage. For example, if you are claiming your 20-year-old roof was damaged by hail, the adjuster will look for signs of wear and tear, deteriorated shingles, or inadequate maintenance that suggest the roof was nearing the end of its lifespan anyway.
The adjuster's damage assessment will be the basis for the insurer's payout on the claim. The adjuster will write an estimate for the cost of repairs based on their inspection. However, these estimates are often incomplete or lowball the true cost of restoring the property to its pre-loss condition. The adjuster may not include certain required code upgrades, use unreasonably low unit pricing, or omit necessary scope items.
As the policyholder, you do not have to accept the insurance company's initial damage estimate or payment. I always advise my clients to get independent estimates from reputable local contractors to compare to the insurance adjuster's estimate. If there is a large discrepancy, you can submit the competing estimate and supporting documentation to the adjuster to argue for a higher payout. If the adjuster refuses to budge, you may need to invoke the appraisal clause in your policy or hire an attorney to dispute the lowball offer.
Policyholder Duties and Claim Procedures
Insurance policies place certain duties on policyholders in the event of a loss. These include promptly notifying the insurer of the damage, taking reasonable steps to protect the property from further damage, providing requested documents and information to the adjuster, submitting a sworn proof of loss, and appearing for an examination under oath if requested.
Adjusters will scrutinize your claim looking for any technical failure to comply with these policyholder duties. They may argue that late notice or failure to mitigate the damage prejudiced the insurer and justifies denying the claim. The adjuster will also look to see if you followed the proper claim procedures outlined in the policy. This may include providing a complete inventory of damaged property or appearing for a recorded statement.
As burdensome as these policyholder duties may seem, it's critical to substantially comply with them to avoid giving the insurer an easy excuse to deny your claim. Carefully document your communications with the adjuster and the steps you take to cooperate with the investigation. Be careful what you say in a recorded statement. Don't speculate about the cause or admit fault. Stick to the facts of what you observed.
Potential for Fraud
Insurance fraud costs insurers billions of dollars each year. As a result, insurance companies train adjusters to be vigilant in looking for "red flags" that may indicate a policyholder is submitting a fraudulent claim. These red flags could include a history of prior insurance claims, invoice or estimate alterations, refusal to provide requested documents, or deception about the cause or circumstances of the loss.
Some dishonest policyholders do attempt to claim pre-existing damage or inflate claim payments by exaggerating the extent of the damage. Others stage accidents or intentionally damage their own property in the hopes of getting an insurance payout.
However, many times an adjuster's suspicion of fraud proves unfounded. False accusations of insurance fraud can be used as a bad faith tactic to intimidate policyholders and avoid paying valid claims. An aggressive adjuster may ask for unnecessary documentation, insinuate wrongdoing, or make you feel like you are under criminal investigation.
If an adjuster accuses you of insurance fraud, stay calm but stand firm. Reiterate that you are making an honest claim for sudden and accidental damage that is covered under your policy. Provide evidence to support your position, such as "before" photos of the property, maintenance records, or witness statements. If the adjuster continues with a fraud investigation, politely decline to give further statements and consult with an experienced insurance lawyer about your rights and options.
Negotiating a Fair Settlement
Once the adjuster has completed their investigation, they will make a settlement determination. If the insurer accepts coverage (or accepts partial coverage while disputing other portions of the claim), they will send you a settlement offer with a check for the undisputed amount.
Beware of any settlement release or check endorsement language that requires you to waive future claims or recovery. The first offer is often just a starting point for negotiations, not a take-it-or-leave-it proposition. Don't feel pressured to accept a lowball offer.
Review the adjuster's offer closely and flag any areas where it falls short of your full damages. It may help to create a spreadsheet comparing the adjuster's offer to your contractor's repair estimate line by line. For a large claim, consider hiring a public adjuster to prepare a full damage estimate and scope of work to submit to the insurer.
Back up your settlement demand with as much documentation as possible. This could include photos, repair estimates, invoices, and expert reports showing the full extent of the loss. Emphasize that you are simply asking the insurer to pay what they owe under the policy contract for a covered loss. If the adjuster refuses to negotiate in good faith or unjustifiably delays processing your claim, put your complaints in writing and remind them of their legal duty to fairly and timely adjust claims.
Unfortunately, sometimes even doing everything right is not enough to get a fair shake from an insurance company. If the adjuster continues to lowball, delay, or deny your valid claim, it may be time to hire an bad faith insurance lawyer to fight for your rights in court. Document the adjuster's bad faith tactics as evidence. The threat of a lawsuit may be enough for a more reasonable settlement offer.
How to Protect Yourself Before and After a Loss
While you can't control what an insurance adjuster will do, there are some proactive steps you can take to improve your chances of a smooth claim process:
• Carefully read your insurance policy and understand your coverages, exclusions, deductibles, and policyholder duties before a loss occurs. Consider if you need to add any coverage endorsements.
• Take date-stamped "before" photos and videos of your property, especially any high-value items. Update them periodically. Keep copies of these records off-site or in the cloud in case the originals are destroyed.
• Perform regular property maintenance. Fix small issues before they become large ones. Keep maintenance records and receipts.
• If you experience property damage, promptly notify your insurance company in writing. Take reasonable steps to prevent further damage.
• Document the damage thoroughly with photos, videos, and notes before starting any demolition or repairs.
• Get independent repair estimates from licensed local contractors to compare to the insurance company's damage valuation.
• Be cautious about giving recorded statements to adjusters. Stick to the facts.
• Don't accept a lowball settlement offer without understanding your rights and options.
• Consult with an experienced bad faith insurance lawyer if you feel the insurer is unjustifiably delaying, denying, or lowballing your claim.
Takeaways
Insurance adjusters are not on your side, even if they seem friendly and empathetic. Their job is to protect the insurance company's bottom line. While most adjusters are ethical and try to be fair, some will look for any reason to minimize or deny your claim.
As a policyholder, you have contracted with the insurance company to pay for certain damages in exchange for your premium dollars. Don't be afraid to assert your rights to a full and fair claim payout in accordance with the policy terms.
The claim process can feel daunting, but knowing what to expect can help you stay one step ahead. By understanding what adjusters look for, properly documenting your damage, complying with your duties, and standing firm in settlement negotiations, you can increase your chances of obtaining a favorable outcome on your insurance claim.
If you reach an impasse with the adjuster or suspect bad faith, contact an experienced insurance lawyer to review your case and advise you of your legal options. With competent legal counsel on your side, you can level the playing field against a powerful insurance company and fight for the compensation you deserve.