Every profession has some motto and a few secrets hidden in aspecial place. For physicians, the essence of the HippocraticOath is “Do no harm.” Their black box is likely a black bag with astethoscope and other tools. For attorneys, the motto may be“Litigate the issue!” and the black box is a case for briefs. Weadjusters also have a black box, but it's most often in our head.Our tools are the policy, other contracts, a recorder, a camera,maybe a tape measure, a smart phone and a computer. It is what isin that black box that gives adjusters a basic understanding ofwhat we do: it consists of six words and our motto is: “Neverassume!”

Six words can adjust any type of claim: property,casualty, marine or life, and health insurance. Investigate,evaluate, and negotiate (or resolve) are the first three words. Thenext three are: Coverage, liability, and damages. These must bedone in the proper order: Investigate the coverage first, andnegotiate the damages last. The contents of this little black boxwill keep the adjuster out of trouble.

Until the coverage issues are investigated, evaluated andresolved, one cannot determine liability, because if there is nocoverage, liability doesn't matter. Obviously it is not always thatsimple. If a coverage problem cannot be immediately resolved, itmay be necessary to proceed and investigate the type of liabilityor the nature of the damages under a Reservation of Rights in orderto determine if coverage applies. But that is part of theinvestigation of the coverage.

Waiver and Estoppel

The fastest way for an adjuster to get into trouble and end uppaying claims not owed is to give the impression that coverage isin order, that there is liability, and the damages will be paid.But when it is determined that there is no coverage or noliability, the adjuster has made a big “oops!” Coverage defensesare waived and the insurer is estopped from using its defenses.Whether liability for damages is first-party or third-party,coverage is the most important factor.

How many adjusters can recite, word for word, the policylanguage for every policy under which they handle a claim? Thosepolicies keep changing, and each may come with endorsements orconditions different from the “standard.” There is only one way tobe certain that the coverage matches the claim and that is to lookat the claim in light of the policy language.

Assuming that we understand the coverage and that it will applyto the loss, we adjusters can get ourselves and our principals intotrouble. Joe works at the ABC Company. Joe is injured at work. Asimple workers' compensation claim is submitted and paid – and thenthe adjuster learns that Joe actually works for an independentcontractor. Oops!

Mary reports a claim to her auto insurance agent about anintersection accident. Jim's car was damaged and Jim has called theinsurer to see where he can have his car repaired. The adjustertells him where he can have his car repaired and authorizes arental for the repair time. Then the police report is received and,by golly, it was Jim who was at fault. Oops! These are simpleclaims, but mistakes are easy.

Too Many Oopses!

We've all had “oops!” moments. Unless someone constantlymonitors our files, we may get away with an occasional “oops,” butif they occur too often, some day that oops will be a disaster andour principal will end up in court trying to explain to a judge orjury what went wrong. The answer lies in that black box; theadjuster forgot to open it and look inside to see what was there.On airliners the black box – although orange or red – revealsmistakes that pilots may have made that caused a crash.

The adjuster's black box can do the same – but it can alsoprevent that crashing “oops!” It's low-tech, but it works, saving alot of misery.