The 3 Biggest Mistakes New Adjusters Make

John O’Brien | AdjusterPro | March 29, 2019

Recently, my friends at AdjusterPro asked if I’d like to be a guest author for their blog page. Since I’ve been a successful claims adjuster now for a number of years, they felt my perspective on the biggest mistakes new adjusters make might be helpful for their readers.

My immediate response was, “That’s simple. They don’t know what they’re doing.” However, I was quickly told that I “wasn’t getting off that easy” and furthermore, my answer was “not helpful.”

Back to the drawing board.

But the fact is the biggest challenge facing new adjusters IS  that simple: they don’t know what to do. Now please don’t misunderstand. I don’t blame new adjusters. After all, we’ve all been there. And as the old saying goes: you don’t know what you don’t know.  Whether you’re an insurance claims adjuster just starting your career, a salesperson dealing with your first tough client, or a family with a newborn….you can’t very well fix unknown problems.

When it comes to insurance claims adjusting however, I do think there are areas where new adjusters could better prepare themselves for the job and set themselves up for real long-term success in this industry. I’ve broken them down into 3 main areas where I’ve seen new adjusters struggle the most.

It’s worth noting that independent insurance adjusting is a fantastic job with high pay and low barrier to entry. Pass your state license exam and boom – you are a licensed adjuster. But achieving the high pay part gets a little more complex. Independent adjusters get paid on each claim that they inspect, estimate, and close. So while the success formula is simple: more claims closed = more money, there are plenty of challenges standing in the way of the ‘more claims closed’ part of the equation.

MISTAKE #1: Insufficient (or no) preparation for estimate writing.

The easiest first step you can take but perhaps the most important is gaining a solid grasp of how to use Xactimate. This estimating software is used by the majority of all adjusters for most property-related claims in the US. I can not stress enough how important it is to be functional in Xactimate. This is partially related to a big misconception in the insurance claims industry. Many people think most of a claims adjuster’s work is in the inspections…but 75% of the work you will do as an adjuster is actually estimate writing.

So back to the equation more claims closed = more money.  Being able to write 5 claims in an evening will make you 5 times more successful than an adjuster who can only write one claim per evening. Not only will it earn you more money, it will increase your value to your employer – who will likely give you more claims and more opportunities whereby the cycle begins again.

Oh and by the way, please don’t be that guy/gal that thinks they can learn on the fly during their first big storm deployment. (AdjusterPro Co-Founder Adam Gardiner wrote a great article on his experience as an Xactimate newbie during Hurricane Charley. It’s worth a read.) First, nobody has time to help you because they are too busy writing their own claims. Taking 2 hours to help you could literally cost them thousands of dollars. Plus, two hours of frustrated help from a fellow adjuster won’t be nearly enough time to get you up to speed. The only other option is to go to your adjusting firm’s help center and wait patiently for one of the overworked help staff to walk you through. But again, time is money and time spent waiting is time you aren’t closing claims.

So first things first – get Xactimate training. AdjusterPro has a great Xactimate Tactical Training course to get you started. Then practice, practice, practice. Once you know the basics, there are a host of “tricks of the trade” that you can learn to cut your writing time down.

MISTAKE #2: Not having an ordered, systematic process for approaching your workload.

Insurance claims checklist

This one isn’t as cut and dry but it is every bit as important for new adjusters – and can truly make or break your career in claims. So what does this really mean? It means you need a system: a step-by-step, consistent approach you use for every claim, no matter the size or circumstance.

Whether you have 1 claim or 50, every single claim requires incredible attention to detail. Closing the claim means completing all of the necessary steps in the correct order. Miss one and it leads to additional mistakes or missed tasks, potentially resulting in a kicked back claim. If nothing else missed steps and tasks will cost you time. And, as we’ve discussed, time = money.

This was a huge challenge for me when I first deployed. I was proficient in Xactimate writing so I thought I’d do ok. Not so. I constantly found myself in a mental fog of chaos as I bounced from one task to another with no real organization. I became stressed which led to more mistakes I needed to fix which, of course, led to more stress.

Fortunately, I was able to identify my problem and make some changes. With a bit of trial and error, I was able to create a systematic approach to every claim. It’s allowed me to handle huge claims loads from multiple firms and multiple carriers at the same time. My Adjuster Success Method training course was really developed for this purpose. I wanted to share my experiences: the good, the bad, and the ugly, and help new adjusters get a leg up on this all-important part of a successful career in claims.

The bottom line? If you want to be successful you need to get organized and stay organized.

