How Insurance Companies Investigate General Liability Claims
To borrow a quote from Tom Hanks in the movie Forrest Gump, as in life, handling general liability claims is “like a box of chocolates – you never know what you are going to get”. The general liability adjuster is faced with a myriad of issues, and must be able to address them in an organized, timely and calculated method. To successfully handle these issues, the insurance adjuster must develop each claim according to protocol, so that nothing is overlooked during the course of an investigation.
Understanding The Issues : The first thing to be done by the claims adjuster is to obtain an understanding of the issues involved. The insured themselves may have no clear idea as to why they have been placed on notice, or the allegations being made against them. The insured may not be aware of the claim being advanced against them. It therefore becomes necessary for the adjuster to develop a clear understanding of each party’s stance. Pinpointing the allegations and theory of liability is the initial part of the investigation.
Know The Coverage : Once the adjuster understands the issues involved, they then identify and address any potential coverage issues. Oftentimes, the initial coverage analysis is based on very limited information. For this reason, a timely and well written reservations of rights letter should be issued citing the potential coverage issues. Coverage is a particularly sensitive issue and should not be taken lightly by the adjuster. Discussions with management should be an ongoing process to ensure that the correct coverage position is taken.
Know The Insured’s Role Or Status : It is essential that the adjuster develops a clear understanding of the role or status that the insured has in a general liability insurance claim. Does our insured own or lease the property? Is the insured a real estate management company? If so, does our insured have a real estate management agreement? Is our insured the snow removal contractor? Is our insured the General Contractor, or are they a subcontractor? Is our insured the manufacturer, distributor, retailer or installer of a product?
Find Out About The Insured’s Work Or Service : The adjuster needs to take the time to learn about the type of work or service the insured performs, and how this contributed to the alleged bodily injury or property damage. An expert will not only provide vital testimony, but will also assist the adjuster in developing an understanding of the technical issues involved with the claim.
Secure And Analyze Relevant Documents : Although an insured may have no tort liability, an insured may have entered into a contract or lease agreement which could expose them to contractual liability. The contract or lease agreement contains vital information needed to complete a contractual liability or risk transfer analysis. For this reason, an adjuster must recognize when there is a potential risk transfer exposure, and to secure copies of any applicable contracts or lease agreements.
Secure Field Investigation : Accident scenes may change as efforts are made by an insured to complete a job. For this reason, it is necessary for the adjuster to develop a close rapport with their field investigator. The field investigator has the responsibility of communicating information essential to the disposition of the investigation.
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The author, Joseph Badowski, is a liability insurance expert who has worked in the industry for more than 20 years. He currently works at Harleysville Insurance, and can be contacted at jkmbadowski@yahoo.com
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