I firmly believe that education and training are essential for all insuranceprofessionals, and perhaps most importantly for claims adjusters because they are the ones who are the first inline to interpret insurance coverage language on the primary level.They have the initial opportunity to voice a “nay” or “yay” when aclaim is filed, investigated, and consequently accepted ordenied.

However, property and casualty (P&C) insurance issituational, which makes the correct application ofcoverage even more difficult and complicated. I am constantlyamazed when I see adjusters who are part insurance expert, partcontractor, and part legal expert (although of course they cannotoffer legal advice). They are the ones who best combine their yearsof training and education with the valuable knowledge that can onlycome from experience.

The FC&S staff has a lot of dialogue with its adjustersubscribers, some of whom can describe a plumbing system incomplete detail, using the correct terminology for all of thepipes, connectors, and other items that make up the system. Inaddition, there are those who know there was water damage butreally can't describe where the water came from or what caused theleak. Although the FC&S staff is first to proclaimthat each claim must be looked at in its entirety and the detailsof the situation considered, there are certain questions that areconsistently asked about by agents and adjusters—leading us toadopt certain general principles about these most frequent ofquestions.

Water Damage Claims
Perhaps the most common water damage claim question involves thebackup of a sewer or drain. Most property policies exclude damagefrom water that backs up or overflows from a sewer, drain, or sump,but many astute agents take care of this exclusion by attaching anendorsement covering loss from that possibility. However, thequestion we get very often is whether a claim qualifies as a backupor overflow under the attached endorsement.

The question typically involves clogged drains. For example,leaves cover a drain opening on a flat roof, so rain cannot enterthe drain and be carried away from the roof. A corner of the roofinvariably leaks, and water cascades down the inside wall of thebuilding, causing damage. Is that an overflow or back up of adrain? Our standard answer is “no,” as water that neverentered the drain cannot have backed up or overflowed fromit. Therefore we do not believe this situation is covered, eventhough the policyholder may have paid the premium for theendorsement.

Another confusing situation involves damage toan interior or to personal property within the building by rain,snow, sleet, ice, sand, or dust. There is no coverage unless theopening through which the elements entered the building was made bya cause of loss that is covered by the policy or if the damage wascaused by the thawing of snow, sleet, or ice that had been on thebuilding. Seem fairly clear cut? Often confusion arises not becauseof the interpretation of the limitation but, rather, because ofvariation in how property policies typically word thelimitation.

For example, the standard ISO cause of loss form (CP 10 30)states that interior damage to both the building and the personalproperty within the building is limited in this type of situation.The ISO businessowner's policy (BP 00 03) is less restrictive. Itonly limits coverage in this situation to the building itself.Personal property within the building that is damaged by theseelements is covered even if the hole through which theelements entered was not made by a covered cause of loss. So whatis the difference here? If a policyholder leaves a window or a dooropen and snow or sleet enters, then contents would becovered on a businessowner's policy but not on a commercialproperty policy. Many insurance professionals would be surprised byhow many times insurance agents and claims adjusters forget thatseemingly minor difference when arguing for or against a claimbeing paid.

Falling Objects Are Closer Than TheyAppear
Of course, then there are the claims that are caused by “fallingobjects.” One of the most vivid memories I have is my firstexperience with a falling object claim. In that situation, a cranehad dropped a heavy piece of steel within a manufacturing facility.The steel thankfully did not injure anyone when it fell, but it diddemolish the piece of machinery that was directly beneath it. Atthe time, I was certain that the damage to the demolished machinerywould be covered because falling objects was listed as a specifiedcause of loss on the commercial property form as well as on manyother standard property coverage grants.

At that point, I recall that I was seeing only half of thestory. Although falling objects definitely is considered a coveredcause of loss, the coverage once again is limited by thesituation. Damage to the interior of a building, or to the contentsof that building, is not covered unless the roof or an exteriorwall is first damaged by a falling object. Because the fallingobject in my situation did not damage the roof or an exterior wall,the machinery was not covered. This unfortunately resulted in avery large uninsured loss for that manufacturing facility.

From a liability perspective, one of thesituations that may be missed by an adjuster or claims departmentinvolves the fact that defense provisions on a liability policy aremost often much broader than coverage provisions. Our experiencewith claims adjuster subscribers leads us to believe that most ofthem clearly understand this concept. However, the theory maybecome muddled when the allegations are lengthy and involve manyallegations that clearly are not covered, with perhapsonly one that potentially is covered on the policy.

Needle in a Haystack?
In many jurisdictions, defense is required for the whole of theclaim even when only one tiny piece might be covered by theinsured's policy. This type of situation frequently arises when theclaimant prepares a laundry list of allegations, and many of themare clearly excluded. This is when the experienced adjuster checksthe jurisdiction of the incident to see whether it requires theinsurer to provide defense for the entire claim when only a minorpart of it actually will trigger coverage.

Although the insurer may subsequently be allowed to recoup someof the defense costs, the initial necessity may be to provide acomplete defense until the court says otherwise.

It is these types of situations that make P&C insurance sointeresting. Insurance agents and claims adjusters must bewell-versed, even experts, on coverage language so that they canquickly and correctly apply the stipulated coverage.

This skill is frequently learned through training and education.However, the experience gained by dealing with ever-changingdetails and situations is what separates the professional claimsadjuster from the one who simply follows a company policy manual.It takes both training and experience to become an accomplishedprofessional.