MISTAKE #3: Taking yourself out of the game.

Facing the daunting task of figuring out how to do their job while navigating a major catastrophe deployment is what sends many a new adjuster back to the safety and predictability of a normal 9-5 job. Most of the time, they would have made fine adjusters if they’d just had a little more guidance before facing that first CAT deployment. But I have seen so many become stressed, get overwhelmed, and pack it in and go home.

There isn’t a one size fits all solution here. But if you want to be successful in this field, you need to be prepared and you need the determination to stick it out, no matter how tough it gets. And it will get tough. But with the right training, the right mind frame, and a great system? You’ll be killing it in no time.

Is an Adjuster Independently Liable for Bad Faith Conduct?

J. Ryan Fowler | Property Insurance Coverage Law Blog | March 10, 2019

I often get calls from potential clients that have filed a claim with their insurance and have been enraged by an insurance agent or adjuster assigned on the claim. Many potential clients say something like “I just wanted to get the claim settled but the adjuster was acting in bad faith and just wouldn’t listen.” Most states have some case law or consumer protection laws that apply to an insurance company, but not all apply to the insurance personnel you deal with. The Supreme Court of Washington will soon decide this issue for members of the Evergreen State.

On February 26, 2019, the Washington Supreme Court heard arguments in Keodalah v. Allstate Insurance Company, et al..1 The insured, Keodalah, suffered catastrophic injuries when his truck was struck by a motorcycle. Keodalah sought the full $25,000 limit of his underinsured motorist coverage with Allstate but the company instead offered to settle for a smaller amount, claiming he had been partially at fault.

Keodalah filed suit against Allstate. In the litigation, the insurance adjuster assigned testified that Keodalah was talking on his cellphone and ran a stop sign. However, the police had determined he was not using his phone and that Allstate’s own accident reconstructionist had determined that he had stopped at the sign. The adjuster later admitted that both reports were true, according to court documents. The jury found that the motorcyclist was solely at fault and awarded Keodalah and his wife more than $100,000.00.

Keodalah then filed a bad faith lawsuit against Allstate and the insurance adjuster individually, claiming violations of the CPA. The trial court dismissed the claims against the adjuster, and Keodalah appealed.

In March of last year, a state appellate court overruled the trial court’s decision2 and found that Keodalah could file an individual bad faith claim against the adjuster, saying that the relevant state law makes no distinction between corporations and individuals. The case is now before the Washington Supreme Court.

Allstate’s arguments are essentially that the relationship of insured and insurer creates the duties and that adjusters don’t have a duty of good faith because they are not a party to the contract. The insurance company also argued that allowing suits against adjusters would deter good adjusters from doing their jobs in fear they may get sued.

Keodalah’s position is that the applicable statute plainly imposes a duty of good faith on insurers and their “representatives,” including adjusters and that the state’s Legislature intended that claims adjusters carry a good-faith duty. Keodalah has argued that the recognition of a bad faith cause of action against individual adjusters would benefit policyholders by deterring adjusters from engaging in wrongful denial or delay tactics in the claim handling stage.

Amicus briefs have been filed by the American Insurance Association, National Association of Mutual Insurance Companies, and Property Casualty Insurers Association of America, and GEICO, along with the Washington State Association for Justice Foundation and the Coalition Against Insurance Fraud. The battle lines have been drawn in Washington with insurance lobby groups and companies on one side and consumer advocacy groups for policyholders on the other and we will await the Washington Supreme Court’s decision.
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1 Keodalah v. Allstate Ins. Co., et al., No. 95867-0 (Wash. 2018).
2 Keodalah v. Allstate Ins. Co., 413 P.3d 1059 (Wash App. 2018).


Restoration Contractors Providing Great Quality Workmanship Are Policyholder Friends But Many Insurance Companies Refuse To Pay For Quality

Chip Merlin | Property Insurance Coverage Law Blog | February 17, 2019

Contractors often tell me and other Merlin Law Group attorneys of the crazy excuses and refusals insurance adjusters give to avoid paying for required construction materials, processes, and practices which constitute quality workmanship. Cheap and non-quality construction is easy to do and often overlooked by policyholders completely unfamiliar with the detailed specifications demanded by manufacturers of materials, building codes and OSHA requirements which must be followed for legal and quality construction to take place. Insurance company claims mangers know that doing construction right is a lot more expensive and demanding than paying for cheap construction.

