The Insurance Company’s Intent

The insurance industry has the best business model in the world.  Imagine owning a company where:

Client pays up front
Insurance Company benefits from that up front payment
Loss occurs
– Policyholder expects to be paid for losses
– Insurance company hits the breaks

The policy purchased by the policyholder is know as a “Contract of Adhesion”. This means, that the contract (policy) is a standard form contract drafted by one party (the party with the stronger bargaining power – CARRIER) and signed by the weaker party (usually a consumer in need of goods or services – POLICYHOLDER), who must adhere to the contract and therefore does not have the power to negotiate or modify the terms of the contract. Being that the policyholder cannot negotiate the terms or make revisions to the policy, they must “adhere” to what it says word=for-word. Sounds unfortunate for the policyholder. However, the Carrier must adhere as well.  This means anything that’s ambiguous or unclear goes to the default of the party who did not generate the contract (the POLICYHOLDER).

With that being said, and the fact that the insurance company (carrier) is the stronger party who has collected money from the policyholder, they have a duty to protect that policyholder and provide any and all available coverage to each client.

“The primary duty of the [insurance company] claim representative is to deliver the promise to pay.  Therefore, the [insurance company] claim representative’s chief task is to seek and find coverage, not to seek and find coverage controversies or to deny or dispute claims.”
James J. Markham et al., The Claims Environment, 13 (1st ed. 1993).

Seek And Find All Available Coverage

If the insurance adjuster and the carrier’s responsibility is to seek and find all available coverage, then why does it seem that with many claims the carrier is trying to find fraudulent activity by the policyholder? Investigations, depositions, waiver of right forms, release of all claim forms, etc. Well, it must be all part of the “Delay, Deny, Defend” model followed by many of the carriers that was designed to increase their bottom line… but that’s another story. Not “all” carriers follow this model, however, most of the “Big Boys” do!

Resources:Thesaurus – contract of adhesion

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Home Owners Insurance Claims
Insurance Adjusters Think You Are The Enemy

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(C) Joe Brennan is President and owner/operator of Insurance Claims Group, Inc., a national independent adjusting, appraisal, and umpiring firm. We will answer your claim questions FREE as part of our FREE Insurance Advice and Insurance Claim Consulting Services.

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Joe Brennan
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