NEWS
Independent Insurance Agents of Virginia
Incorporated
8600 Mayland Drive, Richmond, VA 23294
December 1999
Claims Handling Procedures within the Agency Dear Doug:
Our office is concerned about how claims handling can affect our E & O. I was told recently by a company adjuster that an agent can give coverage where there is none when discussing a claim with an insured. As an agent, I want to be helpful to the insured but not hinder the adjuster's handling of the claim. Can you give some generic guidelines for claims handling? With the issue of Y2K facing us, are there additional procedures forY2K related claims? Barbara S. Jenkins, AAI, ACSR DeJarnette & Beale, Inc, Bowling Green, Va.
Dear Barbara,
Thank you for your question about E&O issues in the claims handling process. While an agent technically cannot expand coverage after the fact during the handling of a claim, if the agent is not careful in what (s)he says, a comment by an agent may lead an insured to believe that: (a) there is coverage, when there is not; and/or (b)there is greater coverage (e.g., higher limits) than provided for in the policy. In order to prevent such situations, I recommend the following guidelines: 1. Never comment on the amount or the scope of coverage unless the policy file (paper or automated) is in front of you. 2. Never express opinions about the amount or the scope of coverage. 3. Never comment on the personality of the adjuster. 4. Always tell the inured that the adjuster, and only the adjuster, has the authority to authorize expenditures by the insured for a claim (unless that authority has been delegated to you). 5. Always be familiar with each carrier's claims handling guidelines for the agency. 6. ALWAYS DOCUMENT YOUR CONVERSATIONS WITH THE INSURED!!! All agents have "apparent authority," under which the public may be unintentionally misled into believing things about coverage, simply because an agent made a statement. This legal doctrine is particularly important in the claims handling process because insureds, after a loss, are often emotional and will truly remember things (conversations with you) the way they wished they happened, instead of the way they actually happened. That is why documentation is so important. Similarly, adjusters are on the front line after a claim, and comments that you make about them could lead to lawsuits against you and the adjusters. There is no inherent adversity between you and the adjuster, and any negative comments against one or the other could be misconstrued. You also asked about whether there are special procedures for Year 2K claims. I am not aware of such procedures, but suggest that, due to the uncertainty surrounding these potential claims, all agents be especially vigilant as 1900 gets closer. (A little humor never hurts!) Douglas M. Palais, MEZZULLO & McCANDLISH, P.C.