An excellent article, Quality Construction Management, was published by International Risk Management Institute n/k/a IRMI and concludes:

A contractor must have a robust quality management program as it is critical to the overall success of a construction project. An effective program creates a process for clarifying standards and requirements, established means and methods for managing the process, defines responsibilities and accountabilities, and adds another avenue to more effectively manage the supply chain, while it reduces misunderstanding and potential conflict. It effectively facilitates and manages the collection of data, identifies performance discrepancies and nonconforming work, and substantially increases efficiency by reducing defects and punch list work, which aids in. improving the working relationship with the design team and the project owner. It systematically manages quality and enhances the contractor’s project delivery, increases productivity, eliminates or reduces waste, and ultimately improves profitability.

It does not take a rocket scientist to figure out that quality contractors performing the type of work discussed in the IRMI article cannot possibly stay in business if insurance companies demand “cheap” pricing. Contractors and policyholders reading this post should also read, Insurance Company Adjuster Training Scripts and Role Paying, on how insurance companies teach their adjusters with scripts to avoid paying contractor demanded pricing as well as overhead and profit costs.

Many insurance claims departments have a culture that will only pay for “okay” construction. AT&T’s current advertising campaign about “okay” services and products makes the point. Would you want just an “okay” surgeon or tattoo artist? Would you want your sushi to be just “okay?” Would you search for and buy your grand-baby the “cheapest but acceptable” car seat?

Yet, when it comes to insurance restoration construction, I have never heard an insurance company property insurance adjuster demanding that the contractors providing their pricing, or the pricing found in Xactimate, to be only from quality contractors with the types of processes and culture I quoted from in the IRMI article. They always go cheaper and for “okay” construction. They wrongfully allow the “cheap” contractors to provide data for pricing used by Xactimate.

Quality restoration contractors fighting these adjustment practices are heroes for all of us. Demanding fair pricing which allows for quality and standing up to the insurance industry adjusters is admirable. It is far easier to accept lower pricing and provide cheap and inferior workmanship.

A post about how State Farm tried to influence and obtain “okay” construction and pricing is found in, Membership in Professional Organizations Helps a Small Public Adjusting Firm Achieve a Big Result. Clay Morrison was a State Farm preferred construction vendor. The State Farm claims manger demanded that Morrison provide unethical pricing which would only result in cheap construction. Rather than acquiesce and keep the State Farm business, Clay Morrison rose to the occasion at his moment of truth and refused. He lost State Farm’s business, but he was a champion for all policyholders, his family and himself.

Similar battles are being fought every day by those in the insurance restoration construction trade. Those contractors that follow the rules and refuse to become just “okay” should be congratulated.

Insurance Company Adjuster Training Scripts and Role Paying

Chip Merlin | Property Insurance Coverage Law Blog | September 24, 2018

Insurance companies spend time training their insurance adjusters. Training is a very important. It sets the tone and culture of how the claims department functions. Training can be ethical and professional as discussed by Ken Brownlee in Insurance Companies Must Perform in Good Faith Regardless of Their Customer’s Imperfect Actions. It can also lead into bizarre scenarios as exampled by the “Jewish Lawyers List” in Hindin v. State Farm – The Landmark Claims Practice Case That Few Know About Finally Ends.

April Hall sponsored a wonderful Overhead and Profit seminar in Dallas last Friday. Public adjusters, independent adjusters, contractors and some roofers were in attendance. One former insurance catastrophe adjuster sent me a script and role-playing training exercise required of an insurance company. I wonder how roofers, contractors and policyholders would feel if the insurance company would provide them this script and role-playing training actually used following a catastrophe:

Good morning!

I know many of us spend quite a bit of time dealing with roofers who are wanting to charge an additional 21% (10 and 10) profit and overhead for the more simple hail and wind claims. Please understand that I am not intending to cover here when we do, or do not owe additional profit and overhead. We have guidance on that in iConnect. Please consult those sources and your TM if you are not familiar with this issue.

My intention here is to help you structure your argument when you encounter the issue and it is not warranted.

Roofer: I have a right to charge profit and overhead!

Good: You are absolutely right! You have the right to charge whatever you want. We live in a free market place. However, for that same reason, I will be paying what the going competitive market rate is for this sort of repair. If I have missed something on my estimate, I am more willing to work with you to get it right. Otherwise, if you and I cannot reach an agreement on a competitive price for the work, I will engage another local, reputable, insured, and bonded roofer to review the covered damage and my estimate to see if they are able to complete the work for that amount. My insured is of course free to hire you to do the work, but I will be paying the competitive market rate for the job.

