All-Lines Adjuster Manual

Chapter 1.1 - What Is Insurance? 1 Chapter 1.2 - Types of Insurers Chapter 1.3 - Characteristics of Insurance Contracts Chapter 1.4 - Important Terms Chapter 1.5 - Risk & Risk Management Chapter 1.6 - Insurable Risk Chapter 1.7 - Valuation and Deductibles Chapter 1.8 - Types of Hazards Chapter 1.9 - Cause and Loss Chapter 1.10 - Interest, Subrogation and Claims Chapter 1.11 - Liability and Law Chapter 1.12 - Settlement & Release Chapter 2.1 - Insurance Rules & Regulations Chapter 2.2 - The Agent & Authority Chapter 2.3 - Unlawful Behaviors Chapter 2.4 - Unfair Claim Settlement Practices Chapter 2.5 - Standards for Claim Filing & Handling Chapter 3.1 - Dwelling Insurance Chapter 3.2 - Homeowners' Insurance Chapter 3.3 - Farm Insurance Chapter 3.4 - Crop Insurance Chapter 3.5 - Flood Insurance Chapter 3.6 - Umbrella and Excess Liability Chapter 3.7 - Personal Auto Chapter 4.1 - Commercial Property Chapter 4.2 - Commercial General Liability Chapter 4.3 - Professional Liability Coverage Chapter 4.4 - Commercial Package Policies Chapter 4.5 - Commercial Crime & Bonding Chapter 4.6 - Commercial Auto Insurance Chapter 4.7 - Mechanical Breakdown Chapter 5.1 - Inland Marine Chapter 5.2 - Ocean Marine Chapter 5.3 - Aviation Insurance Chapter 5.4 - Workers' Compensation Chapter 6.1 - What is Adjusting? Chapter 6.2 - Successful Negotiations Chapter 6.3 - Negotiations Chapter 6.4 - Ethics Chapter 6.5 - Settlement Chapter 6.6 - Practices, Duties & Liabilities Chapter 6.7 – Fair Credit Reporting / HIPAA / IIPPA Chapter 6.8 – Insurance Fraud Copyright 2011 ‐ AdjusterPro LLC ‐ All‐Rights Reserved Chapter 1.1 - What Is Insurance? Insurance is an economic device utilized by individuals and organizations to protect themselves against the risk of realizing unforeseen and extraordinary financial losses. By purchasing an insurance policy from an insurance company, an individual or organization can transfer the financial risk of a potentially devastating loss to another party, called the insurer. The Insurer is a company offering insurance. The Insured is the individual or entity purchasing the insurance. Insurance essentially allows individuals and organizations to pay a scheduled and affordable fee called a premium to an insurance company today, and in turn the insurance company makes a promise to protect that individual or company financially if they suffer from a specified unforeseen and devastating economic loss in the future. Purchasing an insurance policy offers peace of mind to the policyholder by relieving the potential financial burden of unexpected occurrences, such as: What would we do if our house were destroyed by a hurricane? How would I cope with the enormous expense of a serious automobile accident? An insurance company operates by spreading the risk of experiencing a large unforeseen financial loss amongst a large group of people. An insurance company collects premiums from its group of policyholders, and places those premiums into a large pool of money. When a policyholder experiences an unforeseen loss, that policyholder makes a claim against their insurance policy. The insurance company then pays the claim of the policyholder from funds collected in the large pool of money. Since only a small fraction of an insurance company's policyholders will experience a devastating loss over the course of their policy term, the pooled money should always be sufficient to pay for the individual losses amongst the group of policyholders. For example, while an insurance company may collect premium payments from 100,000 auto insurance policyholders over a one-year period, odds are that only 3,000 of those policyholders will actually file a claim due to an auto accident. The insurance company then uses the premiums collected from 100,000 policyholders to pay the claims of the 3,000 people actually involved in accidents. An insurance company ensures this pool of money is always sufficient by managing risk, which we'll explore a little later. Copyright 2011 ‐ AdjusterPro LLC ‐ All‐Rights Reserved Insurers select certain types of risks based on the potential for that risk to produce a profit even if there is a loss. A good risk selection is one where the profit collected is greater than the loss and expenses. This produces a profit for the insurer. The process of selecting these “profitable” risks is called Underwriting. What is a Contract? A contract is defined as a legally enforceable agreement between two or more persons or parties. In order for a contract to be legally binding, all the following conditions must be met: Agreement- all parties to a contract must agree to the terms of a contract. This is usually specified by a signature to the terms of a contract. Consideration- each party must contribute something of value to the contract (for example, Bob transfers ownership of his car to Kate and in exchange she gives Bob $5,600). Competent Parties- both parties must have the legal capacity to enter into a contract (for example, both parties must be 18 years of age for a contract to be enforceable, and both parties must be of proper mental capacity when they sign the contract).