Bad: Oh, okay. I will need you to send me the invoices from your subcontractors to show me that you indeed are acting as a General Contractor. Okie dokie?

Ugly: Our estimating guidelines say I am not allowed to pay you that.

 

Roofer: (This is a TX thing) The Department of Insurance has ruled that insurance companies owe for profit and overhead.

Good: Oh, yes, I am familiar with that. What the DOI said is that when an insurance company calculates the actual cash value of a loss, they must include profit and overhead in that calculation. If you would like to read it, I can send you a link to it. Xactimate pricing includes an amount of profit and overhead that reflects the competitive market for this type of job, and I have included it in my calculation of the actual cash value of the loss.

Bad: Oh okay. Please send me that ruling when you send in your final bill, and if that is true, I’ll take care of it.

Ugly: You lie like an old rug!

 

Conversation with the customer:

Good– I wanted to let you know up from that XYZ Roofing typically charges about 20% over the going market rate for hail work in this area. They call it profit and overhead. The vast majority of roofers do not charge that extra amount. Because the majority of roofers want to do this work for you for 20% less than XYZ charges, I will not be agreeing to the extra amount. My estimate will include profit and overhead for the job, but not the additional 20% that XYZ typically charges. I wanted to let you know in advance, so you can consider how you want to move forward with the repairs. You may hire whoever you wish to do the repairs. If you like, I can refer you to other local roofers who will complete the work for what I will estimate. If they find additional damage, or I miss something, I would work directly with them. You would not have to play middle person.

Bad- I see you have an XYZ sign in your yard. I want to let you know up front that they charge 20% profit and overhead, and I can’t pay for that.

Ugly- That’s too bad you chose XYZ roofing. They are very difficult to deal with. I’ll tell you up front; my manager says I can’t pay their high rates.

There is a battle being waged by many insurance companies regarding property claims payments. Regulators should start making Market Conduct Studies of the ethics found in these training programs.

Many field adjusters are caught in a no-win situation where they are simply ordered what to say to reduce claims payments. Many are taught relatively sophisticated techniques developed by claims managers with significant insight into the psychology of claims negotiation rather than techniques for proper evaluation and investigation. This training is purely designed to reduce the amount paid and often without regard to what constitutes proper and legal construction.

Denied Water Damage Claims and Unethical Adjuster Conduct

Chip Merlin | Property Insurance Coverage Law Blog | July 9, 2018

Denied water damage claims are one of the more frequently handled claims by our law firm. The cost to repair these claims can be quite high depending on many factors including the length of time the water leaked, the length of the leak, the nature of the water, and the location of the water leak itself.

Many insurance companies have recently changed policy language or taken positions so water damage claims are more frequently in litigation. Merlin Law Group recently noted denied water damage claims in Follow-Up: My Insurance Claim Was Denied Because My Water Leak Lasted Over a Period of 14 Days or More – Was the Denial Proper, and Policyholders Beware: When You Hear “Drip…Drop” Think “Tic Tock.”

Insurance adjusters can say and do the most outrageous comments and actions. It results with very upset and frustrated policyholders, especially if the claim is denied. Does that mean that if adjusters act unethically and even in bad faith, that such conduct relieves the requirement that coverage is found?

In a water damage denial case, one court recently answered this question “no” stating:

The central fact issue for the jury in this case was whether the Insureds’ loss fell under the repeated seepage or leakage exclusion of the policy. If so, there was no coverage; if not, there was coverage. The main problem with the jury instructions and the Insureds’ arguments at trial is that the jury could have decided the case solely because the adjuster did not “do a good job” regardless of whether the incident fell within the policy exclusion. The instructions focused on whether the adjuster “properly investigated” or “properly adjusted” the claim and talked about a code of ethics. While such considerations may be appropriate in a bad faith case, they have no place in a simple breach of contract action….The Insureds were free to criticize the adjuster’s conclusions without arguing that he breached a duty or obligation to them. If an adjuster makes a mockery of the code of ethics but the insurance company correctly denies a claim, there is no action for breach of contract.1

I am not certain I agree with this in every instance. Suppose an adjuster agrees to coverage, intentionally instructs the policyholder to do something which destroys the evidence of the cause of the loss, and then changes his position and claims no coverage? I could make up many other scenarios.

But, the court correctly noted that whether an adjuster did a good job does not absolutely mean that such breach of the good faith and ethical duties of the adjuster means that coverage exists.

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1 Citizens Prop. Ins. Corp. v. Mendoza, No. 4D16-1302 (Fla. 4th DCA July 5, 2018).